1. Identifying pricing objectives and constraints
2. Estimating demand and revenue
3. Determine cost, volume, and profit relationships
4. Select an approximate price level
5. Set list or quoted price (dynamic/flexible pricing)
6. Make adjustments to list or quoted price (legal pricing issues)

• Skimming
• Penetration
• Prestige
• Price Lining
• Odd-Even
• Target
• Bundle
• Yield Management

• Standard markup
• Cost-plus
• Experience curve

• Target profit
• Target return on sales
• Target return on investment

• Customary
• Above-, at-, or below-market
• Loss leader

• There is variance across multiple segments regarding price sensitivity, with substantial segment size at higher price levels
• Barriers to entry from competition
• Economies of scale don't lower costs enough to make penetration differentially attractive

• Lack of significant variance across multiple segments regarding price sensitivity - not enough people willing to pay differentially higher prices, most people are price sensitive for the product.
• Lack of barriers to entry from competition
• Economies of scale lower costs enough to make penetration differentially attractive

• Sale price of $xx.99, 95, 98, etc...

• XBOX 360 bundles, and stuff like that

• Marking everything up a certain percentage

• Cost-Plus-Percentage-of-Cost Pricing - price is based on cost + a certain percentage of that cost
• Cost-Plus-Fixed-Fee Pricing - Cost plus a fixed fee
• Ex: custom flasks charge you a fixed cost of setting up the machine

• Determining a target for profit, sales, ROI and then solving for it using an equation.

Competition Oriented Pricing

• customary pricing
• above, at-, or below market pricing
• loss-leader pricing

• Acquisition Utility = Inherent need satisfying ability of the product - price

• Company Effects - Product line pricing
• Customer Effects
• Competitive Effects - Price War

• Trade-in
• Promotional
• Everyday low pricing (EDLP)

• FOB origin pricing
• Uniform Delivered pricing

• Horizontal Price Fixing
• Vertical Price Fixing
• Price Discrimination
• Deceptive Pricing
• Predatory Pricing

Middleman - any intermediary between manufacturer and end-user markets

Agent or Broker - Any intermediary with legal authority to act on behalf of the manufacturer

Wholesaler - Any intermediary who sells to other intermediaries, usually to retailers

Retailer - An intermediary who sells to consumers

Dealer - An imprecise term that can mean the same as retailer, wholesaler, and so forth.

• Transactional Function - Buying, Selling, Risk taking
• Logistical Function - Assorting, Storing, Sorting, Transporting
• Facilitating Function - Financing, Grading, Marketing information and research

• Use of two or more marketing channels for distributing the same products to the same target market (Best Buy has a store, and an online store)

• The use of multiple media activities to reach a targeted customer group. (television and internet)

• An arrangement between two companies who have decided to share resources in a specific project (the beer industry in Boston should have a strategic alliance to share a warehouse and cut down on costs)

• Corporate - Polo/Ralph Lauren
• Administered - Proctor & Gamble
• Contractual - Franchise (most popular)
  • Manufacturer sponsored retail franchise - Ford
  • Manufacturer sponsored wholesale francise - Coca Cola
  • Service sponsored retail franchise - Holiday Inn
  • Service sponsored franchise - H&R Block

Corporate Systems

• Forward Integration
• Backward Integration

• Forward Integration - a business strategy whereby activities are expanded to include control of the direct distribution of its products (controlling at the retail end)
• Backward Integration - Acquiring ownership of one's supply chain, usually in the hope of reducing supplier power and thus reducing input costs (control of the supplier end)

• Intensive Distribution - Gum, Coca Cola, Candy
• Selective Distribution - Golf clubs, Polo
• Exclusive Distribution - Apple

• Vertical Conflict - conflict between two or more hierarchical members of a distribution channel. (retail wont carry manufacturers product from low sales)
• Disintermediation - The removal of intermediaries in the supply chain
• Horizontal Conflict - Conflict between competitors of the same marketing channel, resulting in over saturation of the target population area and extreme competition.

• Economic
• Expertise
• Identification
• Legitimate Right

• Inform prospective buyers
• Persuade them to try
• Remind them of the benefits
• rotate demand to make it more inelastic
• shift demand to the right

1. Who is the target audience?
2. What response do you want?
3. What message will motivate this response?
4. What source attributes should accompany the message?
5. What channel of communication should be used?
6. What feedback should be collected?

1. Source
2. Message
3. Channel of Communication
4. Receiver
5. Response
6. Feedback

• Identify the target audience
• Specify the objectives
• Set the budget
• Select the right promotional tools
• Design the promotion
• Schedule the promotion

• Pretest the promotion
• Carry out the promotion

• Post test the promotion
• Make needed changes

1. Advertising
2. Personal Selling
3. Public Relations
4. Sales Promotion
5. Direct Marketing

• Start early, avoid "no comment," be proactive
• If there is a negative, get it all out there at once
• Stay positive
• Announce proactive measures to right any wrong
• BE SINCERE
• Make it a company-wide team effort (get your story straight)

• Introduction - To inform
• Growth - To persuade
• Maturity - To remind

• Complexity
• Risk
• Ancillary Services - less important services performed by the product

• Push Strategy - push demand for the product on the marketplace (college works)

• Percentage of Sales Budgeting - Allocating a certain percentage of your sales to go to promotions
• Competitive Parity Budgeting - Matching your promotion budget to that of your competitors, or relative to your market share
• All-You-Can-Afford Budgeting - Paying as much for promotion as you can afford (smaller companies)
• Objective and Task Budgeting - budgeting method in which the amount to be spent on promotion is determined by the desired result of the activity and the tasks necessary to achieve it

• Pioneering (informational)
• Competitive (persuasive)
• Reminder
• Comparative

"Advertising or other sales representations that praise the product or service with subjective opinions, superlatives, or exaggerations, vaguely and generally, stating no specific facts."

"Puffing consists of statements that are so obviously exaggerated or subjective that customers are not misled by them. Such sales rhetoric is expected in society and is excluded from the definition of misrepresentation."

Example: "The best hand soap ever made!"

• Explicit comparative advertisements deliver information previously unavailable to consumers
• Enhances the information flow in the marketplace to the benefit of consumers

• Advertising whose purpose is to promote the image of a corporation rather than the sale of a product or service
• Used to create public awareness of a corporation or to improve its reputation in the marketplace

• Message Content
  • Informational element
  • Persuasive element
• Types of Appeals
  • Fear appeals
  • Sex appeals
  • Humorous appeals
  • Rational appeals

• Reach - total number of different people or households exposed, at least once to a medium during a given period of time.
• Rating - percentage of total potential audience who choose a particular media vehicle over another (in broadcast media, rating = # of households watching a particular show/# of households with a TV)
• Frequency - Relates to marketing programs that aim to maintain or increase the frequency of visits, purchases, orders, etc...
• Gross Rating Points = Reach*Frequency
• Cost per Thousand - Cost per 1000 impressions generated

• Continuous Schedule - Steady
• Flighting Schedule - Intermittent
• Pulse Schedule - Burst

• Portfolio Test - A test to determine opinions of a set of advertisements
• Jury Test - ask consumers to compare, rank, and otherwise evaluate the ads
• Theater Test - a way to test television commercials, respondents view the commercials in a theater or other location and indicate their approval or disapproval

• Full-Service Agency - dies research, selects media, develops copy, and produces artwork; also coordinates integrated campaigns with all marketing efforts
• Limited-Service Agency - Specializes in one aspect of creative process, usually provides creative production work; buys previously unpurchased media space
• In-House Agency - Provides range of services, depending on company needs

• Aided Recall
• Unaided Recall
• Attitude Tests
• Inquiry Tests
• Sales Tests

Allowances and Discounts

• Merchandise Allowance
• Case Allowance
  • Free Goods
• Finance Allowance
  • Floor Stock Protection
  • Freight Allowance

A system by which ad costs are divided between two or more parties. Usually, such programs are offered by manufacturers to their wholesalers or retailers, as a meas of encouraging those parties to advertise the product