Chapter 14: Managing Distribution and Pricing Flashcards
Companies partner with________ to help distribute products to the customer
marketing intermediaries like retailers and wholesalers
4 common distribution channels
- Direct channel
- producer to retailer to customer channel
- producer to wholesaler to retailer to customer channel
- producer to agent to wholesaler to retailer to customer channel
organization that helps move products from producers to customers
marketing intermediaries
businesses that specialize in selling products to the end user
retailers
companies that sell products to other businesses, like retail stores instead of selling to customers
wholesalers
a distribution channel where the producer sells directly to customers with no marketing intermediaries in between
direct channel
a distribution channel where the producer sells to a retail store, which then sells to customers. Is also the largest and most common type of marketing
producer to retailer to customer channel
a D.C where goods are first sold to wholesalers and then to retailers
producer to wholesaler to retailer to customer channel
a distribution channel similar to the producer to wholesaler to retailer channel but with the addition of sales agents who connect buyers to sellers
producer to agent to wholesaler to retailer to customer channel
Benefits of marketing intermediaries
- they provide efficiency and assortment
- break bulk for producers
- provide valuable market information
- provide an instant sale infrastructure for the producer
Most important benefit of marketing intermediary
provides an instant sale infrastructure for the producer
____ are the link between producers and customers
retailers
4 common features that differentiate various physical retailers
- number of product categories
- pricing
- distribution intensity
- size and selection
the level of market coverage of a product, and is usually measured by the # of outlets where the product is sold
distribution intensity
Convenience goods generally would use _____ distribution
intensive
shopping goods would use ______ or _______ distribution
intensive or selective
specialty and unsought products would use _____ distribution
exclusive
retail stores that employ 25 or more staff
Department stores
sell products at a lower price
discount stores
sell a limited variety of products
convenience stores
Large-self service store
supermarkets
large retail stores that carry additional product lines
superstore
Large-scale members-only establishments
warehouse clubs. ex: Costco
Carry a narrow product mix with deep product lines
traditional specialty stores
stores that buy manufacturers seconds and off-season merchandise. ex: Winners
Off-price retailer
Very large specialty stores that concentrate on a single product line and compete by offering low prices
Category killers
selling that does not take place in conventional store
non-store retailing
____ use direct selling, direct marketing and vending machines
non-store retailing
the marketing of products to customers through face-to -face sales
direct selling
the use of the phone, internet to communicate product and organizational info to customers
direct marketing
3 primary functions of physical distribution:
inventory management, warehousing and transportation
the supply of goods that a company holds for use in production or for sale of customers
inventory
deciding how much of each type of inventory to keep on hand
inventory management
receiving and storing goods, then preparing them for transportation
warehousing
transportation (function of physical distribution)
the shipment of products
the mix of marketing intermediaries a producer uses to move products to customers
channel of distribution
the actual type of transportation for moving physical goods from one point to another
mode of distribution
Factors that affect product price
economic conditions, the industry, and stage of a products life cycle
if a customer is in a competitive industry it sets prices
comparable to similar products
3 keys to consider when determining pricing
your cost, max price customers are willing to pay, what competitors charge
minimum number of units the company must sell to cover costs
break-even-point
operating costs of a company
fixed cost
cost of producing or purchasing product
variable cost
the profit you make per unit of sale because it is the amount of money that each sale contributes to paying fixed costs
contribution margin
action designed to achieve pricing objectives
pricing strategy
new-product pricing
price skimming and penetration pricing
strategy of charging the highest possible price for a product during the introduction stage of life cycle
price skimming
strategy of selling new products at low prices
price penetration
purchases based on the emotional response rather than economically
psychological pricing
strategy of setting prices using odd numbers that are slightly below whole dollar amounts
odd-number pricing
setting a single price for 2 or more units. ex: 2 cans for 99c rather than 50c per can
multiple-unit pricing
pricing a product at a moderate level and positioning it next to a more expensive model
reference pricing
packaging 2 or more products to be sold for single price
bundle pricing
marketer sets a low price for its products on a consistent basis
everyday low prices
sets the price of certain goods on the basis of tradition. ex: chewing gum and chocolate bars
customary pricing
can provide marketers with flexibility in price setting
product-line-pricing
when the basic product in a product line is priced low, while the price on the items required to operate it are set at a higher price
captive pricing
occurs when the highest-quality product in a product line is given the highest price
premium pricing
strategy of selling goods only at certain predetermined prices. ex: lulu sports bras are either 34$ or 54$
price lining
_____ includes: price leaders, special event pricing, and comparison discounting
promotional pricing
involves advertising sales or price cutting linked to holiday or event
special-event pricing
are priced below usual markup or below cost
price leaders
sets price of a product at specific level and compares it with a higher price
comparison discounting
