Price
Which pricing strategy involves setting a price by comparing a product's price to a competitor's price or an established benchmark?
a. Professional services pricing
b. Quantity discount
c. Reference pricing
d. Single-price tactic
c. Reference pricing
A luxury brand like Rolex uses a distribution strategy where its products are sold only in a few select high-end stores. This is an example of which type of distribution?
Exclusive distribution
Which of these tools of consumer sales promotion involves providing a free gift with purchase?
a. Sampling
b. Premiums
c. Point-of-purchase promotions
d. Loyalty marketing programs
Sandy owns a bakery where she sells several items including cookies. Her most popular cookies are her homemade chocolate chip cookies. Each cookie sells for $2.50. Sandy generated this price after aiming for a 35% margin on each cookie. What is the cost of each cookie?
Margin = (Price – Cost)/Price
.35 = (2.50 – Cost)/2.50
.875 = (2.50 – Cost)
-1.625 = -Cost
$1.63 = Cost
What is price elasticity?
Price elasticity: customers’ responsiveness or sensitivity to price changes
Target prices their discounted sunglasses at $14.99 while keeping their newest sunglasses at $18.00. Which tool of fine-tuning base price are they most likely to be using?
a. Two-part pricing
b. Professional services pricing
c. Product pricing
d. Odd-even pricing
d. Odd-even pricing
True or False: Pull strategy focuses on stimulating demand directly from the end user.
True
This definition best describes which element of the promotional mix: “impersonal, one-way mass communication about a product or organization that is paid for by the marketer?”
Advertising
Jackson bakes specialty pies. Each pie costs him $9.25 to make. He sells each pie for $18.00.
a. What is his mark-up?
b. What is his margin?
What is his mark-up?
Mark-up = (Price – Cost)/Cost
Mark-up = (18.00-9.25)/9.25
Mark-up = 8.75/9.25
Mark-up = .946 = 94.6%
What is his margin?
Margin = (Price – Cost)/Price
Margin = (18.00-9.25)/18.00
Margin = .486 = 48.6%
What are the two types of advertising? Explain them.
Product advertising
Institutional advertising
During the Christmas season, Oreo sets up a large display at the end cap of an aisle to promote their new hot cocoa flavor. What tool of consumer sales promotion is this?
Point-of-purchase promotion
Who is involved in a direct marketing channel?
Manufacturer --> consumer
What is the primary function of public relations?
To evaluate public attitudes and execute programs to gain public understanding and acceptance.
A jewelry maker spends $22.50 on materials to create a bracelet. She wants to sell the bracelet with a 70% mark-up. What should she charge?
A jewelry maker spends $22.50 on materials to create a bracelet. She wants to sell the bracelet with a 70% mark-up. What should she charge?
Mark-up = (Price – Cost)/Cost
.70 = (Price – 22.50)/22.50
15.75 = (Price – 22.50)
$38.25 = Price
What are the four goals of promotion and two types of advertising appeals?
Four goals:
1. Inform
2. Remind
3. Persuade
4. Connect
Appeals:
1. Informational
2. Emotional
Nimbus Stationary recently launched into the paper goods industry, producing elegant, minimalist stationary and writing products. The company offers quality paper goods at the highest end of the price range in the industry. Which pricing strategy is Nimbus Stationary using?
Price skimming
What is the primary function of retailers in the distribution process?
a. Facilitates the sale of goods from producers to wholesalers without taking title.
b. Buys goods from manufacturers, stores them, and ships them.
c. Represents manufacturers or wholesalers without owning the goods.
d. Sells goods primarily to consumers.
d. Sells goods primarily to consumers
Name all the parts of the promotional mix.
1. Advertising
2. Public Relations
3. Sales promotion
4. Content marketing
5. Personal selling
A furniture store sells dining tables for $849.99. The store aims for a 30% margin. What is the markup percentage applied to the tables?
Margin = (Price – Cost)/Price
.30 = (849.99 – Cost)/849.99
254.997 = 849.99 – Cost
-594.993 = -Cost
Cost = $594.99
Mark-up = (Price – Cost)/Cost
Mark-up = (849.99 – 594.99)/594.99
Mark-up = .4286 = 42.86%
What are the four factors that affect price elasticity and HOW do they affect it?
How factors affect elasticity
A company is launching a new product and decides to set a low introductory price to attract a large number of customers and quickly gain market share. They aim to establish their presence in the market before gradually increasing the price. What pricing strategy are they using?
Price penetration
Thrive Nest produces high-quality, plant-based furniture. Their products are available through their online store and in several Ashley Furniture stores around the country. What type of distribution intensity are they using?
Selective distribution
Explain each type of media mentioned in promotion.
Paid media: based on traditional advertising model where by a brand pays for media space
Earned media: based on public relations or publicity model; gets customers talking about products or services
Owned media: new category based on brands becoming publishers of their own content to maximize brands’ value to customers
A clothing boutique sells a designer jacket for $199.99. The boutique applies a 40% markup on the jacket. What is the original cost of the jacket? What is the boutique’s profit margin on the sale?
Mark-up = (Price – Cost)/Cost
.40 = (199.99 – Cost)/Cost
.40 * Cost = 199.99 – Cost
1.40 * Cost = 199.99
Cost = $142.85
Margin = (Price – Cost)/Price
Margin = (199.99 – 142.85)/199.99
Margin = .2857 = 28.57%
List the four types of products.
Describe the level of distribution intensity that each product would likely have.
Types of Products:
1. Convenience
2. Shopping
3. Specialty
4. Unsought
Levels of Distribution Intensity:
1. Intensive distribution
2. Selective distribution
3. Exclusive distribution
Matching
Convenience products --> intensive distribution
Shopping --> selective distribution
Specialty --> exclusive distribution
Unsought --> Varies