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BUSINESS 1 Marketing in a Changing World: Creating Customer Value and Satisfaction
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BUSINESS 2 What Is Pricing? Process of determining what a company will receive in exchange for its products
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BUSINESS 3 Pricing to Meet Business Objectives Pricing objectives are goals that producers hope to attain in pricing products for sale Profit-Maximizing Objectives Pricing for E-Business Objectives Market Share Objectives Market share is a company’s percentage of total market sales for a specific product type Other Pricing Objectives
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BUSINESS 4 Pricing Existing Products Pricing above prevailing market prices for similar products Pricing below market prices Pricing at or near market prices
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BUSINESS 5 Pricing New Products Price skimming is setting an initial high price to cover new product costs and generate a profit Penetration pricing is setting an initial low price to establish a new product in the market
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BUSINESS 6 Cost-Oriented Pricing Cost-oriented pricing considers the firm’s desire to make a profit and its need to cover production costs Markup is the amount added to an item’s cost to sell it at a profit
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BUSINESS 7 Breakeven Analysis Breakeven analysis assesses costs versus revenues for various sales volumes Variable cost is a cost that changes with the quantity of a product produced or sold Fixed cost is a cost unaffected by the quantity of a product produced or sold Breakeven point is the sales volume at which the seller’s total revenue from sales equals total costs with neither profit nor loss
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BUSINESS 8 Breakeven Analysis
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BUSINESS 9 Fixed versus Dynamic Pricing for E-Business Dynamic pricing works because information flow on the Web notifies millions of buyers of instantaneous change in product availability. Sellers can alter prices privately, on a one-to- one, customer-to-customer basis. Fixed pricing is still the most common option for cybershoppers.
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BUSINESS 10 Pricing Tactics Price lining is setting a limited number of prices for certain categories of products Psychological pricing takes advantage of the fact that consumers do not always respond rationally to stated prices Odd-even pricing is based on the premise that customers prefer prices not stated in even dollar amounts Discount is a price reduction offered as an incentive to purchase
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BUSINESS 11 Distributing Products
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BUSINESS 12 What Is the Distribution Mix? The combination of distribution channels by which a seller gets its product to end users
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BUSINESS 13 The Value-Adding Intermediary
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BUSINESS 14 Intermediaries and Distribution Channels Intermediaries (once called middlemen) help to distribute a producer’s goods Wholesalers are intermediaries who sell products to other businesses for resale to final consumers Retailers sell products directly to consumers
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BUSINESS 15 What Is a Distribution Channel? Network of interdependent companies through which a product passes from producer to end user
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BUSINESS 16 Channels of Distribution
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BUSINESS 17 Distribution of Consumer Products Channel 1: Direct Distribution of Consumer Products Direct channel occurs when the product travels from producer to consumer without intermediaries Channel 2: Retail Distribution of Consumer Products Channel 3: Wholesale Distribution of Consumer Products Channel 4: Distribution through Sales Agents or Brokers Sales agents (or Brokers) represent producers and sell to wholesalers, retailers or both
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BUSINESS 18 The Pros and Cons of Nondirect Distribution Each link in the distribution chain makes a profit by charging a markup or commission. The more members in the channel—the more intermediaries—the higher the final price. Markup levels depend on competitive conditions and practices in a particular industry.
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BUSINESS 19 Distribution Strategies Intensive distribution is a strategy by which a product is distributed through as many channels as possible Exclusive distribution is a strategy by which a manufacturer grants exclusive rights to distribute or sell a product to a limited number of wholesalers or retailers
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BUSINESS 20 Distribution Strategies Selective distribution is a strategy by which a company uses only wholesalers and retailers who will give special attention to specific products
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BUSINESS 21 Channel Conflict and Channel Leadership Channel conflict occurs when members of the channel disagree over roles or rewards Channel Leadership Channel captain is a channel member who is most powerful in determining the roles and rewards of the others members
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BUSINESS 22 What Is Physical Distribution? Activities needed to move a product efficiently from manufacturer to consumer
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BUSINESS 23 Types of Warehouses Public and Private Warehouses Private warehouses are owned by and providing storage for a single company Public warehouses are independently owned and operated Storage Warehouses and Distribution Centers Storage warehouses provide storage for extended periods Distribution centers provide short-term storage of products whose demand is both constant and high
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BUSINESS 24 Warehousing Costs Inventory control tracks inventory on hand and ensures that an adequate supply is in stock at all times Materials handling involves the transportation, arrangement and orderly retrieval of inventoried goods Unitization is a strategy that calls for standardizing the weight and form of materials
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BUSINESS 25 Transportation Operations Major transportation modes: Trucks Railroads Planes Water carriers Pipelines
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BUSINESS 26 Transportation Operations Factors in choosing transportation methods: Cost Nature of the product Distance Speed Customer wants and needs
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