Mkt 291 Final Exam

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an information and communication based electronic exchange environment

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marketpsace

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any activity that uses some form of electronic communication in the inventory, exchange, advertisement, distribution, and payment of goods and services

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electronic commerce

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intranet

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internet-based network used within the boundaries of an organizaiton

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extranets

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internet-based technologies that permit communication between a company and its suppliers, distributors, and other partners

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Caveat emptor

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let the buyer beware

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Consumer bill of rights

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codified the ethics of exchange between buyers and sellers. Consumers ha dthe right to safety, right to be informed, right to choose, and right to be informed

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Two kinds of unethical behavior

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economic espionage: collection of trade secrets or proprietary info about a company's competitor.
bribery

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set of values, ideas, and attitudes that is learned and shared among the members of an organization

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corporate culture

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code of ethics

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a formal statement of ethical principles and rules of conduct. 86% of companies have these

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the idea that organizations are part of a larger society and are accountable to that society for their actions

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social responsibility

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Profit responsiblity

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companies need to maximize profits for their owners/stockholders

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Stakeholder responsiblity

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focuses on the obligations an organization has on consumers, employees, suppliers, and distributors

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Societal responsibility

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obligations that organizations have to the preservation of the ecological environment and to the general public

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marketing efforts to produce, promote, and reclaim environmmentally sensitive products

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green marketing

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occurs when the charitable contributions of a firm are tied directly to the customer revenues produced through the promotion of one of its prodcuts

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case marketing

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social audit

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systematic assessment of a firm's objectives, strategies, and performance in terms of social responsibility

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barter

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the practice of exchanging products and services for other products and services instead of money

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Value

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ratio of perceived benefits to the price

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Demand oriented pricing

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focuses on expected customer taste and preferences

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Types of demand-oriented pricing: skimming pricing

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-Introducing a new/innovative product
-intial high price
-lowers price to meet the price-sensitive segment
-Effective when: enough customers buy it at the high intiial price, lowering the price has minor effects on increasing the sales volume and reducing unit cost

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Types of demand-oriented pricing: Pentration pricing

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-used to set a low initial price on a new product to appeal immediatley to mass market
-opposite of skimming pricing
-low initial price discourages competition from entering

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Types of demand-oriented pricing: Prestige pricing

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setting a high price so that quality/status conscious consumers will be attracte do the product and buy it

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Types of demand-oriented pricing: Odd-even pricing

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-setting a few dollars or cents under an even number

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Types of demand-oriented pricing: Target pricing

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manufacturer adjusts the composition and features of a product to achieve the target price the consumer wants

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Types of demand-oriented pricing: bundle pricing

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marketing two or more products in a single package price

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Types of demand-oriented pricing: yield management pricing

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charging of different prices to maximus revenue for a set amount of capacity at a given time

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Cost-oriented pricing

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price is set by looking at the produciton and marketing costs and then adding enough to cover direct expenses, overhead, and profit

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Cost oriented pricing: standard markup pricing

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adding a fixed percentage to the cost of all items in a specific product class

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Cost-oriented pricing: cost-plus pricing

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summing the toal unit cost of providing a product or service and adding a specific amount ot the cost to arrive at a price
-favorable in business to business marketers

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Profit-oriented pricing

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choosing to balance both revenue and cost to set price

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profit-oriented pricing: target profit pricing

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when a firm sets an annual target of a specific dollar volume of profit
-could be disastorous if estimate is too high

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profit-oriented pricing: target return-on-sales pricing

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sets prices that will give them a profit that is specified percentage of the sales volume
-used because of the difficulty in establishing a benchmark of sales or investment

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profit-oriented pricing: target return-on-investment pricing

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set prices to achieve a return-on-investment (ROI) target

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Competition-oriented pricing

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stress what competitors or "the market" is doing

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Competition-oriented pricing: customary pricing

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used where a standardized channel of distribution or other competitive factors dictate the price

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Competition-oriented pricing: above-, at-, or below- marketing pricing

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marketers chose a price above, at, or below market prices
-private brands of products deliberately set low prices

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Competition-oriented pricing: Loss-leader pricing

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deliberately sell a product below customary price to attract attention to it. (promotions that retail stores use)
-purpose isn't to increase sales, but to attract customers to their store to buy other products

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Four cost concepts

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-total cost
-fixed cost
-variable cost
-unit variable cost

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technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output

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break-even analysis

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Sales objective

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-increase sales
-can be translated easily into meaningful targets for marketing managers

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market share objective

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-the ratio of the firms sales revenues or unit sales to those of the industry
-pursue market share objective when industry sales are relatively flat or declining

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unit volume objective

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-used by firms that sell multiple products at different prices and need to match the unit volume demanded by cutomers with price and produciton capacity

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Survival objective

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firms want to survive or stay in business

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social responsibilty objective

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firm may forgo higher profit on sales and follow a pricing objective that recognizes its obligations to customers and society in general

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Pricing constraints

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factors that limit the range of prices a firm may set

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Pricing constraints: legal and ethical considerations: price fixing

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Illegal under the sherman act
-Horizontal: when two or more competitors collude to explicitily or implicitly set prices
-Vertical: controlling agreements between independent buyers and sellers where sellers are required to not sell products below a minimum retail price

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Pricing constraints: legal and ethical considerations: price discrimination

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charging different prices to different buyers for goods of like grade and quality.
-clayton act prohibits this

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Pricing constraints: legal and ethical considerations: deceptive discrimination

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price deals that mislead consumers
-outlawed by FTC
-Bait and Switch: firm offers very low price on a product (th ebait) to attract customers. The customer in the store is persuaded to purchase a higher-priced item (the switch) by degrading promoted item and not having promoted item in stock

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Pricing constraints: legal and ethical considerations: predatory pricing

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practice of charging very low prices for a product with the intent of driving competitors out of business.

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reductions from list price that a seller gives a b uyer as a reward for some activity of the buyer that is favorable to the seller

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discount

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quantity discouts

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reductions in unit costs for a larger order

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seasonal discounts

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engourage buyers to stock inventory earlier than their normal demand would require

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trade discounts

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offered to resellers in channel of distribution to reward them for marketing functions they will perform in the future

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cash discounts

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encourage retailers to pay their bills quickly, manufacturers offer them cash discounts

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consists of individuals and firms involved in the process of making a product or service available for use or consumption by consumers or industrial users

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marketing channel

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make possible the flow of products from producers to ultimate consumers by perfoming three basic functions

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intermediaries

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intermediaries three basic funcitons

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-transactional
-logistical
-facilitating

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transactional function

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when they buy and sell goods or services, also taking risks

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logistical function

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Assorting, Storing, Sorting, and Transporting products

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facilitating function

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makes transactions easier for buyers by dealing with:
-financials
-grading, inspecting, testing or judging products
-Gathering marketing information and conducting research

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Consumer benefits of intermediaries

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having the goods and services you want, when you want them, where you want them, and in the form you want them i

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Contractual vertical marketing system

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independent production and distribution firms integrate their efforts on a contractual basis to obtain greater functional economies and marketing impact than they could achieve alone

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chains involve a wholesaler that develops a contractual relationship with small, independent retailers to standardize and coordinate buying practices, merchandising programs, and inventory management efforts

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wholesaler-sponsored voluntary

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small, independent retailers form an organizaiotn that operates a wholesale facility cooperatively

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retailer-sponsored cooperatives

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contractual arrangement between a parent company and an individual/firm tha tallows the franchisee to operate a certain type of business under an established name

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franchising

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where a manufacturer licenses dealers to sell its product subject to various sales and service conditions

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manufacturer-sponsored retail franchise
Ex: ford licenses dealers to sell its cars subject to certain conditions

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where a company licenses wholsalers that purchase raw materials to make the product and distribute its products to retailers

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manufacturer-sponsored wholsale franchise: pepsi-cola licenses wholesalers that purcahse concentrate from Pepsi-Cola and then carbonate, bottle, promote, and distribute product

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provided by firms that have designed a uniwue approach for performing a service and wish to profit by selling the franchise to others

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service-sponsored retail franchise systems

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franchisors licsense individuals or firms to dispense a service under a trade anme and specific guidelines

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service-sponsored franchise

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Administered vertical marketing system

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achieve coordination at successive stages of production and distribution by the size and influence of one channel member rather than through ownership

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Intensive distribution

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firm places its products in services in as many outlets as possible
-Ex: convenience products

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Exclusive distribution

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only one retailr in a specified geographical area carries firm's products
-Ex: specialty products or services

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Selective distribution

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firm selects a few retailers in a specfic geographical area to carry its products

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gaining access to channels and intermediaries that satisfy at least some of the interests buyers might want fulfilled when they prucahse a firm's products or services

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buyer requirements

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channel conflict

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arises when one channel member believes another channel member is engaged in behavior that prevents it from achieving its goals

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vertical channel conflict

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occurs between different levels in a marketing channel:
-disintermediation: channel member bypassed another member and sells or buys products directly

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horizontal channel conflict

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occurs between intermediaries at the same level in a marketing channel.
-manufacturer increases its distribution coverage in a geographical area
-dual distribution causes conflict when differnt types of retailers carry the same brands

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Four customer service factors

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-time
-dependability
-communication
-convenience

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Time

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refers to order cycle or replenishment time for an item.
-The time between the ordering of an item and when it is received and ready for use of sale

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Depndability

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-consistent lead time
-Safe delivery
-Complete delivery

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Communication

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a two-way link between buyer and seller that helps in moniotoring service and anticipating future needs

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Convenience

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there should be a minimum effort on the part of the buyer in doing business with the seller