LSUS CHEN- MBA 706 MODULE 4
QUESTIONS & ANSWERS(RATED A+)
Cost reductions - ANSWERProducts are modified to provide similar performance but
at a lower cost:
ex: iphone XS vs Iphone XR
Price - ANSWERPricing decisions are hard to make due to the complexity of
interaction among consumers, competitors, and the distribution network: and
decisions are made quickly without testing
- usually there is a large and aggressive company who determines the prices from
the industry, and almost all other companies are obliged to follow, except a few niche
companies
Pricing strategy - ANSWERPrice takers:
- follow the prices set by other firms
Price makers:
- Possess the market power to determine the levels and patterns of price that others
follow
Meeting or following competition: - ANSWERFollow competitor's prices until
establishing a good reputation
Single segment concentration - ANSWER- firms focus on a single segment
- very high-risk strategy, but usually works well for small companies
- this type of concentrated marketing efforts can develop a strong market position
( brand image of specialist)
Survival - ANSWERPrices are reduced to below cost in order to maintain a sufficient
cash flow
Return on Investment - ANSWERPrices are set to achieve a predetermined level of
return on investment
Place: Channel management - key decision areas - ANSWER- formulate channel
strategy
- design channel structure
- select channel members
- motivate channel members
- coordinate channel strategy with the marketing mix
- evaluate channel member performance
Formulate channel strategy - ANSWER- objectives: how, when, and where the
company offering should be made available to the target markets
- importance of a channel strategy depends on whether:
::distribution is important to target market
::distribution can provide a differential advantage over competitors
, ;; Distribution may become a competitive vulnerability
;; Channel coordination may become a competitive advantage
Market stabilization - ANSWERFirms set prices to minimize the possibility of market
leader retaliation and to ensure market stability
Maintenance and improvement of market position - ANSWERPrices are set to
increase market share and minimize the possibility of price wars
Pricing to reflect product differentiation - ANSWERPrices are set differently for each
market segment and to create different perceptions of their product's value
ex: car manufacturers
Market skimming - ANSWERFirms enter the market with a high price nd gradually
lowers the price to gain more customer's
ex: high-tech products
Market penetration - ANSWERPrices are set low to generate high sales revenue and
keep competitors away
ex: Japanese car manufacturers selling low-priced but reliable cars in US during 60s-
70s
Early cash recovery - ANSWERPrices are set to generate a high cash flow to solve
problems of liquidity
Discouraging others from entering the market: - ANSWERPrices are set low as a
barrier to entry which also signals the possibility of price war
Design Channel Structure: 3 channel options - ANSWER- Direct marketing
- sales force
- intermediary marketing channel
Intermediary Marketing channel - ANSWER- merchants
- agents
-Facilitators
ex: P&G
Channel Management Design Channel structure (3 strategies) - ANSWER- Intensive
distribution
- Selective distribution
- Exclusive distribution
Intensive distribution: - ANSWERused for products of high value, low value, mass
demand
Ex: soft drinks
Selective distribution - ANSWERUsed for consumer durables: consumers will usually
"compare shopping" ex: Home appliances
QUESTIONS & ANSWERS(RATED A+)
Cost reductions - ANSWERProducts are modified to provide similar performance but
at a lower cost:
ex: iphone XS vs Iphone XR
Price - ANSWERPricing decisions are hard to make due to the complexity of
interaction among consumers, competitors, and the distribution network: and
decisions are made quickly without testing
- usually there is a large and aggressive company who determines the prices from
the industry, and almost all other companies are obliged to follow, except a few niche
companies
Pricing strategy - ANSWERPrice takers:
- follow the prices set by other firms
Price makers:
- Possess the market power to determine the levels and patterns of price that others
follow
Meeting or following competition: - ANSWERFollow competitor's prices until
establishing a good reputation
Single segment concentration - ANSWER- firms focus on a single segment
- very high-risk strategy, but usually works well for small companies
- this type of concentrated marketing efforts can develop a strong market position
( brand image of specialist)
Survival - ANSWERPrices are reduced to below cost in order to maintain a sufficient
cash flow
Return on Investment - ANSWERPrices are set to achieve a predetermined level of
return on investment
Place: Channel management - key decision areas - ANSWER- formulate channel
strategy
- design channel structure
- select channel members
- motivate channel members
- coordinate channel strategy with the marketing mix
- evaluate channel member performance
Formulate channel strategy - ANSWER- objectives: how, when, and where the
company offering should be made available to the target markets
- importance of a channel strategy depends on whether:
::distribution is important to target market
::distribution can provide a differential advantage over competitors
, ;; Distribution may become a competitive vulnerability
;; Channel coordination may become a competitive advantage
Market stabilization - ANSWERFirms set prices to minimize the possibility of market
leader retaliation and to ensure market stability
Maintenance and improvement of market position - ANSWERPrices are set to
increase market share and minimize the possibility of price wars
Pricing to reflect product differentiation - ANSWERPrices are set differently for each
market segment and to create different perceptions of their product's value
ex: car manufacturers
Market skimming - ANSWERFirms enter the market with a high price nd gradually
lowers the price to gain more customer's
ex: high-tech products
Market penetration - ANSWERPrices are set low to generate high sales revenue and
keep competitors away
ex: Japanese car manufacturers selling low-priced but reliable cars in US during 60s-
70s
Early cash recovery - ANSWERPrices are set to generate a high cash flow to solve
problems of liquidity
Discouraging others from entering the market: - ANSWERPrices are set low as a
barrier to entry which also signals the possibility of price war
Design Channel Structure: 3 channel options - ANSWER- Direct marketing
- sales force
- intermediary marketing channel
Intermediary Marketing channel - ANSWER- merchants
- agents
-Facilitators
ex: P&G
Channel Management Design Channel structure (3 strategies) - ANSWER- Intensive
distribution
- Selective distribution
- Exclusive distribution
Intensive distribution: - ANSWERused for products of high value, low value, mass
demand
Ex: soft drinks
Selective distribution - ANSWERUsed for consumer durables: consumers will usually
"compare shopping" ex: Home appliances
