1. Session #4 Pricing & Marketing Distribution Channels
Marketing Management
Session #4
Pricing & Marketing Distribution Channels
Ice Breaking and Trainer Introduce Himself

2. Pricing Strategy

3. The amount of money charged for a product or service
Generally price is..
The amount of money charged for a product or service
So how are Prices Set ???

4. Historically…
Prices were usually set by buyers and sellers bargaining with each other. BUT NOW ...

5. Price setting is based on…
Internal Factors
1. Marketing objectives
2. Marketing mix strategy
3. Costs
4. Organizational considerations
External Factors
1. Nature of the market and demand
2. Competition
3. Other environmental factors (economy, resellers, government)
Pricing Decisions

6. Internal Factors: Objectives
Survival
Low Prices to Cover Variable Costs and
Some Fixed Costs to Stay in Business.
Current Profit Maximization Choose the Price that Produces the Maximum Current Profit, Etc.
Marketing
Objectives
Market Share Leadership
Low as Possible Prices to Become
the Market Share Leader.
Product Quality Leadership
High Prices to Cover Higher
Performance Quality and R & D.

7. Internal Factors: Marketing Mix
Product Design
Nonprice
Positions
Price
Distribution
Promotion 7

8. Internal Factors: Costs
Costs set the floor for the price.
Price should covers costs for producing, distributing and selling the product, and provides a good profit.
Cost based pricing 8

9. Internal Factors: Organization Consd.
Costs/Revenue TR TC VC FC
Output/Sales 9

10. Price setting is based on…
Internal Factors
1. Marketing objectives
2. Marketing mix strategy
3. Costs
4. Organizational considerations
External Factors
1. Nature of the market and demand
2. Competition
3. Other environmental factors (economy, resellers, government)
Pricing Decisions 10

11. External Factors: Demand vs. Supply (1)11

12. External Factors: Demand vs. Supply (2)12

13. Price setting is based on…
Internal Factors
1. Marketing objectives
2. Marketing mix strategy
3. Costs
4. Organizational considerations
External Factors
1. Nature of the market and demand
2. Competition
3. Other environmental factors (economy, resellers, government)
Pricing Decisions 13

14. Think about it…
VALUE ???
PRICE??

15. Case Study: Iron Industry
Production of 1 ton costs: L.E 1,500
Transportation costs: L.E 200
Handling costs: L.E 300
Market price: L.E 3,500
Demand >> Supply
Profit maximization strategy
Monopoly
Price control from the government 15

16. Pricing Approaches

17. General Pricing Approaches
Cost-Based Pricing
Value-Based Pricing
Competition-Based Pricing

18. Product
Customer
Cost-Based Pricing
Value-Based Pricing
Cost
Value
Price
Price
Value
Cost
Customers
Product

19. Competition-Based Pricing

20. New-Product Pricing Strategies
Market-Skimming Pricing :
Intel is a prime user of this strategy.

21. New-Product Pricing Strategies
2. Market-Penetration Pricing :
Dell uses penetration pricing to sell computers.

22. Marketing Distribution Channels

23. “Distribution Channel" can be defined as
"all the routes through which a product can pass between its point of production and consumption"

24. Marketing Channel Functions
Physical distribution
Transporting and storing goods
Financing
Acquiring and using funds to cover the costs of the distribution channel
Risk taking
Assuming some commercial risks by operating the channel (e.g. holding stock)
Information
Gathering market research data- important for marketing planning
Matching
Adjusting the offer to fit a buyer's needs, including grading, assembling and packaging
Negotiation
Reaching agreement on price and other terms of the offer

25. Number of Channel Levels
Producer
Consumer
Producer
Retailer
Consumer
Producer
Wholesaler
Consumer
Retailer

26. Channel 1 Called a direct-marketing channel Has no intermediary levels
It consists of a manufacturer selling directly to consumers
Producer
Consumer

27. Channel 2 Contains one intermediary level.
Producer
Retailer
Consumer
Contains one intermediary level.
In consumer markets, this level is typically a retailer.
For example, the makers of televisions, cameras, furniture, major appliances and many other products sell their goods directly to large retailers, which then sell the goods to final consumers.

28. Channel 3
Producer
Wholesaler
Retailer
Consumer
Contains two intermediary levels , a wholesaler and retailer.
This channel is often used by manufacturers of food, drugs, hardware and other products

29. Different forms of distribution channels
Franchise
Agent

30. How to choose the distribution channel ??

31. Characteristics of intermediaries
You must consider:
Company Plan
Marketing strategy Financial situation
The number of its outlets
Choice of its transportation method
Characteristics of intermediaries
Their abilities to handle promotion, customer contact, storage and credit
Ability to deliver the product with required Quality
Competitors' channels
Better be similar to competitors channels
Using the same channel expected by the customers

32. Integrated Marketing Communication

33. Marketing Communications
The means by which firms attempt to
inform, persuade, and remind
consumers, directly or indirectly, about
the products and brands they sell.

34. Communications Environment
Market Fragmentation Led to
Media Fragmentation
Marketers Have Shifted
Away From Mass
Marketing
Less Broadcasting
Two Factors
are Changing the Face of Today’s
Marketing Communications:
Improvements in
Information Technology
Has Led to
Segmented Marketing
More Narrowcasting

35. Integrated Marketing Communications
With Integrated Marketing Communications (IMC), the Company Carefully Integrates and Coordinates Its Many Communications Channels to Deliver a Clear, Consistent, and Compelling Message About the Organization and Its Product or Service.

36. IMC Builds Brands

37. Communication Platforms (1)
Advertising
Print and broadcast ads
Packaging inserts
Motion pictures
Brochures and booklets
Posters
Billboards
Logos
Videotapes
Sales Promotion
Contests, games
Sampling
Trade shows
Coupons
Extra quantity
Gifts

38. Communication Platforms (2)
Events/ Experiences
Sports
Festivals
Arts
Causes
Factory tours
Street activities
Public Relations
Press kits
Speeches
Seminars
Annual reports
Charitable donations
Publications
Community relations

39. Communication Platforms (3)
Personal Selling
Sales presentations
Sales meetings
Incentive programs
Samples
Fairs and trade shows
Direct Marketing
Catalogs
Mailings
Telemarketing
Electronic shopping
TV shopping
Fax mail
Voice mail

40. Elements in the Communications Process

41. Designing the Communications
Message strategy
Creative strategy
Message source
Personal communication channels
Nonpersonal communication channels
Integration

42. Setting the Promotion Mix
Advertising
Reach Many Buyers, Repeat Message Many Times, Impersonal, Expensive
Personal
Selling
Personal Interaction, Relationship Building, Most Expensive Promo Tool
Sales
Promotion
Wide Variety of Tools, Rewards Quick Response, Efforts Short-Lived
Public
Relations
Very Believable, Dramatize a Company or Product
Direct
Marketing
Nonpublic, Immediate, Customized, Interactive

43. Questions