Q.
a) Explain with the use of examples in the housing sector, the common elements in the marketing mix. (10 marks)
b) Discuss how a company could develop the broad pricing strategy for a new product. (10 marks)
(20 marks, 2012 Q8)
A.
a) Refer to write up on Market Mix 4Ps here.
The 4 P's of the Marketing Mix
The original 4 P's of marketing (although they have been renamed a bit over the years) that were the elements of a marketing mix are:
Product – The products or services offered to your customer: Their physical attributes, what they do, how they differ from your competitors and what benefits they provide.
Price – How you price your product or service so that your price remains competitive but allows you to make a good profit.
Place (Also referred to as Distribution) – Where your business sells its products or services and how it gets those products or services to your customers.
Promotion – The methods used to communicate the features and benefits of your products or services to your target customers.
Ref:
http://homebusiness.about.com/od/homebusinessglossar1/g/marketing-mix.htm
b) how to develop broad pricing strategy for a new product.
Pricing strategy is one of the marketing mixes.
Price for a product is standardized by the value that buyers perceive that it comes with. Hence, value is the price setter. If there is already a standard value of similar product in the market, pricing should be based on this existing value. This is to stay competitive in the market. Thereafter, an incremental premium be added to this price to commensurate a higher value with features added onto it.
To set a range of pricing, which means a window of variable pricing, the value that comes with the various products need to be convincing. For property, it can be viewed as a price varying with different specific types of the property.
A strategy would be land size correlate to price. The same structure of property but price range from low to high with varying land sizes, from small to large plot of land.
Another strategy would be type of built. Bigger built costs more, and smaller built costs less. Intermediate which is smaller costs less than corner which is bigger.
Varying finishing can also be factor which determines price. For example, wood (solid timber) finishing for flooring would cost more than parquet flooring. Sound proof specialized wall would cost more than brick wall.
Line extension for product can also be used to determine price setting. For example, houses which is tailor made for kitchen with built-in-cabinet would cost more. Ready-to-use type with built-in water heater and oven would have different price range.
Hence, broad pricing strategy can be advantageous for new products as generally people are attracted to various features putting in or taken out, and the resulting price can sometimes be at a premium.
Ref:
Own account.