4.5.2-3 Price & Promotion

Cost-plus pricing

A pricing strategy where a percentage of the cost per unit product is added to the cost and set as the price for the product

Penetration pricing

A pricing strategy where the products are initially sold cheaply to break into the market and gain a sufficient market share, boosting up sales. It is often used by an emerging business

Loss leader pricing

A pricing strategy where the prices are set at the product's cost per unit or lower

Predatory pricing

A pricing strategy where a business temporarily sets the prices relatively lower than the competitors to force them out of the market

Premium pricing

A pricing strategy where the price for products is relatively higher than the similar products. It is often used for luxury products, which are bought to exhibit or/and display

Place

The process of how a product gets from the manufacturer to the final consumers/ distribution channel

A channel of distribution

Means to ensure customers gain access to their products.

Wholesalers

Businesses that purchase a large distribution of products from a manufacturer and then 'break' the bulk purchases into smaller units for resale to retailers.

Pros of wholesalers

+ Wholesalers bear the cost of storage

+ Retailers don't have to purchase in large quantities

+ Producers have lower transaction costs

+ Wholesalers deal with distribution issues

Cons of wholesalers

- Producer takes a risk when passing on the marketing

- Wholesalers may not promote products the way the producer wants

- Some retailers do not use wholesalers in order to cut their costs

Distributors

Independent and specialist businesses that trade in the products of only a few manufacturers

Agents

Negotiators who act on behalf of buyers and vendors (sellers) of a product

Retailers

Shops, stores, and kiosks that sells the products to the final consumer.

Specialty channel of distribution

Any indirect way to distribute products that do not involve retailers. E.g. telemarketing, e-commerce, vending machines,