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225 Cards in this Set

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Price
moeny or other onsiderations (goods, services) exchanged for ownership or use of good / service
Barter
Exchanging goods and services for other goods and services rather than for money
Price eqn
Price = List price - allowances + extra fees
Value
ratio of perceived benefits to price
Value-pricing
Practice of simultaneously increasing product and service benefits while maintaining or decreasing price
Profit eqn
Profit = total revenue - total cost
Total revenue = unit price x quantity sold
What are the 6 steps in pricing-setting process?
identify pricing objectives and constraints, estimate demand and revenue, determine cost, volume, and profit relationships, select an approximate price level, set list or quoted price, make special adjustments to list or quoted price
Pricing objectives
specifying the role of price in an organization's marketing and strategic plans
Market share
Ratio of firm's sales revenues or unit sales to those of the industry (competitors + firm itself)
The 3 different pricing objectives
Managing for long-run profits: giving up immediate profit in exchng fo rhigher market share by developing quality products to penetrate competitive markets; maximizing current proft; target return: set a profit goal determined by board of directors
Pricing Constraints
factors that limit range of prices a firm may set
Demand curve
Graph relating the quantity sold and price, which shows the maximum number of units that will be sold at a given price
Demand factors
Factors that determine consumers' willingness and ability to pay for goods and services
Difference between mvt ALONG and SHIFT of demand curve
Mvt along curve: price change
Shift: Demand factors change
Average revenue
Avg amt of money received for sellign one unit of a product, or simply the price of that unit
Total revenue / Quantity
Marginal revenue
Change in total revenue tha tresutls from producing and marketing one additional unit:
Change in total revenue / 1 unit increase in Quantity = SLOPE of TR curve
Price elasticity of demand
percentage change in quantity demanded relative to percentage change in price
Total cost
total expense incurred by a firm in producing and marketing a product
Fixed cost
Sum of the expenses of the firm tha tvary directly with the quantity of a product that is produced and sold
Variable cost
cost varying directly with quantity of a product that's produced and sold
Marginal cost
Change in total cost that results from producing and marketing one additinal unit of a product: changein TC/ 1 unit increase in Q = slope of TC curve
Marginal analysis
a continuing, concise trade-off of incremental costs against incemental revenues
MR = MC
Break-even analysis
technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output
Break-even point
= FC/(P-UVC)
total revenue and total cost are equal
skimming pricing
setting the highest initial price that customers really desiring the product are willing to pay
penetration pricing
setting a low initial price on a new product to appeal immediately to the mass market
prestige pricing
setting a high price so that quality or status conscious consumers will be attracted to the product and buy it
price lining
a firm selling not just a single product but a line of products may price them at a number of different specific pricing points
odd-even pricing
setting prices a few dollars or cents under an even number
target pricing
manufacturer deliberately ajusting the ocmposition and features of a product to achieve the target price to consumers
bundle pricing
marketing of 2 or more products in a single package price
yield management pricing
charging of different prices to maximize revenue for a set amoutn of capacity at any given time
standard markup pricing
adding a fixed % to the cost of all items in a specific product class
cost-plus pricing
summing the total unit cost of providing a product or service and adding a specific amt to the cost to arrive at a price
experience curve pricing
the unit cost of many products and services declines by 10 to 30% ea time a firm's experience at producing and selling them doubles
target profit pricing
set an annual target of a specific dollar volume of profit
target return-on-sales (or investment) pricing
set typical rpices that will give them aprofit that is a specified % of the sales volume
Target return on sales = target profit / total revenue
customary pricing
standardized channel of distribution, or other compeitive factors dictate the price
loss-leader pricing
for special promotion, retail sotres deliberately sell a product below its customary price to attract attention to it; hope customers will buy other products as well
flexible price policy
dynamic pricing; setting different prices for products and services depending on individual buys and purchase situations (like yield management pricing)
product line pricing
setting of prices for all items in a product line; manager seeks to cover the total cost and produce a profit for the complete line, not necessarily for ea item
price war
successive price cutting by competitior to increase or maintain their unit sales or market share
discounts
reductions from the list price that a seller gives a buyer as a reward for some activity of teh buyer that is favorable to the seller
quantity discounts
reductions in unit costs for a larger order
trade or functional discounts
these reduction off the list or base price are offered to resellers in the channel of distribution on the basis of where they are in the channel and the marketing activities they are expected to perform in the future
cash discounts
encourage retailers to pay their bills quickly
allowances (trade-in / promotional)
reductions from list or quoted prices to buyers for performing some activity
everyday low pricing
practice of replacing promotional allowances with lower manufacturer list prices
geographical adjustments
list or quoted prices to reflect the cost of transportation of the products from seller to buyer
FOB origin pricing
"free on board"; seller pays cost of loading the product onto the vehicle involves the seller's factory or warehouse as the location;
buyer responsible for picking specific mode of transportation, all the transport costs, and handling
uniform delivered pricing
price the seller quotes includes all transport costs
single-zone pricing
all buyers pay the same delievered price for the products, regardless of distance from the seller
multiple-zone pricing
divides its selling territory into geographic areas or zones
FOB iwth freight-allowed pricing
price quoted by seller; buyer allowed to deduct freight expenses form list price of goods
base-point pricing
selecting one or more geogrpahical ocations form which the list price for products plus freight expenses are charged to the buyer
price fixing (horizontal and vertical)
a conspiracy among firms to set prices for a product;
horizontal: 2 + competitors set prices
vertical: controlling agreements between independent buyers and sellers whereby sellers are required to not sell products below a min retail price (resale prie maintenance outlawed by Consumer goods pricing act)
price discrimination
practice of charging different prices to different buyers for goods of like grade and quality
predatory pricing
practice of charging a very low price for a product with the intent of driving competitors out of business (sherman act, FTC Act)
marketing channel
consists of individuals and firms involved in the process of making a product or service available for use or consumption by consumers or industrial users
What does intermediaries do?
Make sellign goods and services more efficient b/w minimize # of sales contacts necesary to reach a target market (transactional, logisticla, and facilitating fxn)
Transactional function of intermediaries
buying, selling, risk taking (ownership of inventory)
Logistical function
assorting, storing, sorting, transporting
Facilitating function
financing, grading, marketing info and research
direct channel
producer and ultimate consumers deal directly with each other
indirect channels
intermediaries are inserted b/w producer and consumers and perform numerous channel fxns
agent / broker
intermediary w/ legal authority to act on behalf of manufacturer
middleman
intermediary b/w manufacturer and end-user markets
industrial distributor
selling, stocking, delivering a full product assortment and financing (like wholesalers)
electronic marketing channels
employ the internet to make goods and services available for consumption or use by consuemrs or business buyers
direct marketing channels
allow consumers to buy products by interacting with various advertising media without a face-to-face meeting with a salesperson (mail order, direct mail, catalog, telemarketing, televise)
dual distribution
arrangement whereby a firm reaches different buyers by employing two or more different types of channels for the same basic product
strategic channel alliances
one firm's marketing channel is used to sell another firm's products
merchant wholesalers
independently owned firms that take title to the merchandise they handle
manufacturer's agents or representatives
work for several producers and carry noncompetitive, complementary merchandise in an exclusive territory
selling agents
represent a single producer and are responsible for the entire marketing function of that producer
brokers
independent firms or individuals whose principal fxn is to bring buyers and sellers together to make sales
what does a manufacturer's branch office do?
carries a producer's inventory and performs the fxns of a full-service wholesaler
manufacturer's sales office
does not carry inventory, typically performs only a sales fxn and serves as an alternative to agents and brokers
vertical marketing systems
professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact
Forward and backward integration
forward: proudcer own intermediary at the next level down in channel
backward: retailer own manufacturing operature
wholesaler-sponsored voluntary chains
wholesaler that develops a contractual relationship with small, independent retailers
retailer sponsored cooperatives
small, independent retailers form an organization that operates a wholesale facility cooperatively
franchising
contractual arrangement b/w parent company and individual/firm tha tallows the franchisee to operate certain type of business under an established name and according to specific rules
administered vertical marketing systems
achieve coordination at successive stages of production and distribution by the size and influence of one channel member rather than thru ownership
channel partnership
agreements and procedures among channel members for ordering and physically distributing a producer's products thru the channel to the ultimate consumer
intensive distribution
a firm tries to place its products and services in as many outlets as possible
exclusive distribution
extreme opposite of intensive distribution b/c only 1 retail outlet in a specified geographical area carries the firm's proudcts
selective distribution
a firm selects a few retail outlets in a specific geographical area to carry its products
what are the categories of consumer's interests firms might wnat to fulfill when designing channels?
info, convenience, variety, attendant services
What are 3 considerations when designing channels?
target market coverage, satisfying buyer requirements, and profitability
channel conflict
when one channel member believes another channel member is engaged in behavior that prevents it from achieving its goals
channel captain
a channel member that coordinates, directs, and supports other channel members
disintegration
when channel member bypasses another memebr and sells or buys products direct
exclusive dealing
a supplier requires channel members to sell only its products or restricts distributors from selling directly competitive products
tying arrangements
occur when a supplier requires a distributor purchasing some products to buy others from the supplier
logistics
inovles those activities that focus on getting the right amt of the right porducts to the right place at the right time at the lowest possible price
logistics management
the practice of organizing the cost-effective flow of raw materials, in-process inventory, finished goods, and related info from pt of ori to pt of consumption to satisfy customer requirements
supply chain
sequence of firms that perform activities required to create and deliver a good or service to consumers or industrial users; includes suppliers that provide raw material inputs to a manufacturer as well as the wholeslaers and retailers that deliver finsihed goods
supply chain management
the integration and organization of info and logistics activities across firms in a supply chain for the purpose of creating and delivering goods and services that provide value to consumers
What are 3 steps that marketers recognize in determining a marketing strategy and choice of a supply chain?
understand the customer, understand the supply chain, and harmonize supply chain w/ marketing strategy
cross-docking
practice that involves unloading products from suppliers, sorting products for individual stores, and reloading products onto trucks for a particular store
electronic data interchanges (EDIs)
combine proprietary computer and telecommunication tech to exchange electronic invoices, payments, and info among suppliers, manufacturers, and retailers
extranet
an internet/web-based network that permits secure business-to-business communication b/w manufacturer and its suppliers, distributors, and stimes other partners
Total logistics cost
includes expenses associated with transportation, materials handling and warehousing, inventory, stockouts, order processing, and return goods handling
customer service
the ability of logistics management to satisfy users in terms of time, dependability, communication, and convenience
lead time (order cycle/replenishment time)
the lag from ordering an item until it is received and rady for use or sale
quick response, efficient consumer response
reduce retailer's lead time for receiving merchandise, lowering a retailer's inventory investment, improving customer service levels, and reducing logistics expense
What is dependability when it comes to supply chains?
consistent lead time, safe delivery, complete delivery
What are 4 key logistic fxns in a supply chain?
transportation, warehousing and materials handling, order processing, and inventory management
third-party logistics providers
firms that perform most or all of the logistics fxns that manufacturers, suppliers, and distributors would normally perform themselves
What are some concerns with transportation?
cost, time, capability, dependability, acessibility, frequency
What is intermodal transportation?
combining different transportation modes to get the best features of each (truck-rail... piggyback/trailer on flatcar)
What are freight forwarders?
firms that accumulate small shipments into larger lots and then hire a carrier to move them, usually at reduced rates
What happens if an item is out of stock?
Backorder
What are some inventory costs?
captial costs: opportunity costs tyed up in inventory instead of using them in other investments (interest rates);
inventory service costs: items such as insurance and taxes that are present in many states;
storage costs; risk costs: possible loss, damage, etc
just-in-time (JIT) concept
inventory supply sys that operates w/ very low inventories and requires fast, on-time delivery
vendor-managed inventory (VMI)
inventory-management sys whereby the supplier determines the product amt and assortmt a customer needs and automatically delivers tha ppropriate items
reverse logistics
process of reclaiming recylclable and reusable materials, returns, and reworks from the pt of consumption or use for repaire, remanufacturing, redistribution, or disposal
retailing
include activities involved in selling, renting, and providign goods and services to ultimate customers for personal, family, or household use
what are the consumer utilities offered by retailing?
time, place, form, and possession
form of ownership
distinguishes retail outlets based on whether individuals, corporate hains, or contractal sys own the outlet
level of service
describes the degree of service provided to the customer (self, limited, and full)
merchandise line
how many different types of products a store carries and in what assortment
what are contractual systems in retailing?
they involve independently owned stores that band together to act like a chain (retailersponsored cooperatives, wholesaler-sponsored voluntary chains, and franchises)
What are the 2 types of franchises?
business-format franchises: franchisor rpovides step-by-step procedures for most aspects o teh business and guidelines for the most likely decisions a franchisee will face;
and product-distribution franchises
What's the difference b/w breadth and depth of a product line?
Breadth: variety of different items a store carries;
depth: the store carries a large assortment of each item
scrambled merchandising
offers several unrelated product lines in a single store
hypermarket
large stores based on a the concept: offer consumers everything in a signle outlet, eliminating need to stop at more than one location
intertype competition
competition b/w very dissimilar types of retailer outlets (local bakery compete with department store or gas station)
what are some types of nonstore retailing?
automatic vending, direct mail and catalogs, television home shopping, online retailing, telemarketing, direct selling
retail positioning matrix
positions reatil outlets on 2 dimensions: breadth of proudct line and value added (location, product reliability, or prestige)
what is the key to positioning retail store?
it must have an identity that has some advantages over the competitors yet is recognized by consumers
retailing mix
includes activities related to managing the store and the merchandise in the store; includes retail pricing, store location, retail communication, and merchandise
shrinkage
breakage and theft of merchandise by customers and employees
off-price retailing
selling brand-name merchandise at lower than regular prices
central business district
oldest retail setting, the community's downtown area
regional shopping centers
consist of 50 to 150 stores that typically attract customers who live or work within a 5- or 10- mile range
community shopping center
typically has one primary store and often about 20 to 40 smaller outlets
strip location
cluster of stores to serve peopel who are w/in a 5- to 10- min drive; a variation of this is power center, a huge shopping strip w/ multiple anchor stores
category management
assigns a manger with the responsibility for selecting all products tha tconsumers in a market segment mgiht view as substitutes for ea other, with the objective of maximizing sales and profits int he category
wheel of retailing
describes how new forms of retail outlets enter the market
retail life cycle
process of growth and declien that retail outlets, like products, experience (early growth, accelerated development, maturity, decline)
multichannel retailers
utilize and integrate a combo of traditional store formats and nonstore formats such as catalogs, tv, and online retailing
promotional mix
combo of communication tools (advertising, personal selling, sales promotion, public relations, direct marketing) used to inform prospective buyers about the benefits of product, persuade them to try it, and remind them later about eh benefits they enjoyed by using the product
integrated marketing communications (IMC)
concept of designing marketing communications programs that coordinate all promotinoal activities to provide a consistent msg across all audiences
communication
process of conveying a msg to others and requires source, msg, channel of communication, receiver, and the processes of encoding and decoding
channel of communication
salesperson, ad media, pr tools
encoding
process of having the sender transform an idea into a set of symbols
decoding
process of having the receiver take a set of symbols, the msg, and transformt them back to an idea
field of experience
a similar understanding and knowledge sender and receiver apply to the msg
noise
extraneous factors that can work against effective communication by distorting a msg or the feedback received
advertising
any paid form of nonpersonal communication about an organization, good, service, or idea by an identified sponsor
personal selling
2-way flow of communication b/w a buyer and a seller, designed to influence a person's or group's purchase decision; most expensive
public relations
form of communication management that seeks to influence the feelings, opinions, or beliefs held by customers, prospective customers, stockholders, suppliers, employees, and other publics about a company and its products or services
publicity
nonpersonal, indirectly paid rpesentation of an org, good, or service
sales promotion
short-term inducement of value offered to arouse interest in buying a good/service (coupons, rebates); offered to intermediaries as well as consumers
direct marketing
uses direct communication w/ consumers to generate a response in the form of an order, a request for further info, or a visit to a retail store (face to face, direct mail, catalogs, etc)
what are the stages of the buying decision? and describe the important of the element of promotional mix in each stage
prepurchase: advertising, sales promotion;
purchase: sales promotion, personal selling;
postpurchase: personal selling, ads, sales promotion
push strategy
directing the promotional mix to channel members to gain their cooperation in ordering and stocking the product; personal selling and sales promotions
pull strategy
directing promotional mix at ultimate consumers to encourage them to ask the retailer for a product
hierarchy of effects
sequence of stages a prospective buyer goes through from awareness of a product to eventual action: awareness, interest, evaluation, trial, adoption
percentage of sale budgeting
funds are allocated to promotion as a % of past/anticipated sales, in terms of either dollars or units sold
competitive parity budgeting
marching the competitor's absolute lvl of spending/the proprtion/pt of market share
objective and task budgeting
company determines its promotion objectives, outlines the tasks to accomplish these objectvies, and determines the promotion cost of performing these thasks
direct orders
result of offers that contain all the info necessary for a prospecitve buyer to make a decision to purchase and ocmplete the transaction
lead generation
result of offer designed to generate interest in a product / service and a request for additional info
traffic generation
outcome of offer designed to motivate people to visit a business
push strategy
directing the promotional mix to channel members to gain their cooperation in ordering and stocking the product; personal selling and sales promotions
pull strategy
directing promotional mix at ultimate consumers to encourage them to ask the retailer for a product
hierarchy of effects
sequence of stages a prospective buyer goes through from awareness of a product to eventual action: awareness, interest, evaluation, trial, adoption
percentage of sale budgeting
funds are allocated to promotion as a % of past/anticipated sales, in terms of either dollars or units sold
competitive parity budgeting
marching the competitor's absolute lvl of spending/the proprtion/pt of market share
objective and task budgeting
company determines its promotion objectives, outlines the tasks to accomplish these objectvies, and determines the promotion cost of performing these thasks
push strategy
directing the promotional mix to channel members to gain their cooperation in ordering and stocking the product; personal selling and sales promotions
direct orders
result of offers that contain all the info necessary for a prospecitve buyer to make a decision to purchase and ocmplete the transaction
pull strategy
directing promotional mix at ultimate consumers to encourage them to ask the retailer for a product
lead generation
result of offer designed to generate interest in a product / service and a request for additional info
hierarchy of effects
sequence of stages a prospective buyer goes through from awareness of a product to eventual action: awareness, interest, evaluation, trial, adoption
traffic generation
outcome of offer designed to motivate people to visit a business
percentage of sale budgeting
funds are allocated to promotion as a % of past/anticipated sales, in terms of either dollars or units sold
competitive parity budgeting
marching the competitor's absolute lvl of spending/the proprtion/pt of market share
objective and task budgeting
company determines its promotion objectives, outlines the tasks to accomplish these objectvies, and determines the promotion cost of performing these thasks
direct orders
result of offers that contain all the info necessary for a prospecitve buyer to make a decision to purchase and ocmplete the transaction
lead generation
result of offer designed to generate interest in a product / service and a request for additional info
traffic generation
outcome of offer designed to motivate people to visit a business
3 forms of product advertisement and their fxns
pioneering: tell what the product is, what it can do, where to buy;
competitive (comparative): persuade target market to select the firm's brand rather than that of a competitor;
reminder: reinforce previous knowledge of a product
institutional advertisement and types
build goodwill or an image for an organization rather than promote a specific good/service;

advocacy, pioneering institutional, competitive institutional, and reminder institutional
reach
# of different people or households exposed to an advertisement
rating
% of households in a market tha tare tuned to a particular tv show/radio station
gross rating points (GRPs)
reach times frequency
cost per thousand (CPM)
cost of reaching 1000 individuals or households with the advertising message in a given medium
place-based media
msgs are placed in locations that attract a specific target audience such as airports, doctors' offices, health clubs, theaters
what are the types of pretests for an ad
portfolio tests: test ad is placed in a portfolio w/ several other ads and consumers are asked to read thru and evaluate them;
jury tests: showing ad copy to a panel of consumers and having them rate how they liked it;
theater tests: consumers view new tv shows/movies in which test commercials are also shown
what are some types of posttests for an ad?
aided recall (recognition-readership);
unaided recall;
attitude test;
inquiry tests
consumer-oriented sales promotions
sales tools used to support a company's advertising and personal selling
point-of-purchase display
these product displays take the form of advertising signs, which someties actually hold/display the product, and are often located in high-traffic areas near the cash register or end of an aisle
product placement
involves use of a brand-name product in a movie, tv show, video, or commercial for another product
trade-oriented sales promotions and list types
sales tools used to support a company's advertising and personal selling directed to wholesalers, retailers, or distributors;
allowances and discounts;
cooperative advertising;
training of distributors' salesforces
cooperative advertising
programs by which a manufacturer pays a % of retailer's local advertising expense for advertising the manufacturer's products
personal selling
2-way flow of communication b/w a buyer and seller, often in a face-to-face encounter, designed to influence a person's or group's purchase decision
sales management
planning the selling program and implementing and controlling the personal selling effort of the firm
relationship selling
practice of building ties to customers based on a salesperson's attention and commitment to customer needs over time
partnership selling
buyers and sellers combine their expertise and resources to creat customized solutions
what is the difference b/w inbound and outbound telemarketing?
inbound: toll free number customers can call
outbound: contacting current and prospective customers
missionary salespeople
do not directly solicit orders but concentrate on performing promotional activities and introducing new products
sales engineer
salesperson who specializes in identifying, analyzing, and solving customer problems, and brings know-how and technical expertise to eh seling situation but often doesn't actually sell products and services
team selling
practiec of using an entire team of proessionals in sellign to and servcing major customers
personal selling process
prospecting, preapproach, approach, presentation, close, follow-up
stimulus-response presentation
assumes that given the appropriate stimulus by a salesperson, the prospect will buy
formula sellign format
a presentation consists of info tha tmust be provided in a nccurate, thorough, and step-by-step manner to inform the prospect
need-satisfaction format
emphasizes probing and listening by the salesperson to identify needs and interests of prospecitve buyers
sales plan
statement describing what is to be achieved and where and how the selling effort of salespeople is to be deployed
acct management policies
specify whom salespeopel should contact, what kinds of sellign and customer service activities should be engaged in, and how these activities should be carried out
interactive marketing
2-way buyer-seller electronic communication in a computer-mediated environment in which the buyer ctrl the kind and amt of info received from seller
choiceboard
an interactive, internet-enabled sys that allows individual customers to design their own products and services by answering a few questions and choosing from a manu of product/service attributes, prices, and delivery options
collaborative filtering
automatically groups people with similar buying intentions, preferences, and behaviors and predicts future purchases
permission marketing (opt-in)
soliciation of a consumer's consent to receive email and advertising based on personal data supplied by the consumer
what are the 7 website design elements?
context, content, community, customization, communication, conection, and commerce
why do consumers shop online?
convenience, choice, customization, communication, cost, and control
bots
electronic shopping agents or roborts that comb websites to compare prices and prodcuts or service features
viral marketing
internet-enabled promotional strategy that encourages individuals to forward marketer-initiated msgs to others via email
dynamic pricing
practice of changing prices for products and services in real time in response to supply and demand conditions
portals
electronic gateways to the internet that supply a broad array of news and entertainment, etc. (search engines)
cookies
computer files that a marketer can download onto the computer of an online shopper who visits the marketer's site
multichannel marketing
blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships w/ consumers who shop and buy in the traiditonal marketplace and marketspace.