Marketing 3010 Week 11 Notes
Marketing 3010 Week 11 Notes Mkt 3010-001
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This 7 page Class Notes was uploaded by Hannah Stephens on Sunday March 27, 2016. The Class Notes belongs to Mkt 3010-001 at Clemson University taught by Carter Willis McElveen in Spring 2016. Since its upload, it has received 36 views. For similar materials see Principles of Marketing in Marketing at Clemson University.
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Date Created: 03/27/16
Providing Great Service: The Gaps Model Standards Gap: setting service standards ▯ Setting standards for quality ▯ Developing systems to ensure high-‐quality service ▯ Need effective standards to eliminate gap ▯ Gap caused by not setting appropriate standards The Delivery Gap: Delivering service quality ▯ Not delivering to the standard, difference between standard set and delivery ▯ Ways to overcome… o Empowering employees o Provide and support incentives o Use of technology Communications Gap: Communicating the Service Promise ▯ Difference between services advertised and what is actually provided ▯ Ways to overcome… o Manage customer expectations o Promise only what you can deliver o Communicate service expectations Service Recovery ▯ Listen to customer ▯ Resolve problems quickly ▯ Provide a fair solution Chapter 14: Pricing Concepts ***Only 1 of the 4 P’s that generates money!! • Price Maker: you can set prices and others will follow o Luxottica is a price maker • The Importance of Price o To the seller… Price is revenue o To the consumer… Price is the cost of something o Price allocates resources in a free-‐market economy • What is Price? o What is given up in an exchange to acquire a good or service o Sacrifice Effect of Price ▯ What’s sacrificed to get a good or service • Money, time, dignity o Information Effect of Price ▯ Interquality information based on price • Higher quality=higher price • Convey status o Value based upon perceived satisfaction ▯ Reasonable price=perceived reasonable value ▯ Exchange based on expectation of satisfaction • Price As A Signal o Prices can be both too high and too low o Price set too low may signal poor quality o Price set too high might signal low value • The Role of Price in the Marketing Mix o Price usually ranked as one of the most important factors in purchase decisions o Price is the only marketing mix element that generates revenue • Trends that Affect Pricing o Flood of new products o More availability of bargain-‐priced private and generic brands o Price cutting as a strategy to maintain or regain market share o Internet used for comparison shopping • 5 C’s of Pricing 1. Competition 2. Costs 3. Company Objectives 4. Customers 5. Channel Members o All 5-‐effect price or value! 1. Competition Orientation a. Competitive parity b. Status quo pricing c. Value is not part of this pricing strategy d. Customer orientation i. Focus on customer expectations by matching prices to customer expectations. i.e. Diamonds—you expect to pay a lot for diamonds and if price is low, you think it’s a fake. 2. Customers a. Demand increases as price decreases b. Demand & Supply i. Demand—quantity of a product that will be sold in the market at various prices for a specified period. ii. Supply—quantity of a product that will be offered to the market by a supplier iii. Knowing demand curve enables you to see relationship between price and demand*** c. How Demand & Supply Establish Price i. Price Equilibrium—price at which demand=supply ii. Elasticity of Demand—consumers’ responsiveness or sensitivity to changes in price d. Price Elasticity of Demand i. Elastic (price sensitive) ii. Inelastic (price insensitive) iii. Consumers are less sensitive to price increase for necessities e. Factors Influencing Price Elasticity of Demand i. Availability of substitutes ii. Price relative to purchasing power iii. Product durability iv. A product’s other uses v. Rate of inflation f. Substitution Effect i. Meet Pete, college student on a budget: ii. Old Spice Sport Deodorant user iii. At store, he notices Old Spice more expensive iv. He decides to give another brand a try and save money g. Cross Price Elasticity i. Meet Kendra, self-‐supporting college student: ii. Buys a new printer on sale for a great price iii. Learns it requires special ink cartridges that cost more than the printer 3. Costs a. Variable Costs: vary with production volume b. Fixed Costs: unaffected by production volume c. Total Costs: sum of variable and fixed costs 4. Competition a. Decreased Price Competition i. Monopoly—1 firm controls the market. ii. Monopolistic Competition—many firms selling different products at different prices. b. Increased Price Competition i. Oligopoly—a handful of firms control the market. ii. Pure Competition—many firms selling commodities for the same price. 5. Channel Members a. Manufacturers, wholesalers & retailers can have different perspectives on pricing strategies b. Manufacturers must protect against gray market transactions • Methods Used to Set Prices: Competition o Customary pricing—setting price based on way product is delivered o Above-‐, At-‐, or Below –Market Pricing ▯ Nordstrom, Bloomingdales—Above–Market price ▯ Macy’s, Belk’s—at-‐market pricing ▯ Kohl’s—Below-‐market pricing o Loss-‐Leader pricing ▯ Wal-‐Mart—marked DVDs below cost to get customers into store • Legal & Ethical Aspects of Pricing o Price Fixing: against the law. Conspiracy among firms to set a price. At horizontal level when multiple businesses work together to inflate prices. At vertical level manufacturer to wholesaler to retailer artificially inflate prices. o Price Discrimination: Charging changes prices to change buyers for goods of like grade and quality ▯ i.e. charging more for out-‐of-‐state tuition o Predatory Pricing: is illegal but hard to prove ▯ Wal-‐Mart often accused of this o Bait & Switch Pricing: Happens at retail level. Becomes illegal when false advertising happens. Chapter 15: Supply Chain Management Supply Chain▯Place • FedEx Supply Chain Management o Competitive advantage of the Super Hub o Integrated logistics provider o CEO▯Fred Smith: created the company at 28 • What is Supply Chain? o Connected chain of business entities o Internal/external o Can be competitive advantage o Supports the logistics function ▯ Logistics: activities that focus on getting the right amount of the right products to the right place at the right time at the lowest possible cost. o Supply Chain Management ▯ Communicator of customer demand from point of sale to supplier ▯ Physical flow process that engineers the movement of goods o Benefits of Supply Chain Management ▯ SC oriented commonly report: • Lower inventory, transportation, warehousing, and packaging costs • Greater supply chain flexibility • Improved customer service • Higher revenues • Increased profitability