1. CHAPTER OBJECTIVES © SOUTH-WESTERN EDUCATIONAL PUBLISHING PRICING AND PROMOTION nDiscuss how businesses and consumers make their buying decisions. nDescribe factors involved in establishing product prices and common pricing strategies. nDiscuss ways that companies try to control costs that can lead to higher prices. nDiscuss the purpose of promotion in meeting business and consumer needs. nIdentify the common promotional methods. nExplain the parts of the selling process and how each is used to help customers make effective buying decisions. nIdentify important laws and regulations that apply to advertising and promotion. 2323

2. © SOUTH-WESTERN EDUCATIONAL PUBLISHING THE BUSINESS BUYING DECISION nWhat to purchase nWhen to purchase nFrom whom to purchase nHow much to purchase

3. © SOUTH-WESTERN EDUCATIONAL PUBLISHING PAYMENT TERMS AND DISCOUNTS nPayment terms nDiscounts nTrade discount nQuantity discount nSeasonal discount nCash discount

4. © SOUTH-WESTERN EDUCATIONAL PUBLISHING COMPONENTS OF PRICE nSelling price nCost of goods sold nOperating expenses nMargin or gross profit nNet profit nMarkup nMarkdown

5. © SOUTH-WESTERN EDUCATIONAL PUBLISHING COMPONENTS OF SELLING PRICE $.05 Net Profit $.35 Operating Expenses $1.00 Selling Price $.40 Margin or Gross Profit $.60 Cost of Goods Sold

6. © SOUTH-WESTERN EDUCATIONAL PUBLISHING PRICING STRATEGIES nPricing to meet competition nPricing to earn a specific profit nPricing based on consumer demand nPricing to sell more products nPricing to provide customer services

7. © SOUTH-WESTERN EDUCATIONAL PUBLISHING CONTROLLING COSTS nMarkdowns nDamaged or stolen merchandise nReturned merchandise

8. © SOUTH-WESTERN EDUCATIONAL PUBLISHING PROMOTION AS MARKETING COMMUNICATION Consumer Decision-Making Process nProblem recognition nInformation search nAlternative evaluation nPurchase nPost-purchase evaluation

9. © SOUTH-WESTERN EDUCATIONAL PUBLISHING n To inform and educate. n To introduce product or business. n To announce improvement or product change. n To reinforce features and benefits. n To increase frequency of use. n To increase variety of uses. ADVERTISING PURPOSES n To convince people to enter a store. n To develop a list of prospects. n To make a brand, trademark, or slogan familiar. n To improve the image of a company of product. n To gain support for ideas or causes.

10. © SOUTH-WESTERN EDUCATIONAL PUBLISHING nPublication nMass media nOutdoor nDirect nDisplay nInternet MEDIA CHOICES

11. © SOUTH-WESTERN EDUCATIONAL PUBLISHING PLANNING AND MANAGING ADVERTISING nThe advertising budget nTiming of advertising

12. © SOUTH-WESTERN EDUCATIONAL PUBLISHING PERSONAL SELLING nStudying the wants of customers nPresenting and demonstrating the product nAnswering customer questions nClosing the sale nFollow-up

13. © SOUTH-WESTERN EDUCATIONAL PUBLISHING SALES PROMOTIONS Sales promotions — any promotional activities other than advertising and personal selling intended to motivate customers to buy

14. © SOUTH-WESTERN EDUCATIONAL PUBLISHING TRUTH IN ADVERTISING AND SELLING nFalse advertising nFull disclosure nSubstantiation nCease and desist order nCorrective advertising