MKTG 222- Week 6

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  • Created by: erised
  • Created on: 07-05-17 12:43

Channel Intermediaries

B2C

Producer                                                                                                                  Consumer
Producer                                                                                  Retailer                    Consumer
Producer                                     Whole Saler                          Retailer                   Consumer
Producer        Agent                   Whole Saler                          Retailer                    Consumer

  • e.g. Nike: Producer    Consumer
  • e.g. Nike: Producer     Retailer     Consumer - Nike highstreet store
  • e.g. Nike: Producer     Whole saler    Retailer    Consumer - Through Sports Direct

B2B

Producer                                                                                                                    Business
Producer           Agent                                                                                               Business
Producer                                                      Distributor                                             Business
Producer           Agent                                 Distributor                                             Business

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Channel Strategies

Factors that affect channel selection:

  • Market - customer expectations - characteristics 
  • Producer - What are our capabilities?
  • Product - Is it perishable? - Difficult to store?
  • Competition - Who controls the key distribution channels? - Can we offer a different channel?
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Intensity of Distribution

  • Intensive - Fast moving consumer goods (FMCG), brand switching, impulse buy, saturating the market
  • Selective - Use of limited number of geographically stategic outlets. Buyers are willing to shop around. Selection of appropiate outlets
  • Exclusive - Exclusive distributors or outlets only.
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Types of Retailing

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Pricing Decisions - Cost

Cost Based Pricing is pricing by adding a mark up to their total costs. 

Breakeven where TR=TC

Pros: Gives an indication of the break even price

Cons: Doesn't think about the market. Demand forecast might be wrong. If sales go down, the price goes up.

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Pricing Decisions - Competition

Competition and Market Lead Pricing

Think about:

  • Where we will be sitting compared to the competitors?
  • What is the value for my target segment?
  • How much are people willing to pay for my total product?

Market research to work out how much competitiors charge in target segments.

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Pricing Decisions - Demand

Elasticity of Demand 

If PED>1. As price increases demand decreases. Elastic demand

If PED<1. as price increases demand stays the same (slighty fall). Inelastic demand. 

How we determind PED:

  • Subsitutites - How many? - How close?
  • Brand Loyalty.
  • Nature of product - luxury vs. essential?
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Pricing Decisions

Positioning

A price is an indicator of quality. A high status, luxury brand needs to charge high prices.

Product Life Cycle

Skimming (high price for entry) e.g apple vs. Penetration (low price for entry) e.g FMCG.

Comparing With Other Product Lines

Tesco finest vs. Tesco value

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