Ch13 - Pricing, Promoting and Distributing products

Question 1

market share

Answer 1

company’s percentage of the total industry sales for a specific product type
-> at the beginning, companies may initially set low prices for new products to establish market share

Question 2

cost-oriented pricing

Answer 2

considers a firm’s desire to make a profit and its need to cover production costs
price = seller cost + profit
(covers variable costs but not fixed costs)

Question 3

markup def

Answer 3

the amount added to an item’s purchase cost to sell it at a profit

Question 4

breakeven analysis

Answer 4

assesses costs versus revenues for various sales volumes and shows, at any selling price, the amount of loss or profit for each possible volume of sales (covers variable + fixed costs)

Question 5

pricing strategies for existing products

Answer 5

1 - pricing above prevailing market price for similar products (takes advantage of assumption that higher price = better quality)
2 - pricing below market prices
3 - pricing at or near market prices

Question 6

strategies for pricing new products

Answer 6

1 - price skimming : set initial high price to cover dev and production costs and generate a large profit on ea. item sold -> only works if you can convince the customers
2 - penetration pricing - set initial low price to attract customers (best when it has a lot of competitors)

Question 7

price lining

Answer 7

offering all items in certain categories at a limited number of prices (having similar products at different price points)

Question 8

psychological pricing

Answer 8

1000$ vs 999.95$ (trick customers)

Question 9

promotion def

Answer 9

techniques for communicating information about products and is part of the communication mix—the total message any company sends to customers about its product = must communicate the uses, features, and benefits of products, and marketers use an array of tools for this purpose

Question 10

promotional strategies

Answer 10

push strategy : “push” its product to wholesalers and retailers, who then persuade customers to buy it
pull strategy : appeals directly to customers, who demand the product from retailers, who in turn demand the product from wholesalers, who in turn demand the product from the manufacturer

Question 11

advertising def

Answer 11

paid, nonpersonal communication by which an identified sponsor informs an audience about a product

Question 12

distribution mix

Answer 12

the combination of distribution channels by which a firm gets products to end users

Question 13

Intermediaries and wholesalers def

Answer 13

int : help to distribute goods, either by moving them or by providing information that stimulates their movement from sellers to customers
whol : intermediaries that sell products to other businesses for resale to final consumers (retailers sell directly to customers)

Question 14

distribution channel (and 4 types)

Answer 14

path a product follows from producer to end user
1 - direct distribution (producer -> customer)
2 - retail distribution : producer -> retailer -> customer)
3 - wholesale distribution : producer -> wholesaler -> retailer -> customer)
4 - distribution by agents or brokers : producer -> agent -> customer (they receive commissions on the goods they sell)

Question 15

distribution strategies

Answer 15

Intensive distribution : product is distributed through as many channels and channel members as possible (usually low-cost customer goods)
Exclusive distribution : manufacturer grants the exclusive right to distribute or sell a product to one wholesaler or retailer in each geographic area (luxury products)
Selective distribution : between intensive and exclusive, selects only wholesalers and retailers that will give special attention to the product in terms of sales efforts, display position, and so on