Pricing, Channels, Logistics

1
Pricing, Channels, Logistics

• 12 Pricing Strategies/Programs
• 13 Selecting/Managing Channels
• 14 Retailing/Wholesaling/Logistics

2
Pricing

• 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)

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
Adapting Price

• Discriminatory (segment, prod form, image,
  location, timing) if segments, lower-priced cant
  sell to higher, no ill will
• Product Mix pricing (product lines, features,
  captive-product, two-part for svcs, by-product,
  bundling

• Geo and Global (barter, compensation, buyback,
  offset)
• Discounts/allowances (cash, quantity, functional,
  seasonal, promo allowances)
• Promotional (loss-leader, event, rebates,
  interest)

6
Price Changes

• Initiating Price cuts (excess capacity, drive for
  market share, competitors match?)
• Initiating Price increases (inflation,
  anticipatory, overdemanddelayed quotes,
  escalator clauses, unbundling, reduction of
  discounts)
• Benchmarking competitive moves, countermoves

7
Marketing Channels

• 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, mans reps, sales branches.

8
Channel-Design

• Customers desired service output levels (lot
  size, waiting time, spatial convenience, product
  variety, service backup)
• Channel presence (intensive distribution-convenien
  ce 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
Channels Logistics

• 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

12
14 Logistics

• 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