Microsoft Marketing Mix - Essay Example

Microsoft Marketing Mix Pricing i. Value-based pricing and cost-based pricing In Value-based pricing method, pricing is based onthe kind of perceptions that buyers have. This implies that the market forces in play cannot determine the product’s design and associated marketing program and ultimately set the price. Before setting the marketing program, price together with other variables that constitute marketing mix are considered. In this regard, value perceptions and customer needs are assessed. One of the strengths of this method is that is suits products that are so expensive. However, the method has a weakness of involvement into extensive research by the company pertaining to the price the buyers are willing to pay. Therefore, the value of a product is subjective to the buyer. Cost-based pricing on the other hand, entails setting the price of products based on the production cost, the cost of distributing the product, costs incurred in selling the product and the suitable rate on return expected by the company to cater for risks involved and the effort put in. It involves designing a great product, determining the cost of the product and then setting the price of the product based on the incurred costs. This method of pricing has the strength of enabling the company to harvest much profit by making greater sales due to smaller margins. It is, therefore, suitable for mass production. Just as value based pricing, it also has a weakness of not factoring in the relationship between demand and price and the consumer value (Ferrell, & Hartline, 2010). ii. How Microsoft Company prices its main services and products Currently, Microsoft Company is pricing its products and services using cost-based pricing method due to rising competition and serious downturn. Prices have been cut of various fronts to realize lower margins on products ranging from flagship Windows and Microsoft office products and services such as the newfangled internet. This is aimed at boosting the sales of the existing products as well as making quick headway with the new products. This has helped in minimizing piracy on the products and services. This method, therefore, does not consider break-even analysis in pricing since it is not value-driven but is rather, product-driven. However, it helps the company is coping with the rates of piracy by increasing sales in piracy regions such as China. iii. Traditional methods of penetrating and skimming. Skimming is the introduction of a product or service at a high initial price by targeting the cream revenues in layers from the market. Penetration, however,is the setting up of prices of products and services initially at low values in order to penetrate the market easily and faster. The aim is to attract a large number of consumers. Skimming has enabled Microsoft Company to reap the benefits of exceeding profit margins. For instance, in 2007, Windows 7 OS was sold at $240 when it was launched but currently is sold at $40. 2. Distribution a. Difference between vertical marketing and horizontal marketing system. Vertical marketing is a case where all the consumers of a given company such as Microsoft are in a given industry, for example, computer software, operating systems, and computer programs among others. Horizontal marketing, on the other hand, is a case where all consumers use products of a given company to do the same thing irrespective of what industry they are operating in. for example, Google search engine used for searching music, books, news among others. b. System that describes Microsoft Company Microsoft employs vertical marketing since it deals in different products yet all the consumers are in the same industry of computer-related products such as operating systems, programs, software among others. c. Microsoft’s primary marketing channels, weaknesses, and strengths i. Primary marketing channels The operating systems can be bought online through online distributors or at the Microsoft stores. It can be acquired at a physical computer supermarket store or used in various places without purchasing such as universities (Evatt, 2014). In addition, it can be obtained freely as a donation. ii. Weaknesses One of the weaknesses is multimillion poor investment decisions such as WebTV, Link Exchange. Reliance on hardware manufacturers in order to run its Windows Operating System is another problem. Slow innovation and cloud-based services still continue to face Microsoft. iii. Strengths Microsoft has incredible reputation and brand loyalty that has been built over the years to 90 percent market share as a result of being the leading software and operating system provider. The company has also created tie ups with leading hardware developers such as Samsung. In addition, the software products are such as flagship OS is simple to use due to high quality. They also have strong financial surplus due to growing revenue that is more than $63 billion with a 20% increase witnessed between 2008 and 2012. Online presence was improved greatly as a result of acquiring Skype to reach over 300 million people 3. Promotion a. Overview of the Microsoft’s 5 elements of promotion mix i. Personal Selling This is a personalized selling that allows for direct contact with consumers and prospects it is marked with comparatively high expenses. ii. Advertising This involves promotion of services, ideas, goods using different media platforms using one-sided communication between the company and the consumers or prospects. iii. Direct marketing This type of promotion is targeted to a specific group of consumers or prospects and is done via e-mail or printed mail. It helps in generating sales and is also one-sided communication such as bulletins and special promotions. iv. Sales promotion This promotion mix virtually covers all forms marketing activities apart from PR, advertising, and personal selling. It is used to stimulate buying and selling with the aim of boosting sales, creating good company image and informing consumers about new market arrival products. v. Public Relations These help the company to woo a targeted group of prospects or consumers by creating an impressive image of the company, distribution channels, new policies, new services, and new products among others. b. How leveraged sales approach can strengthen Microsoft’s current sales. The leveraged sales approach can strengthen Microsoft’s company current sales by informing both existing and prospecting customers about new product arrivals, distribution channels available, current prices. This gives room for the consumers to compare prices and quality in order to make informed purchase decisions. c. Microsoft’s brand management model i. Brand Vision Global inclusivity and diversity form the integral part of the company’s brand vision towards becoming a diverse workforce. The company aims at comprehending global marketplace cultural demand and delivering incredible business results in its brand vision. ii. Brand Personality This has been considered as business-oriented and boring and old. But for the sake of teenagers, children, and youths, the company chose on Jerry Seinfeld. iii. Brand positioning Microsoft brand positioning is based on the identity of the company and is lacking style, boring and confused. The company, therefore, needs to take time to define and embrace the brand, values, brand story and personality. d. Why it is necessary to build a brand initially with PR and then sustaining with advertising when launching a new product brand PR assists the company to woo a targeted group of prospects or consumers by creating an impressive image of the company, distribution channels, and new products among others. Once this is done, sales are boosted by using sustained advertising. 4. Global Marketplace a. Levitt’s bold assertions i. Homogenization of world’s desires and need This is not true. Wants and desires are unique for each individual and in each geographical location due to invariance in technological exposure and socialization. ii. Technology This is true since there is uniformity in computer functionality and internet sites. With time people see and interact with similar things in media. iii. Cultural preferences These diffuse into different groups in different geographical locations using technology such as dressing code. b. Globalization challenge impacting Microsoft company The main challenge facing Microsoft Company is stiff competition from companies like Apple. That is why the company had to lower the prices of services and products such as operating systems and software in order to boost sales and also cope with piracy rate. References Evatt, R. (2014, July 25). Microsoft Store to Open Permanent Store in Woodland Hills. World Business. Ferrell, O. C., & Hartline, M. D. (2010). Marketing Strategy. Mason, OH: Thomson/South-Western. Top of Form Top of Form Read More