Fourth Edition
PART 4 . . . . . . . . . . . . . . . . . . . . . . . .
Understanding Principles of Marketing
Copyright ©2003 Prentice Hall, Inc.
Chapter 11
Pricing, Promoting, and
Distributing Products
Copyright ©2003 Prentice Hall, Inc.
11 - 2
“If there is no price to be paid,
it is also not of value”
~Albert Einstein
Copyright ©2003 Prentice Hall, Inc.
11 - 3
Key Topics
Pricing objectives, price-setting tools, and
pricing strategies and tactics
Promotion and the promotion mix
Personal selling and sales promotion
Channels of distribution
Retailing and retail stores
The physical distribution process
Copyright ©2003 Prentice Hall, Inc.
11 - 4
Pricing to Meet Business Objectives
Profit maximizing objectives
Market share objectives
Copyright ©2003 Prentice Hall, Inc.
11 - 5
Price Setting Tools
Cost Oriented Pricing
Markup
Markup percentage 
Sales price
Breakeven Analysis
Total fixed costs
Breakeven point (in units) 
Price - Variable cost
Copyright ©2003 Prentice Hall, Inc.
11 - 6
Pricing Strategies
Pricing existing products
Pricing new products
Price skimming
Penetration pricing
Pricing e-commerce products
Dynamic vs. fixed
Copyright ©2003 Prentice Hall, Inc.
11 - 7
Pricing Tactics
Price lining
Psychological pricing
Odd-even pricing
Discounts
Copyright ©2003 Prentice Hall, Inc.
11 - 8
Promotional Objectives
Communicate information
Position products
POSITIONING
An identifiable product image
in the minds of consumers
Add value
Control sales volume
Copyright ©2003 Prentice Hall, Inc.
11 - 9
The Promotional Mix
The combination of tools used to promote
a product
Advertising
Personal Selling
Sales Promotions
Publicity & Public Relations
Copyright ©2003 Prentice Hall, Inc.
11 - 10
Promotion and the Buyer Decision Process
Stages of the Consumer Buying Process
Problem (Need)
Recognition
Information
Seeking
Evaluation of
Alternatives
Purchase
Decision
Postpurchase
Evaluation
ADVERTISING
ADVERTISING
Personal Selling
SALES
PROMOTION
ADVERTISING
Publicity
PERSONAL
SELLING
Personnel Selling
Personal Selling
Most Effective Promotional Tool
Copyright ©2003 Prentice Hall, Inc.
11 - 11
Advertising Promotions
Advertising Media
Communication devices for carrying a seller’s
message to potential customers
Newspapers
Television
Direct mail
Radio
Magazines
Outdoor
Copyright ©2003 Prentice Hall, Inc.
25%
22%
18%
7%
5%
1%
11 - 12
Network Television Ad Expenditures (millions)
$300
$200
$100
Copyright ©2003 Prentice Hall, Inc.
$400
297
288
286
274
McDonald's
Tricon Globa
Restaurants
DaimlerChrysler
WorldCom
365
Pfizer
383
Ford
Philip Morris
$500
Johnson & Johnson
Proctor & Gamble
$900
General Motors
Top 10 Network TV Advertisers
$1,000
888
$800
$700
$600
621
467
365
$0
11 - 13
Internet Advertising
High Potential, But With Limitations
Targeted advertising is key
Data Mining
Data Warehousing
Copyright ©2003 Prentice Hall, Inc.
11 - 14
Personal Selling
One-on-One Interaction With Potential Buyers
Telemarketing
Using the telephone to
perform personal selling
Order Processing
Creative Selling
Missionary Selling
Copyright ©2003 Prentice Hall, Inc.
11 - 15
Sales Promotions
Short-term Promotional Activity
Goal: To stimulate consumer buying or cooperation
from distributors and sales agents
Coupons
Point-of-purchase displays
Premiums
Trade shows
50%
OFF
Contests
Samples
Copyright ©2003 Prentice Hall, Inc.
11 - 16
Publicity and Public Relations
Publicity
When information about a company or product is
communicated to the public via mass media
PRO
CON
Free to the
company
The company
has no control
Public Relations
Company-influenced publicity
Copyright ©2003 Prentice Hall, Inc.
11 - 17
Distribution Terms
Distribution Channel
Distribution Mix
Intermediary
Wholesaler
Retailer
Agent/broker
Copyright ©2003 Prentice Hall, Inc.
11 - 18
Channels of Distribution
Producer Agent/Broker Wholesaler
Retailer
Users
Channel 1
Consumer
Channel 2
Consumer
Channel 3
Consumer
Channel 4
Consumer
Channel 5
Consumer/
Business
Channel 6
Business
Channel 7
Business
Channel 8
Business
Copyright ©2003 Prentice Hall, Inc.
Consumer
Channels
Consumer/
Business
Channel
Business
Channels
11 - 19
Wholesaling
E-intermediaries
Merchant
Wholesaler
Copyright ©2003 Prentice Hall, Inc.
Syndicated Sellers
Shopping Agents
Business-to-Business Brokers
11 - 20
Retailing
Product Line Retailers
Department stores
Bargain Retailers
Discount houses
Supermarkets
Catalog showrooms
Specialty stores
Factory outlets
Warehouse clubs
Convenience stores
Copyright ©2003 Prentice Hall, Inc.
11 - 21
Nonstore and Electronic Retailing
Direct Response Retailing
Mail order (or catalog marketing)
Telemarketing
Direct selling
Electronic Retailing
Electronic storefront
E-catalogs
Interactive marketing
Copyright ©2003 Prentice Hall, Inc.
11 - 22
Physical Distribution
Warehousing Operations
Public and private warehouses
Transportation Operations
Modes
E-customer satisfaction
Distribution can be a
competitive advantage!
Copyright ©2003 Prentice Hall, Inc.
11 - 23
Chapter Review
Identify pricing objectives, strategies, and tactics
Discuss promotional objectives, the promotional
mix, and advertising media
Describe personal selling and the various types of
sales promotions
Identify the channels of distribution and the
differences between merchant wholesalers and
agents/brokers
Copyright ©2003 Prentice Hall, Inc.
11 - 24
Chapter Review
Identify the different types of retailing and retail
stores
Describe the major activities in the physical
distribution process
Copyright ©2003 Prentice Hall, Inc.
11 - 25