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221 Cards in this Set

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  • Back
profit
the reward to a business firm for the risk it undertakes in offering a product for sale; the money left over after a firm's total expenses are subtracted from its total revenues
corporate level
top management directs overall strategy for the entire organization
business unit
refers to an organization that markets a set of related products to a clearly defined group of customers
business unit level
the level at which business unit managers set the direction for their products and markets to exploit value-creating opportunities
functional level
where groups of specialists actually create value for the organization
cross-functional teams
a small number of people from different departments in an organization who are mutually accountable to a common set of performance goals
mission
a statement of the organization's scope, often identifying its customers, markets, products, technology, and values
stakeholders
the people who are affected by what the company does and how well it performs
organizational culture
a set of values, ideas, and attitudes that is learned and shared among the members of an organization
goals or objectives
convert the mission into targeted levels of performance to be achieved, often by a specific time
market share
the ratio of sales revenue of the firm to the total sales revenue of all firms in the industry, including the firm itself
competencies
an organization's special capabilities, including skills, technologies, and resources that distinguish it from other organizations
competetive advantage
a unique strength relative to competitors, often based on quality, time, cost, or innovation
quality (TQM)
those features and characteristics of a product that influence its product cycles through benchmarking
benchmarking
discovering how others do something better than your own firm so you can imitate or leapfrog comptetition
strategic marketing process
approach whereby an organization allocates its marketing mix resources to reach its target markets
marketing plan
a roadmap for the marketing activities of an organization for a specified future period of time, such as one year or five years
situation analysis
taking stock of where the firm or product has been recently, where it is now, and where it is headed in terms of the organization's plans and the external factors adn trends affecting it
SWOT analysis
an acronym describing an organization's appraisal of its internal Strangths and Weaknesses and its external Opportunities and Threats
market segmentation
involves aggregating prospective buyers into groups, or segments, taht have common needs adn will respond similarly to a marketing action
points of difference
those characteristics of a product that make it superior to competetive substitutes
marketing strategy
the means by which a marketing goal is to be achieved, usually characterized by a specified target market and a marketing program to reach it
marketing tactics
detailed day-to-day operational decisions essential to the overall success of marketing strategies
business firm
privately owned organization that serves its customers in order to earn a profit
nonprofit organization
a nongovernmental organization that serves its customers but does not have profit as an organizational goal
business portfolio analysis
uses quantified performance measures and growth targets to analyze a firm's business units as though they were a collection of seperate investments
SBU
strategic business units
SBU matrix
vertical axis is market growth, horizontal market share
cash cows
sbus that typically generate large amounts of cash
stars
sbus with a high share of high-growth markets that may need extra cash to finance their own rapid future growth
question marks or problem children
SBUs with a low share of high-growth markets
dogs
SBUs with a low share of low-growth markets
diversification
a marketing strategy of developing new products and selling them in new markets
strategic marketing process
process of allocating marketing mix resources to reach target markets is divided 3 phases: planning, implementation, and control
planning phase
situation analysis, market-product focus and goal setting, adn marketing program
planning gap
the difference between the projection of the path to reach a new goal and the projection of the path of the results of a plan already in place
price
the money or other considerations exchanged for the ownership or use of a good or service
barter
the practice of exchangeing goods and sercvices for other goods and services rather than money
price equation
price = list price - (incentives + allowances) + extra fees
value
ratio of percieved benefits to price: perceived benefits/price
value-pricing
the practice of simultaneously increasing product and service benefits while maintaining or decreasing price
profit equation
profit = total revenue - total cost

profit = (unit price x quantity sold)
pricing objectives
involve specifying the role of price ina n organization's marketing and strategic plans
market share
ratio of the firm's sales revenues or unit sales to those of the industry
pricing constraints
factors that limit the range of prices a firm may set (consumer demand)
demand curve
a 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
total revenue
TR = P x Q
total revenue = price x quantity
average revenue
ar = tr/q = p
total revenue
the total money received from the sale of product
average revenue
the average amount of money received for selling one unit of a product or simply the price of that unit
marginal revenue
the change in total revenue that results from producing and marketing one additional unit
marginal revenue
MR = change in TR / 1 unit increase in Q = change in TR / change in Q
marginal revenue
slope of the total revenue curve
price elasticity of demand
measures sensitivity of consumer demand and the firm's revenues to changes in price
price elasticity of demand
E = percentage change in quantity demanded / percentage change in price
elastic demand
1% decrease in price produces more than a 1% increase in quantity
inelastic demand
1% decrease in price produces less than a 1% increase in quantity
unitary demand
% change in price is identical to % cahnge in quantity
total cost
TC = FC + VC
total cost
the total expense incurred by a firm in producing and marketing a product
fixed cost
the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold
variable cost
the sum of the expenses of the firm that vary directly with teh quantity of a product that is produced and sold
unit variable cost
UVC = VC / Q
marginal analysis
a continuing, concise trade-off of incremental costs against incremental revenues
break-even analysis
a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output
break even point
the quantity at which total revenue and total cost are equal
break even point
BEP = fixed cost / unit price - unit variable cost
services
intangible activities or benefits that an organization provides to consumers in exchange for money or something else of value
four I's of services
intangibility, inconsistency, inseperability, inventory
idle production capacity
when the service provider is available but there is no demand
service continuum
a range of what companies bring to the market from the tangible to the intangible or good-dominant to service dominant offerings
classifications of services
delivery, profit or nonprofit, government sponsored
gap analysis
asks consumers to asses their expectations and experiences on dimensions of service quality such as reliability, responsiveness, assurance, empathy
customer contact audit
a flowchart of the points of interaction between consumer and service provider
internal marketing
based on the notion that a service organization must focus on its employees, or internal market, before successful programs can be directed at customers
capacity management
the service component of the marketing mix must be integrated with efforts to influence customer demand. must manage availability of the offering so that demand matches capacity over the duration of the demand cycle and the organization's assets are used in ways that will maximize the ROI
off-peak pricing
consists of charging different prices during different times of the day or days of the week to reflect variations in demand for the service
four common approaches to finding a price level
demand-oriented, cost-oriented, profit-oriented, competition-oriented
skimming pricing
setting the highest initial price that customers really desiring the product are willing to pay. then they are lowered to hit a more price-sensitive level
penetration pricing
setting a low initial price on a new product to appeal immediately to the mass market
prestige pricing
involves setting a high price so that quality or status conscious consumer will be attracted to the product and buy it. (if price is lowered, it may lose its prestige)
price lining
a firm that is 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 below an even number
target pricing
estimating the price that the ultimate consumer would be willing to pay for a product, working backward through markups taken by retailers and wholesalers to determine what price is charged to wholesalers, and then deliberately adjusting the composition and features of a product to achieve the target price to consumers
bundle pricing
the marketing of two or more products in a single package price
yield management pricing
the charging of different prices to maximize revenue for a set amount of capacity at a given time
standard markup pricing
entails adding a fixed percentage to the cost of all items in a specific product class
cost-plus pricing
involves summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at a price
experience curve pricing
based on the learning effect -- as the company gains more experience creating the product, costs go down and so do prices
target profit pricing
a firm sets an annual target of a specific dollar volume of profit
target return-on-sales pricing
firms such as supermarkets us to set typical prices that will give them a profit that is a specified percentage, say, 1 percent, of the sales volume
target return-on-sales
= target profit / total revenue
target return-on-investment pricing
a method of setting prices to achieve this target
customary pricing
for products where tradition, a standardized channel of distribution, or other competitive factors dictate the price
above-at-or below-market pricing
setting a market price for a product or product class based on a subjective feel for the competitors' price or market price as the benchmark
loss-leader pricing
for a special promotion retail store deliberately sell a product below its customary price to attract attention
one-price policy (fixed price)
setting one price for all buyers
flexible-price policy (dynamic pricing)
involves setting different prices for products and services depending on individual buyers and purchase situations
product-line pricing
the setting of prices for all items in a product line (if one is underpriced, another is overpriced)
price war
involves successive price cutting by competitors to increase or maintain their unit sales or market share
quantity discounts
used to encourage customer to buy larger quantities of products, firms offer reductions in unit cost for a larger order
trade (functional discounts)
30/10/5 $100 -- 30% to retailers ($30) 10% to wholesalers closest to the resaler ($7), and 5% to wholesaler nearest the manufacturer
allowaces
trade-in and promotional
promotional allowances
cash payments or extra amount of free goods awarded sellers in the channel of distribution for undertaking certain advertising or selling activities to promote a product
everyday low pricing
the practice of replacing promotional allowances with lower manufacturer list prices
FOB origin pricing
seller puts the product on board, transportation costs go to buyer
uniform delivered pricing
price the seller quotes includes all transportation costs
basing-point pricing
involves selecting one or more geographical locations from which the list price for products plus freight expenses are charged to the buyer
price fixing
a conspiracy among firms to set prices for a product

horizontal -- two manufacturers
vertical -- manufacturer and retailer
price dicrimination
the practice of charging different prices to different buyers for goods of like grade and quality
predatory pricing
the practice of charging a very low price for a product with the intent of driving competitors out of business
retailing
includes all activities involved in selling, renting, and providing goods and services to ultimate customers for personal, family, or household use
four basic consumer utilities
time, place, form, and possession
form of ownership
distinguishes retail outlets based on whether individuals, corporate chains, or contractual systems own the outlet
level of service
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
depth of product line
store carries a large assortment of each item
breadth of product line
the variety of different items a store carries
scrambled merchandising
offering several unrelated product lines in a single store
hypermarket
offer consumers everything in a single outlet, eliminating the need to stop at more than one location
intertype competition
competition between very dissimilar types of retail outlets, caused by hypermarkets
telemarketing
nonstore retailing that involves using the telephone to interact with and sell directly to consumers
direct selling
door-to-door retailing (mary kay and what mrs. floridia used to do
retail positioning matrix
a matrix developed by the MAC Group that positions retail outlets on two dimensions: breadth of product line and value added
retailing mix
includes activities related to managing the store and the merchandise in the store. retail pricing, store location, retail communication, and merchandise
off-price retailing
involves selling brand-name merchandise at lower than regular prices. excess merchandise bought by retailers at low prices
shrinkage
breakage and theft of merchandise by customers and employees
central business district
the oldest retail setting, the community's downtown area
regional shopping centers
large shopping areas that often contain two or three anchor stores
community shopping center
one primary store and about 20 to 40 smaller outlets (mall)
strip location
clusters of stores
power center
a huge shopping strip with multiple anchor stores
retail communication
ambiance, image, etc.
category management
an approach to managing the assortment of merchandise, assigns a manager with the responsibility for selecting all products that consumers in a market segment might view as substitutes for each other
wheel of retailing
describes how new forms of retail outlets enter the market. begin with low prices, margins, status, go higher, still higher, back to characteristics of beginning
retail life cycle
early growth, accelerated development, maturity, decline
multichannel retailers
combine many formats to offer a broader spectrum of benefits and experiences, utilized and integrate a combination of traditional store formats and nonstore formats (websites)
promotional mix
the combination of one or more communication tools used to inform prospective buyers, persuade them, and remind them about the benefits
integrated marketing communications
the concept of designing marketing communications programs that coordinate all promotional activities to provide a consistent message across all audiences
communication
the process of conveying a message to others and requires six elements: source, message, channel, receiver, and process off encoding and decoding
source
a company or person who has information to convey
message
the information sent by the source
channel of communication
means by which message is conveyed (salesperson, advertising, PR)
receivers
consumers who get the message
encoding
the process of having the sender transform an idea into a set of symbols
decoding
the reverse of encoding, or the process of having the receiver take a set of symbols, the message, and transform them back to an idea
field of experience
a mutually shared understanding and knowledge that a sender and receiver apply to a message so that it can be communicated effectively
response
the impact the message had on the receiver's knowledge, attitudes, or behaviors
feedback
the sender's interpretation of the response and indicates whether the message was decoded and understood as intended
noise
extraneous factors that can work against effective communication by distorting message or the feedback received
advertising
any paid form of nonpersonal communication about an organization, good, service, or idea by an identified sponsor
personal selling
the two-way flow of communication between a buyer and a seller, designed to influence a person's or group's purchase decision
public relations
a 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
a nonpersonal, indirectly paid presentation of an organization, good, or service
sales promotion
a short-term inducement of value offered to arouse interest in buying a good or service (coupons, etc.)
direct marketing
uses direct communication with consumers to generate a response in the form of an order, a request for further information, or a visit to a retail outlet (catalogs, etc)
product characteristics complexity, risk, ancillary services
complexity: how complicated product is (technical sophistication)

Risk: financial, social, and physical

ancillary services: the degree of service or support required after sale
push strategy
directing the promotional mix to channel members to gain their cooperation in ordering and stocking the product
pull strategy
directing its promotional mix at ultimate consumers, retailers order the product from wholesalers, and thus the item is pulled through the intermediaries
hierarchy of effects
the sequence of stages a prospective buyer goes through from initial awareness of a product to eventual action: awareness, interest, evaluation, trial, adoption
percentage of sales budgeting
funds are allocated to promotion as a percentage of past or anticipated sales, in terms of either dollars or units sold
competitive parity budgeting
matching the competitor's absolute level of spending or the proportion per point of market share
all-you-can-afford budgeting
money is allocated to promotion only after all other budget items are covered
objective and task budgeting
the best approach to promotion, whereby the company determines its promotion objectives, outlines the tasks to accomplish these objectives, and determines the promotion cost of performing these tasks
direct orders
the result of offers that contain all the information necessary for a prospective buyer to make a decision to purchase and complete the transaction
lead generation
the result of an offer designed to generate interest in a product or service and a request for additional information
traffic generation
the outcome of an offer designed to motivate people to visit a business
advertising
any paid form of nonpersonal communication about an organization, a good, a service, or an idea by an identified sponsor
product advertisements
focused on selling a good or service, takes on three forms: pioneering (informational), competitive (persuasive), reminder
institutional advertisements
builds goodwill or an image for an organization rather than promote a specific good or service. advocacy, pioneering, competitive, reminder
appeals in advertising
fear: suggests that he or she can avoid some negative experience through the purchase and use of a product or service

sex:suggest to the audience that the product will increase the attractiveness of the user

humorous: imply either directly or subtly that the product is more fun or exciting than competitor's offerings
reach
the number of different people or households exposed to an advertisement
rating
the percentage of households in a market that are tuned to a particular TV show or radio station
frequency
the average number of times a person in the target audience is exposed to a message or advertisement
gross rating points (GRPs)
reach x frequency. to obtain the appropriate number of GRPs to achieve an advertising campaign's objectives, the media planner must balance reach and frequency
cost per thousand (CPM)
refers to the cost of reaching 1,000 individuals or households with the advertising message in a given medium
infomercials
program-length (30-minute) advertisements that take an educational approach to communication with potential customers
scheduling advertising factors
buyer turnover, purchase frequency, forgetting rate
three basic approaches to advertising scheduling
continuous, flighting, pulse
pretests
conducted before the advertisements are placed in any medium to determine whether the ad communicates the intended message or to select among alternative versions of the ad
three forms of pretesting
portfolio, jury (panel), theater (most sophisticated)
full-service agency
provides the most complete range of services for carrying out the advertising program, including market research, media selection, copy development, artwork, and production
limited-service agencies
specialize in one aspect of the advertising process such as providing creative services to develop the advertising copy or buying previously unpurchased media space
in-house agencies
made up of the company's own advertising staff may provide full services or a limited range of services
posttests
advertisement may go through one after it has been shown to the audience to determine whether it accomplished its intended purpose. aided recall, unaided recall, attitude tests, inquiry tests, sales tests
consumer-oriented sales promotions
sales tools used to support a company's advertising and personal selling (coupons, etc)
product placement
involves the use of a brand-name product in a movie, television show, video, or commercial for another product
trade-oriented sales promotions
sales tools used to support a company's advertising and personal selling directed to wholesalers, retailers, or distributors (allowances and discounts, cooperative advertising, and training of distributors' salesforces
cooperative advertising
encourage both better quality and greater quantity in the local advertising efforts of resellers. programs by which a manufacturer pays a percentage of the retailer's local advertising expense for advertising the manufacturer's product
sales management
involves planning the selling program and implementing and controlling the personal selling effort of the firm
relationship selling
the 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 create customized solutions; commit to joint planning; and share customer, competitive and company information for their mutual benefit and ultimately the customer
order taker
processes routine orders or reorders for products that were already sold by the company. preserve an ongoing relationship with existing customers and maintain sales
order getter
sells in a conventional sense and identifies prospective customers, provides customers with information, persuades customers to buy, closes sales, and follows up on customers' use of a product or service
missionary salespeople
do not directly solicit orders but rather concentrate on performing promotional activities and introducing new products
major account management
the practice of using team selling to focus on important customers so as to build mutually beneficial, long-term, cooperative relationships
workload method
formula-based method of organizing sales force integrates the number of customers served, call frequency, call length, and available selling time to arrive at a figure for the salesforce size
workload method
Number of sales people = (#customers x call frequency x length of avg call) / avg amount of selling time available per year
account management policies
specifies who salespeople should contact, what kinds of selling and customer service activities should be engaged in, and how these activities should be carried out
emotional intelligence
the ability to understand one's own emotions and the emotions of people with whom one interacts with on a daily basis
sales quota
contains specific goals assigned to a salesperson, sales team, branch sales office, or sales district for a stated time period
salesforce automation
the use of these technologies to make the sales function more effective and efficient
sales plan
a statement describing what is to be achieved and where and how the selling effort of salespeople is the be deployed
consultive selling
focuses on problem identification, where the salesperson serves as an expert on problem recognition and resolution
adaptive selling
involves adjusting the presentation to fit the selling situation, such as knowing when to offer solutions and when to ask for more information
need-satisfaction presentation
selling format that emphasizes probing and listening by the salesperson to identify needs and interests of prospective buyers
formula-selling presentation
selling format based on the view that a presentation consists of information that must be provided in an accurate, thorough, and step-by-step manner to inform the prospect
stimulus-response presentation
selling format that assumes that given the appropriate stimulus by a salesperson, the prospect will buy
personal selling process
consists of six stages: prospecting, preapproach, approach, presentation, close, and follow-up
team selling
the practice of using an entire team of professionals in selling to and servicing major customers
sales engineer
a salesperson who specializes in identifying, analyzing, and solving customer problems and brings know-how and technical expertise to the selling situation but often does not actually sell products and services
missionary salespeople
do not directly solicit orders but rather concentrate on performing promotional activities and introducing new products
order taker
processes routine orders or reorders for products that wer already sold by the company
order getter
sells in a conventional sense and identifies prospective customers, provides customers with information, persuades customers to buy, closes sales, and follows up on customers' use of a product or service
partnership selling
buyers and sellers combine their expertise and resources to create customized solutions; commit to joint planning; and share customer, competitive, and company information for their mutual benefit, and ultimately the customer
relationship selling
the practice of building ties to customers based on a salesperson's attention and commitment to customer needs over time
sales management
involves planning the selling program and implementing and controlling the personal selling effort of the firm
cooperative advertising
programs by which a manufacturer pays a percentage of the retailer's local advertising expense for advertising the manufacturer's products
product placement
involves the use of a brand-name product in a movie, television show, video, or commercial for another product
trade-oriented sales promtions
sales tools used to support a company's advertising and personal selling directed to wholesalers, retailers, or distributors