CHAPTER OBJECTIVES © SOUTH-WESTERN EDUCATIONAL PUBLISHING PRICING AND PROMOTION nDiscuss how businesses and consumers make their buying decisions. nDescribe

© SOUTH-WESTERN EDUCATIONAL PUBLISHING

CHAPTER

OBJECTIVESOBJECTIVES

PRICING AND PROMOTION

Discuss how businesses and consumers make their buying decisions.

Describe factors involved in establishing product prices and common pricing strategies.

Discuss ways that companies try to control costs that can lead to higher prices.

Discuss the purpose of promotion in meeting business and consumer needs.

Identify the common promotional methods. Explain the parts of the selling process and how each is

used to help customers make effective buying decisions. Identify important laws and regulations that apply to

advertising and promotion.

23232323


THE BUSINESS BUYING DECISION

What to purchase When to purchase From whom to purchase How much to purchase


PAYMENT TERMS AND DISCOUNTS

Payment terms Discounts

Trade discount Quantity discount Seasonal discount Cash discount


COMPONENTS OF PRICE

Selling price Cost of goods sold Operating expenses Margin or gross profit Net profit Markup Markdown


COMPONENTS OF SELLING PRICE

$.05Net Profit

$.35Operating Expenses

$1.00 Selling Price

$.40 Margin or Gross Profit

$.60Cost of Goods Sold


PRICING STRATEGIES

Pricing to meet competition Pricing to earn a specific profit Pricing based on consumer demand Pricing to sell more products Pricing to provide customer services


CONTROLLING COSTS

Markdowns Damaged or stolen merchandise Returned merchandise


PROMOTION AS MARKETING COMMUNICATION

Consumer Decision-Making Process Problem recognition Information search Alternative evaluation Purchase Post-purchase evaluation


To inform and educate. To introduce product or

business. To announce

improvement or product change.

To reinforce features and benefits.

To increase frequency of use.

To increase variety of uses.

ADVERTISING PURPOSES

To convince people to enter a store.

To develop a list of prospects.

To make a brand, trademark, or slogan familiar.

To improve the image of a company of product.

To gain support for ideas or causes.


Publication Mass media Outdoor Direct Display Internet

MEDIA CHOICES


PLANNING AND MANAGING ADVERTISING

The advertising budget Timing of advertising


PERSONAL SELLING

Studying the wants of customers Presenting and demonstrating the

product Answering customer questions Closing the sale Follow-up


SALES PROMOTIONS

Sales promotions — any promotional activities other than advertising and personal selling intended to motivate customers to buy


TRUTH IN ADVERTISING AND SELLING

False advertising Full disclosure Substantiation Cease and desist order Corrective advertising

Documents

CHAPTER OBJECTIVES © SOUTH-WESTERN EDUCATIONAL PUBLISHING PRICING AND PROMOTION nDiscuss how businesses and consumers make their buying decisions. nDescribe