Study your flashcards anywhere!

Download the official Cram app for free >

  • Shuffle
    Toggle On
    Toggle Off
  • Alphabetize
    Toggle On
    Toggle Off
  • Front First
    Toggle On
    Toggle Off
  • Both Sides
    Toggle On
    Toggle Off
  • Read
    Toggle On
    Toggle Off
Reading...
Front

How to study your flashcards.

Right/Left arrow keys: Navigate between flashcards.right arrow keyleft arrow key

Up/Down arrow keys: Flip the card between the front and back.down keyup key

H key: Show hint (3rd side).h key

A key: Read text to speech.a key

image

Play button

image

Play button

image

Progress

1/135

Click to flip

135 Cards in this Set

  • Front
  • Back
Price
Amount charged for a product or service sum of all values that a consumer gives us in exchange for an item
Steps in setting Price
1. Develop Pricing objectives
2. Estimate demand
3.Determine Costs
4. Evaluate pricing environment
5. Chose a pricing strategy
6. Develop pricing tactics
Price must be seen as
providing value by the consumer
1.Develop pricing objectives
what is the firm trying to achieve with its pricing strategey
Increase ssales or market shares
Does not always lead to profits (b/c of sales/discounts)
Long term profitability
Resonable margins over time
Short term Survival
used for products ith high seasonality or in emergency situations
Just cover out of pocket costs
Enhancement of Image
high prices to create status
2. Estimate Demand
How much of a product is the entire market willing to buy as the price goes up or down

In general, but not always, demand varies inversly, with price
Price elasticity of demand
How sensitive consumers are to price

Percentage change in demand divided by the percentage change in price

Does demand change more, the same or less than price?
Demand is price elastic if
a change in price has a large change on dmeand- in the oposite direction
Demand is price inelastic if
a change in price has little change on demand
Prestige items
An increase in price increases demand
Demand Curve
graph of demand at various price points
Psychological price point
Price "Limit" for most consumers where the market evaporates
Price at which the majority of consumers drop out of the market
Demand curves are developed assuming that as price changes there is no change in
Consumer income
Consumer tastes
Availability of substitutes
3. Determine costs
In general the price that is set must cover all costs of making and selling the product
Fixed Costs
costs of production that do not change with the number of units produced

Normally presented as "Total fixed Costs"
Variable COsts
costs of production that are ties to and change with the number of units produced

Normally presented as "variable costs per unit"
Break even analysis
Shows the point where all coats are covered by revenue
Can be used to determine
1. What quantity to produce given a predetermined selling price

2. What selling price to set tgiven an estimated demand
Look over Break even price caluculations
And remember to cast your burdens on the Lord who loves you
4. Evaluate the pricing environment
The economy- business cycles will influence prices

Competition- generally price must be within normal range, will be influenced by structure of the competitive market
5. Choosing a pricing strategy
can focus primarily on costs, demand, or environment
Cost plus *
add profit to cost

Works only if cost plus is below value
Demand based
yield management- what makrte will bear at specific points in time (Football tickets, airline tickets)
Target costing
figure out what consumers will pay and then build to that
COmpetitive based
price leadership, prestige pricing
6. Develop Pricing tactics
Actions generally taken at the consumer level
Product line pricing
comapany produces myltiple versions at different quality levels of the same item (golf shirts at 19.99, 39.99, 59.99)
Loss leader
low price on one item to attract store traffic

Make money on other items

Generally considered legal ( some states limit this if price is below costs)
Bundling
Selling two or more different items for one price

Combo meals
Odd- even
set small amount below even number

( 9.99, 5.99)
Price fixing
conspiracy among firms to set prices

Illegal under the sherman act
Price discrimination
Charging different customers different prices for the same product, when no cost differences exists

Illegal under the Robinson-Patman Act
Deceptive pricing
pricing which misleads the consumers such as:
Bait and swith
Inflating prices prior to a sale
Comapring sale prices to never used "regular" prices
Predatory Pricing
Charging a very low price with the intent of eliminating competition

Illegal under FTC Act and Sherman Act
Promotion
Marketer's communication efforts to influence attitudes or behaviors
The promotional mix included
Advertising
Sales promotion
Personal selling
Public relations
Advertising
nonpersonal communication paid for by the sponsor, generally using mass media
sales promotion
short term activities designed to encourage tuse or build interest
Personal selling
direct interaction and communication b/w a sales agent and a potential buyer
Public relations
communication activities designed to build good will and obtain relase of informations without payment
Integrated MArketing Communications
coordinates apporach using all of the elements of the promotional mix

Provided a "unifed voice" across all elements
Guerilla Marketing
placing promotions in unexpected outlets
Viral marketing
(online) using incentives to get consumers to spread good about your product. Sometimes this is how buzz marketing starts (whether online or not)
Before doing any promotion, the firms must
Decide on a Target Market
Decide on Objectives (Generally want to move someone, from awareness, through Knowledge, desire, purchase to loyalty)

Set or be aware of Budget
Volume of Advertising
About 265 billion annually in the US

About 470 Billion worldwide
Product Advertising
Designed to promote a specific item
Pioneering/informational
Purpose is to inform/educate
Usually for new items
Competitive/persuasive
purpose is to persuade
Promotes features of a specific brand
reminder
Purpose is to remind

Reinforces loyalty to a product
Institutional Advertising
related to a company rather than a product
Pioneering
to introduce a new company
Coroporate image
promotes overall organization
Corporate advocacy
shows company's stand on social issues
The advertising Process
1. Identify the target market
2. Develop objectives
3. Design the advertisment
4. Pretest
5. Choose media and schedule
6. Evaluate (post test)
1. Identify the Target market
first decide audience
2. Develop objectives
Budget objective- how much is to be spent

Message objective- what is to be acomplished ( inform-educate, persuade-convince, remind-keep in evoked set)

Must be specific in target maket and time
3. Design the ads
Creative stategy- what will be conveyed and how?

Content (What is conveyed)

Appeal( How it is conveyed)"Theme"

Factual- what is different about the product

Emotional- fear, humor, sex

Celebrity Endorsement

Slice of life- Testimonials

Demonstration- i.e. agents in area of disaster
4. Pretest the Ad
Are consumers likey to respond positively to the ad?

DO they understand its content?

Portfolio Tests- used for print ads, proposed ad is inserted in a sample magazine

Theater test- Ad inserted in Test TV program, viewer is much more likely to watch adds as they would at home

Focus groups
5. Choose media and schedule
What method of communication will be used? Determine media and specidic outlet

Media= TV, newspaper
Outlet= Apprentice, Red and Black
The following note cards are
things a marketer should consider when selecting media and determining schedule
Reach
Percentage of the Target Market that will be exposed to ad at least one time
Frequency
Number of times a person in the Target mgroup will be exposed to the advertisement during the ad campaign
Gross Rating Point
Reach versus Frequency

Allows comparison across different media and different outlets


Rating- percentage of household w/ a TV that are watching the program
Qualitative Selectivity
How Homogeneous the audience is
Cost per thousand
cost of reaching 1000 individuals with the ad

To calculate: (cost of the ad/ reach in number) X 1000
TV
large audience, low CPM, multiple senses, can be creative, can demonstrate, High absolute cost, short exposure time. Networks collabortate and put on the same commercial at the same time. Audiences is becoming increasingly fragmented
Radio
Low cost, can be placed qucikly. Short exposure time, split attention, no visuals
MAgazines
Long life, can handle complexity, high qualitative selectivity. Long lead time to place, fairly high cost, fragmentation, not a lot of flexibility
Newspapers
Low cost, excellent local coverage, can place quickly, Can target specifically, short life span, limited flexibility, not high with young people
Direct Mail
can convey large volume of information, flexible, creative, can be tracked, high postal costs, junk mail problems
Outdoor
Includes billboards, transit ads, good local coverage, good frequency. May be subject to environmental regulations. Message must be short, low selectivity
Internet
Can link ads to online purchases, multiple senses, w/ cookies can track actions, consumer resentment, low "click through" (less than 5% of people)
Other
Movie theaters, renatal tapes, hot air ballons, plane trailers, ski lifts, less competitions but some resentment
Advertorial/ Infomercial
Magazine/TV advertisemtnes that resembles editorial content or news. Includes "non-advertising" content
Product Placement
Having your product featured or used in a program or movie

Marketer pays a fee or provides items free or charge
Decide on a scheduling strategy
Continuous- steady stream of ads through out a year

Pusing- ads are focused in a few time periods throughout the year
Schedule and run advertisment
can usually specify a time slot for TV, radio and issues of print

Can not always control exact placement
6. Evaluate the effectiveness
Post test- to see if meeting objective

recall tests- with help ( aided) or without help (unaided) consumers are asked to discuss an ad they have seen. Attitude test- survey to see if awareness/attitudes about a product have changed. Sales Test-sales are measured before and after the campaign
Ethical issues with advertising
Does advertising misrepresent the Truth?
Does advertising lead to higher prices?

Does Advertising "brainwash" consumers?

Does advertising stereotype consumers?

Does advertising ignore good taste?
Public relations strategies
Publicity- unpaid information that appaears in a media outlet, often a result of a press relase
. Very creditable, but you can control

Sponsorships- company provides funding in return for acknowledgement

Company tours and speakers
Sales promotion
Short term activities designed to encourage use or build interest
Trade
aimed at channel members
Consumer
aimed at us
General Objectives of sales promotion
get people to try a new item
Get boost in sales
Neutralize competitive actions
Trade sale promotions aimed at intermediaries
encourage them to load up on the product ( push strategy) can be aimed at the channel member company or employees of the channel member
Cooperative adveertising
Manufacturer shared advertising expenses
Point of purchase displays
provided by mfg to retailer
end of isle display- display box
Trade allowances
a discount or deal to encourage retailer participation in stocking or advertising product
Trade shows
Periodic event showcasing products
Contests
salesperson who sells the most wins, prizes, cahs, trips. Setup and managed by the mfg not the retailer
Push money
Manufacturer pays retail employeee a bonus everytime a specific item is sold- Called spiffs
Issues with Trade sales Promotions
Those aimed at employees of channel members can create conflict

All promotions must be provided on a proportional basis to similar channel members
Consumer sale promotions
desidned to get consuers to demand the product ( a pull stategy)
Types of consumer sale promotion
coupons, rebates
Price/bonus packs- ( more product for same price)

Advertising specialities, sampes- "choke sign"

Sweepstakes, contests, games
Pure chance- cannot be required to buy something or it is gambling
Continuity programs
Personal Selling
Direct interation and communication b/w a sales agent and a potential buyer
When personal selling makes the most sense
Selling to a company rather than an individual
Product is expensive/ complex
Product is a new product category for buyer
Personal selling process
1. Prospecting and qualifyinf
2. Preapproach
3. Approach
4. Sales presentation
5. Handling objections
6. Close
7. Follow up
1. Prospecting and qualifying
Identifying and developing a list of potential and qualified customers
Prospects should be :
resonalbly acessible
able to afford
willing to consider the purchase
2. Preapproach
Learning more about the prospect and planning the sales interview

"doing homework"
FOr organizational Buyers: websites, business publications and directories
FOr individual buyers: information from customer datd base, review of previous purchases, phone or web
3. Approach
Intitial contact
Establish rapport, build interest, set stage for rest of sales call, try to determine specific needs
4. Sales presentations
making the sales "pitch"
Formula selling
a step by step approach
usually a canned presentation ( memorized speech)
Stimulus response
If the sales rep provides the right stimulus , the ustomer will provide the right response
Successive commitment
a series of questions designed to result in a yes anser (frog in the pot)
Needs satifaction
Salesperson encourages customer to do most of the talking and then responds to ideas/ questions or customers
5. Handling objectionos
Be prepared for them- anticipate

Address them before they are raised by the consumer
6. Close
"clinch" the sale
Common closing techniques: not here tomorrow, special inducement, assumptive close, ask about options
7. Follow-up
Make sure the customer is satisfied after the sale, provide any needed after sale support to get repeat business, to get good "word of mouth"
Supply chain
All of the fifrms invilved in any part of creating and getting a product to a final consumer. Supply chaini Management includes not only physical movement but measurement, marketing relationships, etc. Sometimes refered to as demaand chain, to put emphasis on the fact that you should start with the consumer
Channel of distribution
firms involved in moving and selling a finished product from the manufacturer to the consumer
Direct Channel
Item is cold fromm manufaturer directly to final consumer. Most often used for: services, complex expensive items, products sold to organizations
Indirect Channel
One or more intermediaries exist between the manufactureer and the consumer

Most commonly used for consumer goods, inexpensive, standard items
Intermediaries reduce the cost of each transaction
Through economies of scale_ purchasse and distribution in volume. Breaking bulk-buying in large amounts, break up sale

Through specialization of labor-Gaining expertise in "selling"
INtermediaries reduce the number of
transactions
INtermediaries provide utility and fuctionaliry
Utility-time, place, assortment, pocession

Preform marketing functions- contracting customers, promotion, negortiation, risk taking, physical movement (distribution), Financing
All functions myst be preformed by someone
If not preformed by and intermediary, the funtions must be preformed by either the manyfacturer or the consumer
Disintermediation
Elimination or reduction in the number of intermediaried used ( layers in the channel) Being facilitated by the internet
Manufacturer owned wholesalers
sales branches for manufacturer that sell to organizational customers
Merchant wholesalers
Independent firms that take title to the product
Agents or brokers
Wholesalers who help arrange a slae but do not take title to the product
Julia
Clarke
You are
Beautiful
The Sovereign Lord
Wil wipe away
The tears
from all the faces
He will
remove
the disgrace
of his people
from all
the earth
The Lord
Has spoken
Isaiah
25:8
Come to me all you who are weary and burdened and I will give you rest
Take my yoke upon you and learn from me for I am gentle and humble in heart and you will find rest for your souls
For my yoke is easy and my burden is light
Matthew 11:28-30