Transcript Business Essentials 5e.

Chapter 11
Pricing,
Distributing, and
Promoting
Products
PowerPoint Presentation by Charlie Cook
Copyright © 2005 Prentice Hall, Inc.
All rights reserved.
Key Topics
• Pricing objectives, price-setting tools, and
pricing strategies and tactics
• Promotion and the promotion mix
• Personal selling and sales promotion
• Channels of distribution
• Retailing and retail stores
• The physical distribution process
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11–2
Pricing to Meet Business Objectives
• Profit maximizing objectives
• Market share objectives
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11–3
Price Setting Tools
Cost Oriented Pricing
Markup
Markup percentage 
Sales price
Breakeven Analysis
Total fixed costs
Breakeven point (in units) 
Price - Variable cost
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11–4
Breakeven Analysis
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Figure 11–1
11–5
Pricing Strategies
• Pricing existing products
 Price at market, below, or above
• Pricing new products
 Price skimming: low
 Penetration pricing: high
• Pricing e-commerce products
 Dynamic vs. fixed
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11–6
Pricing Tactics
• Price lining
 Setting a limited number
of prices for certain
categories of products
• Psychological pricing:
we are not rational
 E..g, Odd-even pricing
• Discounts
 Price reduction
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11–7
Distribution Terms
• Distribution Channel
 Path followed by product
from producer to end user.
• Distribution Mix
 Combination of distribution
channels used
• Intermediary
 Wholesaler: sells products
to other companies for
resale to final consumers
 Retailer: sells products
directly to consumers
 Agent/broker: receive
commissions
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11–8
Channels of
Distribution
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Figure 11–2
11–9
Wholesaling
• E-intermediaries
 Syndicated Sellers
 Shopping Agents
Merchant
Wholesaler
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 Business-to-Business
Brokers
11–10
Retailing
• Product Line Retailers
• Bargain Retailers
 Department stores
 Discount houses
 Supermarkets
 Catalog showrooms
 Specialty stores
 Factory outlets
 Warehouse clubs
 Convenience stores
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11–11
The Value-Adding Intermediary
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Figure 11–3
11–12
Nonstore and Electronic Retailing
• Direct Response Retailing
 Mail order (or catalog marketing)
 Telemarketing
 Direct selling
• Electronic Retailing
 Electronic storefront
 E-catalogs
 Interactive marketing
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11–13
Small Business and the Web
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Figure 11–4
11–14
Physical Distribution
• Warehousing Operations
 Public and private warehouses
• Transportation Operations
 Modes
 Trucks,
railroads, planes, water carriers, pipelines
 E-customer satisfaction
Distribution can be a
competitive advantage!
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11–15
Promotion
• Promotional Objectives
 Communicate information
 Position products: we need an identifiable
product image in the mind of the consumer
• Positioning
 Establishing an identifiable product image in the
minds of consumers
 Add
value
 Control sales volume
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11–16
The Promotional Mix
The combination of tools used to promote a
product: How do you reach your target audience?
Advertising
Personal Selling
Sales Promotions
Publicity and Public Relations
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11–17
The Consumer Buying Process
and the Promotional Mix
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Figure 11–5
11–18
Advertising Promotions
• Advertising Media
 Communication devices for carrying a seller’s
message to potential customers
Newspapers
Television
Direct mail
Radio
Magazines
Outdoor
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25%
22%
18%
7%
5%
1%
11–19
Internet Advertising : High Potential, But
With Limitations
• Targeted advertising is key
 Data Mining
 Data Warehousing
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11–20
Personal Selling: One-on-One
Interaction With Potential Buyers
• Order Processing
• Creative Selling
• Missionary Selling
• Telemarketing
 Using the telephone to
perform personal selling
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11–21
Sales Promotion:
Short-term Promotional Activity
• Goal: To stimulate consumer
buying or cooperation from
distributors and sales agents
 Coupons
 Point-of-purchase displays
 Premiums
 Trade shows
 Contests
 Samples
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50%
OFF
11–22
Publicity and Public Relations
• Publicity
 When information about a company or product is
communicated to the public via mass media
• Public Relations
 Company-influenced publicity
PRO: Free to the
company
CON: The company
has no control
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11–23
Chapter Review
• Identify pricing objectives, strategies, and tactics.
• Discuss promotional objectives, the promotional
mix, and advertising media.
• Describe personal selling and the various types of
sales promotions.
• Identify the channels of distribution and the
differences between merchant wholesalers and
agents/brokers.
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11–24
Chapter Review (cont’d)
• Identify the different types of retailing and retail
stores
• Describe the major activities in the physical
distribution process
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11–25