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391 Cards in this Set

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____ is the interaction between two entities where an exchange of goods takes place.
Marketing Definition
= product, services, feelings, etc.
GOODS
What are the 4 P's in marketing mix?
Product, promotion, price, place
The idea, good, service provided is the....
Product
Communication & PR of the product to the target customer is the...
Promotion
Having the correct price for the product and target customer is the...
Price
Where the product will be distrubted; having the product available to the customer when and where they expect it is the...
Place
When products sell themselves; there is more demand than supply; companies are concerned w/ production and making quality products at the least cost; there was less branding competition and many monopolies....
Production Era
Ford's model-T mass production is an example of this
Production Era- making quality products at the least cost
more companies in market; more competition; demand decreases causing an excess of supply; companies sell on value
Sales Era
companies ask their customers what they want or need from a product; do research on competition; company creates customer value; focus on the customer
Marketing Era
What 4 utilities does marketing provide?
Place, Time, Form, Possession
Financing a car or store credit is an example of
Possession
What are the 9 ingrediants to the Marketing Planning Process?
Business Definition, Situation Analysis, Goals & Objectives, Strategies, Tactics, Measurements, Mission, Values, Culture
Define your business _____ to cover opportunities; but ____ enough to have a well defined niche market
broadly; narrow
Disney and Anheiser Bush are in the entertainment industry is an example of...
Business Definition
SWOT, learn about your business capabilities, your customers &competition, the market.
Situation Analysis
Change the mission statement into a targeted level of performance achieved by a specific time. Tells where the company is going and measures success.
Goals and Objectives
How are the golas & objectives achieved, where one or a combo of the 4 P's are used
Strategies
3M has a ____ strategy
Product strategy
Wal-Mart has a ___ strategy
Price Strategy
P&G has a ___ strategy
Promotin Strategy
Amazon has a _____
Placement & Price strategy
Action plan to carry out the strategy; specifies how the strategy will be implemented. Normally includes the budget
Tactics
Results measure against your goals; a bar for next year; indicates changes needed to be made
Measurement
a statement of the company's scope; identifies customer base, markets, products, technologies, and values
Mission Statement
Connecting w/ Stakeholders
Values
the unit's system of shared values, attitudes, and behaviors
Culture
Business should be defined _____ enough to take advantage of opprotunities, but ____ narrowly enough to have a well defined market.
broadly; narrowly
the company's assessment of their internal strengths, weaknesses, external opporutnities & threats; helps the company understand its position and its areas of improvements; their competition, the customers, and the market/industry trends
SWOT Analysis
Helps understand where the company or product is now, where it's been, and where it is heading based on org. plans and external factors.
Situation Analysis
What are the 4 growth strategies?
Penetration, Product Development, Market Development, Diversification
Penetration
Old/Old
Product Development
New/Old
Market Development
Old/New
Diversification
New/New
Intro of McDonalds into Russia is an example of...
Market Development
McDonald's into of a line of clothing is an example of...
Diversification
What are the internal environments?
Suppliers, Employees, Facilities, Stockholders, Customers
What are the external environments?
Socio/Cultural, Economic, Technological, Regulatory, Competitive
Their level of service/quality should be the same as you promised your customers
Suppliers
Your ____ should interact accordingly w/ the customers. The ____ should give a good impression of the company of reliability and success.
Employees; facilities
Demographics of your market and the culture; target customer's age, gender, trends, times, needs, diversity, language, relgious beliefs, moral values, etc.
External Envion. Socio/Cultural
Company has some control over them; they are the strengths and weaknesses in the SWOT analysis...
Internal Environments
Company has no contorl or almost no control over them....
external environments
Macroeconomic conditions (inflation/recession) & how they affect your product; consumer's income(gross income, disposable income, discretionary income)
External Environment.; Economic
Invention or innovations of applied science or engineering research. i.e. Computers and Internet....
External environments; Technological
licensing and regulation, politics; product depend on materaisl heavily regulated by govt.
External Environments; Regulatory
Research competition(followers or leaders, leading or challenging, do you have an identity?) EX: Walmart vs. Target vs. Kmart; JCPenny vs. Montgomery
External Environment; Competitive
Describing the population based on characteristics: age, gender, ethnicity, income, occupation, education, etc.
Demographics
____ incorporates the set of values, ideas and attitudes of a ______ group of people that are passed from generations.
Culture; homogeneous
Roles of women; changing values in family, honesty, self-esteem, diet, value consciousness are all examples of...
Culture
What are the 4 different kinds of competitive markets?
Pure, Monopolistic, Oligopoly, Monopoly
Every company has the same product
PURE competitive market
many sellers compete w/ the their products on a substantial basis
MONOPOLISTIC competitive market
Increase coffee price; people change to tea is an example of...
MONOPOLISTIC competitive market
few companies contorl the majority of industry sales
OLIGOPOLY competitive market
AT&T, WorldCom, and Sprint contorl 80% of the long distance service market; price competition is discourage... this is an example of
OLIGOPOLY competitive market
One company sells the product; no competition
MONOPOLY competitive market
Who are the 5 Participants in the Consumer Buying Unit?
Initiator, Influencer, User, Decider, Buyer(Purchaser)
Who first has the idea of the product?
Initiator(Info. Gatherer)
Who can have an effect on the Initiator; the only participant that can be outisde the unit(i.e. a friend, advertisement, etc.)?
Influencer
Who can be more than one person?
User
Who decides what will be purchased; this is who you need to get as a marketer bc they decide the purchase?
Decider
Who actually physically makes the purchase; often aim for this participant bc of spontaneous purchases?
Buyer(Purchaser)
What are the 5 steps in the Purchase Decision Process?
Problem Recognition, Information Search, Alternative Evaluation, Purchase Decision, Postpurchase Behavior
Perceiving a difference btw a person's ideal and actual situations big enough to trigger a decision; activate the Purchase Decision Process by showing product shortcomings.
Problem Recognition
after recognizing a problem, search for info.; includes internal search and external search...
Info. Search
scanning memory for previous experiences w/ products
Internal Search; info search
using personal sources, public sources, market dominated sources
External Search; info search
Using other factors(evaluative criteria) that the info search does not provide which represent both the objective and subjective attributes; establish the brands in your consideration set...
Alternative Evaluation
group of brands that a consumer would consider acceptable from all brands aware of...
Consideration Set
choose 1)from whom to buy 2)when to buy
Purchase Decision
after buying, consumer compares w/ expectations and is satsified or dissatisfied; this can affect consumer comm. and repeat purchases
Postpurchse Behavior
Dissatisfied buyers complain to _____ people.
9; postpurchase behavior
When a consumer is faced w/ two or more highly attractive alternatives; feeling of postpurchase psychological tension or anxiety
Cognitive Dissonance
Consideration Set is also known as
Evoked Set
What are the 3 levels of involvement for consumers?
Extended Problem Solving, Limited Problem Solving, Routine Problem Solving
5 stages of the consumer purchase decision process is used in purchase; considerable time & effort on external info. search and evaluating alternatives; high-involvment purchase(expensive)
Extended Problem Solving
seek some info. or rely on a friend for alternatives; little time or effort to spend
Limited Problem Solving
Choosing a toaster, a restaurant are examples of
Limited Problem Solving
recognize problem; make decision, little effort seeking external info or alternatives; a habit, very low-involvement, low-priced and frequently bought
Routine Problem Solving
What are the 5 situational influences on purchase behavior?
Purchase Task, Social Surroundings, Physical Surroundings, Temporal Effects, Antecedent States
raeson for engaging in the decision in the first place
Purchase Task
other people being present when purchase made...
social surroundings
decor, music, crowding in retail stores...
Physical Surroundings
time of day; amount of time available
Temporal Effects
consumers' mood; amount of cash on hand
Antecedent States
What are the 4 marketing mix influences?
Product, Price, Promotion, Place
What are the 6 Psychological Influences?
Motivation, Personality, Perception, Learning, Values Beleifs and Attitudes, Lifestyle
Energizing force that stimulates behavior to satisfy a need...
Motivation; Psychological Influences
Guides and directs behavior; refers to a person's consistent behaviors or responses to recurring situations...
Personality; Psychological Influences
process by which an individual selects, organizes, and interprets of exposure, comprehension, and retention; includes subliminal risk and perceived risk
Perception; Psychological Influences
See or hear messages w/out being aware of them
Subliminal Perception
anxieties felt because the consumer cannot anticipate the outcomes of a purchase but believes that there may be negative consequences
Perceived Risk
refers to those behaviors that result from 1)repeated experience and 2) reasoning; includes behavioral learning and cognititve learning
Learning; Psychological Influences
developing automatic responses to a situation built up through repeated exposure to it
Behavioral Learning
thinking, reasoning, and mental problem solving without direct expsoure, connections between two or more ideas
Cognitive Learning
try to change beliefs about the extent to which a brand has certain attributes, changing the perceived importance of attributes, adding new attributes
Values, Beliefs and Attitudes; Psychological Influences
mode of living identified by how people spend their time and resources, what they consider important, what they think of themselves, psychographics
Lifestyle; Psychological Influences
the analysis of consumer lifestyle which provides insight into consumer needs and wants
Psychographics
What are the 4 Sociocultural Influences?
Personal Influence, Reference Groups, Family Influence, Culture and Subculture
individuals who exert direct or indrect social influence
Opinion Leaders; Personal Influence; Sociocultural Influences
the influencing of people during conversations & most powerful and authentic info source bc it involves friends viewed as trustworthy
Word of Mouth; Personal Influence; Sociocultural Influences
individual looks as a basis for self-appraisal or as a source of personal standards; influence info, attitudes, and aspiration levels
Reference Groups
process by which people acquire the skills, knowledge, and attitudes necessary to function as consumers
Consumer socialization; Family Influence
the distinct phases that a family progresses though from formation to retirement
Family Life Cycle; Family Influence
Most decisions are made by both husband and wife; common for cars, vacations, houses, home appliances, electornics, medical care
Joint decision making; family decision making; family influence
decision for which either the husband or the wife is responsible for; groceries, children's toys, clothing, medicines, home and car maintenance
spouse-dominant decision making; family decision making; family influence
What are the 5 roles of the family members in the purchase process element of family decision making?
info gatherer, influencer, decision maker, purchaser, user
a basis for identifying and reaching particularly good prospects for the products and services; EX: JCPenny appeals to the middle class
Social class; family influence
subgroups within the larger, or national, culture within unique values, ideas and attitudes
subculture
List Maslow's Hierarchy of Needs from bottom to top
Physiological Needs, Safety Needs, Social Needs, Personal Needs, Self-actualization Needs
What are the 4 different types of Organizational Markets?
Industrial Firm, Reseller Market, Govt. Markets, Global Organizational Markets
reprocess a product or service they buy before selling it again to the next buyer
Industrial Firms
first four types of buyers- manufacturers, mining, construction, and farm/timber/fisheries...
sell products and represent 26% of all industrial firms
Service markets sells diverse services as _____, ______, and ______ about 73%.
legal advice, auto repair, dry cleaning
wholesalers and reatils that buy physical products and resell them again w/out reprocessing
Reseller Markets
____units are the federal, state and local agencies that buy goods and services for the consitituents they are in
Government markets
industrial, reseller and govt markets exist on a ____ scale mostly buying goods and services for their own use or for resale
Global Organizational Markets
What are the 4 characteristics of organizational buying?
Market, Product or Service, Buying Process, Marketing Mix
demand for industrial products and services is derived; few customers; purchase orders are large
Market Characteristics in Organizational Buying
Products/Services are technical in nature & purchased on basis of specifications; predominance of raw and semifinished goods purchased; heavy emphasis is placed on deliverty time, technical ass., postal service and financing ass.
Product/Service Characterisitics in Organizational Buying
technically qualified and professional buyers exist, follow established purchasing policies; buying objectives and critieria are spelled out; multiple buying influences; multiple parties participate in purchase decisions; reciprocal arrangements exist, negotiation btw buyers and sellers is common; online buying over Internet is widespread
Buying Process Characteristics in Organizational Buying
Direct selling to org. buyers is the rule; physical distribution is important; adv is technical in nature; price is negotiated; inelastic owing to derived demand and frequently affected by trade and quantity discounts
Marketing Mix Characteristics in Organizational Buying
the demand for industrial products and services is driven by demand for consumer products and services; often based on expectations of future consumer demand
Derived Demad
an industrial buying practice where two orgs agree to purchase each other's products and services; frowned upon bc it restricts normal operation of free market
Reciprocity
Who are the participants in the Buying Center?
Users, Influencers, Buyers, Deciders, Gatekeepers
actually use the product or service in buying center; EX: secretary for word processor
Users
affect buying decision; help define the specifications for what is bought; EX: information systems manager for a new mainframe computer
Influencer
formal authority; select supplier and negotiate terms of contract; Purchasing Manager
Buyers
formal or informal power to select or approve the suppier that receives contract; EX: R&D, engineering, quality control
Deciders
contorl the flow of info in the buying center
Gatekeepers
What are the 3 types of Buying Situations?
Straight rebuy, modified rebuy, new buy
reorders an existing product/service from list of acceptable suppliers w/out even checking w/ anyone; EX: office supplies
Straight Rebuy
users, influencers, or deciders want to change the product specifications, price, delivery, schedule, or supplier; same as w/ straight buy but changes usually necessiate enlarging the buying center to include new people
Modified Rebuy
first-time buyer; involves greater potential risk so buying center is enlarged
New Buy
What are the 5 stages in the Business Purchase Decision Process?
problem recognition, information search, alternative evaluation, purchase decision, postpurchase behavior
Marketing research and sales departments observe that competitors are improving their product. The firm decides to improve their own correlating product on their own new models, which will be purcahsed from an outsider supplier.
Problem Recognition
design and production engineers draft specifications for product. The purchasing department identifies suppliers of product.
Information search
purchasing and engineering personnel visit w/ suppliers and assess facilities, capacity, quality control, and financial satus. They drop any suppiers not satisfactory on these factors.
Alternative Evaluation
they use quality, price, delivery, and technical capability as key buying crtieria to select a supplier. Then they negotiate terms and award a contract.
Purchase Decision
They evaluate suppliers using a formal vendor rating system and notify a suppier if products do not meet their quality standard. If the problem is not corrected, they drop the firm as a future supplier.
Postpurcahse Behavior
the practice of suing barter rather than money for making global sales and it accounts for an estimated 15 to 20% of world trade
Countertrade
the difference btw the monetary value of a nation's exports and imports; exports exceed its imports, incurs a surplus in its balance of trade
Balance of Trade
all products involved in balance of trade and adds all other monetary transactions
balance of payments
explains why some companies and industries in an country suceed globall and others lose or fail
Competitive Advantage Theory
What are the 4 key elements in the Competitive Advantage Theory?
factor conditions, demand conditions, related and supporting industries
natural resources, educaiton and skills levels, wage rates- affect a nation's ability to turn its natural resources, education, and infrastructure into an advantage
factor conditions
size of market, sophisticaiton of consumers, media exposure of products- includes number and sophistication of domestic customers for an industry's product
Demand Conditions
Existence of supplier clusters- firma nd industries seeking leadership in global markets need clusters of world-class suppliers that accelerate innovation
Related and Supporting Industries
Number of companies in an industry, intensity of competition, public or private ownership- conditions governing the way a nation's bsinesses are organized and managed, along w/ intensity of domestic competition
Company strategy, structure, and rivalry
the practice of shielding one or more industries w/in a country's economy from foreign competition through the use of tariffs or quotas. The economic argument is that it limits the outsourcing of jobs, protects a nation's political security, discourages economic dependency ono hter countries, encourages the development of domestic industries; earns profits for domestic producers and tariff revenue
Protectionism
Government tax on goods or services entering a country.
Tarriff
restriciotn placed on the amount of a product allowed to enter or leave a country
quota
What are the 3 levels a company goes thruogh to becoming a global economy?
International firm, Multinational firm, transational firm
trade and marketing in different countries as an extension of the marketing strategy in its home country; market existing products in the same way as in their home country
Internaional firm
views the world as consisting of unique parts and markets to each part differently; different product variations as countries in which they do business
Multinational Firm
views the world as one market and emphasizes cultural similarities across countries or universal consumer needs and wants more than differences; standardize marketing activities when similiarities and adapting when cultures differ
Transnational Firm
What are the 4 options for global market entry?
exporting, licensing, joint venture, direct investments
producing goods in one country and selling them in another country; allows a company to make the least number of changes in terms of its product, its organization, and even its corporate goals; indirect exporting and direct exporting
Exporting
when a firm sells its domestically produced goods in a foreign coutnry through an intermediary; has the least amount of commitment and risk but will probably return the leas profit; ideal for company w/ no overseas contacts
Indirect exporting
firm sells its domestically produced goods in a foreign country w/out intermeidaries; more risk taking and opens the door to increased profit
Direct exporting
company offers the right to a trademark, patent, trade secret, or other similarly valued items of intellectual property in return for a royalty or a fee; low risk and capital-free entry into a foreign country
Licensing
when a foreign company and a local firm invest together to create a local business...
joint venture
a domestic firm actually investing in and owning a foreign subsidiary or division; biggest commitment a company can make when entering the global market; often follows one of the other three market-entry strategies; advantages of cost savings, better understandings of local market conditions and fewer local restrictions
Direct Investment
What are the 5 stages in the Research Process?
define the problem, develop the plan, collect relevant info by specifying, develop findings, take marketing action
set research objectives; identify possible marketing actions
define the problem; research process
specify constraints; identify data; how to collect data
develop the plan; research process
secondary and primary data
collect relevant info by specifying; research process
analyze data; present findings
develop findings; research process
make action recommendations; implement actions, evaluate results
take marketing actions; research process
financial statements, research reports, file, customer letters, sales call reports, customer lists
internal data; secondary data
US Census reports, trade association studies and magazines, business periodicals
external data; secondary data
mechanical and electronic approaches, personal approaches
observational data; primary data
in depth interviews, focus groups, mail, online, telephone, surveys
questionnaire data; primary data
Advantages of Secondary Data; Disadvantages of Secondary Data
time savings, low cost; out of date, definitions might not be right
Advantages of Primary Data; Disadvantages of Primary Data
more specific to the problem; more costly and time consuming
What are the 4 different kinds of surveys?
personal interview surveys, mail surveys, telephone interviews, email fax Internet surveys
Advantage of Personal Interview Surveys; Disadvantages of Personal Interview Surveys
enables the interviewer to be flexible in asking probing questions; very costly
Mail Surveys are....
biased bc most likely to respond have had especially positive or negative experiences w/ the product or brand
allow flexibility, are increasingly difficult to complete bc respondents may hang up on the interviewer
Telephone Interviews
restricted to respondents having the technologies but are expanding rapidly
Email, fax, and Internet surveys
What is the 5 criteria for segmenting a market?
potential for increased profit, similarity of needs of potential buyers w/in a segment, difference of needs of buyers among segments, potential of a marketing action to reach a segment, simplicity and cost of assigning potential buyers to segments
What are the 8 different ways of segmenting a market?
geographic, demographic, personality, psychographic, outlet type, benefits sought, usage/patrongage, awareness/intentions, behavior
Usage rate is known as this rule; ____% of a firm's sales are obtained from ____% of its customers. Not fixed.
80%; 20%
What 5 criteria is used in actually selecting the target segment?
market size, expected growth, competitive position, cost of reaching the segment; compatibility with the organization's objectives and resources
the place an offering occupies in consumers' minds on important attributes relative to competitive products
Product Positioning
competing directly with competitors on similar product attributes in the same target market
head to head positioning
seeking a less competitive, smaller market niche in which to locate a brand; compaies also follow a DP strategy to try to minimize cannibalization of a brands sales or shares
Differenitation positioning
total sales of a product that a firm expects to sell during a specified time period under specified environmental conditions and its own marketing efforts
sales (company) forecast
judgement of the person who must act on the results; individual decision maker
judgements of the decision maker
involves estimating the value to be forescast without any intervening steps
direct judgement of decision maker
involves making a forecast using the last known value and modifying it according to positive or negative factors expected in the future
Lost horse judgement of decision maker
involves asking prospective customers if they are likely to buy the product in the future
buyers intentions; surveys of knowledgeable groups
involves asking the firm's salespeople to estimate sales during a comoing period
salesforce survey; surveys of knowledgeable groups
involves extending a pattern observed in past data into the future(linear if straight); assumes underlying relationships in the past will continue into the future
trend extrapolation; statistical methods
group of products that are closely related bc they satisfy a class of needs, used together, sold to the same customer group, distributed through same type of outlets, fall w/in a given price range; has own marketing strategy; has a product item
product line
a specified product as noted by unique brand, size or price
product item
# of product lines offered by a company; EX: Fortune Brands has sporting equipment and office products
Product Mix
What are the 2 classifications of products?
Type of User, Degree of Tangibility
products purchased by the ultimate consumer
Consumer goods; type of user
products that assist directly/indirectly in providing products for resale; some products considered both consumer and business
Business goods (B2B, industrial, organizational); type of user
item consumed in one or few uses, such as food and fuel; its inexpensive and purchased frequently; wide distribution
nondurable good; degree of tangibility
one that usually lasts over an extended # of uses; EX: appliances, autos and stereos; generally goest more and last longer; personal selling is important
Durable goods; degree of tangibility
activities, benefits, or satisfactions offered for sale; intangible, special marketing effort is usually needed
services; degree of tangibility
What are the 4 classifications of consumer goods?
convenience goods, shopping goods, specialty goods, unsought goods
consumer purchases frequently, conveniently, w/ minimum of shopping effort, inexpensive, widespread, price/availability/awareness stressed, will accept substitutes; EX: grocery store stuff
convenience goods; consumer goods
consumer compares several alternatives such as price/ quality/ style; fairly expensive, large number of selective outlets, differentiation from competitors stressed, accepts substitutes, infrequent purchases; EX: cameras, tvs, clothing
shopping goods
consumer makes a special effort to search out and buy; very expensive; very limited/ uniqueness stresse; brand loyal wont accept substitutes; infrequent and needs extensive serach and decision time; EX: Rolls Royce, Rolex
Specialty goods
consumer either does not know about or knows about but does not initally want; price varies; often limited; awareness is essential; accepts substitutes; infrequent and needs some comparison; EX: burial insurance, thesaurus
Unsought goods
sales of ________goods frequently result from the sale of consumer goods
business/ industrial
used in manufacturing process that becomes part of the final product; includes raw materials like grain/lumber as well as component parts; marketing based on factors like price, quality, delivery and service
Production goods
used to assist in producing other goods/services; includes installations, accessory equipment, supplies and services
Support goods
buildings, fixed equipment, buyers deals directly w/ construction company and manufacturers through sales reps
installations
similar to convenience goods and consist of procuts such as stationary, paper clips, and brooms; little purchasing effot, uses straight rebuy decision; price and deliver key factors
buyers of supplies
intangible activies to assist the industrial buyer; includes maintenance and repair services and advisory serves such as tax or legal counsel; seller's rep is critical
Industrial services
no new behaviors must be learned; effective marketing simply depends on genrating awareness and having strong distributions in appropriate outlets; EX: new plasma TV's don't require new TV watching education
Continuous Innovation
only minor changes in behavior required for use; marketing strategy is to educate prospective buyers; EX: built-in, fold down seats
Dynamically continuous innovation
learn entirely new consumption patterns in order to sue product; marketing efforts invovle not ony gaining initial consumer awareness but also educating consumers on both the benefits and proper use of teh product can be costly; EX: IBM voice recognition software
Discontinuous Innovation
What are the 7 major marketing reasons for product failure?
insignificant point of difference, incomplete market and product definition before product development started, too little market attractiveness, poor execution of the marketing mix, poor product quality of sensititivty to customer needs on critical factors, bad timing, no economical access to buyers
What is the most important marketing reason for product failure?
insignificant point of difference- needs to have superior characteristics over competition
Coca Cola's OJ concentrate is an example of....
poor execution of the marketing mix
grocery products are an example of no economical _______
access to buyers.
What are the 7 stages in the New Product Process?
New product strategy development, idea generation, screening and evaluation, business analysis, development, market testing, commercialization
purpose is to identify new product niches; marketing method used is company objectives and assessment of firms current strengths and weaknesses in terms of market and product
new-product strategy development
purpose is to develop concepts for possible products; new ideas are generated by customers, suppiers, employees, basic R&D and competitors
Idea generation in New Product Process
purpose is to separate good product ideas from bad ones inexpensivly; marketing methods used are screening critieria, concept tests, and weight point systems
Screening and Evaluation stage
purpose is to identify the products features and its marketing strategy, and make financial projections; marketing methods used are product's key features/ anticipated marekting mix strategy/ economic, marketing, production, legal and profitability analyses
Business analysis
purpose is to create the prototype product and test it in the labs and on consumers; marketing methods used are test markets and simulated test markets
Market Testing
purpose is to position and offer product in the marketplace; marketing methods used are perceptual maps, product positioning and regional rollouts
Commercialization
What are the 4 stages in the Product Life Cycle?
introduction, growth, maturity and decline
occurs when a product is first introduced to its intended target market; sales grow slowly and profit is minimal; marketing objective is to create consumer awareness and stimulate trial
Introduction stage in Product Life Cycle
characterized by rapid increases in sales; stage where competitors appear; profit usually peaks; adv shifts to stimulating selective demand and benefits are compared w/ competitors; improved version or new features are added to the original desig; important to gain as much distribution possible; repeat purchasers
Growth stage in Product Life Cycle
characterized by slowing of total industry sales or product class revenue; competitors begin to leave; sales increase at a decreasing rate, profit declines bc no competition; marketing is directed toward holding market share through product differentiation and finding new buyers
Maturity Stage in Product Life Cycle
occurs when sales and profit begin to drop bc of environ. changes and techn. innovation; products tend to consume a disproportionate share of management time and financial resources relative to their potential future worth; company will follow either deletion strategy or harvesting strategy
Decline Stage in Product Life Cycle
In the Boston Consulting Group Matrix, the vertical axis is the....
market growth rate- the annual rate of growth of the specific market/industry in which a given SBU is competing
In the Boston Consulting Group Matrix, the horizontal axi is the....
relative market share- the sales of SBU divided by the sales of teh largest firm in the industry
SBUs that typically generate large amounts of cash(Kodak film sales in US)
Cash cows
SBUs with a high share of high-growth markets that may need extra cash to finance their own rapid future growth(Kodak digital cameras)
Stars
SBUs w/ a low share of high-growth markets requiring large amounts of cahs just to maintain market share(Kodak printers)
Question marks/ problem children
SBUs w/ a low share of low-growth markets that generate enough to sustain themselves but will not become real winners and must be dropped(Kodak self service kiosks)
Dogs
Venturesome, higher educated, use multiple info sources; makes up 2.5% of population; type of product adopter
Innovators
Leaders in social setting, slightly above average education; make up 13.5% of population; type of product adopter
Early Adopters
Deliberate, many informal social contacts; makes up 34% of population; type of product adopter
Early Majority
Skeptical, below average social status; make up 34% of population; type of product adopter
Late Majority
Fear of debt, neighbors and friends are information sources; make up 16% of population; type of product adopter
Laggards
What are 2 ways to extend the maturity state by modification?
modifying the product, modifying the market
invovles altering a products characteristics, such as quality, performance, or appearance, try to increase product sales
Modifying the Product
a company tires to find new customers, increase a products use among existing customers, create new use situations, reposition product, react to comeptitor's position, reach a new market, catch a rising trend, or change the value offered
Modifying the Market
any word, device(design, sound, shape, color) or combo of these used to distinguish a seller's goods or services
Brand Name
The name should do 5 things:
suggest product benefits; be memorable/distinctive/positive; fit the company or product image; have no legal or regulator restrictions; be simple and should be emotional
What are the 4 different branding strategies?
multiproduct branding(family/corporate); multibranding; private branding(private labeling/reseller branding); Mixed branding
when a company uses one name for all its products in a product class; consumers whove had a good experience w/ the product will transfer to other items in the product class w/ same name
Multiproduct Branding(Family/Corporate)
gives each product a distinct name; useful when brands are intended for different market segment; some companies array their brands on the basis of price-quality segments; others introduce new product brands called fighting brands to counteract competition
Multibranding
when a company manufactures products but sells them under the brand name of a wholesaler or retailer; popular bc it typically produces high profits
Private Branding(private labeling/ reseller branding)
where a firm markets products under its own name and that of a reseller bc the segment attracted to the reseller is different from its own market
Mixed Branding
any container in which it is offered for sale and on which label info is conveyed
Packaging
major benefit is the label info. on it conveyed to the consumer, such as directions on how and when to use the product and its composition; can have brand equity benefits for a company bc it has been shown to enhance brand recognition and brand associations
Communication Benefits
plays an important role such as storage, convenience, protection, or product quality; convenience, consumer protection, and product quality are affected
Functional Benefits
consumer's minds can be affected; brands can benefit from "country of origin or manufacturer"
Perceptual Benefits
What are the 4 I's of service?
Intangibility, Inconsistency, Inseparability, Inventory
services can't be held, touched, or seen before the purchase decision; much more difficult for consumers to evaluate so marketers try to make them tangible or show the beneifts of using the service
intangibility
quality of service often inconsistent so difficulty developing, pricing, promoting, and delivering services; bc they depend on the people who provide them, their quality varies w/ each person's capabilities and day to day job performance; attempt to reduce inconsistency through standardization and training
Inconsistency
w/ services, inventory carrying costs are more subjective are related to idle production capacity, which is when the service provider is available but there is no demand; the inventory cost of a service is the cost of paying the person used to provide the service along w/ any needed equipment; costs can be lower or nonexistent bc the idle production capacity can be cut back by reducing hours or having no salary to pay bc of the commission compensation system
Inventory
profession services, including management consulting firms; skilled or unskilled labor services
delivered by people
do not have the marketing concerns of inconsistency bc people are removed; electric utilities, movie theatres, self-service technologies
Delivered by Equipment
their excesses in revenue over expenses are not taxed or distributed to shareholders; when excess revenue exists, the money goes back into the treasury to allow continuation of the service
Non profit Organizations
although there is no direct ownership and they are non-profit, governments at the federal, state, and local levels provide a broad range of services
Government Sponsored
the money or other considerations(including other goods/services) exchanged for the ownership or use of a good or service
Price
the practice of exchanging goods and services for other goods and services rather than for money
Barter
_________ limit the range of prices a firm may set. ________ for the products clearly affects the price that can be charged. Others constraints vary from factors w/in the organization to competitive factors outside the organization. There are also ________ and regulatory constraints.
Pricing constraints; consumer demand; legal
What are the 6 pricing objectives?
Profit, Sales, Market Share, Unit Volume, Survival, Social Responsibility
when a company gives up immediate profit in exchange for achieving higher market share by developing quality products to penetrate competitive markets; products priced low copmared to cost to develop but the firm expects to make greater profits
managing for long run profits
comomn bc the targets can be set and performance measured quickly
maximizing current profit objective
occurs when a firm sets a profit goal usually determined by board of directors
target return objective; profit
objective may be to increase sales revenue; have the advantage of being translated easily into meaningful targets than profit objectives; but cutting price on one product may increase its sales revenue but reduce those of related products
Sales
the ratio of the firms' sales revenues or unit sales to those of the industry; pursue when industry sales are relatively flat or declining
Market Share
the quanitity produced or sold; often selling multiple products at very different prices and need to match the unit volume demanded by customers; can be counterproductive if a volume objective is achieved
unit volume
usually bc a firm cant match price cuts by big discount retailers
survival
recognizing obligations to customers and society; a critical social responsibility issue today is drug pricing- setting a price low enough to ake the durg affordable by consumers needing it but high enough for drug companies to cover costs and profit
Social Responsibility
slight decrease in price resluts in relatively large increase in demand or units sold
elastic demand
slight increases or decreases in price will not significantly affect the demand or units sold
inelastic demand
when % change in price is exactly equal to the percentage change in quantity demanded so that sales revenue remains the same
unitary demand
price elasticity is determined by 3 factors:
1)the more substitues, themore likely it is to be a elastic 2) necessities are elastic 3) requiring a large cash outlay compared w/ a person's disposable income is elastic
the total expense incurred by a firm in producing and marketing a product; it is the sum of fixed cost and variable cost;
Total Cost= Fixed Cost + Variable Cost
the sum of the expenses of the firm that are stable and do not change w/ the quantity of a product that is produced and sole; EX: rent, executive salaries, insurance
Fixed Costs
sum of the expenses of the firm that vary directly w/ the quantity of a product that is produced and sold, so as quantity sold doubles, variable cost doubles; EX: direct labor, direct materials, sales commissions
Variable Cost
variable cost expressed on a per unit basis
Unit Variable Cost; UVC= VC/Q
is the change in total cost that results from producing and marketing one additional unit of a product
Marginal Cost; MC= change TC/ change Q= slope of TC curve
quantity at which total revenue and total cost are equal
Break even point; BEP= FC/ (P-UVC)
analyzes the relationship btw total revenue and total cost to determine profitability at various levels of output; marketers employ this approach which consider cost, volume, & profit relationships based on the profit equation.
Break Even Analysis
weight factors underlying expected customer tastes and preferences more heavily than such factors as cost, profit, and competition when selecting a price
Demand Oriented
setting the highest intial price that customers really desiring the product are willing to pay (usually for new or innovative products); customers aren't price sensitive; as their demand is satisfied the firm lowers the price to attract another more price sensitive segment; effective strategy 1) enough customers willing to buy product immediately at the high price; 2) the high price will not attract competitors 3)lowering the price has minor effect on increasing sales volume and reducig the unit costs; 4) customers interpret high price as high quality
Skimming Pricing
setting a low initial price on a new product to appeal immediately to the mass market; conditions favoring are 1)much of market is price-sensitive; 2)low price discourages competitors 3) unit production and marketing costs fall as production volume increases; firm using penetration pricing may maintain initial price to gain profit low from low introductory level or lower the price further counting on the new volume to generate profit
Penetration Pricing
when a firm that is selling not just a single product but a line of produc but a line of products prices them at a # of different specific pricing points; in some cases manufacturers design products for different price points and retailers apply approximately the same markup percentages to achieve the 3 or 4 different price points offered
Price Lining
involves setting prices a few $$s or cents under and even number; the presumption is that consumers see the product as price at "something over $400" rather than about $500. In theory, demand incrases if the price drops from $500 to $499.99.
Odd-Even Pricing
when manufacturers estimate the price the ultimate consumer would be willing to pay for aproduct, then work backaward through markeups taken by retailers and wholesalers to determine what price they can charge wholesalers; the manufacturer deliberately adjusts the composition and features of a product to achieve the target price
Target Pricing
the marketing of two or more products in a single package price; based on the idea that consumers value the package more than the individual items due to the benefits from not having to make separate purchases; provides a lower total cost to buyers and lower marketing costs to sellers; EX: Vacatoin packages including airfare, care rental, and lodging
Bundle Pricing
charging of different prices to maximize revenue for a set amount of capacity at any given time; continually matches demand and supply to customze the price for a service; EX: seats priced differently w/in coach class
Yield Management Pricing
What are the 8 DEMAND ORIENTED types of pricing?
skimming price, penetration pricing, prestige pricing, price lining, odd-even pricing, target pricing, bundle pricing, yield management pricing
a price setter stresses the cost side of the pricing problem, not the demand side; price is set by looking at the production and marketing costs and then adding enough to cover direct expenses, overhead and profit
Cost Oriented Pricing
entails adding a fixed % to the cost of all items in a specific product class; % varies depending on type of retail store and on the product; markups must cover all expenses of the store, pay overhead, and contribute to profits; EX: supermarkets
Standard Markup Pricing
involves summing the total unit cost of providing a product or service and adding a specific amount to the cost oto arrive at a price
Cost Plus Pricing
fixed % is added to total unit cost (for one of a kind items)
Cost Plus Percentage of Cost Pricing
a supplier is reimbursed for all costs, regardless of what they turn out to be, but is allowed only a fixed fee as profit that is independent of the final cost the project; most commonly used to set prices for business products
Cost Plus Fixed Fee Pricing
based on the learning effect, which holds that the unit cost of many products and services declines by 10% to 30% each time a firm's experience at producing and selling them doubles
Experience Curve Pricing
What are the 3 types of COST ORIENTED pricing?
Standard Markup Pricing, Cost Plus Pricing, Experience Curve Pricing
rather than emphasize demand, cost or profit, can stress what competitors or "the market" is doing
Competition Oriented Pricing
where tradition, standardized channel of distribution, or other competitive factors dicatate the price
Customary Pricing
large department stores establish the going market price in theminds of their competitors
At-Market Pricing
manufacturers and retailers that offer private brands of products ranging from peanut butter to shampoo deliberately set prices below the prices of nationally branded competitive producs
Below-Market Pricing
Roley takes pride that it makes one of the most expensive watches you can buy
Above-Market Pricing
What are the 3 types of COMPETITION ORIENTED pricing?
Customary Pricing, Above/ At/ or Below Market Pricing, Loss-Leader Pricing
for a special promotion retail stores delibertely sell a product below its customary price to attract attention to it; its not to increase sales but to attract customers in hopes they will buy other products as well
Loss-Leader Pricing
setting one price for all buyers of a product or service
One Price Policy(fixed pricing)
setting different prcies for products and services depending on individual buyers and purchase situations; gives sellers considerable discretion in setting the final price in light of demand, cost and competitive factor
Flexible Price Policy(dynamic pricing)
setting of prices for all items in a product line; seek to cover total cost and produce a profit for the complete line; must determine what the lowest and highest period products are
Product- Line Pricing
don't price store brands more than 20% below manufacturer's brands bc the consumers view the lower price as signaling lower quality
Effects of pricing on Customers
if competitors begin to match the lower price, other things begin to equal:
the expected market share, sales, and intended profit gain are lost
a 1% price cut lowers a company's net profit by an average ____%
8%
a company should only consider price cutting when:
1)cost or technological advantage over competitors 2)primary demand will grow 3) price cut confined to specific product or consumer and not across the board
reductions from the list price that a seller gives a buyer as a reward for some activity of the ubyer tha is favorable to the seller
Discounts
reductions in unit costs for alarger order to encourage buying in bulk
quantity discounts
based on the size of an individual purchase order, encourages large orders not a series of orders
non cumulative discounts
apply to the accumulation of purchases of a product over a given time period, encourages repeat buying by a single customer
Cumulative Discounts
encourages buyers to stock inventory earlier than their normal demand would require; rewards wholesalers for the risk they accept in assuming increased inventory carrying costs and having supplies in stock at the time they are wanted by customers
Seasonal Discounts
reward wholesalers and retailers for marketing functions they will channel of distribution on the basis of 1)where they are in the channel 2)marketing activities they are expected to perform
Trade (Fucntional)
to encourage retailers to pay their bills quickly
Cash
Reductions to buyers for some activity
Allowances
reduction given when a used product is part of the payment on a new product
Trade In
for undertaking certain advertising or selling activities to promote a product; could include actual cash payment or an extra maount of "free goods"
Promotional
replacing promotional allowances with lower manufacturer list prices
Everyday low pricing; promotional
when a firms offers a very low price on a product to attract customers to a store; once in the store the customer is persuaded to purchase a higher priced item using a variety of tricks; downgrading the promoted item, not having the itme in stock, refusing to take orders for the item
Bait and Switch
when a buyer is offered "I-cent sales," "buy one get one free" and "get 2 for the price of 1" its legal only if the first items are sold at the regular price, not a price inflated for the offer; also substituting lower-quality items on either 1st or 2nd purchase is deceptive
bargains conditional on other purchases
advertising like "retail value 100, our price 85" is deceptive if a verified and substantial number of stores did not price the item at 100
Comparable Value Comparisons
a claim that price is below a manufacturer's suggested or list price may be deceptive if a few or no sales occur at teh price in a retailer's market area
Comparisons w/ suggested prices
when a seller represents a price as reduced, the items must have been offered at a higher price for a substantial previous period
Former Price Comparisons
any intermediary between manufacturer and end-user markets
middleman
any intermediary w/ legal authority to act on behalf of the manufacturer
agent/broker
any intermediary who sells to other intermediaries, usually retailers
wholesaler
an intermediary who sells to consumers
retailer
intermediaries who perform a variety of distribution functions, including selling, inventory, extending credit
Distributor
can mean the same as distributor, retailer, wholesaler,etc.
dealer
purchasing products for resale oras an agent for supply of a product
Transactional Buying
contacting potential customers, promoting products, and soliciting orders
Transactional Selling
assuming business risks in the ownership of inventory that can become obsolete or deterioate
Transatctional Risk Taking
creating product assorments from several sources to serve customers
Logistical Assorting
assembling and protecting products at a convenient location to offer better service
Logistical Sorting
physically moving a product to customers
Logistical Transporting
extending credit to customers
Facilitating Financing
inspecting, testing or judging produts and assigning them quality grades
Grading; Facilitating
providing info to customers and suppliers including competitive conditions and trends
Marketing info and research; facilitating
producer--> consumer; most are this way
direct channel
producer-->retailer-->consumer; most common when a reatiler is large and can buy in large quantities
indirect channel
producer-->wholesaler-->retailer-->consumer; most common for low-cost, low-unit value items that are frequently purchased
indirect channel
producer-->agent-->wholesaler-->retailer-->consumer; when there are many small manufacturers and many small retailers
indirect channel
represent sellers but do not actually take title to products and typically provide fewer channel functions- their role is to bring a seller and buyer together; have legal authority to acton behalf of the manufacturer; take their profit form the sale of the merchandise they own
Agent
work for several producers and carry noncompetitive, complementary merchandise
manufacturer's agent
represent a single producer and are responsible for the entire marketing function of that producer
selling agent
professionally managed and certrally coordinated marketing channels desgined to achieve channel economics and maximum marketing impact. They have emerged fro the purpose of improving efficiency and achieving greater marketing effectiveness
Vertical Marketing Systems
combo of successive stages of production and distribution under a single ownership; seek to reduct distriubution costs and gain greater control over supply sources or resale
Corporate systems
independent production and distrubution firms integrate their efforts on a contractual basis to obtain greater financial economies and merting impact then they could achieve alone; franchising is a contractual arrangement between a parent company and an individual that allow the individual to operate a certain type of business under an est. name and to specific rules
Contractual Systems
achieve coordination by the size and influence of one channel member rather than thru ownership
Administered Systems
convenience goods, means that a firm tries to place its products and services in as many outlets as possible
Intensive Market Coverage Distribution
is the extreme opposite of intensive bc only one retail outlet in a specified geographical area carries the product; usually specialty goods
Exclusive Market Coverage Distribution
lies between two extremes and means that firm selects a few retail outlets in a geographical area to carry produts, shopping goods, most common
Selective Market Coverage Distribution
inventory supply system that operates w/ very low inventories and requires fast, on-time delivery; when parts are needed, they arrive "just in time" which means neither before nor after they are needed; used in situations where demand forecasting is reliable and not suitable for storing over significant periods of time
Just-in-time logistic system
whether individuals, corporate chains, or contractual sstems own the outlet; contractual involves independetly owned stores that band together to act like a chain, retail-sponsored cooperatives, wholesaler-sponsored voluntary chains and franchises
Form of Ownership retail outlets
whether degree of service provided is self(little provided by outlet), limited(provide some but not all) or full service(most specialty stores and dept. stores, provide many services)
Level of Service retail outlet
how many different types of products a store carries in what assortment
merchandise line
what are the 3 ways to classify retail outlets?
form of ownership, level of service, merchandise lin
warehouse, gas station, some grocery stores, airlines, camera/photo stores, hotels examples of....
self service retailers
provides some services, like credit and merchandise return; walmart, kmart, target....
Limited Service retailers
provides many services; neiman marcus, nordstroms, saks, most specialty stores and dept. stores....
Full service retailers
a considerable assortment of a related line of items are limited; in one primary line of items are single line; both limited and single line are specialty outlets which focus on one type of product at very competitive prices
Depth
variety of different items; broad product line w/ limited depth are general merchandise stores; several unrelated product lines in a single store is scrambled merchandising:EX: modern drugstore, Walmart supercenter
Breadth
What are the 6 types of non store retailing?
automatic vending, direct mail and catalogs, television home shopping, online retailing, telemarketing, direct selling
positions retail outlets on two dimensions; breadth of a product line and value added
retail positioning matrix
must have an identity that has some advantages over the competitors yet is recognized by cosumers; can have outlets in several positions on the matrix but his approach is usually done w/ different store names
keys to positioning
includes retail pricing, store location, retail communcation and merchandise
retailing mix
decids on markup, mark down, and timing for markdowns
retail pricing
oldest retail setting, the downtown area; less convenient bc of lack of parking, higher crime, exposure to weather, suburban pop. has grown
central business district
50 to 100 stores that attract customers who live/work in the area(5 to 10 mile range)
regional shopping centers
clusters of stores(5 to 10 miles in range) where composition of stores is unplaned
strip location or power centers
one primary store and often 30outles(10 to 20mile range)
community shopping center
deciding on image and the store's atmosphere or ambiance
retail communication
managing the breadth and depth requires retail buyers who are familiar w/ the needs of the target market and alternative products available
merchandise
describes how new forms of retail outlets enter the market; usually enter as low status, low margins, low price stores; gradually add more embellishments to increase attractiveness, higher prices, etc.; finally they face some new form of retail outlet that again appears as low status outlet
Wheel of Retailing
early growth w/ sharp departure from existing competition, market share rises but no profit lost; accelerated development market and profit acheive greatest growth rates, competitors enter, battle for market share before maturity stage, challenge is to delay enterting the decline stage
Retailing Life Cycle
someon who has info to convey; the info sent and is conveyed by means of a channel of comm. such as a sales person
source; message