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Chapter 7 Pricing and Distribution——Delivering the Value - Coggle Diagram

- - - - Product costs----Price floor, no profit bellow this price
      - Competition and other external factors-----Competitors' strategies and prices +Marketing strategy, objectives, and mix+ Nature of the market and demand
      - Consumer Perceptions of value----Price ceiling, no demand above this price
    - - Marketing Penetration
      - Skim the Cream
      - Product Line Pricing
      - Cost Plus Pricing
      - Target Pricing
      - Price Differentiation
      - Going Rate Pricing
      - EDLP(Everyday Low Price)
      - Odd Number Pricing
      - Value-based Pricing
    - - Customer Value-Based Pricing
        
        Value-based pricing uses the buyers’ perceptions of value rather than the seller’s cost.
        
        At the end of the day, customer will decide whether a product’s price is right.
        
        Pricing decisions, like other marketing mix decisions, must start with customer value.
        
        Customer-oriented pricing involves understanding how much value consumers place on the benefits they receive from the product and setting a price that captures that value
        
        Customer perspective on price
        
        Customers define value as benefits minus cost
        
        Examples of costs to e-tailing customers
        
        Money – what is the real cost? How is it calculated; what does it include (shipping, taxes, duties, gift wrap)
        
        Time – finding what you want, waiting for it to arrive, slow web sites
        
        Energy – Web = self service, so no-one to help in research and locating an item
        
        Psychic costs – frustration, lack of trust of web commerce, lack of confidence in on-line service delivery etc.
        
        Value-Based Pricing vs. Cost-Based Pricing
        
        Cost-based pricing
        
        Design a good product
        
        Determine product costs
        
        Set price based on cost
        
        Convince buyers of product's value
        
        Value-based pricing
        
        Assess customer needs and value perceptions
        
        Set target price to match customer perceived value
        
        Determine costs that can be incurred
        
        Design product to deliver desired price
      - Dynamic Pricing
        
        Big issue now is persuading people to pay for something they used to get for “free”
        
        Get instant vendor price comparisons
        
        Check prices at the point of purchase
        
        Name your price and have it met
        
        Monitor customer behavior & tailor offers
        
        Give customers access to special prices
        
        Negotiate prices online or even in person
        
        A changing pricing environment
        
        Sharing economy
        
        Bartering
        
        Renting
        
        Where the company sells goods or services at two or more
        different price points, based on segment/value differentiation
        
        System automatically generates a different price depending on a number of pre-set variables
        
        Technology/Data gives the ability to recognize a consumer, then customize prices, segmenting sometimes to a segment of one
        
        Use with care – customers may get upset
- - - - Physical flow of products
      - Flow of ownership
      - Payment flow
      - Information flow
      - Promotion flow
    - - Information: Gathering and distributing marketing research and intelligence information about actors and forces in the marketing environment needed for planning and aiding exchange.
      - Promotion: Developing and spreading persuasive communications about an offer.
      - Contact: Finding and communicating with prospective buyers.
      - Matching: Shaping and fitting the offer to the buyer’s needs, including activities such as manufacturing, grading, assembling, and packaging.
      - Negotiation: Reaching an agreement on price and other terms of the offer so that ownership or possession can be transferred.
      - Physical distribution: Transporting and storing goods
      - Financing: Acquiring and using funds to cover the costs of the
        channel work.
      - Risk taking: Assuming the risks of carrying out the channel work
    - - Vertical Marketing Systems
        
        Conventional distribution systems consist of one or more independent producers, wholesalers, and retailers, each separate business seeking to maximize its own profits, perhaps even at the expense of profits for the system as a whole.
        
        Historically, conventional distribution channels have lacked leadership and power, often resulting in damaging conflict and poor performance.
        
        One of the biggest channel developments over the years has been the emergence of vertical marketing systems that provide channel leadership.
        
        Conventional distribution systems: producer--wholesaler--retailer--consumer
        
        Vertical Marketing Systems: produce+wholesaler+retailer-------consumer
        
        Vertical Marketing Systems----its simply a channel in which members at different levels(hence, vertical) work together in a unified way( hence, system) to accomplish the work of the channel.
        
        Vertical marketing systems (VMSs) provide channel leadership and consist of producers, wholesalers, and retailers acting as a unified system.
        
        Corporate marketing systems - combine successive stages of production and distribution under single ownership.
        
        Contractual marketing systems - independent firms at different levels of production and distribution who join together through contracts, e.g. Franchise organizations
        
        Administered marketing systems - successive stages of production and distribution are coordinated through the size and power of one of the parties.
      - Horizontal Marketing Systems
        
        Horizontal marketing system is a channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity.
        
        By working together, companies can combine their financial, production, or marketing resources to accomplish more than any one company could alone. eg, SUMSUNG+SONY
      - Multichannel Distribution Systems
        
        Multichannel distribution systems are systems in which a single firm sets up two or more marketing channels to reach one or more customer segments.
        
        Single Channel: Customer experience a single type of touch-point; Retailers have a single type of touch-point
        
        Multi-Channel: Customer sees multiple touch-points acting independently; Retailers' channel knowledge and operations exist in technical & functional silos
        
        Cross-Channel：Customer sees multiple touch-points as part of the same brand; Retailers have a "single view of the customer" but operate in functional silos
        
        Omni-Channel: Customer experience a brand not a channel within a brand; Retailers leverage their "single view of the customer" in coordinated and strategic ways
      - Changing Channel Organization
        
        Disintermediation is the cutting out of marketing channel intermediaries by producers or the displacement of traditional resellers by new intermediaries.
        
        Reintermediation – Opodo, Hulu
        
        Door-to-Door Selling: Growing popularity in China— AIG insurance, Mary Kay, Tupperware, Avon, Amway
        
        Peer-to-Peer Marketing:ITCs are dramatically altering distribution (e.g. Google Lens); Interactive TV may become a viable direct marketing channel in the future; eBay pioneered P2P and now Etsy, AirBnB, TaskRabbit are transforming it.