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180 Cards in this Set

  • Front
  • Back
Marketing Strategy
Macroenvironmental analysis
Swot analysis
Industrial analysis
Product life cycle
Marketing mix
Action plan
contingency plan
Political and legal
Industrial analysis
Supplier power
Buyer power
New entrance
Product life cycle
Obectives for new entrant
Maintain position
Increase market share
Preempt segmentation
Establish foot in new market
Provide cash cow
Defend market share
Strategies new entrant
Skimming and Withdrawal
Mass penetration
Niche penetration
Marketing Mix new entrant
Skimming i.e. high price for ROI
Penetration price for market share
High distribution
High promotion
Action plan
Includes mix and budget plan as well as profit and loss projection
contingency plan
Preparation for opportunity and threats
Objective for growth market with market leader as SBU
Share maintenance:
Retain customers
stimulate selective demand among early adopters
Strategies growth market with market leader as SBU
Fortress i.e Position defendance
Flanker e.g. build a second brand
market expansion
Contraction i.e. strategic withdrawal
Objective for growth market with follower as SBU
Attain market share
Strategies for growth market with follower as SBU
Leap frog
Frontal attack
Guerilla attack
marketing mix for growth market with Leader and follower as SBU
Price usually low but can be stable íf demand exceeds supply
Distribution through channel or direct sales with the aim to increase availiblity at low cost
Promotion is high but more brand than product
Objectives for mature market
Maintain market share
Extend volume growth
Strategies for mature market for market share objective
Strategies for for mature market with volume growth objective
increas penetration
extended use
Market expansion
Global market expansion
Marketing mix for mature market
Price and promotion are stable
Intensive distribution
Objectives for decline market
Depends on conditions of demand i.e.
Exit barier
intensity of future rivalry
Stratgies for attractive decline market
Profitable survivor
Strategies for unattractive decline market
Marketing research Definition
Marketing research is the design, collection and analysis and report of data for a particular marketing challenge
Research data source
Primary data
Secondary data
Advantages of secondary data
Easier to collect
based on existing and proved behaviour
Research Types of data
Advantages of qualitative data
Deeper insight on consumer behaviour
Disadvantages of qaulitative research data
small sample may not represent the larger population
Data collection technique for qualitative and quantitative data
Focus group interviews
questionaires with quantitative questions such as:
Semantic differentiation
intention to buy
Marketng research step
1. Identify the problem
2. Determine data type and source
3. Design the research, the type pf study, collection method and sample plan with size and method
4. Data collection (Error most occur through bias)
5. Analyse data
6. Report result
Data collection method in research step
Contact method
Marketing helps business to:
Find out which customer to target
Develope products that satisfy Needs of chosen target
Make products readily available
Develop customer awareness
Increase appreciation value
Obtain feedback and use feedback for improvement
work to build a long term relationship with customer
Marketing definition:
Marketing is a social process involving the activitieis necessary to enable individuals and organisation to obtain what they need and want to develop on going exchange relationships
Changes in society the enhance the need for markting
Division of labor
Specialisation of labor
econmical and environmental changes such as:
growth of service
rapid growth and change in IT
increased importance of relationship and efficiency
Knowledge Factors neccessary for change include:
parties involved and their buying behaviour
which needs tobe satisfied
emotional and social needs
physical needs
which specific want they have and with which to satisfy their need
more about the product being exchange
the value of th eproduct in terms of benenfit, price and service
How to achieve business success
Strategy marketing
market research and opportunity analysis
industrial and environmental knowledge
segmentation and defferentiation as well as positioning
Marketing management process
1. Integrating marketing plan with corp and sbu strategy
2. opportunity analysis involving the 4 cs through macrotrend analysis, industrial analysis, measurement od opportunity through forecast and research
segmentaton, targeting and positioning
3. creating a marketing programme making decisions on th 4 ps
4. creating strategic marketing program taking into account the market lif cycle
5. Implementiing the programm defined and controlling
Difference between consumer buyer and organisational buyer
Org.Demand: eratic, inelastic, depends on consumer demand for goods
Org demographics: amount is larger, geography is more concentrated
there are few number of people involved
Org. buyer/seller relationship: more personal, long term, based on specifications, defined number of people influence buying process
there are usualls standardized process
involves specialist from the purchase department
Types of buying situation
New buy
straight rebuy
modified rebuy
Types of products and characteristics being bought by an org
Raw materials: few suppliers, location shoule be nearby
Component parts: lon term contracts, very competitive
Installation: long term contract and relationship, budgeting committe is involde in decision process
Accessory equipment: not as long lasting
operation supplies: consumer goods frequently purcahsed
business services: long term contract and relationship
Peopled involved in orga buying process
descion makers
Org buying decision process
1. recognition of need: specifications, requirements, derived demand
2. supplier and product information: value analysis, decision to make or buy, collecting information on suplier
3. evaluate and select supplier through supplier analysis
4. -type of purcahse: Longterm, on the spot
5. Post purchase analysis and evaluation
Define marketing
Marketing is a social process involving the activities necessary to enable individuals and organizations to obtain what they need and want through exchanges with others and to develop on going exchange relationships.
Describe what is involved in marketing management
Marketing Management is the process of analyzing, planning, implementing, coordination and controlling programs involving the conception, pricing, promotion and distribution of products, services, and ideas designed to create and maintain beneficial exchanges with target markets for the purpose of achieving organizational objectives.
What is the difference between a corporate and a business strategy?
The corporate or business strategy is the direction for the company’s mission, the business it chooses to be in and its growth policies.
Business Types
1. Questions marks:
2. Stars:
3. Cash cows:
. 4. Dogs:
What are limitations of value based planning?
It relies on forecast based on a financial value on  I.e. forecasts of sales volumes, product mix, unit price and competitive action
What is the role of marketing in formulating and implementing strategies?
Marketing mangers bear the primary responsibility for formulating and implementing strategic marketing plans for individual product-market entries.  However freedom of action in designing such plans is often constrained by the firm’s corporate and business-level strategies.
What are the more important characteristics of a market-oriented company?
The marketing concept holds that the planning and co-ordination of all company activities around the primary goal of satisfying customer needs in the most effective means to attain and sustain a competitive advantage and achieve company objectives over time.  They adopt a variety of organizational procedures and structures to improve the responsiveness of their decision making, including more detailed environmental scanning, continuous, real-time information systems; seeking frequent feedback form and coordinating plans with key customers and major suppliers; decentralization of strategic decisions, encouragement of entrepreneurial thinking among lower-level mangers an the use of inter functional management teams to analyze issues and initiate strategic actions outside the formal planning process.
SBU design
A homogenous set of markets
a limited number of related technologies..
A unique set of products markets. Control over those factors necessary for successful performance.
Responsibility for their own profitability
Three dimensions that define the scope and mission of the entire corporation also define individual SBUs:
Technical Compatibility. Similarity in the customer needs. Similarity in the personal characteristics or customers’ behavior patterns
What are miles and mores business strategy
Prospector, Defender. Analyser. Reactor
What are the characteristics of Prospector:
broad product-market domain that undergoes periodic redefinition. a ‘first mover’ in new product and market areas
Responds rapidly to early opportunity
Competes primarily by stimulating and meeting new market opportunities
What are the characteristics of Defender:
locate and maintain a secure position
stable product or service areas. limited range of products or services compared to competitors. protect its domain by offering lower price, higher quality or better service than competitors.
not at the forefront technological
What are the characteristics of Analyser:
An intermediate type; fewer and slower product-market changes than prospectors,
less stability and efficiency than defenders.
maintain a stable,
limited line of products or services, Seldom a first mover, but often a second or third entrant
What are the characteristics of Reactor:
No defined stragty
SBU Goals and Objective. Theperformance dimensions:
Efficiency. .
Number of successful new products introduced relative to those competitors.
% of sales accounted for by products introduced within the last 5 years.
What are the appropriate external environment conditions for a prospector strategy?
Market characteristics:
Industry in introductory or early growth stage of life cycle,
many potential customer segments as yet unidentified and/or undeveloped.
Technology: Newly emerging technology;
Competition: Few established competitors;
single competitor holds commanding share of major market segments.
Business's relative strengths:
strong R&D, product engineering and marketing research and marketing capabilities
What are the appropriate external environment conditions for a low-cost defender strategy?
Market characteristics: Industry in maturity or decline stage of life cycle; current offerings targeted at all major segments; sales primarily due to repeat purchases/ replacement demand. Technology: Basic technology fully developed and stable; few major modifications or improvements likely. Competition: Small to moderate number of well- established competitors; industry structure stable, though acquisitions and consolidation possible; maturity of market means relative shares of competitors tend to be reasonably stable over time. Business's relative strengths: SBU (or parent) has superior sources of supply and/or process engineering and production capabilities that enable it to be LOW-COST producer; R&D, product engineering, marketing, sales or service capabilities may not be as strong as those of some competitors
What are the appropriate external environment conditions for a defferentiated defender strategy?
Same as low cost but different in: Business's relative strengths: SBU has NO outstanding strengths in R&D or product engineering; HIGHER COSTS than those of at least some competitors; SBU’s OUTSTANDING STRENGTHS are in process engineering and QUALITY control and/or in MARKETING, sales, distribution or customer services
What are the appropriate external environment conditions for an analyser?
Market characteristics: Industry in late growth or early maturity stage of life cycle, one or more product offerings currently targeted at major customer segments, but some potential segments may still be undeveloped. Technology: Basic technology well developed but still evolving; product modifications and improvements – as well as emergence of new competing technologies – still likely. Competition: Large number of competitors, but future shake-out likely; industry structure still evolving; one or more competitors hold large shares in major segments but continuing growth may allow rapid changes in relative shares. Business's relative strengths: SBU (or parent) has good R&D, product engineering and marketing research capabilities, but not as strong as those of some competitors; has either low-cost position or strong sales, marketing, distribution or service capabilities in one or more segments.
Ideally, what characteristics should strategic business units have?
A homogenous set of markets to serve with a limited number of related technologies. A unique set of products markets. Control over those factors necessary for successful performance Responsibility for their own profitabilit
Three dimensions that define the scope and mission of the entire corporation also define individual SBUs:
Technical Compatibility, Similarity in the customer needs, Similarity in the personal characteristics or customers’ behavior patterns
What are the various levels by which a product can be defined?
Generic category: Includes an array of non-competing products i.e. car industry. Product class: May serve diverse markets or market segments. The more generic the definition the higher the aggregation level of products i.e. desserts versus pastries. Product type: Subsets of product class contain items that are technically the same. Brand level: Bottom of the aggregation hierarchy, inappropriate units of analysis.  Sales largely function of managements strategic decisions,
What are the product lifecycle stages
Introduction, Growth, Shake out, Mature, Decline
The diffrences in purchasing process of goverments and non profit
More bureucracy
tediuos paper work
submission of bids
General steps of a control system
Set the standard of performance based on the objectives and strategies at the SBU and Product entry level - measurement should be both financial and non-financial
Step2: Specify and obtain data
3. Evaluate the feedback
Take corrective measures
Determinants of performance at product level
Price parity
relative shelf facing
customer satisfaction
customer attitude to changes in product
Balance scorecard
Is used to measure customer satisfaction, market share and product quality
Steps in control system at product level
1. Sales analysis: by product, by order size, by customer and by territory
2. Analyse line item margin and expenses

3. Define how to provide information and how often
4. Contingency plan with: identification of critical assumption, assignemnt of probalilities, rank order of assumption
5. Tracking and monitoring
6. Activate the contingency pan
Specify response optioms
7. Global market control
Control determinants at marketing performance level
Market share
Control steps at marketing level
1. Identify the variables to monitor: external and internal
2. Track and monotor the control plan
3. Assess the stragy monthly, quaterly or annually
What is the purpose of a marketing audit
It is used to periodically assess the marketing performance and provides and SBUs current competitive postion as well as that of its product market entries. Each of the 4 ps have to be annalysed and the audit has to take in to account environmental changes and how it will affect the business strategy or he product market action plan
Types of audit
Environment audit: industrial analyisis and analysisi of the 4 cs
Objectives and streatgy analysis
Planning and control system audit
Organisation audit
marketing productivity audit
markeitng function audit
company's ethical audit
product manager audit
How do you measure marketing performace at SBU level
State determinants
State the steps
What is the purpose of marketing audit
Explain the purpose and state the types of audit.
Importance of marketing in business sucess
Define marketing
State how it helps in terms of the decisions made in regards to 4 ps and knowledg of consumer behaviour, targeting and postioning
State changes in the society
State factors necessary for exchange
State steps in the strategic marketing process Analysis, research, oppotunities, competitive advantage
Options available for an SBU seeking competive advantage
Explain what an sbU is
Expalin porter and miles strategies
Explain differences in terms of :
Scope: technology, customer segment, domain
Goals and objectives, effective or effecient
State marketing strategy
What is value proposition
State the strategies for competitive advantage from porter and milse
Define the value propostion
The steps neede in order to position a product and write value propostion
1. Identify the reslevant set of competitive products
2. Identify the determinant attribute usually features and benefits
3. Collect the data on consumer perception of products
4. Analyse the position of current products through perceptual map or positioning grid. Limitations: does not show customer preference
5. Find put the best combination of attributes prefered by customer through survey
6. Consider the best postion to suit customer needs
7. Write the value propostion
How to manage a new product dvelopement process
State the importance of new products
State the stages and gates
Gate 1_ Idea generaton and initial screening.
Stage 1 Preliminary assessment
Gate 2 Second screening decisions
Stage 2 Detailed investigation and preparation of business case
Gate 3 Decision on business case presented
Stage 3 Deelopement stage
Gate 4 Review post developement decsions
Stage 4 Testing and validation
Gate 5 precomercial and business analysis decision - field test, laboratory or experimental tests
Stage 5 Roll out and market launch
Consumer buying decision process
Explain why marketers have to know
Name the two types of involvement decisons and explain the kind of products and how they are bought
State the steps in the buying process of both involvement.
Buying decsion for low involvemtnt goods
Probelm identification
Post purcahse evaluation
Buying decision process for high involvemnt ggods
Problem identification
Information search - elaborate on influence, intensity and sources
Evaluation of alternatives: elaborate on the consumers dimensions of evaluation
Post purchase evaluation
What influences the inforamtion serach in a high involvement good buying process
Product factors
Situational factors: social accepatability, vlaue-related
Personal factors: demographics, personality: dogmatic, low risk perciever
What influences the intensity of information search
Opportunity cost and psychological cost
Sources of information in the high involvemnt buying decision
Personal: family
Commercail: collateral from consumer
Public: consumer sites and publiciued product tests
Dimenstion by which a cosmer evaluates alternatives in a high involvment buying process
Social attributes
Describe the psychological variables and social infliuences which are likely to affect buying behaviour
State the importance of the knowledge of buying behaviour of customers
State the 5 social sectors and social and psycological influences
social infliuences which are likely to affect buying behaviour
social class
reference group
Psychological variables which are likely to affect buying behaviour
Perception: perceptional vigilance and perceptual defence
Need and attitude towards brand and product. Use of fishbein model to find out to customer most important attribute and compensatory and non-compesatory attribute
5 Social sectors used to social differente customers buying behaviour
How can marketers try to change consumers psychological influence
Change importance of an attribute
Add a salient attribute
improve the rating af a salient attribute
lower the ratings of competitors sailint attribute
Duiscuss the appropriteness of segmentation
Define market segmentation
and why it is important
State the benefits of Segmentation
Benefits of segmentation
Improves strategic resource allocation
gives opportunity to new product developement
Helps design marketing mix
Steps taken to evaluate the market potential of a chosen market
Select the market attractiveness based on competitive factors
Add Weight rate to the different factors
Rate the segment on each factor
Project future postion of segment
Choose segment and allocate resources at lest 2 of the dimentsions have to be fulfilled and one moderately fulfilled
Market attractiveness an competitive factors of a potential market is based on
Consumer needs and behaviour
Size of the market segment and the growth rate
Opportunity to for competitive advantage
Resources available
Industrial analysis
Contents of avalue proposition
4 Promotion mix (IMC)
- Advertising: any paid form of non-personal presentation or promotion by identified sponsor, print advert, direct mail, email, radio.
- Personal selling: pesuading one or more contacts to buy a product by use of oral presentation, person to person communication, sales meeting.
- Sales promotion: Incentives designed to stimulate purchase of a product usually short term e.e trade-in, rabates
- Public relations: non paid, npn personal stimulation of demand for product e.g. newspaper articles
Intgrated marketing commumnication plan or process
1. Define the target market
2. Set promotional objectives takining into account the key elements
3. Set a promotion budget. (Elaborate on the methods)
4. Design the promotion mix ( state the steps)
5. Evaluate the results
Some marketing mix objectives are
Winining aceptance of new product by existing customers
Devloping new customers for existing products
Mainting loyalty of current customers by providing good service
facilitating future sales by providing technical sevices to potential customers
facilitating future sales by communicating product information to potential customers
Gathering market information
Making advertising decisions
This involves 1. setting the right objectives to help evalute afterwards through communication hirachy:- awareness, comprehension, conviction, action
2. Setting advertising budget should be based on reach and frequency and cost is calculated by use of gross rating point (GRP) = %reach x average frequency
3. deciding which media to use : Old media - radio, print, exhibition, supplementary media, direct marketing or new media - webbaner, search key words
portal deals, emails.
4. Developing a creative strategy (copy platform content) based on:
products targeting, positioning decisions, what advertising should accomplish, selling idea or key benefit (USP), creative strategy steement (campaign theme), surportive information
5. emotiotional apeal, attention, interest, call for action
6. Use of international media
How do you measure advertising results
Before tests - recall test, sales test
After tests - recogniton test, recall test
What are the key elements in setting promtional objectives as part of the promition plan or process
Target audience
How accpeects of audience perception or attitude should change
How quickly such a change should occur
Degree of change required
Methods of setting a promotion budget in a promotion plan
Percentage sale method - budget set as a % of anticipated sales
Competitive parity method - relative level of promotional spending is based on level of market share
Objective and task method - define the promotion objectives, determine strategies and tasks as specifically as possible, Estimate the costs of performing task and budget accordingly
The steps in dsigning a promotion mix in a prootion plan
Decide on promotion components e.g. advertising
Choose activities within each component - web
vehicle to employ within each activity - email
Making personal selling decisions:
It involves: account management policy
Deployment/territory design
sales force organiasation
What are the keys to sales performance
Evaluation and control through sales analysis - monitor sales volume and break down sales, cost analysis - cost of selling activities (travel costs)
Behavioural analysis - obtained from activity reports
Making decision on sales promition in the promotion plan
This involves deciding the technique to use. Techniques are: sampling, sweepstakes, contest, trade promotions.
Anminstrative Factors, marketing progams and conditions for sucessful implementation of prospector strategy
Prospector has to have a
High degree of autonomy
Low funtional programs and facilities shared
High evaluation and reward of performance is high based on sales and share growth
Anminstrative Factors, marketing progams and conditions for sucessful implementation of diffrentiated defender strategy
Moderate degre or autonomy
low/high degree on funtional programmes and facilities shared
High reward and evaluation of performance based on ROI
Anminstrative Factors, marketing progams and conditions for sucessful implementation of low cost defender strategy
Low degree of autonomy
high degree of shred funtional activiteis and facilties
describe the fit between marketing programms and the different business strategies
Describe all foru strategies in terms of price, product, place and promotion. - high broead, narrow. Mention the markting strategy for each BU strategy.
Design the right orga. structure for implementation
First we have to define the
Funtional competencies
Resouce allocation
decide on organisation structure
decide on organisational form
Types of organisational structure
Types of organisational form
Funtional orga
Product management orga
marketing management orga
matrix org
New trens - Global structures - litlle or no formalorga, intenational division, global structures, central or decentral decision making
Contents of an annual marketing plan
Executive summary
Current situation analysis
performance review
key issues
marketing strategy or program
action plan
projekced profit and loss
contingency plan
What are the types of products
Goods and services
Design the right orga. structure for implementation
First we have to define the
Funtional competencies
Resouce allocation
decide on organisation structure
decide on organisational form
Types of organisational structure
Types of organisational form
Funtional orga
Product management orga
marketing management orga
matrix org
New trens - Global structures - litlle or no formalorga, intenational division, global structures, central or decentral decision making
What are the types of products
Goods and services
What are the eight dimensions of quality in goods
perceived quality
What are the eight dimensions of quality in services
The product concept consists of
core benefit
product features
other services such as delivery, intallation
Types of research techniques for product design
Empathic design - observation
capturing data
reflection and analysis
brain storming
developing prototypes
Types of brand
Brand name, brand mark, trademark
Anvantages of branding to sellers
effective marketing programm
customer loyalty
price and margins for competitive advantage
succesful brand esxtention
positive channel relationship
What are the diffrent brand strategies
Individual branding
Family branding
Distributor and retailer brand
The components of service decisions are
delivery reliability
fast order
fast delivery
personnel training
repair and maintenance
You can manage product lines through
Product line extensions
Brand extensions
Dropping products
Product systems
Types of product line extensions
Line filling - add or drop attibutes
Line streching - changes in size and price - upwards or downwards
Line extensions - changes in other ways apart from size and price
Product decision involves
Type of product
product concept
product design research technique
branding decisions
packaging decision
service and warranty decision
Key components of a corporate, business and marketing strategy
Goals and objectives
Resouce deployment
Identification of sustainable competitive advantage
Hierachy of strategies
Corporate growth strategies
Expansion by:
- increasing penetraiotn
- developing new products for current customers
- selling existing product to new segment
- diversifying
Types of Diversification
vertical integration - forward vertical, backward integration (acquire the supplier)
- Related diversification (concentric)
- unrelated diversification (conglomerate)
- organisational relationship or networking
Models for allocating corporate resources
Portfolio models
value-based planning
sources of corporate synergy
Knowledge based synergy
corprate brand and corporate identity
Synergy from shared resources
What are the institutions found in a marketing chanel
Merchant wholesalers
Agent middlemen - brokers or representatives of maufacturers, rack jobbers
Fascilllitating ageincies - advetisng ageny, research firms
Types of retailers
General merchandise discount chain
wholse clubs
single-line mass merchandise stores - toyRs
Types of nonstore retailer
Direct selling
Vending shop
online shop
5 Consumer good channel
producer - consumer
producer - retailer - consumer
producer - agents - wholesaler - reetailer - consumer
producer - agent - retailer - consumer
4 industrial goods channel
producer - industrial buyer
producer - wholesaler - industrial buyer
producer - agent - industrial buyer
Producer - agent - wholesaler - industrial buyer
BUs objective and resources for for channel
- Increase in product availablilty - mention strategies for retail coverage i.e. exclusive, selective and intensive distribution
- satisfy customers service requirement
- ensure promotional effect
- obtain market share
- increase cost effectiveness - supply chain management, make or buy decsions
- maintain flexibility
- Multiple channel distribution - hybrid system
Three basic strategies of retail
Explain the "intensive" basic retail strategy with its retail coverage, major strength , weakness and product appropriate
Intensive - maximum coverage, strength: product availability, weakness: lack of retailer support, products are low involvement convinient goods
Explain the "exclusive" basic retail strategy with its retail coverage, major strength , weakness and product appropriate
Exclusive - single coverage, strength: matches retailer clientele with target market, fascilitates close co-operation with retailer, weakness: risk of relying on one retailer, high-involvement products
Explain the "iselective" basic retail strategy with its retail coverage, major strength , weakness and product appropriate
Seletive - limited coverage, strength: provides adequate coverage without risking manufacturer retailer co-operation, weakness: difficult to implement due to competition, products are not frequently purchased goods
Types of vertical integrated markting systems
Corporate - verticlly integrated system
Contracttual - wtih agreements stating obligation, rights of members of the system
Adminstered - co-operation between on or two channel partners based on norms of mutual trust
Major souces of channel power
economic power
coercive power
expert power
referent power
legitimate power
Under what condition should the manufacturer use a pull or push strategy
Pull - where manufacter is market leader and has the resources for promotion, new product, high demand

Push strategy - small firm little or no resource for promotion, little or no demand, has to convince the retailer to promote his products
What is the use of chanel incentives
Increase purchases - get channel partner to store larger inventory
Increased personal selling effort
increased promotinal effort - instore, local advert, increased display space
improved customer service
Types of channel incentive
quantity discount, buy-in and buy-back, sales training, larger margins, exclusie teritories, joint advertising, display racks
In Decisions on designing a distribution channel one has to take into account
SBU and market strategy
target market characteristics
product characteristics
computer characteristics
company strengths and weakness
environmental trends
Using a middleman can improve the following
Functional effeciency
Scale effeciency
Transactional effeciency
Channel Ways of entering a global market
- Exporting - using export merchants, agents or cooperative organisation eho export for several producers
- Contractual entry modes - e.g. licensing
- Franchising
- Contract manufacturing - out sourcing - e.g. turnkey construction contact
- coproduction - technical knowhow in return for share in output
- countertrade - counter purchase (dleayed barter), barter, compensation packages, buyback arrangement
- overseas direct investment - joint venture or sole ownership
Types of franchise system
. manufacturer - retail e.g oil or car companies - shell, toyota
. manufacturer - wholesaler e.g softdrink industries sell concentrate to bottling wholsalers
. wholesaler - retailer e.g drug stores
. service sponsor - retailer e.g. mcdonalds, burger king, subway, car rental - sixth
Types of coporate vertical marketing system
Forward vertical integration
backward vertical integration
What are the strategic pricing objectives
Maximise sales growth
maintian quality or service differentiation
maximsie current profit
attain social objectives
How can an SBU reach the price objective of maximising sales growth and what are the conditions.
Penetraton pricing
conditions are
- target maerket is cos sensitive
- firm cost is low compared to cpmpetitor
- sbu is pursuing a low- cost defender business stratgy
- prodcution cost is likely to fall with increase in volume
Low price is likely to discourage competitor from entering
How can a BU achieve the price objective to maintain quality and service and what are the conditions
Premium pricing.
conditions are -
- target customer not sensitive to price
- product market is in growth or mature stage
- Percieved by target to have quality and service advantage
- SBU is pursuing deferentiated defender strategy
- firm has high cost
extensive advertising to maintain image
How can a BU achieve the price objective to maximise current profit and what are the conditions
1. Skimming price policy (setting price very high at the beginnning), Conditions are. - Product market at introductory or early growth stage - Firms first entrant - SBU pursuing prospector strategy - Limited capacity - Advanced technology hinder immediate competitor entrance
2. Harvesting (set price to maintain margins and ROI) Conditions are: - Product market is at late maturity or decline stage
- SBU is pursuing differentiated defender strategy
- competitive position can not be sustained
- product is a cash cow
3. Survival very low price, Conditions are: - Weak product
- Firm needs to buy time and maintain cash flow
- product market in growth or early maturity stage
How can a non profit BU achieve its social price objective and what are the conditions
Low price, perhaps below total cost for some segments, to stimulate or subsidise demand
Conditions are:
- Non-profit
- Costs subsidised by tax revenue or contributions
- one or segments need product but are unable to pay the price
What are the factors tha affect customers sensitivity to price
perception and prefrence
awareness and attitude towards substitutes
ability to pay
Which conditions affect buyers ability to pay in terms of price sensitivity
total expenditure
end benefit
shared cost
which conditions affect buyers awareness and attitude to sustitutes in terms of price sensitivity
Difficult comparison
sunk investment
subsitute awareness
Which conditions affect buyers perception in terms of price sensitivity
Unique value
price - quality ratio
Price elasticity of demand
% change in quantity divided by % change in price
What are the disadvantages of estimated demand
Reaction to change in price can not be calculated
Ignores effect of non price factors
Ways of estimating demand curve
Survey consumer in a laboratory tes atmosphare
instore experiments
analysis of sales history
multiple test markets
To estimate cost a firm has to include
Fixed costs and variable costs
How to determine the right price level or unit cost
Unit cost= Variable cost + fixed cost/expected unit sales
How to calculate a markup or cost plus pricing
Markup price: unit cost divideded by 1 minus desired % markup on retail
How to calculate a rate of return or target return pricing
Target return price= unit cost plus desired % return x capital investment divided by unit sales
How to calculate the break even volume
Break-even volume= fixed cost divided by price minus varaiable cost
Types of discounts and allowances
trade discount
quantitiy discount
cash discount
price off promotions
Types of defferential pricing
Time pricing
Location pricing
customer segment pricing
Types of global counter trade in pricing
compenstion deals
buy back arrangements
Methods to estimate costumer value in pricing
Industrial engineering
overall estimate
decomposition approach
compositional approach
improtance rating