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627 Cards in this Set
- Front
- Back
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What is the Definition of Marketing?
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The process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return
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What is the twofold goal of marketing?
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1) Attract new customers by promising superiority over the competition
2) Keep and Grow current customers by delivering satisfaction |
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What is the 5-Step Marketing process?
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1) Understand the marketplace and customer needs and wants
2) Design a customer-driven marketing strategy 3) Construct an integrated marketing program that delivers superior value 4) Build profitable relationships and create customer delight 5) Capture value from customers to create profits and customer equity |
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What are Needs?
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A state of felt deprivation
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What are Wants?
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The form human needs take as shaped by culture and individual personality
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What are demands?
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Wants backed by buying power
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What are market offerings?
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Combination of products, services, and information or experience offered to the market to satisfy a need or want
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What is Marketing Myopia?
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The mistake of paying more attention to specific products a company offers than to the benefits and experiences produced by the products
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What is an exchange?
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The act of obtaining a desired object from someone by offering something in return
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What is a market?
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the set of actual and potential buyers of a product
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What is marketing management?
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The art and science of choosing target markets and building profitable relationships with them
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What are the two questions marketing management seeks to answer?
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1) What is our target market?
2) What's our value proposition? |
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What is market segmentation?
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Dividing the market into segments of customers
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What is target marketing?
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Selecting which segments to go after
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What is a value proposition?
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The set of benefits or values the company promises to deliver to consumers to satisfy their needs
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What are the 5 concepts of Marketing Management?
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product concept, selling concept, marketing concept, production concept, Societal marketing concept
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What is the production concept in regards to marketing management?
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Consumers favor products that are available and highly affordable, management should focus on improving production and distribution efficiency, can lead to marketing myopia
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What is the product concept in regards to marketing management?
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Consumers favor products that offer the most quality, performance, and innovative features, marketing strategy focuses on making continuous product improvements, can also lead to marketing myopia
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What is the selling concept in regards to marketing management?
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Consumers will not buy enough of the firm's product unless it undertakes a large-scale selling and promotion effort, typically practiced with unsought goods such as blood donations or insurance
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What is the marketing concept in regards to marketing management?
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Achieving organizational goals depends on knowing needs and wants of the target markets and delivering desired satisfactions better than competitors, customer focus and value, customer-centered strategy
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What is the societal marketing concepts in regards to marketing management?
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Questions whether pure marketing concept overlooks possible conflicts between consumer short-run wants and consumer long-run welfare
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What is the goal of a marketing program and what is it?
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Builds customer relationships, consists of marketing mix, set of marketing tools, 4 ps!!!!
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What are the 4 ps of marketing?
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product, price, place, promotion
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What is customer-perceived value?
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Customer's evaluation of the difference between all benefits and costs of market offering relative to competing offers
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What is selective relationship management?
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Target fewer and more profitable customers by using customer profitability analysis to weed out the losing customers
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Why do new communication tools pose a challenge to marketers?
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Consumers are better informed, have more power and control
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What is partner-relationship management?
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Working closely with partners in other company departments and outside the company to jointly bring greater value to the customer
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What do marketing channels consist of?
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Distributers, Retailers, and others who connect the company to buyers
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What is customer lifetime value?
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The value of the entire stream of purchases that the customer would make over a lifetime of patronage
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What is Share of Customer?
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The share companies get of the customer's purchases in their product category
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What is Customer Equity?
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The total combined customer lifetime values of all the company's current and potential customers
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What are the 4 types of customers in regards to building customer relationships?
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Strangers, Butterflies, True Friends, Barnacles
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What are the characteristics of the "Strangers" Customer group and what is the marketing strategy for them?
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1) Low potential profitability and little product loyalty
2) Little fit between company company offerings and their needs 3) Don't Invest |
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What are the characteristics of the "Butterflies" Customer group and what is the marketing strategy for them?
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1) potentially profitable but not loyal
2) Good fit between company offerings and their needs 3) Invest for the moment, but then cease after brief period |
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What are the characteristics of the "True Friends" Customer group and what is the marketing strategy for them?
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1) Both profitable and loyal
2) Strong fit between company offerings and their needs 3) Invest and grow, turn into true believers |
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What are the characteristics of the "Barnacles" Customer group and what is the marketing strategy for them?
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1) Highly loyal, low profitability
2) Limited fit between company offerings and their needs 3) Improve profitability, if it doesn't work, fire them |
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What is strategic planning?
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The process of developing and maintaining a strategic fit between the organization's goals and capabilities and its changing market opportunities
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What is a key element of strategic planning?
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Adapting the firm to take advantage of opportunities in its constantly changing environment
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What is a mission statement?
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A statement of the organization's purpose- what it wants to accomplish in the larger environment, acts as an invisible hand to guide people in the organization
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What should a mission statement be?
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Should be market oriented and defined in terms of satisfying basic customer needs, should not be stated in terms of making more sales or profits
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What should a company do immediately following the creation of a mission statement?
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Turn it into detailed supporting objectives for each level of management
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What is a business portfolio?
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The collection of businesses and products that make up the company, the best one is the one that best fits the company's strengths and weaknesses to opportunities in the environment
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What is portfolio analysis?
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The process by which management evaluates the products and businesses that make up the company
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What are SBU's (Strategic Business Units)?
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The key businesses that make up the company
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What must the company do with its SBU's?
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Assess their attractiveness and decide how much support each deserves
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What is the Growth-Share Matrix?
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A portfolio-planning method that evaluates a company's strategic business units in terms of its market growth rate and relative market share
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What is the vertical axis of the BCG Growth-Share Matrix?
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Market Growth Rate- Measure of market attractiveness
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What is the horizontal axis of the BCG Growth-Share Matrix?
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Relative Market Share- Measure of company strength in the market
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What are stars in the BCG Growth-Share Matrix and where are they located?
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High-Growth, High-Share Businesses or products. Often need heavy investments to finance rapid growth. Eventually growth will slow down and they will turn into cash cows. Top left
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What are cash cows in the BCG Growth-Share Matrix and where are they located?
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Low-Growth, High-Share Businesses or products. Established and successful SBU's need less investment and hold market share. produce a lot of cash. Bottom left
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What are question marks in the BCG Growth-Share Matrix and where are they located?
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Low-Share SBU's in High-Growth markets. Require a lot of cash to hold share. Either develop or phase out. Top right
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What are dogs in the BCG Growth-Share Matrix and where are they located?
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Low-Growth, low-share businesses and products. May generate enough cash to maintain but not large sources of cash. Bottom right
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What are the four strategies to pursue a SBU?
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1) Build its share
2) Hold the SBU's share at current level 3) Harvest SBU, milk short-term cash flow 4) Divest SBU, sell it or phase it out |
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What is the problem with the Matrix Approaches?
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Focus on classifying current businesses, provide little advice in future planning
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What is the product/market expansion grid?
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A portfolio planning tool for identifying company growth opportunities through market penetration, market development, product development, or diversification
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What are the four factors of product/market expansion grid?
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1) Market penetration
2) Market development 3) product development 4) Diversification |
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What is market penetration in terms of the product/market expansion grid?
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A strategy for company growth by increasing sales of current products to current market segments without changing the product
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What is market development in terms of the product/market expansion grid?
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A strategy for company growth by identifying and developing new market segments for current company products
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What is product development in terms of the product/market expansion grid?
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A strategy for company growth by offering modified or new products to current market segments
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What is Diversification in terms of the product/market expansion grid?
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A strategy for company growth through starting up or acquiring businesses outside the company's current products and markets
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What is downsizing?
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Reducing the business portfolio by eliminating products of business units that are not profitable or that no longer fit the company's overall strategy
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What is the Value Chain?
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The series of departments that carry out value-creating activities to design, produce, market, deliver, and support a firm's products, only as strong as its weakest link
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What is a Value Delivery Network?
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The network made up of the company, suppliers, distributors, and ultimately customers who "partner" with each other to improve the performance of the entire system
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What is a Marketing Strategy?
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The marketing logic by which the business unit hopes to create customer value and achieve profitable customer relationships
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What is Market Segmentation?
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Dividing a Market into distinct groups of buyers who have different needs, characteristics, or behaviors, and who might require separate products or marketing programs
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What is a Market Segment?
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A group of consumers who respond in a similar way to a given set of marketing efforts
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What is Market Targeting?
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The process of evaluating each market segment's attractiveness and selecting one or more segments to enter
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What is positioning?
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Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers
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What is differentiation?
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Actually differentiating the market offering to create superior customer value
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What is a Marketing Mix?
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The set of controllable tactical marketing tools-product, price, place, and promotion- that the firm blends to produce the response it wants in the target market
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Define product
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The goods and services combination the company offers to the target market
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Define price
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The amount of money customers must pay to obtain the product
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Define place
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Company activities that make the product available to target consumers
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Define promotion
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Activities that communicate the merits of the product and persuade target customers to buy it
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An effective marketing program...
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Blends all of the marketing mix elements into an integrated marketing program
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What are the 4 Customer C's that correspond to the 4 Marketing p's?
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product- customer solution, price- customer cost, place- convenience, promotion- communication
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What is SWOT Analysis?
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An overall evaluation of the company's strengths (S), weaknesses (W), opportunities (O), and threats (T)
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What is Marketing Implementation?
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The process that turns marketing strategies and plans into marketing actions in order to accomplish strategic marketing objectives. Addresses the who, where, when and how of marketing
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What does CMO stand for?
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Chief Marketing Officer
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What is the functional organization way of marketing management?
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Different marketing activities are headed by a functional specialist.
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What is the geographic organization way of marketing management?
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Used in companies that sell across the country or internationally. Sales and marketing people are assigned to specific countries, regions, or zones.
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What is product management organization in regards to marketing management?
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product manager develops and implements complete strategy and marketing program for specific product or brand. Used in companies with many very different products or brands
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What is Customer Management Organization in regards to marketing management?
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Market managers are responsible for developing marketing strategies and plans for their specific markets or customers. For companies that sell one product line to many different types of markets and customers
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What is Marketing Control?
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The process of measuring and evaluating the results of marketing strategies and plans and taking corrective action to ensure that objectives are achieved
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What is Return on Marketing Investment (Marketing ROI)?
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The net return from a marketing investment divided by the costs of the marketing investment
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What is a marketing environment?
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The actors and forces outside marketing that affect marketing management's ability to build and maintain successful relationships with target customers
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What is a microenvironment?
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The actors close to the company that affect its ability to serve its customers- the company, suppliers, marketing intermediaries, customer markets, competitors, and publics
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What is a macroenvironment?
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The larger societal forces that affect the microenvironment- demographic, economic, natural, technological, political, and cultural forces
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What are marketing intermediaries?
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Firms that help the company to promote, sell, and distribute its goods to final buyers
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What are physical distribution firms?
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Firms that help the company to stock and move goods from the points of origin to their destination
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What are marketing services agencies?
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Firms that specialize in research, advertising, media, and marketing consulting
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What are financial intermediaries?
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Banks, credit companies, insurance companies, and other businesses that help finance transactions or insure against risks
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What is a public?
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Any group that has an actual or potential interest in or impact on an organization's ability to achieve its objectives
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What are financial publics?
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The group that influences the company's ability to obtain funds. (Banks, investment houses, stockholders)
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What are media publics?
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The group that carries news, features, and editorial opinion (newspapers, magazines, radio and tv stations)
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What are consumer markets?
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Consist of individuals and households that buy goods and services for personal consumption
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What are business markets?
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Buy goods and services for further processing or for use in their production process
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What are reseller markets?
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Buy goods and services to resell at a profit
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What are government markets?
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Made up of government agencies that buy goods and services to produce public services or transfer the goods and services to others who need them
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What are international markets?
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Consist of buyers in other countries, including consumers, producers, resellers, and governments
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What is demography?
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The study of human populations in terms of size, density, location, age, gender, race occupation, and other statistics
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What are the main three factors affecting natural environment?
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1) Shortages of raw materials
2) Increased pollution 3) Increased government intervention |
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What is public policy?
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Sets of laws and regulations that limit business for the good of society as a whole
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Why has business legislation been enacted?
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1) protect companies from each other
2) protect consumers from unfair business practices 3) protect the interest of society against unrestrained business behavior |
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What is a cultural environment?
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Institutions and other forces that affect society's basic values, perceptions, preferences, and behaviors
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What is the difference between core and secondary beliefs?
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Core beliefs are passed on from parents to children and are reinforced by schools, churches, business, and government. Secondary beliefs are more open to change
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What is the formula for break even analysis?
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Total Revenue= Total Costs,
QBE= TFC + pg (profit goal) / (p - vc/unit) |
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What is the formula for contribution margin?
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price - variable cost/unit
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What is the heirarchy of strategic planning?
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Company Mission < Business Objectives < Marketing Objectives
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What is the role of marketing? (5 points)
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1) provide a guiding philosophy
2) Identify attractive opportunities 3) Design effective strategies 4) Build strong value chains 5 ) Form superior value delivery networks |
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What is the horizontal axis of the expansion alternatives grid?
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product (new and old)
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What is the vertical axis of the expansion alternatives grid?
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Market (new and current)
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Expansion Alternatives grid- name the 4 quadrants and their locations
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Market penetration- top left
Market expansion- bottom left product development- top right Diversification- bottom right |
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What are the three factors in consumer decision making?
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1) Social Factors
2) personal factors 3) psychological factors |
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For the consumer, demand is..
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1) price inelastic
2) derived 3) fluctuates more |
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What are the four factors in B2B Decision Making
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1) Environmental Factors
2) Organizational Factors 3) Interpersonal Factors 4) Individual Factors |
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What is customer relationship management?
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The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction
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What is customer perceived value?
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The customer's evaluation of the difference between all the benefits and all the costs of a marketing offer relative to those of competing offers
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What is customer satisfaction?
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The extent to which a product's perceived performance matches a buyer's expectations
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What is consumer-generated marketing?
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Marketing messages, ads and other brand exchanges created by consumers themselves- both invited and uninvited
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What is an economic environment?
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Factors that affect consumer buying power and spending patterns
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What are Engel's laws?
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Differences noted over a century ago by Ernst Engel in how people shift their spending across food, housing, transportation, health care, and other good and services categories as family income rises
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What is a natural environment?
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Natural resources that are needed as inputs by marketers or that are affected by marketing activities
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Environmental sustainability
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Developing strategies and practices that create a world economy that the planet can support indefinitely
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What is technological environment?
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Forces that create new technologies, creating new product and market opportunities
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What is political environment?
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Laws, government agencies and pressure groups that influence and limit various organizations and individuals in a given society
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What is cultural environment?
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Institutions and other forces that affect society's basic values, perceptions, preferences, and behaviors
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What is consumer buyer behavior?
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The buying behavior of final consumer- individuals and households that buy goods and services for personal consumption
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What is a consumer market?
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All the individuals and households who buy or acquire goods and services for personal consumption
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What is a culture?
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The set of basic values, perceptions, wants, and behaviors learned by a member of society from family and other important institutions
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What is a subculture?
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A group of people with shared value systems based on common life experiences and situations
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What is social class?
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Relatively permanent and ordered divisions in society whose members share similar values, interests, and behaviors
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What is a group?
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Two or more people who interact to accomplish individual or mutual goals
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What is an opinion leader?
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person within a reference group who, because of special skills, knowledge, personality, or other characteristics, exerts social influence on others
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What is a lifestyle?
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A person's pattern of living as expressed in his or her activities, interests, opinions.
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What is a personality?
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The unique psychological characteristics that lead to relatively consistent and lasting responses to one's own environment
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What is brand personality?
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The specific mix of human traits that may be attributed to a particular brand?
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What is a motive?
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A need that is sufficiently pressing to direct the person to seek satisfaction of the need
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What is a perception?
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The process by which people select, organize, and interpret information to form a meaningful picture of the world
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What is learning?
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Changes in an individual's behavior arising from experience
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What is a belief?
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A descriptive thought that a person holds about something
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What is an attitude?
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A person's consistently favorable or unfavorable evaluations, feelings, and tendencies toward an object or idea
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What is complex buying behavior?
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Consumer buying behavior in situations characterized by high consumer involvement in a purchase and significant perceived differences among brands
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What is dissonance-reducing buying behavior?
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Consumer buying behavior in situations characterized by high involvement but few perceived differences among brands.
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What is habitual buying behavior?
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Consumer buying behavior in situations characterized by low-consumer involvement and few significantly perceived brand differences
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What is variety-seeking buying behavior?
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Consumer buying behavior in situations characterized by low consumer involvement but significant perceived brand differences
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What is need recognition?
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The first stage of the buyer decision process, in which the consumer recognizes a problem or need
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What is information search?
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The stage of the buyer decision process in which the consumer is aroused to search for more information; the consumer may simply have heightened attention or may go into an active information search
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What is alternative evaluation?
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The stage of the buyer decision process in which the consumer uses information to evaluate alternative brands in the choice set
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What is purchase decision?
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The buyer's decision about which brand to purchase
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What is postpurchase behavior?
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The stage of the buyer decision process in which the consumers take further action after purchase, based on their satisfaction or dissatisfaction
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What is cognitive dissonance?
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Buyer discomfort caused by postpurchase conflict?
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What is a new product?
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A good, service, or idea that is perceived by some potential customers as new
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What is the adoption process?
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The mental process through which an individual passes from first hearing about an innovation to final adoption
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What is business buyer behavior?
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The buying behavior of the organizations that buy goods and services for use in the production
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What is business buying process?
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The decision process by which business buyers determine which products and services their organizations need to purchase, and then find, evaluate, and choose among alternative suppliers and brands
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What is derived demand?
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Business demand that ultimately comes from the demand for consumer goods
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What is supplier development?
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Systematic development of networks of supplier-partners to ensure an appropriate and dependable supply of products and materials for use in making products or reselling them to others
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What is a straight rebuy?
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A business buying situation in which the buyer routinely reorders something without any modifications
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What is a modified rebuy?
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A business buying situation in which the buyer wants to modify product specifications, prices, terms, or suppliers
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What is a new task?
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A business buying situation in which the buyer purchases a product or service for the first time
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What is systems selling?
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Buying a packaged solution to a problem from a single seller, thus avoiding all the seperate decisions involved in a complex buying situation
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What is a buying center?
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All the individuals and units that play a role in the purchase decision-making process
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What are users?
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Members of the buying organization who will actually use the purchased product or service
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Who are influencers?
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people in an organization's buying center who affect the buying decision; they often help define specifications and also provide information for evaluating alternatives
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Who are buyers?
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The people in the organization's buying center who make an actual purchase
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Who are deciders?
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people in the organization's buying center who have formal or informal power to select or approve the final suppliers
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What is supplier development?
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Systematic development of networks of supplier-partners to ensure an appropriate and dependable supply of products and materials for use in making products or reselling them to others
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What is a straight rebuy?
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A business buying situation in which the buyer routinely reorders something without any modifications
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What is a modified rebuy?
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A business buying situation in which the buyer wants to modify product specifications, prices, terms, or suppliers
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What is a new task?
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A business buying situation in which the buyer purchases a product or service for the first time
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What is systems selling?
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Buying a packaged solution to a problem from a single seller, thus avoiding all the seperate decisions involved in a complex buying situation.
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What is a buying center?
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All the individuals and units that play a role in the purchase decision-making process
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What are users in business buying?
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Members of the buying organization who will actually use the purchased product or service
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What are influencers in business buying?
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people in an organization's buying center who affect the buying decision; they often help define specifications and also provide information for evaluating alternatives
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What are buyers in business buying?
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The people in the organization's buying center who make an actual purchase
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What are deciders in business buying?
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people in the organization's buying center who have formal or informal power to select or approve the final suppliers
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Who are gatekeepers in business buying?
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people in the organization's buying center who control the flow of information to others
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What is problem recognition in business buying?
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The first stage of the business buying process in which someone in the company recognizes a problem or need that can be met by acquiring a good or a service
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What is general need description?
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The stage in the business buying process in which the company describes the general characteristics and quantity of a needed item
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What are Customer Insights?
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Fresh understandings of customers and the marketplace derived from marketing information that becomes the basis for creating customer value and relationships
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What are the drawbacks of utilizing customer insights?
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1) Companies must not become customer controlled
2) Customers must be given what they need, not everything they want |
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What is a Marketing Information System (MIS)?
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people and procedures for assessing information needs, developing needed information, helping decision makers use information to generate and validate customer and market insights
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What are the three processes of a MIS?
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1) Assess information needs
2) Develop needed information 3) Help users analyze and use information |
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A Good MIS...
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Balances what users would like to know against what they need to know and what is feasible to offer
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What are the three techniques marketers can use to obtain data?
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1) Internal data
2) Marketing Intelligence 3) Marketing Research |
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What are Internal Databases?
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Electronic collections of consumer and market information obtained from data sources within a companies network
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What are the problems with internal databases?
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1) May be incomplete or in wrong form for making marketing decisions
2) Data ages quickly 3) Too much information |
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What is Marketing Intelligence?
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The systematic collection and analysis of publicly available information about competitors, consumers, and developments in the marketing environment
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What is Marketing Research?
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The systematic design, collection, analysis, and reporting of data relevant to specific marketing situations facing the organization
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What are the 4 steps of Marketing Research?
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1) Define problem and research objective
2) Develop research plan 3) Implementing research plan 4) Interpreting and reporting findings |
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What is exploratory research?
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Marketing research to gather preliminary information that will help define problems and suggest hypothesis
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What is descriptive research?
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Marketing research to better describe marketing problems, situations or markets
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What is causal research?
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Marketing research to test hypothesis about cause-and-effect relationships
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How should a research plan be presented?
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In a written proposal
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What is secondary data?
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Information that already exists somewhere, collected for another purpose
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What is primary data?
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Information collected for specific purpose at hand
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What are commercial online databases?
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Computerized collection of information available from online commercial sources or via the internet
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What are some examples of commercial online databases?
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Dialog, proquest, lexisnexis
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What are the advantages and disadvantages of secondary data?
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Advantages:
1) Can be collected more quickly and at a lower cost 2) Sources sometimes provide information that cannot otherwise be obtained Disadvantages: 1) Needed information may not exist 2) Information gained may not be very usable |
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Designing a plan for primary data collection relies on 4 factors, what are these factors?
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1) Research Approaches
2) Contact Methods 3) Sampling plan 4) Research instruments |
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What is observational research?
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Gathering primary data by observing people, actions, situations
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What are the advantages of observational research?
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1) Gain insight that can't be had from asking questions
2) Can obtain information people are unwilling or unable to provide |
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What are the disadvantages of observational research?
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1) Some things cannot be observed (Ex. feelings, attitudes, motives)
2) Can't observe long-term or infrequent behavior 3) Can be hard to interpret |
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What is ethnographic research?
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A form of observational research that involves sending trained observers to watch and interact with the customer in their natural habitat
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What is survey research?
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Gathering primary data by asking people questions about knowledge, attitudes, preferences, and buying behavior
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What are the advantages of survey research?
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1) Best suited for gathering descriptive information
2) Flexible |
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What are the disadvantages of survey research?
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1) people unable to answer questions because they cannot remember or never thought of what they do and why
2) Unwilling to respond to unknown interviewers or on private issues 3) May answer questions with an ulterior motive (eg. appearing smarter) 4) Busy people may not take the time to respond or may resent the intrusion of privacy |
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What is experimental research?
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Gathering primary data by selecting matched groups of subjects, giving different treatments, controlling certain factors, and checking for differences in group response
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What is the advantage of experimental research?
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Best suited for gathering causal information
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What are the advantages of mail questionnaires?
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1) provide large amounts of information at low cost/respondent
2) More honest answers to personal questions 3) No interviewer to introduce interviewer bias |
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What are the disadvantages of mail questionnaires?
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1) Not flexible
2) Take longer to complete 3) Response rate is low 4) Hard to control who answers them |
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What are the advantages of telephone interviews for collecting primary data?
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1) Gather information quickly
2) Greater flexibility than mail questionnaires 3) Can explain difficult questions or modify survey based on responses 4) Response rates higher than mail questionnaires 5) Can target respondent |
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What are the disadvantages of telephone interviews for collecting primary data?
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1) Cost is higher
2) May not want to discuss personal questions with interviewer 3) Introduces interviewer bias 4) Hang-ups |
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What is Focus Group Interviewing?
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personal interviewing involving six to ten people gathering for a few hours with a trained interviewer to talk about products, services, or organization, moderator "focuses" group discussion on important issues
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What are the disadvantages of Focus Group Interviewing?
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1) Samples often very small, hard to generalize
2) Groups not always open and honest |
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What is Online Marketing Research?
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Collecting primary data online through internet surveys, online focus groups, web-based experiments, or tracking consumer's online behavior
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What are the advantages of online marketing research?
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1) Internet suited to quantitative research
2) Speed and low cost 3) High response rates 4) Excellent medium for hard to reach consumers |
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What are the advantages and disadvantages of online focus groups?
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Advantages:
1) participants can log in from anywhere around the globe Disadvantages: 1) Lack real world dynamics 2) Restricted internet access 3) Lack of control over who participates |
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What is a sample?
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A segment of the population selected for marketing research to represent the population as a whole
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What are the three elements important to consider when choosing a sample?
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1) Who to sample
2) Sample size 3) Sampling procedure (probability v. nonprobability) |
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What are closed and open ended questions respectively utilized for?
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Closed ended: Interpretation and tabulation
Open ended: What people think, not how many people think that |
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What are touch points?
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Every point of contact between the customer and the company
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What is Customer Relationship Management (CRM)?
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Managing detailed information about individual customers and carefully managing customer "touch points" in order to maximize customer loyalty
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What are data warehouses?
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A companywide electronic database of finely detailed customer information that needs to be sifted through for gems
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What is the most common mistake in regards to using CRM?
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Seeing it only as a technology and software solution, not as a way to build customer relationships
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What are the three criteria for evaluating research design?
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1) Validity
2) Reliability 3) Representativeness |
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What are the qualitative techniques for market research?
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1) Focus Groups
2) Depth Interviews 3) projective techniques |
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What are the conditions necessary to establish causality when dealing with experimental research?
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1) Temporal Antecedence- cause must precede effect
2) Covariation- Change in cause must produce change in effect 3) Absence of Rival Explanations |
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What are the three critical issues of experimental research?
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1) Internal validity
2) External Validity 3) Construct Validity |
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What is geographic segmentation?
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Dividing a market into different geographical units such as nations, states, regions, counties, cities, or neighborhoods
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What is demographic segmentation?
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Dividing the market into groups based on variables such as age, gender, family size, family life cycle, income etc.
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Why are demographic segmentations the most popular forms of segmenting customer groups?
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Consumer needs, wants and usage rate vary closely with demographic variables, demographic variables are easier to measure than most other types of variables
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What is age and life-cycle segmentation?
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Dividing a market into different age and life-cycle groups
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What is the biggest pitfall of age and life-cycle segmentation?
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Guarding against stereotypes
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What is gender segmentation?
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Dividing a market into different groups based on gender
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What is income segmentation?
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Dividing a market into different income groups
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What is psychographic segmentation?
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Dividing a market into different groups based on social class, lifestyle, or personality characteristics
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What is behavioral segmentation?
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Dividing a market into groups based on consumer knowledge, attitudes, uses, or responses to a product
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What is an occasion segmentation?
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Dividing the market into groups according to occasions when buyers get the idea to buy, actually make their purchase, or use the purchased item
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What is benefit segmentation?
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Dividing the market into groups according to the different benefits that consumers seek from the product
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What are the different user statuses that market can be segmented into?
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1) Nonusers
2) Ex-users 3) potential users 4) First-time users 5) Regular users |
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What are the usage rate markets can be segmented into?
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Light, medium, and heavy
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What can a company gain by studying user loyalty patterns?
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By studying very loyal users, the company can pinpoint its target market and develop marketing appeals. By studying less loyal users, the company can detect which brands are most competitive with its own
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What do most marketers believe provide the best basis for segmenting business markets?
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Buying behavior and benefits
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What is the flaw of geographic segmentation?
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Assumes that places close to one another will have many common traits and behaviors
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What is intermarket segmentation?
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Forming segments of consumers who have similar needs and buying behavior even though they are located in different countries
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To be useful, market segments must be...
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1) Measurable
2)Accessible 3) Substantial 4) Differentiable 5) Actionable |
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When evaluating different market segments, a firm must look at what three factors?
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1) Segment size and growth
2) Structural attractiveness 3) Company objectives and resources |
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What factors make a segment less attractive?
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Strong and aggressive competitors, readily available substitute products, power of buyers, and powerful suppliers who can control price or reduce quantity and quality
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What is a target market?
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A set of buyers sharing common needs or characteristics that the company decides to serve
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What are the three ways in which companies can target their segment?
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1) Very broadly (Undifferentiated)
2) Very Narrowly (Micromarketing) 3) Somewhere in between (Differentiated or concentrated marketing) |
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What is undifferentiated marketing?
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A market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer
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What does undifferentiated marketing focus on?
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What is common with consumers rather than what is different
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What are the problems with undifferentiated marketing?
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1) Difficult to make a product that satisfies all customers
2) Trouble competing with more narrowly focused firms |
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What is differentiated (segmented) marketing?
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A market-coverage strategy in which a firm decides to target several market segments and designs seperate offers for each
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What are the advantages and disadvantages of differentiated marketing?
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Advantages:
1) Higher sales and stronger positiion within each market segment Disadvantages: 1) Higher cost of doing business |
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What is concentrated (niche) marketing?
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A market-coverage strategy in which a firm goes after a large share of one or a few segments or niches
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What are the advantages and disadvantages of niche marketing?
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Advantages:
1) Firm achieves stronger market position through greater knowledge of customer needs 2) Can market more efficiently and effectively 3) Smaller companies can focus resources on niches that may be overlooked by bigger competitors 4) Could be highly profitable Disadvantages: 1) Higher risk |
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When should a company not use market segmentation?
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1) When the market is too small
2) Market potential is largely untapped 3) Consumer preferences are homogenous |
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If the company's market is not an effective market for segmentation, what should be their alternate strategies?
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1) Target new users
2) Increase usage among current users 3) Expand usage situations |
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What is primary demand stimulation?
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Marketing activity intended to increase demand for the product category
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What is selective demand stimulation?
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Marketing activity intended to increase demand for one organization’s product or services over those of competitors
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What are the four ways to segment business markets?
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1) Demographic segmentation
2) Operating variables 3) Situational factors 4) personal characteristics |
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What are the four most common ways to segment international markets?
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1) Geographic segmentation
2) Economic Factors 3) political and legal factors 4) Cultural factors |
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What is micromarketing?
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The practice of tailoring products and marketing programs to the needs and wants of specific individuals and local customer groups- includes local marketing and individual marketing
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What are the two aspects of micromarketing?
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1) Local marketing
2) Individual marketing |
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What is local marketing?
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Tailoring brands and promotions to the needs and wants of local customer groups- cities, neighborhoods, and even specific stores
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What are the drawbacks of local marketing?
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1) Drive up manufacturing and marketing costs by reducing economies of scale
2) Create logistics problems 3) Brand's overall image might be diluted if product and message vary too much |
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What are the two advantages of local marketing?
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1) Helps company to market more effectively in face of pronounced regional and local differences
2) Meets needs of company's retailers |
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What is individual marketing?
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Tailoring products and marketing programs to the needs and preferences of individual customers
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What is mass customization?
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The process through which firms interact one-to-one with masses of customers to design products and services tailor-made to individual needs, Nike Id. etc
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What are the important factors in choosing a targeting strategy?
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1) Company resources
2) product variability 3) product's life-cycle stage 4) market variability 5) competitor's marketing strategies |
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What is product position?
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The way the product is defined by consumers on important attributes- the place the product occupies in consumer's minds relative to competing products
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What do perceptual positioning maps show?
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Consumer perceptions of brands versus competing products on important buying dimensions
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What is the most important aspect to a brand's positioning?
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Serve the needs and preferences of well-defined target markets
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What are the three steps involved with differentiation and positioning?
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1) Identifying a set of differentiating competitive advantages upon which to build a position
2) Choosing the right competitive advantages 3) Selecting an overall positioning strategy |
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What is a competitive advantage?
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An advantage over competitors gained by offering greater customer value, either through lower prices or providing more benefits that justify higher prices
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What are the ways in which a company can differentiate itself or its market offer?
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product, services, channels, people, or image
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A difference is worth establishing to the extent that it satisfies what criteria?
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1) Important
2) Distinctive 3) Superior 4) Communicable 5) preemptive 6) Affordable 7) profitable |
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What is a value proposition?
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The full positioning of a brand- the full mix of benefits upon which it is positioned- answer to customer's question "Why should I buy your brand?"
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What are the ways in which a product can be positioned?
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1) More for more
2) More for the same 3) The same for less 4) Less for much less 5) More for less |
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What is more for more positioning?
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Offering the most upscale product or service and charging a higher price to cover the higher cost
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When should a company use more-for-more positioning, and what are its risks?
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Should use in underdeveloped product or service category, often invite imitators who claim same quality at lower price
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What is more for the same positioning?
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Brands offering comparable quality but at lower price
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What is Same for less positioning?
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Offer many of same brands but at deep discount (Eg walmart)
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What are the pitfalls of more for less positioning?
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Only works in short-run, in long run, difficult to subsidize costs, may lose out to more focused competitors
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What is a positioning statement?
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A statement that summarizes company or brand positioning- it takes the form: To (target segment and need) our (brand) is (concept) that (point-of-difference)
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What are the two main positioning approaches?
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1) Goal based positioning
2) Competition based positioning |
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What are the four d's of effective positioning?
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1) Define the brand
2) Differentiate the brand from other products 3) Deepen the brand's connection to consumer goals 4) Defend the position as competitors react |
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What are the four common positioning errors?
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1) Underpositioned
2) Overpositioned 3) Confused positioning 4) Doubtful positioning |
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Why is underpositioning an error?
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Customers cannot sense what is the difference
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Why is overpositioning an error?
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projecting too narrow an image
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Why is confused positioning an eror?
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Too many claims, or keep changing position
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Why is doubtful positioning an error?
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Hard to believe given feature/price/manufacturer
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What is a product?
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Anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need
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What is a service?
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Any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything
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What are pure tangible goods?
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Goods which are not accompanied by a service eg. toothpaste, soap, salt
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What is a pure service?
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Offers primarily consisting of a service with no goods
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What are the three levels that product planners must think of products and services?
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1) Core customer value- what is the buyer really buying?
2) Actual product- develop features, design, quality level, brand name, packaging 3) Augmented product- offer additional consumer services and benefits |
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What are the two broad classes that products and services fall into based on the types of consumers that use them?
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Consumer products and industrial products
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What are consumer products?
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A product bought by final consumer for personal consumption
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What are the four categories of consumer products?
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1) Convenience products
2) Shopping products 3) Specialty products 4) Unsought products |
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What are convenience products?
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A consumer product that customers usually buy frequently, immediately, and with a minimum of comparison and buying effort, usually low priced, placed in many location to make them readily available
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What are shopping products?
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A consumer product that the customer, in the process of selection and purchase, usually compares on such bases as suitability, quality, price, and style. Usually distributed through fewer outlets but provide deeper sales support to them
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What are specialty products?
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A consumer product with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort. Buyers invest only the time needed to reach dealers carrying the wanted products
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What are unsought products?
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A consumer product that the consumer either does not know about or knows about but does not normally think of buying. Require a lot of advertising, and marketing effort
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What are industrial products?
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A product bought by individuals and organizations for further processing or for use in conducting a business
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What are the three groups of industrial products and services?
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Materials and parts, capital items, and supplies and services
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What are materials and parts?
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Group of industrial products consisting of raw materials and manufactured materials and parts
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What are Capital items?
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Industrial products that aid in buyer's production or operations, include installations and accessory equipment
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What are supplies and services?
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Industrial products that are convenience products in the industrial field, include operating supplies, repair and maintenance items, and business services
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What is organization marketing?
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Activities undertaken to create, maintain, or change attitudes and behavior of target consumers toward an organization
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What is person marketing?
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Activities undertaken to create, maintain, or change attitudes or behaviors toward particular people
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What is place marketing?
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Activities undertaken to create, maintain, or change attitudes or behavior toward particular places
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What is social marketing?
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The use of commercial marketing concepts and tools in programs designed to influence individual's behavior to improve their well-being and that of society (Eg. health campaign to reduce smoking)
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What are the three levels at which marketers make product and service decisions?
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1) Individual product decisions
2) product line decisions 3) product mix decisions |
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What is product quality?
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The characteristics of a product or service that bear on ts ability to satisfy stated or implied customer needs
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What is a brand?
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A name, term, sign, symbol, design, or a combination of these that identifies the products or services of one seller or group of sellers and differentiates them from those of competitors
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What is packaging?
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The activities of designing and producing the container or wrapper for a product
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What is a product line?
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A group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges
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What is product line length, and what makes it good or bad?
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The number of items in a product line; too short if manager can increase profits by adding items, too long if manager can increase profits by dropping items
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What is product line filling and what are its risks?
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Adding more items within the present range of the line, risks cannibalization and customer confusion
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What is product line stretching, and what are the two ways it can be executed?
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Adding products that are higher or lower priced than the existing line, can be done upwards or downwards
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What is a product mix (portfolio)?
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The set of all product lines and items that a particular seller offers for sale
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What are the four important dimensions to consider with a product mix, and what do they mean?
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1) product width- number of different product lines a company carries
2) product length- total number of items company carries within its product lines 3) product depth- the number of versions offered of each product in the line 4) product consistency- how closely related the various product lines are in various ways |
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What is brand equity?
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The differential effect that knowing the brand name has on customer response to the produce or its marketing, measure of brand's ability to capture consumer preference and loyalty
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What is the fundamental asset underlying brand equity?
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Customer equity- the value of the customer relationships that the brand creates
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What are the major strategy decisions for building a strong brand?
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1) Brand positioning
2) Brand name selection 3) Brand sponsorship 4) Brand development |
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What are the three ways a brand can be positioned?
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1) Lowest level- product attributes
2) Medium level- Benefits 3) Highest level- strong beliefs and values |
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What are the desirable qualities for a brand name?
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1) Suggest something about product's benefits and qualities
2) Be easy to pronounce, recognize, and remember 3) Distinctive 4) Extendable 5) Translate well into other languages 6) Be capable of registration and legal protection |
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What are the four sponsorship options for a brand?
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1) National Brand
2) Store brand 3) Licensed brand 4) co-brand |
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What is a store brand and what are its advantages/disadvantages?
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A brand created and owned by a reseller of a product or service; hard to establish and costly to stock and promote, yield higher profit and give resellers exclusive products
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What is co-branding and what are its advantages/disadvantages?
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The practice of using the established brand names of two different companies on the same product, combined brans create broader consumer appeal and greater brand equity, partners must carefully coordinate and rely on each other
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What is a line extension?
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Extending an existing brand name to new forms, colors, sizes, ingredients, or flavors of an existing product category
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What is a brand extension?
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Extending an existing brand name to new product categories
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What is service intangibility?
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A major characteristic of services- they cannot be seen, tasted, felt, heard, or smelled before they are bought
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What is service inseperability?
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A major characteristic of services- they are produced and consumed at the same time, and cannot be separated from their providers
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What is service variability?
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A major characteristic of services- their quality may vary greatly, depending on who provides them and when, where, and how
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What is service perishability?
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A major characteristic of services- they cannot be stored for later sale or use
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What is the service-profit chain?
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The chain that links service firm profits with employee and customer satisfaction
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What is internal marketing?
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Orienting and motivating customer-contact employees and supporting service people to work as a team to provide customer satisfaction
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What is interactive marketing?
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Training service employees in the fine art of interacting with customers to satisfy their needs
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What are two alternative branding strategies?
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1) Individual Branding
2) Family or "umbrella" branding |
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What are the effects of branding extensions?
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1) Reduces marketing costs
2) Effects on the core brand 3) May dilute brand image |
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What are the additional 2 p's that apply to service?
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1) people
2) process |
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What are the basis for service expectations?
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1) Experience
2) Knowledge of the firm 3)perception of past service encounters |
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Service parallel to augmented products
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Core and peripheral services
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What are the two ways a firm can obtain new products?
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Acquisition and new product development
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What is new product development?
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The development of original products, product improvements, product modifications, and new brands through the firm's own prodcut-development efforts
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To create successful new products, a company must understand...
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Its consumers, markets, and competitors and develop products that deliver superior value to customers
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What is idea generation?
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The systematic search for new-product ideas
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What is idea screening?
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Screening new-product ideas in order to spot good ideas and drop poor ones as soon as possible
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What is product concept?
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A detailed version of the new-product idea stated in meaningful consumer terms
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What is the difference between product idea, product concept, and product image?
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product idea- idea for possible product that company can see itself offering to market
product concept- detailed version of idea state in meaningful consumer terms product image- the way consumers perceive an actual or potential product |
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What is concept testing?
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Testing new-product concepts with a group of target consumers to find out if the concepts have strong consumer appeal
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What is marketing strategy development?
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Designing an initial marketing strategy for a new product based on the product concept
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What is business analysis?
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A review of the sales, costs and profit projections for a new product to find out whether these factors satisfy the company's objectives
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What is product development?
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Developing the product concept into a physical product in order to ensure that the product idea can be turned into a workable market offering
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What is test marketing?
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The stage of new-product development in which the product and marketing program are tested in realistic market settings
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What are standard test markets? Why are they advantageous/disadvantageous?
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Small number of representative test cities to conduct full marketing campaign in, very costly and lengthy, competitors can monitor them, competitors can react early
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What are controlled test markets?
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Same as test markets, several research firms keep controlled panels of stores that have agreed to carry new products for a fee
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What are simulated test markets?
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Test markets in which companies use a simulated shopping environment
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What is commercialization?
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Introducing a new product into the market
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What is customer-centered new-product development?
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New-product development that focuses on finding new ways to solve customer problems and create more customer-satisfying experiences
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What is a product life-cycle?
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The course of a product's sales and profits over its lifetime. Involves five distinct stages: product development, introduction, growth, maturity, and decline
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What are the five stages of a product life-cycle?
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1) product development
2) Introduction 3) Growth 4) Maturity 5) Decline |
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What is a style?
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A basic and dstinctive mode of expression
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What is a fashion?
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A currently accepted or popular style in a given field
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What is a fad?
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A temporary period of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity
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What is the introduction stage of a product life-cycle?
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The product life-cycle stage in which the new product is first distributed and made available for purchase
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What are the characteristics of the introduction stage of the product life-cycle?
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profits negative or low, promotion spending high, firms focus on selling to buyers ready to buy
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What is the growth stage of a product life-cycle?
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The product life-cycle stage in which a product's sales start climbing quickly
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What are the characteristics of the growth stage of a product life-cycle?
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New competitors enter market, new product features, expanding market, prices remain or fall slight, profits increase,
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What is the maturity stage of a product life-cycle?
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The product life-cycle stage in which sales growth slows or levels off
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What are the characteristics of the maturity stage of a product life-cycle?
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Greater competition, overcapacity, marking down prices, look for better product improvements, modify market product or marketing mix
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What is the decline stage of a product life-cycle?
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The product life-cycle stage in which a product's sales decline
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What are the reasons for success of a new product?
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1) Good understanding of consumer needs
2) Technological superiority 3) Seeing differently |
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What are some reasons for new product failure?
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1) Not understanding consumer needs
2) Too small a market 3) poor product/company fit 4) Not new or different |
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Reducing prices unnecessarily can lead to...
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lost profits and price wars, signal to the customer that price is more important than customer value
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What is price?
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The amount of money charged for a product or service, or the sum of the values that customers exchange for the benefits of having or using the product or service
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What three factors are unique about price?
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1) Major factor affecting buyer choice
2) Only element in marketing mix that produces revenue 3) One of the most flexible marketing mix elements |
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The price the company charges will fall somewhere between...
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One that is too high to produce any demand and one that is too low to produce a profit
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A product's price ceiling is equivalent to
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Customer perceptions of the product
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A product's price floor is equivalent to
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Product costs
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What is value-based pricing?
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Setting price based on buyers' perceptions of value rather than on the seller's cost, Ex. Bentley GT
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Value-based pricing means that...
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The marketer cannot design a product and marketing program and then set the price
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How does value-based pricing work?
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1) Company assesses customer needs and value perceptions
2) Sets target price based on customer perceptions of value 3) Targeted value and price drive decisions about costs that can be incurred and product design |
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Good value is not the same as
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Low price
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What is a problem with value-based pricing?
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It is difficult to measure the value customers will attach to a product
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What is Good-value pricing?
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Offering just the right combination of quality and good service at a fair price, Ex. Taco Bell and McDonald's value menus
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What does Ryanair and it's cheap prices have to do with Good-value pricing?
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A type of good-value pricing is redesigning existing brands to offer more quality for a given price or the same quality for less
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What is everyday low pricing?
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A type of good-value pricing pioneered by walmart, charge a constant everyday low price with few or no temporary discounts
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In contrast to everyday low pricing, what is high-low pricing?
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Charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items
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What is a company's pricing power and how can a firm increase theirs?
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Its power to escape price competition and to justify higher prices and margin, increased by retaining or building value of market offering
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What is value-added pricing?
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Attaching value-added features and services to differentiate a company's offers and charging higher prices, Ex. Stag Umbrellas
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What is cost-based pricing?
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Setting prices based on the costs for producting, distributing, and selling the product plus a fair rate of return for effort and risk
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What are fixed costs (overhead)?
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Costs that do not vary with production or sales level
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What are variable costs?
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Costs that vary directly with the level of production
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What are total costs?
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The sum of fixed and variable costs for any given level of production, the price charged should at least cover these costs
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Why does average cost/unit sometimes fall when production goes up?
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Fixed cost is spread amongst more units
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Why does average cost/unit sometimes rise when production goes up?
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Beyond a certain point, production becomes inefficient
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What is the experience curve (learning curve)?
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The drop in the average per-unit production cost that comes with accumulated production experience
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What does a downward-sloping experience curve suggest and what are the restrictions on interpreting it?
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Suggests company's unit production cost will fall fast the more units they make and sell during a given time period. However, the market must be ready to buy a higher output. In addition, the firm must obtain a large market share early in product's life cycle.
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What are the risks of experience-curve pricing?
|
Aggressive pricing might give product a cheap image, assumes that competitors are waeak and not willing to meet price cuts, competitor may find lower-cost technology
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What is cost-plus pricing?
|
Simplest pricing method, adding a standard markup to the cost of the product, Ex. construction companies
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Why does using standard markups to set prices not make sense?
|
Ignores demand and competitive prices
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Why are the advantages to cost-plus pricing?
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Sellers more certain about costs than demand, when all firms use it price competition is minimized, fair to both buyers and sellers
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What is break-even pricing?
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Setting prcie to break even on the costs of making and marketing a product, or setting price to make a target profit
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What is break-even volume?
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The point on the break-even chart at which total revenue and total cost curves cross
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What are the internal factors affecting pricing?
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Company's overall marketing strategy, objectives, marketing mix, other organizational considerations
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What are the external factors that affect pricing?
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Nature of the market and demand, competitors strategies and prices, other environmental factors
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Before setting price...
|
The company must decide on its overall marketing strategy for product or service
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What is target costing?
|
Pricing that starts with an ideal selling price, then targets costs that will ensure that the price is met
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What are nonprice positions?
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Firms deemphasizing price and using other marketing mix tools
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If a product is positioned on nonprice factors, what decisions strongly affect price?
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Quality, promotion, and distribution
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What is the difference between small and large corporations in terms of who sets prices?
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Generally, in small corporations prices are set by top management. In large companies, pricing is handled by divisional or product line managers.
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How do firms in industries in which pricing is a key factor (airlines, steel, railroads etc.) handle pricing?
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They have a pricing department to handle it
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What are the four types of markets in which seller's pricing freedom varies?
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Pure Competition, Monopolistic competition, Oligopolistic competition, pure monopoly
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What is pure competition?
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Market consists of many buyers and sellers trading uniform commodity. No single buyer or seller has much effect on going market price. Sellers cannot charge more or less than going price. If price and profits rise, new sellers can easily enter market. Marketing strategy plays little or no role
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What is monopolistic competition?
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Market consists of many buyers and sellers who trade over range of prices. Occurs because sellers can differentiate offers. Sellers freely use marketing strategy to seperate offers. Because there are many competitors, each firm is less affected by competitors pricing strategies
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What is oligopolistic competition?
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Market consists of few sellers highly sensitive to each other's pricing and marketing strategies. Product can be uniform or not. Difficult for new sellers to enter market. Each seller alert to competitor's strategies and moves.
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What is a pure monopoly?
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Market consists of one seller. Seller may be government monopoly, private regulated or nonregulated monopoly. In regulated, government permits company to set rates that yield fair return. In nonregulated, free to price at what market will bear.
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What is the demand curve?
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A curve that shows the number of units the market will buy in a given time period, at different prices that might be charged
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When does the demand curve slope upward?
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Prestige goods, higher prices mean better quality in consumer's mind.
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Demand curve shows what in a monopoly
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Total market demand resulting from different prices.
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If a firm faces competition, the demand curve will depend on...
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Whether competitors' prices stay constant or change with the company's own prices
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What is price elasticity?
|
A measure of the sensitivity of demand to changes in price
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What does it mean if demand is inelastic?
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Demand hardly changes with a small change in price
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What does it mean if demand is elastic?
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Demand changes greatly with a small change in price
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What is the formula for price elasticity of demand?
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% Change in Quantity Demanded/ % Change in Price
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Pricing is of paramount importance in..
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Mature/ Slow-Growth Markets
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The less elastic the demand...
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The more it pays for the seller to raise the price
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What determines the price elasticity of demand?
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Buyers are less price sensitive when the product is unique or high in quality, prestige or exclusiveness. Less price sensitive when substitute products are hard to find or when cannot easily be compared to quality of substitutes. Also less price sensitive when total expenditure for product is low relative to their income or when cost is shared by another party.
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What are the advantages and disadvantages of lower pricing?
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Produce more total revenue, may turn product into commodities
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What are the effects on competition of high and low pricing?
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High- Attract competition
Low- Stop Competitors or drive them out of the market |
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What is market-skimming pricing?
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Setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales
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When does market-skimming pricing make sense?
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Product's quality and image must support higher price, enough buyers must want product at that price, costs of producing smaller volume cannot be so high that they cancel the advantage of charging more, competitors should not be able to enter market easily and undercut high price
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What is market penetration pricing?
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Setting a low price for a new product in order to attract a large number of buyers and a large market share
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What is the ideal result of market-penetration pricing?
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High sales volume results in falling costs, allowing companies to cut their prices even further
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What conditions must be met for market-penetration pricing to work?
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Market must be highly price sensitive, production and distribution costs must fall as sales volume increases, low price must help keep out competition, penetration pricer must maintain low-price position
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How does the strategy for setting a product's price change when the product is part of a pricing mix?
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Firm looks for set of prices that maximizes profits on total product mix. Pricing is difficult b/c various products have related demand and costs and face different degrees of competition.
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What are the five product mix pricing situations?
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Product line pricing, optional-product pricing, captive-product pricing, by-product pricing, and product bundle pricing
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What is product line pricing?
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Setting the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors' prices, Ex. Quicken Line
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What is optional product pricing, and why is it challenging?
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The pricing of optional or accessory products along with a main product. Complicated b/c must decide which features to include in base price and which to offer as options, Ex. Auto industry
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What is captive-product pricing?
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Setting a price for products that must be used along with a main product, such as blades for a razor and film for a camera
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What is the correct strategy for utilizing captive-product pricing?
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Price main products low, set high markups on supplies
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Why must companies using captive-product pricing be careful?
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Consumers trapped into buying expensive supplies may come to resent the brand that ensnared them
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What is captive-product pricing called in the service industry, what is it broken down into, and how does it produce profit?
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Two-part pricing, fixed fee plus variable usage rate, fixed amount should be low enough to induce usage of service, profit made on variable fees
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What is by-product pricing?
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Setting a price for by-products in order to make the main product's price more competitive ex. oil companies
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What is product bundle pricing, what are the advantages and disadvantages, and give an example
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Combining several products and offering the bundle at a reduced price. Ex. fast food combos. Can promote sales of products consumer might not otherwise buy, combined price must be low enough to get consumers to buy bundle.
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What are the price adjustment strategies?
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Discount and allowance pricing, segmented pricing, psychological pricing, promotional pricing, geographical pricing, dynamic pricing, and international pricing
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What are discounts and allowances?
|
Rewards companies give customers on price for certain responses, such as early payment or volume purchases
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What is a discount?
|
A straight reduction in price on purchases during a stated period of time
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What is a cash discount?
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A discount to buyers who pay their bills promptly
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What is a quantity discount?
|
Price reduction to buyers who buy large volumes
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What is a functional discount?
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Price reduction to trade channel members who perform certain functions, ex. coach who makes more money by agreeing to sign early and not look at other offers
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What is a seasonal discount?
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Price reduction to buyers who buy merchandise or services out of season
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What are allowances?
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Promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer's products in some way.
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What are trade-in allowances?
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Price reductions given for turning in an old item when buying a new one
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What are promotional allowances?
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Payments or price reductions to reward dealers for participating in advertising and sales support programs.
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What is segmented pricing?
|
Selling a product or service at two or more prices, where the difference in prices is not based on differences in cost
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What is customer-segment pricing?
|
Different customers pay different prices for the same product or service, ex. senior or student discount
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What is product-form pricing?
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Different versions of the product are priced differently but not according to differences in their costs.
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What is location pricing?
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Charging different prices for different locations, even though cost of offering each location is the same, ex. out of state tuition at texas
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What is time pricing?
|
Firm varies its price by season, month, day, or even hour, ex. public utilities time of day usage
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For segmented pricing to be an effective strategy, what conditions must be met?
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Market must be segmentable, segments must show different degrees of demand, costs of segmenting and watching market cannot exceed extra revenue obtained from price difference, reflect real differences in customers' perceived value
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What is psychological pricing?
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A pricing approach that considers the psychology of prices and not simply the economics; the price is used to say something about the product
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When is psychological pricing a good strategy to use and why does it work?
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When customers cannot judge quality because they lack information or skill, price becomes an important quality signal
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What is a reference price?
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Prices that buyers carry in their minds and refer to when they look at a given product
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What is signpost pricing?
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Setting a low price on a product which the consumer has accurate price knowledge to suggest other store prices are low
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What is price-matching guarantee?
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A guarantee that one store's prices are lower than another's
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What is promotional pricing?
|
Temporarily pricing products below the list price, and sometimes even below cost, to increase short-run sales
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What are the advantages and disadvantages of promotional pricing?
|
Advantages:
1) Create buying excitement and urgency 2) Increase sales and reduce inventories Disadvantages: 1) Create deal-prone customers who wait until brands go on sale before buying them 2) Constantly reduced prices can erode brand's value 3) Quick fix instead of weathering the storm 4) Lead to industry pricing wars |
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What is geographical pricing?
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Setting prices for customers located in different parts of the country or world
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What is FOB-origin pricing, what are the advantages and disadvantages?
|
A geographical pricing strategy in which goods are placed free on board a carrier; the customer pays the freight from the factory to the destination, argued to be the most fair way to assess freight charges, high cost firm to distant customers
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What is uniform-delivered pricing, what are the advantages and disadvantages?
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A geographical pricing strategy in which the company charges the same price plus freight to all customers, regardless of their location, opposite of FOB pricing, fairly easy to administer, lets firm advertise its price nationally, better chance of winning over long distance customer, lose close by customer
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What is zone pricing, what are the advantages and disadvantages?
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A geographical pricing strategy in which the company sets up two or more zones. All customers within a zone pay the same total price, the more distant the zone, the higher the price. Customers within a given price zone receive no price advantage from the company, close by customers shoulder part of cost of far away customers in same zone
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What is basing-point pricing?
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A geographical pricing strategy in which the seller designates some city as a basing point and charges all customers the freight cost from that city to the customer, if all sellers used same basing-point city, delivered prices would be the same and price competition would be eliminated
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What is freight-absorption pricing?
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A geographical pricing strategy in which the seller absorbs all or part of the freight charges in order to get the desired business.Seller reasons if it gets more business, average costs will fall and more than compensate for extra freight cost. Used for market penetration and to hold on to increasingly competitive markets
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What are fixed price policies?
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Setting one price for all buyers
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What is dynamic pricing?
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Adjusting prices continually to meet the characteristics and needs of individual customers and situations
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When does dynamic pricing make sense and when does it not make sense?
|
Adjusts prices according to market forces, often works to benefit of the customer. Need to be careful
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The price a company should charge in a specific country depends on..
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economic conditions, competitive situations, laws and regulations, and development of wholesaling and retailing system
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What are three main causes for companies initiating price cuts?
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excess capacity, falling demand w/ strong price competition, drive to dominate the market through lower costs
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What are two major factors in price increases?
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cost inflation, overdemand
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When raising prices, a company must avoid...
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Being perceived as a price gouger
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Competitors are most likely to react to price changes when...
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Number of firms is small, product is uniform, buyers are well informed about product and prices
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What are the four responses competitors can take to respond to price change?
|
Reduce its price ( maintain quality as prices are cut), raise perceived value of its offer, improve quality and increase price, launch a low-price "fighting brand"
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What is price fixing?
|
Sellers must set prices without talking to competitors
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What is predatory pricing?
|
Selling below cost with the intention of punishing a competitor or gaining higher long-run profits by putting competitors out of business
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What is price discrimination?
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Offering different price terms to customers at a given level of trade
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Why should price competition be avoided?
|
It can erode the value of the brand and will drive profits away
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What are upstream users in terms of supply chain management?
|
The set of firms that supply the raw materials, components, parts, info, finances, and expertise needed to create a product or service
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A supply chain takes a _____ view of the business while a demand chain takes a _____ view of the business
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make-and-sell, sense-and-respond
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What is a value delivery network?
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The network made up of the company, suppliers, distributors, and ultimately customers who "partner" with each other to improve the performance of the entire system in delivering customer value
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What is a marketing (distribution) channel?
|
A set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business use
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Why do producers use intermediaries?
|
They create greater efficiency in making goods available to target markets
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In the most basic sense, intermediaries are important because...
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They match supply and demand
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What are the 8 flows in marketing channels?
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physical possession, ownership, promotion, negotiation, financing, risking, ordering, payment
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In dividing the work of the channel, functions should be assigned to whom?
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Channel members who can add the most value for the cost
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What is channel level?
|
A layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer
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What is customer satisfaction?
|
The extent to which a product's perceived performance matches a buyer's expectations
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What is consumer-generated marketing?
|
Marketing messages, ads, and other brand exchanges created by consumers themselves-- both invited and uninvited, eg. Heinz Ketchup ads
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What is product specification in terms of business buyer behavior?
|
The stage of the business buying process in which the buying organization decides on and specifies the best technical product characteristics for a needed item
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What is supplier search in terms of business buyer behavior?
|
The stage of the business buying process in which the buyer tries to find the best vendors
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What is proposal solicitation in terms of business buyer behavior?
|
The stage of the business buying process in which the buyer invites qualified suppliers to submit proposals
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What is supplier selection in terms of business buyer behavior?
|
The stage of the business buying process in which the buyer reviews proposals and selects a supplier or suppliers
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What is order-routine specification?
|
The stage of the business buying process in which the buyer writes the final order with the chosen supplier(s), listing the technical specifications, quantity needed, expected time of delivery, return policies, and warranties
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What is performance review?
|
The stage of the business buying process in which the buyer assesses the performance of the supplier and decides to continue, modify, or drop the arrangement
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What is e-procurement?
|
Purchasing through electronic connections between buyers and sellers--usually online
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What are institutional markets?
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Schools, hospitals, nursing homes, prisons, and other institutions that provide goods and services to people in their care
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What is a government market?
|
Governmental units-federal, state, and local--that purchase or rent goods and services for carrying out the main functions of government
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What is market segmentation?
|
Dividing a market into smaller groups with distinct needs, characteristics, or behavior that might require seperate marketing strategies or mixes
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What is market targeting?
|
The process of evaluating each market segment's attractiveness and selecting one or more segments to enter
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What is differentiation?
|
Actually differentiating the market offering to create superior customer value
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What is positioning?
|
Arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers
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What is a direct marketing channel?
|
A marketing channel that has no intermediary levels
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What is an indirect marketing channel?
|
Channel containing one or more intermediary levels
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What is channel conflict?
|
Disagreement among marketing channel members on goals and roles- who should do what and for what rewards
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What is horizontal conflict?
|
Conflict among firms at the same level of the marketing channel
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What is vertical conflict?
|
Conflict among firms between different levels of the same channel
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What is a conventional distribution channel?
|
A channel consisting of one or more independent producers, wholesalers, and retailers, each a separate business seeking to maximize its own profits, even at the expense of profits for the system as a whole
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What is a vertical marketing system (VMS)?
|
A distribution channel structure in which producers, wholesalers, and retailers act as a unified system. One channel member owns the others, has contracts with them, or has so much power that they all cooperate.
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What is a corporate VMS?
|
A vertical marketing system that combines successive stages of production and distribution under single ownership-channel leadership is established though common ownership.
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What is a contractual VMS?
|
A vertical marketing system in which independent firms at different levels of production and distribution join together through contracts to obtain more economies or sales impact than they could achieve alone
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What is a franchise organization?
|
A contractual vertical marketing system in which a channel member, called a franchisor, links several stages in the production-distribution process
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What is an administered VMS?
|
A vertical marketing system that coordinates successive stages of production and distribution, not through common ownership or contractual ties, but through the size and power of one of the parties, ex. Bullying
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What is a horizontal marketing system?
|
A channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity
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What is a multichannel distribution system?
|
A distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segments
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What is disintermediation?
|
The cutting out of marketing channel intermediaries by product or service producers, or the displacements of traditional resellers by radical new types of intermediaries
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What is marketing channel design?
|
Designing effective marketing channels by analyzing consumer needs, setting channel objectives, identifying major channel alternatives, and evaluating them
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What is intensive distribution?
|
Stocking the product in as many outlets as possible
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What is exclusive distribution?
|
Giving a limited number of dealers the exclusive right to distribute the company's products in their territories
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What is Selective distribution?
|
The use of more than one, but fewer than all, of the intermediaries who are willing to carry the company's products
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What is marketing channel management?
|
Selecting, managing, and motivating individual channel members and evaluating their performance over time
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What are marketing logistics?
|
planning, implementing, and controlling the physical flow of materials, final goods, and related information from points of origin to points of consumption to meet customer requirements at a profit
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What is supply chain management?
|
Managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers
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What is a distribution center?
|
A large, highly automated warehouse designed to receive goods from various plants and suppliers, take orders, fill them efficiently, and deliver goods to customers as quickly as possible
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What is intermodal transportation?
|
Combining two or more modes of transportation in the transport of goods or services
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What is integrated logistics management?
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The logistics concept that emphasizes teamwork, both inside the company and among all the marketing channel organizations, to maximize the performance of the entire distribution system
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What are third-party logistics providers?
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An independent logistics provider tha performs any or all of the functions required to get its client's product to market
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What is retailing?
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All activities involved in selling goods or services directly to final consumers for their personal, nonbusiness use
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What are retailers?
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A business whose sales come primarily from retailing
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What is a specialty store?
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A retail store that carries a narrow product line with a deep assortment within that line
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What is a department store?
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A retail organization that carries a wide variety of product lines- each line is operated as a separate department managed by specialist buyers or merchandisers
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What is a supermarket?
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A large, low-cost, low-margin, high-volume, self-service store that carries a wide variety of grocery and household products
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What is a convenience store?
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A small store, located near a residential area, that is open long hours seven days a week and carries a limited line of high-turnover convenience goods
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What is a superstore?
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A store much larger than a regular supermarket that offers a large assortment of routinely purchased food products, nonfood items, and services
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What is a category killer?
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A giant specialty store that carries a very deep assortment of a particular line and is staffed by knowledgeable employees
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What is a service retailer?
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A retailer whose product line is actually a service, in cluding hotels, airlines, banks, colleges, and many others
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What is a discount store?
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A retail operation that sells standard merchandise at lower prices by accepting lower margins and selling at higher volume
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What is an off-price retailer?
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A retailer that buys at less-than-regular wholesale prices and sells at less than retail. Examples are factory outlets, independents, and warehouse clubs
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What is an independent off-price retailer?
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An off-price retailer that is either independently owned and run or is a division of a larger retail corporation
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What is a factory outlet?
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An off-price retailing operation that is owned and operated by a manufacturer and that normally carries the manufacturer's surplus, discontinued, or irregular goods
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What is a warehouse club?
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An off-price retailer that sells a limited selection of brand name grocery items, appliances, clothing, and a hodgepodge of other goods at deep discounts to members who pay annual membership fees
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What is a chain store?
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Two or more outlets that are commonly owned and controlled
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What is a franchise?
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A contractual association between a manufacturer, wholesaler, or service organization and independent businesspeople who buy the right to own and operate one or moer units in the franchise system
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What is a shopping center?
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A group of retail businesses planned, developed, owned, and managed as a unit
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What is the wheel-of-retailing concept?
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A concept that states that new types of retailers usually begin as low-margin, low-price, low-status operations but later evolve into higher-priced, higher-service operations, eventually becoming like the conventional retailers they replaced
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What is wholesaling?
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All activities involved in selling goods and services to those buying for resale or business use
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What is a wholesaler?
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A firm engaged primarily in wholesaling activities
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What is a merchant wholesaler?
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An independently owned business that takes title to the merchandise it handles
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What is a broker?
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A wholesaler who does not take title to goods and whose function is to bring buyers and sellers together and assist in negotiation
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What is an agent?
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A wholeslaer who represents buyers or sellers on a relatively permanent basis, performs only a few functions, and does not take title to goods
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What are manufacturer's sales branches and offices?
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Wholesaling by sellers or buyers themselves rather than through independent wholesalers
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What is a promotion mix?
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The specific blend of promotion tools that the company uses to persuasively communicate customer valuea nd build customer relationships
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What is advertising?
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Any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor
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What is sales promotion?
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Short-term incentives to encourage the purchase or sale of a product or service
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What is personal selling?
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personal presentation by the firm's sales force for the purpose of making sales and building customer relationships
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What is public relations?
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Building good relations with the company's various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events
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What is direct marketing?
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Direct connection with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships
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What is integrated marketing communications?
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Carefully integrating and coordinating the company's many communications channels to deliver a clear, consistent, and compelling message about the organization and its products
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What are buyer-readiness stages?
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The stages consumers normally pass through on their way to purchase, including awareness, knowledge, liking, preference, conviction and purchase
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What are personal communication channels?
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channels through which two or more people communicate directly with each other, including face to face, on the phone, through mail or e-mail, or even through an internet chat
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What is word-of-f mouth influence?
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personal communication about a product between target buyers and neighbors, friends, family members, and associates
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What is buzz marketing?
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Cultivating opinion leaders and getting them to spread information about a product or service to to others in their communities
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What is nonpersonal communication channels?
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Media that carry messages without personal contact or feedback, including major media, atmospheres, and events.
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What is an affordable method?
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Setting the promotion budget at the level management thinks the company can afford
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What is percentage of sales method?
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Setting the promotion budget at a certain percentage of current or forecasted sales or as a percentage of the unit sales price
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What is a competitive-parity method?
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Setting the promotion budget to match competitor's outlays
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What is objective-and-task method?
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Developing the promotion budget by 1) defining specific objectives, 2) determining the taks that must be performed to achieve these objectives, and 3) estimating the costs of performing these tasks. The sum of these costs is the proposed promotion budget
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What is a push strategy?
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A promotion strategy that calls for using the sales force and trade promotion to push the product through channels. The producer promotes the product to channel members who in turn promote it to final consumers.
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What is a pull strategy?
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A promotion strategy that calls for spending a lot on advertising and consumer promotion to induce final consumers to buy the product, creating a demand vacuum that "pulls" the product through the channel
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What is an advertising objective?
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A specific communication task to be accomplished with a specific target audience during a specific period of time
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What is advertising strategy?
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The strategy by which the company accomplishes its advertising objectives. It consists of two major elements: creating advertising messages selecting advertising media.
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What is Madison and Vine?
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A term that has come to represent the merging of advertising and entertainment in an effort to break through the clutter and create new avenues for reaching consumers with more engaging messages
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What is creative concept?
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The compelling "big idea" that will bring the advertising message strategy to life in a distinctive and memorable way
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What is execution style?
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The approach, style, tone, words, and format used for executing an advertising message
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What is advertising media?
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The vehicles through which advertising messages are delivered to their intended audiences
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What is return on advertising investment?
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The net return on advertising investment divided by the costs of the advertising investment
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What is an advertising agency?
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A marketing services firm that assists companies in planning, preparing, implementing, and evaluating all or portions of their advertising programs
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What is a salesperson?
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An individual representing a company to customers by performing one or more of the following activities: prospecting, communicating, selling, servicing, information gathering, and relationship building
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What is sales force management?
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The analysis, planning, implementation, and control of sales force activities. It including designing sales force strategy and structure and recruiting, selecting, training, supervising, compensating, and evaluating the firm's salespeople
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What is territorial sales force structure?
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A sales force organization that assigns each salesperson to an exclusive geographic territory
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What is product sales force structure?
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A sales force organization under which salespeople specialize in selling only a portion of the company's products or lines
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What is customer sales force structure?
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A sales force organization under which salespeople specialize in selling only to certain customers or industries
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What is outside sales force?
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Outside salespeople who travel to call on customers in the field
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What is inside sales force?
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Inside salespeople who conduct business from their offices via telephone, the internet, or visits from prospective buyers
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What is team selling?
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Using teams of people from sales, marketing, engineering, finance, technical support, and even upper management to service large, complex accounts
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What is sales quota?
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A standard that states the amount a salesperson should sell and how sales should be divided among the company's products
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What is the selling process?
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The steps that the salesperson follows when selling, which include prospecting and qualifying, preapproach, approach, presentation and demonstration, handling objections, closing, and follow-up
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What is prospecting?
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The step in the selling process in which the salesperson or company identifies qualified potential customers, in NCAA example = getting recruiting videos in the mail
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What is the preapproach?
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The step in the selling process in which the salesperson learns as much as possible about a prospective customer before making a sales call, in NCAA example = high-school recruiting visits
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What is the approach?
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The step in the selling process in which the salesperson meets the customer for the first time, in NCAA Example = the first phone call by coach
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What is the presentation?
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The step in the selling process in which the salesperson tells the "value story" to the buyer, showing how the company's offer solves the customer's problems, in NCAA Example coach selling school, deemphasizing others
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What are handling objections?
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The step in the selling process in which the salesperson seeks out, clarifies, and overcomes customer objections to buying
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What is closing?
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The step in the selling process in which the salesperson asks the customer for an order, in NCAA example = offering a scholarship
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What is follow-up?
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The last step in the selling process in which the salesperson follows up after the sale to ensure customer satisfaction and repeat business
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What is sales promotion?
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Short-term incentives to encourage the purchase or sale of a product or service
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What is consumer promotions?
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Sales promotion tools used to boost short-term customer buying and involvement or to enhance long-term customer relationships
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What is event marketing?
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Creating a brand-marketing event or servicing as a sole or participating sponsor of events created by others
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What are trade promotions?
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Sales promotion tools used to persuade resellers to carry a brand, give it shelf space, promote it in advertising, and push it to consumers
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What is business promotions?
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Sales promotion tools used to generate business leads, stimulate purchases, reward customers, and motivate salespeople
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What is sustainable marketing?
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marketing that meets the present needs of consumer and businesses while also preserving or enhancing the ability of future generations to meet their needs
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What is consumerism?
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An organized movement of citizens and government agencies to improve the rights and power of buyers in relation to sellers
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What is environmentalism?
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An organized movement of concerned citizens and government agencies to protect and improve people's current and future living environment
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What is environmental sustainability?
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A management approach that involves developing strategies that both sustain the environment and produce profits for the company
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What is consumer-oriented marketing?
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The philosophy of sustainable marketing that holds that the company should view and organize its marketing activities from the consumer's point of view
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What is customer-value marketing?
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A principle of sustainable marketing holds that a company should put most of its resources into customer-value building marketing investments
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What is innovative marketing?
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A principle of sustainable marketing that requires that a company seek real product and marketing improvements
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What is sense-of-mission marketing?
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A principle of sustainable marketing that holds that a company should define its mission in broad social terms rather than narrow product terms.
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What is societal marketing?
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A principle of sustainable marketing that holds that a company should make marketing decisions by considering consumer's wants, the company's requirements, consumer's long-run interests, and society's long-run interests
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What are deficient products?
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products that have neither immediate appeal nor long-term benefits
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What are pleasing products?
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products that give high immediate satisfaction but may hurt consumers in the long run, ex cigarettes
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What are salutary products?
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products that have low appeal, but may benefit the consumer in the long run, ex. eat your broccoli
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What are desirable products?
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products that give both high immediate satisfaction and high long run benefits
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