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drop in unit cost as accumulated vol sold increases; as sales grow, costs drop allowing further price reductionoPenetration pricing: low initial price to lure away from competitors, discourages competitors bc low profit marginPrice skimming: sell new prod/svc @ high price that innovators/early adopters willing to payLoss leader pricing:lower price below store’s cost (BOGO)Bait & switch:lure in w/ low price ad prod then aggressively pressure to purchase higher priced modelPrice discrimination:sell same prod to diff re-sellers or ultimate consumer at diff prices; not all forms illegal (Clayton & Robinson-Patman Acts)Price fixing:collude w/ other firms to control prices (Sherman Antitrust Act)oHorizontal: competitors take price out of consumer decision processoVertical:parties at diff levels of same marketing channel colludeMSRP:price manufacturers suggest retailers use to sell their merchandiseContribution per unit: price – var cost per unitChapter 15: Supply Chain & Channel Mgmt.Marketing channel/supply chain mgmt.: set of approaches/techniques firms employ to efficiently/effectively integrate suppliers/manufacturers/warehouses/transporters/storesWholesalers: buy prods from manufacturers & sell to retailersDistribution center:facility for receipt/storage/distribution of goods to comp stores/customersDirect channel:manufacturer customerIndirect channel:1+ intermediariesVertical channel conflict:members of same channel disagreeHorizontal channel conflict:disagreement among 2 @ same level (competitors)
Independent/conventional channel:indep members try to satisfy own objectives & max profits, @ expense of other membersVertical marketing sys:members act as unified sysoAdministered: dominant member controls channel relationshipPower:1 firm can control actions of another member @ diff levelReward power:offer rewards to gain powerCoercive power:threatening/punishingReferent power:1 wants to be associated w/ another, mkt share %Expertise power: has expertise another needs/wantsInfo power: 1 provides/withholds info from anotherLegit power: get another to behave in certain wayoContractual: indep firms @ diff levels join together by contracts to obtain econs of scale & reduce conflictFranchising:franchisor allows franchisee to operate bus using name/format developed/supported by franchisoroCorporate: parent comp has total control & dictates channel priorities/objectivesStrategic/partnering relationship: members maintain long term, invest in mutually beneficial opportunities; requires mutual trust/open comm/common goals/credible commitmentsUPC:black & white bar code (manufacturer, description, special packaging info, & special promos)ASN:e-doc supplier sends retailer in advance of shipment to tell retailer what to expect in shipmentEDI:electronic data interchange; computer to computer exchange of bus docs from retailer to vendor & backoCycle time: