Learning Guide Unit 5: Unit 5: Pricing and Sales Promotion

Learning Guide Unit 5
Learning Guide Unit 5
Overview
Unit 5: Pricing and Sales Promotion
Topics:
 Defining customer value

 Different bases for setting price
 Pricing based on customer value
 The pros and cons of sales promotion
Learning Objectives:
By the end of this Unit, you will be able to:
1. Estimating customer value as part of pricing strategy

2. Integrating information about customer value into the pricing decision
3. Analyze differences in pricing strategies given the marketplace
4. Examine ethical issues related to pricing certain types of products
Tasks:
 Peer-assess Unit 4 Written Assignment

 Read through the Learning Guide and the Reading Assignment
 Complete the Discussion Assignment by posting in the Discussion Forum
 Respond to three of your fellow classmates’ posts in the Discussion Forum
 Complete and submit the Written Assignment
 Complete and submit the Portfolio Assignment
 Begin working on your Group Activity
Introduction
Price is perhaps the most important element of the 4Ps of marketing because it is the only one that generates revenue.
American Marketing Association (AMA) suggested that sales promotion is media and nonmedia marketing pressure which
organizations apply for a predetermined, limited period of time to stimulate product and service trial, increase consumer
demand, or improve quality. Effective sales promotion helps improve the basic value of products for a limited time and
directly stimulates consumer purchasing, selling effectiveness, or effort by sales professionals. Sales promotion is useful to
inform, persuade, and remind targeted consumers about a business and its marketing mix. Businesses usually target sales
promotions at consumers, resellers, and the business's own sales force. Standard types of sales promotions include
rebates, coupons, sweepstakes, price-off deals, in-store displays, trade shows, contests, premiums, and samples. By
providing incentives for business targets to purchase or support their brand over another sales promotion, acts as a
competitive weapon. Most companies still use a naïve approach to pricing which is based on the cost of making the
product. Usually, higher pricing works for a premium market either because the product or services is superior or because
it is an essential product or services with no cheaper options.
Regardless of prices, businesses can have high or low promotion with different effects. Promotions are not cheap and
promotional decisions should be clearly based on return-on-investment (ROI). Strong promotion of a cheap product can
lead to rapid penetration into a large market, resulting in a compelling gain in position and share. With low pricing the
value of a product may increase, making it both desirable and affordable. However, with low promotion, only a limited
market penetration can be realized as fewer people can know about the product. In this Unit's readings, students will learn
that today’s pricing decisions are increasingly based on understanding customer value—the amount that a customer is
willing to pay for a product or service. In particular, students will learn how to measure and incorporate that measure of
willingness to pay as it pertains to the pricing decision. In addition, students will learn sales promotions and how price-
oriented promotions should be incorporated into marketing decision-making as well as the differences between sales
promotion and advertising.
Reading Assignment
Principles of marketing. (2015). University of Minnesota Libraries

Publishing. https://doi.org/10.24926/8668.1901 (Original work published 2010)
 Chapter 15.1 - The Pricing Framework and a Firm's Pricing Objectives

 Chapter 15.2 - Factors that Affect Pricing Decisions
 Chapter 15.3 - Pricing Strategies
Dholakia, U. (2016, June 27). Do shoppers benefit when stores use everyday low pricing? Psychology
Today. https://www.psychologytoday.com/us/blog/the-science-behind-behavior/201606/do-shoppers-benefit-
when-stores-use-everyday-low-pricing
FIRST ASSIGNMENT: Discussion Assignment
Give two examples of brands where manufacturing costs are well below the selling price. With that in mind provide
answers to the below questions;
1. How have the companies been successful in charging high prices to the brand’s consumers, despite the low costs of
manufacturing?
2. How is customer information used as a part of the pricing strategy?
Your Discussion should be a minimum of 250 words in length and not more than 750 words. Please include a word count.
Use APA citations and references for the textbook and any other sources used.
SECOND ASSIGNMENT: Written Assignment
Assume that you are a sales consultant for a local product or service. Prepare an analysis for the company and address the
following:
1. Provide a brief background of the company and mention the major markets.
2. What are the striking benefits of marketing these products or services to consumers?
3. Briefly describe the company's marketing strategy model.
4. What other product-pricing strategies, if any, would you recommend to maximize profit in the short and long-term?
Submit a 2-3 page analysis, (independent of the title page and reference page) double-spaced in Times New Roman font
which is no greater than 12-points in size. Paper and all citations should be in APA format.
Papers will be peer-assessed using this rubric.

THIRD ASSIGNMENT: Portfolio Activity
The responsibilities of product marketing manager include communicating a product’s value to the market. Product
marketing managers create marketing materials for communicating product features, in addition to developing marketing
tools and campaigns for attracting and keeping new and existing customers. A marketing manager is involved in long-
term sale of a product through effective advertising.
With this in mind, pick any product of your choice and write a reflection on effective advertisement for the product. In
your reflection, provide answers to the following questions:
1. In the short-term, how does a marketing manager encourage growth through sales promotions of the product?
2. What are the similarities and differences between advertising and sales promotions for the product?
3. What benefits and challenges are associated with each?
For assistance with reflective writing, read How to Write a Reflective Paper.
The Portfolio Assignment entry should be a minimum of 500 words and up to 750 words. Use APA citations and references
if you use ideas from the readings or other sources.
This assignment is graded by the instructor using the Portfolio Activity Rubric.

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Learning Guide Unit 5

Learning Guide Unit 5

Unit 5: Pricing and Sales Promotion

 Defining customer value

By the end of this Unit, you will be able to:

1. Estimating customer value as part of pricing strategy

 Peer-assess Unit 4 Written Assignment

Principles of marketing. (2015). University of Minnesota Libraries

 Chapter 15.1 - The Pricing Framework and a Firm's Pricing Objectives

2. How is customer information used as a part of the pricing strategy?

3. Briefly describe the company's marketing strategy model.

Papers will be peer-assessed using this rubric.

3. What benefits and challenges are associated with each?

For assistance with reflective writing, read How to Write a Reflective Paper.

This assignment is graded by the instructor using the Portfolio Activity Rubric.

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