The Daily Omnivore

Psychological pricing (also known as ‘price ending’ and ‘charm pricing’) is a pricing/marketing strategy based on the theory that certain prices have a psychological impact. Consumers tend to perceive ‘odd prices’ as being significantly lower than they actually are, mentally rounding to the next lowest monetary unit. Thus, prices such as $1.99 are associated with spending $1 rather than $2. Now that many customers are used to odd pricing, some restaurants and high-end retailers psychologically-price in even numbers in an attempt to reinforce their brand image of quality and sophistication.

In a traditional cash transaction, fractional pricing imposes tangible costs on the vendor (printing fractional prices), the cashier (producing awkward change) and the customer (stowing the change). These factors have become less relevant with the increased use of checks, credit and debit cards and other forms of currency-free exchange; also, the addition of sales tax makes the pre-tax price less relevant to the amount of change (although in Europe the sales tax is generally included in the shelf price).

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In marketing, brand management is the analysis and planning on how a brand is perceived in the market, with the goal of developing a good relationship with the target market. Tangible elements of brand management include the product itself (i.e. the look, price, packaging). Intangible elements include the experience that the consumer has had with the brand, and also their relationship with it. A brand manager would oversee all of these things. The modern discipline of brand management is considered to have been started by a famous memo at Procter & Gamble by Neil H. McElroy.

Marketing scholar Molly Hislop defined branding as ‘the process of creating a relationship or a connection between a company’s product and emotional perception of the customer for the purpose of generating segregation among competition and building loyalty among customers.’ It is a fulfillment in customer expectations and consistent customer satisfaction. Brand management aims to create an emotional connection between products, companies and their customers and constituents. Brand managers create strategies to convert a suspect to prospect; prospect to buyer; buyer to customer and customer to brand advocates.

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Inbound marketing is promoting a company through blogs, podcasts, video, eBooks, electronic newsletters, whitepapers, SEO (search engine optimization), physical products, social media marketing, and other forms of content marketing which serve to attract customers through the different stages of the purchase funnel. In contrast, buying attention (marketing stunts), cold-calling, direct paper mail, radio, TV advertisements, sales flyers, spam, telemarketing, and traditional advertising are considered ‘outbound marketing.’

Inbound marketing refers to marketing activities that bring visitors in, rather than marketers having to go out to get prospects’ attention. Inbound marketing earns the attention of customers, makes the company easy to be found, and draws customers to the website by producing interesting content. Many companies are now realizing that their technical documentation, often considered a ‘necessary evil,’ is authoritative, trustworthy content that can be their most effective inbound marketing channel, generating more than half of overall site traffic and over half of lead generation.

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Earned media refers to publicity gained through promotional efforts other than advertising, as opposed to ‘paid media,’ which refers to publicity gained through advertising. There are many types of media available to online marketers and fit into the broad categories. Owned media is defined as communication channels that are within one’s control, such as websites, blogs, or email.  Paid media refers mostly to traditional advertising. Earned media, on the other hand, is generated when content receives recognition and a following outside of traditional paid advertising, through communication channels such as social media and word of mouth.

A Nielsen study in 2013 found that earned media (also described in the report as ‘word-of-mouth’) is the most trusted source of information in all countries it surveyed worldwide. It also found that earned media is the channel most likely to stimulate the consumer to action. Other authorities make the distinction between online and offline earned media / word-of-mouth, and have shown that offline word-of-mouth has been found to be more effective than online word-of-mouth.

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The study of the history of marketing as an academic field emerged only recently with the publication of ‘The History of Marketing Thought’ by Robert Bartels in 1976. Broadly defined marketing is any activity that connects producers with consumers, which was previously considered a subtopic of economics. Wroe Alderson’s book, ‘Marketing Behavior and Executive Action’ (1957) is also considered a break-point in the history of marketing thought. After Alderson, marketing began to incorporate other fields of knowledge besides economics, notably behavioral science, developing into a multidisciplinary field.

Marketing historian Jagdish Shethhave identified three schools of marketing: Managerial (systematized marketing emerged during the late 1950s and became arguably the predominant and most influential school of thought in the field), Consumer/Buyer Behavior (the use of behavioral science to market goods and services was popularized in the second half of the twentieth century), and Social Exchange (recently, ‘exchange’ has been forwarded as the fundamental concept of marketing).

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