Elements Of The Marketing Mix 2: Pricing + Place Flashcards
Importance of Pricing
People tend to want value for money. Increases in price tend to lead to falls in demand (the extent can vary).
Price skimming
Setting a high price when a product first enters a market. Used when there’s a high demand.
Penetration pricing
Launching a new product at a low price for fast sales. Work best when customers are sensitive to price.
Competitive pricing
Matching the prices of competitors
Loss leader
A product sold at a loss in the hopes that customers will buy the business’s other products
Cost plus pricing
When prices cover costs but with an additional percentage
Factors influencing pricing
Costs
Demand
Competitor’s pricing
Stage in the products life cycle
Strength of brand
Nature of market and rest of marketing mix
Objectives
Distribution channel
Describes how the ownership of a product passes from the producer to the final customer
Producers
Supplies goods or services
Wholesalers
Break bulk; buy in large quantities from a producer to sell to retailers
Retailers
Shops that sell directly to the customer
How the business can connect the distribution channel to the customer
Mail-order (producing catalogues which customers order from)
Telesales
E-commerce/M-commerce
Direct marketing
When there’s a direct link from the producer to the customer with no intermediaries
Intermediary
A link in the distribution chain between the producer and the customer
Types of distribution channel
-zero level: no intermediaries between producer and buyer
-one level: one intermediary
-two level: when there are two intermediaries
