Benefits of Dynamic Pricing Advantages • Real-time pricing: adjust based on demand, competitor • Reap profit in high demand, increase sales in low demand • Reap more profit by addressing unmet demands or those willing to pay more • Data analytics reveal valuable insights into customer needs Disadvantages • Requires complex algorithm which may not always work • Consumers perceive it as unfair • Although it offers a customer a choice in service 3.6 Geographical Pricing : Setting prices for customers located in different parts of the country or world. 3.7 International Pricing • Companies marketing products internationally must decide what prices to charge in different countries . eg: Gucci $140 (Italy) vs. $240 (USA) • Prices vary depending on many factors -Economic conditions -Competitive situation -Laws / regulations -Distribution system -Consumer perceptions/behaviors -Operational & Selling costs, shipping, tariffs & taxes, exchange rate Common Pricing Mistakes • Determine costs and take traditional industry margins (too cost-oriented) • Failure to revise price to capitalize on market changes • Setting price independently of the rest of the marketing mix • Failure to vary price by product item, market segment, distribution channels, and purchase occasion
Distribution & Place Distribution components = moving a product from producers to consumers Component = channel + logistic Channel = Intermediaries = middleman Function of Marketing Channel 1.Transactional ➔Buying: buy for resale ➔Selling: contact customers, promote products, seek orders ➔Risk taking: hold the inventory →obsolete 2.Logistical ➔Assorting: create product assortment ➔Storing: protect product at a convenient location ➔Sorting: purchase in large quantities and break into smaller amount ➔Transporting 3.Facilitating ➔Financing: extend credit to customers ➔Grading: judge & grade quality ➔Marketing information & research: provide info to customers & suppliers Benefits of Distribution Channel 1 Specialization ➢Firms can’t perform all tasks ○Shipping and handling capabilities ○Dealing with a large number of customers (lend the credit, provide service) ➢Channels help sell the products better than a producer works alone ➢Specialized expertise and economy of scale of channel members ○Perform better (Enhance the overall performance) ○With lower costs (Creates greater efficiency) 2 Overcoming Discrepancies
3 Providing contact efficiency ➢Reducing the number of required transaction Type of marketing channel 1.Wholesaler: buy large quantities of product from producers →store and break them down to smaller units 2.Retailers: buy products from wholesalers, agents, or distributors and sell to consumer. a.Store: shopping mall, supermarket b.Non-store: direct selling (insurance), direct marketing (TV direct, mail catalogue) Channel Trend ●Offline ●Online Disintermediation ➢Try to reduce role of intermediaries in the supply chain ○Manufacturers sell directly to consumers ex. Apple has their own store and sell online.