Chapter 11-14 FInal Exam Study Guide

Fi lower total cost to buyers and lower marketing

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f.i. lower total cost to buyers and lower marketing costs to sellers g. Yield Management pricing: charging of different prices to maximize revenue for a set amount of capacity at any given time- airlines, hotels, car rentals ESTIMATING DEMAND AND REVENUE Translate estimated customer demand into estimated revenues firm will receive “Fundamental of Estimating Demand” Price, consumer tastes, price and availability of substitutes, and consumer income affect demand Marketing managers concerned with price elasticity of demand : % change in Qd relative to a % change in P. Measures how sensitive consumer demand is to changes in price Elastic demand : slight price change results in large change in demand Inelastic demand : slight increase/decrease will not affect demand (necessities) DETERMINING COST, VOLUME, AND PROFIT RELATIONSHIPS Total cost (TC) is the total expense incurred by a firm in producing and marketing a product. TC= FC + VC. Important to keep under control Fixed cost (FC) is the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold. Examples of fixed costs are rent on the building, executive salaries, and insurance. Variable cost (VC) is the sum of the expenses of the firm that vary directly with the quantity of a product that is produced and sold. Direct labor and direct materials Unit variable cost (UVC) is expressed on a per unit basis, or VC/Q “Break-Even Analysis” Considers cost, volume, and profit relationships A technique that analyzes the relationship between TR and TC to determine profitability at various levels of output. BEP= when TR and TC are equal. BEP= (Fixed Cost)/ [(Unit Price) – (Unit Variable Cost)] CHAPTER 13 CHANNEL STRUCTURE AND ORGANIZATION
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Direct Channel v Indirect Channel Retailer addition common when retailer is large and buys in large quantities (automobile) Wholesaler addition common for low-cost, low-unit value items (candy, magazines) Agent added when many small manufacturers and many small retailers “Electronic Marketing Channels” Electronic marketing channel: Internet to make products and services available for consumption. Combine electronic and traditional intermediaries to create time, place, form, and possession utility “Direct and Multichannel Marketing” Direct Marketing channels: consumer buy product without face to face meeting with salesperson Direct-mail, catalog, telemarketing, TC, catalog Multichannel marketing blends different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop and buy in traditional intermediaries and online “Dual Distribution and Strategic Channel Alliances” Dual distribution: an arrangement whereby a firm reaches different buyers by employing two or more different types of channels for the same basic product> GE to home and Lowe’s Strategic channel alliances : one firm’s marketing channel is used to sell another firm’s products
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