MKTG 311 1st Edition Lecture 20 Outline of Last Lecture I. Elastic/Inelastic Demand CurvesII. Step 3: Determining CostsIII. Understanding Break-Even AnalysisIV. Understanding Marginal AnalysisV. Step 4: Choose a Pricing Strategy- Various ApproachesVI. Step 5: Set the list or quoted priceOutline of Current Lecture I. Step 6: Price Adjustment StrategiesII. Other ConsiderationsIII. Ch-15: Key TermsIV. Example: The Automotive Supply ChainV. Why Have IntermediariesVI. Consumer Channels- LevelsCurrent LectureI. Step 6: Price Adjustment Strategies- Discounts- Cash (pay bill quickly), Quantity (cumulative or non) Seasonal, Trade or functional (offered to members of the trade. Selling, credit, and storage)- Allowances- Manufacturer compensates retailer for helping to promote product (attractive product display in retail location)These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.- Geographical Pricing- Based on location of the customer- F.O.B Pricing (Free on Board Pricing): Seller pays to load product and buyer pays to ship.- Uniform Delivered Pricing: Everyone pays same amount to ship product. Example: DVD club $4.99- Zone Pricing: Everyone pays same amount within the same zone but the further the distance from seller, the more you pay. Example: USPS- Basing Point Pricing: Used in industrial sector. Determines the price basedon certain points not actually the distance from the seller.- Freight Absorption Pricing: Seller takes on all or part of the cost of shipping the product. Example: High ticket items such as Jewlery.II. Other ConsiderationsLegal and Ethical Issues in Pricing1. Price Fixing- 2 or more companies that conspire to set prices, can be 2 companiesat the same level of the distribution level (2 Manufacturer) or 2 companies at different levels of the distribution channel (Manufacturer and Retailer)2. Price Discrimination- Practice of charging different prices to different customers of for like goods of the same quality. Services do not apply. This action has to lessen competition or result in a monopoly.3. Bait-and-Switch- Company advertises a very low price for a product (bait) to get you into store but no intention of selling you the product. Instead they encourageyou to purchase a higher priced item (switch).4. Predatory Pricing- A Company sets a very low price for the purpose of driving competitors out of business then increase price when successful.III. Ch-15: Key Terms- The Difference between:- Distribution/Marketing Channel: Individuals or firms involved in making a good or service available for use or consumption to the end user.- Direct Distribution Channel: Producer and consumer – no in-between- Indirect: One or more intermediaries - between - Ex.) Wholesalers: Purchase finished products from manufacturer and resell toretailer- Retailers: Physical firms, online or both- Agents and Brokers: Facilitate transactions between buyer and seller. Agents can represent buyer or seller.- Brokers represent neither. Example: Real Estate Brokers- Supply Chain: Broader concept which includes all of the firms that supply the raw materials, component parts, supplies and those firms that facilitate the movement of the product to the end user.IV. Example: The Automotive Supply ChainV. Why Have IntermediariesBenefits of Intermediaries: Example- Sears1. Transactional Functions- This applies to some intermediaries where they take on the risk associated with selling the product.2. Logistical Functions- They aid in creating product assortment or a variety of goods in 1 location.3. Facilitation Functions- They assist producers in making goods more attractive. Example: Extending credit, assigning quality grades- Disintermediation: Removal of intermediaries in the distribution channel. Thus did not happen (Internet)VI. Consumer Channels- Levels*3rd is most common B2C Dist. Channel. *4th Agent is used when trying to facilitate many transactions between buyers and
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