Textbook Notes (368,566)
Canada (161,966)
MCS 3040 (228)
Chapter 24

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Marketing and Consumer Studies
MCS 3040
Joseph Radocchia

Chapter 24 Sales & Marketing: Price, Distribution & Risk Management Price  Usually price is determined when forming contract but in a few industries in Canada, prices are regulated by government agencies or are subject to regulatory bodies that set prices between producers/growers & users (Eg. utilities & agricultural marketing boards)  Legal regulation of price is to stop practices that create an uneven playing field between market participants and therefore harming competition Pricing Practices between producer and commercial purchaser  The federal Competition Act prohibits unfair pricing practices, including those involving the producer and its commercial purchaser  Objective is to create a level playing field  Act seeks to ensure that commercial customers aren’t subject to unfair differential treatment that could really reduce competition in the marketplace The completion act includes… Pricing Conspiracies  Some businesses will manipulate the market by conspiring w/ direct competitors to control prices  The penalties for conviction have been increased recently to a max of 14 years and/or a fine of $25 million  For this criminal offence to be proven, it must be established that there was an agreement to conspire to set prices and also that the agreement lessened competition  If the conspiracy is considered sufficiently serious, violators can be incarcerated with jail time up to 1 year Bid Rigging Bid Rigging: Conspiring to fix the bidding process to suit the collective needs of those submitting bids  Penalties include fines and/or imprisonment  Can take many forms such as agreements to submit bids on a rotating basis or to split a market geographically Abuse of Dominant Position Abuse of a dominant position: Conduct that is viewable under the Competition Act b/c the dominant company or group of companies have engaged in anticompetitive behaviour that unduly prevents or lessens competition  Anticompetitive acts include buying up products to prevent the erosion of price levels, requiring suppliers to sell only to certain customers and selling products below acquisition cost in order to discipline or eliminate competitors  To find them guilty, the competition tribunal must find that the company or group under investigation substantially controls the market and that they have engaged in a practice of anticompetitive acts, and that the practice has the effect of preventing or lessening competition in the market  Tribunal may order the offenders to take corrective action and may impose admin penalties up to $10 million Price discrimination: The failure to provide similar pricing terms and conditions to competing wholesalers or retailers for equivalent volume sales at an equivalent time  Usually occurs when producer responds to a customers pressure tactics  Differential discounts are allowed only if it can be shown that customers who were prepared to purchase under equivalent conditions were offered the same terms Predatory Pricing: The practice of setting unreasonably low prices to eliminate competition Distribution (Place)  Distribution includes process of ensuring goods get to customers – including shipping & transport  Distribution decisions determine whether goods will be sold by retailers, wholesalers
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