MARKETING CHANNELS Pricing Strategy Berman Chapter 9 Version

MARKETING CHANNELS Pricing Strategy Berman Chapter 9 Version 3. 0 1

• • • A. Introduction B. Price vs Non Price Competition C. Pricing Objectives D. Overall Pricing Strategy E. Cost-Oriented Pricing F. Demand-Oriented Pricing G. Competition-Oriented Pricing H. Integrated Pricing I. Pricing policies J. Gray Markets K. Adapting Price Strategies L. Legal Aspects 2

• A. Introduction • B. Price vs Non Price Competition 3

• C. Objectives – sales based – profit based – gross margin, return on investment – status quo based • D. Overall Pricing Strategy – cost approach – demand approach – competition approach 4

• E. Cost - Oriented Pricing – markup pricing • at retail, at cost – variable markup policies – planned initial markup percent by retailers – direct product profitability • winners - dogs, sleepers - traffic builders • sources of gross margin data – Robert Morris Associates – Dun and Bradstreet Annual Statement Studies – Progressive Grocer Annual Report • small samples, different years and geogs 5

• F. Demand-Oriented Pricing – demand minus, chain markups • G. Competition-Oriented Pricing – competitive bidding • H. Integrated Approach to Pricing Strategy 6

• I. Determining Pricing Policies – High, Low Pricing • forward buying, trade loading – Every Day Low Pricing EDLP • J. Gray Market Goods • domestic vs foreign • parallel vs diverted – Risks of Gray market • free rider phenomenon 7

• Strategies to limit gray marketing – Identify firms that have resold to gray resellers – Set quantity discounts schedule and price strategy by market to reduce transshipping – differentiate products sold to different markets – develop customer awareness of risks with transshipped goods – Develop an MIS to monitor above average purchase levels by companies • Price Guarantees • Selling Against the Brand 8

• K. Adapting the Price Strategy – additional discounts, markups • L. Legal Aspects of Pricing – resale price maintenance – state sales-below-cost laws – gray market goods – price discrimination • Robinson Patman – Discounts and Terms • availability rule 9