Marketing_MidTerm3_StudyGuide

Marketing_MidTerm3_StudyGuide - Marketing Midterm #3 Study...

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Marketing Midterm #3 Study Guide Lecture Notes Chapter 12 (Notes on Pricing DVD) Pricing Strategy / Policy Important → Value in eyes of Consumer Previously based solely on Labor, Production (Not So Today! Other Factors Involved) Pricing Policy → (Need to Know Cost to Manufacture) Price = “What the Customer is Being Asked to Pay for Value Deliver” Revenue = Price X Quantity Profit = Revenue – Cost Value = Certain Quality for Good Price Perception of Value differs between Consumers Price Consideration (Determining) 1. Competition or Substitutes (Structure of Market) Price Depends upon Markets 2. Product Life Cycle – Early (Cost More) Ex. Cell Phones 3. 4. Demand – Elasticity 5. Costs Cost Structure Fixed Costs – Regardless of you selling anything Variable Costs – Associated with Manufacturing of Single Product. Breakeven – Cover Costs Different Firms have Different Cost Structures Pricing & Perceived Value Quality Pricing Strategies - Market Entry / Share (Ex. Price Promotion) - Psychological Sense - Odd-Even Pricing (Ex. 14.99 instead of $15.00) - Skimming & Penetration Global Pricing Cross-border Trade Pricing (Hard/Difficult in European Union) More Complex
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Questions After DVD Pricing is NOT Science! More Art Form Break even = Fixed Costs / (Sales Price – Variable Costs) Calculations of Break Even Does NOT Set Price! “Leave Money on Table” Think about Fixed and Variable Penetration Market Share Measurement of Penetration in Market 1% of Market Share 2 Perspectives Channels (or Logistics) = “Think about People Involved in movement of manufacturing to end user.” Examples: Retailers, Wholesalers, etc. Physical Distribution = “The Means of Moving Product” 2 nd Hardest to “Manage” - Control is harder as channel grows (Longer) The Channel Goals is simply to make a Sale! Shorter Channel, Greater Control Longer Channel, Less Control Vertical Integration (Absolute Control) → Expensive for all companies to be vertically integrated. Own All Aspects of Manufacturing (Trucks, Bottling, Etc. ) Horizontal Integration (Not in Full Control) → Lose Control of End-Price. Channel Doesn't Care about Consumers (Passes on Manufacturing) Channel Could Have One Product Manufacturing Wants Lots of Products (Bull Whip Effect?) Incentives Drive Channel Members to do What Manufacturers want. Demand-Push Incentives – Any Incentive We Give to channel is an incentive to push product to consumer. Demand-Pull Incentives – Any Incentive for Consumers (Coupons, Financing, Etc.) Used effectively to bring Channel Members in Line w/ Manufacturing Process.
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Physical Distribution Shrinkage Has 3 Elements 1. Loss 2. Damage 3. Theft Physical Distribution (5 Things to Remember) 1. Location of Production Facilities (Close to Raw Materials) 2. Location of Warehouse (Close to Consumers) 3. Freight Decisions 4. Inventory Policies
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Marketing_MidTerm3_StudyGuide - Marketing Midterm #3 Study...

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