MRKTNG 3000 1st Edition Exam 3 Study Guide Lectures 14 20 Chapters 8 6 9 Lecture 14 October 21 Distribution Distribution Intermediary functions Benefits o Transactional Buying and selling Risk taking o Logistical Concentration Storing Sorting Physical distribution o Facilitating Financial Grading o Informing Marketing research To companies Providing information To consumers Distribution Strategy o Coverage or channel width The number of distributors offering product service o Channel depth The levels of warehouses distributors brokers between producer and consumer o Three coverage strategies Intensive Provide offering in as many outlets as possible o Objective maximize exposure in geographical area E g gum cigarettes Coverage sales effort tradeoff o Maximum coverage and no sales effort at point of purchase Sales depend on consumers seeing product and easy buying opportunity o Usually lower priced items E g Hershey s bar not Godiva chocolate Selective Provide offering in selective i e only some outlets o Objective restrict distribution in geographical area to intermediaries based on performance capability E g Compaq computers Calphalon cookware Swatch watches Coverage sales effort tradeoff o Middle ground medium coverage and sales effort When there is need for both coverage and sales effort E g Compaq computers at Fry s Computerland but not Sears Exclusive Using only one outlet in a geographic area o Objective maximize push of a distributor E g Steinway pianos Ferrari cars Rolex watches Coverage sales effort tradeoff o Maximum sales effort at point of purchase minimum coverage Exclusive distributor may only carry one product line E g Lazy Boy furniture If carrying multiple products product exclusivity provides added motivation Classification of Retailers by Form of Ownership o Corporate chain Centrally owned and managed stores that carry similar products o Independent Single unaffiliated store o Contractual vertical marketing system Contract specifies how members will operate Retailer cooperative small retailers establish and operate a wholesale warehouse Voluntary chain wholesalers contract with interested retailers to provide services to them Franchising franchisor provides trademark and assistance in return to payments from franchises Nonstore Retailing o Retailing activities resulting in transactions that occur away from a retail store o 4 types Direct selling personal contact between a salesperson and a consumer away from a retail store Door to door involves cold canvassing or occurs after other initial contact Party plan host or hostess invites people to party with a sales presentation Telemarketing salesperson initiates contact with a shopper and also closes sales over telephone Automatic vending sale of products through a machine with no personal contact between buyer and seller Direct marketing use of advertising to contact customers who in turn purchase products without visiting a retail store Direct mail Catalog retailing Televised shopping Online retailing Lecture 15 October 23 Pricing Price elasticity o Change in quantity demanded when the price changes Price inelastic o Price changes quantity demanded does NOT Pricing Existing and New Products o Objectives Segmentation and positioning Consistency with target market s and competitive positioning Signal of product quality Profit goals profit orientation o Ex Mercedes if we want to position ourselves above other manufacturers our price needs to reflect that target high income households o Lower the price lower the perceived quality Vise versa o Objectives Market share goals sales orientation Economic industry conditions o Competitive pricing climate Survival or domination goals o E g airline price wars vs Microsoft internet explorer Social responsibility E g predatory pricing drug companies gouging brings regulatory heat o Predatory pricing price your product below cost to drive out competition Hard to prove Illegal Pricing Strategies New Products o Penetration Pricing Set price low to gain immediate sales market share scare off competitive entry Negative impact slow recovery of investment profits E g new airline route fares internet browsers o Price skimming Set price high to achieve quick large profits E g intel s newest Pentium innovations always priced high Pricing Strategy Existing Products o Based on product characteristics Perishability Foods produce bread bakery items etc Services airline flights concerts and sports events Short time demand Christmas cards wrapping merchandising tie ins Small Soldiers action figures high fashion clothing Need flexible pricing strategy Distinctiveness High price for high quality products Depends on product class gasoline vs watches Depends on consumer perception Perrier vs Ozarka Nature of competition In general greater the competition lower the price o Product life cycle generally price decreases as product moves from growth to maturity to decline Pricing Methods o Markup pricing and other cost based methods o Perceived value pricing Basing price on perceived value to customers Often used in conjunction with heavy promotion o Going rate competitive pricing Pricing according to what competition is doing Commodities e g oil companies fruits and veggies Discriminatory Pricing to Consumers o Legal as long as it doesn t substantially hinder competition Victoria Secret charges more in Orange County CA than in Boone County MO Museums movie theaters charge different fees to students senior citizens Other examples Student discounts at stores located in college towns Texas Drug Discrimination o 1999 study found pharmaceutical prices in Central Texas were much higher for senior citizens than for insurance firms HMOs etc o Is this legal Pharmaceutical companies won case because there was no proof that it was done to substantially hinder competition Apple s Pricing Distribution Strategy o How are Apple s products priced relative to competition Higher o How are Apple s products distributed relative to competition Selective for new products Software is intensively distributed free Relationship between pricing strategy and distribution Lecture 15 October 28 Holiday Marketing Holiday Marketing o About 50 of directs sales made 602 billion Thanksgiving New Year s Day Perishability of Holiday Goods o X mas trees o Halloween Candy o Fireworks o Wrapping Paper Marketing Holidays o Gift giving promoted for all occasions Valentine s day Birthdays Anniversary o Marketing specialized holidays Secretary