Ch. 7-12 Test

Front 1

7.1 Explain the role of market segmentation in creating a differentiation and positioning strategy. Make sure you convey the requirements of a good market segment.

Back 1

Differentiation distinguishes the market offering to create superior value.

Positioning creates a distinct impression of the mkt. offering in the minds of target consumers.

In these strategies, Market Segmentation forms collections of customers that share a common set of characteristics

(Measurable, Accessible, Substantial, Differentiable, Actionable)

Front 2

7.2 List and explain Porter’s Five Forces

Back 2

Barriers to Entry - identifies to what degree other companies can easily enter the industry
Threat of Substitutes - to what degree can customers find an alternative way to meet their needs
Degree of Rivalry - how intense is competition amongst existing companies in that industry
Buyer Power - looks at to what degree can the buyers dictate prices terms and conditions (concentrated in a few large chains)(consumer end users)
Supplier Power - to what degree can the suppliers dictate prices, terms and conditions. (US FOODS)

Front 3

8.1 Identify and define the differences between a good and a service.

Back 3

Goods- a physical object that meets the needs of customers
Service- Activity, benefit, a satisfaction offer for sale that is essentially intangible and does not result in ownership of anything

Inseparability- services cannot be separated from their providers
Variability- quality of services depends on who provides them and when, where, how
Perishability- can not be saved or stored for later sale or use
Intangibility- Services cannot be seen tasted felt heard or smelled before purchase

Front 4

8.2 List and describe the three levels of a product.

Back 4

Core Customer Value- The key benefit customers derive from the product
Actual product- a way in which a company is meeting customers needs
Augmented product- ways to add value or set products apart

Front 5

9.1 List and explain each of the stages of the Product Life Cycle.

Back 5

Product Development- everything involved in the creation of the product before commercialization. Sales are zero and investment cost mounts
Introduction- period of slow sales growth as the product is introduced to the market. Profits are nonexistent because heavy expenses
Growth- rapid market acceptance and increases in profit
Maturity- a period of slowdown in sales growth because product has achieved acceptance, profits level off or decline because of increase marketing outlays to defined the product against competition
Decline- the period when sales fall off and profits drop

Front 6

10.1 List and explain the three main pricing philosophies.

Back 6

Valued Based Pricing- Uses the buyers perception of value as the key to pricing. Will set the price and then design the product accordingly
Cost-Based Pricing- When we determine the price of a product based on the cost of producing, distributing, and selling the product + a fair rate of return
Competition Based Pricing- (Competitive Parity) pricing that is based on similar products from similar companies

Front 7

11.1 List and explain the new product pricing strategies.

Back 7

Market Skimming Pricing- is when you introduce a new product and you start with a high price. A profit maximizing pricing strategy.
Market Penetration Pricing- the company prices the product low in order to capture a large market share.

Front 8

12.1 Know and define the 3 types of distribution strategies.

Back 8

Intensive- Stocking the product in as many outlets as possible
Exclusive- Giving a limited number of dealers the exclusive right to distribute the company's product in their territory
Selective- The use of more than one but fewer than all of the intermediaries who are willing to carry the company's product