Term
| Three major pricing strategies |
|
Definition
value-based pricing
cost-based pricing
competition-based pricing |
|
|
Term
|
Definition
the sum of all the values that a customer
the amount of money charged for ap roduct or service; the sume of the values that customers exchange for the benefits of having or using the product or service |
|
|
Term
| customer value-based pricing |
|
Definition
| setting price based on buyers perceptions of value rather than on seller's cost |
|
|
Term
|
Definition
| offering the right combination of quality and good service at a fair price |
|
|
Term
|
Definition
| attaching value-added features and services to differentiate a company's offers whie charging higher prices |
|
|
Term
|
Definition
| setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk |
|
|
Term
|
Definition
| costs that do not vary with production or sales level |
|
|
Term
|
Definition
| costs that vary directly with the level of production |
|
|
Term
|
Definition
| the sum of the fixed and variable costs for any given level of production |
|
|
Term
| cost-plus pricing (markup pricing) |
|
Definition
| adding a standard markup to the cost of the product |
|
|
Term
| break-even pricing (target return pricing) |
|
Definition
| setting price to break even on the costs of making and marketing a product, or setting price to make a target return |
|
|
Term
| competition-based pricing |
|
Definition
| setting prices based on competitors' strategies, prices, costs, and market offerings |
|
|
Term
|
Definition
| pricing that starts with an ideal selling price and then targets costs that will ensure that the price is met |
|
|
Term
|
Definition
| a curve that shows the number of units the market will buy in a given time period, at different prices that might be charged |
|
|
Term
|
Definition
| a measure of the sensitivity of demand to changes in price |
|
|
Term
| market-skimming pricing (or price skimming) |
|
Definition
| setting a high price for a new product to skim maximum revenues layer by layer forom segments willing to pay the high price; the company makes fewer byt more profitable sales |
|
|
Term
| market-penetration pricing |
|
Definition
| setting a low price for a new product to attract a large number of buyers and a large market share |
|
|
Term
|
Definition
| setting the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors' prices |
|
|
Term
|
Definition
| the pricing of optional or accessory products along with a main product |
|
|
Term
|
Definition
| setting a price for products that must be used along with a main product such as blades for razor and games for a videogame console |
|
|
Term
|
Definition
| setting a price for by-products to make the main product's price more competitive |
|
|
Term
|
Definition
| combining several products and offering the bundle at a reduced price |
|
|
Term
|
Definition
| a straight reduction in price on purchases made during a stated period of time or in larger quantities |
|
|
Term
|
Definition
| a reduction from the list price for buyer actions such as trade-ins or pomotional sales support |
|
|
Term
|
Definition
| selling a product or service at two or more prices, where the difference in prices is not based on differences in costs |
|
|
Term
|
Definition
| pricing that considers the psychology of prices, not simply the economics, the price says something about the products |
|
|
Term
|
Definition
| prices that buyers carry in their minds and refer to when they look at a given product |
|
|
Term
|
Definition
| temporarily pricing products below the list price, and sometimes even below cost, to increase short-run sales |
|
|
Term
|
Definition
| adjusting prices continually to meet the characteristics and needs of individual customers and situations |
|
|
Term
| good pricing captures.... |
|
Definition
| the value that a product or service creates for customers and setting a price that captures that value |
|
|
Term
| customer perceptions of the products value set the.... |
|
Definition
|
|
Term
| company and product costs set the.... |
|
Definition
|
|
Term
| cost-based pricing is often.... |
|
Definition
|
|
Term
| value-based pricing assess... |
|
Definition
| customer needs and value perceptions and then sets target price to match targeted value |
|
|
Term
| internal factors that influence pricing decisions (4) |
|
Definition
1. overall marketing strategy
2. objectives
3. marketing mix
4. organizational considerations (management, size of company, etc.) |
|
|
Term
|
Definition
1. customer retention
2. building profitable customer relationships
3. preventing competition
4. supporting resellers and gaining their support
5. avoiding government intervention |
|
|
Term
| price decisions must be coordinated with: (3) |
|
Definition
1. product design
2. distribution
3. promotion decisions |
|
|
Term
| who decides who is responsible for setting price? |
|
Definition
|
|
Term
| external pricing considerations (2) |
|
Definition
1. the nature of the market and demand
2. environmental factors (economy, reseller needs, government)
3. |
|
|
Term
| demand curve relationship |
|
Definition
| price-demand relationship |
|
|
Term
|
Definition
| consumer sensitivity to prices |
|
|
Term
| major strategies for pricing new products (2) |
|
Definition
1. market-skimming pricing - initially setting high prices to skim the maximum amount of revenue from various segments of the market
2. market - penetrating pricing - setting a low initial price to penetrate the market deeply and win a large market share |
|
|
Term
|
Definition
pricing structure is designed by a company to cover all products
changes over time and adjust it to account for different customers and situations
usually changes as a product passes through its life cycle |
|
|
Term
| when the product is part of a product mix, the firm searches for a set of prices that will... |
|
Definition
| maximize profits form the total mix |
|
|
Term
|
Definition
| the company decides on price steps for the entire set of products it offers |
|
|
Term
|
Definition
| optional or accessory products included with the main product |
|
|
Term
|
Definition
| products that are required for use of the main product |
|
|
Term
|
Definition
| waste or residual products produced when making the main product |
|
|
Term
|
Definition
| combinations of products at a reduced price |
|
|
Term
| price adjustment strategies are used to... |
|
Definition
| account for differences in consumer segments and isutions |
|
|
Term
| discount and allowance pricing |
|
Definition
| the company establishes cash, quantity, functional, or seasonal discounts, or varying types of allowances |
|
|
Term
|
Definition
| company sells a product at two or more prices to acommodate different customers, product forms, locations, or times |
|
|
Term
|
Definition
| better communicate a product's intended position |
|
|
Term
|
Definition
| a company offers discounts or temporarily sells a product below list price as a special event, sometimes even selling blow cost as a loss leader |
|
|
Term
|
Definition
| the company decides how to price to near or distant customers |
|
|
Term
|
Definition
| company adjusts its price to meet different conditions and expectations in different world markets |
|
|
Term
| what is considered when changing price |
|
Definition
| customer's and competitor's reactions |
|
|
Term
| buyer reactions to price changes are influenced by.. |
|
Definition
| the meaning customers see in the price change |
|
|
Term
|
Definition
| A network composed of the company, suppliers, distributors, and, ultimately, customers who partner to help the entire system deliver better customer value |
|
|
Term
| Marketing channel (or distribution channel) |
|
Definition
| A set of interdependent organizations that help make a product or service available for use or consumption y the consumer or business user |
|
|
Term
|
Definition
| A layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer |
|
|
Term
|
Definition
| A marketing channel that has no intermediary levels |
|
|
Term
| Indirect marketing channel |
|
Definition
| A marketing channel containing one or more intermediary levels |
|
|
Term
|
Definition
| Disagreements among marketing channel members on goals, roles, and rewards- who should do what and for what rewards |
|
|
Term
| Conventional distribution channel |
|
Definition
| A channel consisting of one or more independent producers, wholesalers, and retailers, each a separate business seeking to maximize its own profits, perhaps even at the expense of profits for the system as a whole |
|
|
Term
| Vertical marketing system (VMS) |
|
Definition
| A channel structure in which producers, wholesalers, and retailers act as a unified system. One channel member owns the others, has contracts with them, or has so much power that they all cooperate |
|
|
Term
|
Definition
| A vertical marketing system that combines successive stages of production and distribution under single ownership –channel leadership is established through common ownership |
|
|
Term
|
Definition
| A vertical marketing system in which independent firms at different levels of production and distribution join together through contracts |
|
|
Term
|
Definition
| A contractual vertical marketing system in which a channel member, called a franchisor, links several stages in the production-distribution process |
|
|
Term
|
Definition
| A vertical marketing system of coordinate successive stages of production and distribution through the size and power of one of the parties |
|
|
Term
| Horizontal marketing system |
|
Definition
| A channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity |
|
|
Term
| Multichannel distribution system |
|
Definition
| A distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segments |
|
|
Term
|
Definition
| The cutting out of marketing channel intermediaries by product or service producers or the displacement of traditional resellers by radical new types of intermediaries |
|
|
Term
|
Definition
| Designing effective marketing channels by analysing customer needs, setting channel objectives, identifying major channel alternatives, and evaluating those alternatives |
|
|
Term
|
Definition
| Stocking the product in as many outlets as possible |
|
|
Term
|
Definition
| Giving a limited number of dealers the exclusive right to distribute the company’s products in their territories |
|
|
Term
|
Definition
| The use of more than one but fewer than all of the intermediaries who are willing to carry the company’s products |
|
|
Term
| Marketing channel management |
|
Definition
| Selecting, managing, and motivating individual channel members and evaluating their performance over time |
|
|
Term
|
Definition
network of partners used to create customer values
individual companies and brands don't compete, their entire value delivery networks do |
|
|
Term
| marketing channel (or distribution channel) |
|
Definition
a set of interdependent organizations involved in the process of making a product or service available for use or consumption by the consumer or business user
through their contacts, experience, specialization, and scale of operation, intermediaries usually offer the firm more than it can achieve on its own |
|
|
Term
| marketing channel key functions (2) |
|
Definition
| 1. complete transactions by: -gathering and distributing information -developing and spreading persuasive communications about an offer -performing contact work -matching -entering into negotiation 2. fulfill the completed transactions by -offering physical distribution -financing -risk taking |
|
|
Term
| channel alternatives open to a company |
|
Definition
| channel alternatives cary from direct selling to using one, two, three, or more intermediary channel levels |
|
|
Term
| three of the most important trends are the growth of...(3) |
|
Definition
1. vertical
2. horizontal
3. multichannel marketing systems |
|
|
Term
| channel design process (2 steps) |
|
Definition
1. assessing customer channel service needs and company channel objectives and constraints
2. identifies the major channel alternatives in the terms of the types, the number, and the channel responsibilities of intermediaries of each |
|
|
Term
| channel management calls for.... |
|
Definition
| selecting qualified intermediaries and motivating them |
|
|
Term
| how do companies select, motivate, and evaluate channel members |
|
Definition
producers vary in their ability to attract qualified marketing intermediaries
when selecting intermediaries, the company should evaluate each channel member's qualifications and select those that best fit its channel objectives
once selected, channel members must be continuously motivated to do their best |
|
|
Term
| place in the marketing mix |
|
Definition
| place is about where your product is available for sale |
|
|
Term
|
Definition
| the entire network of companies and processes that make sale happen efficiently |
|
|
Term
|
Definition
| design, production, marketing, delivery and support |
|
|
Term
|
Definition
| the entire process from raw materials to customer; product production plus movement among stages |
|
|
Term
|
Definition
|
|
Term
|
Definition
people and firms involved in making a product available to consumers
(should accomplish the sale with the minimum number of contacts - shouldn't hire someone who doesn't add value) |
|
|
Term
| how channels add value (2) |
|
Definition
1. transform product assortments made by manufacturers into assortments sought by consumers
breadth vs. depth
2. match supply and demand; network of producers/ suppliers/intermediaries - sometimes you go to the vendor for a specific product, sometimes the product goes to all vendors for you (ex: gum) |
|
|
Term
|
Definition
breadth - Walmart has everything, but they don't have every brand of everything
depth - Petsmart is one category, but they have every brand
another example is department stores (breadth) and boutiques (depth) |
|
|
Term
| functions channels perform (3) |
|
Definition
1. transactional - ex: hugo boss & macys - once the inventory is bought, macys owns it and provide info to customers
2. logistical - physical distribution of goods, sorting, storing, and dispersing ex: warehouse/distributors, transporters
3. facilitating - financing, credit, market research, promotion ex: stores offer credit cards |
|
|
Term
| steps to designing a channel (4) |
|
Definition
1. decide on distribution goals/roles (analyze consumer needs and company objectives & constraints)
2. identify major design criteria (types of intermediaries, numbers needed, roles in channel)
3. select strategy to achieve goals (channel structure, length)
4. execute strategy |
|
|
Term
|
Definition
target market coverage = density
ties to/reinforces overall image and positioning - exclusive, selective, intensive
consumer needs - what does consumer seek/ expect from trade intermediary - information, convenience, variety, adjunct services
profitability - cost to meet needs
control - function of product, competition, resources |
|
|
Term
| exclusive, selective, intensive |
|
Definition
(design criteria)
cartier is exclusive
GAP is selective because it is available, but not everywhere
Starbucks and Dunkin Donuts are intensive because they are everywhere |
|
|
Term
|
Definition
1. conventional
2. multichannel/hybrid
3. vertical marketing system
4. horizontal market system
5. direct marketing
6. strategic channel alliances |
|
|
Term
|
Definition
channel strategy
independent channel members working cooperatively
ex: manufacturer -> distributor/ warehouse -> retailer -> end user |
|
|
Term
|
Definition
channel strategy
two channels for same product
ex: bricks and mortar, plus internet and catalog |
|
|
Term
| vertical marketing system |
|
Definition
channel strategy
unifies manufacturers, wholesalers, and retailers
can be owned by one channel member (forward and/or bckward integration)
-backward ex: 7/11 owns citgo
-forward ex: goodyear tires have goodyear stores so you can get specific goodyear mechanics
can be contractual or franchises
ex: McDonalds -> they think you are representative of them, the franchisee thinks that it is just their business |
|
|
Term
| horizontal marketing system |
|
Definition
channel strategy
intermediaries as same level work together to increase effectiveness and decrease costs
-ex: IGA - individual supermarkets band with other individual supermarkets and buy in bulk together so that it is cheaper for them |
|
|
Term
|
Definition
channel strategy
consumers buy forms of media [telemarketing, internet] or in home sales |
|
|
Term
| strategic channel alliances |
|
Definition
channel strategy
ex: cheerios brand product used Nestle outlet to get into an international market. Even though it says Nestle in that country it is a cheerio's product |
|
|
Term
| execute channel strategy steps (3) |
|
Definition
1. select channel members
2. managing channel members
3. evaluating channel members |
|
|
Term
| types of intermediaries (3) |
|
Definition
1. merchant wholesalers aka distributors
-buy goods from manufacturer and sell to resellers
2. merchandise agents and brokers
-brings buyers and sellers together
-never take title to product
3. manufacturer-owned intermediaries
-maintain consistent product image; control; geographic distribution |
|
|
Term
| common cost based strategies |
|
Definition
standard markup
cost + percentage of cost
cost + fixed fee
experience curve pricing
target costing
yield management pricing
transportation/geographic |
|
|
Term
|
Definition
skimming
penetration pricing
trial
product line pricing
bundled pricing
psychological pricing
-odd/even
-prestige |
|
|
Term
| competition based strategies |
|
Definition
price leadership
customary pricing
above, at, below [+ - or =] market
loss leader/promotional
sealed bid |
|
|
Term
|
Definition
value pricing = good deal at price point
EDLP = everyday low price
dynamic pricing = immediate response to market or constatnly adjusted pricing based on an algorythm ex: ebay |
|
|
Term
|
Definition
conspiracy to set prices
illegal |
|
|
Term
|
Definition
different prices changed to different buyers for like goods where competition is lessened or monopoly is creating
[most often affects promotional pricing]
illegal |
|
|
Term
|
Definition
| deals- suggested from former pricing that wasn't the actual price |
|
|
Term
|
Definition
| when it lessens competition |
|
|
Term
|
Definition
| lowball price to drive out competition |
|
|
Term
|
Definition
|
|
Term
|
Definition
aka gross profit margin
revenue - costs of goods sold |
|
|
Term
|
Definition
| selling price per unit - variable cost per unit |
|
|
