PAZARLAMA YÖNETİMİ - Deneme Sınavı - 11

Price is the amount of money paid by consumers to possess a product or get a service. A broader definition is that; price is the total of all the values, which customers sacrifice in order to benefit from using or having a product or service.

Price can be set between two limits. The upper limit is customer value while the lower one is cost. The gap between these limits is called “Strategic Pricing Gap”.

Price can be affected by many factors. These factors can be grouped as external and internal factors. The external factors include market and demand structure, economic factors, competitors’ costs and prices, distribution channels, legal regulations, and societal concerns. No single company can affect external factors; therefore, companies should adapt them. On the other hand, a company can manage internal factors such as costs, pricing aims of the firm, and diverse variables driven by other elements of marketing mix.

In value-based pricing, customers’ value is used to charge a price for a product. Because the strategy is customer-driven, starting point is consumer.

Cost-based pricing includes different approaches such as cost-plus pricing or standard mark-up, break-even analysis, and target profit pricing.

The pricing strategies change in different stages of product life cycle. Two pricing strategies can be used in the introductory stage: market-skimming and market-penetration. Market-skimming pricing sets high prices to skim higher revenue from the market. Prices are dropped to attract new buyers after a while. In other words, prices are decreased step by step to sell the products to new consumers. In market-penetration pricing, companies set low prices to penetrate the market as much as possible.

Companies start to set prices by considering the whole marketing mix rather than just the product itself. In this way, profits can be maximized. There are six different product mix pricing strategies including product line pricing, by-product pricing, optional-product pricing, captive-product pricing, two-part pricing, and product bundle pricing.

Markets are so dynamic; therefore, prices should be adapted to the fast changing environment. There are many price-adjustment strategies including dynamic pricing, psychological pricing, discount and allowance pricing, segmented pricing, geographical pricing, promotional pricing, and international pricing. In dynamic pricing, prices are being adjusted continually to maximize revenue. For example, prices are changing thousands times a day in the airline sector.

Price changes involve price cut and price increase. Companies cut prices to increase sales and market share in case of excess capacity or insufficient demand. On the other hand, increased demand, inflation, or prices lack of supply cause price increase.

Marketing channel is defined as sets of interdependent organizations involved in the process of making a product or service available for use or consumption.

First, a marketing channel is “set of interdependent organizations”, meaning a marketing channel is not just one company doing its best in the market for the customers; instead, many organizations normally take part in the marketing channels. Second, operating a marketing channel is a “process”. There are a number of processes and transactions a product or service follows production, resulting in purchase and consumption by the final user or consumer. Third, the purpose of the marketing channel is to satisfy the final customers (consumers or business buyers) in the market by making a good or service available for use or consumption.

The sorting function undertaken by intermediaries covers the functions of sorting, accumulation, allocation, and assorting. Accumulation refers to bringing together similar inventory from a number of sources into a larger homogeneous supply.

The negotiation channel is the one in which buying and selling agreements are made. This could include transactions face to face or by telephone, e-mail, or almost any other form of communication. Brokers are associated with this channel. They are independent intermediary and paid to arrange a particular transaction.

There is a continuous flow in a distribution channel; thus, it resembles a pipeline. The work of the channel covers the performance of several marketing flows. The flows in the distribution channels are physical flow, possession flow, payment flow, information flow, and promotion flow.

The customer is the keystone in any channel design; and therefore, the size geographic distribution, buying habits, outlet preferences and usage patterns of customers must be taken into account when making channel design decisions.

Exclusive distribution refers to utilizing only a limited number of intermediaries within a given market. Some companies deliberately restrict the number of intermediaries serving their products in exclusive distribution. In this type of distribution, the producer gives just a limited number of dealers the exclusive right to distribute its goods in their territories.

In general, wholesalers are classified in three groups: Merchant wholesalers, brokers and agents, and manufacturers’ branches and offices. They include two broad types: Full-service wholesalers and limited-service wholesalers.

Ballou (1999) emphasizes that the objectives of logistics management as “getting the right goods or services to the right place, at the right time, and in the desired condition (undamaged) at the lowest cost and highest return on investment.”  The overall goal of logistics is to achieve a targeted level of customer service at the lowest possible total costs.

Order Processing: The ability of companies to establish good relations with their consumers depends on how to handle orders given by the customers. Activities related to order processing provides information inputs that are critical in fulfilling a customer’s order. Order processing includes all activities related to receiving, entering and processing orders.

Consumers are individuals who buy products or services for personal consumption. Since not all consumers are similar in terms of preferences, buying habits etc., marketers define their consumers’ characteristics through market segmentation based on demographic, psychographic, behavioristic and geographic criteria. The correct option is E.