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10-3 MARKETING (part 2) Price and Distribute Products

10-3 MARKETING (part 2) Price and Distribute Products. Goal 1 Discuss how the selling price of a product is calculated. Goal 2 Differentiate between a direct and an indirect channel of distribution.

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10-3 MARKETING (part 2) Price and Distribute Products

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  1. 10-3 MARKETING (part 2)Price and Distribute Products Goal 1 Discuss how the selling price of a product is calculated. Goal 2 Differentiate between a direct and an indirect channel of distribution.

  2. Price- the money a customer must pay for a product or service(6 FACTORS IN PRICING A PRODUCT) • Supply and demand • Uniqueness • Age • Season • Complexity • Convenience

  3. VALUE AND PRICE • Buyers usually want to pay the lowest price possible. • Sellers want to charge the highest price possible.

  4. PRICE A PRODUCT • Selling price – Price paid by customer • Product costs- cost of a business to make or purchase the product • Operating expenses- all of the expenses operating the business in order to sell product. • Profit- the amount of money available to the business after all costs and expenses (Revenue minus Costs)

  5. Gross Margin- the difference between the selling price and the production costs. Gross Margin = Selling price + Product costs

  6. MARK-UP VS MARK-DOWN MARK-UP • The amount added to the cost of a product to set the selling price • Markup on cost • Markup on selling price MARK-DOWN • A reduction from the original selling price • Reasons for markdowns: • Low demand, End of season, Flaws

  7. DISTRIBUTION • Distribution- How the product is delivered to the consumer. • Channels of Distribution: The route a product goes through to make its final stop at the target customer Example: Manufacturer by truck to wholesale by truck to retail to customer Channel Members- all of the businesses involved in getting the final product to the customer

  8. What is the difference between Direct & Indirect Distribution • Direct channel of distribution, products move directly from the producer to the consumer. Example: Ordering a computer online from Dell • In an indirect channel, others may participate in the movement of products from the producer to the consumer, such as transportation services and retailers. Example: Allen Outlet Mall Store Nike has products delivered by truck from warehouse in Oklahoma

  9. Wholesalers VS Retailers Wholesaler- Intermediaries between manufacturers and retailers. Items in bulk Example: Furniture Warehouses, Sam’s Club Retailer-Direct contact with the customer Example: Allen Outlet Mall Stores

  10. Distribution Channels- the more channels the higher the cost

  11. 10-4 Plan Promotion Goal 1 Justify the importance of communication in marketing. Goal 2 Identify and describe the common types of promotion.

  12. Advertising: Planned Promotion • Promotion- any form of communication to inform, persuade or remind customers about a product or service. • Effective Communication- the exchange of information so that there is common understanding by everyone. • Personal Selling- Direct, individualized promotion face-to-face with potential customer.

  13. ADVERTISING- (3 Types) Paid promotion of a product, service, or company 1) PRINT- printed form of advertising Ex: Magazine, Newspaper, Mail Flyer Cheap but effective in specific areas 2) BROADCAST- Advertising through light, sound, or motion Ex: TV or Radio Expensive but very effective 3) CYBER- Online Advertising Ex: Pop-up Ads Cost depends on the web site

  14. COMPONENTS OF EFFECTIVE COMMUNICATION

  15. Checkpoint  • How does identifying a target market improve promotion communications? • Communication can be developed and directed more specifically if a target market is identified.

  16. TYPES OF PROMOTION • Merchandising- promotional activities designed to generate sales in the retail setting. • VISUAL MECHANDISING- Signage • DISPLAY- A display of products usually placed near the front door/window

  17. Checkpoint  • Describe the advantages and disadvantages of the major types of promotion. • Personalized promotion allows the provider to meet customers and identify customer needs. • It is, however, the most expensive type of promotion. • Mass promotion reaches a larger target market and is much less expensive. • It does not, however, provide for individualized service, and sales (results) are often not immediate.

  18. ONLINE RESEARCH • Superbowl Ads- Watch and analyze superbowl Ads. www.superbowl-ads.com • In 2014 the average price per 30 second ad was around 4 million dollars each.

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