Jcpenney fair and square pricing strategy case study

MARKETING MANAGEMENT M6 Overview Topic Overview • Increasingly, marketers are taking a value-network view of their business. Rather than focusing on their suppliers, distributors and customers, they are examining the entire supply chain that connects raw materials and manufactured goods, showing how their products move to the end user. Companies are looking at their suppliers' suppliers upstream, and their distributors’ customers downstream. They are looking at customer segments and considering a wide range of new and different means to sell, distribute, and service their offerings. Today, companies must build and manage a continuously evolving and increasingly complex channel system and value network. In doing so, they explore strategic and tactical issues with integrating marketing channels and developing value networks. They also must deal with channel issues from the perspective of intermediaries--retailers, wholesalers, and logistic organizations. In a rapidly changing world, it is important to recognize that intermediaries are developing their own marketing strategies. They too strive for marketing excellence and, like other companies, reap the benefits. The more successful intermediaries use strategic planning, advanced information systems, and sophisticated marketing tools. They segment their markets, improve targeting and positioning, and pursue expansion and diversification strategies. • Price Price is the only element of the marketing mix that generates revenue and the easiest to adjust. Price also informs the market of the company’s intended value positioning for its products. Pricing decisions can be complex and difficult and must take into account factors relevant to customers, the competition, and the overall marketing environment in which it will compete. These decisions must be consistent with the firm’s marketing strategy, its brand positioning, and its target markets’ demands.Objectives for this module: o o o o Describe a marketing channel system and a value network. Understand problems related to managing marketing channels. Identify key issues with e-commerce and m-commerce. Evaluate marketing decisions made by intermediaries. o o o Appreciate private label brands as a marketing strategy. Be familiar with pricing for products and services. Realize how to respond to a competitor’s price change. Note: The information presented here is based on the contents of the following texts: 1) A Preface to Marketing Management, J. Paul Peter and James H. Donnelly, Jr., 14th edition, McGraw-Hill. 2) Marketing Management, Kotler and Keller, 14th edition, Prentice Hall. Readings Required In A Preface to Marketing Management, J. Paul Peter and James H. Donnelly, Jr., 14th edition, McGraw-Hill.: • Chapters 10 and 11 J.C. Penney Case Study (in the custom textbook) Optional Keep up with and monitor external sources of information - newspapers, magazines, journals, and television and radio. These sources can help you in diverse areas such as spotting trends, assessing your organization's marketing efforts, and understanding how theory and research can be applied. Some of the publications you should monitor are The Wall Street Journal, New York Times, USA Today (an excellent source for information on popular culture), Business Week, Fortune, American Demographics, and Advertising Age. Content Guide Marketing Channels Most producers do not sell their goods directly to final users. Between producers and final users stands a host of marketing intermediaries performing a variety of functions. Companies use intermediaries when they lack the financial resources to carry out direct marketing, when direct marketing is not feasible, and when they can earn more by doing so. Intermediaries provide information, promotion, negotiation, ordering, financing, risk taking, physical possession, payment, and title. Manufacturers have many alternatives for reaching a market. They can sell direct or use one-, two-, or three-level channels. Deciding which type(s) of channel to use calls for analyzing customer needs, establishing channel objectives, and identifying and evaluating the types and numbers of intermediaries involved in the channel. Effective channel management calls for selecting intermediaries and training and motivating them. The goal is to build a long-term partnership that will be profitable for all channel members. Marketing channels are characterized by continuous and sometimes dramatic change. Three of the most important trends are the growth of vertical marketing systems, horizontal marketing systems, and multichannel marketing systems. All marketing channels have the potential for conflict and competition resulting from such sources as goal incompatibility, poorly defined roles and rights, perceptual differences, and interdependent relationships. There are a number of different approaches companies can take to try to manage conflict. Channel arrangements are up to the company, but there are certain legal and ethical issues to be considered with regard to practices such as exclusive dealing or territories, tying agreements, and dealers’ rights. E-commerce has grown in importance as companies have adopted “brick-and-click” channel systems. Channel integration must recognize the distinctive strengths of online and offline selling and maximize their joint contributions. An emerging new area is m-commerce and marketing through cell phones and PDAs.