• Preference is one of the aspects of consumer's choices
• Price elasticity and promotion elasticity are also important aspects.

Pr_i = Probability of choosing brand i

V = Preference level of brand i

N = Number of brands

Pr_i = Probability of Buying brand i

V_i = Intrinsic preference for brand i

B_k = Respondent's evaluation of attribute k

X_{i, k} = Brand i's level on attribute k

Price should be near the price of the market leader, and higher margin.

Retail promotion usually causes consumers' stockpiling

Retailers want to increase traffics of customers by retail (=consumer promotion)

Frequent purchasing products and leading products in a category are effective to increase customer traffics.

An sales increase in a brand may cannibalize the other brand.

Trade promotion usually causes retailers' forward buying

Retailers do not want to promote a weak brand, since it does not increase traffics of consumers.

Category expansion is preferable for retailers. (Ex. an initial category development)

1. Goals
2. Target markets
3. Product positioning
4. Advertisement budget
5. Media selection
6. Promotion tactics (ex. Samples)
7. Trade deals
8. Retailer awareness
9. Consumers' awareness
10. Competitors' reactions

• When a new brand contributes to an increase in sales of the distributors
• When a competitor of the distributor sells the new product
• When heavy advertisement is expected
• When a new brand has a unique benefit
• When sales forces push aggressively

Awareness

• Advertisement
• On the selves at retailers
• Samples, coupons, trial sizes
• Word of mouth

• Enough display on the shelves
• Relative low price to competitor's brands
• Promotion (Samples, coupons, price down etc)

• Trial usage
• Product satisfaction
• Perceived value
• Usage rates

1. Skim pricing: higher margin, no competition in the early stage, price reduction is easier than price raising.
2. Penetration pricing: to acquire a broad market.