Chapter 12, 13, 14 verhage Flashcards
profit equation
the role of price in a firm’s profitability is demonstrated by the so called profit equation
profit = total revenue - total costs
= (unit price x quantity sold) - total costs
price setting
the customer is the ideal place to start in price setting
the key question is how much money is the product or service worth to the buyer.
the art of the products value in the eye of the consumer into the amount of money he is willing to pay.
pricing strategy
in addition to demand and cost consideration you should also take into account the corporate and marketing strategy, competition, other components of the product mix, the resellers interest, and any legal and ethical constraints.
price
is the exchange value of the product expressed in terms of amount of money the buyer is willing to pay in return for the desired product or service.
for this you have to understand the consumers value perception
price discrimination
refers to charging different buyers, different prices for the same quantity of products or services.
loss leader
products that are sold at a lower than usual markup for the purpose of increasing store traffic
cost
pricing at less than cost is not a common strategy
variable cost
cost of raw materials, is a cost that varies directly with the number of units produced and marketed
fixed costs
often called overhead costs, tend to remain stable at any production level, this includes rent, lease payment and insurance premiums.
price leader
most companies will follow a price reduction by the price leader, but not a price increase.
complementary products
products sold or used jointly with other products, such as printers and ink cartridges.
middlemen
by setting price you must take conflicting interest of the middle man in account
margin
price negotiations begin with normal trade margins for the product.
the high gross margin for electronics retailers includes a supplier contribution to their promotion and service costs
cartel
many countries have laws designed to protect the general interest by prohibiting price fixing, cartels or other contracts of conspiracies that restrain trade
predatory pricing
a practice where one company tries to drive out competitors by temporarily pricing at such a low level that rivals cannot match their cuts and still profit.
revenue
is the per unit price multiplied by the number of units sold
price mechanism
has three vital functions
- comparison
- stimulation and reduction
- rationing
demand curve
shows the maximum number of products that customers will buy in a market during a period of time at various prices if all other factors remain the same
introductory price
once the initial price has been announced it may be difficult to change.
prestige products
or status products, because these appeal to status-conscious consumers, their price, should be relatively high.
price skimming
is a strategy of introducing a new product at an artificially high price.
works best for new types of durable consumer goods, such as high tech cellular phones, from which prestige buyers derive status.
penetration price strategy
opposite of price skimming a company using this strategy introduces a new product at a very low price to speed up ots market acceptance and drive sales upward.
pricing strategy
provides the framework through which we translate our pricing objectives into actual market pricing tactics.
pricing objectives
are formulated in various ways, some managers derive their pricing objectives straight from corporate goals.
price perception
reflects how consumers view or experience a price
price awareness
refers to the degree of consumer knowledge about the prices of alternative products and services that they are interested in buying.
price acceptance
by measuring the price acceptance, the marketing researcher can also discover if consumers think the prices charged are reasonable.
price treshold
the highest and lowest prices that buyers are willing to pay for a particular product or service.
price sensitivity
indicates the extent to which consumers will reach to small price changes.
market share objectives
the goal to maintain or increase their share of a particular market.
price wars
the primary advantage of meeting price cuts is that it will eliminate competitive advantage. it may also prevent price war with prices spiralling downward in successive rounds of price cuts actuated by competitors to maintain their unit sales or market shares.
value pricing
compete on the basis of a superior price/quality relationship.
non-price competition
instead of emphasizing low prices, they could focus on creative use of other marketing instruments.
distribution
a company has to decide which distribution channels are most suitable or delivering its products and which retailers are best to engage for that purpose.
distribution channel
the distribution channel is a network of independent organisations that, combined, perform all of the activities necessary to link producers and end customers.
distribution strategy
involves the analysis, planning, implementation and control of the activities that make the right products available to the target market at the right time, at the right place and at the lowest possible cost.
intermediary
functioning as exporters, brokerage firms, importers, agents, wholesalers and retailers, are organisations or individuals that operate between the producer and consumer in a channel of distribution
channel structure
the shape or form that a distribution channel takes
channel length
the channels vary in number
direct channel
the movement of products and services from producers to consumers without the use of independent intermediaries
indirect channel
if it is not a producer -> consumer channel but entails more than one like
producter -> retailers -> consumer
producer -> wholesalers ->retailers -> consumer
producer -> agents -> wholesalers -> retailers -> consumer
single channel strategy
reach several segments with a single product
dual distribution
also called a multichannel distribution system
by using this firms can expand their market coverage, lower marketing costs and offer greater opportunities for customisation, which all help increase sales
hybrid system
in which the channel members perform complementary tasks for the same consumer instead of for different segments
distribution functions
as a producer moves down the distribution channel from producer to consumer it changes hands more than once as independent channel members perform various tasks or distribution functions many of these require special skills. six of the most important functions are 1. relationship building 2. promotion 3. sorting 4. inventory control 5. financing 6. reasearch and marketing information
upstream management
fouses on managing raw materials, inbound logistics and warehouse and storage facilities
downstream management
focuses on managing finishes product storage, outbound logistics, marketing and sales, and customer service
supply chain
the complete sequence of suppliers and activities that contribute to the creation and delivery of products and services
value delivery network
the cooporation between the company and its suppliers, distributors and ultimately costumers who partner with each other to enhance the performance of the entire system and provide buyers with the highest possible value results
supply chain management
through supply chain management the channel members form long term partnerships in an effort to minimise transportation, inventory, administrative and handling costs by eliminating inefficiencies
distribution intensity
the number of outlets used to distribute a product or service in a particular market
intensive distribution
the product or service is made available to buyers through as many outlets as possible, in effect all suitable wholesalers and retail stores willing to stock and sell the product
selective distribution
is the level of distribution at which a product is sold by a number of retailers but not by all potential retailers in a market area
exclusive distribution
is the extreme opposite of intensive distribution because a single retail outlet in a particular market is allowed to sell the company’s products
retailing
includes all activities involved in selling products and services directly to ultimate consumers for their personal, family or household use
sorting
assembling assortments od products and services from various suppliers to sell
wheel of retailing
according to this theory, new types of retailers that try to fill niches in the retailing environment enter the market as low margin, low status discounters.
merchandise mix
the total set of all product lines and products offered for sale by a retailer
specialty store
relatively small stores offering a great deal of product depth within a narrow range of product lines.
specialisation
may take the form of offering consumption related items or may be based on appealing to a specific consumer segment
convenience store
a small shop located near a residential area that carries a limited assortment of food products and high turnover convenience goods.
supermarket
large department food stores that carry a limited range of non-food products
scrambled merchandising
the practice of s single retailer selling unrelated lines of merchandise
hypermarket
or superstores are huge establishments, originally introduced in europe are at least twice the size of supermarkets and sell everything
supercentre
a combination of supermarkets and discount departments store that is not as mommoth as a hypermarket
department store
a large service-oriented retail institution that carries a wide product mix of shopping and specialty goods, and offers a deep selection in product categories such as apparel, cosmetics, jewellery and household products.
shop in the shop
when in department store you pay within each department rather than at a center check out point.
department stores are strategically located in attractive urban areas or occupy anchor positions in shopping malls.
discount stores
offshoots of department stores they carry the same but at lower prices
variety store
targets the mass market with an extensive range of low-priced products (in europe and latin america)
warehouse club
the merchandise is usually displayed, in barebones building , in boxes or in pallets, reinforces the retailer bargain image among price conscious customers.
factory outlet store
are operated by manufacturers of a national brand and typically dispose of surplus stocks or clearance merchandise.
limited-line store
offers an extensive assortment of models within one product line or a few related lines.
category killer
are special type of limited line store, by offering at low prices a huge selection of products in a single product line, these store dominate their narrow merchandise segments
non store retaillers
online stores or phone stores
direct selling
the marketing of products and services to ultimate consumers through personal interactions and sales presentations at home or at the work place
door - to - door selling
party plan
a direct seller attend a get together at a host customers home to demonstrate products and take orders.
networkd marketing
direct selling companies in which a so-called master distributor persuades other individuals to join the organisation as independent agents and then resells the company’s merchandise to these distributors who eventually sell it to consumers.
pyramid scheme
an illegal network in which the initial distributors profit by selling merchandise to other distributors, with most of the products never reaching the ultimate consumer
street peddling
for example people selling snacks and food items from pushcars on the street
destination store
is a store with an established image and an attractive product assortment that consumers deliberately visit.
planned shopping center
a group of retail stores, designed, coordinated, and market to shoppers in a geographic trade area in order to satisfy specific customer needs.
balanced tenancy
so that the stores complement each other in variety and quality of their merchandise
neighbourhood shopping centre
consists of ten or fifteen stores, provides sale of convenience products and personal services that meet the daily needs of an immediate neighbourhood area.
community shopping centre
designed to serve approximately five times the number of people that a neighbourhood centre serves. draw consumers looking for specialty goods.
regional shopping centre
or malls attract large number of shoppers willing to drive significant distances to find products and services not available in their home towns.
factory outlet mall
these malls feature discount and manufactury owned outlet stores selling excess merchandise although some also offer upscale merchandise
power center
shopping centre that does not include a traditional anchor department store
off price retailer
stores that purchase manufacturers overruns returns seconds and off season products for resale to consumers at steep discounts
lifestyle centre
open air retailing format appeals to upper income consumers who dislike malls
e-commerce
refers to a company efforts to facilitate its online merchandise sales by using marketing principles to guide prospective buyers to a website
e-marketing
is the means by which e-commerce is achieved
e-retailing
is an integral compoonent of e-marketing:
the e-marketing efforts directed towards ultimate consumers
online-marketing
also called internet marketing
aways involves an interactive computer system to connect sellers and buyers electronically
brick and mortar
bring and click firms
operate as traditional stores but, as multichannel retailers, also have a significant web presence
pure-click
internet only retailers limit themselves to conducting business online, making the internet the core of their marketing strategied
interactive marketing
as soon as a consumer clicks on an area of the website to learn more about a products features and price the company can provide him with details he needs to make an informed purchased decision
