Information for last midterm slides 213 253 Questions Retailing class notes only 9 Price Ch 11 and notes 9 Global Ch 19 and notes 4 Market Research Ch 4 and notes 4 Videos 4 Chapter 11 Pricing Strategies New product pricing strategies Market skimming pricing price skimming price the item high so there is a high profit margin and you dont have to worry about volume of sales the product has to be cool enough to support this tactic and low levels of production must be attainable ex iPhone Market penetration pricing set a low initial price to penetrate as many as possible must be in a highly price sensitive market high sales allows them to lower costs even further Product Mix Pricing Strategies you want to maximize the total profits of the products Product line pricing setting prices across an entire product line ex Rossignol skis have a big range in price optional product pricing pricing optional or by accessory products sold with the main products ex is a nav system in a car or premium audio captive product pricing pricing products that must be used with the main product ex would be razor blades printer cartridges so you set the price of the main product low this is why theres 30 printers and the ink costs just as much by product pricing pricing low value products to get rid of them make money ex turning animal shit into money at the zoo product bundle pricing pricing bundles of products sold together ex fast food places haivng combos or time warner bundles Price Adjustment strategies Discount and allowance pricing reducing prices to reward customer responses such as volume purchases paying early or promoting the product ex is companies doing the 2 10 net 30 payment due in 20 days but you get 2 off if you pay in 10 days allowance example is trading your car in or video game in and getting store credit Segmented pricing adjusting prices to allow for differences in customers products and locations ex for customers is senior prices ex for products is flying first class ex of location is college charging instate vs out of state tuition Psychological pricing adjusting for prices for psychological effect the idea that higher price means higher quality also adding reference pricing ex having something priced at 1 99 Promotional pricing temporarily reducing prices to spur short run sales goal is to create urgency ex limited time offers geographical pricing adjusting prices to account for the geographic location of customers one type is FOB origin pricing the customer is charged the same price no matter where they are located but they pay shipping thought to be the fairest way Uniform delivery pricing opposite of FOB a uniform delivery price is charged it would be the composite average price to ship anywhere Zone pricing falls in between the 2 the company would set up geographical zones and the price gets higher the further away a zone is Point based pick a random city as your point you ship from freight absorption pricing the seller absorbs all the costs of shipping dynamic pricing adjusting prices continually to meet the characteristics and needs of individual customers and situations ex airlines changing prices based on projected demand websites looking at your search history ex you buy a first class plane ticket to london another website you visit after that may charge you a higher price this is legal as long as it does not discriminate based on age sex location online auctions fall under this category eBay international pricing adjusting pricing for international markets import tariffs etc ex a big mac isnt the same price everywhere Price Changes Price increases major cause is inflation profit margins get slim so they pass it along to the consumer another factor is over demand consumer reaction brand name is closely tied to price Rolex example competitor reactions they may match you How should a firm respond to another firm s price change decide if you want to lower your profit margin maybe launch a new brand item Public Policy and Pricing there are laws about pricing price fixing is illegal competitors must set prices without talking to one another predatory pricing is illegal Chapter 19 the Global Marketplace Global marketing today a global firm is one that by operating in more than one nations gains advantages Looking at the global marketing environment governments may charge tariffs the company does not decide on tariffs An economic community is a group of nations organized to work toward common goals in the regulation of international trade like free trade zones Exporting is entering a foreign market by selling goods produced in the company s home country Economic environment there are 2 big factors an international marketer must consider Industrial structure and income distribution 4 types of industrial structure are Subsistence economies African countries they barter Raw material exporting economies countries that survive bc they have one lucky mineral found in their country so they export that but they don t have much else going for them Emerging industrializing economies a country experiencing fast growth in manufacturing which leads to overall economic growth Industrial economies major exporters of manufactured goods the US Government regulations can play a role exchange rates for currencies can make countries worried about making international deals Cultural environment Every different culture has it s own norms etc this needs to be taken into account with global marketing plans Deciding how to enter a market Exporting the easiest and quickest start they don t need to change their products they just export their surpluses Joint venturing joining foreign companies there are 4 types Licensing for a fee royalty payments someone else can make the product contract manufacturing you contract with places to make all your stuff loss of control and profits management contracting foreign company provides the capital but a domestic firm manages it and joint ownership self explanatory Direct Investment Building actual facilities in the other countries Deciding on the Global Marketing Program one end of the spectrum is standardized global marketing a standard approach used everywhere the other end is the use adapted global marketing changing your products based on where you sell them Successful companies use a fusion of the 2 and fall somewhere in the middle of spectrum PRODUCT ways to get a product successful across the world Straight line product extension keeping the product the
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