Exam 12: Distribution and Pricing: Right Product, Right Person, Right Place, Right Price

Recently, Sal Grasso purchased an expensive European automobile. He was impressed that the car dealer delivered the car to his house and offered to pick up the vehicle every four months so it can be regularly serviced at the dealership. While Sal's car is being serviced, he will be able to use a loaner car from the dealership at no additional charge. This is an example of a business providing service utility.

What is the difference between cost-based pricing and demand-based pricing? For each pricing method, describe the major challenge facing the marketer.

Jorge Castilla willingly paid $499 for an Apple iPhone on the day it hit the market, even though it was far more expensive than cell phones he had bought in the past. He wasn't concerned about the price; he just wanted to be one of the first on campus to have this product. Consumers like Jorge are the target of firms using skimming pricing strategies.

Firms that use multichannel retailing may sell products to their final customers using both store and nonstore approaches.

Category killers dominate a category by offering a huge variety of one type of product.

A company that breaks even is making a profit.

Physical distribution strategy involves determining how products will flow through the distribution channel from producer to consumer.

Many firms now outsource the management of their supply chains.

Describe the four pricing strategies used to boost volume.

Ben Arrington is an agent. This means that he assumes a significant risk of loss because he takes legal title to the products he helps distribute.

Which strategy, intended to maximize profitability by offering new products at a premium price, did Apple use when introducing the iPod?

What do we call an intermediary that takes legal possession of the goods being distributed?

What is breakeven analysis? Describe how marketers use this tool.

The wheel of retailing has proven to be a theory that describes the evolution of virtually every real-world retailer with exceptional accuracy.

Cash and carry wholesalers are full-service merchant wholesalers who specialize in selling to small retailers.

High/low pricing is the strategy of charging some customers a high price while charging other customers a low price for exactly the same product at the same time.

Explain how distributors deliver value to consumers through utilities. Include examples of three utilities to support your response.

A distribution strategy consists of two main parts: pricing strategy and promotion strategy.

Everyday low pricing is a pricing strategy that is consistent with a goal of achieving long-term profitability through high volume.

Cost-based pricing is the most popular method of fixed margin pricing.