Marketing VII

Question 1

What is broad cost-oriented Pricing?

Answer 1

A company calculated costs of producing to determine profit margins using:

• Fixed costs
• Variable costs
• total costs

A break even analysis is conducted to decide on a cost structure.

Question 2

When a company starts making profit, what is the next cost-oriented pricing strategy?

Answer 2

To maximize these profits the firm needs to calculate marginal costs and marginal revenue in order to see how they can reduce production costs.

When marginal revenue and cost intersect is where the company maximizes its profit.

Question 3

What is Yield management?

Answer 3

A special Variant of dynamic price differentiation where:

At different times, different demanders are willing to pay different prices.
ex. airlines with reservation booking

Reservation forecasting plays an important role here.

Question 4

What is the “Place” (or Distribution channel) for a product ?

Answer 4

A channel of distribution is a group of individuals and organizations that direct the flow of products from producers to customers.

• transport
• storage
• customer service

Question 5

What different levels of distribution channels do you know of?

Answer 5

0 Level: (direct marketing channel) is where a manufacturer sells directly to final customer.

1 Level: Contains one selling intermediary ex. retailer

2 Level: Contains two intermediaries ex. wholesaler and retailer

3 Level: contains three intermediaries ex. wholesaler, jobber and retailer

Question 6

When should a product be distributed by direct sale? (0 Level?) Name pros and cons

Answer 6

• product is complex
• high quality service is required

Benefit:

• Producer can control sales process
• Independence from third parties

Cons:

• High costs for set up and maintain
• No risk sharing

Question 7

When a product is sold via indirect sales which functions do the intermediaries take on?

Answer 7

• logistics
• acquisition
• support or influence the marketing

Question 8

Who are the different indirect intermediaries?

Answer 8

1. Wholesaler
   - sells goods unchanged
   - sells to retails no direct distribution
2. Retailer
   - sells mainly to consumers and private households
   - key player in direct distribution

Question 9

What are the Pros and Cons of Indirect sales?

Answer 9

Pro:

• Access to broad customer base
• increase of sales and market shares
• less expensive than dircet sales
• Partners offer local support to customers

Con:

• Loss of control / Independence
• Loyalty issues (competitors)
• Danger of prro execution (misinformation, poor promotion)

Question 10

What type of retailers do you know of?

Answer 10

1. Store retailers
2. Nonstore retailers
3. Corporate retailing + franchising

Question 11

What does a typical Store retailer offer?

Answer 11

• Wide range of consumer goods in different product categories and formats:

self-service: cornerstone of all discount operations

self-selection: customer find own goods but can ask for assistance

full-service: salespeople are ready to assist every phase of the process.

Question 12

What do Nonstore Retailers operate like?

Answer 12

Direct selling:
also MLM and Network marketing with 100s of companies and door-to-door ex. Tupperware.

Automatic vending:
offers a variety of merchandise, often in factories / offices / hotels ex. Coca Cola, Snickers

Buying Services:
storeless retailer for special clientele. Employees of large organizations who are entitled to buy from a list of retails in return for membership.

Telemarketing and Internet Selling:
ex. amazon

Question 13

How does corporate retailing and franchising operate?

Answer 13

• two or more stores under common ownership are called corporate retail organization

Franchising systems:

• purchase of the right to operate in the name of the franchisor
• provide brand recognition to franchisee
• franchisor is centralized purchasing source