Transcript elc310day23

ELC 310
Day 23
Agenda
 1 – 4 case grades
2 A’s & 2 B’s
 Student Evaluations
 Fifth Student Case
 OSRAM Sylvania by Gediminas (Grand Duke of
Lithuania)
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E-mail presentations at least 15 min before class so I
may upload to web server
 Case studies are tied to proceeding chapters, make sure you
discuss the connection
 Discussion/lecture Pricing and Distribution
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Rest of Schedule
 Today
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OSRAM Sylvania
 G.Sumyla
Pricing and Distribution
 Dec 11
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 Dec 7
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Logistics.com A & B
 G. Nagradic
Build a Trusting
Relationship with
Customer
Travelocity
 K. Pelletier
The Future of Digital
Marketing
 Dec 14
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Citibank Online
 L. Dubois
Written Case Study Due
 Dec 20 @ 3PM
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Quiz #4
Case Study Presentations
Due
Overview
 Introduction
 Pricing Strategies
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Standard price models
Incentives
B2B exchanges
Auctions
 Distribution
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Chanel conflicts
End to end system integration
Introduction
 Value = benefits – cost
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Price for consumer is part of cost
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Increased price means lower value
Price for producer is part of benefits
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Increased price means higher value
 Price part of total product package of benefits
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Becomes a consumer decision variable
 Digital technologies affect pricing in a few
ways
Price
 Price must be between cost of production and
value of product to consumer
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Price too low means manufacture loses profit
Price too high means less consumer buy less
product (which can also lead to lower profits)
 Ideally, Price should extract maximum
profitability from the product
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Price based in supply and demand
Equilibrium pricing
Assumes perfectly elasticity of supply and demand and perfect competition
http://en.wikipedia.org/wiki/Supply_and_demand
Pricing Models
 Cost plus
 Cost of manufacturing plus profit
 Break even analysis
 Break Even = Fixed Cost / (Unit Price - Variable Unit
Cost)
 Unit Price = (Fixed Cost/Break Even) – Variable Unit
Cost; assuming a conservative estimate for Break
Even units
 Volume as a function of price point
 Competitive Pricing
 Penetration Pricing
 Market building
Incentive Sites
 Add benefits to the consumer value
proposition as a offset to price
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Add customers
 MyPoints
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http://www.mypoints.com/
 Thank You network
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https://www.thankyou.com/
 Cool Savings
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http://www.coolsavings.com/
B2B exchanges
 Biggest promise from early ecommerce
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Biggest bust
Insufficient incentives for potential participants
to participate
 Most B2B exchanges have failed
 Tele Flower Auction (TFA) is an exception
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http://www.tfa.nl/
Added reach (non domestic growers) to an
existing process (Dutch flower auction)
Auctions
 Reverse Auctions
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Auctions off demand
Suppliers bid against demand
http://www.freemarkets.com/
 Forward Auctions
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Auctions off supply
Buyers bid against supply
http://www.ebay.com
Distribution
 Methods of transportation and storage usually
by intermediaries bringing products to
consumers
 Internet promise of disintermediation failed
since intermediaries add value by
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Matching buyers to sellers
Requisitioning (aggregation and
disaggregation)
Problem solving
 Big problem is channel conflict
End to end system integration
 Creating and capturing value in the supply chain
(SCM or VCM)
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Tighter integration between intermediaries
Better information flow
 Wal-Mart
 Inventory Management System
 POS
 Perpetual Inventory system
 Backroom receiving system systems
 Information available to distribution centers and partner
vendors daily
 Right products are on the right selves at the right time
for the right price