©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Pricing and Promotion The Business Buying Decision Pricing and Costs Promotion CHAPTER 22

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e The Business Buying Decision GOALS ● Discuss how businesses make their buying decisions. ● Describe the steps in the business buying process. 2 CHAPTER 22

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Planning a Business Purchase ● What to purchase ● When to purchase ● From whom to purchase ● How much to purchase 3 CHAPTER 22

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Business Buying Processes ● New task purchase ● Modified rebuy ● Straight rebuy 4 CHAPTER 22

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Pricing and Costs GOALS ● Distinguish between various types of discounts and price components. ● Describe factors involved in establishing product prices and common pricing strategies. ● Discuss ways that companies try to control costs that can lead to higher prices. 5 CHAPTER 22

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Payment Terms and Discounts ● List price ● Payment terms ● Discounts ● Trade discount ● Quantity discount ● Seasonal discount ● Cash discount 6 CHAPTER 22

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Components of Price ● Selling price ● Cost of goods sold ● Operating expenses ● Margin or gross profit ● Net profit ● Markup ● Markdown 7 CHAPTER 22

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e ©2013 Cengage Learning. All Rights Reserved. Components of Selling Price 8 CHAPTER 22

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Pricing Strategies ● Pricing to meet competition ● Pricing to earn a specific profit ● Profit based on consumer demand ● Pricing to sell more products ● Pricing to provide customer services 9 CHAPTER 22

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Controlling Costs ● Careful purchasing and operating decisions ● Factors that can affect costs ● Markdowns ● Damaged or stolen merchandise ● Returned merchandise 10 CHAPTER 22

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Promotion GOALS ● Discuss the purpose of promotion in meeting business and consumer needs. ● Discuss how businesses use advertising to promote their products. ● Explain the parts of the selling process and how each is used to help customers make buying decisions that meet their needs. ● Describe the different types of sales promotions. 11 CHAPTER 22

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Promotion as Marketing Communication ● Promotional mix ● Consumer decision-making process ● Problem recognition ● Information search ● Alternative evaluation ● Purchase ● Post-purchase evaluation 12 CHAPTER 22

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Advertising ● Advertising purposes and media choices ● Planning and managing advertising ● Advertising budget ● Timing of advertising ● Advertising evaluation 13 CHAPTER 22

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Advertising Purposes ● To inform and educate consumers ● To introduce a product or business ● To announce improvement or product change ● To reinforce features and benefits ● To increase frequency of use ● To increase variety of uses ● To convince people to enter a store ● To develop a list of prospects ● To make a brand, trademark, or slogan familiar ● To improve the image of a company or product ● To gain support for ideas or causes 14 CHAPTER 22

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Types of Advertising Media ● Publication advertising ● Mass media advertising ● Outdoor advertising ● Direct advertising ● Display advertising ● Internet advertising 15 CHAPTER 22

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Truth in Advertising and Selling ● False advertising ● Full disclosure ● Substantiation ● Penalties for violations ● Case-and-desist order ● Corrective advertising ● Fines 16 CHAPTER 22

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Personal Selling ● Studying the wants of customers (buying motives) ● Presenting and demonstrating the product ● Answering customer questions ● Closing the sale ● Follow-up 17 CHAPTER 22

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Sales Promotions ● Coupons ● Promotional material ● Samples ● Demonstration ● Displays ● Self-service merchandising 18 CHAPTER 22