Afford        allocate      cost            match         objectives

Percent      respect                   setting                    task            thumb

Cut

(1) …… a Marketing Budget

Posted By Khouse:

Are there any rules of (2)….. for setting a marketing budget?

Posted by ChamberE:

I suggest using a mix of objective-and- (3) …..  and affordability methods. Decide on your marketing (4)….. . Then determine and (5) ….. out the marketing tactics you need to implement. Finally, compare those costs with what you can (6) ….. to spend. You have to (7) ….. your budget. If you are over budget, you will need to (8) ….. costs.

Posted by MattAp:

It depends on what your competitors are spending. You need to (9)…..  the spending of the market leader.

Posted by CathE:

There are guidelines by industry. What industry are you servicing? Many companies (10)….. a percentage of expected sales to marketing support. High tech companies can spend up to fifty (11)…. of net sales on promotion.

Posted By Khouse:

Thanks to you all for your responses. I can see it depends a lot on the type of business and its objectives. Thanks again - I appreciate your help.

6.9 Imagine that you are preparing a marketing budget for a non-profit organization. Explain the different possible approaches to setting the marketing budget to the organization's members.

 Text 4    Pricing strategies.

  Marketing Teacher is a website for marketing students. The following extract looks at some strategies to consider when fixing a price.

Premium pricing:Use a high price where there is a substantial competitive advantage - for example, rooms in Savoy hotels.

Penetration pricing:The price charged for products and services is set artificially low in order to gain market share. Once this is achieved, the price is increased.

Economy pricing:Marketing and manufacturing costs are kept to a minimum. Supermarkets often have economy brands for soups, spaghetti, etc.

Price skimming:Charge a high price because you have a new product type. However, the high price attracts new competitors into the market, and the price falls due to increased supply. DVD players were launched with this strategy.

Psychological pricing:The consumer responds on an emotional, rather than rational, basis. For example, charging 99 cents instead of 1 dollar.

Captive product pricing:Companies will charge a premium price where the consumer cannot choose a competitive product.

Product bundle pricing:Sellers combine several products in the same package. This also serves to move old stock. Videos and CDs are often sold using the bundle approach.

Pricing considerations

The marketing team for Stick Tea are preparing for a meeting about the price of a new range of tea that comes in a stick instead of a bag. They make notes on pricingconsiderations.

* alternative solutions: our stick packaging is unique  

* ease of comparison: easy to compare price but difficult to compare taste

* unique benefits/ unique selling points (USPs): quality of tea, stick format

* monetary significance: tea is cheap, but the innovative packaging has a high value

* demand: tea consumption is stable, but sales in speciality shops are on the rise

* price sensitivity: consumers are very price sensitive – sales decrease when prices increase

* complimentary costs: none – the consumer doesn’t even need a spoon

The price test

Stick Tea decide to carry out a price test for their range of tea. They want to know what customers think is a fair price for a box of 50 sticks. They are also interested in comparing different possible retail price points (€12, €14 and €16), to find out what customers consider to be the full priceand the bargain pricefor abox of 250 sticks.

6.10 Read the descriptions and name the pricing strategies that are being used.

1) charging a high amount for bottles of water inside a football stadium during the World Cup

2) charging $2.95 instead of $3

3) charging a low price to win sales in a new market

4) packaging shampoo, conditioner and hair gel from the same hair care product line together, and charging one price for the lot

6.11 Match the questions about pricing strategy (1-7) to the pricing considerations (a-g).

1) What is the value of the product or service for the consumer?

2) What is special or different about the product or service?

3) Is it difficult to compare the price and quality of similar products or services?

4) How many people want to buy the product or service?

5) How many similar products or services are there on the market?

6) What else does the consumer need to pay for in order to use the product or service?

7) How much does a change in price affect consumer demand for the product or service?

a        alternative solutions

b    ease of comparison

с    unique benefits

d    monetary significance

e    demand

f    price sensitivity

g    complementary costs

6.12 Complete the text using the following words:

Bargain      costs           fair             points        premium sensitive significance solutions    unique

When deciding on the price of a product or service you have to consider the product or service itself. For example, does it have (1)….. benefits? Does the consumer have any alternative (2) ….? What is the monetary (3) …. of the product or service? You also have to think about the possibility of complementary (4) ….. , and how price (5) ….. the consumers are to these and the product or the service cost.

Then you need to think about the pricing strategy and how this relates to the brand. For a luxury brand it is essential to follow a (6)…. pricing strategy in order to maintain the brand image. A no-frills low price would not be suitable for a brand such as Cartier.

Finally, you need to carry out a price test to check the price (7)….. you are considering. The (8) ….. price is the amount that the consumer is prepared to pay for the product or service. A (9) ….. price is a low price that may be used during special offers or for promotional pricing.

Think about three products you have bought recently. Identify the pricing strategy.

6.13 Read the attachment that marketing manager sent to his team and find words or phrases that mean the following:

1 when a customer pays the same fee each month / year / etc.

2 to sell a group of things (like products or services) as a package

3 reduced price

4 another word for product launch

5 enhanced features or services that customers have to pay more money for