M6 Flashcards
exchange or transaction
Price
given up to obtain benefits
Buyer’s View
reflects the revenue generated for each product sold.
Seller’s View
FIVE C’S OF PRICING
- Company Objectives
- Customers
- Cost
- Competition
- Channel Members
methods and objectives may ultimately be oriented.
Company Objectives
firms usually implement target profit pricing
Profit Orientation
firms using a sales orientation to set prices believes that increasing sales.
Sales Orientation
firms take a competitor, they strategize according to the premise.
Competitor Orientation
invokes the concept of value. Focusing on customer satisfaction and setting prices.
Customer Orientation
developed their company objectives, understand consumer reactions to different prices.
Customers
shows how many units of products or services consumers will demand.
Demand Curves and Pricing
refers to % change in quantity demanded to % change in price.
Price Elasticity of Demand
FACTORS INFLUENCING PRICE ELASTICITY OF DEMAND:
Income Effect
Substitution Effect
Cross-Price Elasticity
people’s income increases, their spending behavior changes.
Income Effect
consumer’s ability to substitute other products for the present or focal brand.
Substitution Effect
this happens in the case of complementary products.
Cross-Price Elasticity
to make effective pricing decisions, firms must understand their cost structures.
Cost
labor and material that vary with production volume.
Variable Costs
cost that remain essentially at same level.
Fixed Costs
simply the sum of fixed and variable costs.
Total Costs
competition has profound impact on pricing strategies.
Competition
THREE LEVELS OF COMPETITIONS:
Oligopolistic
Monopolistic
Pure
manufacturers, wholesalers, and retailers can have different views when it comes to pricing strategies.
Channel Members
Types of Pricing Strategies
Cost-Based
Competitor Based
Value Based
determine the final price to be charged starting with the cost.
Cost-Based Methods
prices are set to reflect the way they want.
Competitor Based
focus on overall value of product offering
Value-Based
PRICING METHODS
- Premium Pricing
- Penetration Pricing
- Economy Pricing
- Price Skimming
- Psychological Pricing
- Pricing Variations
- Optional Product Pricing
- Captive Product Pricing
- Product Bundle Pricing
- Geographical Pricing
- Value Pricing
uses a high price, but gives a good or services
Premium Pricing
offers low price to gain market - share
Penetration Pricing
placed at ‘no frills’ low price
Economy Pricing
when prices are high- usually during introduction “parity”
Price Skimming
to get a customer to respond on an emotional, rather than rational basis.
Psychological Pricing
‘off-peak’ pricing, early booking discounts etc.
Pricing Variations
e.g optional extras- BMW famously under-equipped
Optional Product Pricing
products that complement others. e.g Gillete Razors (low price) Blades (high price)
Captive Product Pricing
sellers combine several products at the same price e.g software, books, CD’s
Product Bundle Pricing
different prices for customers in different parts of the world.
Geographical Pricing
using during difficult economic conditions
Value Pricing
A set of interdependent organizations
(intermediaries) involved in the process of
making a product or service available for
use or consumption by the consumer or
business user.
Distribution Channel
TYPE OF CHANNEL MEMBERS
- Resellers
- Retailers
- Wholesalers
- Industrial Distributors
generally purchase or take
ownership of products from the marketing company with the
intention of selling to others.
Resellers
Organizations that sell products directly to
final consumers.
Retailers
Organizations that purchase products from
suppliers
Wholesalers
Firms that work mainly in the
business-to-business market selling products obtained from
industrial suppliers.
Industrial Distributors
Organizations that mainly work to bring
suppliers and buyers together in exchange for a fee.
Agents and Brokers
Offer services aiding in the
movement of products such as assistance with transportation, storage, and order processing.
Distribution Service Firms
FACTORS AFFECTING DISTRIUBUTION CHANNEL
- Product Issues
- Promotion Issues
- Pricing Issues
- Target Market Issues
LEVEL OF DISTRIBUTION COVERAGE
- Mass Coverage
- Selective Coverage
- Exclusive Coverage
DISTRIBUTION SYSTEMS: DIRECT
- Direct Marketing System
- Direct Retail System
- Personal Selling System
- Assisted Marketing System
DISTRIBUTION SYSTEMS: INDIRECT
- Single-Party Selling System
- Multiple- Party Selling System
is a form of corporate communication
that uses various methods to reach a targeted
audience
Promotion
TYPES OF PROMOTION OBJECTIVES:
- Build Awareness
- Create Interest
- Provide Information
- Stimulate Demand
- Reinforce the brand
INTEGRATED MARKETING COMMUNICATION:
- Advertising
- Personal Selling
- Public Relations
- Direct Marketing
- Sales Promotion
Any Paid Form of
Nonpersonal Presentation and
Promotion of Ideas, Goods, or
Services by an Identified
Sponsor.
Advertising
describes promotional methods
using special short-term techniques to persuade members of a target market to respond or
undertake certain activity.
Sales Promotion
involves the cultivation of
favorable relations for organizations and products
Public Relations
is a promotional method in which
one party (e.g., salesperson)
Personal Selling
is a sometimes controversial
sales method by which advertisers approach
potential customers directly with products or
services.
Direct Marketing
