Cost advantages stem from the fact that a company can quickly reap higher profit margins despite selling products or services at competitors price due to lower production costs. Higher profit margins lead to more price reductions, more investments in products developments, R&D and innovation; and ultimately greater value for
To gain market share a lower price is set and once it is established a higher price can be set. Cheaper prices can get them higher sales and that recover the cost as business benefit for bulk buying. Advantages and disadvantages of using this strategy (analysis): Organizations use this strategy to gain customers and increase their sales. Another advantage of this strategy is it can also reduce competition as weak competitors might withdraw. The disadvantages include if they plan to increase the price customers would switch to another company so it is harder to increase prices.
Dimensions of Value proposition from company’s perspective are Value Creation: The basic step where the idea of value specification is presented and processed. Value appropriation: Is the second stage where product development, product improvement and smoothing customers buying experience comes in place. Value Consumption: Is the final step where customer uses the product and finally customer satisfaction and dissatisfaction is measured at this stage. Some important attributes of value proposition
2.3.2 Sales Promotion and its Relationship with Consumer Brand Preference It has been acknowledged that consumer and trade promotions can be a very effective tool for generating short-term increases in sales, and many brand managers would rather use a promotion to produce immediate sales than invest in advertising to build the brand’s image over time (Belch & Belch, 2003). They, however, caution that overuse of sales promotion can be detrimental to a brand in several ways. The first is that a brand that is constantly promoted may lose perceived value. This is in line with Teunter (2002) and Jha-Dang’s (2004) assertion that the presence of a promotion will lead consumers to attribute lower quality to the brand owing to the fact that it is on
Consumers are very greedy, they will normally prefer the discount items which is cheaper than normal price. Marketing use this techniques to lower the selling price and indirectly increasing the sales of consumer purchasing. Moreover, sales promotion techniques include merchandising allowance. It means that the more of the product that the retailer purchases, the lower the price they can get it. The manufacturer reduces the cost for larger orders that ordered by the retailers.
needs. Therefore, with lowered inventory level, the flexibility and reaction speed from the distributors have been enhanced and both the customer fill rate and stockout rate could be improved as well. With less hurry orders interruption, both distribution and manufacturing costs could be reduced: Barilla has long changeover time to setup another product as mentioned in the case. The less disturbance, the more cost-efficient in the whole supply chain process. But it is only applicable for the bottleneck machines and it is true for the distribution cost too.
Innovative Promotional Tools Marketers make use of a variety of promotion tools to communicate with customers and other stakeholders. Also known as Marketing Communication Mix, it consists of “a specific blend of advertising, public relations, personal selling, sales promotion, and direct-marketing tools that the company uses to persuasively communicate customer value and build customer relationships” (Armstrong & Kotler 2008). Figure: The Marketing Communications Mix: Advertising, Sales Promotion, Personal Selling, Public Relations, Direct Marketing Source: Armstrong & Kotler, 2008. The promotion tools of the Marketing Communication Mix are described below, together with the advantages and disadvantages of each component. Advertising Marketers whom need to reach large, geographically dispersed audiences, often with high frequency, use advertising to promote their business.
P3.1 Analyze the role of sales teams within marketing strategy. Your sales and marketing team has a substantial influence on the profitability of the business. You have to define roles that reflect the strengths of your products and assign responsibilities for achieving the sales performance required by the company. When your marketing strategy builds on the roles taken on by the members of your team, they can set achievable targets and take responsibility for meeting their objectives Market Segments The roles assumed by the members of your sales and marketing team depend on the products you offer and how you segment your markets. For example, if your products are highly technical, a
A company’s competitive strategy is its plan of satisfying a set of customer needs through its products or services. For example, Dell's competitive strategy is providing a customized variety of products at a reasonable cost. Competitive strategy is based on customer's priority on product cost, delivery time, variety and quality. In order to execute this competitive strategy, decisions have to be taken at each stage of the supply chain that defines the supply chain strategy. For example, supply chain strategy selects from where and how, how much, raw materials to be procured, mode of transport to and from the company, distribution of the products and more.
If a company is not able to grow internally due to lack of managerial and physical resources, it can externally grow through mergers and acquisitions. Enhanced Profitability The combination of two or more companies can raise the profitability of the company more than the average level due to efficient utilization of resources and cost reduction. These can happen because of economies of scale, operating economies and synergy. Economies of scale arise when increase in production causes the average price per unit to come down. Combination of companies can also reduce operating costs.