Your Marketing Plan: Reaching Your Target Markets

3. Your Pricing Strategy

Price is a very important factor in your marketing plan. It affects: 

• Your sales volume and profits
• The actions of your competitors
• The image of your products and/or services, your company, and your presence in the marketplace (i.e., your retail location, your website, etc).

Key factors that affect your pricing strategy include:

• Your customers' ability and willingness to buy. Ability to pay is determined by your customers’ income level. Willingness to buy is determined by your customers' taste, need, perceived value, and where your products and/or services rank on your customers' level of importance.
• Perceived value of your product or service. You can determine the perceived value of your product or service by asking your customers how much they would be willing to pay for the same service in a different setting. Or, if you are contemplating adding a new feature or benefit to your product or service, ask them how much they would be willing to pay for the improvement. It is perceived value that decides the price that your customers are willing to pay.
• Your costs. Your prices must cover both your fixed and variable costs, and allow you a reasonable margin for profit.
• Your competition. How do your prices compare to similar products and/or services offered by your competitors? Do you offer extra features or benefits for which you can charge a premium? Have you clearly differentiated your business and your products and services from those of your competitors (both direct and indirect)?

4. Your Promotion Strategy

Promotion is the activity of informing, persuading, and influencing your customers’ purchase decisions.

The type and scope of promotional activities that you need to undertake will depend on what the promotion is intended to do, and what goals and objectives you want to achieve. There are a number of reasons for promotional activities:

• Introduce a new product or service 
• Enter a new market
• Obtain a new dealer outlet (for manufacturers or distributors) 
• Increase or maintain sales 
• Build or maintain the image of your business and of your products and/or services 
• Support other selling efforts 
• Reach customers inaccessible by your salespeople 
• Educate the public

Your choice of promotional activities will be determined by a number of factors, including:

• Objectives
• Product/service type 
• Market segment 
• Stage in the life cycle 
• Competitive activity 
• Distribution channels utilized

There are four general types of promotional activities:

1. Advertising. There are three core reasons for advertising:

• Information. If you are opening a new store or introducing a new product, you must build consumer awareness of your existence. Promotion of a new store(s), or products that are early in their product life cycle, should be geared towards providing information. 
• Persuasion. You want to persuade potential customers that you have the product or service that best their needs. 
• Awareness/Reminder. You want to regularly remind your customers that your product or service is still available, the unique benefits of your product or service, and/or where they can purchase it.

2. Sales promotion. Sales promotions focus on short-term incentives to encourage sales of your products and/or services. 

• Consumer promotions include samples, coupons, rebates, contests, and demonstrations. 
• Trade promotions include buying allowances, free goods, co-operative advertising, and dealer sales contests.
• Sales force promotions include bonuses, contests, and sales rallies.
• Trade shows allow you to show your product, meet new buyers, learn more about your competition, and monitor changes in your industry.

3. Publicity and Public Relations. Also generally known as PR, publicity and public relations exercises expose your company to the public:

• Publicity are programs and activities that give your company exposure through news releases, feature stories, and editorial comments. To obtain this exposure for your business, it can be helpful to research effective campaigns/events of others in a related industry. 
• Public relations is the promotion of your company’s image and identity. The intent of PR is to create goodwill, a good reputation, and positive word-of-mouth by promoting your company’s good work or services. Remember, word-of-mouth from a satisfied customer is one of the most persuasive forms of promotion.

4. Personal Selling. This type of promotion involves a direct, face-to-face relationship with your customer. It includes explaining or demonstrating the features and benefits of your products and/or services in an attempt to persuade the customer to buy.