BUAD307_L11_Distribution

BUAD307_L11_Distribution - Marketing Channels and Supply...

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Marketing Channels and Supply Chain Management July 11, 2011 Yi Zhu
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Pricing Review Pricing Objectives Profit Sales Status Quo Considerations in setting price Customer value (value-based pricing) Cost (cost-based pricing) Others (demand, PLC, competition, etc.) Pricing Strategies New product Product mix Price adjustment
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Exercise 1
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Exercise 2 As a company that assembles electronics parts to create music players for consumers (MP3s, car audio systems, etc.), eShock recently was notified that one of its major suppliers of a central component to its products was raising prices, thereby raising eShock’s unit costs to $40. To determine whether its customers would tolerate a price hike, eShock ran a small-scale experiment in one of its local marketplaces to see what demand fluctuations would look like for a couple of different prices. In one market, it raised its price 10%, from $100. Last quarter sales in the test market ran to 2,000 units. During the test quarter, with the price increase, units sold fell to 1,500. Should eShock raise its price permanently to $110 or decrease the price to $90? [Assume constant elasticity of demand.]
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Marketing Channels
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Distribution Strategy Introductory Example: Goods All three make and sell computers Laptops Desktops All three are successful, profitable manufacturers Difference?
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Distribution Strategy Introductory Example: Services Both … sell food/drinks have sit-in/take-out chains worry about store performance Difference?
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Questions?
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This note was uploaded on 11/01/2011 for the course BUAD 307 taught by Professor Morristowns during the Summer '07 term at USC.

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BUAD307_L11_Distribution - Marketing Channels and Supply...

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