MKT 327 Practice Exam 4

(price is what you pay with)
money or other considerations exchanged for ownership of product / service
3 roles of pricing
competitive advantage
Total Price Concept (3 parts)
time spent
Price Strategies (Pricing Decision) (strategy is direction you will go over life time)
direction price of product will take over life time
Price Strategies (4 types)



Competitive Price Strategy
– create / maintain advantages
– maintain competitive structure
– protect market share
Skimming Price Strategy
– set high initial price
– high profit margin
– invite competitors short term profits
Penetration Price Strategy
– sell to whole market
– high volume sacrifice profit margin
– keep out competition economies of scale
Price Objective (Pricing Decision) (economic objectives for profit sales and survival)
Impact positioning and competitive advantages
—profit (ROI) Oriented
——-long term
——-short term
—others (social responsibility/ survival/ non-price)
Price Tactics (Pricing Decision) (tactics is how you price it)
how product will be priced
Price tactics (2 types)
Customer oriented
Competitor Oriented
Customer oriented price tactics (4 types)
Reference Pricing
Segmented Pricing
Psychological Pricing
Dynamic Pricing
Psychological Pricing Tactic (2 types)
Odd even pricing
Pricing / Quality pricing
Odd even pricing tactic
setting price just under and even number
Price / quality pricing tactic
consistently placing price above or below average to stay consistent with image
Competitor Oriented price tactics
Leader follower pricing
going rate pricing
discount or premium pricing
geographic pricing
competitive bids
promotional pricing
Discount Pricing tactic
lower buying price
Discount Pricing tactic (3 types)
Premium Pricing tactic (1 type)
Allowance – does not formally change price
(rebates , car trade in)
Yield management Pricing (capacity management)
charging different prices to maximize revenue for set capacity
Price Orientation (price level) (Pricing Decision)
(orientation is how you calculate price)
Specifies how actual price will be calculated
– demand (value) based
– cost based
– competition based
Demand (value) based (price orientation) (cvpcp)
(demand for cv pcp)
1. customers
2. value
3. price
4. cost and profit
5. product distribution communication
Competitive / Market Based (price orientation) (dpcpc)
(Give competition dpc)
1. demand / supply forces, competitive strategies
2. price
3. cost and profit
4. product distribution communication
5. customers
Cost Based (price orientation) (pvc)
(cost of pvc)
1. product distribution communication
— value
2. cost and profit
3. price
4. value
5. customers
Channels needed because of ….
market discrepancies
Intermediary functions (3 basic types)
Considerations for choosing a market channel
Market Channel (5 types) (ddvmr)
(channels are on the ddvmr)
Distribution channel
direct channel
Vertical Channel
multiple channel
reverse channel
Distribution (marketing) channel
(distribution make available for purchase)
make product or service available for purchase by consumers or businesses
— add to price of good
— provide value
— can be direct or reverse
Direct (market) channel
product flows from manufacturer straight to end user ( doesn’t have to be face to face)
Direct marketing impacts value creation similar to
sales promotion
Reverse Channel (reverse logistics)
intermediaries are inserted between producer and consumer and perform channel functions
Vertical Marketing Channel
centrally coordinated marketing channels
(max marketing impact)
Vertical Marketing System (3 major types) (cca)
Corporate (VMS)
production and distribution under single ownership
(Manufacturing clothes and own apparel shops (forward integration))
Contractual (VMS)
Independent production and distribution firms integrate efforts
(obtain greater functional economies and market impact than alone)
(franchises – parent company lets individual own business under established name and rules)
Administered (VMS)
successive stages of production and distribution by size and influence of one channel member
(ordering wholesale amount of items when needed)
Multiple Channel
blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers
supply chain
various firms involved in performing activities required to create and deliver a product or service to consumers or industrial users
Supply chain management basic responsibilities
physical distribution
efficient consumer response
Channel Organization
(admin control is organized)
impacts administrative control organization has respect to its value creation
Channel Intensity
number of locations where product/ service is available
Selective Distribution (Intensity)
firm selects a few retail outlets in a specific area to carry products (dell)
— used to market against competitors
Intensive Distribution (intensity)
uses as many outlets as possible (coke)
Exclusive Distribution (intensity)
one retail outlets in an area carriers firm product (no competition ( gucci , louis V))
If organization distributes products through merchant wholesaler, it would receive payment from retailer or end user
FALSE> receives payment from wholesaler that bought it
Retailers create value through….
customer service
Value in Exchange
Objective worth of product
Online (Web) Community
website that allow people to talk online about topics not related to company
Corporate Website
website that allow people to talk online about topics related to company
Web page that is a public personal journal for individual or company
___ and ___ dont take title to goods they just perform only few channel functions
Rack Jobber (delivery)
furnishes shelves that display merchandise, perform all channel function, sell on consignment to retailers
Drop Shipper (desk jobber)
own merchandise they sell but don’t physically do anything
Truck Jobber
small wholesaler that have small warehouse, distribute to retailers
Wheel of retailing DEF
how new forms of retail outlets enter market