Farag

Question 1

it is the amount of money charged for a product or service. It is the sum of all the values that consumers give up in order to gain the benefits of having or using a product or service.

it is the only element in the marketing mix that produces revenue; while all other marketing mix elements represent costs.

Answer 1

Price

Question 2

Factors to Consider When Setting Prices

Answer 2

Customer perceptions of the product’s value set the ceiling for prices. If customer perceive that the price is greater than the product’s value, they will not buy the product.
Product cost set the floor of prices. If the company prices the product below its cost, company profits will suffer.
In setting prices within these limits (price ceiling and floor) the company must also consider** other internal** and external factors:
Internal factors include the company’s overall marketing strategy, objectives, marketing mix, and other organizational considerations.
External factors include the nature of the market and demand, competitors’ strategies and prices, and other environmental factors.

Question 3

is customer driven
Setting the price based on buyers perceptions of value rather than seller’s cost.
OR uses the buyers’ perceptions of value, not the sellers cost, as the key to pricing.
Price is considered before the marketing program is set.

Answer 3

Value-based Pricing

Question 4

offers the right combination of quality and good service to fair price

Existing brands are being redesigned to offer more quality for a given price or the same quality for less price
Everyday low pricing (EDLP) involves charging a constant everyday low price with few or no temporary price discounts
High-low pricing involves charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items

Answer 4

Good-value pricing

Question 5

attaching value-added features and services to differentiate a company’s offers and to support charging higher prices.

Pricing power is the ability to escape price competition and to justify higher prices and margins without losing market share.

Answer 5

Value-added pricing

Question 6

is product driven
involves setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for its effort and risk.

It use adds up cost of making the product and sets a price that covers costs plus a target profit as the key to pricing

Answer 6

Cost-based pricing

Question 7

New porducts strategy Market skimming pricing

Answer 7

is setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales.
It is a strategy with high initial prices to “skim” revenue layers from the market

Market skimming makes sense only under certain conditions:
1. Product quality and image must support its higher price
2. Buyers must want the product at that price
3. Competitors should not be able to enter the market easily
4. Costs of producing the product in a smaller volume should not be so high that they cancel the advantage of charging more

Question 8

Market penetration pricing

Answer 8

• New-Product Pricing Strategies

: is setting a low initial price in order to penetrate the market quickly and deeply to attract a large number of buyers quickly to gain market share.
Which means setting a low price for a new product in order to attract a large number of buyers and a large market share.
Ex: Hyper One, Spinney’s and other discount retailers use penetration pricing

Several conditions must be met for this low price strategy to work:
1. Market must be highly price sensitive so that low price produces more market growth
2. production and distribution cost must fall as sales volume increases
3. Low prices must keep competition out of the market

Question 9

offer producers greater efficiency in making goods available to target markets. Through their contacts, experience, specialization, and scale of operations, intermediaries usually offer the firm more than it can achieve on its own.
From an economic view, intermediaries transform the assortment of products into assortments wanted by consumers
Channel members add value by bridging the major time, place, and possession gaps that separate goods and services from those who would use them

Answer 9

How Channel Members Add Value
Intermediaries

Question 10

Companies can design their distribution channels to make products and services available to customers in different ways.

Answer 10

The number of intermediary levels indicate the length of channel.
1. Direct marketing channel has no intermediaries; the company sells directly to consumers.
2. Indirect marketing channels contain one or more intermediaries.

Question 11

Consist of one or more independent producers, wholesalers, and retailers. Each seeks to maximize its own profits, and there is little control over the other members and no formal means for assigning roles and resolving conflict. (Ex.: Convenience Products)

Answer 11

Conventional distribution systems

Question 12

provide channel leadership and consist of producers, wholesalers, and retailers, acting as a unified system

Answer 12

Vertical marketing systems (VMSs

Question 13

Distribution strategies

Answer 13

1. Intensive distribution: the products are available everywhere or widespread (convenience products).
2. Selective distribution: the products are available in a certain (chosen or selective) places (shopping products).
3. Exclusive distribution: the products are available in one place only (specialty products).

Question 14

The is the specific blend of advertising, public relations, personal selling, and direct-marketing tools that the company uses to persuasively communicate customer value and build customer relationships

Answer 14

promotion mix

Question 15

is any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor by using different media such as:
Broadcast
Print
Internet
Outdoor

Answer 15

1. Advertising

Question 16

is the short-term incentive to encourage the purchase or sale of a product or service such as:
Discounts
Coupons
Displays
Demonstrations

Answer 16

2. Sales promotion

Question 17

is the personal presentation by the firm’s sales force for the purpose of making sales and building customer relationships through
Sales presentations
Trade shows
Incentive programs

Answer 17

3. Personal selling

Question 18

involves building good relations with the company’s various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events such as:
- Press releases
- Sponsorships
- Special events
- Web pages

Answer 18

4.Public relations

Question 19

involves making direct connections with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships—through the use of direct mail, telephone, direct-response television, e-mail, and the Internet to communicate directly with specific consumers such as using
- Catalog
- Telemarketing
- Kiosks

Answer 19

5. Direct marketing