Pricing, Distributing, and Promoting Products Essay Sample
A firm’s pricing determinations reflect the pricing aims set by direction. Some houses pursue the end of maximising net incomes. while others aim to maximise market portion. Extra considerations include endurance in a competitory market. societal and ethical concerns. and image. Important price-setting attacks include cost-oriented pricing and breakeven analysis. For new merchandises. pricing schemes include monetary value skimming and incursion pricing. while tactics include monetary value liner. psychological pricing. and dismissing. E-commerce has reintroduced dynamic pricing to the U. S. market place. leting Sellerss to change monetary values on a consumer-by-consumer footing.
The ultimate end of publicity is to increase gross revenues. but other ends include pass oning information. positioning a merchandise. adding value. and commanding gross revenues volume. Sellers must find the promotional mix. which is the combination of tools to accomplish promotional aims. Possibilities include advertisement. personal merchandising. gross revenues publicity. and promotion and public dealingss. In finding the mix of tactics. sellers must see the merchandise itself. features of the mark audience. the buyer’s determination procedure. and the promotional mix budget.
In choosing a distribution mix. a house may utilize all or any of eight distribution channels to administer merchandises merely to consumers. to consumers and concern clients. or merely to concern clients. Distribution intermediaries – merchandiser jobbers. agents and agents. and e-agents – aid to administer merchandises. Retailers – merchandise line retail merchants and deal retail merchants – besides facilitate distribution. Non-store retailing is a turning tendency that includes mail-order selling. telemarketing. electronic retailing. and direct merchandising.
Physical distribution includes all of the activities needed to travel merchandises from makers to consumers. including client service. repositing. and transit of merchandises.
1. Identify the assorted pricing aims that govern pricing determinations and depict the price-setting tools used in doing these determinations. 2. Explain the distribution mix and place the different channels of distribution. 3. Identify the different types of retailing and retail shops. 4. Define physical distribution and depict the major activities in the physical distribution procedure. 5. Identify the of import aims of publicity. discourse the considerations in choosing a promotional mix. and depict the cardinal advertisement media. 6. Sketch the undertakings involved in personal merchandising and depict the types of gross revenues publicities.
Opening Case: Congested? Stuffed Up? Try DTC.
I. Determining Monetary values
A. Pricing to Meet Business Aims
1. Profit-maximizing Aims
2. Market Share Objectives
B. Price-Setting Tools
1. Cost-Oriented Tools
2. Breakeven Analysis: Cost-Volume-Profit Relationships
II. Pricing Schemes and Tacticss
A. Pricing Schemes
1. Pricing Existing Merchandises
2. Pricing New Merchandises
3. Fixed versus Dynamic Pricing for E-Business B. Pricing Tacticss
III. The Distribution Mix
A. Mediators and Distribution Channels
1. Distribution of Consumer Merchandises
a. Channel 1: Direct Distribution of Consumer Products B. Channel 2: Retail Distribution of Consumer Products c. Channel 3: Sweeping Distribution of Consumer Products d. Channel 4: Distribution Through Gross saless Agents or Agents 2. The Pros and Cons of Nondirect Distribution a. Channel 5: Distribution by Agents to Consumers and Businesses 3. Distribution of Business Products
a. Channel 6: Direct Distribution of Business Products B. Channel 7: Sweeping Distribution of Industrial Products c. Channel 8: Sweeping Distribution to Business Retailers IV. Wholesaling
A. Merchant Jobbers
B. The Advent of the E-Intermediary
1. Syndicated Sellers
2. Shopping Agents
3. Business-to-Business Agents
A. Types of Retail Mercantile establishments
1. Merchandise Line Retailers
2. Bargain Retailers
B. Nonstore and Electronic Retailing
1. The Boom in Electronic Retailing
a. Internet-Based Shops
B. Electronic Catalogs
c. Electronic Storefronts and Cybermalls d. Interactive and Video Marketing
VI. Physical Distribution
A. Warehousing Operations
B. Transportation Operations—Transportation Modes
C. Physical Distribution and E-Customer Satisfaction D. Distribution as a Selling Scheme
VII. The Importance of Promotion
A. Promotional Aims
B. The Promotional Mix—The Target Audience: Promotion and the Buyer Decision Process C. Advertising Promotions
1. Ad Media
2. Internet Advertising—Data Mining and Data Warehousing for Internet Advertising D. Personal Selling
1. Personal Selling Undertakings
2. Telemarketing and Personal Gross saless
E. Gross saless Promotions—Types of Gross saless Promotions
F. Publicity and Public Relations
I. Determining Monetary values ( Use PowerPoint 11. 3. )
A. Pricing to Meet Business Aims
Marketers’ pricing schemes are influenced by a assortment of factors.
1. Profit-maximizing Objectives. Marketers effort to put monetary values to sell the figure of units that will bring forth the highest possible net incomes.
2. Market Share Objectives. Market portion is determined by gauging the entire per centum of the market that the seller is presently providing ; a concern may be willing to accept minimum net incomes or even losingss to set up market portion.
B. Price-Setting Tools ( Use PowerPoint 11. 4. )
Sellers must gauge the possible impact before make up one’s minding on concluding monetary values. Tools used for this intent are: cost-oriented pricing and breakeven analysis.
1. Cost-Oriented Pricing. This tool considers the demand to cover production costs and the cost of the ware. Markup is the sum added to an item’s sum cost to gain a net income ; markup is normally stated as a per centum of the product’s merchandising monetary value.
2. Breakeven Analysis: Cost-Volume-Profit Relationships. Breakeven analysis determines the figure of units that must be sold before covering fixed costs. which are costs unaffected by the figure of merchandises produced or sold. and gaining a net income.
II. Pricing Schemes and Tactics ( Use PowerPoint 11. 5. )
Pricing schemes are planned activities that affect the selling mix. Pricing tactics are ways that directors implement a firm’s pricing schemes.
A. Pricing Schemes
1. Pricing Existing Products. A house can monetary value bing merchandises supra. below. or at market monetary value. Sellers that monetary value merchandises above market rely on the premise that higher monetary values are accompanied by higher quality. Pricing below the market can win if the house can offer a merchandise of acceptable quality. In some industries. monetary value leaders implement market pricing. which is the monetary value that other companies follow.
2. Pricing New Products. If a seller can distinguish a merchandise from all others. the sellers may implement monetary value planing. in which monetary value is set high to gain big net incomes. Such a scheme will pull rivals to come in the market place with lower monetary values. With incursion pricing. monetary value is set low to make consumer involvement and to excite test purchases. Net income is low ; hence. the seller relies on raising monetary values as consumer credence grows.
3. Fixed versus Dynamic Pricing for E-Business. Dynamic pricing works because information flow on the Web notifies purchasers of alterations in merchandise handiness.
B. Pricing Tacticss ( Use PowerPoint 11. 6. )
Monetary value run alonging involves offering all points in certain classs at a limited figure of monetary values. A shop predetermines three or four monetary value points at which a peculiar merchandise will be sold. Price run alonging involves puting each monetary value degree with a specific type of client in head and so packaging and promoting merchandises consequently. One illustration of psychological pricing is odd-even pricing. which proposes that clients prefer monetary values that are non stated in even dollars. Discounts are monetary value decreases designed to excite gross revenues.
III. The Distribution Mix ( Use PowerPoint 11. 7. )
The distribution mix is the combination of distribution channels that a house selects to acquire a merchandise to concluding consumers.
A. Mediators and Distribution Channels ( Use PowerPoint 11. 8. )
Mediators are persons or houses that help administer merchandises and add value as they make the right merchandises available when and where consumers want them. Jobbers sell merchandises to other concerns. which resell the merchandises to concluding consumers. Retailers sell merchandises straight to concluding consumers. The nature of the merchandise and the mark market greatly impact whether mediators are used.
1. Distribution of Consumer Products. A distribution channel is the way that a merchandise follows from manufacturer to concluding consumer.
a. Channel 1: Direct Distribution of Consumer Products. A direct channel includes no mediators.
B. Channel 2: Retail Distribution of Consumer Products. Manufacturers distribute merchandises through retail merchants.
c. Channel 3: Sweeping Distribution of Consumer Products. Jobbers enter the distribution web chiefly for the intent of storage.
d. Channel 4: Distribution through Gross saless Agents and Brokers. These parties are manufacturers’ representatives that sell through jobbers and/or retail merchants.
2. The Pros and Cons of Nondirect Distribution. Nondirect distribution becomes higher priced for terminal users because each distribution nexus charges a markup or committee. However. mediators can salvage consumers clip by cut downing the figure of contacts made. and money by supplying velocity of bringing. storability. and less cost by purchasing cheaply in majority from makers and so go throughing nest eggs on to concluding consumers.
a. Channel 5: Distribution by Agents to Consumers and Businesses. This channel uses agents to convey Sellerss and consumers and
industrial purchaser together.
3. Distribution of Business Products. Business distribution involves the flow of manufactured goods to industrial consumers. a. Channel 6: Direct Distribution of Business Products. Channel 6 is the direct distribution of manufactured goods to industrial purchasers.
B. Channel 7: Sweeping Distribution of Industrial Products. This channel is normally used for accessary equipment and providers.
c. Channel 8: Sweeping Distribution to Business Retailers.
IV. Wholesaling ( Use PowerPoint 11. 9. )
Jobbers perform assorted maps. which may include hive awaying. supplying an mixture of merchandises. and offering bringing. recognition. and merchandise information ; maps performed can depend on the type of jobber involved.
A. Merchant Jobbers
Merchant jobbers buy merchandises from makers and sell them to other concerns ; most normally provide storage and bringing of merchandises.
B. The Advent of the E-Intermediary
1. Syndicated Sellers. Web sites offer other sites committees for mentioning clients.
2. Shoping Agents. Such agents help Internet consumers by garnering and screening information.
3. Business-to-Business Brokers. E-commerce mediators are emerging.
V. Retailing ( Use PowerPoint 11. 10. )
Changing greatly in size. retail merchants represent the terminal of the distribution channel. doing the sale of goods or services to concluding consumers.
A. Types of Retail Mercantile establishments
U. S. retail operations vary by type. size. pricing schemes. location. scope of services. or scope of merchandise lines.
1. Merchandise Line Retailers. Retailers that characteristic wide merchandise lines include: section shops. which are arranged into specialised sections and manage a broad scope of goods ; supermarkets. which offer a broad choice at low monetary values ; hypermarkets. which are much larger and offer a wider scope of goods than supermarkets ; and. forte shops. which are little shops that carry a line of related merchandises.
2. Bargain Retailers. Bargain retail merchants come in many signifiers and include: price reduction houses. which feature name-brand points at low monetary values ; off-price shops. which buy extra stock lists of major sellers and sell them at reduced monetary values ; catalog salesrooms. which allow clients to see shows. topographic point orders. and wait briefly while clerks retrieve orders from warehouses ; factory mercantile establishments. which avoid mediators by leting mills to sell straight to consumers ; warehouse nines. which require members to pay rank fees to buy from a assortment of merchandises from a figure of merchandise classs ; and convenience shops. which offer easiness of purchase of a narrow mixture of merchandises with higher monetary values.
B. Nonstore and Electronic Retailing ( Use PowerPoint 11. 11. )
Some retail merchants sell some or all of their merchandises without shops. Major types of nonstore selling include direct-response retailing. in which houses make contact with clients both to inform them about merchandises and to have gross revenues orders. and direct merchandising. in which companies sell door-to-door or through home-selling parties.
1. The Boom in Electronic Retailing. This is possible by communications webs that let Sellerss post merchandise information on consumers’ Personal computers. a. Internet-Based Shops
B. Electronic Catalogs
c. Electronic Storefronts and Cybermalls
d. Interactive and Video Marketing
VI. Physical Distribution ( Use PowerPoint 11. 12. )
Physical distribution refers to the activities needed to travel merchandises expeditiously from maker to consumer. Two primary activities include warehousing and transit.
A. Warehousing Operations
Private warehouses are owned by a individual maker. jobber. or retail merchant that needs storage infinite on a regular footing ; public warehouses are independently owned and rent infinite to houses that need it. Storage warehouses provide storage for drawn-out periods of clip ; distribution centres are common in the food market and nutrient industry. which requires rapid bringing to consumers.
B. Transportation Operations
Factors involved in taking a transit method include: the nature of the merchandise. the distance it must go. the velocity with which it must be received. and the customers’ wants and demands.
1. Transportation Modes. The most common manners are trucks. railwaies. planes. H2O bearers. and grapevines.
C. Physical Distribution and E-Customer Satisfaction
Any hold in physical distribution is a dislocation in fulfilment ; holds in after-sale distribution are a major cause of dissatisfaction.
D. Distribution as a Selling Scheme
Distribution is an progressively of import manner of constructing a firm’s competitory advantage. This involves measuring and bettering the watercourse of activities involved in acquiring merchandises to consumers.
VII. The Importance of Promotion
Promotion is any technique designed to sell a merchandise ; it is a message that a seller sends to consumers about its merchandise ( s ) .
A. Promotional Aims ( Use PowerPoint 11. 13. )
Sellers may utilize publicity to carry through a figure of undertakings. such as pass oning information. placement merchandises. adding value. or commanding gross revenues volume.
B. The Promotional Mix ( Use PowerPoint 11. 14. )
Sellers use four types of promotional tools: advertisement. personal merchandising. gross revenues publicities. and promotion and public dealingss. A marketer’s merchandise. its mark audience. and its budget are all of import considerations in constructing the promotional mix.
1. The Target Audience: Promotion and the Buyer Decision Process. Buyers must acknowledge the demand to do a purchase prior to seeking for merchandise or service information. Buyers so compare viing merchandises and services before buying one. Buyers so measure the purchase.
C. Advertising Promotions ( Use PowerPoint 11. 15. 11. 16. )
Ad is paid. nonpersonal communicating used by an identified patron to inform an audience about a merchandise.
1. Ad Media. These media are specific communicating devices for transporting a seller’s message to possible clients ; publicizing media include newspapers. telecasting. direct mail. wireless. magazines. and out-of-door advertisement. 2. Internet Advertising. This is the newest advertisement medium ; Internet advertizers can mensurate the success of messages.
a. Data Mining and Data Warehousing for Internet Advertising. Vast pools of informations on user behavior reveal who has bought which merchandises and how many.
D. Personal Selling ( Use PowerPoint 11. 17. )
In personal merchandising. a sales representative communicates one-to-one with possible clients to place their demands and to line them up with the seller’s merchandises. Personal merchandising requires a certain degree of trust between purchaser and marketer which must be established over clip.
1. Personal Selling Tasks. The undermentioned basic undertakings by and large accompany personal merchandising: order processing ; originative merchandising ; missional merchandising. In order processing. a sales representative receives an order and sees to its handling and bringing. Creative merchandising can assist to carry purchasers when the benefits of a merchandise are non wholly clear. A company may utilize missional merchandising when its intent is to advance itself and its merchandises instead than merely to shut a sale.
2. Telemarketing and Personal Gross saless. Costss have prompted many companies to turn to telemarketing. which entails the usage of phone solicitations to carry on the personal merchandising procedure.
E. Gross saless Promotions ( Use PowerPoint 11. 18. )
Gross saless publicities are short-run promotional activities designed to excite consumer purchasing or cooperation from distributers. gross revenues agents. or other members of the trade. Gross saless publicities are of import because they increase the likeliness that purchasers will seek merchandises. The best-known signifiers of publicity are vouchers. point-of-purchase shows. assorted buying inducements. trade shows. and competitions and sweepstakes.
F. Publicity and Public Relations ( Use PowerPoint 11. 19. )
Consumers frequently see promotion as nonsubjective and extremely credible.
Sellers. nevertheless. hold small control over promotion. Public dealingss is company-influenced promotion that seeks to construct good dealingss with the populace and to cover with the effects of unfavourable events.
Answers to Questions and Exercises
Questions for Review
1. How does breakeven analysis aid directors measure the possible impact of monetary values?
Breakeven analysis and cost-oriented pricing are normally used together to mensurate the possible impact on pricing aims prior to make up one’s minding on concluding monetary values. Both of these tools allow directors to place monetary values that allow companies to make their aims.
2. What is the overall end of monetary value planing? Of incursion pricing?
Monetary value planing allows the seller to reimburse development costs and/or earn high net incomes early since monetary value is set high in the beginning. This scheme may be particularly effectual for merchandises with few replacements or rivals. Penetration pricing is an effort to make consciousness and excite test purchases by puting monetary values low. Once consumer trueness is built. sellers may be able to raise monetary values without losing clients.
3. Identify the eight channels of distribution. In what ways do the four channels used merely for consumer merchandises differ from the channels used merely for industrial merchandises?
• Channel 1 involves direct gross revenues to consumers.
• Channel 2 involves a retail merchant.
• Channel 3 involves both a retail merchant and a jobber. • Channel 4 includes an agent or agent before the jobbers and retail merchants. • Channel 5 includes merely an agent between the manufacturer and the consumer. • Channel 6 involves a direct sale to an industrial user. • Channel 7 entails selling to concern users through jobbers. • Channel 8 includes retail superstores that get merchandises from manufacturers or jobbers for reselling to concern consumers.
4. Explain how the activities of e-agents or agents differ from those of traditional agents/brokers?
E-agents or agents assist users in happening merchandises and monetary values on the Internet. but do non take ownership of merchandises.
5. Compare the advantages and disadvantages of different advertisement media.
Newspapers provide first-class coverage. but have hapless reproduction quality and are extremely temporary. Television provides broad geographic coverage and reaches a figure of consumers. but is expensive and tends to confound viewing audiences with many short commercials. Direct mail allows a seller to choose its audience and personalise its message. but is expensive. and is frequently regarded as debris mail. Radio ads reach a big audience and are cheap. but they are over rapidly and may necessitate repetition exposure to be effectual. Magazines have comparatively long shelf lives and benefit from pass-along readership. but ads must be prepared long in progress and can look in unfavourable locations in the magazine. Outdoor ads benefit from high repetition exposure. but can show merely limited sums of information. The Internet allows promptly. extremely targeted entree to online endorsers. but many consumers may be annoyed at legion ads or inordinate item.
Questions for Analysis
6. Suppose that a little publishing house merchandising to book distributers has fixed runing costs of $ 600. 000 each twelvemonth and variable costs of $ 3. 00 per book. How many books must the house sell to break-even if the merchandising monetary value is $ 6. 00? If the company decides on a 40 % markup. what will the merchandising monetary value be?
Break-even units=Fixed costs/ ( selling price-variable costs ) Break-even units= $ 600. 000/ ( $ 6- $ 2 ) =200. 000 books.
Selling price/40 % markup on variable costs/ $ 3+ ( $ 3 X 40 % ) = $ 4. 20 per book.
7. Take a expression at some of the advertisement conducted by locally based concerns in your country. Choose two runs: 1 that you think effectual and one that you think uneffective. What differences in the runs make one better than the other?
Answers will change. In finding run effectivity. pupils should see the intended mark audience. the media. the budget. every bit good as the originative construct.
8. See the assorted sorts of non-store retailing. Give illustrations of two merchandises that typify the merchandises sold to at-home shoppers through each signifier of non-store retailing. Explain why different merchandises are best suited to each signifier of non-store retailing.
• Direct mail selling: Insurance and magazine subscriptions are best suited because consumers can reexamine selling information and respond easy. • Mail order or catalog selling: Clothing and gifts are best suited because the merchandises can be shown and described and returned if necessary. • Telemarketing: Telephone service and overseas telegram telecasting are best-suited because gross revenues representatives can depict characteristics and benefits every bit good as reply inquiries. • Direct merchandising: Cosmetics and housewares are best suited because person the consumer already knows and trusts can show them.
9. Choose a merchandise with which you are familiar and analyze assorted possible pricing aims for it. What information would you desire to hold if you were to follow a profit-maximising aim? A market portion nonsubjective? An image aim?
Answers will change. but may include the undermentioned:
• Profit-maximizing: A great trade of competitory information. including figure of rivals. competitory monetary values. etc. • Market portion: Breakeven point
• Image: How low can the monetary value travel without conveying low quality? Or if snob entreaty is the end. how high must the monetary value be to convey premium position?
10. Choose a merchandise that is sold nationally. Identify as many media used in its publicity as you can. Which medium is used most? On the whole. make you believe the run is effectual? Why or why non?
Answers will change. However. pupils will likely happen that Television and magazines are to a great extent used for nationally distributed merchandises. In finding effectivity. pupils should get down by sing the mark audience. Is the media mix making the mark audience?
Answers to Exercising Your Ethical motives
1. What are the duties of each party – the client. the shop. the bringing house – in this state of affairs? • Customer: To supply right bringing information to the shop • Shop: To clearly pass on its bringing policies to consumers • Delivery house: To do timely bringings to the designated reference and to clearly pass on its policies to the shop
2. From an ethical point of view. in what ways is the shop manager’s action right? In what ways is it incorrect?
• Right: Since the shop fulfilled its duty to the client. financial duty would propose that the shop director should non return the customer’s money. • Incorrect: Since the bundle was non delivered to the bride. good client service would propose that the shop director should return the money.
3. If you were appointed to settle this affair. what actions would you take?
Answers will change. but pupils should acknowledge that clients typically broadcast a bad experience to many of their friends and co-workers. amplifying the impact of a dissatisfying experience.
Answers to Building Your Business Skills
1. Why do you believe some purchasers want personalized cards? Why do some consumers want ready-made cards from retail shops?
There are many. many options in the market place for purchasers who prefer personalized cards for assorted occasions. Ready-made cards. nevertheless. are easy accessible and can be purchased at the last minute from legion types of shops ; this type of card may be preferred for the less originative purchaser.
2. Today’s computing machine runing systems provide easy entree to package for planing and doing cards on place Personal computers. How does the handiness of this merchandise impact your recommendation?
There may still be a stigma against such cards. particularly since most people publishing these cards will simply utilize traditional transcript paper which may give the consequence of a “cheap” card. Students’ replies will change.
3. What was your most convincing statement for utilizing direct mail? For utilizing personal merchandising?
Students’ replies will change.
4. Can a start-up company compete in retail shops against industry giants such as Hallmark or American Greetings?
Students’ remarks will change. but most will acknowledge that such competition will be possible to get the better of if the start-up company can add a particular type of graphics. design. wit. or some other emotional gimmick to pull a specific niche.
1. This activity is based on the Classroom Activity # 2 from Chapter 10. Ask the pupils to run into in their antecedently assigned groups. Students should analyze closely the mark market they have selected for one of the three merchandises used in the activity. Now. inquire the pupils to alter that mark market to another demographic. psychographic. or geographic market section. How would they alter the promotional mix? What different media options would they utilize? How would the image of the merchandise be changed among consumers’ perceptual experiences?
2. Working in groups of two. pupils shall discourse the design and selling scheme behind a new merchandise or service—one that has ne’er yet been invented. Students can be every bit originative as they wish! Ask the pupils to explicate how they have determined market demand for their merchandise or service. how they would choose a mark market. and how they would advance to that specific market section.