Odd-Even Pricing...

Have you ever had more of a desire to buy a product priced at $19.99 rather than $20.00 thinking that you were getting a good deal? Or what about when deciding between two brands of the same product you bought the $20.00 one rather than the $19.99 one thinking the $20.00 one was of better quality? This is a popular psychological pricing method known as odd-even pricing based on the belief that certain prices are more appealing to buyers. This method involves setting a price in odd numbers, just under round even numbers, to make people think they are getting a better deal. Or if a company is looking to present an image of high quality for their product they may decide to price the product at even levels, which is also known as prestige pricing. Prestige pricing is another psychological pricing method that involves setting a higher price to ensure higher quality compared to a lower priced product. An example of this would be a pair of Ray Ban sunglasses is usually priced around $150.00 as opposed to a cheaper pair that one may find at Walmart priced at $9.99. Ray Ban prices their sunglasses at a higher price ending in even numbers to promote high quality and Walmart prices the sunglasses at $9.99 to promote a bargain.

Can you think of a product you recently bought because it was priced in odd numbers? When buying it did you think the price was lower than it really was?

In Response to Rebecca's Post...

If this trend continues, what kinds of things will you do in order to cut back on the money you spend weekly on gas? Do you think that people will change their lifestyles to save money? 

The increase we have seen in gas prices already is astonishing. Yesterday when I went for a walk in the morning I saw the price of gas to be $3.99/gallon and when I walked by the same gas station just 3 hours later it had already gone up to $4.02/gallon! As Rebecca stated in her post, gas has an inelastic demand for it since people need to purchase it no matter what happens to the price. I do feel however that even though the demand for gas is inelastic, people will try to cut back on consuming it by carpooling and taking other means of transportation. Recently I took the Amtrak train to Burlington, VT from Brattleboro, VT and the price of a ticket each way was only $12 making the roundtrip to be $24. When I drove to Burlington from Keene about a month ago I spent about $50 in gas total. Taking the train is clearly much cheaper than driving a car and I will now try to take the train whenever I can in order to cut back on the money I would be spending on gas. I definitely think other people will start trying to change the way they go about their daily lives in order to conserve gas.

What is another major product you can think of with an inelastic demand? If the price of this item increases do you think consumers will find ways to conserve their overall use of the product?

Top Brand In The World

As of the start of 2012, Apple Inc. became the top brand of the world putting Google in second place. The value of the enterprise is at $350,257 million and Apple's brand value is worth over $70,605 million, up about $40,000 million from 2011. Apple sells everything from smart phones to digital music and is best known for its Macintosh computers and iPods, iPhones, and iPads. Apple is the most valuable technology company, surpassing Microsoft. Microsoft dominated the business world providing goods and services that satisfied the needs of businesses, yet Apple's focus is on satisfying consumers wants and needs and this clearly generates the largest revenue. There are four distinct components of brand value which include reputation value, relationship value, experiential value, and symbolic value. Apple has become the most successful brand because they possess great value within these four components. Apple is always improving it's products and coming out with new versions of products that sell well. This helps create a great brand loyalty which Apple has with each of its consumers and has given Apple a good reputation value. People rarely complain with their Apple products and people have such a good experience with their Apple products that when a new version is released, they demand it and this has given the brand a good experiential value. Consumers find the Apple brand to be very reliable, and Apple provides good value for the money that is exchanged for their products which has helped establish a good relationship value with its consumers. And lastly, the Apple brand has a symbolic value which consists of being "the best of the best". When people see the Apple symbol on products they know that the product is   an Apple product and is of high quality and is worth a good amount of money.

When you see the Apple symbol/logo what do you think of? What are your first thoughts that come to mind about the brand or product?

In Response to Rebecca's Post..

What are some of the reasons that you think Domino’s is so much more successful than Pizza Hut?

In my opinion Domino’s is much more successful than Pizza Hut for many reasons. Domino’s seems to offer more deals and promotions like the 5-5-5 deal and they advertise their promotions much more frequently, especially on T.V. in commercials. Domino’s is open later hours than Pizza Hut which makes their food more convenient for customers such as college students. As for the Domino’s in Keene, college students are the majority of their consumers and being open til 1 am during the week and 3 am on the weekends brings in more sales because late nights are the times students want to order pizza. Pizza Hut on the other hand is only open until 10 pm and this does not meet college student’s needs. Also, Pizza Hut and Domino’s offer online ordering, yet Domino’s website provides an online tracking system where you can watch the process of your order and see when it’s done cooking. Domino’s also has won “Chain of the Year” two consecutive years and this I’m sure has helped their reputation. In December of 2009 Domino’s also came out with a new pizza recipe and they had a corresponding advertising campaign featuring real customers and employees talking about their great experiences with the new recipe which helped boost sales.

What marketing tactics do you think Pizza Hut could take on in order to be more successful than Domino's?

Starbucks: Premium Quality Coffee

Starbucks is one of the first companies that come to mind when I think of successful product positioning. For those of you who don’t know, product positioning is a marketing technique which involves creating a unique, consistent, and recognized customer perception about a firm’s offering and image. In other words, it involves creating and maintaining a certain concept of a product in the customer’s eyes. However, before creating the product position the company must determine the market segment they want to target their product or service to. In this case, Starbucks decided to mainly target office workers with middle to high incomes and in turn the company provides premium products with a place people can go between work and home and relax gather and socialize. Within the walls of Starbucks you can find comfortable furniture and tables and they serve multiple different coffee drinks and pastries that are associated with a high price to show their high quality. This is how Starbucks wanted its products and services to be perceived. Starbucks maintains a premium quality image by carefully monitoring each and every step of coffee production. They buy dark-roast whole bean coffee from countries like Costa Rica, Sumatra, and Kenya and then roast the coffee beans in their own plants and sell them only through company-owned stores. Starbucks also provides excellent service and they are always making sure customers are more than satisfied. 

What is the first company that comes to mind when you think of product positioning? How does the company create a unique and consistent customer perception of their product or service?

In Response to Danielle’s Post

What do you think of brands advertising on campus, through student ambassadors or sponsored activities? Should colleges allow this sort of thing, or should campuses be kept as ad-free as possible?

In my opinion what American Eagle and Target did at the University of North Carolina was a very smart marketing tactic. I think all companies whose target market consists of college students should consider implementing this type of advertising into their marketing plan. I agree with Danielle that college students don’t want to be advertised to and when it comes to seeing ads their focus is mainly on whether the advertisement is “cool” or not. However, I think through student ambassadors and sponsored activities, companies can reach their target market of students in the most effective way. Many college students try to keep up with the latest trends and they influence each other’s styles so they are more likely going to listen to their peers rather than adult marketers. I think colleges should allow this type of marketing and I don’t see any harm in these marketing practices. However, I do think that colleges need to put a limit on how many companies can use their campuses for advertising their brands because it could become very distracting for students if their campus becomes a huge marketing central. 

What other on campus tactics so you think companies could use to market their products effectively towards college students?

Marketing in a Consumer Market vs. Business Market

Markets fall into two categories: consumer markets and business markets. A consumer market consists of purchasers and household members who intend to consume or benefit from the purchased products and they do not buy products to make profits. Business markets consist of individuals or groups that purchase a specific kind of product for resale, direct use in producing other products, or use in general daily operations. One can imagine the marketing strategies for these two markets have to be different since the needs, wants and buying procedures are different for the markets. Generally business markets are more likely to be price driven and consumer markets are more brand driven. Therefore, a company selling to another business may want to focus more on promoting why what they have to offer is worth the price, and have the price be the focus of their advertising. Whereas a company selling to a consumer may want to focus more on promoting their brand name, making it the focus of their advertisements. Also, for consumer markets the customer is usually very distant from the manufacturer/company making the product therefore businesses in consumer markets need to use mass communication and distribution tools to market their products/services. In business markets on the other hand, the customer is much closer and the manufacturer has a lot more knowledge of the customer and may market through personal selling techniques rather than mass communication. 

Do you think companies in a consumer market spend more money on marketing than companies in a business market?