Business Essentials Tenth Canadian Edition Chapter 13 PDF

Business Essentials Tenth Canadian Edition Chapter 13 Pricing, Promoting, and Distributing Products Copyright © 2023 Pearson Canada Inc. 13 - 1 Learning...

Business Essentials Tenth Canadian Edition Chapter 13 Pricing, Promoting, and Distributing Products Copyright © 2023 Pearson Canada Inc. 13 - 1 Learning Objectives (1 of 2) Identify the various pricing objectives that govern pricing decisions and describe the price-setting tools used in making these decisions. Discuss pricing strategies that can be used for different competitive situations and identify the pricing tactics that can be used for setting prices. Identify the important objectives of promotion and discuss the considerations involved in selecting a promotional mix. Define the role of advertising and describe the key advertising media. Outline the tasks involved in personal selling, describe the various types of sales promotions, and distinguish between publicity and public relations. Explain the meaning of the distribution mix and identify the different channels of distribution. Describe the role of intermediaries. Explain the functions of wholesalers and identify the types of retailers and e-intermediaries. Describe the physical distribution process. Copyright © 2023 Pearson Canada Inc. 13 - 2 Learning Objectives (2 of 2) BRIAN SNYDER/REUTERS/Alamy Stock Photo Copyright © 2023 Pearson Canada Inc. 13 - 3 Pricing Objectives and Tools (L O 13.1) (1 of 3) Pricing to Meet Business Objectives Profit-maximizing – pricing to maximize profit (bottom line) – may sacrifice unit sales to maximize profit Market-share – pricing to gain the greatest possible market percentage Copyright © 2023 Pearson Canada Inc. 13 - 4 Pricing Objectives and Tools (L O 13.1) (2 of 3) Price-Setting Tools Cost-oriented pricing – considers the cost of the product and adds a “markup” to arrive at a final cost ▪ a light bulb costs $0.45 to the retailer ▪ the retailer sells it for $0.75 (a markup of $0.30) Copyright © 2023 Pearson Canada Inc. 13 - 5 Pricing Objectives and Tools (L O 13.1) (3 of 3) Break-Even Analysis: Cost–Volume–Profit Relationships Figure 13.1 Breakeven analysis Copyright © 2023 Pearson Canada Inc. 13 - 6 Pricing Strategies and Tactics (L O 13.2) (1 of 2) Pricing Strategy – the pricing plan based on the marketing mix Pricing Existing Products – above, below, or near market prices Fixed v s. Dynamic Pricing for Online Business Pricing New Products Some celebrities and other high-income consumers are willing to pay thousands of dollars for designer products like – skim vs. penetration Louis Vuitton purses and handbags. Ray Tamarra/Everett Collection Inc/Alamy Stock Photo Copyright © 2023 Pearson Canada Inc. 13 - 7 Pricing Strategies and Tactics (L O 13.2) (2 of 2) Pricing Tactics Price lining Psychological pricing – Odd–even pricing Discounting – price reduction offered as an incentive to Firms often use psychological pricing tactics to entice customers to buy their products. For instance, this candy store purchase is promoting various products that are priced at one cent below the next dollar amount. The idea is that people may see a price of $4.99 to be meaningfully lower than a price of $5. Keith Levit/Alamy Stock Photo Copyright © 2023 Pearson Canada Inc. 13 - 8 Promoting Products and Services (L O 13.3) (1 of 3) Promotion – techniques to communicate information about products. Key objectives: ▪ increase product awareness & knowledge ▪ increase product Beats by Dre was built through a non-traditional approach; the message and reputation was spread through social preference media buzz, YouTube videos, and more traditional techniques such as cinema ads. A few years ago, Apple ▪ help position products bought the company for more than $3 billion. and add value SK D/Alamy Stock Photo ▪ help control/stabilize sales volume Copyright © 2023 Pearson Canada Inc. 13 - 9 Promoting Products and Services (L O 13.3) (2 of 3) Promotion Strategies Push strategy – firm promotes aggressively to intermediaries Pull strategy – firm promotes directly to consumers, who demand the product from intermediaries Many firms use a combination of both strategies Copyright © 2023 Pearson Canada Inc. 13 - 10 Promoting Products and Services (L O 13.3) (3 of 3) Copyright © 2023 Pearson Canada Inc. 13 - 11 Advertising Promotions (L O 13.4) (1 of 4) television radio newspapers outdoor magazines direct mail Internet mobile WestJet has been able to maximize the power of online campaigns by using various forms of online advertising to make an impact. word-of-mouth Pearson Canada Copyright © 2023 Pearson Canada Inc. 13 - 12 Advertising Promotions (L O 13.4) (2 of 4) Table 13.1 Total media usage, strengths, and weaknesses Advertising Medium Total $ Spent and Strengths Weaknesses Percentage of Total Advertising9 Online (includes search, $5.9 billion (*including Targeted audience Some forms are annoying for display, classifieds, email, mobile) Measurable success consumers video, and video gaming) Easy to ignore Mobile Accessibility Sometimes difficult to read BLANK Relative cost Lack of standardization Ability to personalize Growing importance Television $2.05 billion Program demographics Most expensive Ads allow for customized ads increasingly skipped (DVR s) Large audience Shift to online “binge Combines sight, sound, watching” (e.g., Netflix) and motion Radio $890.9 million Inexpensive Large Easy to ignore Message audience Fairly easy to quickly disappears identify segments Copyright © 2023 Pearson Canada Inc. 13 - 13 Advertising Promotions (L O 13.4) (3 of 4) Table 13.1 Total media usage, strengths, and weaknesses Advertising Medium Total $ Spent and Strengths Weaknesses Percentage of Total Advertising9 Newspapers $726.7 million Broad coverage Quickly discarded Quality Ads can be changed daily of ad images is limited Larger percentage of readers have high income and are educated Outdoor $368.5 million Inexpensive Difficult to Presents limited ignore Repeat exposure information Little control over audience Magazines $221 million Often reread and shared Require advanced planning Fairly easy to identify Little control over ad segments placement Copyright © 2023 Pearson Canada Inc. 13 - 14 Advertising Promotions (L O 13.4) (4 of 4) Online: The Power of Consumer Engagement Companies are encouraging consumers to get involved and influence marketing decisions. – Starbucks ▪ name a flavour – Crayola ▪ new colour ideas – Frito Lay ▪ new flavour ideas Yuya is a Mexican vlogger who provides beauty tips to more and ad themes than 21 million subscribers to her YouTube channel. She has amassed more than two billion views. Clasos/LatinContent Editorial/Getty Images Copyright © 2023 Pearson Canada Inc. 13 - 15 Personal Selling (L O 13.5) Personal Selling – the most expensive form of promotion per contact – involves personal interaction – telemarketing is becoming more Buying a home is a major decision, and while direct selling popular due to lower has grown over the years, the personal selling function provided by a real estate agent is a key factor in most cost transactions. D. Hurst/Alamy Stock Photo Copyright © 2023 Pearson Canada Inc. 13 - 16 Sales Promotions (L O 13.5) Sales Promotions – short-term promotional activities designed to stimulate buying or cooperation from distributors ▪ Coupons ▪ Point-of-purchase (PO P) displays ▪ Purchase incentives/premiums ▪ Contests and sweepstakes The Consumer Electronic show (CE S) is the top trade ▪ Trade shows show for companies displaying their new innovations. More than 170,000 people attend it each year. UzFoto/Shutterstock Copyright © 2023 Pearson Canada Inc. 13 - 17 Publicity and Public Relations (L O 13.5) Publicity – information made available to consumers via media outlets – free, but the company has no control over it Public Relations – company-influenced information aimed at building goodwill or dealing with an unfavourable event ▪ public service announcements Copyright © 2023 Pearson Canada Inc. 13 - 18 The Distribution Mix (L O 13.6) (1 of 4) The combination of distribution channels used to get products to end-users Intermediary – an entity other than the producer who distributes the product Wholesaler – an intermediary who sells products to other businesses for resale Retailer – an intermediary who sells products directly to consumers Copyright © 2023 Pearson Canada Inc. 13 - 19 The Distribution Mix (L O 13.6) (2 of 4) Distribution channel – the path a product follows to the end user Figure 13.2 Channels of Distribution Copyright © 2023 Pearson Canada Inc. 13 - 20 The Distribution Mix (L O 13.6) (3 of 4) Sales Agent – independent intermediary – deals in related product lines of a few producers – forms long-term relationships Broker – independent intermediary – matches numerous sellers and buyers as needed Copyright © 2023 Pearson Canada Inc. 13 - 21 The Distribution Mix (L O 13.6) (4 of 4) Distribution Strategies Intensive – use as many channels and members as possible Selective – use of a limited number of outlets Exclusive – use of only one intermediary in a market area Channel Conflict – when members of a distribution channel disagree over the roles they should play and/or the rewards they should receive Copyright © 2023 Pearson Canada Inc. 13 - 22 Retailing (L O 13.7) (1 of 3) Types of Retail Outlets Product Line Retailers – Department stores – Supermarkets – Specialty stores Andrey_Popov/Shutterstock – Category killers Bargain Retailers – Discount houses – Factory outlets – Wholesale clubs Convenience Stores Andrew Rubtsov/Alamy Stock Photo Copyright © 2023 Pearson Canada Inc. 13 - 23 Retailing (L O 13.7) (2 of 3) Non-Store Retailing Direct-Response – Mail-Order – Telemarketing – Direct Selling – Video/TV Copyright © 2023 Pearson Canada Inc. 13 - 24 Retailing (L O 13.7) (3 of 3) E-intermediaries – internet-based channel members who perform one or both of two functions: 1) collect information about sellers and present it to consumers 2) they help deliver internet products to buyers Copyright © 2023 Pearson Canada Inc. 13 - 25 Physical Distribution (L O 13.8) (1 of 3) Physical Distribution – activities needed to move a product efficiently from manufacturer to consumer Warehousing Operations – the storing of goods through the distribution process Copyright © 2023 Pearson Canada Inc. 13 - 26 Physical Distribution (L O 13.8) (2 of 3) Transportation Modes Digital Transmission Trucks Planes Railroads Water carriers Pipelines The Weeknd performed live at the 2021 Super Bowl halftime show. BRIAN SNYDER/REUTERS/Alamy Stock Photo Copyright © 2023 Pearson Canada Inc. 13 - 27 Physical Distribution (L O 13.8) (3 of 3) Distribution as a Marketing Strategy – increasingly important tool to gain a competitive advantage – companies that have leveraged distribution advantages include ▪ Walmart ▪ Zara ▪ Dell Copyright © 2023 Pearson Canada Inc. 13 - 28 Quick-Check Questions (1 of 5) 1) ________ provides an assessment of how many units must be sold at a given price before the company begins to make a profit. A) Cost-benefit analysis B) Competitive pricing analysis C) Cost-based pricing analysis D) Break-even analysis Copyright © 2023 Pearson Canada Inc. 13 - 29 Quick-Check Answer (1 of 5) 1) ________ provides an assessment of how many units must be sold at a given price before the company begins to make a profit. A) Cost-benefit analysis B) Competitive pricing analysis C) Cost-based pricing analysis D) Break-even analysis Copyright © 2023 Pearson Canada Inc. 13 - 30 Quick-Check Questions (2 of 5) 2) Lays Chips is about to introduce a new brand of low fat, low-sodium potato chips to the market. They wish to ensure as many customers try them as possible. What pricing strategy should they use? A) price skimming B) price lining C) market price D) penetration pricing Copyright © 2023 Pearson Canada Inc. 13 - 31 Quick-Check Answer (2 of 5) 2) Lays Chips is about to introduce a new brand of low fat, low-sodium potato chips to the market. They wish to ensure as many customers try them as possible. What pricing strategy should they use? A) price skimming B) price lining C) market price D) penetration pricing Copyright © 2023 Pearson Canada Inc. 13 - 32 Quick-Check Questions (3 of 5) 3) Many pay-per-view events advertise on free television and ask interested viewers to “contact their cable provider.” This is an example of a ___________. A) pull strategy B) push strategy C) promotional mix D) direct marketing strategy Copyright © 2023 Pearson Canada Inc. 13 - 33 Quick-Check Answer (3 of 5) 3) Many pay-per-view events advertise on free television and ask interested viewers to “contact their cable provider.” This is an example of a ___________. A) pull strategy B) push strategy C) promotional mix D) direct marketing strategy Copyright © 2023 Pearson Canada Inc. 13 - 34 Quick-Check Questions (4 of 5) 4) When products are expensive and complicated, the most effective promotional tool is likely ____________. A) publicity B) infomercials C) magazine advertising D) personal selling Copyright © 2023 Pearson Canada Inc. 13 - 35 Quick-Check Answer (4 of 5) 4) When products are expensive and complicated, the most effective promotional tool is likely ____________. A) publicity B) infomercials C) magazine advertising D) personal selling Copyright © 2023 Pearson Canada Inc. 13 - 36 Quick-Check Questions (5 of 5) 5) Rolex watches uses _______ distribution, while Coca Cola uses a(n) ________ distribution strategy. A) exclusive; intensive B) intensive; exclusive C) selective; intensive D) intensive; selective Copyright © 2023 Pearson Canada Inc. 13 - 37 Quick-Check Answer (5 of 5) 5) Rolex watches uses _______ distribution, while Coca Cola uses a(n) ________ distribution strategy. A) exclusive; intensive B) intensive; exclusive C) selective; intensive D) intensive; selective Copyright © 2023 Pearson Canada Inc. 13 - 38