Transcript elc310day23 - Tony Gauvin`s Web Site

ELC 310
Day 23
Agenda
 1st round case grades
1 A, 2 B’s and 1 C+
 More research and analysis!
 Fifth Student Case
 OSRAM Sylvania by Owen

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

Case study Grading rubric
(corrected)
 Grade Generation for analysis





Demonstrated Mastery of Case Study
Understanding of How Case Study Fits
Presentation effectiveness
Quality of PowerPoint
Ability to Engage the Class in Discussion
 Grades will be posted Nov 25 & Dec 12
35%
35%
10%
10%
10%
Rest of Schedule
 Today
 OSRAM Sylvania (Owen)
 Pricing and Distribution
 Dec 5
 Student evualations
 Logistics.com A & B (Steve)
 Build a Trusting Relationship with
Customers
 Dec 9
 Travelocity (Randy)
 The Future of Digital Marketing
 Dec 12
 Citibank Online (Emlyn)
 Take Home Quiz #4 Assigned
 Dec 17 @ 1 PM
 Take Home Quiz #4 Due
 Written Case Study &
Presentations Due
® Tony Gauvin, UMFK , 2007
Overview
 Introduction
 Pricing Strategies




Standard price models
Incentives
B2B exchanges
Auctions
 Distribution


Chanel conflicts
End to end system integration
Introduction
 Value = benefits – cost

Price for consumer is part of cost


Increased price means lower value
Price for producer is part of benefits

Increased price means higher value
 Price part of total product package of benefits

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


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

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

Add customers
 MyPoints

http://www.mypoints.com/
 Thank You network

https://www.thankyou.com/
 Cool Savings

http://www.coolsavings.com/
B2B exchanges
 Biggest promise from early ecommerce


Biggest bust
Insufficient incentives for potential participants
to participate
 Most B2B exchanges have failed
 Tele Flower Auction (TFA) is an exception


http://www.tfa.nl/
Added reach (non domestic growers) to an
existing process (Dutch flower auction)
Auctions
 Reverse Auctions



Auctions off demand
Suppliers bid against demand
http://www.freemarkets.com/
 Forward Auctions



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



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)


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