1.Purchaser behavior and factors influencing the choice of product and product category……………………………………………………………….…3
2. Methodology for compiling a commodity classifier…………………………21
3. Specify the basic requirements for a trade marketing manager……………26
List of used literature…………………………………………...29
Buying behavior and factors influencing the choice of product and product category.
Purchasing behavior is the process by which a consumer decides to allocate his income among the various goods and services he intends to purchase. Knowledge of this mechanism will allow a more rational distribution of their resources for organizing the production of relevant goods and services.
There are 4 types of purchasing behavior based on the degree of involvement of the buyer in the buying process and awareness of the differences between brands of goods.
1) Comprehensive buying behavior.
Complex buying behavior is said to be when the consumer is highly involved in the buying process and is aware of significant differences in brands. This usually refers to rare purchases of expensive goods. Most often, the buyer does not have sufficient information about the product category and needs to Additional Information. For example, a person buying a computer may not know what such specifications, as "RAM 32 MB", "monitor resolution", "hard disk capacity". Such details do not mean anything to the buyer until he understands them himself.
Complex buying behavior is a three-step process. First, the buyer develops a certain belief in relation to the product. Then he develops an attitude towards him and, finally, after careful consideration, the person makes a purchase. Manufacturers of goods whose purchase requires a high degree of consumer involvement should be aware of how seriously he will collect information about the proposed purchase and evaluate it. Marketers need to develop strategies to help consumers understand the relative importance of product features and to inform consumers about the difference between one brand and another using print media.
2) Buying behavior that smooths out dissonance.
Sometimes the buying process takes place with a high degree of involvement of the consumer, who does not always notice small differences between similar products from different manufacturers. The high degree of involvement is based on the fact that the purchase itself is risky, very rare, and the cost of goods is high. In this case, the buyer will try to go around all the stores in order to compare the products offered, but he will make a purchase quickly enough, based mainly on the level of price and service in the store. For example, buying a sofa involves a high degree of consumer involvement, as it is an expensive purchase that also reflects the taste of the buyer. On the other hand, most sofas from different manufacturers, but at about the same price, may seem very similar to each other to the consumer. After the purchase, the consumer may experience a sense of dissonance, noticing some flaws in the sofa or hearing favorable reviews from colleagues. But he will listen very carefully to information confirming the correctness of his choice. In this example, the consumer first makes a purchase, then a new belief is formed, and then an attitude. That's why marketing policy should be aimed at providing the consumer with information that would help him to be satisfied with the purchase.
3) Habitual buying behavior.
Usually, the purchase of goods involves a low degree of consumer involvement in the purchase process, with no significant differences between brands. Consider the process of buying salt. Here the degree of consumer involvement is low. What could be easier than going to the store and buying a pack of salt? If someone is used to buying salt of a certain brand, then such consumer loyalty in this case is rather an exception.
So, when buying cheap everyday goods, the degree of involvement in the consumer is very low. When buying a product that does not require a high degree of consumer involvement, his behavior does not fit into the usual scheme of "belief-attitude-behavior". There is no need to actively search for information about various brands, evaluate their characteristics and carefully consider the purchase decision.
In this case, the consumer passively perceives information from commercials and newspaper ads. Repeated repetition of the names of the same brand in advertising leads to the fact that the consumer only gets acquainted with it, and is not convinced of the need to buy it.
Buyers do not develop a stable relationship with a particular brand; they choose her, most likely because they are familiar with her. After the purchase, they cannot evaluate their choice due to weak involvement in the process.
Thus, the process of buying with a low degree of consumer involvement in it begins with the formation of a belief in relation to the brand through passive assimilation of information. Then buying behavior is formed. This may be followed by evaluation. Producers of this kind of goods with small differences between brands effectively use the practice of discounts and sales to increase sales, as buyers do not attach much importance to a particular brand. Advertisements should describe only the most basic features of the product and use only easy-to-remember, brand-specific visual or figurative symbols. Advertising campaign should be aimed at repeated repetition of short messages. In this sense, television is more effective than print advertising.
4) Choice-Oriented Buying Behavior
products.
Some purchases are characterized by a low degree of consumer involvement in them, but significant differences between brands of goods. In this case, the consumer ceases to focus on any particular brand.
Consider the example of buying cookies. The consumer has some beliefs about this product, he chooses a brand without much hesitation and evaluates it in the process of consumption. But next time, out of a desire to try something new, or just out of curiosity, he buys a different kind of cookie. Switching from one brand to another is caused by a wide range of products, not dissatisfaction with a particular brand.
In this situation, the strategies of the market leaders and its other subjects differ. Leaders will seek to maintain habitual buying behavior by increasing the share of their products on store shelves and investing in regular high-impact advertising.
Competitors will encourage the shopper to switch from one brand to another by offering special prices, coupons, free samples, and by running ads to convince the shopper to try something new.
To increase the degree of consumer involvement in the purchase of a particular product, manufacturers use four strategies:
1. They associate the use of the product with a solution to a problem, such as Colgate toothpaste and caries prevention.
2. The product is tied to a personal situation - for example, coffee ads use the story that the aroma of morning coffee helps the consumer shake off the remnants of sleep.
4. Products are being improved (for example, a fortified drink is added to a simple soft drink).
But each of these strategies, at best, raises the degree of buyer involvement in the purchase process - from low to medium (but not to high).
The specificity of the consumer goods market lies in the fact that these markets are divided into numerous segments that have certain categories of buyers with their own requirements, tastes, requests, traditions, cultural characteristics, and effective demand limits. In practical marketing, consumers are divided into two groups: end users and consumer organizations. It is the consumer, deciding what and where to buy, who determines what goods to produce and what business will be successful. The freedom of choice of goods by the buyer is now especially enhanced due to his mobility and better awareness through advertising, the media, and the Internet. Market researchers study the influence of numerous factors on the behavior of the buyer when making a purchase decision.
Cultural factors
The strongest influence on consumer behavior is exerted by cultural factors, especially its general level, belonging to a certain subculture and social class.
Culture.
Culture is a determining factor in the needs and behavior of a person who from childhood learns in the family and through other social institutions a certain set of values, stereotypes of perception and behavior. The American child grows up in a society that values striving for achievement, success, activity, efficiency and practicality, constant movement forward, material comfort, individualism, freedom, philanthropy, good health.
Subculture.
Subcultures are formed on a national, religious, racial or regional basis, many of them form important market segments that manufacturers must consider when developing products and planning marketing programs. Belonging to a certain subculture also influences Linda Brown's behavior as a customer, determines her preferences in food, clothing style, leisure and work. Suppose that she was brought up in a subculture in which the highest value was considered high level education, which explains her interest in computers.
social classes.
Social classes - built in a strict hierarchy, relatively homogeneous, stable social groups, united by common values, interests and behavior.
The criteria for dividing society into classes include not only income, but also work, education and place of residence. Representatives of different social classes differ in style of dress, speech, organization of recreation and many other characteristics.
The distinguishing features of a social class include, firstly, the tendency of its representatives to more or less the same behavior; secondly, the presence of a certain social status; thirdly, education, occupation and income level. And, finally, fourthly, the possibility of moving from class to class.
Members of social classes have certain common preferences in the choice of various goods and trademarks including clothing, home furnishings, leisure activities and automobiles. Some manufacturers, using this circumstance, focus their attention on meeting the needs of a particular class. Social classes are characterized by different media preferences: members of the upper class opt for books and magazines, while members of the lower class while away their evenings in front of television screens. Social classes are also characterized by the presence of linguistic differences, which must be taken into account when creating advertising products.
Social factors
In addition to cultural, consumer behavior is influenced by such social factors like reference groups, family, roles and statuses.
reference groups.
Human behavior is influenced by various social groups.
Reference groups - groups that have (with personal contact) a direct or indirect influence on a person's attitude to something or someone and his behavior. Groups that have a direct influence on a person are called membership groups.
Membership groups can be primary (family, friends, neighbors, work colleagues, all those communities, interaction with members of which is permanent and informal) and secondary groups (professional groups, religious and trade union associations, built more on a formal basis, communication with whose members is periodic).
Reference groups influence an individual in at least three ways: they can push a person to change their behavior and lifestyle; influence the attitude of the individual to life and his idea of himself; may influence an individual's choice of particular products and brands.
A person is also influenced by groups external to him, of which he is not a member. Groups to which an individual would like to belong are called desirable groups.
A family.
The family is the most important social association of consumers-buyers. Family members constitute the most influential primary reference group. There are two types of families. The guiding family consists of the individual's parents and relatives. In it he receives religious instructions, here his life goals, feelings of self-worth and love are determined, in it his position on political and economic problems. Even if a person rarely communicates with their parents, their influence on their purchasing behavior may remain significant; it is especially significant in those countries where parents traditionally live in the same family with adult children. At the same time, the influence of the mentoring family is rather indirect. The direct influence on the buyer's behavior is exerted by his generated family - spouse and children.
Roles and statuses.
A person throughout his life belongs to several groups - family, friends, various organizations. His position in each group is determined by his role and status. A role is a set of actions that are expected of a person by those around him.
Personal factors
The decision of the buyer is influenced by his personal characteristics: age and stage life cycle his family, work, economic situation, lifestyle, character traits and self-esteem.
Age and stages of the family life cycle.
Throughout life, a person acquires a variety of goods and services. The child needs children food. An adult tends to try a wide variety of foods, and in old age he switches to diet food. Over time, human tastes change in relation to clothing, furniture, recreation.
The consumption structure of an individual also depends on what stage of the life cycle his family is at. Usually there are 9 stages of the family life cycle, each of which is characterized by a certain financial position and typical shopping. Often during development marketing plan manufacturers focus on certain target groups family life cycle. It should be noted that not always the inhabitants of one house form a single family.
Occupation.
The buyer's occupation has a great influence on the purchase of goods by the buyer. The American worker is forced to purchase overalls and footwear. And the position of the president of the company requires the purchase of expensive suits and membership in privileged country clubs. Marketers seek to define professional groups, interested in purchasing specific goods and services, and companies tend to release goods for them.
Economic situation.
The economic situation greatly influences the choice of goods by the consumer. The economic situation of an individual is determined by the level and stability of the expenditure side of his budget, the size of his savings and assets, debts, creditworthiness and attitude to the accumulation of money. Producers of goods whose sale depends on the level of income of buyers constantly monitor trends in personal incomes of the population, savings rates and interest rates. If macroeconomic indicators indicate a reduction in household income, the manufacturer can take steps to change the characteristics of the product, its price, positioning, so that the product is still of value to the consumer.
Lifestyle.
People belonging to the same subculture, the same social class and having the same occupation can lead completely different lifestyles.
Lifestyle is a form of human being in the world, expressed in his activities, interests and opinions. The way of life reflects “the whole person” in his interaction with others.
Personality type and self-image.
A person's buying behavior is influenced by their personality type.
Personality type - a set of distinctive psychological characteristics of a person, which determine his relatively constant and consistent reactions to environmental influences.
Personality type is usually defined on the basis of the following inherent traits of a person: self-confidence, influence on others, independence, respect, sociability, self-defense and adaptability. It can be a very useful variable in the analysis of consumer behavior, provided it is properly classified and justified by the relationship between certain types of personality and a person's choice of a particular product or brand.
Psychological factors
There are four main factors influencing the consumer's choice of product. psychological factors- motivation, perception, learning, beliefs and attitudes.
Motivation.
At any moment in life, a person experiences a lot of needs. Some of them are of a biogenic nature, they occur in a certain physiological state of the body - hunger, thirst, discomfort. Others are psychogenic in nature and are the result of such states of psychological tension, such as a person's need for recognition, respect, or spiritual closeness. Most of the needs do not require immediate satisfaction. A need becomes a motive when it forces a person to act, and its satisfaction reduces psychological stress.
Psychologists have developed several basic concepts of human motivation. The most famous of these, the theories of Sigmund Freud, Abraham Maslow, and Frederick Herzberg, lead their proponents to very different conclusions about consumer research and marketing strategy.
The theory of motivation according to Freud. The great psychologist believed that people for the most part are not aware of the psychological forces that guide the behavior of the individual, which means that they are not able to fully understand the motives for their actions.
To find out the deep associations evoked by the product, the researchers collect “in-depth interviews” using techniques that allow you to turn off the conscious self - word associations, incomplete sentences, picture explanations and role-playing games. As a result, psychologists have come to a number of interesting and strange conclusions: consumers do not want to buy prunes because they are shriveled and remind them of old people; men smoke cigarettes because it subconsciously reminds them of thumb sucking in infancy; women prefer vegetable fats to animals, as they feel guilty before slaughtered animals.
Psychologists have established that any product initiates a unique set of motives in the consumer.
A. Maslow's theory of motivation. Abraham Maslow tried to explain why in different time the individual has different needs. Why does one person spend a lot of time protecting himself from all sorts of external threats, while another strives to earn the respect of others? A. Maslow explains this by the fact that the system of human needs is built in a hierarchical order, in accordance with the degree of importance of its elements: physiological needs, the need for a sense of security, social needs and the need for self-affirmation. The individual first of all tries to satisfy the most important needs. When he succeeds, the satisfied need ceases to be motivating, and the person strives to saturate the next in importance.
A. Maslow's theory helps manufacturers understand how a variety of products fit the plans, goals and life of potential consumers.
The theory of motivation according to F. Herzberg. Frederick Herzberg developed the theory of two motivation factors, one of which causes dissatisfaction of a person, and the other - his satisfaction. In order for the purchase to take place, the absence of the dissatisfaction factor is not enough - the active presence of the satisfaction factor is required.
In practice, the theory of two factors is applied in two ways. First, the seller must avoid the appearance of dissatisfaction factors (for example, incomprehensible computer instructions or poor service). Such things not only do not contribute to the growth of sales, but can also disrupt the purchase. Secondly, the manufacturer must determine the main factors of satisfaction or motivation for the purchase of the product and ensure that their presence in the product does not go unnoticed by the buyer.
Perception.
A person driven by a motive is ready for action. The nature of this action depends on his perception of the situation.
Perception is the process of selecting, organizing and interpreting incoming information by an individual and creating a meaningful picture of the world. Perception depends not only on physical stimuli, but also on their relationship to environment and on the characteristics of the individual.
Keyword in the definition of the concept of "perception" - an individual. Why do people perceive the same situation differently? This is explained by the fact that the processes of perception occur in the form of selective attention, selective distortion and selective memorization. As a result, the consumer does not always see or hear the signals that manufacturers send him.
Assimilation.
In the process of conscious activity, a person acquires certain knowledge. Assimilation - certain changes in a person's behavior that occur as he accumulates experience. Human behavior is basically learned. Theorists believe that assimilation is the result of the interaction of urges, stimuli of varying intensity, and reinforcement.
Motivation is a strong internal stimulus that pushes an individual to action. When the impulse is directed to a certain stimulus that can relieve tension, it becomes a motive.
beliefs and relationships.
An individual's beliefs and attitudes are formed through actions and learning and influence consumer behavior.
A belief is a mental characteristic of something.
Of course, manufacturers are very interested in the beliefs of buyers about products and services that create images of products and brands. People act based on their beliefs. If certain beliefs are wrong and prevent a purchase from being made, marketers need to campaign to correct them.
Attitude - a stable positive or negative assessment by an individual of an object or idea, feelings towards them and the direction of possible actions in relation to them.
People develop attitudes towards everything: religion, politics, clothing, music, food, and so on. The attitude towards an object makes people love it or hate it, move closer to it or move away.
The formed stable assessment determines approximately the same attitude of a person to similar objects, because in this case there is no need to react in a new way to each individual stimulus. Relationships save the physical and mental energy of the individual and that is why they are very stable. Human relations are a logically connected chain in which a change in one link will require the transformation of other links. Therefore, when developing new products it is advisable to take into account already existing customer relationships without trying to change them. But don't forget about the exceptions, when a change in attitude pays off.
Modern service: trends, tasks, principles
The service sector is one of the sectors of the economy, and its condition always depends on the development of other sectors. Changes in service activities have always been integral part development of the world economy.
Outstanding American economist John Galbraith describes the features of service in a pre-industrial society as follows: “In the pre-industrial era, a very large part of the non-agricultural economic activity reduced to the personal service of one person to another. This included food preparation, wardrobe care, personal toilet and hygiene assistance, educational services, and numerous other services from one person directly to another. The person providing the service was dependent on the consumer of the service. “Low productivity and overcrowding lead to a large share of the underemployed population, which is distributed in agriculture and the domestic service sector, characterizes such social system creator of the theory of post-industrial society, Daniel Bell.- Therefore, there is significant employment in the service sector, which remains mostly personal services. Because workers are often content to pay just enough to eat, housework is cheap and extremely common. In England the servant class remained the most numerous.
In an industrial society, the development of industry led to a sharp reduction in the number of domestic servants. The main task of economists of this era is the mass production of goods. Numerous services that were previously performed by family members themselves are transferred to small firms and independent private entrepreneurs. Developed free services education and health, turned out to be tourism, some information Services, culture and art services.
The main activity in a post-industrial society is no longer the production of goods, but the processing of information and the provision of services, in particular, new types of services are becoming widespread. These are the humanities - education, health care, and professional services- analysis and planning, design, programming, etc. The expansion of the post-industrial sector requires that as many people as possible have higher education received the skills of abstract-conceptual thinking.
The main tasks of the service system.
1. Advising potential buyers before they purchase products from this company.
2. Training of the buyer's personnel for the most efficient and safe operation of the purchased equipment.
3. Transfer of the necessary technical documentation.
4. Delivery of the product to the place of use in such a way as to minimize the likelihood of damage to it in transit.
5. Bringing the product into working condition at the place of operation and demonstrating it to the buyer in action.
6. Prompt supply of spare parts, close contact with manufacturers of spare parts.
7. Collection and systematization of information about how equipment is operated by consumers and what comments, complaints, and suggestions are made at the same time.
8. Participation in the improvement and modernization of consumable products based on the results of the analysis.
9. Collection and systematization of information about how competitors conduct service work, what service innovations they offer to customers.
10. Formation of a permanent clientele of the market according to the principle: "You buy our product - we do everything else."
Basic approaches to the implementation of the service.
· negative approach. With this approach, the manufacturer considers the manifested product defects as random errors. The service is not viewed as an activity that adds value to the product, but rather as an overhead that needs to be kept as small as possible.
· Exploratory approach. The emphasis is on the careful collection and processing of information about product defects in order to improve its quality in the future.
· Service-obligation of the supplier. The obligations of the manufacturer are limited to the supply of the agreed spare parts and assistance within the warranty period. A service discount is a very common solution for organizations that follow this approach.
· Limited liability . The manufacturer and supplier are responsible for maintenance until the end of the warranty period. After that, the service is carried out by independent firms.
· Service-means in competition. Service technicians are required to visit customers periodically, whether or not a problem has been reported. The goal is to convince the consumer that in the future, if it becomes necessary to purchase a new product of the product range of the corresponding manufacturer, he should not even think about any other choice.
· The goal is optimal quality. With this approach, attention is directed to the study of the real needs and conditions of consumers and to the adaptation of technical and operational indicators of products to them. The service is seen as an important source of information about why a problem occurred and what needs to be done to improve the product so that this does not happen in the future.
Trends modern service: dangers and new opportunities.
Marketers note the following main trends in the development of after-sales service:
1. Manufacturers are creating more and more reliable, easily adaptable equipment to different conditions. One of the reasons for this progress is the replacement electrical equipment electronic, which gives fewer failures and is more maintainable. In addition, companies are expanding the production of stand-alone and disposable equipment.
2. Modern Consumers are well versed in matters of after-sales service and require an individual approach.
3. A feature of service contracts is that the seller provides Maintenance and makes repairs within a certain period of time at a price agreed in the contract.
4. The number of services provided is growing rapidly, which reduces the price of services and the profit from selling equipment at a price that does not include the cost of after-sales service.
5. Requirement additional services increasingly as a condition of payment for basic services.
6. The desire for self-service is growing more and more.
Principles of modern service.
Before talking about the principles of modern service, I would like to define the very concept of service at the present stage.
The most common definition of a service is the work of providing services, i.e. to satisfy someone's needs. But if you expand this definition, then service is a supply system that allows the buyer to choose for himself best option acquisition and consumption of a technically complex product, as well as economically advantageous operation of it for a reasonably stipulated period dictated by the interests of the consumer.
There are a number of generally accepted norms, the observance of which warns against errors:
· Mandatory offer. On a global scale, companies that produce high-quality goods, but poorly provide them with related services, put themselves at a huge disadvantage.
· Optional use. The firm should not impose service to the client.
· Service elasticity. The package of service activities of the company can be quite wide: from the minimum required to the most appropriate.
· Service convenience. The service must be presented in a place, at a time and in a form that suits the buyer.
· Information return of the service. The management of the company should listen to the information that the service department can give out regarding the operation of goods, about the assessments and opinions of customers, the behavior and methods of service of competitors, etc.
· Reasonable price policy. The service should be not so much a source of additional profit, but an incentive to purchase the company's products and a tool to strengthen customer confidence.
· Guaranteed conformity of production to service. A manufacturer conscientiously treating the consumer will strictly and strictly measure his production capacity with the capabilities of the service and will never put the client in the conditions of "serve yourself."
Price certainly plays a huge role in the buying decision. Unfortunately, for many consumers, it is a decisive factor. Yes, they can influence those who look “beyond” the price, but this does not underestimate the importance of the price. But is the question of pricing really that simple? How do these figures affect the buyer in terms of psychology? Let's figure it out.
"Sound"
It turns out that the very sound of the price affects its perception by the consumer. According to the results of this study, the less time the buyer spends on "pronouncing" the price, the better. In the terms of the Russian language, this means that the most favorable numbers for indicating the price are "two", "three", "five", "six", "seven". All other numbers contain more than one syllable, which means that by "pronouncing" them, the consumer subconsciously begins to perceive the price as higher than it actually is. The effect is relevant not only for numbers, but also for separators. A period, a space, beating thousands from hundreds, can make a negative impression on the buyer and adversely affect his purchase decision. So try to get rid of the "long" numbers and separators by conducting the next price review and / or redecoration of your store.
Size matters!
In fact, everything is simple here: if the price is written in large numbers that dominate its environment, it is perceived as high. According to the results of this study, this is how our brain interprets the size of the numbers on the price tags.
In many stores you can see a comparison of the old and new price, while the old price is crossed out, and the new one is served to the consumer in large print. Based on the results of scientific research, everything should be done the other way around: the old, higher price should be displayed in a larger font, and the new, reduced price should be shown in a font size two or three smaller. The main thing is not to overdo it, otherwise the visitor may notice only the old, higher price, and will not pay attention to the new one.
Green or red?
Another point where reality diverges from the intuitive conclusions of the majority. It is generally accepted that red is the color of danger, and if you write the price in red, sales will be lower. And green, on the contrary, signals that everything is in order, there is no danger. However, the results of this study show that men like the color red. On a subconscious level, of course. The fact is that in wildlife, red very often means a call for reproduction, and sex, as you know, sells. Seeing the price in red, the man believes that he is being offered a good deal. The price tag, painted in black, does not produce such an effect. On women, red has the same effect, but to a lesser extent.
If your store's audience is male-dominated and red doesn't go against the overall design concept, try coloring the numbers on your price tags that color.
Left or right?
Where is it better to place the price on the page, on the left or on the right? And if there are two prices - old and new - in what sequence should they go? According to the results of this study, we subconsciously refer to the past everything that is on the left (on the page or in the visually perceived area). Numbers, text, images, etc., located on the right, are perceived the other way around, we attribute them to the future. This phenomenon is substantiated by the usual direction of reading: from left to right.
When setting a discount on a product, place the old price to the left of the new one, if possible - in the left part of the visible area.
Neither rubles nor kopecks
The ruble recently acquired its own sign, and many stores immediately adopted it. No less common is the practice of writing "rub." after price. But the results of this study show that this practice is vicious. Seeing the sign of the currency or its other designation, a person realizes that we are talking about spending, and spending, that is, giving away one’s own, is psychologically difficult for the vast majority of people. But if no sign exists, the consumer is more willing to part with the money, since he does not have the feeling of spending.
Try to remove all hints of money from the price tag. Indeed, in most cases, the context and the word “Price” above the numbers allow the visitor to unambiguously interpret them.
Odd or even?
In addition to the “sound” of numbers in price tags, it also matters whether they are even or odd. According to the results of this study, we subconsciously round odd numbers down. That is why price tags ending in 9 and 7 are extremely popular. Seeing the price of “99 rubles”, the consumer perceives it not as “almost 100”, but as “a little more than 90”. Taking into account the importance of the number of syllables in the numbers that make up the price, we can assume that the seven “works” even better, although in the English-speaking environment the nine is more profitable: nine is one syllable, seven is two syllables.
Total, if we take into account all the features of the perception of numbers, the price should:
- consist of "monosyllabic" numbers;
- be written in small size font, without any separators;
- be on the right;
- be dyed red
- to be alone, without a badge / currency indicator;
- end in 9 or 7.
What experiments with prices did you conduct? Share your experience and opinions in the comments.
The price level is the ratio of the weighted average prices of one period to the weighted average prices of the base period. The price level of the base year is taken as 1.0. Typically, the price level is used in economic models.
Introduction
The problem of pricing goods and services is facing all firms, enterprises and organizations. In a market environment, pricing is a process that is influenced by many factors. The choice of direction in pricing, approaches to determining prices for products, services rendered in order to increase the volume of sales of goods turnover, services and increase production, strengthening the market position of the enterprise is provided on the basis of marketing research. At the same time, one of the main components of marketing are prices and pricing policy. Prices are closely related to other aspects of the company's activities. The commercial results of the company's activity largely depend on the price level. The essence of a targeted pricing policy is to set such prices for goods in order to vary them depending on the situation on the market and its conjuncture, in order to seize the maximum share, achieve predictable profits, and successfully solve all strategic and tactical tasks. As part of the pricing policy, all problems of the relationship of prices for goods within the range, the use of discounts and price variation, ensuring the optimal ratio of prices and comparable prices of competitors, the formation of prices for new goods and services are solved. All this is concentrated into a single integrated system. Establishing a single price for all buyers is a new thing. Usually prices are set by sellers and buyers during the auction. Sellers ask for a price above what they intended to receive, and buyers below what they expected to pay. At the end of the auction, they converged on a mutually acceptable price.
When setting the final price, the degree state regulation, the level of demand dynamics, the nature of competitors, the needs of wholesalers and retailers, general economic criteria that determine the deviation of the price level from the value of the goods and depend on the manufacturer of the goods.
The problem of pricing occupies a special place in the system market relations. The liberalization of prices for goods and services carried out in Russia has led to a reduction in the influence of the state on the process of price regulation and a huge increase in prices. With the help of artificially raised prices, producers compensate for any production costs, and at the same time they are not interested in improving the quality of the product. Since 1992, the pricing system has been reduced to the use of free, market prices, the value of which is determined by supply and demand in the goods market. State regulation of prices is used for a narrow range of goods produced by monopoly state enterprises.
1. Factors affecting the price level and their characteristics
When choosing a pricing strategy, the firm must identify and analyze all factors that may affect prices. There are quite a lot of such factors, to a greater extent these are factors that are not controlled by the company. Some contribute to lower prices: production growth, technological progress, lower production and distribution costs, increased labor productivity, competition, tax cuts, expansion of direct ties. Others cause prices to rise: decline in production, instability of the economic situation, monopoly of the enterprise, excessive demand, increase in the supply of money in circulation, increase in taxes, increase in wages, increase in enterprise profits, improvement in product quality, conformity with fashion, rising labor costs, low efficiency of capital use .
Consumers of goods have a significant impact on the firm's pricing decisions. The relationship between prices and the number of purchases made at those prices can be explained in two ways. The first is the interaction of the laws of supply and demand and price elasticity. Another - in the unequal reaction of buyers of different market segments to the price.
In market pricing, prices for goods are determined by their owners. The state can regulate prices only for a very limited range of goods. For all other goods, it defines only general approaches and principles of pricing. State bodies do not have the right to set specific prices for goods manufactured by their owners. In the market, firms sell their products, works, services at prices and tariffs set at their discretion or on a contractual basis, and only in special cases provided for by legislative acts - at state prices. The products of enterprises that occupy a monopoly position in the market, as well as goods and services that form prices in various sectors of the economy and the standard of living of the population (electricity, gas, oil products, rent, utility tariffs), may be subject to state regulation.
The freedom of enterprises in pricing is limited by the state. We distinguish three levels of such activity:
Setting fixed prices by the state:
in the form of state list prices;
· “freezing” of free market prices;
fixing monopoly prices.
Government regulation of prices through establishing pricing conditions for enterprises. These restrictions take the form of:
fixing the price limit;
· allocating maximum allowances or coefficients to fixed list prices;
introduction of the limit value of retail price elements;
Establishing the maximum level of one-time price increases;
· state control over monopoly prices; setting prices for the products of state-owned enterprises.
State regulation of prices carried out in several main directions. Legislation restricts attempts to collude on prices and establish fixed prices by producers of goods, representatives of wholesale and retail trade.
No matter how justified these fixed prices are, they are recognized as illegal. Entrepreneurs who install them are severely punished, and huge fines are imposed on companies. Such violations are called “horizontal price fixing”.
In order to avoid suspicion of such violations of the law, entrepreneurs should: consult about prices, discounts, terms of sale and credit; to discuss the prices, allowances and costs of any firms at professional industry meetings; negotiate with competitors to temporarily reduce production in order to maintain high prices. The exception is an agreement on prices reached under the supervision of a state-authorized authority.
A violation punishable by law is also “vertical price fixing”. It manifests itself in the fact that manufacturers or wholesale requires the sale of its goods at specific prices, thus controlling various prices.
The state is also taking steps to protect small shops from unfair price competition from larger ones. It is forbidden to sell products at prices below their cost in order to attract buyers and eliminate competitors. Wholesalers and retailers must sell products at prices that include costs and fixed percentage to them, as well as covering overheads and profits. This applies in particular to goods such as bread, dairy products, and alcoholic beverages.
Price decisions are influenced by and participants in distribution channels from the manufacturer to wholesale and retail trade. All of them seek to increase sales and profits and establish greater control over prices. The manufacturer influences the price of goods using a system of monopoly goods movement, minimizing the sale of goods through discount stores. The manufacturer opens its own stores and controls prices in them.
Wholesale and retail trade achieves a greater share in pricing by demonstrating to the manufacturer its role as a buyer of goods, associating profit growth with the most successful and modern form sales. She refuses to sell unprofitable products, sells the goods of competing firms, thereby placing the buyer towards the seller, and not towards the manufacturer. In some cases, trade takes actions directed against the brand of goods: it holds products, setting a higher price for it, while selling goods of other brands at lower prices.
In order to reach the agreement of all participants in the distribution channel in decisions on prices, the manufacturer must: provide an appropriate share of the profit to each participant to cover his expenses and generate income; provide wholesale and retail in obtaining products at the lowest prices; offer special consents, including discounts on the price for a certain period or a free lot of goods to stimulate purchases by wholesalers and retailers.
An important element influencing the price level, - competition. Depending on who controls prices, there are three types of competitive environments.
Environments where prices are controlled by the market differ a high degree competition, and the similarity of goods and services. It is in this environment that it is important for a firm to set prices correctly. Inflated prices will alienate buyers and attract them to competing firms, and lower prices will not provide conditions for productive activity. However, it is impossible to hide a successful pricing strategy. In this regard, the management of the enterprise faces a big and difficult task - to see the prospects for the chosen pricing strategy, to prevent competition from outgrowing price wars.
An environment where prices are controlled by the firm is characterized by limited competition and differences in goods (services). Under these conditions, it is relatively easier for firms to operate, earning high profits: their products are out of competition. Both at high and low prices for their products, firms find buyers, and the choice of price depends only on the strategy and target market.
When setting the price for a service, management makes one of the most important decisions. Pricing is the only market strategy that directly generates revenue.
All other variables in the market structure—advertising, service preparation, distribution—incur costs. In recent years, economic and competitive pressures have led to new pricing strategies. At the same time, pricing practices in many companies remain intuitive and routine. Often the price is set by determining the amount of costs. However, pricing is not a major factor in market strategy for services. Service firms must be active in the face of constant pressure from growing competition.
Organizations that have been successful in fixing market prices have been able to active position in pricing. They were able to consistently raise or lower prices without any competitive response, and then become the leading force in pricing strategy and tactics.
There are two main prerequisites for success in pricing.
Firstly, you need to understand how the price works. Due to the complexity of pricing under the influence of suppliers, sellers, distributors, competitors and consumers, the simple prescriptions of traditional microeconomic theory are not suitable for a modern market system. In addition, companies that focus primarily on their costs in determining the price make a serious mistake.
Secondly, any seller needs to imagine how the consumer will perceive the price and its change. Price plays two roles. It is used as an indicator of how much the customer has to pay and as an indication of the quality of the service. The difference between prices creates a preference for the buyer. Therefore, the one who sets the price must know how the buyer will perceive this information. Moreover, the price must be commensurate with the perception of the value of this product by the buyer. Neglect of these basic principles leads to gross errors.
When setting a price, six main factors must be taken into account:
Requirements. The level of requirements for services limits the ceiling, or maximum price, that can be set. The determination of the maximum price depends on the customer's perception of the value of the seller's offer.
Expenses. They limit the lower level or low of the possible price. For existing services, the characteristic costs are the costs of creation, marketing, and distribution. For new services, this is the future direct cost of the entire life cycle of the service. The difference between what the buyer is willing to pay and the minimum cost is the extent to which the bidder can act at his own discretion.
Competition factors. They can narrow these limits, primarily by lowering the price ceiling.
General profits. You need to take into account the desired level of profit. It usually reflects the level of risk in the business and results in an increase in the cost-based floor price.
market goals. Can the price be used to increase sales in the selected market?
Legal and legal restrictions. Are there any legal acts affecting pricing?
Depending on the type of service, the nature of the requirements and competition, the range of prices may be relatively large, or it may not be. However, some other important factors should be taken into account when setting the price.
The Economics of Pricing
One of the most important factors in determining the price is demand. More precisely, we are talking about the volume of the service that buyers want to purchase at a certain price, that is, the demand for this service. There is both a basic theory of pricing and several important analytical concepts for practical decisions in this area. Some of them are the following:
Buyer behavior theory. The price affects the choice of the buyer, as for him it is an indicator of the cost of the service. The buyer wants to get maximum satisfaction within their financial capabilities. One of the sources of information for the buyer is the price. Other sources are not always available. Unknown information misleads the customer about the possibility of obtaining the required satisfaction when purchasing the service. So, the buyer can use the price as an indicator of both the cost of the service and the quality.
price elasticity. The ability to set the price level depending on the measure of the relationship between the price and the changing demand for the service. When demand falls due to a price increase, the elasticity is negative.
income elasticity. Serves to measure the relationship between income and changing demand for a service. If demand expands as income rises, the elasticity is positive.
Elasticity of adjacent prices. Serves as a measure of the effect of a change in the price of another service on the demand for this service. If these relationships are negative, then both services are in demand. If these relationships are positive, then both require changes. Adjacent price elasticity is also used as a measure of the efficiency of competitors' price changes.
Addition to the price for the service
Pricing decisions are influenced by the fact that there are usually several customers who can pay more than the set price for a given service. Basically this means that set price may be lower than some consumers estimate the value of this service. The difference between the price they are willing to pay and the price they actually pay is called consumer addition to the price.
Essentially, consumer value is what the consumer receives when they exchange money for a service. The value of the benefit (what the consumer receives) minus the exchange value (price) is a positive difference. The value of the benefit always exceeds the value of the exchange, simply because what consumers would pay must be more than what they actually pay. Otherwise, they would not have taken part in the exchange.
The important thing here is that the price at which the exchange takes place is not equivalent to the value, since it is often assumed. The general willingness to pay must take into account the actual value of the exchange and the addition to the price of the service.
This newly developed concept becomes an important contribution to price determination. Instead of focusing on costs when setting a price, it is better to determine what value this service represents to the consumer.
Buyer Perception
Optimal the price of the service is considered, which is set taking into account the significance of this service for the buyer. The perception of the service by the buyer plays a key role in the service market. Perception usually involves a process of categorization. When the buyer has to pay a price different from what he paid last time, he must decide whether this difference is material. If he decides that the order of prices has not changed, he may proceed as he did last time. Conversely, if the difference is perceived to be quite significant, then the buyer may consider that the newly provided service is different from the previously provided one and make his choice based on the price.
The buyer makes a decision to purchase a service in two stages. First, he evaluates the significance of the proposal. Then decides whether to make a purchase. It is also possible that he will postpone the purchase until full information is received.
The choice of the buyer depends on the perception of quality or its benefit in relation to the price. When buying, he balances the expected quality with the loss associated with having to pay for it.
An equivalence of price and quality of service must be achieved, which will serve the interests of the cause. Indeed, most publications point out that the quality of a product or service can be a powerful competitive advantage. If the buyer knows that price and quality are interrelated in the service market, he is likely to perceive the price as an indicator of quality. If he knows that the price does not match the level of quality, he will use other indicators to assess the quality.
Pricing Strategies
A company has a lot to do before it sets prices for the services it puts on the market. Given the specifics of the service, prices depend on the type of potential buyers. If different consumers purchase different amounts of services, should the seller offer a discount? The company must also decide whether to make a discount if the buyer pays in advance, if so, when to make this discount and what it should be. Usually a company provides many services, and the answers to these questions should be given in relation to each service.
One of the most interesting and difficult tasks is determining the price of a new service. These decisions are usually made with very little information about needs, costs, competition, and other variables that can affect success. Some services have not been successful with consumers because they did not provide what they expected from them, or because the services were not offered at the right time and in the right place. Others - because they had the wrong price - too low or too high. The difficulty in setting a price for a new service is that once the service is widely adopted, it will become obsolete much faster.
The key to setting a price for a new product or new service is to take into account the sensitivity of prices to demand and profit growth, as well as to the costs of producing a product or service. At the same time, the main thing is to determine why the product or service deserves the attention of buyers, and not how much it costs the seller. Here it is important to consider how the price of an evolving type of service is related to the consumer's perception of the benefits of this service, compared with the costs of purchasing it and with the choice that the buyer has.
sliding pricing
Two alternative strategies may be chosen by the company regarding the customer's perception of the service. Some types of services prove that their development is really aimed at meeting the needs of customers. For such services during their market development a high price strategy combined with high advertising costs can be chosen under the following conditions:
The level of sales of the service is expected to be less price sensitive at an early stage than at the stage when it is fully “ripe” and competitors appear.
Setting a high price for a new service is effective remedy to divide the market into segments according to different needs. A high initial price provides an opportunity to generate high returns from a market that is relatively price insensitive.
The sliding policy is more reliable given that we do not know the flexibility of demand; during the research phase, we may waive the original high price.
A high price can generate more sales than a low starting price. Under these conditions, the trailing price provides an opportunity to allocate funds to finance the company's conquest of a larger market segment.
There is a certain limitation of the buyer's options.
There is a high consumer surplus for this service.
Using low prices
This is the second strategy for setting a price for a new service. Despite many advantages, the sliding policy is not suitable for all types of new services. Using low prices in the beginning as a way to capture a wider market is realistic under the following conditions:
Sales volume is very sensitive to price even at an early stage of introducing the service to the market.
Ability to achieve significant cost savings when working with large volumes.
The service faces the threat of strong potential competitors immediately after the period of introduction of the service to the market. Therefore, a strong position in the market becomes one of the priorities during the provision of services.
There are no buyers willing to pay a high price for the service.
Since such a pricing policy can be implemented at any stage of the service life cycle, this strategy should always be tested before a new service is introduced to the market. Sometimes moving to a low price policy can save a service from "death" after high returns have been generated in the market.
Pricing Management
A price determined taking into account the significance of the service to the consumer can make it possible to prevent the mistake of setting an unreasonably high price. Setting a price for profit without consumer perception of it often frustrates attempts to secure competitive advantage and the ability to charge above average market prices. Along with pricing policy and tactics, there are a number of issues that need to be addressed in order to set a price:
Goal alignment. Not all pricing objectives may be the same. For example, the desire to increase sales, cash and profits can lead to different goals in the pricing policy. Despite the contradictions, companies often try to achieve all these goals at the same time. Therefore, it is necessary to clearly formulate the tasks that require their priority solution, and to single out the main ones from them. However, anyone who deals with pricing at any level of the organization must understand the need to harmonize these objectives.
Price Research Program. The lack of data in the field of pricing often leads to the development of unreasonable strategies. In order to avoid this, it is necessary to develop and implement a price research program that, at a minimum, develops a reasonable classification of costs and determines how the consumer relates the price to the quality and value of the service. Such an approach is necessary in order to understand how the change and the existing price difference affect the cost and volume of services.
Maintaining feedback and control. It is important that the company is convinced that the pricing policy adopted by it is consistent with the overall market strategy of the company. Often prices are set based on the financial interests of the company and ignore the impact of the needs of the buyer. Moreover, such policies tend to exaggerate the cost aspects of pricing. The buyer is usually not interested in how much it costs the seller to provide this service. He is more interested in the relationship between the price and the value of the service. Feedback provides information about this relationship.
Careful analysis. When choosing a pricing strategy, a service provider must conduct a thorough analysis of the goals of the organization, the costs of providing specific services, the offers and costs of competitors, and the value of this service to the consumer. Each service should be priced according to its specifics and its place among all the services provided by the company.
When forming a pricing policy, it is necessary to take into account factors that have a direct impact on prices.
The action of these factors predetermines the price level, its dynamics, composition, structure.
All factors can be subdivided into factors macro environment and microenvironments.
Factors macro environment(external factors) are as follows:
inflationary, political factors;
financial, tax, monetary policy of state and local authorities authorities;
policy of state regulation of prices;
foreign economic policy of the state.
In addition, the macro-environment factors include the demand factor. The effective demand, the level of savings, the volume of demand are investigated.
Factors microenvironments, subdivided into:
a) factors of consumer choice that determine the competitiveness of the goods produced. These include:
utility for the buyer;
consumer properties of services;
service comparability;
interchangeability of services;
reasonable (usual) prices;
buyer habits;
the prestige of the service;
b) factors, offers, determining the price of the offer of goods. These include:
production cost;
production stage;
the expected volume of production of services;
payback point;
integration with other products;
market share and position of competitors;
prices for labor force, fixed and circulating assets;
c) factors characterizing the market. These include:
distribution channels used and available;
distribution structure;
market segments;
distribution geography;
service promotion opportunities.
5.3 Pricing policy formation technology
The formation of a pricing policy is a complex process that includes the following main steps:
market type research;
setting pricing objectives;
determining the demand for the service;
determination of costs;
competitor price analysis;
choice of pricing model;
choice of market pricing strategy;
setting the final price.
When conducting market research, it is necessary to evaluate it according to the following criteria:
the number of sellers and buyers of the service;
degree of sensitivity to competitors;
interchangeability and homogeneity of the service;
the behavior of the seller.
Depending on these factors, one can four main market types: 1) free competition; 2) monopolistic competition; 3) oligopoly; 4) pure monopoly.
After researching the type of market, it is necessary to determine pricing goals, which can be short-term, medium-term and long-term (there may be several of them), but the most significant are the following:
maintaining the current position of the company. This target can be considered when the short-term floor price covers variable costs;
short term profit maximization. In order to ensure profit maximization, it is necessary to determine the demand and costs for each product at a certain price;
sales maximization. A minimum price is set to attract an additional market segment;
quality leadership. High quality corresponds to a high price, consumers who are most sensitive to the level of quality are attracted.
Determining the demand for a service is one of the most important stages of price justification. Demand sets the maximum price. The magnitude of demand depends on: 1) the need for a given service, changes in the number of buyers, consumer characteristics, consumer income and its structure that replaces services, the price of an additional service, customer preference for the service, customer expectations; 2) the nature of the service, inflation expectations; 3) changes in prices for factors of production, changes in technology and the transition to more effective ways production, improve the efficiency of the service promotion system.
Demand is depicted as a relationship showing how much of a product the consumer is willing and able to purchase at a certain price from those possible within a certain time.
Law of demand reflects the relationship between price and demand. Under other conditions, an increase in price reduces demand and, conversely, a decrease in price leads to an increase in demand. The degree of this dependence is determined by the price elasticity of demand. The coefficient of elasticity K el demand from the price is determined by the formula
where 
- volume of sales;
- price.
When the elasticity of demand is greater than one (demand is elastic), a decrease in price causes an increase in the quantity demanded so that total revenue increases. If the quantity demanded is equal to one, the decrease in price is offset by a corresponding increase in sales, while revenue remains unchanged. When the elasticity of demand is less than one (inelastic demand), a price decrease causes demand to fall so much that total revenue also falls.
In addition, it must be taken into account that:
the more services on the market that are substitutes for these services, the more elastic the demand;
the higher the share of expenses for this service in the consumer's budget, the higher the elasticity of demand;
the elasticity of demand is lowest for services that are most needed from the consumer's point of view.
The next step in price justification is determination of the cost of production of goods, which form the minimum price. Cost analysis in pricing is of particular importance. Determining them is necessary to calculate the offer price, develop an effective pricing strategy.
Analysis of competitors' prices allows you to set the price of a service between its minimum and maximum values, determined based on costs and demand. When studying the prices of competitors, it is advisable to organize a systematic collection of information, its evaluation, aggregation, analysis of this information by specialists and bring information to those persons who can use them in the process of making a decision on pricing policy.
The next step in price setting is choice of pricing model. Depending on the goals set, alternative pricing models are applied. The choice of a pricing policy model depends on the nature of the service, the degree of its novelty, differentiation in terms of quality characteristics, the stage of the service life cycle, the type and method of production. In addition, external factors are also taken into account: political stability, the level of inflation, the system of state regulation, the structure of the market, the level of solvency of the population.
