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Your Marketing Investment
Part Nine

by Mark Levit

In other articles we’ve covered establishing your marketing investment, the most common budgeting exercise, competitive position and market environment, new product activity, market growth, capacity utilization, budgeting for low ticket items, budgeting for the lower percentage of a customer’s total purchases and budgeting considerations and your brand’s characteristics.

This installment, covers The Price-Performance Relationship

The value of a product offering consists of two elements, its price and its performance (i.e., quality) relative to the product offerings of its competitors. “Value” is measured with regard to price and performance. Value is represented as either high, average, or low. Relative to your competitor, your product’s price can be high (premium), average, or low (discount). Likewise your quality can be high (superior), average, or low (inferior).

A marketer, which offers a superior performance product at a premium price may be offering a value to a customer which is nearly equivalent to another marketer’s, that offers a product providing substantially less performance, but sold at a discount price. In contrast, a high value positioning of a product requires a marketer to offer greater performance to the customer relative to equivalently priced products. Other research indicates that having value and increasing that value to the customer drives growth in market share.

How do price, performance (quality), and value affect marketing expenditures? Beginning with the next article, we’ll take each element and examine marketing expenditure patterns.

If you’d like to discuss the budgeting cycle or how to plan for
it, contact our Managing Partner, Mark Levit, at 212.696.1200 now.

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