Chapters 14-19 Pricing Strategies

• Exam 3 covers chapters 14-19
• The last required exam is multiple-choice only and open all-day Tuesday, April 22
• An optional final exam opens Monday, May 5, at 10:30 AM and closes Wednesday, May 8, at 10:30 AM

Chapter 14: Pricing

• Value is the ratio of perceived benefits to price
• Trade promotions are excluded from the exam

Pricing Approaches

• Demand-oriented approaches include skimming, penetration, prestige, price lining, odd-even, target, bundle, and yield management pricing.
• Cost-oriented approaches include standard markup, cost-plus, and experience curve pricing.
• Profit-oriented approaches include target profit, target return on sales, and target return on investment.
• Competition-oriented approaches include customary, above-, at-, or below-market, and loss leader pricing.

Price Skimming

• Price skimming involves setting high prices
• Price skimming is successful when there is inelastic demand and unique advantages or superior features
• Situations like legal protection of product, a technological breakthrough, and encouraging competitors to enter can allow skimming to thrive

Chapter 15: Marketing Channels

• A marketing channel refers to the individuals and firms involved in the distribution process to consumers or individual users

Channel Intermediaries

• Middleman: Any intermediary between manufacturer and end-user markets.
• Agent or broker: Any intermediary with legal authority to act on behalf of the manufacturer; they don't take title.
• Wholesaler: An intermediary who sells to other intermediaries, usually retailers
• Retailer: An intermediary who sells to consumers.
• Distributor: Intermediaries who perform distribution functions like selling and maintaining inventories.
• Dealer: Another term that can mean the same as distributor, retailer, wholesaler, and so forth.

The Value of an Intermediary

• Time Utility: Having a service available for a long duration
• Place Utility: Having a convenient location
• Form Utility: Coca Cola and Pepsi sell concentrate, their licensed bottlers sell the consumer goods
• Possession Utility: Having agents help buyers take possession

Multichannel Marketing

• Multichannel Retailer: Uses multiple channels to reach multiple segments
• Pro: Increased sales/market coverage
• Con: Potential for conflict.
• Profitability is an important consideration when choosing channels

Channel Strategy Decisions

• Factors affecting channel choice include target market coverage, consumer wants, and profitability
• Types of distribution include intensive, selective, and exclusive distribution

Channel Strategies

• Traditional Channel: The producer, wholesaler, retailer, and consumer are seperate
• Vertical Marketing System: Should know what it is

Channel Relationships

• Vertical Conflict: Members of different levels disagree
• Disintermediation: A vertical conflict where some intermediary is removed
• Horizontal Conflict: Members at the same level disagree
• Increased distribution in a geographic area

Chapter 16: Retailing

• Research and watch chapter videos for retail trends

Retailer Depth vs Breadth

• Product Line Depth: A large assortment within one main product category
• Product Line Breadth: Lots of different product categories in the same store

Retailing Strategy

• The retailing mix consists of product, price, place, and promotion

Store Performance Metrics

• Calculate Sales per Square Foot
• Calculate the Same Store Growth (%)

Chapter 17: IMC

• Integrated Marketing Communications (IMC): Communications that coordinate all promotional activities to provide a consistent message

The Promotional Mix

• Advertising
• Public Relations (the most credible one in consumers' minds)
• Sales Promotions
• Direct Marketing
• Personal Selling

Promotional Element Comparison

• Advertising: Efficient, high cost, hard to receive feedback
• Personal Selling: Persuasive, immediate feedback, expensive
• Public Relations: Credible source, difficult to get media cooperation
• Sales Promotion: Effective in a short run, can lead to promotion wars
• Direct Marketing: Facilitates relationships, Declining customer response

Promotional Strategies

• Push Strategy: Promotional mix directed to intermediaries such as car dealerships
• Pull Strategy: Promotional mix directed at final consumers

Chapter 18: Advertising and Sales Promos

• Advertising: Any paid form of nonpersonal communication about an organization, product, service, or idea by an identified sponsor

Types of Advertisements

• Product Advertisements
• Pioneering (or informational) – new products
• Competitive (or persuasive), also comparative
  • Examples: Kindle vs iPad
• Reminder (reinforcement) – established brands

Appeals in Advertising

• Rational
• Emotional
• Moral
• Fear appeals (avoid a negative experience-e.g. insurance companies)
• Sex appeals (a popular choice, however, research shows they don't seem to affect recall, recognition, or purchase intent)
• Humor appeals (effectiveness may vary across cultures; may come across as offensive)
• Celebrity spokesperson (fit with product important/is the endorser believable or an expert)

Media Alternatives (Advantages & Disadvantages)

• Television: Reaches a large audience, high cost to prepare and run ads
• Radio: Low cost can target specific local audiences, no visual element
• Magazines: Can target specific audiences, long time is needed to place ad
• Newspapers: Excellent coverage of local markets, competes for attention with other newspaper features
• Internet: Video and audio capabilities, animation and interactivity require large files and more time to load
• Outdoor: Low cost, local market focus, message must be short and simple
• Direct mail: High selectivity, poor image

Chapter 19: Social Media

• Textbook reading on social media effectiveness
• Concentrate on the material in the powerpoint slides
• Focus on: UGC (User-generated content), differences and similarities between social media and traditional media, and Social Media Effectiveness Metrics

Differences Between Social Media & Traditional Media

• Similarities: Reach (large and niche audiences)
• Differences: Expense and access, social media can be cheaply produced unlike TV ads, time to deliver, permanence

Social Media Effectiveness - Metrics

• Measures linked to inputs (costs)
• Cost per thousand (e.g. will pay $0.50 for every 1000 times the ad loads, up to $100 a month)
• Cost per click (e.g. will pay you X for every visitor who clicks on the ad and goes from your website to mine)
• Cost per action (e.g. will pay you X for every purchase that originates from an ad on your site)
• Measures linked to outputs (revenues)
• Fans/followers
• Visitors
• Share of voice (brand's share of all online clatter)
• Average page views
• Fan source
• Interaction rate (# of people interacting with a post)
• Click-through rate (Percent visitors who have clicked on a link on the page)