© 2012 Cengage Learning. All Rights Reserved. SLIDE 1 10-3 MARKETING (part 2) Price and Distribute...

© 2012 Cengage Learning. All Rights Reserved.SLIDE 1

10-310-3 MARKETING (part 2)MARKETING (part 2)Price and Distribute Price and Distribute ProductsProducts

Goal 1 Discuss how the selling price of a product is calculated.

Goal 2 Differentiate between a direct and an indirect channel of distribution.

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e

C H A P T E R 10SLIDE 2Price- the money a customer must pay

for a product or service(6 FACTORS IN PRICING A PRODUCT)

● Supply and demand

● Uniqueness

● Age

● Season

● Complexity

● Convenience


C H A P T E R 10SLIDE 3

VALUE AND PRICE

● Buyers usually want to pay the lowest price possible.

● Sellers want to charge the highest price possible.


C H A P T E R 10SLIDE 4PRICE A PRODUCT

● Selling price – Price paid by customer● Product costs- cost of a business to make or

purchase the product● Operating expenses- all of the expenses operating

the business in order to sell product.● Profit- the amount of money available to the business

after all costs and expenses (Revenue minus Costs)

Sellingprice

=Product

costs+

Operating expenses

+ Profit



Gross Margin- the difference between the selling price and the production costs.

Gross Margin = Selling price + Product costs


C H A P T E R 10SLIDE 6MARK-UP VS MARK-DOWN

MARK-UP

● The amount added to the cost of a product to set the selling price

● Markup on cost

● Markup on selling price

MARK-DOWN

● A reduction from the original selling price

● Reasons for markdowns:● Low demand, End of season, Flaws


C H A P T E R 10SLIDE 7DISTRIBUTION

● Distribution- How the product is delivered to the consumer.

● Channels of Distribution: The route a product goes through to make its final stop at the target customer

Example: Manufacturer by truck to wholesale by truck to retail to customer

Channel Members- all of the businesses involved in getting the final product to the customer



●Direct channel of distribution, products move directly from the producer to the consumer.

Example: Ordering a computer online from Dell

● In an indirect channel, others may participate in the movement of products from the producer to the consumer, such as transportation services and retailers.

Example: Allen Outlet Mall Store Nike has products delivered by truck from warehouse in Oklahoma

What is the difference between Direct & Indirect Distribution


C H A P T E R 10

Wholesalers VS Retailers

Wholesaler- Intermediaries between manufacturers and retailers. Items in bulk

Example: Furniture Warehouses,

Sam’s Club

Retailer- Direct contact with the customerExample: Allen Outlet Mall Stores

SLIDE 9


C H A P T E R 10

Distribution Channels- the more channels the higher the cost

SLIDE 10

© 2012 Cengage Learning. All Rights Reserved.SLIDE 11

10-410-4 Plan PromotionPlan Promotion

Goal 1 Justify the importance of communication in marketing.

Goal 2 Identify and describe the common types of promotion.



Advertising: Planned Promotion

● Promotion- any form of communication to inform, persuade or remind customers about a product or service.

● Effective Communication- the exchange of information so that there is common understanding by everyone.

● Personal Selling- Direct, individualized promotion face-to-face with potential customer.


C H A P T E R 10SLIDE 13ADVERTISING- (3 Types) Paid promotion

of a product, service, or company

1) PRINT- printed form of advertising

Ex: Magazine, Newspaper, Mail Flyer

Cheap but effective in specific areas

2) BROADCAST- Advertising through light, sound, or motion Ex: TV or Radio

Expensive but very effective

3) CYBER- Online Advertising Ex: Pop-up Ads Cost depends on the web site


C H A P T E R 10SLIDE 14COMPONENTS OF EFFECTIVE

COMMUNICATION



Checkpoint

● How does identifying a target market improve promotion communications?● Communication can be developed and

directed more specifically if a target market is identified.



TYPES OF PROMOTION● Merchandising- promotional activities

designed to generate sales in the retail setting.● VISUAL MECHANDISING- Signage ● DISPLAY- A display of products usually

placed near the front door/window



Checkpoint

● Describe the advantages and disadvantages of the major types of promotion.● Personalized promotion allows the provider to

meet customers and identify customer needs. ● It is, however, the most expensive type of

promotion. ● Mass promotion reaches a larger target market

and is much less expensive. ● It does not, however, provide for individualized

service, and sales (results) are often not immediate.


C H A P T E R 10

ONLINE RESEARCH

● Superbowl Ads- Watch and analyze superbowl Ads.

www.superbowl-ads.com

● In 2014 the average price per 30 second ad was around 4 million dollars each.

SLIDE 18

© 2012 Cengage Learning. All Rights Reserved. SLIDE 1 10-3 MARKETING (part 2) Price and Distribute...

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