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LECTURE OUTLINE AND LECTURE NOTES CHAPTER OPENING PROFILE SSB Technologies (Text pages 282-283) Marco Sorani saw a need for disabled access to the Internet—many of the 54 million disabled Americans were not able to access Web sites. He designed software that can read captions out loud so that blind people can hear what is on the screen. It can also caption Web audio and enlarge text. When the U.S. government issued guidelines for complying with the Rehabilitation Act of 1998, it created an expanded opportunity for Sorani’s company SBB Technologies. Sorani’s marketing strategy involves many of the key concepts discussed in this chapter—understanding consumer behavior, target marketing, and understanding product and price. LECTURE OUTLINE LECTURE NOTES I. INTRODUCTION TO MARKETING ► LEARNING OBJECTIVE 1 Define marketing and its eight functions. (Text pages 284-286) A. Marketing is more than selling or advertising. B. MARKETING is the process of planning and executing the conception, pricing, promotion, and distribution of goods and services to facilitate exchanges that satisfy individual and organizational objectives. II. THE EIGHT FUNCTIONS OF MARKETING A. Eight marketing functions are involved in finding an unmet need in the market and then providing that product or service to consumers. B. Exchange 1. Buying: investing and developing or procuring products to fill customer needs (determined through market research). 2. Selling is involved when customers are 9.1 POWERPOINT 9-1 Chapter Title (Refers to text page 282) POWERPOINT 9-2 Learning Objectives (Refers to text page 283) POWERPOINT 9-3 The Eight Functions of Marketing (Refers to text pages 284-286) TEXT FIGURE 9.1 The Eight Functions of Marketing (Box in text on page 285) LECTURE OUTLINE LECTURE NOTES informed of a product (packaging and advertising). C. Physical Distribution 3. Transportation: goods must be transported from the factory to the place where they will be sold. 4. Storage for products until ready for customers. D. Facilitating 5. Quality and quantity: providing the right quantity of product of the right quality. 6. Financial, including: a. the methods and procedures for payment; b. the price that supplier and wholesalers charge; c. the company’s pricing of their products to consumers. 7. Risks are involved in buying, transporting, and selling products a. Risks are involved in buying, transporting, and selling products. b. Potential competitors also introduce risk. 8. Marketing information: a. Tasks needed to sell products include: i. setting prices; ii. determining how sales of the product will help companies meet their financial objectives; iii. reviewing market research 9.2 TEXT REFERENCE Real World Business Apps (Box in text on page 285) Ariel Powell is a smallbusiness owner who has just developed a brand new product. Ariel has developed a prototype and found a manufacturer. She now must decide what price to charge for the product and how to market it. BONUS CASE 9-1 SolutionPeople: SolutionPeople Have the Idea (Video Case) This bonus case ties in with the video available for use with this chapter. The concepts of product development, packaging, and branding apply to services as well as goods. (See complete case, discussion questions, and suggested answers on page 9.Error! Bookmark not defined. of this manual.) INTRODUCTION TO BUSINESS: Instructor’s Resource Manual LECTURE OUTLINE LECTURE NOTES and competitor’s marketing information. b. A marketer must be prepared to change the message and the product or service accordingly. E. Marketing begins with determining who your customers are. III. MARKET SEGMENTATION A. Consumer groups differ greatly in age, education level, income, and taste. 1. Marketers cannot fill the needs of everyone. 2. They must first decide which group to serve and then develop products and services specially tailored to their needs (as Campbell Soup does). 3. MARKET SEGMENTATION is the process of dividing the total market into groups whose members have similar characteristics. 4. TARGET MARKETING is choosing the market segment for a marketer to focus its efforts on. B. Segmenting the Consumer Market ► LEARNING OBJECTIVE 2 TEXT FIGURE 9.2 Some Methods Marketers Use to Segment the Market (Box in text on page 288) POWERPOINT 9-4 Market Segmentation (Refers to text pages 286290) BONUS CASE 9-2 Whole Foods Markets Naturally This case discusses Whole Foods Markets, a chain of “supernatural” stores that combine the appeal of natural foods and gourmet foods. (See complete case, discussion questions, and suggested answers on page 9.Error! Bookmark not defined. of this manual.) Understand market segmentation and name the types of segmentation. (Text pages 286-289) 1. Methods of dividing the market: a. GEOGRAPHIC SEGMENTATION is dividing the market by geographic area (cities, counties, states, regions, etc.). b. DEMOGRAPHIC SEGMENTATION is segmenting by age, in- CHAPTER 9: Marketing: Product and Price CRITICAL THINKING EXERCISE 9-1 Identifying the Target Market This exercise asks the student to identify the target market for various products and services. (See complete exercise on page 9.Error! Bookmark not defined. of this manual.) 9.3 LECTURE OUTLINE 2. 3. 9.4 LECTURE NOTES come, and education level, race, profession, or religion. c. PSYCHOGRAPHIC SEGMENTATION is segmenting by lifestyle, values, attitudes, and interests. d. BENEFIT SEGMENTATION is determining which benefits are preferred and using those benefits to promote a product. e. VOLUME (USAGE) SEGMENTATION is separating the market by usage (volume of product used) or how often a product is used. The best segmentation strategy is to use all the variables to come up with a consumer profile that’s sizable, reachable, and profitable. Reaching smaller market segments a. NICHE MARKETING is the process of finding small but profitable market segments and designing custom-made products for them. b. RELATIONSHIP MARKETING is a marketing strategy with the goal of keeping individual customers over time by offering them new products that exactly meet their requirements. c. The latest in technology enables sellers to work with buyers to determine their individual wants and needs and to develop goods and services specifically designed for those individuals. BONUS CASE 9-3 Marketing to the Baby Boom Generation The baby boomer generation, the largest population group, is a profitable market for targeted products and services. (See complete case, discussion questions, and suggested answers on page 9.Error! Bookmark not defined. of this manual.) BONUS CASE 9-4 Thermos: CustomerOriented Marketing To become a world-class competitor, Thermos completely reinvented the way it conducted its marketing operations. (See complete case, discussion questions, and suggested answers on page 9.Error! Bookmark not defined. of this manual.) INTRODUCTION TO BUSINESS: Instructor’s Resource Manual LECTURE OUTLINE d. LECTURE NOTES The text uses two examples: service firms such as airlines, rental car companies, and hotels; and the Hard Rock Café. SELF CHECK QUESTIONS (Text page 289) 1. What are three ways in which marketers can segment markets? 2. Why do marketers choose to segment markets? IV. CONSUMER BEHAVIOR ► LEARNING OBJECTIVE 3 Explain the process consumers go through when purchasing products and how consumer markets differ from business-to-business markets. (Text pages 290-294) A. Before you can sell effectively to someone, you must understand their motivations and reasons for purchasing a product. 1. The consumer purchase decision process involves: a. problem recognition; b. information search; c. evaluate alternatives; d. make purchase decision; e. postpurchase evaluation. 2. Consumer behavior researchers also study the influences that impact consumer behavior. a. marketing mix variables (the four Ps) b. psychological influences such as perception and attitudes c. situational influences such as the type of purchase and physical surroundings CHAPTER 9: Marketing: Product and Price TEXT FIGURE 9.3 Outside Influences on the Consumer DecisionMaking Process (Box in text on page 291) POWERPOINT 9-5 Consumer Behavior (Refers to text pages 290292) TEXT REFERENCE Study Skills: Importance of Good Communication Skills (Box in text on page 291) An additional exercise and discussion is available on page 9.Error! Bookmark not defined. in this manual. 9.5 LECTURE OUTLINE LECTURE NOTES d. sociocultural influences such as reference groups and culture 3. Consumer behavior is also influenced by other factors: a. Learning involves changes in an individual’s behavior resulting from previous experiences and information. b. A reference group is the group that an individual uses as a reference point for his or her beliefs, attitudes, values, or behavior. c. Culture is the set of values, attitudes, and ways of doing things that are transmitted from one generation to another in a given society. d. Subculture is the set of values, attitudes, and ways of doing things that results from belonging to a certain group with which one closely identifies. e. Cognitive dissonance is the type of psychological conflict that can occur after a purchase—such as the purchaser’s doubts about whether they got the best product at the best price. B. The Business-to-Business Markets 1. Marketers of goods and services to manufacturers, institutions, commercial operations, and the government are called B2B marketers. 2. Because business buyers have their own decision-making process, market9.6 LECTURE LINK 9-1 Retro Merchandise Sells Wax lips, bubble-gum cigarettes, Slinkies, and Moon Pies. The toys and treats of the post-World War II generation are enjoying a revival. (See complete lecture link on page 9.Error! Bookmark not defined. of this manual.) LECTURE LINK 9-2 Top Ten New Products in History Research and development executives identify the top ten new products of all time. (See complete lecture link on page 9.Error! Bookmark not defined. of this manual.) BONUS CASE 9-5 Food Marketing in the Inner City This case focuses on how food marketing in the inner city is different from that in suburban neighborhoods. (See complete case, discussion questions, and suggested answers on page 9.Error! Bookmark not defined. of this manual.) POWERPOINT 9-6 The Business-to-Business INTRODUCTION TO BUSINESS: Instructor’s Resource Manual LECTURE OUTLINE 3. ing strategies are different. Several factors make business-tobusiness marketing different. a. Number: There are relatively few customers compared to the consumer market. b. Size: Though few in number, industrial customers are relatively large. c. Geographically concentrated: B2B markets tend to be concentrated in certain areas of the country. d. Rational: Business buyers are generally more rational than consumers in their purchase decisions. e. Direct: B2B sales tend to be direct. f. Personal selling: There is more emphasis on personal selling than in the consumer market. g. Packaging tends to be more functional in B2B. SELF CHECK QUESTIONS (Text page 294) 1. What are the five steps in the consumer decisionmaking process? 2. Describe a recent purchase and how you went through this process. 3. What are some differences between the consumer market and the B2B market? V. THE 4Ps OF MARKETING: PRODUCT ► LEARNING OBJECTIVE 4 Describe the various aspects that go into the product element of marketing’s 4Ps. (Text pages 294-302) CHAPTER 9: Marketing: Product and Price LECTURE NOTES Market (Refers to text pages 292-294) LECTURE LINK 9-3 DeWalt Identifies its Target Market DeWalt Tools discovered that it was targeting the wrong market. (See complete lecture link on page 9.Error! Bookmark not defined. of this manual.) TEXT FIGURE 9.4 Comparing Business-toBusiness and Consumer Buying Behavior (Box in text on page 293) CRITICAL THINKING EXERCISE 9-2 Consumer or B2B Good? This exercise asks students to classify various products and services as being a consumer good, a B2B good, or both. (See complete exercise on page 9.Error! Bookmark not defined. of this manual.) POWERPOINT 9-7 The 4Ps of Marketing: Product (Refers to text pages 294-296) 9.7 LECTURE OUTLINE LECTURE NOTES A. MARKETING MANAGEMENT is the process of overseeing all the aspects of marketing a particular product or service for the purpose of attracting and retaining customers. 1. The 4Ps are the ingredients that go into a marketing program: a. Product b. Price c. Place d. Promotion B. Total Product Offer 1. A customer is not only buying a product or a service, but also purchasing everything that goes along with it. 2. TOTAL PRODUCT OFFER consists of everything that consumers evaluate when deciding whether to buy something. C. Market Research 1. MARKETING RESEARCH is the analysis of markets to determine opportunities and challenges, and to find the information needed to make good decisions. a. One goal is to determine exactly what consumers want and need, now and in the future. b. Marketing research is the activity that gathers the information businesses need to compete effectively. c. In addition to customers, marketers should pay attention to the 9.8 BONUS INTERNET EXERCISE 9-1 Comparison Shopping Online This Internet exercise directs students to BizRate.com, a Web site that lets consumers compare both product price and vendor reputation. Students are asked to comparison shop for a digital camera. (See complete exercise on page 9.Error! Bookmark not defined. of this manual.) TEXT FIGURE 9.5 Potential Components of a Total Product Offer (Box in text on page 295) CRITICAL THINKING EXERCISE 9-3 Find a Need and Fill It This exercise asks the student to look around himself or herself to identify a need that is unfilled. (See complete exercise on page 9.Error! Bookmark not defined. of this manual.) POWERPOINT 9-8 Market Research (Refers to text pages 296-298) INTRODUCTION TO BUSINESS: Instructor’s Resource Manual LECTURE OUTLINE 2. views of employees, shareholders, consumer advocates, and other stakeholders. The marketing research process a. Step 1. Defining the problem and determining the present situation b. Step 2. Collecting research data i. PRIMARY RESEARCH is research that a marketer creates and implements, including focus groups. ii. A FOCUS GROUP is of a small group of people who meet under the direction of a discussion leader who tries to discover their opinion about a product. iii. SECONDARY RESEARCH is data already available to the marketer, such as in government publications and journal articles. a. The disadvantage of secondary research is the information is not developed for one marketer’s purpose. b. It is, however, much more inexpensive to conduct and faster to gather than primary research. c. Step 3. Analyzing the research data i. The data collected must be turned into useful information. CHAPTER 9: Marketing: Product and Price LECTURE NOTES TEXT REFERENCE Career Development: The Importance of Positive Attitude (Box in text on page 295) An additional exercise and discussion is available in this chapter on page 9.Error! Bookmark not defined.. BONUS INTERNET EXERCISE 9-2 How Do Nonprofits Market Themselves on the Internet? This Internet exercise asks students to research a nonprofit organization’s Web site to explore how the organization approaches marketing. (See complete exercise on page 9.Error! Bookmark not defined. of this manual.) CRITICAL THINKING EXERCISE 9-4 Good to the Last Drop This exercise involves an inclass product comparison. Can students identify the taste of their favorite cola in a blind taste test? (See complete exercise on page 9.Error! Bookmark not defined. of this manual.) 9.9 LECTURE OUTLINE LECTURE NOTES ii. Careful, honest interpretation of the data can reveal specific marketing challenges. d. Step 4. Choosing and implementing the best solution. 3. A PRODUCT LINE is a group of products that are physically similar or intended for a similar market. a. The costs of marketing research can be spread over an entire product line. D. Product Differentiation 1. PRODUCT DIFFERENTIATION is the creation of real or perceived product differences. a. Actual product differences are sometimes quite small, so marketers must create a unique, attractive image (examples: various brands of bottled water). b. Customers develop strong loyalties over perceived differences. 2. Classifying consumer goods and services a. Convenience goods and services are products that the consumer wants to purchase frequently and with a minimum of effort. i. Examples: candy, milk, snacks, gas, and banking ii. For these, location, brand awareness, and image are important for marketers. iii. Sold in: convenience stores 9.10 POWERPOINT 9-9 Product Differentiation (Refers to text pages 298300) LECTURE LINK 9-4 The Mystique of Coca-Cola A critical element in CocaCola’s success is the aura of mystery around the product’s formula. (See complete lecture link on page 9.Error! Bookmark not defined. of this manual.) TEXT FIGURE 9.6 Various Categories of Con- INTRODUCTION TO BUSINESS: Instructor’s Resource Manual LECTURE OUTLINE b. c. d. (example: 7-Eleven) iii. The Internet provides another level of convenience. Shopping goods and services are those products that the consumer buys only after comparing value, quality, price, and style from a variety of sellers. i. Shopping goods and services are usually sold through shopping centers where consumers can make comparisons. ii. Sold in: Sears and Macy’s. iii. Examples: shoes, appliances, and auto repair services Specialty goods and services are consumer products with unique characteristics and brand identity. i. Because these products are perceived as having no reasonable substitute, the consumer makes a special effort to buy them. ii. Examples: specialty foods, expensive wine, and jewelry iii. These are often marketed through specialty magazines. iv. Interactive web sites make purchasing specialty goods more convenient. Unsought goods and services are products that consumers are unaware of, haven’t thought of buy- CHAPTER 9: Marketing: Product and Price LECTURE NOTES sumer and Industrial Goods and Services (Box in text on page 299) LECTURE LINK 9-5 Brand Management Icons The Michelin Man is 75 years old, but he’s not the oldest brand mascot. (See complete lecture link on page 9.Error! Bookmark not 9.11 LECTURE OUTLINE LECTURE NOTES ing, or find that they need to solve an unexpected problem. i. Examples: car towing services, burial services, dental work 3. An INDUSTRIAL GOOD is a product which is used to produce or as a component of, other products; sometimes called business goods or B2B goods. E. Packaging 1. Packaging plays an important role in customers’ evaluation of the value package. 2. Packaging must do the following: a. Protect the goods inside, stand up under handling and storage, be tamperproof, deter theft, and be easy to open; b. Attract the buyer’s attention; c. Describe the contents and give information about the contents; d. Explain the benefits of the goods inside; e. Provide information on warranties, warnings, and other matters; f. Give some indication of price, value, and uses. F. Branding 1. A BRAND is a name and symbol that identify the product of one seller over another. 2. BRAND EQUITY is a combination of factors that people associate with a given brand name, such as image and 9.12 defined. of this manual.) POWERPOINT 9-10 Packaging (Refers to text pages 300-301) LECTURE LINK 9-6 The 100-Calorie Snack Attack Food companies such a Kraft are introducing individual 100-calorie packages of popular snacks such as Cheetos and Oreos. (See complete lecture link on page 9.Error! Bookmark not defined. of this manual.) LECTURE LINK 9-7 The New Barcodes After years of using a 12digit UPC barcode, U.S. companies will now be using the same 13-digit standard that has long been the worldwide standard. PPT 911 below shows an example of the new code. (See complete lecture link on page 9.Error! Bookmark not defined. of this manual.) POWERPOINT 9-11 Example of a UPC Barcode (Refers to text pages 300301) CRITICAL THINKING INTRODUCTION TO BUSINESS: Instructor’s Resource Manual LECTURE OUTLINE perceived quality. 3. BRAND LOYALTY is the extent to which a customer will choose one product over another on a continual basis. G. Product Development Process 1. The new product develop process includes six steps: a. idea generation; b. product screening; c. product analysis; e. development; f. testing; g. commercialization. 2. Idea generation: ideas come from employees, suppliers, and others. 3. Product screening, looking at the new ideas in terms of profit potential and marketability. 4. Product analysis: If the costs of making the product versus the sales forecasts are attractive, the product goes into the development and testing stage, then is commercialized. 5. Products that don’t meet the established criteria are abandoned. SELF CHECK QUESTIONS (Text page 302) 1. 2. What are the 4Ps? What are four classifications of product? 3. Describe the difference between the two types of market research. CHAPTER 9: Marketing: Product and Price LECTURE NOTES EXERCISE 9-5 Choosing a Brand Name This gives students a chance to create unique brand names for several consumer products. (See complete exercise on page 9.Error! Bookmark not defined. of this manual.) BONUS INTERNET EXERCISE 9-3 Most Valuable Global Brands Interbrand, a research company, annually ranks the most valuable brands in the world. This exercise asks students to research the current year’s ranking. (See complete exercise on page 9.Error! Bookmark not defined. of this manual.) POWERPOINT 9-12 Product Development Process (Refers to text pages 301-302) TEXT REFERENCE Ethical Challenge: Celebrity Endorsements (Box in text on page 302) Many producers use brand association to sell their products, often using celebrity endorsements. If young people are lured into trying inappropriate things, who is responsible? LECTURE LINK 9-8 The DVD War The conflict over video formats for consumer video players is heating up. Half the movie companies are adopting the HD DVD format. The other half is adopt- 9.13 LECTURE OUTLINE LECTURE NOTES ing the incompatible Blu-Ray format. (See complete lecture link on page 9.Error! Bookmark not defined. of this manual.) TEXT FIGURE 9.7 The New-Product Development Process (Box in text on page 305) VI. THE 4Ps OF MARKETING ► LEARNING OBJECTIVE 5 Describe the different types of pricing that should be considered in marketing products. (Text pages 302-311 A. The firm may have several objectives in mind when setting a pricing strategy. 1. Pricing objectives include: a. Achieving a target return on investment or profit. Most first seek to maximize profit. b. Building traffic. i. Low prices on certain products (lost-leaders) can bring customers into your store. ii. LOSS LEADERS: When a store advertises certain products at or below cost to attract people to the store. c. Achieving greater market share. Price can be used to capture and hold market share. i. Auto companies offer low finance rates, low lease rates, or rebates. ii. Market share can be defined 9.14 TEXT REFERENCE Thinking Critically: Avoid the Black Hole of Business Start-Ups (Box in text on page 304) No one deliberately sets out to fail in business, but four out of every ten start-ups fail in the first year, six within the first five years. Many of the missteps and disasters that befall a new business are avoidable. POWERPOINT 9-13 The 4Ps of Marketing: Price (Refers to text pages 302-303) TEXT FIGURE 9.8 Sample Strategies Followed During the Product Life Cycle (Box in text on page 305) INTRODUCTION TO BUSINESS: Instructor’s Resource Manual LECTURE OUTLINE as the proportion of sales made by a company vs. the total number of sales for that particular product. d. Creating an image. A high price may present an image of status. e. Furthering social objectives. A product may be priced low so more people can afford to buy it. 2. A company’s short-term pricing objectives may differ from its long-term objectives. a. Pricing objectives are influenced by product design, packaging, branding, distribution, and promotion. b. A product’s price and cost to produce aren’t always related. B. Product Life Cycle 1. Most products go though four stages: introduction, growth, maturity, and decline. a. The PRODUCT LIFE CYCLE is a theoretical model of what happens to sales and profits for a product class over time. b. Not all products follow the life cycle, and some brands may act differently. c. Knowing what stage in the cycle a product is in helps marketing managers to decide when strategic changes are needed. 2. The life cycle affects pricing, because CHAPTER 9: Marketing: Product and Price LECTURE NOTES TEXT FIGURE 9.9 Sales and Profits During the Product Life Cycle (Box in text on page 307) POWERPOINT 9-14 Product Life Cycle (Refers to text pages 303-307 9.15 LECTURE OUTLINE LECTURE NOTES the longer a product stays in the life cycle, the more profit will be made. a. The higher the demand for a product, the higher the price that can be charged. b. A fad product must be priced carefully because it goes through the life cycle quickly. C. Cost-Based Pricing 1. Producers often use cost as a primary basis for setting price. 2. In the long run, the market—not the producer—determines what the price will be. D. Demand-Based Pricing 1. TARGET COSTING means to price based upon demand. 2. A product is designed so it satisfies needs and meets the profit margins desired by the company. 3. Marketers estimate the selling price that people are willing to pay, then subtract the desired profit margin. E. Competition-Based Pricing 1. Competition-based pricing is a strategy based on what other competitors are doing; the price can be set at, above, or below competitor’s prices. 2. PRICE LEADERSHIP is the procedure by which one or more dominant firms set the pricing practices that all competitors in an industry follow. F. Break-Even Analysis 1. Break-even analysis is the process 9.16 TEXT REFERENCE Career Spotlight: So, You Want to Be … in Marketing (Box in text on page 310) POWERPOINT 9-15 Demand-Based Pricing (Refers to text pages 307308) TEXT REFERENCE Real World Business Apps (Box in text on page 312) Ariel has decided to set her price high, using a skimming strategy, to maximize profit. She has designed an attractive package and has chosen a target market: men and women between 18 and 40. CRITICAL THINKING EXERCISE 9-6 Break-Even Analysis This exercise guides the student through the analysis required to determine a res- INTRODUCTION TO BUSINESS: Instructor’s Resource Manual LECTURE OUTLINE 2. 3. used to determine profitability at various levels of sales. The break-even point (BEP) is the point where revenues from sales equal all costs. BEP is calculated: Total fixed cost (FC) . Price of 1 unit — Variable cost of 1 unit You don’t make a profit until you sell more than the breakeven sales volume; beyond that you make a profit. G. Other Pricing Strategies 1. Pricing in the introductory stage is critical. 2. One approach is to use the pricing strategy matrix. a. Determine if the product has high, medium, or low value to the customer. b. The price charged can also be high, medium, or low. c. The place where the two meet shows the direction the marketer should go. 3. Pricing strategies for specific products: a. A SKIMMING PRICE STRATEGY is a pricing strategy in which a new product is priced high to make optimum profit while there is little competition; however, it invites competitors. b. A PENETRATION STRATEGY is a pricing strategy in which a product is priced low to attract more LECTURE NOTES taurant’s break-even point. Use PPT 9-16 below with this exercise. (See complete exercise on page 9.Error! Bookmark not defined. of this manual.) POWERPOINT 9-16 Breakeven Analysis (Refers to text pages 309-311 and CTE 9-6 above) 4. CHAPTER 9: Marketing: Product and Price TEXT FIGURE 9.10 The Pricing Strategy Matrix (Box in text on page 309) POWERPOINT 9-17 Other Pricing Strategies (Refers to text pages 309311) 9.17 LECTURE OUTLINE 4. 9.18 LECTURE NOTES customers and discourage competitors. i. It allows a company to capture market share quickly. ii. This strategy is effective for small businesses. Pricing strategies used by retailers: a. EVERYDAY LOW PRICING (EDLP) is a pricing strategy where prices are set lower than other stores and there are no special sales (example: Wal-Mart). b. The HIGH-LOW PRICING STRATEGY has regular prices that are higher than at stores using EDLP, but they have many special sales in which the prices are lower (example: department stores). c. Consumers can use the Internet to find lower prices, making it harder to use this strategy. d. Some retailers chose the products they carry based on price (example: stores that sell only products priced at $1). e. Retailers also use BUNDLING, grouping two or more products together and pricing them as a unit. f. PSYCHOLOGICAL PRICING (ODD PRICING) is pricing goods and services at price points that make them appear less expensive than they are (example: gasoline priced at $2.99 instead of $3.00). BONUS CASE 9-6 Everyday Low Pricing (EDLP) Retailers such as Wal-Mart and Kmart have had great success using everyday low pricing (EDLP). (See complete case, discussion questions, and suggested answers on page 9.Error! Bookmark not defined. of this manual.) INTRODUCTION TO BUSINESS: Instructor’s Resource Manual LECTURE OUTLINE LECTURE NOTES H. Many factors affect price and must be considered. SELF CHECK QUESTIONS (Text page 311) 1. What are three objectives that might be used when setting pricing strategies? 2. Discuss three types of pricing strategies which might be used in marketing. VII. SUMMARY CHAPTER 9: Marketing: Product and Price 9.19