Transcript Ch 12 busi20 Fall 07

Chapter 12: The other 3 P’s
roduct
rice
lace
romotion
(Distribution)
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11–3
Pricing to Meet Business Objectives
• Profit maximizing objectives
 Highest price possible
 Without killing volume
 Without attracting competition
or governmental scrutiny
 Price elasticity of demand
 Gasoline
vs. steak
• Market share objectives





Penetration pricing
Predatory pricing
Loss-leaders
Win with efficiency & volume
Or, maximize profits later
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11–4
Applying break even analysis
Total fixed costs
Breakeven point (in units) 
Price - Variable cost
• How many watches would we have to sell to
break even if:
 our total fixed costs are $7,000,
 we sell each watch for $200
 the total variable costs for each watch sold are $90?
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11–8
Break Even Chart
Fixed costs = $7,000
Variable costs = $90 per unit
Sales revenue = $200 per unit
$25,000
$20,000
Sales Revenue
Total Costs
$15,000
$10,000
Fixed Costs
$5,000
$0
0
20
40
60
80
100
Units Sold
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11–9
Pricing Strategies
• Pricing existing products
 Premium
 Parity
 Price competition
• Pricing new products
 Price skimming
 Penetration pricing
• Price discrimination
 Dynamic vs. fixed
 Comparison shoppers
 Coupons, sales, market area:

Groceries, diamonds, & cars
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11–11
Pricing Tactics
• Price lining
 Price points
 Target pricing
• Psychological
pricing
 Odd-even pricing
• Discounts
 Call to action
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11–12
Key Topics
• Product
• Pricing
• Place (distribution)
• Promotion
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11–19
Place: Distribution Terms
• Distribution Channel
• Distribution Mix
• Intermediary
 Wholesaler
 Retailer
 Agent/broker
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11–20
The Value-Adding Intermediary
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Figure 11–3
11–21
Channels of
Distribution
Why would any
particular company
choose one channel
over another?
When would it make
sense to go direct.
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Figure 11–2
11–23
Start here
Wholesaling E-style
• E-intermediaries
 Syndicated Sellers

Pay per click
 Shopping Agents

www.pricescan.com
 Business-to-Business Brokers /
Exchanges

www.dmoz.org
 Direct business to business e
commerce

www.qbp.com
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11–24
Retailing: Service by Category
• Specialty stores
• Product Line Retailers
• Department stores
• Supermarkets
• Bargain Retailers
• Discount houses
• Catalog showrooms
• Factory outlets
• Warehouse clubs
• Convenience stores
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• E - tailing
11–26
Place and its place in marketing
• Pick the place that best matches
 your customers’ service expectations,
 your service expectations,
 your profit motivations,
 and puts the product where your customer wants it,
 when they want it.
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11–29
The Marketing Plan
• External analysis
 Competition analysis
 Market segmentation
• Internal analysis
 S.W.O.T., and finding our
purpose
• Marketing Strategy
 Mission, objectives,
 Target markets, our positioning
 Product, Price, Place, Promotion
• Financials and controls
 Measurements and control plans
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
11–30
Chapter 12: The other 3 P’s
roduct
rice
lace
romotion
(Distribution)
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
11–31
Promotion
• Promotional Objectives
 Position products
 Communicate information
 Add value
 Control sales volume
• Positioning
 Establishing an identifiable product image in the
minds of consumers
 Focusing
on what the target market values
 Building the brand
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11–33
The Promotional Mix
The combination of tools used to promote a
product:
Advertising
Personal Selling
Sales Promotions
Publicity and Public Relations
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11–34
The Consumer Buying Process
and the Promotional Mix
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Figure 11–5
11–35
Internet Advertising : High Potential, and
the learning curve
• Banner ads – Yahoo autos.com
• Targeted advertising is key
 Data Mining
 Data Warehousing
• Search results placement
 Requested advertisement
• Pay per click
 Google AdWords
• Permission marketing
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11–38
Personal Selling: One-on-One
Interaction With Potential Buyers
• Order Processing
• Creative Selling
 Traditional selling
• Missionary Selling
 Building relationships
• Telemarketing
 Using the telephone to
perform personal selling
• E-Role
 Chat, I M, email, faq’s, etc.
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11–39
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
11–40
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 less control
PRO: People believe
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it
11–41
Marketing Overview
• External analysis
 Competition analysis
 Market segmentation
• Internal analysis
 S.W.O.T., and finding our
purpose
• Marketing Strategy
 Mission, objectives,
 Target markets, our positioning
 Product, Price, Place, Promotion
• Financials and controls
 Measurements and control plans
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
11–42