Chapter 12: The other 3 P’s
roduct
rice
lace
romotion
(Distribution)
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
11–3
Pricing to Meet Business Objectives
• Profit maximizing objectives
 Highest price possible
 Without killing volume
 Without attracting competition
or governmental scrutiny
 Price elasticity of demand
 Gasoline
vs. steak
• Market share objectives





Penetration pricing
Predatory pricing
Loss-leaders
Win with efficiency & volume
Or, maximize profits later
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
11–4
Applying break even analysis
Total fixed costs
Breakeven point (in units) 
Price - Variable cost
• How many watches would we have to sell to
break even if:
 our total fixed costs are $7,000,
 we sell each watch for $200
 the total variable costs for each watch sold are $90?
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
11–8
Break Even Chart
Fixed costs = $7,000
Variable costs = $90 per unit
Sales revenue = $200 per unit
$25,000
$20,000
Sales Revenue
Total Costs
$15,000
$10,000
Fixed Costs
$5,000
$0
0
20
40
60
80
100
Units Sold
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
11–9
Pricing Strategies
• Pricing existing products
 Premium
 Parity
 Price competition
• Pricing new products
 Price skimming
 Penetration pricing
• Price discrimination
 Dynamic vs. fixed
 Comparison shoppers
 Coupons, sales, market area:

Groceries, diamonds, & cars
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
11–11
Pricing Tactics
• Price lining
 Price points
 Target pricing
• Psychological
pricing
 Odd-even pricing
• Discounts
 Call to action
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
11–12
Key Topics
• Product
• Pricing
• Place (distribution)
• Promotion
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
11–19
Place: Distribution Terms
• Distribution Channel
• Distribution Mix
• Intermediary
 Wholesaler
 Retailer
 Agent/broker
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
11–20
The Value-Adding Intermediary
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
Figure 11–3
11–21
Channels of
Distribution
Why would any
particular company
choose one channel
over another?
When would it make
sense to go direct.
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
Figure 11–2
11–23
Start here
Wholesaling E-style
• E-intermediaries
 Syndicated Sellers

Pay per click
 Shopping Agents

www.pricescan.com
 Business-to-Business Brokers /
Exchanges

www.dmoz.org
 Direct business to business e
commerce

www.qbp.com
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11–24
Retailing: Service by Category
• Specialty stores
• Product Line Retailers
• Department stores
• Supermarkets
• Bargain Retailers
• Discount houses
• Catalog showrooms
• Factory outlets
• Warehouse clubs
• Convenience stores
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
• E - tailing
11–26
Place and its place in marketing
• Pick the place that best matches
 your customers’ service expectations,
 your service expectations,
 your profit motivations,
 and puts the product where your customer wants it,
 when they want it.
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11–29
The Marketing Plan
• External analysis
 Competition analysis
 Market segmentation
• Internal analysis
 S.W.O.T., and finding our
purpose
• Marketing Strategy
 Mission, objectives,
 Target markets, our positioning
 Product, Price, Place, Promotion
• Financials and controls
 Measurements and control plans
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
11–30
Chapter 12: The other 3 P’s
roduct
rice
lace
romotion
(Distribution)
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
11–31
Promotion
• Promotional Objectives
 Position products
 Communicate information
 Add value
 Control sales volume
• Positioning
 Establishing an identifiable product image in the
minds of consumers
 Focusing
on what the target market values
 Building the brand
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11–33
The Promotional Mix
The combination of tools used to promote a
product:
Advertising
Personal Selling
Sales Promotions
Publicity and Public Relations
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11–34
The Consumer Buying Process
and the Promotional Mix
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
Figure 11–5
11–35
Internet Advertising : High Potential, and
the learning curve
• Banner ads – Yahoo autos.com
• Targeted advertising is key
 Data Mining
 Data Warehousing
• Search results placement
 Requested advertisement
• Pay per click
 Google AdWords
• Permission marketing
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11–38
Personal Selling: One-on-One
Interaction With Potential Buyers
• Order Processing
• Creative Selling
 Traditional selling
• Missionary Selling
 Building relationships
• Telemarketing
 Using the telephone to
perform personal selling
• E-Role
 Chat, I M, email, faq’s, etc.
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11–39
Sales Promotion:
Short-term Promotional Activity
• Goal: To stimulate consumer
buying or cooperation from
distributors and sales agents
 Coupons
 Point-of-purchase displays
 Premiums
 Trade shows
 Contests
 Samples
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50%
OFF
11–40
Publicity and Public Relations
• Publicity
 When information about a company or product is
communicated to the public via mass media
• Public Relations
 Company-influenced publicity
PRO: Free to the
company
CON: The company
has less control
PRO: People believe
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it
11–41
Marketing Overview
• External analysis
 Competition analysis
 Market segmentation
• Internal analysis
 S.W.O.T., and finding our
purpose
• Marketing Strategy
 Mission, objectives,
 Target markets, our positioning
 Product, Price, Place, Promotion
• Financials and controls
 Measurements and control plans
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
11–42