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120 Cards in this Set
- Front
- Back
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What is a direct channel?
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It consists of a producer - the individual or firm that produces the product and a consumer
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What is an indirect channel?
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A channel that includes one or more channel intermediaries, which are firms or individuals such as wholesalers or retailers who buy the product and then sell them to the consumer. These intermediaries are the middlemen
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What are consumer channels?
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A channel that moves the product direct from the manufacturer to the consumer
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What is a B2B channel?
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When the manufacturer sells the product to the user or business
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How does the internet work as a distribution channel?
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A direct channel where consumers can purchase an item online - disintermediation of channels
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What is dual distribution?
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The use of multiple channels; selling through more than one channel
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What is a channel leader?
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The dominant firm in a channel and has power relative to other channel members, and even more power when it has legal authority to call shots or control of resources
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What is channel power?
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Related to channel leader, it comes from control over resources
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What is a horizontal marketing system?
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Two or more firms at the same channel level agree to work together. Ex. Wal-Mart with a Subway before
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What is a vertical marketing system?
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A channel in which there is formal cooperation between channel members at two or more levels: manufacturer, wholesaler, retailer; usually one member holds all the power
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What is a conventional marketing system?
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A multi-level distribution channel in which members work independently of one another and each firm seeks to benefit with little concern for the other channel members
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What is wholesaling?
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Encompasses the buying and handling of goods and services and their subsequent resale or organizational buyers - large quantities, middle men, smaller stores
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What is a manufacturer as a service provider?
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The manufacturer owners the intermediaries, does all the all the wholesaling functions and is most consistent with the vertical marketing system
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What is a merchant wholesaler?
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The largest percent - takes title and possession of products for future resale and is most consistent with conventional marketing systems
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What are agents and brokers?
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Perform various wholesaling tasks but do not take title of the product (like a pharmaceutical representative) and are usually paid in commission
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What is warehousing?
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The action of storing goods in anticipation of sale or transfer to another member of the channel of distribution, which enables marketers to provide time utility to consumers by holding on to products until consumers need them
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What is private warehousing?
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Those who use private warehouses have a high initial investment, but they also lose less of their inventory due to damages
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What is public warehousing?
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Allows firms to pay for a portion of warehouse space rather than having to manage their own facility
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What is a distribution center?
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A warehouse that stores goods for short periods of time and provides other functions such as breaking bulk
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What is retailing?
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The final step on the distribution path, the process by which products are sold to customers for personal use to sell directly to the consumer, they add value with image, inventory, quality, location and pricing
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What is a convenience store?
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Stores that carry a limited number of frequently purchased items including basic food products and newspapers to cater to consumers willing to pay a premium for buying staple items closer to home
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What are supermarkets?
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Food stores carrying a wide selection of edible and nonedible products
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What are box stores?
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Food stores with limited selection of items, few brands per item and few refrigerated items, open less hours than convenience stores and items are displayed in open boxes
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What are specialty stores?
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Narrow and deep inventories, they do not offer a lot of product lines but do offer a good selection of brands within the lines they do sell (big and tall clothing stores)
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What are leased departments?
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Departments within a larger retail store that an outside firm rents (photographic studios, jewelry departments)
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What are variety stores?
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Carry a variety of inexpensive items from kitchen gadgets to toys, candy, and candles (dollar stores)
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What are discount stores?
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Stores that carry a broad assortment of items at low prices with minimal service and are the dominant outlet for many products (Wal-Mart, Target)
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What are department stores?
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They sell a broad range of items and offer a deep selection organized into different sections of the store (Macy's)
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What are hypermarkets?
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They combine characteristics of warehouse stores and supermarkets (US consumers find them to be too large)
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What are atmospherics?
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The use of color, lighting, scents, furnishing, sounds and other design elements to create a desired setting to appeal to customers and change behavior
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What does SOR Model stand for?
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Stimulus - Organism - Response. States that there are important environmental factors that relate to the physical and social surroundings and the shoppers' physiological state
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What is the stimulus of the SOR Model?
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Most any aspect of customer and employee environment
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What is the organism of the SOR Model?
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Affect - emotional reaction. Arousal - physiological "feeling state"
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What is the response of the SOR Model?
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Approach behavior, desire to stay, explore, work, affiliate, avoidance, behaviors, desire to stay or not
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What is merchandise mix?
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How retailers decide what to sell, it is a strategy decision on what products to carry - by knowing your target market you will know what products to sell/carry
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What is merchandise depth?
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The variety of choices available within each specific product line. Shallow assortment means the selection within a product category is limited like only selling two colors of a shirt
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What is merchandise breadth?
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The number of product lines available. A narrow assortment in a convenience store means the shoppers will only find a limited selection of product lines such as candy, cigarettes, and soft drinks
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What is scrambled merchandise?
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A merchandising strategy to carry multiple types of products that are not directly related like gas stations or Walgreen's
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What are the advantages of using online retailing?
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Can search for product info online, retailers can update price/product info continually, time saver for many customers, order 24/7, can order from around the world
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What are the disadvantages of using online retailing?
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Customers must wait days to receive the product, people need "touch and feel" before buying, inventory online could cannibalize in-store sales, may increase price competition, and security concerns
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What is E-Tailing?
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Electronic/Online retailing - customers still wait days to receive the product
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What is disintermediation?
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Eliminating layers of channels of distribution - essentially cutting out the middle man
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What are paper airplane channels?
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The supply chain began with the supplier and worked its way to the consumers - push strategy happened when planes were pushed through the channel and the innovators were the ones to seek out the plane
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What is RFID Chip technology and its impact on distribution?
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Radio frequency identification uses tin sensors embedded in packages or store isles to track customers as they pass, the inventory management system makes product tracking and purchasing simple, speedy and acccurate and used to manage, monitor and track inventory and customers
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What is F.O.B. pricing?
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Stands for Free on Board, which means the supplier pays to have the product loaded onto a truck or some other carrier, and the title passes to the buyer at the FOB location - used in B2B
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What is FOB origin pricing?
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When the product is delivered it means the cost of transportation from the factory to the customer's location is the responsibility of the customer
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What is FOB delivered pricing?
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The seller pays both the cost of loading and the cost of transportation to the customer, amounts it includes in the selling price
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What is price?
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The value customers give up or exchange to obtain the desired product, payments may be in the form of money, services or goods, favors, votes, or anything that has value to the other party
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What is the importance of price decisions?
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it is the only source of profit for most institutions, most consumers rank reasonable prices as most important for purchase consideration, people use price as a quality measure, marketers tend to lower price instead of sell value
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How is price determined?
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Based on demand, or what consumers are willing to pay; value pricing, depends on the costs of manufacturing, price has to meet marketing objectives, and price can fluctuate based on marketing strategies
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What is elasticity of demand?
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A measure of the sensitivity of customers to changes in price. It deals with the market reaction to a change in price - % change in quantity demanded and % change in price
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How does elasticity relate to revenues?
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If elastic there is an inverse relationship so if you lower prices then revenue increases. If inelastic then price and revenue go the same way so if you raise the price then you also raise the revenue
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What is inelastic demand?
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When change in price has little or no effect on the quantity demanded
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What is target costing?
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Also called demand backward pricing - when a firm first determines the price a customer would be willing to pay then works backward to design the product in such a way that it can produce and sell at a profit
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What is yield management pricing?
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A demand based pricing strategy (used in hospitality industry) businesses charge different prices to different customers in order to manage capacity while maximizing revenues - use of right time and price
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What is cost-plus pricing?
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most common cost-based approach - the marketer totals up all the costs of a product and then adds an amount (or mark up) to arrive at a selling price - easiest way to generate a profit
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What is mark-up percentage?
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The percentage/cost to produce the item to arrive at the selling price Ex. 35 x .5 =17.5 + 35 = $52.20 -> Mark up of 50%
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What is break even analysis?
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How many units of the product must sell at a certain price to breakeven (cover all costs) BE = total fixed costs/unit selling price - unit variable costs
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What is psychological pricing?
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Consumer based perceptions of price on what they believe to be a fair price
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What is price lining?
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Refers to latitudes of acceptance and rejection to the price of a product based on consumers expectations - if its too expensive people will think its a rip off or if the price is too low people may think the quality to bad
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What are psychological issues in pricing?
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buyer's expectations, internal reference prices, price-quality references
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What is the odd/even psychological price strategy?
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Rather see prices in odd numbers rather than even because they think they are lower ($4.99 instead of $5.00) Prestige products do not use odd pricing
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What is the price lining strategy?
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Items in a product line sell at different prices - cameras priced from $25, $50, $75 and no prices in between - consumers chose the product based on what price range they believe they fit in
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What is two-part pricing?
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A pricing tactic for individual products - two separate types of payment are required to purchase the product (cell phone companies charge monthly fees + minute fees)
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What is captive pricing?
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A pricing strategy used for multiple products - when a firm has 2 or more products that work only when used together (the firm sells one at a low price then makes a profit on the second high-margin item)
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What is bundle pricing?
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A pricing tactic for multiple products - selling 2 or more goods or services as a single package for one price that is usually less than the items would be individually
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What is geographic pricing?
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Modifying a basic list price based on the geographical location of the buyer - reflects the costs of shipping to different locations
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What is loss leader promotional pricing?
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An extremely low price on a certain product to increase store traffic and expose customers to other products - unfair sales act
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What is bait-and-switch promotional pricing?
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To give the customer a very enticing price to tie them in and when they show up to purchase the product it is not available but the company will offer similar products that are more expensive
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What is collusion or horizontal price fixing?
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Term for the illegal act of speaking with other companies to set your price, there must be an agreement to be illegal
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What is vertical price fixing?
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It is illegal for a manufacturer to tell a retailer that they must sell their product at a certain price, they can suggest a price, but not dictate it
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What is price discrimination?
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(Robinson-Patman Act) You cannot discriminate the price from one retailer to the next unless it is justifiable - like lowering the price for buying in bulk
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What is multi-level marketing (Mona Vie)
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A legal pyramid scheme where they have people buy the product then have their friends buy it and so on - network marketing
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What is upward shift in demand?
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An upward shift in the demand curve means at any given price, demand is greater before the shift occurs - they have high demand and sell more products
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What is downward shift in demand?
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If demand quickly declines (if beef goes bad) then selling the product for the same price will reduce the amount of product sold
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What are non-price factors that influence shifts in demand curve?
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Advertising campaigns promoting products, weather and seasonal forecasts, the development of new products
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What is shift in pricing (what causes discounts)
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Quantity discounts, seasonal discounts (when bought out of season), cash discounts, functional discounts (offered to middlemen for performing channel functions)
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What is price leadership?
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A price strategy usually in an oligopolistic industry such as airlines where price is high to minimize price competitions and avoid collusion
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What is cost of ownership?
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The price consumers pay to purchase the product plus the costs of maintaining and using the products
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What is everyday low pricing?
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Setting prices that provide ultimate value or price/benefit ratio to customers through massive quantities, cheap goods - Wal-Mart (focuses more on value added so you can raise the price and not lose customers; pricing power
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What are freenomics?
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A business model that encourages giving products away for free because of the profits that can be gained by getting more people to participate in the market
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What is a promotional mix?
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Refers to the communication elements that the marketer controls - implying there is more than one element
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What are the elements of a traditional promotional mix?
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Advertising, personal selling, sales promotion, public relations and publicity, and direct marketing
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What is advertising?
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Nonpersonal communication from an identified sponsor using mass media and reaches a large number of consumers at one time
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What is personal selling?
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Direct interaction between a company representative and customer that can occur in person, by phone, or even over an interactive computer link that gives customers short-term incentives
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What are sales promotions?
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Short-term incentives to encourage sales during a specific time period such as contests, coupons, or other incentives that marketers design to build interest
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What are public relations and publicity?
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The portrayal an organization and its products positively by influencing perceptions of public. Seeks to create and maintain a positive image
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What is direct marketing?
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When a company or marketer gets in touch with the customer directly either through mail, phone, etc.
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What are the goals of promotion?
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To inform, remind, persuade, and build relationships through the coordination of marketing communication efforts to influence attitudes or behaviors
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What are the pros of television?
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creative and flexible, prestigious, high impact messages, network TV is cost effective for reach, cable is good for target segments
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What are the cons of television?
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Quickly forgotten, requires frequent repetition, increasingly fragmented audiences, shorter ads result in increased clutter
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What are the pros of radio?
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Good for selective targeting, heard out of home, relatively low cost, can be quickly modified, uses listener imaginations
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What are the cons of radio?
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Listeners may not pay full attention, small audiences mean ads must be frequently repeated, not appropriate for products requiring demonstration
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What are the pros of magazine?
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Narrowly targeted audiences by specialized magazines, high credibility and interest level provide good ad environment, long life span and pass along rate, excellent visual quality
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What are the cons of magazine?
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expensive, long deadlines
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What are the pros of newspaper?
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Wide expose and extensive market coverage, flexible format permits use of color, different sizes and editions, useful for comparison shopping, local retailers can tie in with national ads
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What are the cons of newspaper?
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Declining readership, short life span, very cluttered
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What are the pros of outdoor?
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Very high reach, low cost, good for supplementing other media
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What are the cons of outdoor?
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Hard to communicate complex messages, cannot demonstrate product effectiveness, some are controversial and disliked
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What are the four steps in determining ad placement?
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1. Determine reach, frequency, and impact 2. choose among major media types 3. what is the best media for us and how will they perceive it 4. decide on media timing
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What is the Top-down approach?
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Requires top management to establish the overall amount of money that the organization allocates for promotional activities
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What is the bottom-up approach?
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Start at the beginning by identifying promotion goals and allocate enough money to accomplish them
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What is competitive parity?
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Looking at what the competition is spending and spending the same amount
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What is the push strategy?
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The company wants to move its products by convincing channel members to offer them and entice their customers to select these items
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What is the pull strategy?
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counting on the customer to demand the product - increased popularity will convince retailers to stock products
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What is IMC?
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Integrated Marketing Communications - process for managing customer relationships that drive brand value primarily through communication efforts
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What is marketing dashboard?
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Marketing performance measurement that describes the analysis and improvement of the efficiency and effectiveness of marketing
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What is the communication model?
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Source, Message, Medium, Receiver, Feedback - noise and interference are becoming problems in decoding
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What is buzz?
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A reaction made by the public
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What is hype?
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An association that the company creates
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What is stealth marketing?
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You have no idea you are being marketed to - pretend tourist with new camera phone
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What is guerilla marketing?
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unexpected, unconventional, potentially interactive, and consumers have never seen before
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What is viral marketing?
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Consumers passing a message along to other consumers (facebook)
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What is AIDA?
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Attention, Interest, Desire, Action - meeting the message objectives
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What is product placement?
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Practice of integrating specific products and brands into filmed entertainment - 3 types: visual, verbal, hands-on
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What is evaluating advertisements?
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Post-testing by conducting research on consumer's responses to advertising messages they have seen or heard
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What is unaided recall?
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Do not give tips to the consumer to prime
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What is aided recall?
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To prime people to remember by giving them a tip or hint
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What are gross rating points?
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A term used in advertising to measure the size of an audience reached by a specific media vehicle or schedule
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What is Cost Per Thousand
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CPM - a measure used to compare relative cost-effectiveness of different media vehicles that have different exposure rates; cost to deliver a message per 1000 households
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