Marketing Final Exam

Front 1

Retailing

Back 1

Efforts aimed at selling products to final consumers for personal, non-business use

Front 2

Economic Motivators

Back 2

Convenience, Product selection, Special services, Fairness in dealings, Helpful information, Price, Social image, Atmospherics

Front 3

Classification Of Ownership in Retailing

Back 3

1. independent retailers
2. chain stores
3. franchise outlets

Front 4

Benefits of Sole Proprietor & Gen. Partner

Back 4

1. No special fillings or rules for operating the business
2. P&L reported on owners personal income taxes
3. No registration required or fees

Front 5

Drawbacks of Sole Proprietorship & GP

Back 5

1. No protection from liability claims
2. Personal assets at risk

Front 6

Benefits of LLC

Back 6

1. Owners have limited personal liability for claims against
the business
2. Flexibility to apportion P&L

Front 7

Drawbacks of LLC

Back 7

1. Distribution subject to self-employment taxes
2. VC prefer more traditional corporate structure

Front 8

Benefits of S Corp

Back 8

1. Personal liability for claims against business is limited
2. P&L reported on owner’s personal income tax statement
3. Salaries subject to income & employment taxes

Front 9

Drawbacks of S Corp

Back 9

1. P&L can be allocated only in proportion to each
shareholder’s ownership interest
2. Some states tax S Corp like C Corp

Front 10

Benefits of C Corp

Back 10

1. Extensive case law support owners limited personal
liability against claims
2. Lower tax rate vs. LLC for first $50,000 - $75,000 of
profits
3. Favored by venture capitalists

Front 11

Drawbacks of C Corp

Back 11

1. Double taxation problem
2. Separate tax structure requires separate accounting
3. Admin overhead – Board of Directors, annual meeting

Front 12

Classification of Retailers Level of Service

Back 12

1. full service
2. self-service

Front 13

Classification of Retailers in Product Assortment

Back 13

1. breadth
2. depth

Front 14

Classification of Retailers in Price

Back 14

1. gross margin (% of sales)

Front 15

Conventional retailer in terms of selling

Back 15

use low volume/high margin; “buy low sell high” philosophy

Front 16

Classification of Conventional Retailers

Back 16

General Stores, Limited-Line Stores, Specialty Store, Department Stores

Front 17

.General Store

Back 17

carry anything they could sell in
reasonable volume

Front 18

Limited-Line Stores

Back 18

specialize in certain lines of
related products rather than a wide assortment

Front 19

Specialty Stores

Back 19

small; distinct “personality”;
excellent service (Sierra Designs)

Front 20

Department Stores

Back 20

combination of limited-line
stores and specialty stores (Nordstrom’s)

Front 21

Goal of Mass-Merchandising

Back 21

offer low prices to get faster turnover & greater sales volume
by appealing to larger markets

Front 22

Evolution of Mass-Merchandising

Back 22

1.Supermarket
2. Catalog Showroom Retailers
3. Discount Houses
4. Hypermarkets
5. Warehouse Clubs
6. Category Killer

Front 23

Supermarkets

Back 23

large grocery stores; self-service
orientation; wide assortments (Safeway)

Front 24

Catalog Showroom Retailers

Back 24

offer several lines in
display showroom; hold backup inventories (Service
Merchandise)

Front 25

Discount Houses

Back 25

offer “hard goods” (cameras, TVs,
appliances) at substantial price cuts

Front 26

Hypermarkets

Back 26

carry food, drugs, & services that
consumers purchase routinely (Super Target)

Front 27

Warehouse Clubs

Back 27

offer appliances, household items
& groceries; usually sold in bulk; cash-carry basis; may be a
membership fee (Costco)

Front 28

Category Killer

Back 28

offer single-line merchandise; use
self-service, discount prices, high turnover (Best Buy)

Front 29

Clicks vs. Bricks in terms of customers

Back 29

Clicks: young, educated, upscale
Bricks: Cross Section

Front 30

Clicks vs. Bricks in terms of Days of Week they shop

Back 30

Clicks: Weekdays
Bricks: Weekends

Front 31

Clicks vs. Bricks in terms of customer service

Back 31

Clicks: Weak but improving
Bricks: Varies, better than online

Front 32

Click vs. Bricks in terms of products

Back 32

Clicks: Emphasis on one-time
Bricks: Emphasis on routine

Front 33

Click vs. Bricks in terms of examining the product

Back 33

Clicks: Loss of tactile inspection
Bricks: Ability to appraise

Front 34

Clicks vs. Brick in terms of comparative info.

Back 34

Clicks: more extensive, sometimes poorly organized
Bricks: Often Weak, limited to packaging

Front 35

Clicks vs. Bricks in terms of how entices the customer to buy there

Back 35

Clicks: Media experience
Bricks: Social experience

Front 36

Clicks vs. Bricks in terms of pricing

Back 36

Clicks: Product price lower, shipping and handling can be costly
Bricks: Product prices higher, no shipping expense

Front 37

Clicks vs. Bricks in terms of shopping hours.

Back 37

Clicks: 24/7
Bricks: time frame

Front 38

Scrambled Merchandising

Back 38

offer any product line that can be sold profitably

Front 39

U.S. Landscape of retailers

Back 39

1,115,900 retailers

Front 40

Small retailers

Back 40

56% of the pool; annual sales less than $1
million

Front 41

Big retailers

Back 41

11% of the pool; annual sales more than
$5 million

Front 42

What kind of chain do small retailers do?

Back 42

Cooperative chains and Voluntary chains

Front 43

Voluntary chains

Back 43

wholesaler sponsored
(IGA)

Front 44

Cooperative chains

Back 44

retailer sponsored
(True Value Hardware)

Front 45

Franchiser

Back 45

originates the trade name, product, methods of operation

Front 46

Franchisee

Back 46

pays the franchiser for the right of use

Front 47

Franchise agreement

Back 47

usually lasts for 10-20 years; it is legally binding

Front 48

Typically, the franchisee pays

Back 48

1. initial, one-time franchise fee
2. pays weekly, biweekly, or monthly royalty fee (3-7% of
gross revenues)
3. advertising fees (4% of gross revenues)

Front 49

Why Franchise?

Back 49

Risk relatively little capital, Product has already been established, Technical training & assistance , Quality control standards, Substantial lower failure rate , Growing in popularity

Front 50

Factory Outlet

Back 50

an off-price retailer that is owned and operated by the manufacturer

Front 51

Direct retailing

Back 51

the selling of products by representatives who work door-to-door, office-to-office, or at home sales parties

Front 52

Direct Marketing

Back 52

techniques used to get consumers to make a purchase from their home, office, or other non-retail setting.

Front 53

Telemarketing

Back 53

is the use of the tele-phone to sell directly to consumers.

Front 54

Destination Stores

Back 54

stores that consumers plan to visit

Front 55

Business Format franchising

Back 55

is an ongoing business relationship in which a franchisee uses franchiser's name, format, or method of business in return for several type of fees.

Front 56

Retailing Mix

Back 56

product, place, promotion, price, presentation, and personnel

Front 57

Product (Retail)

Back 57

Width and depth of product assortment

Front 58

Place (Retail)

Back 58

Location and Hours

Front 59

Promotion (Retail)

Back 59

Advertising, publicity, and public relations

Front 60

Personnel (Retail)

Back 60

Customer Service and personal selling

Front 61

Presentation (Retail)

Back 61

Layout and Atmosphere

Front 62

Markup Pricing

Back 62

Resellers set prices by using a markup;

Front 63

Markup

Back 63

a dollar amount added to the cost of a product to reach the selling price

Front 64

Markup (percent) is based on...

Back 64

Selling Price

Front 65

A standard markup is acceptable when...

Back 65

(a) covers the firm’s operating expenses
(b) provides a reasonable profit

Front 66

Stockturn rate

Back 66

the number of times the average inventory is sold in a year

Front 67

Markup: Algebraic Method

Back 67

cost + markup = selling price, percent*selling price = markup

Front 68

Markup Price: Useful Equations

Back 68

Markup % = Markup / (Cost + Markup),
Selling Price = Cost / (100% - Markup %

Front 69

Break Even Equation

Back 69

BE = [FC/(SP – AVC)]

Front 70

Demand Pricing Strategies

Back 70

1. Value
2. Reference
3. Leader
4. Bait
5. Odd-Even
6. Prestige
7. Demand-Backward

Front 71

Value Pricing

Back 71

Offer the highest value relative to competitors

Front 72

Reference Pricing

Back 72

Taps the price consumers expect to pay

Front 73

Leader Pricing

Back 73

Offer attractive prices to get consumers into retail stores

Front 74

Bait Pricing

Back 74

Offer a bargain, but sell under protest

Front 75

Odd-Even Pricing

Back 75

Offer prices that end in certain numbers

Front 76

Prestige Pricing

Back 76

Offer a rather high price to suggest high quality or status

Front 77

Odd-Even Pricing

Back 77

Offer prices that end in certain numbers

Front 78

Demand-Backward Pricing

Back 78

Offer an acceptable final consumer price and work backward to what
a producer can charge

Front 79

Price =

Back 79

clear, tangible cue; higher prices set higher expectations

Front 80

Three Cs that impact price

Back 80

Company = cost focus
Customer = demand focus
Competition = market focus

Front 81

Target Return

Back 81

percentage of sales or capital investment; yardstick idea (GE)

Front 82

Satisfactory Profits

Back 82

returns that insure a firm’s survival

Front 83

Profit Maximization

Back 83

charge all that traffic will bear

Front 84

Sales Growth

Back 84

seek some level of unit sales, without referring to profit (Amazon)

Front 85

Market Share

Back 85

seek to gain a specific share (percent) of a market, benchmark idea (Coke)

Front 86

Status quo

Back 86

hold a “don’t rock the boat” mindset; goal: non price competition

Front 87

New-Product Pricing Strategies

Back 87

skim, penetrate

Front 88

Basic Properties of a great ad

Back 88

1. Strategically Sound
2. Creativity Concept
3. Execution

Front 89

Persuasion Process

Back 89

1. Stopping Power
2. Pulling Power
3. Locking Power

Front 90

Appeal

Back 90

efforts that make a product attractive or interesting to target
audiences

Front 91

Types of Appeals

Back 91

1. Rational - utilitarian needs
2. Emotional - psychological needs*
3. Status - quality needs
4. Fear - social approval needs
5. Appetite - physiological needs

Front 92

Execution

Back 92

speaks to how an appeal is presented

Front 93

Factual Message

Back 93

focus on product attributes &
benefits (Ford F-150)

Front 94

Technical Evidence

Back 94

scientific evidence is highlighted
to support a claim (Intel)

Front 95

Demonstration

Back 95

illustrate key product benefits by
showing uses (UPS)

Front 96

Comparison

Back 96

direct or indirect comparison to a
competitive brand (Hertz)

Front 97

Testimonial

Back 97

a person speaks on behalf of the product (Honda)

Front 98

Slice of Life

Back 98

portray real-life situations featuring problems to be solved (Tide Acti-Lift)

Front 99

Animation

Back 99

focus children audiences (TMNT, Hyundai –Brett Favre)

Front 100

Personality Symbol

Back 100

central character who becomes
strongly associated with the product (Geico)

Front 101

Fantasy

Back 101

relies on imagery or illusion (Gatorade)

Front 102

Dramatization

Back 102

creates suspense in the form of a short story (Under Armour)

Front 103

Humor

Back 103

easy to remember, difficult to create (Dude, E*TRADE)

Front 104

Creative Issues

Back 104

Is the creative approach consistent with the brands marketing objectives, Is the creative approach appropriate for the target audience?, Is the approach clear,understandable, and convincing for target audiences?, Is the message sacrificed for creative execution, Is the ad truthful/tasteful

Front 105

Effective Persuasive Talk

Back 105

Effective political ads require verisimilitude, Dialogue quality elicits attitudinal and behavioral response, Delivery quality engenders emotional response

Front 106

Meaning Transfer (celebrity endorsements)

Back 106

1. celebrity derives meaning from past roles
2. meaning transfers to the endorsed product
3. consumers gain meaning via purchase

Front 107

Source Attractiveness

Back 107

similarity, familiarity, liking

Front 108

Caveats regarding celebrity use

Back 108

Overshadow the product, Overexposure, Target audiences, Risk to marketers, Synergy: product; target; celebrity

Front 109

Lecture

Back 109

adv in which the speaker confronts the audience; direct address

Front 110

(Lecture ad) Persuasion =

Back 110

quality of argument or facts

Front 111

Lecture ads assume...

Back 111

the audience wouldn’t dare challenge an expert

Front 112

(Lecture ad) From the viewer’s stance

Back 112

the speaker is trying to impose his/her ideas on me

Front 113

Lecture ads must have

Back 113

1.Credible speakers
2.Viewer appreciation
3.Supportive illustrations

Front 114

Speaker credibility hinges on:

Back 114

1.Expertise → a speaker’s ability; having the proper credentials
2.Trustworthiness → willingness to tell the truth without compromise

Front 115

Advantages of Lecture ads

Back 115

1.Cost savings
2.Compact
3.Explicit

Front 116

Disadvantages of Lecture ads

Back 116

1.Potential for counterarguments
2.Potential for source derogation

Front 117

Drama

Back 117

adv in which characters talk to each other and ignore the audience; indirect address

Front 118

(Drama ad) Persuasion depends on

Back 118

the appearance or semblance of truth

Front 119

Dramas are driven by

Back 119

inferences

Front 120

(Drama ad) From the viewer’s stance

Back 120

the conclusions I draw are my own ideas

Front 121

Drama ads must

Back 121

1. the appearance or semblance of truth
2.Engage viewers
3.Allow viewers to sample emotional rewards associated with the brand

Front 122

Advantages of Drama ads

Back 122

1. Miminal Counteragruements and ource derogation
2.Unleash the power of personal inference

Front 123

Disadvantages of Drama ads

Back 123

1.Viewers may miss intended inference
2.Difficult to achieve verisimilitude
3.Works more so with TV; rarely print

Front 124

Personal Selling

Back 124

person-to-person communication process, message flow from sender => receiver uninterrupted, dyadic communication; allows the message to be tailored

Front 125

Order Getter

Back 125

seek out potential customers
persuade them to buy

Front 126

Order Taker

Back 126

assist customers who
have already decided to buy

Front 127

Missionary

Back 127

work for producers, don’t take orders, build goodwill or educate buyers

Front 128

Technical Specialists

Back 128

assist salespeople and provide technical insight

Front 129

Sales Force Functions

Back 129

1. Locate new customers
2. Underscore product benefits
3. Provide strategic insight
4. Act as visible agents of the company