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 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

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. 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, man’s 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- 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. 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