© 2009 South-Western, a division of Cengage Learning 1 Chapter 13: DISTRIBUTION AND PRICING...
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Transcript of © 2009 South-Western, a division of Cengage Learning 1 Chapter 13: DISTRIBUTION AND PRICING...
Chapter 13: DISTRIBUTION AND PRICINGRight Product, Right Person, Right Place, Right Price
LOOKING AHEADWhat is distribution as it relates to marketing?What is the difference between channels of distribution and physical distribution?What are the different types of wholesale distributors?What are trends in retailing?What are the key factors in physical distribution?What are examples of pricing strategies?
GETTING PRODUCTS TO THE RIGHT PLACEDistribution is a key element of the marketing mixWhere should the product be sold?How will it get to the location(s) from the factory?
DISTRIBUTION: GETTING YOUR PRODUCT TO YOUR CUSTOMERProducerWholesalerConsumerChannel of Distribution the path that a product takes from the producer to the consumer
CHANNEL INTERMEDIARIESChannel Intermediaries informally called middlemen. They facilitate the movement of products from the producer to the consumer.
DISTRIBUTING DIRECTLY TO THE CONSUMERProducerConsumerDirect Channel Distribution process that links the producer and the customer with no intermediaries.
THE ROLE OF DISTRIBUTORS: ADDING VALUE (utility)
DISTRIBUTORS: STREAMLINING CONSUMER TRANSACTIONS
STRATEGIC DISTRIBUTIONReed Hastings created Netflix which revolutionized video distribution partly out of anger that Blockbuster charged him $40 in late fees for a single overdue rental of Apollo 13.
THE MEMBERS OF THE CHANNELRetailers the distributors that sell products directly to the ultimate usersWholesalers distributors that buy products from producers and sell them to other businesses or nonfinal users.
WHOLESALERS: SORTING OUT THE OPTIONSMerchant WholesalersFull-service Limited Service Drop ShippersCash and Carry Truck Jobbers
RETAILERS: THE CONSUMER CONNECTIONStore RetailersNon-Store RetailersOnlineDirect ResponseDirect Selling Vending
DISTRIBUTION STRATEGYINTENSIVE DISTRIBUTIONSELECTIVE DISTRIBUTIONEXCLUSIVE DISTRIBUTION
MULTICHANNEL RETAILINGRetailers are encouraging consumers to buy through multiple channelsStoreOnline
PHYSICAL DISTRIBUTION: PLANES, TRAINS, AND MUCH, MUCH MORESupply Chain Management planning and coordinating the movement of products along the supply chain.
Logistics - focuses on the tactics involved in moving the products.
ELEMENTS OF THE SUPPLY CHAIN
SUPPLY CHAIN MANAGEMENT DECISIONSWarehousingMaterials HandlingInventory ControlOrder ProcessingCustomer ServiceTransportationSecurity
DISTRIBUTING TO THE BIG BOX RETAILERSA typical Wal-Mart distribution center is more than one million square feet, or the equivalent of 10 Wal-Mart retail stores.www.walmartfacts.com/wal-mart-distribution-centers.aspx
MODES OF TRANSPORTATION
PRICING : A HIGH STAKES GAMEPricing plays a key role in the demand for productsPrice is a tough variableLegal constraintsIntermediary pricingStable pricing is not the normPrices must constantly be evaluated
PRICING OBJECTIVES AND STRATEGIESBuilding ProfitabilityMatching the CompetitionCreating PrestigeSkimming PricingBoosting VolumePenetration PricingEvery-day-low PricingHigh/Low PricingLoss Leader Pricing
SLIPPERY FINGER ONLINE PRICING GOOFSFree flights from Los Angeles to Fiji. Round-trip tickets from San Jose, California, to Paris for $27.98.$1,049 televisions wrongly listed for $99.99 on Amazon.$588 Hitachi monitors mistakenly priced at $164.$379 Axim X3i PDAs wrongly priced at $79 on Dells site.
PRICING IN PRACTICE: A REAL WORLD APPROACHBreakeven Point (BP) = Total fixed cost (FC)Price/Unit (P) Variable cost/unit (VC)Breakeven analysis the process of determining the number of units that must be sold to cover costs.
USING BREAKEVEN ANALYSISBusinesses make decisions to adjust the product price and/or costs.Raise pricesDecrease variable costsDecrease fixed costs
FIXED MARGIN PRICINGCost-Based Pricing
Demand-Based PricingProfit Margin the gap between cost and the price per product.
CONSUMER PRICING PERCEPTIONS: THE STRATEGIC WILD CARDConsumer price perceptions can defy logic!The link between price and perceived quality can be powerfulConsumers will use price as a quality indicatorDoes odd pricing like $196 or $199 always mean a bargain?
PSYCHOLOGICAL PRICINGA recent survey of 1,200 prices, found that 57% ended in .99 cents, and another 11% ended in .97 or .98 cents. Only about 3% were whole dollar amounts.
LOOKING BACKWhat is the difference between channels of distribution and physical distribution?What are the different types of wholesale distributors?What are trends in retailing?What are the key factors in physical distribution?What are core pricing objectives and strategies?What is the role of consumer perceptions in pricing?