MICROECONOMICS

Guidelines

Suppose that you are in charge of designing a product campaign for a new shampoo. This campaign will include, among others things, the components of marketing, pricing, and distribution. What will be the ultimate goal of the campaign and what will be your methods for achieving this goal?

1. Prepare a 2-3 page paper in Microsoft Word explaining your answer.

• Include in your response a discussion and analysis of the concepts of utility, price elasticity, consumer choice and demand.
• All written assignments and responses should follow APA rules for attributing sources.

Also, prepare a document using Microsoft Excel which illustrates

• the desired effect of the marketing campaign as a shift in market equilibrium with reference to price and quantity adjustments.
Finally, prepare another document using Microsoft Excel which illustrates how a change in consumer utility affects the price elasticity of demand.

Consider using the 4 Ps for marketing portion of the assignment. 4 Ps is probably the best-known way - of defining the marketing mix, and was first expressed in 1960 by E J McCarthy.

The 4Ps are:

• Product (or Service)
• Place
• Price
• Promotion

A good way to understand the 4 Ps is by the questions that you need to ask to define you marketing mix. Here are some questions that will help you understand and define each of the four elements:

Product/Service

• What does the customer want from the product/service? What needs does it satisfy?
• What features does it have to meet these needs?
• How and where will the customer use it?
• What does it look like? How will customers experience it?
• What size(s), color(s), and so on, should it be?
• What is it to be called?
• How is it differentiated versus your competitors?
• What is the most it can cost to provide, and still be sold sufficiently profitably? (See also Price, below).

Place

• Where do buyers look for your product or service?
• If they look in a store, what kind? A specialist boutique or in a supermarket, or both? Or online? Or direct, via a catalogue?
• How can you access the right distribution channels?
• Do you need to use a sales force? Or attend trade fairs? Or make online submissions? Or send samples to catalogue companies?
• What do you competitors do, and how can you learn from that and/or differentiate?

Price

• What is the value of the product or service to the buyer?

• Are there established price points for products or services in this area?

• Is the customer price sensitive? Will a small decrease in price gain you extra market share? Or will a small increase be indiscernible, and so gain you extra profit margin?

• What discounts should be offered to trade customers, or to other specific segments of your market?

• How will your price compare with your competitors?

Promotion
• Where and when can you get across your marketing messages to your target market?

• Will you reach your audience by advertising in the press, or on TV, or radio, or on billboards? By using direct marketing mailshot? Through PR? On the Internet?

• When is the best time to promote? Is there seasonality in the market? Are there any wider environmental issues that suggest or dictate the timing of your market launch, or the timing of subsequent promotions?

• How do your competitors do their promotions? And how does that influence your choice of promotional activity?