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pricing objectives
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profit, sales, market share, comparative effect, customer satisfaction, image enhancement
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factors in price setting
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costs, demands, revenue, pricing environment
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steps to estimate demand
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number of buyers x avg amt buyer is likely to spend, est mkt share
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price elasticity formula
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% change in quantity demanded/ % change in price
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cross elasticity
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subs and complements
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variable costs
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per-unit costs of production
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fixed costs
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costs of production that doesn't change
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break-even analysis
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# of units that a firm must produce and sell @ given price to cover costs
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break-even point
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total revenue & total profit are equal (beyond: firm makes profit, below: firm makes loss)
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BEP formula (units)
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total fixed costs/ contribution per unit to fixed costs
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BEP forumla (dollars)
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total fixed costs/ (1-(variable cost per unit/price))
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gross margin
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markup amt added to cost of product to cover fixed costs and leave amt for profit
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retailer margin
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margin added by retailer
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wholesaler margin
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margin added by wholesaler
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target costing
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firms id qualitity, functionality, cost before production
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yield management
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charging diff prices to diff cust to manage capacity & max revenues (hotels)
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value pricing/EDLP
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setting prices to provided ult value to cust
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high/low pricing (promo)
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setting prices at list price but holdiing promos frequently
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skimming price
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high premium price for new product
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penetration pricing
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new product at low price to encourage more cust
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trial pricing
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pricing new product low for limited period of time
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surge pricing
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price rises as demand rises and vice versa
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bundling
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selling 2/+ products as single pkg
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captive pricing
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one item is priced low and other is priced high (printer & ink)
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odd-even pricing
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1.99 works better than 2.00 to make sales
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price lining
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setting a limited number of diff specific prices (price points) for items in a product line
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prestige/premium pricing
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keeping prices artificially high to maintain image
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breaking bulk
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dividing larger quantities of goods into smaller lots to meet needs of buyers
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risk-taking functions
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chance retailers take on loss of product when they buy from manuf
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transportation and storage
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occurs when retailers move good from production pt to other locations where they hold them
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facilitating functions
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functions of channel intermediaries that make purchase process for cust & manuf
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create assortments
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to provide a variety of products in 1 loc to meet needs of buyers
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comm and transaction functions
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happens when channel members develop and execute both promo & other types of comm among members of channel
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dual and hybrid distribution sys
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participating in more than 1 distribution sys
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steps in distribution planning
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develop distribution objs, eval int & ext environmental influences, choose distribution strategy, develop distribution tatics
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convention mkting sys
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mult lvl distribution channel where channel members wk independantly
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vertical mkting sys (VMS)
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channel of dist w/ formal coop among members of manuf, wholesale, & retail
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administered VMS
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remain independant but wk together bc of 1 single channel member
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corporate VMS
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single firm owns manuf, wholesale, and retail ops
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contractual VMS
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cooperation is enforced by contracts
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horizontal mkting sys (HMS)
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arrangement w/in channel of distribution in which 2/+ firms at same channel lvl wk together
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intensive distribution
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selling a product thru all suitable wholesalers or retailers
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exclusive distribution
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selling a product only thru a single outlet in a particular region
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selective distribution
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distribution using fewer outlets than intensive distribution but more than exclusive dist
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channel cooperation
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occurs when producers, wholesalers, and retailers depend on another
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characteristics of service
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intangibility, perishablity, variability, inseparability
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servicescape
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actual phys facility where service is perfomed
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SERVQUAL
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mult item scale used to measure service quality across dimension of tangibles, reliability, responsiveness, assurance, & empathy
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diminsions of service quality
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tangibles, reliability, responsiveness, assurance, empathy
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mkting ppl
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pure selling, product improvement, mkt fulfillment
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place mkting
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attract biz, ppl to place
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idea mkting
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seek to gain mkt share for concept/philosophy/issue
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Cheatography n. The art of mapping complex subjects into clear, instantly navigable reference guides.
