Marketing Chapter 13: Pricing and Distribution

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Questions and Answers

What does pricing strategy refer to?

The approach taken by competitors in the market

The method of calculating profit margins

The pricing plan based on the marketing mix (correct)

The plan based on customer feedback

What is a primary strength of outdoor advertising?

Allows for detailed information presentation

Can be quickly updated for current events

Offers repeat exposure to the audience (correct)

Targets specific demographic segments

Which option describes psychological pricing?

Dynamic pricing that changes based on demand

Setting prices based on competitor analysis

Pricing products high to create a perception of quality

Odd–even pricing to make prices appear lower (correct)

What is the primary purpose of promotional techniques?

To communicate information about products Signup and view all the answers

Which advertising medium generally requires advanced planning?

Magazines Signup and view all the answers

What does the term 'price lining' refer to?

Setting different prices for different variations of a product Signup and view all the answers

What is one major weakness of newspapers as an advertising medium?

Ads are often quickly discarded Signup and view all the answers

What is a characteristic of fixed pricing?

Prices remain constant over a period Signup and view all the answers

Which of the following best describes personal selling?

Characterized by direct customer engagement Signup and view all the answers

Which pricing tactic uses discounts as an incentive to purchase?

Discounting Signup and view all the answers

Which factor is increasing the popularity of telemarketing?

Lower cost compared to other selling methods Signup and view all the answers

What is the goal of using a penetration pricing strategy?

To attract a large number of customers by offering low prices Signup and view all the answers

Which consumer engagement strategy is NOT mentioned in the content?

Choosing a packaging design Signup and view all the answers

What characterizes an intensive distribution strategy?

Employ as many channels and members as possible Signup and view all the answers

Which of the following is NOT a key objective of promotion?

Create product scarcity Signup and view all the answers

What is a significant disadvantage of magazine advertising?

Low control over ad placement Signup and view all the answers

What is channel conflict?

Disagreement among distribution channel members over roles or rewards Signup and view all the answers

What is the total spending amount for outdoor advertising?

$368.5 million Signup and view all the answers

Which type of retailer is categorized as a bargain retailer?

Factory Outlet Signup and view all the answers

Which of the following is NOT a type of non-store retailing?

Supermarket Signup and view all the answers

What are e-intermediaries primarily responsible for?

Collecting information and delivering products Signup and view all the answers

Which transportation mode is NOT typically used in physical distribution?

Air Travel Signup and view all the answers

Which of the following companies effectively leverages distribution as a marketing strategy?

Walmart Signup and view all the answers

What does warehousing operations involve in the context of distribution?

The storing of goods during the distribution process Signup and view all the answers

What is the primary goal of profit-maximizing pricing?

To maximize profit Signup and view all the answers

Which of the following best describes cost-oriented pricing?

Pricing that adds a markup to the cost of the product Signup and view all the answers

What is the purpose of break-even analysis in pricing strategy?

To determine the minimum sales needed to cover costs Signup and view all the answers

Which pricing objective focuses on gaining the largest possible percentage of market share?

Market-share Signup and view all the answers

What role do intermediaries play in the distribution mix?

They act as a link between producers and consumers. Signup and view all the answers

Which of the following is a characteristic of personal selling?

It involves direct interaction between a salesperson and a customer. Signup and view all the answers

What is a key distinction between publicity and public relations?

Publicity is paid advertising; public relations is unpaid. Signup and view all the answers

Which pricing tactic would likely be used to discourage new competition in the market?

Penetration pricing Signup and view all the answers

Which analysis helps determine the number of units that must be sold to reach profitability?

Break-even analysis Signup and view all the answers

What pricing strategy should Lays Chips use to encourage maximum customer trial for their new product?

Penetration pricing Signup and view all the answers

The promotional strategy used when pay-per-view events invite viewers to contact their cable provider is known as what?

Pull strategy Signup and view all the answers

Which promotional tool is usually the most effective for expensive and complex products?

Personal selling Signup and view all the answers

What is the main goal of a cost-benefit analysis in pricing?

To compare costs against benefits provided Signup and view all the answers

What is the primary focus of a push strategy in promotion?

Promoting to intermediaries Signup and view all the answers

Which pricing strategy focuses on recovering high costs quickly by setting higher initial prices?

Price skimming Signup and view all the answers

Which of the following is an example of a pull strategy?

Aggressively advertising on social media Signup and view all the answers

In a push strategy, which of the following actions is most likely to be used?

Offering coupons or discounts to retailers Signup and view all the answers

Which advertising medium allows for maximum targeting and personalization?

Online Signup and view all the answers

Which of the following strategies is NOT commonly used in initial product launch scenarios?

Price lining Signup and view all the answers

What is a significant drawback of online advertising?

Some forms are annoying for consumers Signup and view all the answers

Which of the following statements about mobile advertising is true?

There is a growing importance in the market. Signup and view all the answers

What major disadvantage do television ads face due to modern viewing habits?

Ads being skipped or ignored Signup and view all the answers

Which advertising medium is noted for having the ability to quickly identify audience segments?

Radio Signup and view all the answers

What is a common issue faced by mobile advertisements?

Difficulty in reading content Signup and view all the answers

Study Notes

Chapter 13: Pricing, Promoting, and Distributing Products

This chapter covers pricing objectives, tools, strategies, and tactics for product marketing. It also looks at promotion, distribution, and ultimately how companies sell products.

Learning Objectives

Identify pricing objectives and tools used in decision-making.
Determine pricing strategies for various competitive situations.
Understand the importance of promotion and selecting a promotional mix.
Outline the key advertising media and the functions of personal selling.
Define the distribution mix and identify different channels of distribution.
Describe the role of intermediaries (wholesalers, retailers, e-intermediaries).
Explain the physical distribution process.

Pricing Objectives and Tools

Pricing to Meet Business Objectives:
- Profit-maximizing: Pricing to maximize profit (bottom line); potentially sacrificing unit sales.
- Market-share: Pricing to gain the largest possible market share.
Price-Setting Tools:
- Cost-oriented pricing: Considering product cost and adding a markup (e.g., a light bulb costs $0.45; retailer sells it for $0.75).
- Markup Percentage: Formula to calculate markup based on sales price.
Break-Even Analysis:
- Determining the number of units needed to sell to cover all fixed costs and start making a profit. Using figures like total revenue, total cost, fixed costs, and unit sales to arrive at the break-even point.

Pricing Strategies and Tactics

Pricing Strategy: The overall pricing plan for a product, based on the marketing mix.
Pricing Existing Products: Setting prices above, below, or near market price.
Fixed vs. Dynamic Pricing for Online Business: Understanding the difference in pricing models for online businesses.
Pricing New Products: Skimming or penetration pricing strategies to enter new markets and gain traction.
Skimming: Charging a higher price initially to recover development costs and to be among the first to introduce a product.
Penetration: Lower initial price to quickly gain market share.
Pricing Tactics: Pricing techniques to entice customers:
- Price lining: A range of prices for different products, similar to product bundles or lines, aimed at simplifying the customer's choice.
- Psychological pricing: Using odd-even pricing (e.g. $4.99 instead of $5.00.) implying a better value.
- Discounting: Offering price reductions as an incentive for customers to purchase products.

Promoting Products and Services

Promotion: The process of communicating information about a product to consumers.
Promotion Strategies:
- Push strategy: Promoting products aggressively to intermediaries.
- Pull strategy: Promoting directly to consumers to demand the product from intermediaries.
- Promotional mix: Includes advertising, personal selling, sales promotions, publicity, and public relations to achieve marketing objectives.
Advertising Promotions: Different types of advertising techniques and methods.
- Television, Radio, Newspapers, Outdoor advertising, Magazines, Direct Mail, Internet, Mobile, and Word-of-Mouth.
- Companies use a mix of these techniques to maximize the impact and appeal of the product and service.

Personal Selling, Sales Promotions, Publicity, Public Relations

Personal selling: Expensive promotion method emphasizing personal interaction.
Telemarketing: Becoming more popular due to cost.
Sales Promotions: Short-term incentives to stimulate buying, like coupons, contests, or trade shows.
Publicity: Information released without company control.
Public relations: Company-influenced information to build goodwill or address negative events.

The Distribution Mix

Combination of channels used to get products to consumers.
Intermediary: Non-producing entity distributing the product.
Wholesaler: Distribution intermediary selling to businesses for resale.
Retailer: Selling directly to end-users/consumers.
Distribution Strategies:
- Intensive: Maximize distribution channels.
- Selective: Limit the number of distribution channels.
- Exclusive: Limited distribution to a single outlet.
Channel Conflict: Disagreements among distribution channel members.

Retailing

Types of Retail Outlets:
- Product line retailers (e.g., department stores, supermarkets, specialty stores)
- Bargain retailers (e.g., discount houses, factory outlets, wholesale clubs)
- Convenience stores.
Non-Store Retailing (e.g., direct-response, mail-order, telemarketing, video/TV): Non-store retail channels.
E-intermediaries: Internet-based channel members for collection of information and facilitating purchases.

Physical Distribution

Physical Distribution: Activities to efficiently move products from manufacturer to end-user.
Warehousing Operations: Storage of goods during distribution.
Transportation Modes: Trucks, planes, railroads, water carriers, pipelines.
Distribution as a Marketing Strategy: Distribution is a major factor in achieving a competitive advantage. Companies like Walmart, Zara, and Dell have utilized effective distribution strategies.

Quick-Check Questions (Examples)

Break-even analysis: A method for determining how many units must be sold at a given price to break even based on cost factors.
Pricing strategy for new product launch: Penetration pricing is appropriate for a new product with the goal of quickly increasing market share.
Pay-per-view advertising: This is an example of a direct marketing strategy.
Effective tool for expensive/complicated products: Personal selling is the most effective promotional tool for complex or expensive products.
Distribution strategies for Rolex vs. Coca-Cola: Rolex uses exclusive distribution, and Coca-Cola uses intensive distribution.

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Description

This quiz focuses on Chapter 13, which delves into the essential aspects of pricing, promotion, and distribution of products. You will explore various pricing strategies, promotional mixes, and distribution channels used by companies to enhance sales and market presence. Prepare to assess your understanding of pricing objectives and the roles of intermediaries in the marketing process.