MKTG 311 1st Edition Lecture 20 Outline of Last Lecture I Elastic Inelastic Demand Curves II Step 3 Determining Costs III Understanding Break Even Analysis IV Understanding Marginal Analysis V Step 4 Choose a Pricing Strategy Various Approaches VI Step 5 Set the list or quoted price Outline of Current Lecture I Step 6 Price Adjustment Strategies II Other Considerations III Ch 15 Key Terms IV Example The Automotive Supply Chain V Why Have Intermediaries VI Consumer Channels Levels Current Lecture I 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 II 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 based on 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 Other Considerations Legal and Ethical Issues in Pricing 1 Price Fixing 2 or more companies that conspire to set prices can be 2 companies at 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 encourage you 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 to retailer 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 Chain V Why Have Intermediaries Benefits of Intermediaries Example Sears 1 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 VI Disintermediation Removal of intermediaries in the distribution channel Thus did not happen Internet Consumer Channels Levels 3rd is most common B2C Dist Channel 4th Agent is used when trying to facilitate many transactions between buyers and sellers