Ch13 Flashcards
pricing objectives
goals that sellers hope to achieve in pricing products for sale
market share (market penetration)
company’s percentage of the total industry sales for a specific product type
price-setting tools
cost-oriented pricing and breakeven analysis
cost-oriented pricing
pricing that considers the firm’s desire to make profit and its need to cover production costs (selling price = seller’s costs + profit)
markup
amount added to an item’s purchase cost to sell it at a profit
markup percentage = markup/sales price
variable cost
cost that changes with the quantity of a product produced and sold
fixed cost
cost that is incurred regardless of the quantity of a product produced and sold
breakeven analysis
for a particular selling price, assessment of a seller’s costs versus revenues at various sales volumes
breakeven point
sales volume at which the seller’s total revenue equals total costs
- total fixed cost /(price-variable cost) or profit = total revenue – total fixed cost plus total variable cost
price skimming
setting an initially high price to cover new product costs and generate profit
penetration pricing
setting an initially low price to establish a new product in the market
two types of pricing
fixed and dynamic
pricing tactics
price lining, psychological pricing, odd-even pricing, discounts
price lining
setting a limited number of prices for certain categories of products
psychological pricing
pricing tactic that takes advantage of the fact that consumers do not always respond rationally to stated prices
odd-even pricing
psychological pricing tactic based on premise that customers prefer prices not stated in even dollar amounts
promotion
aspect of marketing mix concerned with the most effective techniques for communicating info about and selling a product
push strategy
promotional strategy where a company aggressively pushes its product thru wholesalers and retailers, which persuade customers to buy it
pull strategy
promo strategy where company appeals directly to customers who demand the product from retailers who demand product from wholesalers
promotional mix
portion of marketing concerned with choosing the best combination of advertising, personal selling, sales promotions, and publicity to sell a product
five stages in buyer decision process
- consumers first recognize need to buy. marketers make buyers aware of products
- consumers look for info on product. marketers advertise and use personal selling to educate them
- sales reps can demonstrate product quality, features, benefits, and performance
- buyers are ready to purchase. sales promotion gives consumers incentives to buy
- after buying, advertisers remind customers that they made a wise purchase
advertising
paid, non-personal communication by which an identified sponsor informs an audience about a product
advertising media
specific communication device – tv, radio, internet, direct mail, etc – used to advertise a firm’s message to potential customers
personal selling
promotional tool in which a salesperson communicates one to one with potential customers
sales promotions
short-term promotional activities designed to stimulate consumer buying or cooperation from distributors and other members of the trade
types of sales promotions
coupon, premium, point-of-purchase display, trade show
coupon
type of sales promotion where one is given a certificate that entitles them to savings off regular price
premium
method of sales promotion where an item is offered free or at a bargain price to ppl in return for buying a specific product
point of purchase display
product display is located in a retail store to encourage consumers to buy product
trade show
members of a particular industry gather for displays and product demonstrations designed to sell products to customers
publicity
info about a company, product, or event transmitted by general mass media
public relations
company-influenced info directed at building goodwill with the public or dealing with unfavourable events
distribution mix
combination of distribution channels by which a firm gets its products to consumers
intermediaries
person or firm that helps distribute a product
wholesaler
intermediary who sells products to other companies for resale to final consumers
retailer
intermediary who sells products directly to consumers
distribution channel
network of interdependent companies through which a product passes from producer to end user
direct channel
distribution channel where a product travels from producer to consumer without intermediaries
sales agent
independent intermediary who generally deals in the related product lines of a few producers and forms long-term relationships to represent those producers and meet the needs of many customers
broker
independent intermediary who matches numerous sellers and buyers as needed, often without knowing in advance who they will be
pros and cons of non-direct distribution
cons – higher prices
pros – efficient (saves money, time, and energy for the consumer)
distribution strategies
intensive distribution, exclusive distribution, selective distribution
intensive distribution
distribution strategy where a product is distributed in nearly every possible outlet, using many channels and channel members
exclusive distribution
distribution strategy in which a product’s distribution is limited to only one wholesaler or retailer in a given geographic area
selective distribution
distribution strategy that falls between intensive and exclusive distribution, calling for the use of a limited number of outlets for a product
channel conflict
conflict arising when members of a distribution channel disagree over the roles they should play or the rewards they should receive
channel captain
channel member that is the most powerful in determining the roles and rewards of organizations involved in a given channel of distribution
vertical marketing system (vms)
system where there is a high degree of coordination among all the units in the distribution channel so that a product moves efficiently from manufacturer to consumer
three classifications for retail stores
product-line retailers, bargain retailers, and convenience stores
direct-response retail
form of non-store retailing in which firms directly interact with customers to inform them of products and receive sales orders (ex mail order catalogue marketing, telemarketing, direct selling, video/tv, etc)
e-intermediary
internet distribution channel member that assists in delivering products to customers or that collects info about various sellers to be presented to consumers
shopping agent )e-agent)
e-intermediary in the internet distribution channel that helps ppl find products and prices but doesn’t take possession of the products
electronic retailing (online retailing)
non-store retailing where info about the seller’s products and services is connected to consumers’ computers, allowing consumers to receive the info and purchase products at home (ex amazon)
interactive retailing
non-store retail that uses a website to provide real-time sales and customer service
physical distribution
activities needed to move a product efficiently from manufacturer to consumer
warehousing
physical distribution operation concerned with the storage of goods
examples of ways to transport goods
trucks, planes, digital transmission
