Supermarkets are self serve retailers that specialize in food and some non food products
A merchant wholesaler is an institution that buys goods from manufacturers and resells them to businesses, gov agencies and other wholesalers or retailers
As products move through the marketing channel, channel members provide specialization and division of labor, overcome discrepancies and provide contact efficiency
Retailing can be defined as all activities directly related to the sale of goods and services to the ultimate consumer for personal, nonbusiness use
The six Ps of retailing are product, place, price, promotion, personnel, planning
A marketer using a profit maximization strategy will charge the highest prices the market will bear
FALSE (increase customer satisfaction and cut operation costs)
The direct channel is used more often in consumer markets than in business-to-business markets
Price should not be used as a promotional tool
FALSE? CH 15/18
The logistical functions performed by intermediaries include physically distributing, storing, sorting and financing
Many businesses find recessions to be an excellent time to build market share through use of price shading
FALSE pg 327
Jones soda is positioned as the anti coke. In the earlier years, few mainstream retailers sold Jones soda. Fans had to get Jones in surf shops, tattoo parlors, bookstores, adding to the brands mystique. Jones soda used its ***** to create competitive advantage.
_____are large departmentalized self service retailers that specialize in wide assortments of food and non food items
Price is best described as that
which is given up in exchange to acquire a good or service
_____is defined as all activities directly related to the sale of goods and services to the ultimate consumer for personal and non business use or consumption.
Why are marketing managers finding it more difficult to set prices in today’s environment?
The high rate of new product introductions has led to careful reevaluation by customers?
An organization is using ______ when it sets prices so that the total revenue is as large as possible relative to total cost.
Kraft Foods produces millions of packages of Chips Ahoy cookies each year, but consumers only want to purchase one package at a time. The difference between what Kraft produces and what consumers want to buy is _____
Two effective pricing tactics that can be used during a recession to build or hold market share are ____
Value based pricing and bundling or unbundling. (pg 32)
A 16oz bottle of Prairie Herb vinegar sells for 4.95, and a 16oz bottle of Heinz vinegar sells for 1.05. PH vinegar is new to the market and perceived to be of higher quality and provides a unique flavor to foods used the same way as Heinz. PH vinegar is most likely using a _____
a price skimming policy
As a short term pricing objective, ______ can be effectively used on a temporary basis to sell off excessive inventory
sales maximization
Top Of Mind Awareness reached by being a well-known brand
Every Day Low Prices on any given/average basket
*Prices always change because they want the lowest price
*More variety = higher prices
*Bulk = cheaper
value price marketing deep cuts on few items overall increase $
Number of target consumers exposed to advertisement
Number of times an individual is exposed to an advertisement

(more important than reach)

Pull Strategy
Stimulates consumer demand with promotional efforts on the end of the consumer

(communicate directly to consumer & “pull” through channel)

Push Strategy
Selling to the wholesaler or retailer to carry the product

“push” through the channel

Creates the look of a perfectly stocked store
Impulse Buy
Unplanned decision made just before the purchase
Shelf Talker
Printed card or sign to call the buyers attention
Create an outline that compares strengths and weaknesses of radio, TV, Print, and Billboard advertising. Determine the combination of a $100,000 ad budget FL should spend on the product promotion. How could you use PR in this promotion?
3 examples why food marketers have a method to madness of marketing properly
Identify 4 stages in product lifecycle, the promotional theme for each stage and 3 distinguishing characteristics
A mind that is stretched by a new experience can never go back to its old dimensions” Apply to marketing
Marketing Channel Functions
Transactional Functions–> contacting and promoting (potential customers), negotiating terms, assuming inventory risk

Logistical Functions–> physically distributing (transportation and sorting goods), storing, sorting

Facilitating Functions–> researching (gathering information about other channel members and consumers) and financing

Factors Affecting Channel Choice
Market Factors–> target consumers (size of market too)
Product Factors–> more customized = direct, more standard = intermediaries
Producer Factors
Levels of Distribution Intensity
Intensive Distribution–> max market coverage
Selective Distribution
Exclusive Distribution–> specialty goods
types of supply chain integration
technology and planning
material and service supplier
internal operations
modes of transportation
AIDA (promotional mix)
a model that outlines the process for achieving promotional goals in terms of stages of consumer involvement with the message


consumer sales promotion
targets the ultimate consumer market
trade sales promotion
directed to members of the marketing channel such as retailers and wholesalers
goal of sales promotion
immediate purchase–> short term choice
tools for consumer sales promotion “pull”
*coupons and rebates
*premiums –> extra item offered to the consumer in exchange for purchase proof (happy meal)
*loyalty marketing programs–> reward loyal customers for purchases
*point of purchase display–>promotional display set up by retailer to advertise product and create traffic
*online sales promotion
tools for trade promotion “push”
trade allowance (price reduction offer)
push money
free merchandises
store demonstrations
personal selling
a purchase situation involving a personal, paid-for communication between two people in attempt to influence each other

(good with complex goods with small customer base)
ex: jets/ michael kors

relationship selling
builds trust
win-win situation
multiple time selling (continued relationship)
ex: heavy machinery
value is based upon
perceived satisfaction

price paid is based on the satisfaction consumers expect to receive from a product (not utility they actually receive)

price x quantity sold
Types of Pricing Objectives
1. Profit Oriented
2. Sales Oriented
3. Status Quo
Profit Oriented P.O.
Profit Maximization
Satisfactory Profits
Target Returns on Investments
Profit Maximization
setting prices so that total revenue is as large as possible relative to costs –> increasing customer satisfaction/ reduce costs
Satisfactory Profits
strive for profits that are satisfactory to stockholders (consistent with the level of risk)
Target Return on Investment (ROI)
a percentage that puts a firm’s profits into perspective by showing profits relative to investment
Sales Oriented P.O.
based on market share or on dollar or unit sales

Market Share
Sales Maximization

Market Share
a company’s product sales as a percentage of total sales for that industry

increasing market share is an indicator of the effectiveness of their marketing mix

Sales Maximization
such a firm ignores profits, competition, and the marketing environment as long as sales are rising

short on funds or a unforeseen future

no profitability in the long run

Status Quo Pricing
a pricing policy that maintains existing prices or meets the competition’s prices

ex: gas stations

the quantity of a product that will be sold in the market at various prices for a certain period
the quantity of a product that will be offered to the market by a supplier at various prices for a certain time
Factors that affect elasticity
availability of substitutes
price relative to purchasing power
product durability
rate of inflation
Markup Pricing
the cost of buying the product from the producer, plus the amounts for profits and for expenses not otherwise accounted for
the practice of marking up prices by 100%
profit maximization pricing
a method of setting prices that occurs when marginal revenue equals marginal cost
Types of Pricing (Cost Determinate)
Markup Pricing
Profit Maximization Pricing
Break-Even Pricing
Break-Even Pricing
a method of determining what sales volume must be reached before total revenue equals total costs
Marketing Mix
How to set a price on a product
1. Establish pricing goals
2. Estimate demand, cost, and profits
3. Choose a pricing strategy
4. Fine-Tune the base price with pricing tactics
Establish Pricing Goals
Profit Oriented
Sales Oriented
Status Quo
Pricing Strategies
Price Skimming
Penetration Pricing
Status Quo Pricing
Price Skimming
used when product is perceived to have unique advantages

-a pricing policy whereby a firm charges a high introductory price, often coupled with heavy promotion

Penetration Pricing
opposite of price skimming
when aiming at increasing market share
price-sensitive markets
high sales
-a pricing policy whereby a firm charges a relatively low price for a product initially as a way to reach the market mass
Status Quo Pricing
charging a price identical to or very close to the competition’s price
Price Fixing
an agreement between two or more firms on the price they will charge for a product

ILLEGAL–> high prices to customers

Predatory Pricing
the practice of charging a very low price for a product with the intent of driving competitors out of business or out of a market


Base Price
the general price level at which the company expects to sell the good or service
Value-Based Pricing
setting the price at a level that seems to the customer to be a good price compared to the prices of other options
Pricing Products Too Low
loose profits because they are met by competitors
FOB origin pricing
requires buyer to take freight costs from shipping point
Single Price Tactic
a price tactic that offers all goods and services at the same price (itunes)
Flexible Pricing
a price tactic in which different prices for essentially the same merchandise bought in equal quantities

ex: cars

Price Lining
the practice of offering a product line with several items at specific price points
Leader Pricing
a price tactic in which a product is sold near or even below cost in the hope that shoppers will buy other items once in the store
Bait Pricing
a price tactic that tries to get consumers into a store through false or misleading price advertising and then uses high pressure selling to persuade consumers to buy expensive goods
Price Bundling
marketing two or more products in a single package for a special price
reducing the bundle of services that comes with the basic product

(pay for gift wrapping)

Two Part Pricing
a price tactic that charges two separate amounts to consumer a single good or service

gym/amusement parks

Consumer Penalties
an extra fee paid by the consumer for violating terms of purchase
Joint Costs
costs that are shared in the manufacturing and marketing of several products in a product line
Pricing During Inflation
Cost-Oriented Tactics
Demand-Oriented Tactics
Cost Oriented Tactics
Delayed Quotation Pricing –> a firm price is not set until the item is either finished or delivered

Escalator Pricing –> final price reflect cost increases between order and delivery

Demand Oriented Pricing Tactics
Price Shading–> the use of discounts by salespeople to increase demand for one or more products in a line