Personal selling can be a powerful force for firms trying to sell their products.  According to the textbook, personal selling is a paid personal communication that is used to inform customers and persuade them to buy the firms product or products.  Personal selling allows marketers to focus specifically on the most promising sales prospects.  Personal selling is rising, as it allows for freedom for the sales consultant, can offer high income, and a high level of satisfaction to the person performing such tasks.  This type of selling is handy since most consumers seek information and advice about a product such as a computer before buying.  The sales consultant may recommend a particular firm that they are personal selling for and can succeed in selling that product to the customer.  These type of people are knowledgable about the product, have had personal experience with the product, and give the customer confidence in purchasing the product.  Personal selling is broken down into steps when approaching the customer.  It all begins with prospecting for a customer, pre-approach, approach, making a presentation, overcoming objectives, closing the sale, and following up the sale.  Some examples of personal selling are found in when the John Deere guy shows up at our house in the summer.  He approaches up in a kind, friendly fashion and will help us out for the day, free of charge.  Then he'll make a presentation on how a new John Deere implement would benefit our operation and goes over the great deals that are available to us.  This is all low pressure too, he mentions all these things in a suttle way and lets us think about it for a while.  Then if we do purchase a new swather, tractor, or baler, he offers excellent service and always comes out again to help after the sale.  This type of selling works real well, since we get a chance to get to know him and develop a trust, which in the end always works out great. 

As discussed in my previous blog, pricing can be a difficult thing for any firm to under go.  One such area of pricing mentioned was product-line pricing.  There are several ways for pricing within product-line pricing as described by the textbook.  Product-line refers to a group of closely related products offered by a company to target consumers that may have different needs, within the product line.  One way of product-line pricing includes captive pricing.  Captive pricing is when the very basic product in a particular product line is priced relatively low, then items that may be nessesary to make that basic product better may also be purchased at a higher price.  One great example given in the book is razors for shaving.  You can buy the handle and one or two heads for very cheap, but when you need replacement heads for the razor, they are more expensive.  The book also mentioned another example of gaming systems.  The gaming system itself, very basic, is relatively cheap, but adding more items to enhance the gaming experience can be expensive.  The controllers, games, audio, television set, memory cards, and the list goes on and on will cost more.  Another example of produt-line pricing involves premium pricing, which is described as having a product line with many versions of the same product.  The upper end of these products carry the higher price and on down the line to the basic products having the lower end cost.  This pricing method is commonly used when marketers want to capitalize on the gains that can be had with the higher end premium products.  Bait pricing is another type of product-line pricing.  This technique is when marketers put low prices on one item within the product line to seem attractive to customers, with intentions to get the customer to put the higher priced item in the product-line.  This example works when a retailer offers low prices on lower product-line items, but has the higher quality items available as well, hoping that the low prices get the customers to come, but eventually have the customer buying the higher quality item.  Price lining is the final example, where the price is staircased, and it keeps the demand curve in that staircase form.

How do firms come up with a price for their product?  Well according to the textbook, they look at several things when determining a price for their product thats not too high, yet high enough to turn a profit.  Establishing a price for a product can be broken down into stages, in which each stage is carefully examined.  First of which is to determine the pricing objectives.  Does the firm want to set prices that allow for survival, profit, return on investment, market share, cash flow, status quo, or product quality?  If a firm selects the survival objective, they are simply trying to set a price to increase sales volume to balance out the expenses.  When shooting for a profit objective, a firm is finding a price level and minimum cost levels that lead to maximum profits.  Return of investment objectives have a firm using trial and error since not all cost and revenue information is currently available to set a good price.  Another objective, the cash flow, is used when a firm wants to set prices that allow for quick sales, or suggest rapid sales of the product.  Status quo objectives occur when a firm is targeting a price level that stailizes the demand with the sales, so that everything is balanced.  The final pricing objective is the product quality which is based off of setting prices to balance the reseach and development and give the product a very high quality apperance.  The next stage in determining a price range is to look at target market's evaluation of price.  Depending on what the target market is, can determine whether the consumer is willing to pay the price for the product.  The third stage is to evaluate the competitor's prices (if any).  The firm should look at what the competition is charging for their goods, and decide what price best fits their product and how the compare in quality with the competition.  The fourth stage is to determin a selection of a basis for pricing, which in short how should the firm add to the price over the cost of producing the product.  A firm can use cost-plus pricing, by adding a percentage to the price after the cost to produce the product is determined.  They can go with a markup pricing, which is adding a predetermined percentage to the price of the product. Demand-based pricing, which is determining a price based on demand for the product, and then there is a competition-based pricing.  The competition-based pricing is when a firm decides to price a product based on the competition's price. Then in the fifth stage the firm selcts a pricing strategy, which is selecting a course of action to achieve the pricing and marketing objectives set by the firm.  Once all of these steps have been carefully thought out and considered, the final stage is reached, which is the selection of the price.  There is a lot of reseach and work that has to be put into determining a price, and mainly the firm has to know where they want to go with the product and have an idea of where they want to be in the future of their business.

There are all types of discounts offered to consumers for the products they purchase.  Examples of discounts fall into some sort of category, according to the textbook, which are trade, cash, quantity, seasonal, and allowance.   The first of which, the trade discount, is typically a percentage off of the listed price of the product.  Products purchased with a trade discount are discounted because the purchaser is taking care of transportation, selling, storing, final processing, and giving credit.  The other type of discount is a cash discount.  Discounts are given when the purchaser pays with cash.  A common example of this is paying for fuel with cash.  A lot of times you will see a gas price listed, but a discount of like ten cents is given if the fuel is paid for with cash.  Quantity discounts are another type of discount offered.  An example of this would be if the purchaser is purchasing a large quantity of the product, then the firm would offer a discount for the large quantity purchased.   Example of such occur when purchasing a large quantity of ropes, then usually the purchaser is given like a discount of a dollar off each rope, after so many are purchased as against paying full price for all of them.  Seasonal discounts are discounts offered when a product is being sold and it is out of season.  Example of this discount can be found the day after halloween, when all the halloween candy is cheaper than the day before halloween, since halloween is over the first of November.  The final example of a discount is the allowance discount.  This type of discount occurs when a buyer turns in an used item for a newer one.  One example of this discount could be found with the Best Buy's buyback program with electronics.  When you purchase an elecronic of some sort, you can turn it in when it gets old for a discount on a newer, more up to date elecronic of the same type of product.  These types of discounts can be found every where and help the consumer save money and can be used as promotional tools for the firms selling the products.

Determining the number of products to produce to begin to make a profit is known as the break-even point.  When a new product is being developed, firms start in the red.   The cost of research and development, promotion, and distribution make it tough to start out a new product, usually found during the introductory stage of a products life cycle (life cycle discussed in one of my previous blogs).  To begin making revenue, a firm must find out how many widgets (aka units of the product) to sell to see a return on their hard work.  This break-even point is found relatively easily, the break-even point equals the fixed costs divided by the price minus the variable costs.  (fixed and variable costs discussed in my previous blog as well)  To determine the amount of dollar sales needed to achieve the break-even point, you would simply mutiply the number of units needed to sell to achieve the break-even by the cost-per unit price to come up with a dollar figure.  Break-even point analysis is simple and very straightforward and easy to understand, but also important to firms to know.

Costs, costs, costs, how are they different, or are they different?  Well according to the textbook, there are several different costs associated with a firm.  One of which is known as the fixed cost to produce products.  Fixed costs are what they sound like, fixed.  These costs do not change according to how many products are being produced.  Some examples of fixed costs would be the costs of materials to produce the product, doesn't matter the number of products being produced, the cost of the material is always the same.  Another type of cost is the variable costs.  Variable costs, according to the book, are costs that fluctuate with relation to the number of products being produced.  An example of such would be when a firm is producing more products in a given day and running more shifts to do so, the cost rises with the increased production, but the material costs for more products would remain the same-fixed cost.  To determine the average fixed costs, one would be to divide the fixed costs by the number of units produced.  And to determine the average variable costs, you would take the variable costs divided by the number of units produced as well.  To determine the important cost, the total cost, you would simply add the variable cost to the fixed cost.

Advertising can come in all different styles.  We all get sick of advertisements, but how are they categorized?  What is advertising?  Advertising, according to the textbook, is a paid form communication to the targeted market to get them to purchase their product or buy into their idea/viewpoint.  One type of advertisement is called institutional advertising which promotes ideas, political viewpoints, and organizational images.  Advocacy advertising is another type of advertising, where the viewpoints of the firm and how they stand on the subject matter.  Product advertisement is just simply advertising the product and all the great things about it.  Pioneer advertising tries to invoke a need within the customers to purchase the product by displaying the benefits of the product.  This type hopes to create a demand for the product.  Competitive advertising can be interesting, since it tries to promote the benefits of their product versus "the other" product.  These advertisements will try to show how their product beats the competition in what ever area that they think will give them more customers.  Comparative advertisement compares the brand with one that is very well known.  Reminder advertising is simply putting an advertisement out there that lets the customer know that they still exist and reinforces all the benefits associated with their product.  Reinforcement advertising lets the customer know that they have made a wise decision in picking their product.  There are many types of advertisements, and I'm sure we've all seen these in some form or another on TV.  It's interesting to see how firm's decide which type will work best for them, or if they use a combination of a few.

There are tons of stores out there, how are they all classified and fit together?  All of these stores are retail stores.  According to the text there are general-merchandise, department, discount, convenience, supermarkets, superstores, hypermarkets, warehouse clubs, warehouse showrooms, specialty, category killers, and off-price types of retail.  The first one mentioned, general-merchandise, is a retail outfit that offers many products and several types of retail stores fall under this category.  First of which is a department store, which consists of a larger store, employing 25+ people and offer many products.  Department stores offer a variety of services also, and some example of such stores would be JC Penny and Sear's.  The second type of retail under general-merchandise would be a discount store.  A discount store typically consists of brand names and generic names offered at low prices.  These stores are self-service, where they try to have a high turn-over rate of products by offering the lowest prices possible, thus moving more product.  Examples of these discount stores include Wal-Mart and Target.  Another general-merch retailer would be a convinience store, which are typically small in size and are self service.  These stores offer a much smaller product offering and are products considered to be "convinience products."  These products include;  soft drinks, coffee, snacks, tobacco, newspapers, and such.  Most conviniece stores consist of gas stations, such as a 7 Eleven.  Supermarkets also fall under the general-merchandise category, and are large, self-service types of retail.  Supermarkets carry many products and divide the store into departments to organize the wide type of products offered.  An example of such retail would be Albertson's.  Superstores are giant stores that are similar to supermarkets but sell approxiametly four times as much different types of products.  An example would be a Wal-Mart, where they offer food, non-food, appliances, automotive, electronics, tire, gardening, and such.  Hypermarkets combine the two supermarkets and discount stores together for a complete package. Hypermarkets have been tried by the likes of K-Mart and Wal-Mart.  These mega stores are larger that superstores, incredibly large, in the 225,000 to 325,000 square feet figure!  Another type of retail is the warehouse clubs, where you can only shop there if your a member, such as Costco.  These retail outlets are in huge stores as well, but things come in vast quanities.  Stocking is also easy in these stores, cause they just put a pallet up thats full of the merchandise.  Nothing in these stores can be bought in small quantities.  Another one is warehouse showrooms, which display products but offer very minimal services.  The costomer must transport, finance, and have store larger quantites of food.  General-merchandise retail does not offer everything however, such as specialty items.  Specialty retailers offer specialty items and may offer a lot of depth within a specific product line.  There are two other types of retailers that don't fit the general-merch. description as well, one of which is a category killer.  A category killer large stores that focus on specialty items as well, but are so big and have so much of the specialty items that they can offer them at low prices.  An example of this type is Home Depot and Lowes.
And the final non-general-merchandise store is an off-price retailer.  Off-price retailers buy manufacturers' pick up unwanted items and sell at huge discounts.  An example of this would be the Cinch Outlet Store in Denver, Colorado.  This store picks up all products that maybe don't meet manufacturers' specs, are done being offered or off-season, and returns.

New products introduced into the market have a live cycle.  This cycle has been described into four stages; introduction stage, growth stage, maturity stage, and the decline stage.  The introduction stage, as per the textbook, is the intial appearance into the market.  At this point, profits below zero due to the advertisement of the new product, development of the product, and the distribution of the product.  The next stage, the growth stage is where sales grow very rapidly.  Also during this stage, the profits reach a peak point and then they begin to level off, as the competition begins to catch up.  In the maturity stage, the profits continue to decline, in which the competition is most fierce, as many firms have entered the market.  In the final stage, the decline stage, sales have fallen rapidly and the marketers of this product are considering dicontinueing the product line.  The product may no longer be earning a profit for the firm, and a plan to phase it out is being developed, such as using up what is left of the product and then not making any more. 

Adopters of products that are new, are divided into groups of when they adopt new products.  Innovators are the first ones to adopt a new product and they are always looking for the next new thing to get.  This gropu has the smallest percentage of consumers.  The next category is the early adopters, whom of which will get the new product after much research and they are careful in choosing these new products.  This group is closely watched by marketers, since they indicate whether or not the new product is going to work.  This category consists approximately 13.5% percent of the consumers.  The next group is defined as the early majority, in which these consumers adopt a new product quicker than the "average" person.  These consumers are also careful and do their research before choosing the new product.  This group accounts for 34% of consumers, as well as the next group, the late majority.  The late majority are skepitical of all new products, but eventually give into getting new products because they may have to get them.  The final group of adopters is considered the laggards.  This group is the last of which to adopt the product.  Sometimes they are so late to adopt a new product, that there is already a newer product that may replace the one they just adopted. 

Those people that stand in lines to purchase the newest gaming system would be considered the innovators.  Those of which that purchase the product after the initial date that the product was introduced, and have done some research would fall into the early adopters category.  The early majority would probably purchase the new gaming system within a year of when it was introduced, and the late majority would buy it after that when its probably cheaper, and a lot of people have already purchased the new gaming system.  Then there are the laggards, like me, I just purchased a PlayStation 2, and I guess its been replaced with a PS3 a long time ago.