MRKT 310 University of Maryland Pricing Strategies of New Products Discussion
I’m working on a marketing strategies discussion question and need support to help me learn.
TWO topics are required for Week 6. Topic 1 is required for everyone. Choose Topic 2, 3 OR 4. Include at least two (2) references from learning material or outside sources. Reply to least two (2) classmate posts.
TOPIC 1: Pricing Strategies (Required)
The readings suggest there are certain strategies for pricing new products, which is decidedly more difficult than adjusting prices to existing products. The new product pricing approaches are:
- Everyday low prices
The pricing approaches discussed for existing products are:
- Cost plus
- Odd-even pricing
- Prestige pricing
- Price lining
- Demand backward pricing
- Leader pricing
- Sealed bid pricing
- Going-rate pricing
- Price bundling
- Captive pricing
- Product mix pricing
- Two-part pricing
- Promotional pricing
There is no shortage of pricing approaches, and as customers, we are exposed to all of them at some time or another in our purchasing processes.
Choose one of the pricing approaches and discuss the product, the pricing approach, and why you think it is the most appropriate approach for that particular product given your consumer characteristics. Be sure you understand the definition of your approach before tackling this topic.
Many of you will be tempted to use promotional pricing since it is the easiest to demonstrate. So promotional pricing is not “for sale” (pun intended). Pick one of the other approaches for this topic. . Remember, there are no rights or wrongs in this topic. Each of us as consumers can view pricing differently.
TOPIC 2: Channel Systems
The Coca-Cola company has a very large and complex channel distribution system. Take a look at how the company describes its distribution system by clicking on this link.
Coca-Cola system. (n.d.). The Coca-Cola Company. http://www.coca-colacompany.com/our-company/the-coca-cola-system
Can you outline the indirect channel system based on the information on the website? You might want to refer to Figure 8.4 or Figure 8.5 in the readings to organize your thoughts. What value does each of the channel members provide to the end customer? What might you suggest they do differently?
TOPIC 3: Channel Strategies
This section of the readings explains the three generic distribution strategies:
The choice of which of these distribution strategies would be best for any given product depends on those factors outlined in the readings as follows:
- Type of customer
- Type of product
- Channel partner capabilities
- Business environment and technology
- Competing products’ marketing channels
Pick a product for one of the three distribution strategies. Note your product and the distribution strategy, and then discuss why you feel the distribution strategy is most appropriate for that product based on the factors listed above.
For example, Lexus automobiles are distributed selectively. Customers tend to be upper middle class who want an affordable (as they define it) luxury car that is highly dependable. Because of the service component, dealerships need to be all-inclusive for services needed for a Lexus and be as close to their target market as possible, e.g., upscale neighborhoods. But because Lexus is a car dealership, it can’t be directly located in an upscale neighborhood. The car dealer needs to be able to serve a geographic area that is easy to reach and where customers are willing to drive, and the best choice may be locations visible from highways driven by upscale members of the target market as they drive between home, work, and errands. A Lexus dealership wants to be located near competitive offerings to ensure the target market considers Lexus. It also makes it easy to shop the competition and to increase the value of the brand by being associated with like products. Do not use Lexus!
Do the same type of description for each of the three distribution strategies with a product of your choice.
TOPIC 4: Warehouse & Transportation
One way that manufacturers can reduce the price of a product is by decreasing the warehousing and transportation costs using the demand and inventory planning techniques discussed in Section 6.6 of the main text. This adds value to the customer.
Warehousing and transportation tends to be outsourced by most manufacturers so they don’t have to develop those core competencies. Sometimes the warehousing or transportation channel member becomes the channel leader.
Can you think of an example of a product for which the warehouse or the method of transportation is the channel leader? You might need to do a little web searching to find examples. Think creatively for both online delivery and physical delivery.
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