(BQ) Part 2 book “Essentials of marketing” has contents: Pricing strategies, international marketing, marketing planning, implementation and control, marketing communications and promotional tools, distribution, 21st century marketing.
Last A Head on Spread Pricing strategies Objectives After reading this chapter you should be able to: • explain the advantages and disadvantages of different pricing methods; • calculate prices using different approaches; • choose the correct pricing strategy to fit a firm’s overall objectives; • explain some of the economic theories underlying the marketer’s view of price and value 168 Economic theories of pricing and value 169 INTRODUCTION Pricing may not be exciting, but it is one of the most important issues for marketers; it is crucial not only to the profit that is to be made, but also to the quantity of the products that will be sold This chapter examines the different ways of pricing that are used, and offers some ideas on how to choose a pricing strategy ECONOMIC THEORIES OF PRICING AND VALUE Classical economists assumed that prices would automatically be set by the laws of supply and demand Figure 7.1 shows how this works As prices rise, more suppliers find it profitable to enter the market, but the demand for the product falls because fewer customers think the product is worth the money Conversely, as prices fall there is more demand, but fewer suppliers feel it is worthwhile supplying the product so less is produced Eventually a state of equilibrium is reached where the quantity produced is equal to the quantity consumed, and at that point the price will be fixed Unfortunately this neat model has a number of drawbacks Price determined by market Price Demand line Supply line Quantity supplied or demanded Quantity supplied by market FIGURE 7.1 Supply and demand 170 Chapter • Pricing strategies • The model assumes that customers know where they can buy the cheapest products (i.e it assumes perfect knowledge of the market) • Secondly, it assumes that all the suppliers are producing identical products, which is rarely the case • Thirdly, it assumes that price is the only issue that affects customer behaviour, which is clearly not true • Fourthly, it assumes that customers always behave completely rationally, which again is substantially not the case • Fifthly, there is an assumption that people will always buy more of a product if it is cheaper This is not true of such products as wedding rings or artificial limbs • Finally, the model assumes that the suppliers are in perfect competition – that none of them has the power to ‘rig’ the market and set the prices (see Chapter 2) The model does, at least, take account of customers, and it was the pioneer economist Adam Smith who first said that ‘the customer is king’.1 Unfortunately the shortcomings of the model mean that it has little practical use, no matter how helpful it is in understanding a principle Economists have therefore added considerably to the theory Elasticity of demand This concept states that different product categories will show different degrees of sensitivity to price change Figure 7.2(a) shows a product where the quantity sold is affected only slightly by price fluctuations, i.e the demand is inelastic An example of this is salt Figure 7.2(b) shows a product where even a small difference in price leads to a very substantial shift in the quantity demanded, i.e the demand is elastic An example of this is borrowed money, e.g mortgages, where even a small rise in interest rates appears to affect the propensity to borrow Although these examples relate to consumers, the same is true for suppliers: in some cases suppliers can react very quickly to changes in the quantities demanded (for example, banking), whereas in other cases the suppliers need long lead times to change the production levels (for instance, farming) The price elasticity of demand concept implies that there is no basis for defining products as necessities or luxuries If a necessity is defined as something without which life cannot be sustained, then its demand curve would be entirely inelastic: whatever the price was, people would have to pay it In practice, no such product exists Economic theories of pricing and value Quantity FIGURE 7.2 (b) Elastic demand curve Price Price (a) Inelastic demand curve 171 Quantity Price elasticity of demand Economic choice Economists have demonstrated that there can never be enough resources in the world to satisfy everybody’s wants, and therefore resources have to be allocated in some way (which will probably mean an equality of dissatisfaction) Resources used for one purpose cannot, of course, be used for another: this is the concept of the economic choice For example, a clothing manufacturer has only a certain number of machinists who work a certain number of hours This means that it may be possible to produce either 8000 shirts with the available resources, or 4000 pairs of trousers If the manufacturer has two orders, one for each type of product, he or she will have to choose which order to supply, and disappoint the other customer From the customer’s viewpoint, the economic choice means having to choose between going to the cinema or going to the pub; there may not be the time or the money to both Because of this, customers may also take into account the price of activities other than those the prospective supplier is providing; the pub, for example, may not be aware that the cinema is competition, and that a fall in the price of going to the cinema may affect the takings over the bar Although the economists’ view of pricing offers some interesting insights, there is little practical value in the theories offered because they take little account of the consumer decision-making process (see Chapter 3) Consumers are not always rational; marketers need to take account of this 172 Chapter • Pricing strategies PRICING AND MARKET ORIENTATION As in any other question of marketing, pricing is dependent on how the customer will react to the prices set Customers not usually buy the cheapest products; they buy those that represent good value for money If this were not so, the most popular cars in Britain would be Ladas and Yugos, rather than Vauxhalls and Fords Typically, customers will assess the promises the supplier has made about what the product is and will do, and will measure this against the price being asked.2 This leaves the marketer with a problem Marketers need to decide what price will be regarded by customers as good value for money, while still allowing the company to make a profit The main methods of pricing used by firms are cost-based, customer-based and competition-based Cost-based pricing Cost-based methods are the least customer-orientated; two still used are costplus pricing and mark-up pricing Cost-plus pricing Cost-plus pricing is commonly advocated by accountants and engineers, since it is simple to use and appears to guarantee that the company meets a pre-determined profit target The method works by calculating the cost of manufacturing the product, including distributed overhead costs and research and development costs, then adding on a fixed percentage profit to this figure in order to arrive at the price Such a calculation might look like Table 7.1 TABLE 7.1 Cost-plus pricing Item Labour costs Raw materials Electricity Tooling costs (assuming production run of 20 000 units) Overheads Total production cost per unit Plus profit of 20% Net price Cost per unit £2.52 £4.32 £0.27 £1.78 £3.43 –––––– £12.32 £2.46 ––––––– £14.78 Pricing and market orientation 173 On the face of it, this type of pricing seems logical and straightforward; unfortunately, it does not take account of how the customers will react to the prices quoted If the customers take the view that the price does not represent value for money, they will not buy the product, and the result will be that the company will have made 20 000 units of a product for which there will be no sales Conversely, if the customers take the view that the price is incredibly good value for money, the company may not have enough stocks on hand to meet demand, and competitors will be able to enter the market easily Some government contracts are awarded on a cost-plus basis, but experience in the United States has shown that allowing cost-plus contracts to be granted will often result in the supplier inflating the costs to make an extra profit Mark-up pricing Mark-up pricing is similar to cost-plus pricing, and is the method used by most retailers Typically, a retailer will buy in stock and add on a fixed percentage to the bought-in price (a mark-up) in order to arrive at the shelf price The level will vary from retailer to retailer, depending on the type of product; in some cases the mark-up will be 100% or more, in others it will be near zero (if the retailer feels that stocking the product will stimulate other sales) Usually there is a standard mark-up for each product category Here the difference needs to be shown between a mark-up and a margin Mark-up is calculated on the price the retailer pays for the product; margin is calculated on the price the retailer sells for This means that a 100% mark-up equals a 50% margin; a 25% mark-up equals a 20% margin (Table 7.2) Retailers use this method because of the number of lines the shop may be carrying For a hypermarket, this could be up to 20 000 separate lines, and it would clearly be impossible to carry out market research with the customers for every line The buyers therefore use their training and knowledge of their customer base to determine which lines to stock, and (to some extent) rely on the manufacturers to carry out the formal market research and determine the recommended retail prices This method is identical to the cost-plus method except for two factors: firstly, the retailer is usually in close contact with the customers, and can therefore TABLE 7.2 Mark-up v margin Bought-in price £4.00 Mark-up at 25% of £4.00 £1.00 Price on the shelf £5.00 Margin of 20% of £5.00 £1.00 Bought-in price £4.00 174 Chapter • Pricing strategies develop a good ‘feel’ for what customers will be prepared to pay; and, secondly, retailers have ways of disposing of unsold stock In some cases, this will mean discounting the stock back to cost and selling it in the January sales; in other cases, the retailer will have a sale-or-return agreement with the manufacturer, so that unsold stock can be returned for credit This is becoming increasingly common with major retailers such as Toys ‘R’ Us who have sufficient ‘clout’ in the market to enforce such agreements In a sense, therefore, the retailer is carrying out market research by test-marketing the product; if the customers not accept the product at the price offered, the retailer can drop the price to a point that will represent value for money, or can return it to the manufacturer for credit Customer-based pricing methods The various approaches to customer-based pricing not necessarily mean offering products at the lowest possible price, but they take account of customer needs and wants Customary pricing Customary pricing is customer-orientated in that it provides the customer with the product for the same price at which it has always been offered An example is the price of a call from a coin-operated telephone box Telephone companies need only reduce the time allowed for the call as costs rise For some countries (e.g Australia) this is problematical since local calls are allowed unlimited time, but for most European countries this is not the case The reason for using customary pricing is to avoid having to reset the callboxes too often Similar methods exist for taxis, some children’s sweets, and gas or electricity pre-payment meters If this method were to be used for most products there would be a steady reduction in the firm’s profits as the costs caught up with the selling price, so the method is not practical for every firm Demand pricing Demand pricing is the most market-orientated method of pricing Here, the marketer begins by assessing what the demand will be for the product at different price levels This is usually done by asking the customers what they might expect to pay for the product, and seeing how many choose each price level This will lead to the development of the kind of chart shown in Table 7.3 As the price rises, fewer customers are prepared to buy the product, as fewer will still see the product as good value for money In the example given in Table 7.3, the fall-off is not linear, i.e the number of units sold falls dramatically once the price goes above £5 This kind of calculation could be used to determine the stages of a skimming policy (see below), or it could be used to calculate the appropriate launch price of a product Pricing and market orientation TABLE 7.3 175 Demand pricing Price per unit Number of customers who said they would buy at this price £3 to £4 30 000 £4 to £5 25 000 £5 to £6 15 000 £6 to £7 000 For demand pricing, the next stage is to calculate the costs of producing the product in the above quantities Usually the cost of producing each item falls as more are made (i.e if we make 50 000 units, each unit costs less than would be the case if we made only 1000 units) Given the costs of production it is possible to select the price that will lead to a maximisation of profits This is because there is a trade-off between quantity produced and quantity sold: as the firm lowers the selling price, the amount sold increases but the income generated decreases The calculations can become complex, but the end result is that the product is sold at a price that customers will accept, and that will meet the company’s profit targets Table 7.4 shows an example of costings to match up with the above figures The tooling-up cost is the amount it will cost the company to prepare for producing the item This will be the same whether 1000 or 30 000 units are made Table 7.5 shows how much profit could be made at each price level The price at which the product is sold will depend on the firm’s overall objectives; these may not necessarily be to maximise profit on this one product, since the firm may have other products in the range or other long-term objectives that preclude maximising profits at present TABLE 7.4 Costings for demand pricing Number of units Unit cost (labour and materials) Tooling-up and fixed costs Net cost per unit 30 000 £1.20 £4000 £1.33 25 000 £1.32 £4000 £1.48 15 000 £1.54 £4000 £1.81 000 £1.97 £4000 £2.77 176 Chapter • Pricing strategies TABLE 7.5 Profitability at different price bands Number of units sold 30 000 25 000 15 000 000 Net profit per unit Total profit for production run Percentage profit per unit £2.17 £3.02 £3.61 £3.73 £65 100 £75 500 £54 150 £18 650 62 67 66 57 Based on these figures, the most profitable price will be £4.50 Other ways of calculating the price could easily lead to making a lower profit from this product For instance, the price that would generate the highest profit per unit would be £6.50, but at this price they would sell only 5000 units and make £18 650 The price that would generate the highest sales would be £3.50, but this would (in effect) lose the firm almost £10 000 in terms of forgone profit A further useful concept is that of contribution Contribution is calculated as the difference between the cost of manufacture and the price for which the product is sold – in other words it does not take account of overheads Sometimes a product is worth producing because it makes a significant extra contribution to the firm’s profits, without actually adding to the overheads It is not difficult to imagine a situation where a product carries a low profit margin, and is therefore unable to support a share of the overheads A calculation which included an overall share of the overheads might not give a fair picture, since the contribution would be additional to existing turnover Demand pricing works by knowing what the customers are prepared to pay, and what they will see as value for money Product-line pricing Product-line pricing means setting prices within linked product groups Often sales of one product will be directly linked to the sales of another, so that it is possible to sell one item at a low price in order to make a greater profit on the other one Gillette sells its Mach III system razors at a very low price, with the aim of making up the profit on sales of the blades In the long run, this is a good strategy because it overcomes the initial resistance of consumers towards buying something untried, but allows the firm to show high profits for years to come (incidentally, this approach was first used by King C Gillette, the inventor of the disposable safety razor blade) Polaroid chose to sell its instant cameras very cheaply (almost for cost price) for the US market and to take their profit from selling the films for a much higher price For Europe, the firm chose to sell both films and cameras for a medium Pricing and market orientation 177 level price and profit from sales of both Eventually this led Kodak to enter the market with its own instant camera, but this was withdrawn from sale in the face of lawsuits from Polaroid for patent infringement Skimming Skimming is the practice of starting out with a high price for a product, then reducing it progressively as sales level off It relies on two main factors: firstly that not all customers have the same perception of value for money, and secondly that the company has a technological lead over the opposition which can be maintained for long enough to satisfy the market Skimming is usually carried out by firms who have developed a technically advanced product Initially the firm will charge a high price for the product, and at this point only those who are prepared to pay a premium price for it will buy Profit may not be high, because the number of units sold will be low and therefore the cost of production per unit will be high Once the most innovative customers have bought, and the competition is beginning to enter the market, the firm can drop the price and ‘skim’ the next layer of the market, at which point profits will begin to rise Eventually the product will be sold at a price that allows the firm only a minimum profit, at which point only replacement sales or sales to late adopters will be made The advantage of this method is that the cost of developing the product is returned fairly quickly, so that the product can later be sold near the marginal cost of production This means that the competitors have difficulty entering the market at all, since their own development costs will have to be recovered in some other way Skimming is commonly used in consumer electronics markets This is because firms frequently establish a technological lead over the competitors, and can sometimes even protect their products by taking out patents, which take some time for competitors to overcome An example of this was the Sony Walkman, which cost over £70 when it was first introduced in the early 1980s Allowing for inflation, the price is now around one-tenth of what it was then Recent research shows that customers are aware of skimming in the electronics markets, and are delaying purchases of new electronic devices until the prices drop This may affect the way firms view skimming in the future Skimming requires careful judgement of what is happening in the marketplace, in terms both of observing customer behaviour, and of observing competitive response Market research is therefore basic to the success of a skimming policy, and very careful monitoring of sales is needed to know when to cut the price again Psychological pricing Psychological pricing relies on emotional responses from the consumer Higher prices are often used as an indicator of quality,3 so some firms will use 340 Chapter 12 • 21st century marketing 23 McDonald, Jason B and Smith, Kirk: ‘The effects of technology-mediated communication on industrial buyer behaviour’, Industrial Marketing Management, 33 (2) (2004), pp 107–16 24 Moen, Oysten, Endresen, Iver and Gavlen, Morten: ‘Executive insights: use of the Internet in international marketing: a case study of small computer firms’, Journal of International Marketing, 11 (4) (2003), pp 129–49 25 O’Leary, Chris, Rao, Saly and Perry, Chad: ‘Improving customer relationship management through database/Internet marketing: a theory-building action research project’, European Journal of Marketing, 38 (3/4) (2004), pp 338–54 26 Fraedrich, John: ‘Philosophy type interaction in the ethical decision making process of retailers’, PhD Dissertation (Texas, A&M University, 1988) 27 Schultz, D.E and Schultz, H.E.: ‘Transitioning marketing communications into the twenty-first century’, Journal of Marketing Communications, (1) (1998), pp 9–26 Index Abell, D.F 85 ability, buying decision and 55 accommodation strategy 330, 337 accumulation 193, 194, 209 ACORN 117 action (AIDA) 218, 220, 221, 256 actual product benefits 129, 163 actual state 46, 68 adaptation 76, 82–3, 312–14 adoption 146, 249, 256 advantage comparative 285, 305 relative 146, 164 advertisements 213, 256 advertising 219, 237, 242 agencies 223, 224, 226, 251 decision-making checklist 221–3 definition 220 effectiveness 226, 227 institutional 223, 257 international 297 management of 220–6 manager 10, 223 product 223, 258 production 223–6 affect 54–5, 68, 249 affective states 48, 68 agents 192–3, 194, 209 export 296, 305 AIDA 218, 220, 221, 256 aided recall 227, 256 air travel (case study) 181–3 aircraft carriers (case study) 63–5 all-you-can-afford budgeting 273, 274 allocation (bulk breaking) 193, 209 Amazon.com 132, 199 ambushing 247 analogy 106, 121 approach-approach conflict 48 artefacts 217 ASEAN 286 aspirational groups 57 assorting 193, 194, 209 assortment depletion/extension 45, 68 attention (AIDA) 218, 220, 221, 256 attitude 34, 54–6, 60, 271, 272 attractiveness 87, 227 audit brand 148 marketing 262, 263–4, 265–6, 282 augmented product 317, 337 benefits 129, 163 automatic groups 57 auxiliary characteristics 126, 163 avoidance-avoidance conflict 48 Avon Cosmetics 204–6, 268 awards 245 awareness 146 brand 226, 248, 251, 256, 271, 272 backward integration 267, 282 BAE Systems (case study) 63–5 balance of payments 287, 304 Barksdale, H.C 134 barriers to entry 154, 292–3 barter 291, 304 BCG see Boston Consulting Group matrix behaviour consumer 45–51, 52 segmentation 78, 79, 96 see also buyer(s) belief 34, 55, 60 benchmarking 320–1, 337 benefits bundle of 126, 129–30, 190, 310 core 76, 96 bias, interviewer 110–11, 122 Note: Page numbers in bold indicate terms defined in glossaries 342 Index Bidwell, J 252 Bitner, M.J 9, 138 Body Shop 5, 31–2, 237, 316 Bonoma, T.V 81 Booms, B.H 9, 138 Boston Consulting Group 132–5, 269, 275 brands/branding 223 architecture 155, 163 audit 148 awareness 226, 248, 251, 256, 271–2 definition 147 equity 106 extension 155, 163 family 155, 163 image 147, 150, 151, 153, 154, 218, 247–8 loyalty 226 manager 10, 19 name 87, 147–50, 154, 155, 218, 272 purchase intentions 271 retailers’ own–brands 156–7, 230 semiotics and 149–51 strategic issues 148, 151–4 switching 228, 229, 256 value 229, 230 Brassington, F 288 break-down forecasting 89, 96 bring-a-friend schemes 245 British Airways 181 British Telecom 33, 86 brokers see agents Buchanan, P 298 budget setting 224, 250, 273, 274 see also cost(s) build-up forecasting 89, 96 bulk breaking (allocation) 193, 209 bulletin boards 324, 326 bureaucratic organisation 270, 282 buy-back 291, 304 buyer(s) 68, 312–14 consumer behaviour 45–51, 52 decision-making units 62–3 impulse buying 59–60 industrial 60–3 influences on decision 53–9 perception 51–3 support 313 see also consumer(s); customer(s) Buzzell, R.D 220 Cairns Agreement 286 Calentone, R.J 141, 144 cannibalisation 139, 141 capacity utilisation 156 career security, need for 60 cartoon tests 106 cash-and-carry wholesalers 193, 195, 196, 209 Cash Cow 132–3, 135, 163 cash volume sales analysis 275 catalogue showrooms 199, 209 Categorical Imperative 328 categorisation 51, 87, 314–15 category need 271 census (case study) 116–18 channel co-operation 201, 209 conflict 202, 209 of distribution 192–4, 204, 209 power 200–1, 209 children (role) 59 chip-and-pin credit cards 200 choice 47, 156 economic 171, 186 Christopher, M 310, 311, 320 chunking process 51, 87, 154 citizen action publics 31, 36 clinical focus group 105, 121 co-marketing 201, 209 Coca-Cola 12, 29, 51, 151, 155, 295, 297 cognition 54–5, 68, 249 cognitive dissonance 141 cognitive map 51–3 Cohen, J 14–16 commercial sign (brands) 150 commission 234–5 commodity products 147–8 communications 309, 325, 331–2 campaign planning 250–1 case study (Selfridges’) 252–3 developing 218–19 hierarchy of effects 248–9, 273 signs and meanings 215–18 theory 213–15 word-of-mouth 244–6 see also advertising; personal selling; promotion; promotional mix; public relations; salespeople/salesforce; telecommunications Index comparative advantage 285, 305 comparative parity budgeting 273, 274 compatibility 147, 163 competition 154, 191, 222, 229, 268 analysis 77, 275 international marketing and 288 matching approach 224 meet-the-competition strategy 178, 186 monopolistic 28, 29, 42, 179 perfect 29, 42, 170 shutting out 156 targeting and 84–5 undercut-the-competition strategy 178–9, 187 competitor-based pricing 178–80, 186 competitors 77, 181, 191, 223, 275 environment and 28–30, 265 complaints 50–1, 246, 312 complexity 147, 163 compositioning 155, 163 conation 54, 68, 249 concentrated marketing see niche marketers; niche marketing concentric diversification 267, 282 concessionaires 198, 209 confidence 54, 68 conflict 48, 58 channel 202, 209 conglomerate diversification 267, 282 connotative meaning 216 consequential losses 137 consideration set 47, 68 consumer(s) 11, 144–5, 151, 152, 298 behaviour 45–51, 52 in channels of distribution 192–4 control (Internet control) 325 orientation 4–5 perception 51–3 products 127, 163 see also customer(s) contactors 315, 337 continuous replenishment 204 convenience products 127, 163 convenience stores 198, 209 conviction 248, 249, 256 Cooper, R.G 141, 144 copy 223–6, 257 copyright 157 343 copywriter 224, 226, 257 core (generic) product 317, 337 core benefits 76, 96 core product benefits 129, 163 corporate image 248 corporate objectives 264, 267, 270, 282 cost(s) 152, 156, 180, 191 advertising 220, 221, 222, 223 –based pricing 172–4 direct 276, 282 effectiveness 266, 269–70 Internet 324, 327 leadership 269, 282 marketing cost analysis 273, 276, 282 non-traceable common 276, 282 planning 273, 274 –plus pricing 172–3, 181, 186 salesforce 233, 234–5 switching 146 traceable common 276, 283 countertrading 291, 305 coupons 221, 226, 227, 230, 250 Crawford, C.M 139 creativity 154 credit 200, 293, 332–3 crisis management 243 critical path method (CPM) 114 cross-docking 204 culture 35, 58, 68, 80, 265 internationalisation 285, 289–90, 293, 294 customary pricing 174, 186 customer(s) 7, 11, 28, 77, 157, 275–6 acceptance 140, 141, 144 analysis 79 –based pricing 174–8 environment and 27, 30, 265 expectations 49, 50, 52–3, 202, 318 intimacy 312, 325 loyalty see loyalty relationships 315–17 research 101, 121 retention 200 satisfaction 5–6, 10, 141, 144, 151 service 191, 192, 199–200 survey 90, 96 see also buyer(s); consumer(s) customisation 297, 305 customs union 286, 305 344 Index cut-off 47, 69 cycle analysis 91, 96 data 101, 111–16, 121 database marketing 230, 269–70, 323, 327, 337 DeChernatony, L 147 decider 62, 63, 69 decision 84–5 buying (influences) 53–9 strategic 262–3, 269 support systems 102, 121 tactical 262–3, 269, 329 decision-making heuristics 47, 69 influences 53–9 process 47–51, 171 units 62–3 defense strategy 330, 337 defensive PR 238, 242–3, 258 Delphi technique 90, 96 demand 11, 19, 169, 180, 222 derived 61–2, 69 elastic 170–1, 186 fluctuating 62, 69 inelastic 170–1, 186 joint 62, 70 price elasticity of 170, 187 pricing and 174–6, 186 demographics 42, 54, 116–18, 245 environment 25, 32, 291 segmentation 78, 79–80, 96 Denham, P 278 denotative meanings 216 deontology 328, 337 department stores 198, 209 depth interview 105, 121 derived demand 61–2, 69 description 61, 69 desire (AIDA) 218, 220, 221, 256 desired state 46, 69 Dibb, S 129, 192 differentiated marketing 83, 84, 96 differentiation 269, 282 brand 148, 152, 153 product 222, 250, 258 diffusion of innovation 145–7 direct costs 276, 282 direct marketing 230, 269–70, 323, 327 direct response 250, 257 discount sheds 198–9, 209 discounters 198, 209 discounts 174, 178, 200, 229 Disneyland 155, 202 dissociative groups 57 distribution 285, 296, 329 audit 265, 266 efficient consumer response 202, 204 logistics and 190–4 physical 190–4, 210, 285 research 101, 121 strategy 190, 209 see also retailers; wholesalers distribution channels 191–3, 272–3 management of 200–2, 203, 329 members 194, 200–1, 203, 204 distributor survey 90, 96 diversification 268 concentric 267, 282 conglomerate 267, 282 divestment 45, 51, 52, 69 Dodo 134, 135, 163 Dog 132, 133, 135, 163 Domesday marketing 200, 323, 337 drive 46, 69 drop shippers 196, 210 Drucker, P.F 14 Dugmore, K 117 dumping 180 Dunning, J.H 297 e-commerce see Internet early adopters/majority 140, 145, 163 eclectic theory 297, 305 ecological environment 35, 265 economic choice 171, 186 economic environment 26, 33, 291 economies of scale 130–1, 154, 156, 195, 285, 288, 298, 305, 314 economies of scope 154, 298 editing 111, 121 efficiency audit 266 efficient consumer response 202, 204 Egg (case study) 332–3 elastic demand 170–1, 186 electronic point-of-sale 200, 322 employees 37, 238–9, 241 markets 316, 337 see also salespeople/salesforce Index enjoyment (of advertisements) 226 entry 154, 292–3, 295–7 environment 63 audit 265 external 23–36, 42 internal 23, 36–7, 42 macro– 23, 25, 27, 32–6, 42, 101, 265 micro– 23, 25, 27–32, 42, 101 environmental stimulus 48, 69 equitable performance 49, 69 ethics 328–9 ethnocentrism 289, 292, 298, 299, 305 European Union 26, 34, 158, 286, 287 evaluation 139 of alternatives 45, 47–8, 52 heuristics 47 of performance 273, 275–6 post-purchase 45, 48–51, 52, 70, 138 Evans, M 200, 323 excess capacity utilisation 156 exchange rates 287, 294, 305 exclusive dealing 203, 210 execution format 224, 257 executive judgement 90, 96 expansion 156 expectations 49, 50, 52–3, 202, 318 expected performance 49, 69 expected product 317, 337 expenditure see costs(s) experiencing focus groups 105, 121 experiment/experimentation 106, 121 exploratory groups 105 exponential smoothing 114, 115 export agents 296, 305 export houses 296, 305 exporting 287, 291, 292, 296, 305 external environment 23–36, 42 external search 46, 69 extremity 54, 69 factor analysis 115 family 57–9, 78 family branding 155, 163 Farris, P.W 220 feedback 218, 244, 262–3, 273, 277 Ferrell, O.C 129 finance 31, 141 see also cost(s) 345 fire-fighting approach 235, 242–3, 258 Five Forces model 28, 30 flaming 324 fluctuating demand 62, 69 focus 269, 282 focus group 105, 110, 121, 150, 327 Ford 151, 223, 295, 296, 297 forecasting break-down 89, 96 build-up 89, 96 sales 89–91, 275 formal groups 57 forward integration 267, 282 4–P model 7, franchising 198, 296, 297, 305 free gifts 217, 228 free 'taster' samples 228, 230, 251 free trade areas 286 frequency 224, 230, 257, 314–15 Frequent Flyer programmes 322 friendship need 60 'front-liners' 238, 239 full-line forcing 203 full-service merchant wholesalers 196, 210 function audit 266 functional capability (brands) 153 functional organisation 271, 282 future marketing trends 330–2 gatekeeper 62, 69 GATT 286 gender relations 25, 57–8 general-merchandise wholesalers 196, 210 generic (core) product 317, 337 geocentrism 292, 298, 299 geographic segmentation 78–9, 81, 84, 96 geographical factors 35, 236, 275 global segmentation 293–5 globalisation 35, 297–300, 305, 309 see also international marketing Gordon, W 150 government 31, 36, 241, 290 green marketing/issues 324, 332 Greenpeace 36, 243, 324 Gregory, K 292 group 63 depth interview 105, 121 pressure 35, 36, 241–2, 330 346 Index group (Continued) reference 56, 57, 70 see also focus groups growth strategies 267–8 habitual purchase behaviour 51, 52 Hamill, J 292 Harley Davidson 150 Harris, C.E 134 hedonic benefits 190 hedonic needs 45–6, 69, 76 Heinz 155, 158 Herzberg, F 235 heuristics 47, 69 hierarchy of needs theory 235 High and Mighty 84 Hofstede, G 293 holiday business (case study) 91–3 horizontal diversification 267 horizontal integration 202, 210, 267, 282 Hovis 150 Hutson, J 159 hypermarkets 197, 198, 210 IBM 14, 81, 236, 297, 312 icon 215, 257 ideal performance 49, 69 image 148, 248, 250 brand 147, 150, 151, 153–4, 218, 247 of stores 150–1, 200 importing 287, 291, 305 impulse buying 59–60 income, per capita 291, 305 index 215, 257 individualism 35, 63, 293, 330 industrial buyer 60–3, 299 industrial markets, segmenting 81–2 industrial products 127, 128–9, 163 industry 233–4, 236, 275 inelastic demand 170–1, 186 influence on buying decisions 53–9 informational 56, 69 markets 316, 337 value-expressive 56, 71 influencers 62, 69, 315, 337 influentials 244–5 informal groups 57 information 48, 101, 122, 194, 236 search 45, 46–7, 52 information technology 25, 35, 330, 331 informational influence 56, 69 innovation 140, 145–7 see also new product development innovators 145, 163 inspection 61, 70 institutional advertising 223, 257 intangibility 11, 128, 136, 138 integration 331–2 horizontal 202, 210, 267, 282 vertical 202, 211 intellectual property 296 interest 226 AIDA 218, 220, 221, 256 interference 214, 215, 257 intermediaries 31, 203 internal environment 23, 36–7, 42 internal marketing 37, 237, 316–17 internal networks 327–8 internal PR 239, 247, 257 internal publics 36, 42 internal search 46–7, 70 international marketing barriers to entry 291–3 entry strategies 295–7 global segmentation 293–5 globalisation 298–300 reasons for 287–91 trade initiatives 285–7 International Monetary Fund 286 Internet 25, 35, 199, 292–3, 309 auctions 327, 331–2 marketing 323–8 interpreting 111, 122 interrupts 47–8, 54, 70 interview 110 depth 105, 121 structured 106, 123 interviewer bias 110–11, 122 involvement, level of 54 isolateds 315, 337 jobs/job description 9–11 joint demand 62, 70 joint marketing 155 joint ventures 296, 305 Index Judd, V.C 314 just-in-time method 192 Kalcher, K 277–8 Kant, I 328 Katz, E 214 key network management 314 kinetics 217 knowledge 55, 248–9 see also information Koestler, A 154 Kotler, P 5, 8, 266 Kropf, S 205–6 labelling (of packaging) 158 laggards 140, 145, 164 language 289, 295 Lastminute.com 132, 199, 332 late majority 140, 145, 164 law of primacy 53, 70 Lazarsfield, P 214 legislation/legal factors 13, 26, 265 brands 153, 157 current (examples) 33–4 packaging/labelling 157, 158 Legoland (case study) 277–9 Levi-Strauss 151, 155 Levitt, T 317 licensing 296, 305 lifestyle 6, 25, 78, 79, 83, 245, 293 campaigns 221, 257 liking/likeability 226, 248, 249 limited-line wholesalers 196, 210 limited-service wholesalers 196, 210 line family branding 155, 164 load up 230 loading 178, 186 local publics 31–2 location 7, 199, 264, 294 logistics 30–1, 42, 190–4, 210, 285 logos 218, 230 'lookalike' branding 156–7 lottery and scratch cards 228 low-cost airlines (case study) 181–3 loyalty 37, 78 brand 226 card 15, 200, 210, 230, 315, 322 347 customer 6–7, 51, 200, 228, 276, 288, 309, 310, 327 Lufthansa 138, 322 McCarthy, E.J McConnell, D 204 McDonald, M 147 McDonald's 237, 242, 296, 298, 300, 324 macro-environment 23, 25, 27, 32–6, 42, 101, 265 mail-bombing 324 mail (postal surveys) 106, 122 mail order wholesalers 196–7 mailing list 230, 323 mailshots 249, 257 Manchester United (case study) 300–1 manufacturers 156–7, 229, 230 margin 173, 186 marginal approach (budget) 274 mark-up 173, 186 mark-up pricing 172, 173–4, 181, 186 market 12, 20, 85–6, 139–40, 265, 288 barriers 292 development 264, 268, 282 entry strategies 295–7 influence 316, 337 orientation, pricing and 172–80 referral 316, 338 share 28, 132–3, 134–5, 179, 223 specialisation 86 supplier 316, 338 market research 10, 100–3, 226 analysing results 111–16 approaching respondents 103–11 census (case study) 116–18 products 126, 133, 139, 141 test marketing 91, 97, 140, 174 marketing 9, 19, 148, 155 audit 262–4, 265–6, 282, 321 co-marketing 201, 209 concept development 3–7 cost analysis 273, 276, 282 definitions 2–3 differentiated 83, 84, 96 direct 230, 269–70, 323, 327, 337 Domesday 200, 323, 337 environment research 101, 122 348 Index marketing (Continued) ethics 328–9 future trends 330–2 green 324, 332 information systems 101–2, 122 internal 37, 237, 316–17 multinational 296–7, 305 niche see niche marketing orientation 10–11, 20, 318 research 100, 122 resistance (and responses) 12–13 role 7, 8, 330–2 services 135–8 societal 5–6, 20, 35, 329 telemarketing 199, 211 test 91, 97, 140, 174 traditional 309–15, 338 transaction 309–15, 338 undifferentiated 83, 97 see also brands/branding; buyer(s); distribution; environment; international marketing; planning; positioning; pricing; price; product; promotion; relationship marketing; segmentation; sustainable marketing; targeting marketing mix 7, 20, 151, 270 Seven Ps 9, 84, 138, 264, 294–5 Markus, H 54 Martin, T 158, 159 Maslow, A 235 mass marketing 76, 83, 84, 97 mass media 146, 245 mass production 3, 75–6 matrix 112, 122, 270, 271 meaning, signs and 215–18 mechanistic organisation 270, 282 media 224 events 240–1, 257 media publics 31, 36 meet-the-competition strategy 178, 186 Meidan, A 114 merchant wholesalers 195, 210 message 214–15, 218, 219, 220 metaphor 154 micro-environment 23, 25, 27–32, 42, 101 mid-life kickers 131, 164 missionaries 231, 233, 257 modified re-buy 61 modifiers 315, 337 money-off offers 226, 228, 250, 251 monitoring performance 273, 275–6 monopolistic competition 28–9, 42, 179 monopoly 29, 37, 42 Mosaic 117 motivation 46, 55, 70, 235 Mountford, S 205 multi–stage interaction 145, 146 multinational marketing 296–7, 305 multisegmented marketing 83, 84, 96 multivariable segmentation 80, 96 myths/mythical values 150 natural monopolies 29, 37 need(s) 9–10, 11, 20, 60, 126, 199, 232 hedonic 45–6, 69, 76 Maslow’s theory 235 utilitarian 45, 71 negotiation 61, 70 Nestlé 297 networks 112, 122, 314, 327–8 new entrants 30 new product development 164, 266, 295 clusters 141–4 launch 139–40, 229–30, 240, 248–51, 272 planning 139 positioning 141–5 promotion 228 success rates 141, 143–4 see also innovation; trial new task 61 niche marketers 198, 210 niche marketing 12, 83, 85, 86, 96, 199 noise 214, 215, 257, 273 non-store retailing 199, 210 non-traceable common costs 276, 282 normative compliance 56, 57, 70 North American Free Trade Agreement 286 numbers 217 objective and task approach 224, 250, 273, 274 objectives 148, 224, 262, 265 corporate 264, 267–8, 270, 282 observability 147, 164 observation 106 odd-even pricing 178, 187 Index oligopoly 29, 42 omnibus studies 107, 122 opinion leaders 214–15, 244–5 opportunities (SWOT) 24, 25, 329 optimal stimulation level 46, 70 order getters/takers 231, 233, 257 organisation 63, 81, 266, 292 organismic organisation 270, 282 outshopping 197, 210 own-brands 156–7, 230 ownership, brands and 153 packaging 157–8 panels 107, 122 Parasuraman, A 318, 319 patents 157, 177, 296 Patti, C.H 222 pay (salesforce) 234–5 peer-group pressure 56 penetration pricing 85, 179, 187 people 9, 138, 264, 294 PepsiCo 29, 151 per capita income 291, 305 percentage of sales budgeting 224, 274 perception 51–3, 55, 87, 96 perceptual mapping 87, 88, 89, 96, 141 perfect competition 29, 42, 170 performance 273, 275–6, 277 equitable 49, 69 expected 49, 69 ideal 49, 69 perishability 12, 136, 191, 296 persistence 54, 70 personal selling 219, 231–2, 257 see also salespeople/salesforce personal structured interviews 106 personality 55, 60, 245 PEST analysis 25, 329 Pettitt, S 288 philosophy marketing 13, 264 physical distribution 190–4, 210, 285 physical evidence 9, 138, 264, 294 physical goods 11, 50, 135, 136–8, 321 piggy-backing 228, 257, 296, 305 piloting 108, 122 place 7, 264, 294 planned impulse 59–60, 70 planning 154, 274 349 audit 262, 263–4, 265–6 campaign 250–1 corporate objectives 264, 267–8, 270, 282 feedback 262–3, 277 performance 273, 275–6 promotional strategies 270–3 tactical 262, 268–70 political environment 26, 33, 290–1 polycentrism 298, 299 Porsche 76, 151 Porter, M.E 28, 30 positioning 75, 87–9, 96, 250 post-purchase consonance 49, 70 post-purchase dissonance 49–50, 70, 137, 200 post-purchase evaluation 45, 48–51, 52, 70, 138 post-tests 227, 257 postal surveys 106, 122 potential product 317, 337 power, channel 200–1, 209 power distance 293 PR see public relations pre-tests 226, 227, 258 predatory pricing 179–80, 187, 329 preference 248, 249 premium 82–3, 97 press 36, 237, 239–40, 245, 251 pressure groups 35, 36, 241–2, 330 prestige 60, 78 prestige pricing 178, 187 Priceline.com 199 pricing/price 7, 12, 148, 264, 294 audit 266 economic theories of 169–71 elasticity of demand 170, 187 ethics 329 fixing 179, 329 guarantees 203 leaders 179, 187 market orientation and 172–80 risk 137 setting (stages) 180–1 strategies 169–83 wars 178, 179 see also discounts; premium Pride, W 129 primacy, law of 53, 70 primary characteristics 126, 164 primary groups 57 350 Index primary research 102, 103, 122 private responses 49, 70 proactive management 23, 43 proactive PR 243, 258 proactive strategy 330, 337 probability (random) sample 109, 123 Problem Child 133, 135, 164 problem recognition 45–6, 52 process 9, 128, 138, 262–4, 294 Procter & Gamble 220, 295 producers 151, 152, 192–4 product 11–12, 20, 164, 264, 294, 314 advertising 223, 258 audit 266 barriers 292 benefits 126, 129–30, 163, 190, 310 category 28, 56, 222, 223, 227 champions 140 classification of 127–30 commodity 147–8 concept 318 consumer 127, 163 convenience 127, 163 core (generic) 317, 337 definition 126 development 268, 283 differentiation 222, 250, 258 ethics 328 expected 317, 337 group, sales by 275 industrial 127, 128–9, 163 influentials and 244–5 international marketing 292, 295 life cycle 130–5, 145, 164, 250, 275, 288 –line pricing 176–7, 187 manager 10, 20 mix (in shops) 200 organisation 271 orientation 3–4, 7, 20 packaging 157–8 personality 154 potential 317, 337 range 126, 130–5, 145 research 101, 122 shopping 127, 164 specialisation 86 speciality 127, 164 substitute 40 unsought 127, 164 see also augmented product; brands/ branding product development 268, 283 see also innovation; new product development production 13, 136, 223–6, 288, 296 orientation 3, 20, 318 productivity audit 266 profit/profitability 82, 85, 175–6, 180, 276, 292 program evaluation and review technique (PERT) 114 project teams 139, 140 projective techniques 105, 122 promotion 7, 140, 156, 264, 294–5 campaign 250–1, 330 ethics 328–9 monitoring/evaluation 273, 275–6 research 101, 122 sales 219, 226–31, 258 strategies 270–3 techniques 227–8 promotional mix 219, 248–9, 258 see also advertising; personal selling; promotion; public relations prospects 236, 258 protectionism 290, 298, 305 psychographic segmentation 78, 79, 97 psychological factors 53–6, 292 psychological pricing 177–8, 187 psychological proximity 289–90, 305 public relations 219, 223, 258, 316 definition 236–7 internal 239, 247, 257 manager 10 media events 240–1 other publics and 241–2 press and 239–40 proactive 243, 258 reactive 238, 242–3, 258 role/function 243–4 sponsorship 246–8 staff and 238–9, 241 word-of-mouth 244–6 publics 12, 20, 43, 258 internal 239, 247, 257 marketing environment 31–2, 36, 43 PR and 241–2 Index pull strategies 230, 272–3 purchase 45, 48, 52, 271 see also buyer(s) pure impulse 59–60, 70 push strategies 229, 272, 273 qualitative data analysis 111–13 qualitative objectives 264 qualitative research 104–6, 116, 122 quality 155, 177–8, 311, 316, 338 management, total 319, 338 product 144, 317–18 services 310, 318–19, 320–1 quantitative data analysis 113–16 quantitative research 104, 117, 122 questionnaires 106–8 quota sample 109, 122 rack jobbers 196, 210 Rae, J 117 random factor analysis 91, 97 random sample 109, 123 ratchet effect 228, 258 rational campaigns 221, 258 re-buy (modified/straight) 61 re-invention 147, 164 reach 224, 258 reaction strategy 330, 338 reactive management 23, 43 reactive PR 238, 242–3, 258 recall, aided 227, 256 recall, unaided 227, 259 recognition tests 227 recruitment (salesforce) 232 Redken 127, 313 redundancy (communication) 214, 258 reference group 56, 57, 70 referral markets 316, 338 regional organisation 271, 283 registration (brand names) 149 reinforcement, advertising and 223 relationship marketing 6–7, 270, 276, 327, 338 customers/other players 315–17 development of 317–23 traditional versus 309–15 relative advantage 146, 164 relative power 312, 313 reminder impulse 59–60, 70 resistance 12–13, 54, 71 resources 77, 83–4, 171, 292 respondents 103–11, 123 responses direct 250, 257 private 49, 70 third-party 50, 71 voice 49, 71 retailers 192–4, 210, 229, 231, 272 image 150–1, 200 own-brands 156–7, 230 trends 199–200 types of 197–9 Ries, A 149 risk 46, 137, 153, 293 Roddick, A 316 Rogers, E.M 145, 146 roles 56–9, 71 roll-cage sequencing 204 roll-out 140 Rolls-Royce 6, 318 Sainsbury 156, 328 sales analysis 273, 275–6, 283 cycle 234, 258 forecasting 89–91, 275 manager 10, 20, 232 orientation 4, 20 percentage budgeting 224, 274 personal selling 219, 231–2, 257 research 101, 123 territory 203, 236, 258 sales promotion 219, 226–31, 258 see also promotion salespeople/salesforce 10, 20, 63, 221 distribution and 194 functions/qualities 231–2 management of 232–6 survey 90, 97 see also personal selling sample 104, 108, 123 sample frame 108, 123 sampling 61, 71, 108–9 bias 110, 123 SCEPTICAL analysis 329 Schultz, D.E and H.E 330 search, information 45, 46–7, 52 351 352 Index season tickets 322–3 seasonal analysis 91, 97 seasonal offers/sales 229, 230 second-market discounting 178, 187 secondary groups 57 secondary research 102–3, 123 segmental organisation 271, 283 segmentation 12, 28, 43, 75–83 behavioural 78, 79, 96 demographic 78, 79–80, 96 effectiveness 82–3 geographic 78–9, 81, 84, 96 global 285, 293–5 of industrial markets 81–2 multivariable 80, 96 psychographic 78, 79, 97 reasons for 75–7 single-variable 80, 97 trade-offs 82 variables 77–80 see also targeting selective specialisation 86 selectivity 52, 87 self-administered surveys 107 self-liquidating offers 230, 258 self-referencing 289 Selfridge's (case study) 252–3 selling unique, proposition 250, 259 see also personal selling; sales semantics 217–18 semiotics 149–51, 216 service(s) 11, 30, 87, 195, 314 complaints 50–1, 246, 312 factors distinguishing 136 industrial 128 marketing 135–8 pricing 178 quality 310, 318–19, 320–1 quality benchmarking 320–1, 338 retail 199–200 7–P framework 9, 84, 138, 264, 294–5 Shapiro, B.P 81 shelf price 173, 187 shelf space 229 shopping products 127, 164 sign 149–51, 215–18, 258 signals 47, 71 significance testing 115–16 silent communications 217 Simkin, L 129 single-variable segmentation 80, 97 situational analysis 24–7 situational factors (buying) 54 skimming 85, 174, 177, 187 Skoda 88 slogans 238–9 Smith, A 170 Smith, W.R 75 social activity (of influentials) 245 social factors (buying) 53, 56 social needs 60 societal marketing 5–6, 20, 35, 329 socio-cultural environment 25, 34–5 socio-cultural sign 150 Sock Shop 83, 86, 198 Sony 144, 177, 297 sorting out 193, 210 space 217 spamming 324 Spar 196, 198 specialisation 84, 86 speciality line wholesalers 196, 210 speciality products 127, 164 specifications 60 sponsorship 36, 59, 237, 246–8 stages of development theory 293, 296–7, 306 stakeholders 309, 338 standby airfreight 191, 211 Star 132, 133, 135, 164 statistical methods/testing 114–16 STEP analysis 25, 329 stock levels 229 Stockwell, T.E 14 stores 200, 229, 230 see also retailers straight re-buy 61 strategic fit 140 strategic marketing planning 77 strategic objectives 264, 267–8 strategy 140, 262–3, 283 accommodation 330, 337 alternatives 264, 267 audit 265 branding 148, 151–4 defence 330, 337 Index distribution 190, 209 entry 295–7 market coverage 85–6 meet-the-competition 178, 186 proactive 330, 337 reaction 330, 338 sustainable marketing 329–30 undercut-the-competition 178–9, 187 see also planning; targeting stratified sample 109, 123 strengths 263 SWOT analysis 24, 25, 329 structured interviews 106, 123 subjectivity 51 substitute products/services 30 success rates (products) 141, 143–4 suggestion impulse 59–60, 71 supermarkets 14–16, 198, 211 loyalty cards 15, 200, 210, 230, 315, 322 suppliers 28, 29, 30–1, 312–14 markets 316, 338 supply 169, 327 support staff 231 support systems, decision 102, 121 surveys 90, 96, 97, 104, 106–8, 122 sustainable marketing 309–34 see also relationship marketing switching, brand 228, 229, 256 switching cost 146 SWOT analysis 24, 25, 329 symbols 149, 153, 213, 215, 216, 259 synergy (production/marketing) 141–4 syntactics 216–17 systems decision support 102, 121 information 101–2, 122, 266 tabulating 111, 123 tactics 262–3, 268–70, 283, 295, 329 tamper resistance 157, 164 target audience 84, 218, 224, 247 target market 180 targeting 75, 83–6, 97 see also segmentation tariffs 286, 287, 292, 298, 306 task environment 265 taxonomy 112–13, 123 teamwork 154 353 teaser campaigns 221, 248, 251, 259 technical development 139, 140 technological environment 25–6, 35–6 telecommunications 37–9, 105, 107, 199 teleconferencing 105, 123 telemarketing 199, 211 teleology 328, 338 telephone surveys 107, 123 Telstra (of Australia) 33, 38–9 Tesco 14–16, 156, 197 test marketing 91, 97, 140, 174 tests/testing post-tests 227, 257 pre-tests 226, 227, 258 significance 115–16 third-party responses 50, 71 threats (SWOT analysis) 24, 25, 329 Tie Rack 83, 86, 198 time 132, 217 –series analysis 90–1, 97 total quality management 319, 338 Toys'R'Us 174, 329 traceability 191, 192, 211 common costs 276, 283 trade see international marketing trade-offs 82 traditional marketing 309–15, 338 training (sales staff) 233–4 transaction marketing 309–15, 338 transnational consumer segmentation 293 transport 191–2, 297 tree taxonomy 112–13 trend analysis 91, 97 trial 146, 230 trialability 136, 137, 147, 164 trickle-down theory 145, 146 two-for-the-price-of-one 228 two-step flow theory 145, 146 tying contracts 203, 211 unaided recall 227, 259 undercut-the-competition strategy 178–9, 187 undifferentiated marketing 76, 83, 84, 97 unique selling proposition 250, 259 unit sales analysis 275 United Airlines 138, 322 unsought products 127, 164 usage rate 81, 97 354 Index user 62, 71 utilitarian needs 45, 71 utilitarian sign 150 valence 54, 71 Valentin, V 150 value 6, 12, 150, 227, 310, 314 brand 229, 230 economic theories of 169–71 –expressive influence 56, 71 value for money 4, 12, 87, 89, 172–3, 177, 178, 179 variety stores 198, 211 venture teams 139, 140 vertical integration 202, 211 video-conferencing 105, 123 Virgin 155, 267 virtual shopping 106, 326 voice responses 49, 71 Volkswagen 76, 88 vouchers 228 Walton, S 14 want 11, 20, 126 War Horse 134, 135, 164 Watson, T 14 weaknesses 263 SWOT analysis 24, 25, 329 wealth concentration 291, 306 Webster, F.E 63 Weinberg, R 264 Wetherspoon (J.D.) 158–9 wholesalers 192–7, 211, 272 Wind, Y 63 word-of-mouth 237, 244–6, 326 Young, L 14 Zajonc, R.B 54 ... (assuming production run of 20 000 units) Overheads Total production cost per unit Plus profit of 20 % Net price Cost per unit 2. 52 £4. 32 £0 .27 £1.78 £3.43 –––––– £ 12. 32 2. 46 ––––––– £14.78 Pricing... Wealth of Nations (1776) Zeithaml, Valerie A.: ‘Consumer perceptions of price, quality and value’, Journal of Marketing, 52 (July 1988), pp 2 22 Erickson, G.M and Johannson, J.K.: ‘The role of price... The level of demand for a service at different times of the day, year, week or month Margin The amount of profit calculated as a percentage of the selling price Mark-up The amount of profit calculated