price
money or other consideration (including other goods and services) exchanged for the ownership or use of a good or service
value pricing
the practice of simultaneously increasing product and service benefits while maintaining or decreasing price.
demand factors
Factors that determine consumers' willingness and ability to pay for goods and services
skimming price
A firm sets the highest initial price that customers really desiring the product are willing to pay, and then lowers the price gradually to attract more price-sensitive customer segments
penetration pricing
Setting a low initial price on a new product to appeal immediately to the mass market
prestige pricing
setting a high price so that quality or status conscious consumers will be attracted to the product and buy it
break-even analysis
technique that analyzes the relatinship between ttotal revenue and total cost to determine profitability at various levels of output
break-even point
quanity at which total revenue and total cost are equal
fixed cost/(unit price-unit variable cost)
Price lining
firm that is selling a line of products price them at a number of different specific pricing points
flexible-price policy
setting different prices for products and services depending on individual buyers and purchase situations
Unit pricing
products offered for sale include the price per unit such as per ounce, pound, or quart, in addition to the price of the product as packaged
Cost-plus pricing
The firm calculates "the total unit cost of providing a good or service and add a specific amount to the cost to arrive at a price."
Target pricing
the producer aims for a particular price at which he/she estimates good demand exists, and then works backward, subtracting typical costs and margins of channel members to arrive at the approximate price he/she can charge and the amount he/she can spend on production and marketing
Loss-leader pricing
many retailers deliberately sell products below their customary (or normal) prices to attract attention and induce additional store traffic
Quantity discount
a price reduction offered to buyers buying in multiple units or above a specified dollar amount
Timing/seasonal discount
encourage buyers to stock inventory earlier than their normal demand would require.
Transfer pricing
refers to the pricing policy used to set the prices of goods/services that are exchanged between different divisions or subsidiaries of a decentralized organization
Price fixing
conspiracy among firms to set prices for products. It is illegal per se under the Sherman Act
resale price maintenance
requiring retailers to not sell products below a minimum retail price.
declared illegal per se in 1975 under consumer goods pricing act
Predatory pricing
practice of charging a very low price for a product with the intent of driving competitors out of business.
marketing channel
(or channel of distribution) consists of individuals and firms involved in the process of making a good or service available for use or consumption by consumers or industrial users
Marketing intermediaries
makes the flow of products from producers to ultimate consumers possible by preforming three basic functions:
Transactional functions
Logistical functions
Facilitating functions
indirect channel
intermediaries are inserted between the producer and consumer and preform numerous channel functions
intensive distribution
firm tries to place its products and services in as many outlets as possible (for convenience goods)
exclusive distribution
extreme opposite of intensive distribution because only one retailer in a specific geographical area carres the firms' products (for specialty goods).
selective distribution
firm selects a few retailers in a specific geographical area to carry its products (for shopping goods)
Forward integration
when it controls distribution centers and retailers where its products are sold
ex)Sherwin- Williams makes paint but also owns and operates 2,000 retail outlets
Backward integration
when it controls subsidiaries that produce some of the inputs used in the production of its products
ex) Ford Motor Company produces its own glass and steel
Horizontal integration
the combining of competing firms into one corporation(acquiring a competitor) ex) Kroger bought Smith's
vertical integration
is typified by one firm engaged in different parts of production (e.g. growing raw materials, manufacturing, transporting, marketing, and/or retailing).
Franchising
is a contractual arrangement between a parent company (a franchisor) and an individual or firm (a franchisee) that allows the franchisee to operate a certain type of business under an established name according to specific rules
Logistics
involves those activities that focus on getting the right amount of the right products to the right place at the right time at the lowest possible cost
Logistics management
the practice of organizing the cost-effective flow of raw materials, in-process inventory, finished goods, and related information from point of origin to point of consumption to satisfy customer requirements
supply chain
a sequence of firms involved in performing the activities required to create and deliver a good or service to consumers or industrial users
Supply chain management
integration and organization of information and logistic activities across firms in a supply chain for the purpose of creating and delivering goods and services that provide value to consumers or industrial users
cross docking
a practice that involves unloading products from suppliers, sorting products for individual stores, and quickly reloading products onto its trucks for a particular store
Vendor-managed inventory
is an inventory management system whereby the supplier determines the product amount and assortment a customer (such as a retailer) needs and automatically delivers the appropriate items
Reverse logistics
is a process of reclaiming recyclable and reusable materials, returns, and reworks from the point of consumption or use for repair, remanufacturing, redistribution, or disposal
Retailing
refers to all the business activities directed at selling and/or renting goods and services to ultimate consumers for personal, family, or household use
give your customers what they want
According to Sam Walton, what is the secret of successful retailing?
wheel of retailing
describes how new forms of retail outlets enter the market and change gradually in terms of price, margin and status. It divides the pattern in retail evolution into three stages: innovation, trading up, and vulnerability
television home shopping
is possible when consumers watch a shopping channel on which products are displayed; orders are placed over the phone or internet.
direct selling
sometimes called door-to-door retailing, involves direct sales of goods and services to consumers through personal interactions and demonstrations in their home or office
Hypermarkets
large stores (more than 200,000 square feet) based on a simple concept: offer consumers everything under one roof, eliminating the need to stop at more than one location
category killers
Specialty discount outlets focus on one type of product, such as electronics (Best Buy), office supplies (Staples), or books (Barns and Noble) at very competitive prices. They are referred to as __________ because they often dominate the market
Decoding
process of having the receiver take a set of symbols, the message, and transform them back to an idea.
hierarchy of effects
is the sequence of stages a prospective buyer goes through from initial awareness of a product to eventual action (either trial or adoption of the product). The stages include awareness, interest, evaluation, trial, and adoption.
promotional elements
refers to advertising, personal selling, sales promotion, public relations, and direct marketing
advertising
any paid form of nonpersonal communication about an organization, good, service, or idea by an identified sponsor
Personal selling
the two-way flow of communication between a buyer and seller, designed to influence a person's or group's purchase decision, usually in face-to-face communication between the information sender and receiver.
Sales promotion
a short-term inducement of value offered to arouse interest in buying a good or service
Public relations
is a form of communication management that seeks to influence the feelings, opinions, or beliefs held by customers, prospective customers, stockholders, suppliers, employees, and other publics about a company and its products or services through the use of nonpaid forms of promotion and information
Publicity
is a nonpersonal, indirectly paid presentation of an organization, good, or service. It can take the form of a news story, editorial, or product announcement
Direct marketing
uses direct communication with consumers to generate a response in the form of an order, a request for further information, or a visit to a retail outlet
Integrated marketing communications
is the concept of designing marketing communications programs that coordinate all promotional activities—advertising, personal selling, sales promotion, public relations, and direct marketing—to provide a consistent message across all audiences
push strategy
consists of directing the promotional mix to channel members to gain their cooperation in ordering and stocking the product
pull strategy
onsists of directing the promotional mix at ultimate consumers to encourage them to ask the retailer for a product.