Pricing and Place

Question 1

Price definition?

Answer 1

• The dollar amount the consumer pays

- Includes: Money, time, cognitive effort, behavioral effort, affective effort, commitment

Question 2

What are the trade offs with “Price Elements”

Answer 2

• time for money
• money for time
• money for effort
• effort for money

Question 3

What does price elements contribute to?

Answer 3

Different market segments

Question 4

List concepts involving price:

Answer 4

• Demand
• Price elasticity and demand
• Break even point
• Reference price
• Price perception
• Price competition

Question 5

What is Demand equivalent to?

Answer 5

Total number of potential transactions
-taste or preference
-availability of substitutes
-income
price expectations for future

Question 6

Does demand change with the price?

Answer 6

NO, demand is unlocked by price

-This is called quantity demanded and it changes with price.

Question 7

What is the correlation between Price and Demand?

Answer 7

Price increase, QUANTITY DEMANDED goes down, YES

Income increases, demand goes up? YES

Question 8

Break Even Point

Answer 8

-How many units should you sell in order to cover all your fixed and variable costs, up until that point of selling

Question 9

What is the Break Even Point equation?

Answer 9

• Contribution Margin = Price - Variable Cost

- Break-even Volume = Fixed Cost / Contribution Margin

Question 10

What are issues with the Break Even Point?

Answer 10

• Variable cost being not constant
• fixed cost not being constant
• Quantity demanded, for the price may be lower than the break even point. Need to shift demand. Price change wont help.

Question 11

Reference Price and Price Perception

Answer 11

Ref. Price-The aggregate consumer belief about what the price should be for a particular offering
Price Percept.-is a subjective judgement about a particular market offering (product)

Question 12

What are some common pricing goals?

Answer 12

• Max profits per unit sold
• Max unit sales
• Market share
• Discourage competitors
• Brand image
• Traffic
• Trial purchases

Question 13

List some pricing strategies:

Answer 13

-Cost-plus - (variable cost + allocated cost) * (1+ percentage marked up)

Question 14

Price Skimming

Answer 14

-High to Low. Usually first to the market.

Question 15

Penetration pricing

Answer 15

-Low price. Usually expect that costs go down over time.

Question 16

Experience Curve:

Answer 16

-Lowering with time

Question 17

Prestige Pricing

Answer 17

-Using pricing as information

Question 18

Bait and Switch

Answer 18

-Low base, aggressive add-ons

Question 19

Price Promotions

Answer 19

• Usually short term and aggressive

- —Done for: New introductions, Inventory Management, Get competitors customers to try the product.

Question 20

Is it easy to change prices, but hard to change price perception?

Answer 20

Yes

Question 21

Is product mix and pricing policies can/should synergize.

Answer 21

Yes

Question 22

Place

Answer 22

AKA distribution, or how to get the products to a place where consumers can engage in the exchange.

Question 23

What are the 4 Channel Utilities?

Answer 23

1. Form Utility
2. Place Utility
3. Time Utility
4. Possession

Question 24

Form Utility

Answer 24

convert raw/bulk goods to a consumable product/quantity

Question 25

Place Utility

Answer 25

Making the physical exchange possible where the consumer wants it

Question 26

Time Utility

Answer 26

at a time when the consumer wants it

Question 27

Possession

Answer 27

actual transfer of ownership.

Question 28

Do major retail activities impact both WTD and Cost?

Answer 28

Yes

Question 29

Retail Formats

Answer 29

- A retail format represents a specific configuration of the retail marketing mix which is maintained consistently over time: - nature of merchandise - services offering - pricing policy - advertising and promotion mix - store design and display - location.

Question 30

What are the factors driving E-commerce?

Answer 30

- Dramatic rise in internet access - Increase in shopping convenience - Reduction in time to possession - Information content at point of shopping - Delivery economies of scale - Psychological comfort.

Question 31

Place notes:

Answer 31

- provides form, place, time, and possession utilities - increase efficiency/reduces cost - provides specific functions - varies in formats - e-commerce is surging WW

Question 32

Product is the first among the 4Ps

Answer 32

True

Question 33

Price is the second among the 4Ps

Answer 33

True

Question 34

Explain the 4Ps

Answer 34

Product is first found then we set a Price

Question 35

Means Ends Chains - Attributes - Consequences - Values

Answer 35

Attributes to consequences to values

Question 36

Calyx and Corrolla what was the problem?

Answer 36

1. How to grow? Tapping into demand vs. increase demand

Question 37

How was the US Flower Market in Calyx and Corrolla?

Answer 37

Low per capita consumption Highly Fragmented - Mom and Pop stores Long Supply Chain or Value Chain (Grower, Distributor, Wholesaler, Retail, User) (Takes about 14 days and user has about 7 days of life for flower) Vary upon Seasonality - Demand varies, Risk varies, Supply varies Global Supply Network

Question 38

Roles within the Value Chain?

Answer 38

Grower-Grows bulk quantities $5 Distributor- Aggragrete and store $7.50 Wholesaler- $15 Retailer- Arranging, displaying, inventory, and pricing $40 (risk is high on retailer which takes away from the value surplus) Pre Calyx and Corrolla Model

Question 39

What is Calyx and Corrolla Model?

Answer 39

1. CC sends catalog 2. Customer sends order 3. Order goes to the grower 4. Grower uses Fedex 5. Fedex drops off flowers *Grower does most of the work -Cuts out the middle man Calyx and Corrolla does all the marketing

Question 40

All growth points are not about demand

Answer 40

Look at entire supply chain and take note of all pain points within the supply chain and figure out solutions for each throughout the entire distribution cycle.