Branding, Pricing, and Distribution Strategies

ASSIGNMENT 3 MARKETING PLAN FOR TEACH CHINA BRANDING, PRICING, AND DISTRIBUTION STRATEGIES This section of Teach China’s Marketing Plan will focus in on key factors related to branding, pricing, and distribution: creation and development of the domestic and global product branding strategy; determination of optimum pricing strategy; looking at how the pricing strategy supports Teach China’s branding strategy, preparation of a distribution channel analysis, justification of opting for a push or pull strategy; an overall look at how the distribution strategy fits the product/service target market.
It is very important that a start-up company, such as Teach China, build and develop a strong product brand. It is essential that such branding solidify the link between the values of Teach China and its customers. Because of the competiveness of the education market branding the commodities and services of Teach China must be unique. Additionally, branding education is considerably different than branding a commodity. [ (Gupta & Singh, 2010) ] According the Dr. ’s Gupta and Singh, the movement of a globalized world to a knowledge economy opens immense opportunities for building education brands. (Gupta & Singh, 2010) ] Gupta and Singh also warn against the tendency to confuse “branding in education as making enough noise to get people to enroll. ” (2010) In determining a brand for Teach China it is imperative that the numerous stakeholders in this market are taken into consideration. Gupta and Singh suggest that a “careful balancing of the stakeholders’ interest is a key requirement of the leadership of each education brand. They identify the stakeholders as, students, faculty, prospective employees, parents and society.
Research of current literature show that educational services earn their repeat business by word of mouth of well satisfied and well placed individuals. [ (Gupta & Singh, 2010) ] This idea is further supported by a feasibility study conducted by Bradley and Griswold who posit that “most Chinese are reliant on third-party endorsements from friends and colleagues. ” [ (Bradley III & Griswold, 2011) ] The branding of Teach China must also take into consideration the fact that consumers are savvier, demanding value for their money and have little brand loyalty. (Abhijit & Chattopadhyay, 2010) ] Like other service providers, Teach China will have a logo, but its main source of branding, based on current literature will be through the use of social media and word of mouth. Additionally, Teach China’s partnering with an established educational institute, as stated in an earlier section of the company’s marketing plan, will have a direct impact upon branding. For its international market, Teach China will rely heavily upon business to business publications and its Web presence to promote services offered.

Teach China will also target setting up a booth or kiosk at trade shows. Dr. Young-Han Kim, et al, writing for Managerial and Decision Economic, 2006 stated compelling reasons why optimal pricing is important: Of the four P’s of marketing (product, place, price, and promotion), pricing is the only T’ that generates revenue for a company. Although effective pricing can never compensate for poor execution of other P’s, ineffective pricing can certainly prevent careful execution of other P’s from bearing financial rewards for the company (Nagle and Holden, 1995).
The role of pricing becomes even more critical in the context of global market entry. [ (Kim, Aggarwal, Ha, & Cha, 2006) ] Pricing services offered by Teach China is drastically different from pricing a product. There are three different pricing strategy options available to Teach China: cost-plus pricing, competitor’s pricing, or value added pricing. Cost-plus pricing is the standard used by many businesses. Elizabeth Wasserman, editor of Inc. s technology website, quoting Jerome Osteryoung, a professor of Finance at Florida State University and outreach director of the Jim Moran Institute for Global Entrepreneurship, states that when determining the cost of a service using this method, one must be certain to include a portion of your rent, utilities, administrative costs, and other general overhead costs. [ (Wasserman, 2012) ] This approach could return the greatest profit margin but would cause a fluctuation in price when other costs increase.
According to Professor Osteryoung, one should be aware of what competitors are charging for the same service. Yet he cautions against competing on price. Instead, he suggests that service companies compete on service, ambiance, or other factors that set [them] apart,” [ (Wasserman, 2012) ] The other factor discussed by Professor Osteryoung is perceived value to customers. Osteryoung points out that setting a price for a service can be subjective.
He rightly posits that pricing (for a service) becomes an art form when one considers that “the important factor in determining how much (a customer is) willing to pay for a service may not be how much time was spent providing the service, but what the customer perceives as the value of the service and the level of expertise,” [ (Wasserman, 2012) ] One method available for setting a price for the services offered by Teach China would be to use what has been called in some literature the “service pricing formula”.
Simply put this method helps determine an hourly rate for services rendered. Desired annual salary + Annual fixed costs (overhead) + Desired annual profit ?Annual billable hour = Hourly rate The other method used by my most businesses offering a service is simply that of setting market-based rates. In the book, The Small Business Start-up Kit, the authors suggest that if your rate is too high it will result in not getting clients. (Pakroo & Repa, 2004) There is also danger in setting rates below the market value. A PDF document downloaded from www. edi. org, warns that “In a service business, people tend to think that something is wrong, if your prices are too low. They assume that the services are of inferior quality. ” (Anonymous, 2012) Taking into consideration available literature research, Teach China will use a market based flat fee rate for services (including a 5% profit margin), with an offer of a discount for businesses enrolling five (5) or more employees. An internet search of prices for language courses returned a range of prices from $645 to over $2000.
In order to be competitive in this market, Teach China will offer 20 courses for $1500 this will include study materials, for an additional fee students can spend two weeks in China practicing skills learned. Since these prices reflect doing business in one of China’s major cities, there will be a cost reduction of 10-20% for students from targeted cities. These projections will be adjusted as financial statements are prepared showing the cost of fixed assets, faculty and staff, and other operating expenses.
The chosen pricing strategy for Teach China is designed to enhance customers’ perceptions about the service offered by the company (its brand). Teach China is selling a value service, offering expertise in language training and instruction. The pricing strategy chosen for Teach China will insure that the company can continue to afford and offer the best language instructors in the business. The target market of Teach China usually shop for similar services by listening to recommendation, reputation and testimonials of satisfied customers.
The distribution channels most used by the industry include direct marketing via target mailing, the internet and broadcast media. Teach China will therefore follow the industry standard, specifically, the following strategies will be used to help accomplish the marketing objectives and business goals of Teach China: Direct Mail; Direct Sales; Television programs; with infomercials; Internet strategies; Participation in business trade shows. In its international market, Teach China will benefit from its partnership with its designated education partner already in operation in mainland China.
Chris Rimlinger wrote an article in 2011 in Franchising World in which he advocates a balance of both push and pull marketing strategies to “expand the brand’s reach and attract new consumers, maintain lasting relationships with existing consumers, and meet sales goals by creating demand and satisfying existing market needs. ” [ (Rimlinger, 2011) ] Teach China’s direct marketing tactics will be the push that gets the brand in front of the consumers. Teach China’s television, infomercials and internet strategies will be the pull that creates consumer demand for the service offered.
Using a balance of both push and pull marketing strategies will facilitate Teach China’s brand being disseminated at home and abroad. The combination strategy will allow for specific target marketing to students, businesses and governments. Additionally, according to research conducted by Mike Sands, this type of combination strategy is the most effective way of harnessing technology to develop and control electronic customer relationship management. [ (Sands, 2003) ] Bibliography Abhijit, R. , ; Chattopadhyay, S. P. (2010). Stealth Marketing as a Strategy.
Indiana University, Kelley School of Business. Retrieved May 07, 2012 Anonymous. (2012, May 9). PRICING METHODS. Retrieved from SEDI: www. sedi. org/DataRegV2-unified/capnet… /pricing%20methods. pdf Bradley III, D. B. , ; Griswold, R. J. (2011). A Feasability Study to Develop a Foreign Language Academy in China. Journal of International Business Research, 19. Retrieved May 08, 2012, from http://go. galegroup. com/ps/i. do? id=GALE%7CA275130691;v=2. 1;u=tall18692;it=r;p=AONE;sw=s Gupta, M. , ; Singh, P. B. (2010).
Marketing and Branding Higher Education: Issues and Challenges. M. J. P. Hikhand University, Invertis Institute of Management Studies. Uttar Pradesh, India: Review of Business Reasearch. Retrieved May 07, 2012 Kim, Y. -H. , Aggarwal, P. , Ha, Y. -M. , ; Cha, T. H. (2006). Optimal Pricing Strategy for Foreign Market Entry: A Game Theorectic Approach. Managerial and Decision Economics. Retrieved May 08, 2012, from http://www. jstor. org/page/info/about/policies/terms. jsp Pakroo, P. H. , ; Repa, B. (2004). The Small Business Start-Up Kit. Ipswich,, MA: NOLO.
Rimlinger, C. (2011, December). Push and Pull Marketing Strategies: Using Them to Your Advantage. Franchising World, 43(12), 15-16. Retrieved May 10, 2012, from http://search. proquest. com/docview/913283066? accountid=10913 Sands, M. (2003). Integrating the web and e-mail into a push-pull strategy. Qualitative Market Research, 6(1), 27-37. Retrieved May 09, 2012, from http://search. proquest. com/docview/213439175? accountid=10913 Wasserman, E. (2012, May 08). How to Price Business Services. Retrieved from Inc. Com: http://www. inc. com/guides/price-your-services. html .

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