10 3 MARKETING part 2 Price and Distribute
10 -3 MARKETING (part 2) Price and Distribute Products 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. SLIDE 1
CHAPTER Price- the money a customer must pay 10 SLIDE 2 for a product or service (6 FACTORS IN PRICING A PRODUCT) ● Supply and demand ● Uniqueness ● Age ● Season ● Complexity ● Convenience © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8 e
CHAPTER 10 SLIDE 3 VALUE AND PRICE ● Buyers usually want to pay the lowest price possible. ● Sellers want to charge the highest price possible. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8 e
CHAPTER PRICE A PRODUCT 10 SLIDE 4 ● 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) Selling Product Operating = + + Profit price costs expenses © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8 e
CHAPTER 10 SLIDE 5 Gross Margin- the difference between the selling price and the production costs. Gross Margin = Selling price + Product costs © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8 e
CHAPTER MARK-UP VS MARK-DOWN 10 SLIDE 6 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 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8 e
DISTRIBUTION CHAPTER 10 SLIDE 7 ● 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 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8 e
What is the difference between Direct & Indirect Distribution ● Direct channel of distribution, products move directly from the producer to the consumer. CHAPTER 10 SLIDE 8 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 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8 e
CHAPTER Wholesalers VS Retailers 10 SLIDE 9 Wholesaler- Intermediaries between manufacturers and retailers. Items in bulk Example: Furniture Warehouses, Sam’s Club Retailer- Direct contact with the customer Example: Allen Outlet Mall Stores © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8 e
CHAPTER Distribution Channels- the more 10 SLIDE 10 channels the higher the cost © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8 e
10 -4 Plan Promotion Goal 1 Justify the importance of communication in marketing. Goal 2 Identify and describe the common types of promotion. © 2012 Cengage Learning. All Rights Reserved. SLIDE 11
CHAPTER Advertising: Planned Promotion 10 SLIDE 12 ● 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. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8 e
CHAPTER 10 ADVERTISING- (3 Types) Paid promotion SLIDE 13 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 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8 e
COMPONENTS OF EFFECTIVE COMMUNICATION © 2012 Cengage Learning. All Rights Reserved. CHAPTER 10 SLIDE 14 Principles of Business, 8 e
CHAPTER 10 SLIDE 15 Checkpoint ● How does identifying a target market improve promotion communications? ● Communication can be developed and directed more specifically if a target market is identified. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8 e
CHAPTER 10 SLIDE 16 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 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8 e
CHAPTER 10 SLIDE 17 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. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8 e
CHAPTER 10 SLIDE 18 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. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8 e
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