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Marketing 3010 Week 11 Notes

by: Hannah Stephens

Marketing 3010 Week 11 Notes Mkt 3010-001

Marketplace > Clemson University > Marketing > Mkt 3010-001 > Marketing 3010 Week 11 Notes
Hannah Stephens

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About this Document

These notes cover what we went over in class.
Principles of Marketing
Carter Willis McElveen
Class Notes
Marketing 3010, Clemson University
25 ?




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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              


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