Docstoc

CHAPTER 12 PRICING_ DISTRIBUTING_ AND PROMOTING PRODUCTS

Document Sample
CHAPTER 12 PRICING_ DISTRIBUTING_ AND PROMOTING PRODUCTS Powered By Docstoc
					CHAPTER 12    Pricing, Distributing, and
                    Promoting Products

             Business Essentials, 8th Edition
                               Ebert/Griffin

  Instructor Lecture
     PowerPoints             PowerPoint Presentation prepared
                                            by
                                Carol Vollmer Pope Alverno
                                          College
               Determining Prices
• Pricing to Meet Business Objectives
  • Pricing objectives
     • The goals that sellers hope to achieve in pricing products
       for sale
  • Profit-maximizing pricing objectives
     • Setting prices to sell the number of units that will
       generate the highest possible total profits
     • Revenues = Selling Price x Units Sold
  • Market share objectives
     • Using pricing to establish market share—a company’s
       percentage of the total industry’s sales for a specific
       product type


                                                                 12-2
           Determining Prices (cont.)
• Price-Setting Tools
  • Cost-Oriented Pricing
     • Considers the firm’s desire to make a profit and its
       need to cover production costs
     • Variable costs: Costs that change with the number of
       units of a product produced and sold
     • Fixed costs: Costs such as insurance and utilities that
       must be paid regardless of the number of units
       produced and sold
     • Selling price = Seller’s cost + profit

           Marku
          
        percentag
       Markup
            price
           Sales
                                                                 12-3
          Determining Prices (cont.)

• Breakeven Analysis
  • Shows, at any selling price, the amount of loss or
    profit for each possible volume of sales
  • Breakeven point: Number of products that must
    be sold so total revenues exactly cover both fixed
    and variable costs


        fixe
          co
       Tota
      
   point
    (in
     units)
  Breakeve
        -
        Var
          co
      Price
                                                    12-4
           Pricing Strategies and Tactics
• Pricing Existing Products
  • A firm has three options for pricing existing
    products:
     • Pricing above prevailing market prices for similar products
     • Pricing below market prices
     • Pricing at or near market prices
• Pricing New Products
  • Price skimming
     • Setting an initially high price to cover costs and generate a
       profit—may generate a large profit on each item sold
  • Penetration pricing
     • Setting an initially low price to establish a new product in the
       market

                                                                          12-5
     Pricing Strategies and Tactics (cont.)

• Fixed Versus Dynamic Pricing for E-Business
  • To attract sales that might be lost under
    traditional fixed-price structures, sellers alter
    prices privately, on a one-to-one, customer-to-
    customer basis
  • At present, fixed pricing is still the most common
    option for cybershoppers




                                                     12-6
      Pricing Strategies and Tactics (cont.)

• Pricing Tactics
  • Price lining
     • Offering all items in certain categories at a limited
       number of prices (price points)
  • Psychological pricing
     • Odd-even pricing: Customers prefer prices that are not
       stated in even dollar amounts
     • Discounts: Price reductions that stimulate sales



                                                               12-7
              The Distribution Mix
• Distribution Mix
  • The combination of distribution channels by
    which a firm gets products to end users
• Intermediaries (Middlemen)
  • Help distribute goods, either by moving them or
    by providing information that stimulates their
    movement from sellers to customers
  • Can provide added value by saving consumers
    both time and money
     • Wholesalers sell products to other businesses for
       resale to final consumers
     • Retailers sell products directly to consumers
                                                           12-8
           The Distribution Mix (cont.)

• Distribution Channel
  • Path a product follows from producer to end user
• Popular Paths
  •   Channel 1: Direct distribution (direct channel)
  •   Channel 2: Retail distribution
  •   Channel 3: Wholesale distribution
  •   Channel 4: Distribution by agents or brokers



                                                        12-9
                     Wholesaling
• Wholesalers
  • Independent operations that sell consumer or business
    goods
     • Buy products from manufacturers and sell them to other
       businesses, and usually provide storage and delivery
     • Provide additional value-adding services for customers

• Agents and Brokers
  • Sales and merchandising representatives for producers or
    sellers
     • Do not own inventory, but manage it for producers



                                                                12-10
                              Retailing
• Types of Retail Outlets
   • Product line retailers carry broad product lines
      • Department stores and supermarkets
   • Specialty stores carry one line of related products
   • Bargain retailers carry wide ranges of products and come
     in many forms
      • Discount houses, catalog showrooms, factory outlets, wholesale
        clubs
   • Convenience stores offer accessible locations and ease of
     purchase


                                                                     12-11
                   Retailing (cont.)

• Nonstore Retailing
  • Vending machines
  • Direct-response retailing
     • Mail order (or catalog marketing)
     • Telemarketing
     • Direct selling




                                           12-12
             Online Shopping Agents


•   Two types of E-Intermediaries
    • Shopping agents (e-agents) help Internet
      consumers by gathering and sorting information.
    • Electronic retailing is made possible by
      communications networks that enable sellers to
      post product information on consumers’ PCs.




                                                  12-13
                     Electronic Retailing
• Electronic Catalogs (E-catalogs)
   • Use the Internet to display products
• Electronic Storefronts (virtual storefronts)
   • A website from which consumers collect information
     about products, place orders, and pay for purchases
• Cybermalls
   • Collections of virtual storefronts representing diverse
     products
• Interactive and Video Marketing
   • Viewers shop at home by phoning in or e-mailing orders

                                                               12-14
TABLE 12.1 Top 10 Online Retailers




                                     12-15
             Physical Distribution
• Physical Distribution
  • The activities needed to move products from
    manufacturer to consumer
     • Makes goods available when and where consumers
       want them
     • Keeps costs low
     • Provides services to satisfy customers




                                                        12-16
             Physical Distribution (cont.)

• Warehousing Operations
  • Private warehouses are owned by producers
  • Public warehouses provide rented storage space
• Transportation Operations
  • Principal differences are speed and cost
• Transportation Modes
  •   Trucks
  •   Planes
  •   Water carriers
  •   Railroads
  •   Pipelines
                                                     12-17
          Physical Distribution (cont.)

• Physical Distribution and E-Customer Satisfaction
  • Order fulfillment
     • Involves getting the product to each customer in good
       condition and on time
• Distribution as a Marketing Strategy
  • Distribution is an increasingly important way of
    competing for sales.
  • For some firms distribution is a cornerstone of
    business strategy

                                                           12-18
             The Importance of Promotion
• Promotion
  • The techniques a firm uses for communicating
    information about products
• Promotional Objectives
  •   To communicate information
  •   To position products
  •   To add value
  •   To control sales volume
• Positioning
  • Establishing an easily identifiable product image in the
    minds of consumers by fixing, adapting, and
    communicating the nature of the product itself
                                                               12-19
      The Importance of Promotion (cont.)

• Promotional Mix Tools
  •   Advertising
  •   Personal selling
  •   Sales promotions
  •   Publicity and public relations
• Promotional Mix
  • The combination of promotional tools


                                            12-20
     The Importance of Promotion (cont.)
• Matching Promotional Tools with Stages in the
  Buyer Decision Process:
  • Recognize the need to make a purchase
     • Best tool: advertising and publicity
  • Search for information about products
     • Best tool: advertising and personal selling
  • Compare benefits and features of competing products
     • Best tool: personal selling
  • Choose products that are a good value and buy them
     • Best tool: sales promotion and personal selling
  • Evaluate products after the purchase
     • Best tool: advertising and personal selling

                                                          12-21
           Advertising Promotions
• Advertising
  • Paid, non-personal communication by which an
    identified sponsor informs an audience about a
    product
• Advertising Media
  • The specific communication devices for carrying a
    seller’s message to potential customers
• Media Mix
  • The combination of media through which a
    company advertises

                                                  12-22
TABLE 12.2 Media Use, Strengths, and
            Weaknesses




                                       12-23
                Personal Selling
• Personal Selling
  • A salesperson communicates one-to-one with
    potential customers to identify their needs and
    align them with the seller’s products
     • Can be the most expensive form of promotion
• Personal Selling Tasks
  • Order processing
  • Creative selling
  • Missionary selling


                                                      12-24
                    Sales Promotions
• Sales Promotions
  • Short-term promotional activities designed to
    encourage consumer buying, industrial sales, or
    cooperation from distributors
• Types of Sales Promotions
  •   Samples
  •   Coupons
  •   Premiums
  •   Contests
  •   Point-of-sale displays
  •   Trade shows
                                                  12-25
        Publicity and Public Relations

• Publicity
  • Information about a company, a product, or an
    event transmitted by the general mass media to
    attract public attention
• Public Relations
  • Company-influenced publicity that seeks either to
    build good relations with the public or to deal
    with unfavorable events


                                                  12-26

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:8
posted:8/17/2011
language:English
pages:26