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ELC 310

ELC 310. Day 23. Agenda. 1 st round case grades 1 A, 2 B’s and 1 C+ More research and analysis! Fifth Student Case OSRAM Sylvania by Owen E-mail presentations at least 15 min before class so I may upload to web server

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ELC 310

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  1. ELC 310 Day 23

  2. Agenda • 1st round case grades • 1 A, 2 B’s and 1 C+ • More research and analysis! • Fifth Student Case • OSRAM Sylvania by Owen • E-mail presentations at least 15 min before class so I may upload to web server • Case studies are tied to proceeding chapters, make sure you discuss the connection • Discussion/lecture Pricing and Distribution

  3. Case study Grading rubric (corrected) • Grade Generation for analysis • Demonstrated Mastery of Case Study 35% • Understanding of How Case Study Fits 35% • Presentation effectiveness 10% • Quality of PowerPoint 10% • Ability to Engage the Class in Discussion 10% • Grades will be posted Nov 25 & Dec 12

  4. Today OSRAM Sylvania (Owen) Pricing and Distribution Dec 5 Student evualations Logistics.com A & B (Steve) Build a Trusting Relationship with Customers Dec 9 Travelocity (Randy) The Future of Digital Marketing Dec 12 Citibank Online (Emlyn) Take Home Quiz #4 Assigned Dec 17 @ 1 PM Take Home Quiz #4 Due Written Case Study & Presentations Due Rest of Schedule ® Tony Gauvin, UMFK , 2007

  5. Overview • Introduction • Pricing Strategies • Standard price models • Incentives • B2B exchanges • Auctions • Distribution • Chanel conflicts • End to end system integration

  6. Introduction • Value = benefits – cost • Price for consumer is part of cost • Increased price means lower value • Price for producer is part of benefits • Increased price means higher value • Price part of total product package of benefits • Becomes a consumer decision variable • Digital technologies affect pricing in a few ways

  7. Price • Price must be between cost of production and value of product to consumer • Price too low means manufacture loses profit • Price too high means less consumer buy less product (which can also lead to lower profits) • Ideally, Price should extract maximum profitability from the product • Price based in supply and demand

  8. Equilibrium pricing Assumes perfect elasticity of supply and demand and perfect competition http://en.wikipedia.org/wiki/Supply_and_demand

  9. Pricing Models • Cost plus • Cost of manufacturing plus profit • Break even analysis • Break Even = Fixed Cost / (Unit Price - Variable Unit Cost) • Unit Price = (Fixed Cost/Break Even) – Variable Unit Cost; assuming a conservative estimate for Break Even units • Volume as a function of price point • Competitive Pricing • Penetration Pricing • Market building

  10. Incentive Sites • Add benefits to the consumer value proposition as a offset to price • Add customers • MyPoints • http://www.mypoints.com/ • Thank You network • https://www.thankyou.com/ • Cool Savings • http://www.coolsavings.com/

  11. B2B exchanges • Biggest promise from early ecommerce • Biggest bust • Insufficient incentives for potential participants to participate • Most B2B exchanges have failed • Tele Flower Auction (TFA) is an exception • Added reach (non domestic growers) to an existing process (Dutch flower auction) • http://www.tfa.nl

  12. Auctions • Reverse Auctions • Auctions off demand • Suppliers bid against demand • http://www.freemarkets.com/ • Forward Auctions • Auctions off supply • Buyers bid against supply • http://www.ebay.com

  13. Distribution • Methods of transportation and storage usually by intermediaries bringing products to consumers • Internet promise of disintermediation failed since intermediaries add value by • Matching buyers to sellers • Requisitioning (aggregation and disaggregation) • Problem solving • Big problem is channel conflict

  14. End to end system integration • Creating and capturing value in the supply chain (SCM or VCM) • Tighter integration between intermediaries • Better information flow • Wal-Mart • Inventory Management System • POS • Perpetual Inventory system • Backroom receiving system systems • Information available to distribution centers and partner vendors daily • Right products are on the right selves at the right time for the right price

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