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Pricing, Channels, Logistics

Pricing, Channels, Logistics. 12: Pricing Strategies/Programs 13: Selecting/Managing Channels 14: Retailing/Wholesaling/Logistics. Rent, tuition, fare, interest, donations

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Pricing, Channels, Logistics

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  1. Pricing, Channels, Logistics 12: Pricing Strategies/Programs 13: Selecting/Managing Channels 14: Retailing/Wholesaling/Logistics

  2. Rent, tuition, fare, interest, donations Mistakes? Cost-oriented, not revised enough; independent of the mkt mix; not varied for prod items, segments, & purchase occasions Objective: survival; maximize profit; maximize market share Price skimming (quality, intro of PLC) Penetration pricing (cost leadership, intro of PLC) Pricing

  3. Setting Price • Considerations: price sensitivity (medicine vs beef) (distinctiveness, substitutes, proportion of income, complementary) • Customer assessments – unique product features, customer demand schedule • Competitive benchmarks • Costs • Breakeven point; markups; target-return pricing

  4. Perceived Value Pricing • Low price for high value (computers); reengineer to become low-cost producer • EDLP – everyday low pricing • High-low pricing (sales) • Going-rate pricing (benchmark) • Sealed-Bid • Psychological (reference price; $199 vs $205)

  5. Geo and Global (barter, compensation, buyback, offset) Discounts/allowances (cash, quantity, functional, seasonal, promo allowances) Promotional (loss-leader, event, rebates, interest…) Discriminatory (segment, prod form, image, location, timing) if segments, lower-priced can’t sell to higher, no ill will Product Mix pricing (product lines, features, captive-product, two-part for svcs, by-product, bundling Adapting Price

  6. Price Changes • Initiating Price cuts (excess capacity, drive for market share, competitors match?) • Initiating Price increases (inflation, anticipatory, overdemand—delayed quotes, escalator clauses, unbundling, reduction of discounts) • Benchmarking – competitive moves, countermoves

  7. Functions & Flows Information Terms of ownership Find suppliers/mans Assume risks Storage Movement of physical products Payment, financing Question is not whether the function will be performed, but who will perform which functions Channel Levels MWRC; Direct (0-level) MC 1,2,3-level channels Agents, jobbers, man’s reps, sales branches. Marketing Channels

  8. Channel-Design • Customers’ desired service output levels (lot size, waiting time, spatial convenience, product variety, service backup) • Channel presence (intensive distribution-convenience products; selective distribution-shopping products; exclusive distribution-specialty products) • Evaluating Channel alternatives (economic, control, adaptive criteria)

  9. Vertical Marketing Systems • M – W – R – C • Corporate (ownership) • Administered (leader, power) • Contratual (wholesaler-sponsored voluntary chains, retailer cooperatives, franchises) • Forward vertical integration (M – W) • Backward vertical integraatoin (R – W)

  10. Conflict & Cooperation • Multichannel (Web and stores; or discount stores and department stores) • Slotting fees, display fees, exit fees, • Why? Goal incompatibility, unclear roles, differences in perception, great dependence • Managing – superordinate goals, exchange people, cooptation, diplomacy/arbitration

  11. Legal & Ethical Issues Exclusive dealing Exclusive territories Tying agreements Dealers’ rights Logistics M = T + FW + VW + S M: total market-logistics costs T: total freight cost FW: fixed warehouse cost VW: variable warehouse costs S: lost sales from delivery delay Channels & Logistics

  12. Retailers – self, limited, full service The more merchandise on the floor, the lower the status of the store Product assmnt vs depth Atmospherics Cost vs Prestige/quality Web /&vs brick presence Wholesaling Sell/promote; buy and build assortments; break bulk; warehouse; transport; finance; bear risk; provide information; mngt services Merchant; full, limited service; brokers; agents; man reps 14: Logistics

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