Agenda

1
Agenda

• Article Review 2
• Review of Chapters 16, 17 and 21
• Saturday well do Chapters 19 and 20
• We will not discuss Chapters 18 (Wholesaling and
  Logistics) and 22 (Managing the Total Marketing
  Effort)
• Assignment for Saturday
• Evaluations

2
Developing Price Strategies and Programs

• Marty Gustafson
• EM 670S Chapter 16
• May 7, 2003

3
Setting a Price

• Before setting a price, you must decide where you
  are going to position your product and use that
  to determine a price objective.
• Maximize market share
• Maximize profit
• Survival
• Market skimming
• Partial cost recovery

4
Setting a Price

• There are 9 pricing strategies.

5
Pick a Price

• Markup Pricing
• Unit Cost Variable Cost Fixed Cost/Units Sold
• Retail Cost Unit Cost
• Target Return Pricing
• Price that gives you your Return on Investment
• Hope you sell enough!
• Perceived Value Pricing
• Value Pricing
• Going rate Pricing
• Auction Pricing

6
Evaluate your Price Often

• Customers become more price sensitive
• Demand can change rapidly or not at all if prices
  change
• Costs change
• Learning curve of production
• Variable costs of increased production

7
Pricing Problems

• What has happened with products or stores where
  everything is always on sale?
• Will you buy a car for list price? What effect
  will the current 0 and rebate deals have on you
  the next time you buy a car?

8
Designing and Managing Marketing Channels

• Marty Gustafson
• EM 670S Chapter 17
• May 7, 2003

9
Market Channels

• System of partnerships and alliances to source
  and deliver offerings
• Can require ERP system investments to align all
  channels
• Most companies have a mix of channels
• Wholesalers
• Retailers
• Telemarketers
• Internet
• Direct Sales

10
Market Channels

• The biggest decision for marketers is how much
  effort to devote to PUSH vs. PULL marketing.
• Push
• Uses sales force and promotion money to convince
  intermediaries to sell the product
• Low brand loyalty, make decisions in a store,
  impulse goods, benefits clear
• Pull
• Convince consumers to ask for the product
• High brand loyalty, differences between brands,
  people know what brand they want

11
Market Channels

• Marketers must then figure out the level of
  service required by each channel.

12
Channel Problems

• How has the internet affected traditional
  face-to-face sales channels such as at Avon?
• How can Avon handle the channel disputes between
  Avon ladies and the Internet?

13
Managing the Sales Force

• Marty Gustafson
• EM 670S Chapter 21
• May 7, 2003

14
Sales

• 12 of the total US workforce works full-time in
  Sales Occupations
• (This includes fund-raisers for non-profits,
  recruiters for colleges)
• US Companies spend more than 1 Trillion Dollars
  on sales forces and materials per year

15
Sales Strategy

• The old sales strategy was to sell enough product
  to meet a quota
• The new sales strategy is to diagnose a
  customers problem and offer a solution
• Must know how to show the customer can increase
  their profitability through your products or
  services
• Move to leveraged sales force to reduce costs
  (high end value-added solutions sold through
  direct sales, low end products sold through
  Internet, telemarketers, etc.)

16
Sales Structure

• Territories
• Products
• Industries
• Key Account Managers (growing)
• Major customer accounts assigned a team
• Promotes loyalty
• Better pricing, problem resolution