6 only targeting on 186 205 7 8 9 only 272 280 10 skip 328 336 11 Chapter 9 Price sum of all the values the customers give up in order to gain the benefits of the product flexible Price is only element in marketing mix that produces rev all other elements rep costs Price Ceiling no demand above this price Price Floor no profits below this price Major Pricing Strategies Customer Value Based Pricing sets price based on buyers perceptions of value not seller s cost Good Value Pricing offering just the right combo of quality and good service at a fair price Value Added Pricing attaching value added features and services to differentiate a company s offers and changing higher prices Cost Based Pricing set price based on cost of production distributing and selling fair rate of return Fixed Costs overhead costs that don t vary with production or sales level Variable Costs vary directly with level of production Total Costs Fixed Variable Costs Cost Plus Pricing markup adding a standard markup to the cost of the product Break Even Pricing target return set to break even on the costs of making and marketing Doesn t consider customer value and that when price increases demand decreases Competition Based Pricing setting based on competitor s strategies prices costs and market offerings Chapter 10 Good distribution strategies can contribute strongly to customer value and create competitive advantage for both a firm and its channel partners Supply Chains and the Value Delivery Network Supply chain consists of Upstream Partners firms that supply raw materials info finances expertise Downstream Partners wholesalers retailers form connection between firma and customers Better term for it is demand chain because this suggests a sense and response view of the market Planning starts with needs of target customers Value Delivery Network made up of the company suppliers distributors and ultimately customers who partner with each other to improve the performance of the entire system in delivering customer value The Nature and Importance of Marketing Channels Marketing Channel distribution channel set of interdependent organizations that help make a product or service available for use or consumption The cost of which accounts for 75 of the product s cost A company s channel decision directly affects every other marketing decision Ex of successful innovative channels Apple selling music for iPod via internet How Channel Members Add Value Intermediaries reduces the amount of work that must be done by producers and consumers Role of marketing intermediaries is to transform the assortments of products made by producers into the assortments wanted by consumers play an important role in matching supply and demand Number of Channel Levels Channel Level layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer Producer and final consumer are part of every channel The number of intermediary levels indicates the length of a channel Direct Marketing Channel no intermediary levels company sells directly to consumer Indirect Marketing Channel one or more intermediaries A greater number of levels less control and greater channel complexity for producers Channel Behavior Channel Conflict disagreement among marketing channel members on goals roles and rewards who should do what and for what rewards Horizontal Conflict occurs among firms at the same level of the channel Ex Honda dealer complains Honda dealer in other city putting price too low and stealing sales Vertical Conflict conflicts between different levels of the same channel Ex Goodyear start selling through other retailers fractured dealer relations weakened Goodyear name Conventional Distribution Channel consists of one or more independent producers wholesalers retailers each separate biz seeking to max its own profits even at expense of profits for system as whole None has much control over the others Vertical Marketing System VMS producers wholesalers retailers act as unified system one channel member owns the others has contracts with them or has so much power that they all cooperate Corporate VMS integrates successive stages of production and distribution under single ownership Coordination and conflict management are attained through regular organizational channels Contractual VMS independent firms at different levels of production and distribution who join together through contracts to obtain more economies or sales impact than each could achieve alone Coordinate activities and manage conflicts through contracts Franchise Organization most common contractual a channel member franchisor links several stages in the production distribution process three types 1 Manufacturer Sponsored Retailer Ex Honda and its network of independent franchised dealers 2 Manufacturer Sponsored Wholesaler Ex Coca cola licenses bottlers wholesalers who buy the syrup bottle and sell finished products 3 Service Firm Sponsored Retailer Ex BK and its franchisee operated restaurants Administered VMS leadership is assumed through the size and power of one or a few dominant channel members Horizontal Marketing Systems two or more companies at one level join together to follow a new marketing opportunity Can combine their resources to accomplish more than they could alone Ex mini McDonalds in walmart stores Multichannel Distribution Systems hybrid single firm sets up 2 or more marketing channels to reach one or more customer segment Today almost every large and many small companies distribute this way With each new channel the company expands its sales and market coverage and gains opportunities to tailor its products and services to the specific needs of diverse customer segments Harder to control generate conflict as more channels compete for sales Changing Channel Organization Disintermediation when product or service producers cut out intermediaries and go directly to final buyers or when radically new types of channel intermediaries displace traditional ones Marketing Channel Design 1 Analyzing consumer needs 2 Setting channel objectives 3 Identifying Major Alternatives Types of Intermediaries Number of Marketing Intermediaries 1 Intensive Distribution stock products in as many outlets as possible Usually used by producers of convenience products and common raw materials 2 Exclusive Distribution producer gives only limited number of dealers exclusive rights Used by brands and luxury 3 Selective Distribution more than