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391 Cards in this Set
- Front
- Back
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____ is the interaction between two entities where an exchange of goods takes place.
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Marketing Definition
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= product, services, feelings, etc.
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GOODS
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What are the 4 P's in marketing mix?
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Product, promotion, price, place
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The idea, good, service provided is the....
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Product
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Communication & PR of the product to the target customer is the...
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Promotion
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Having the correct price for the product and target customer is the...
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Price
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Where the product will be distrubted; having the product available to the customer when and where they expect it is the...
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Place
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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....
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Production Era
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Ford's model-T mass production is an example of this
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Production Era- making quality products at the least cost
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more companies in market; more competition; demand decreases causing an excess of supply; companies sell on value
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Sales Era
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companies ask their customers what they want or need from a product; do research on competition; company creates customer value; focus on the customer
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Marketing Era
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What 4 utilities does marketing provide?
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Place, Time, Form, Possession
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Financing a car or store credit is an example of
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Possession
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What are the 9 ingrediants to the Marketing Planning Process?
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Business Definition, Situation Analysis, Goals & Objectives, Strategies, Tactics, Measurements, Mission, Values, Culture
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Define your business _____ to cover opportunities; but ____ enough to have a well defined niche market
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broadly; narrow
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Disney and Anheiser Bush are in the entertainment industry is an example of...
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Business Definition
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SWOT, learn about your business capabilities, your customers &competition, the market.
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Situation Analysis
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Change the mission statement into a targeted level of performance achieved by a specific time. Tells where the company is going and measures success.
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Goals and Objectives
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How are the golas & objectives achieved, where one or a combo of the 4 P's are used
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Strategies
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3M has a ____ strategy
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Product strategy
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Wal-Mart has a ___ strategy
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Price Strategy
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P&G has a ___ strategy
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Promotin Strategy
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Amazon has a _____
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Placement & Price strategy
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Action plan to carry out the strategy; specifies how the strategy will be implemented. Normally includes the budget
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Tactics
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Results measure against your goals; a bar for next year; indicates changes needed to be made
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Measurement
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a statement of the company's scope; identifies customer base, markets, products, technologies, and values
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Mission Statement
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Connecting w/ Stakeholders
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Values
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the unit's system of shared values, attitudes, and behaviors
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Culture
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Business should be defined _____ enough to take advantage of opprotunities, but ____ narrowly enough to have a well defined market.
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broadly; narrowly
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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
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SWOT Analysis
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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.
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Situation Analysis
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What are the 4 growth strategies?
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Penetration, Product Development, Market Development, Diversification
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Penetration
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Old/Old
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Product Development
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New/Old
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Market Development
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Old/New
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Diversification
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New/New
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Intro of McDonalds into Russia is an example of...
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Market Development
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McDonald's into of a line of clothing is an example of...
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Diversification
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What are the internal environments?
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Suppliers, Employees, Facilities, Stockholders, Customers
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What are the external environments?
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Socio/Cultural, Economic, Technological, Regulatory, Competitive
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Their level of service/quality should be the same as you promised your customers
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Suppliers
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Your ____ should interact accordingly w/ the customers. The ____ should give a good impression of the company of reliability and success.
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Employees; facilities
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Demographics of your market and the culture; target customer's age, gender, trends, times, needs, diversity, language, relgious beliefs, moral values, etc.
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External Envion. Socio/Cultural
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Company has some control over them; they are the strengths and weaknesses in the SWOT analysis...
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Internal Environments
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Company has no contorl or almost no control over them....
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external environments
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Macroeconomic conditions (inflation/recession) & how they affect your product; consumer's income(gross income, disposable income, discretionary income)
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External Environment.; Economic
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Invention or innovations of applied science or engineering research. i.e. Computers and Internet....
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External environments; Technological
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licensing and regulation, politics; product depend on materaisl heavily regulated by govt.
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External Environments; Regulatory
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Research competition(followers or leaders, leading or challenging, do you have an identity?) EX: Walmart vs. Target vs. Kmart; JCPenny vs. Montgomery
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External Environment; Competitive
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Describing the population based on characteristics: age, gender, ethnicity, income, occupation, education, etc.
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Demographics
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____ incorporates the set of values, ideas and attitudes of a ______ group of people that are passed from generations.
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Culture; homogeneous
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Roles of women; changing values in family, honesty, self-esteem, diet, value consciousness are all examples of...
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Culture
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What are the 4 different kinds of competitive markets?
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Pure, Monopolistic, Oligopoly, Monopoly
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Every company has the same product
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PURE competitive market
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many sellers compete w/ the their products on a substantial basis
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MONOPOLISTIC competitive market
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Increase coffee price; people change to tea is an example of...
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MONOPOLISTIC competitive market
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few companies contorl the majority of industry sales
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OLIGOPOLY competitive market
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AT&T, WorldCom, and Sprint contorl 80% of the long distance service market; price competition is discourage... this is an example of
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OLIGOPOLY competitive market
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One company sells the product; no competition
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MONOPOLY competitive market
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Who are the 5 Participants in the Consumer Buying Unit?
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Initiator, Influencer, User, Decider, Buyer(Purchaser)
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Who first has the idea of the product?
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Initiator(Info. Gatherer)
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Who can have an effect on the Initiator; the only participant that can be outisde the unit(i.e. a friend, advertisement, etc.)?
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Influencer
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Who can be more than one person?
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User
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Who decides what will be purchased; this is who you need to get as a marketer bc they decide the purchase?
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Decider
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Who actually physically makes the purchase; often aim for this participant bc of spontaneous purchases?
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Buyer(Purchaser)
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What are the 5 steps in the Purchase Decision Process?
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Problem Recognition, Information Search, Alternative Evaluation, Purchase Decision, Postpurchase Behavior
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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.
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Problem Recognition
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after recognizing a problem, search for info.; includes internal search and external search...
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Info. Search
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scanning memory for previous experiences w/ products
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Internal Search; info search
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using personal sources, public sources, market dominated sources
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External Search; info search
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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...
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Alternative Evaluation
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group of brands that a consumer would consider acceptable from all brands aware of...
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Consideration Set
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choose 1)from whom to buy 2)when to buy
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Purchase Decision
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after buying, consumer compares w/ expectations and is satsified or dissatisfied; this can affect consumer comm. and repeat purchases
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Postpurchse Behavior
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Dissatisfied buyers complain to _____ people.
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9; postpurchase behavior
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When a consumer is faced w/ two or more highly attractive alternatives; feeling of postpurchase psychological tension or anxiety
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Cognitive Dissonance
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Consideration Set is also known as
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Evoked Set
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What are the 3 levels of involvement for consumers?
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Extended Problem Solving, Limited Problem Solving, Routine Problem Solving
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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)
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Extended Problem Solving
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seek some info. or rely on a friend for alternatives; little time or effort to spend
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Limited Problem Solving
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Choosing a toaster, a restaurant are examples of
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Limited Problem Solving
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recognize problem; make decision, little effort seeking external info or alternatives; a habit, very low-involvement, low-priced and frequently bought
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Routine Problem Solving
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What are the 5 situational influences on purchase behavior?
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Purchase Task, Social Surroundings, Physical Surroundings, Temporal Effects, Antecedent States
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raeson for engaging in the decision in the first place
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Purchase Task
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other people being present when purchase made...
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social surroundings
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decor, music, crowding in retail stores...
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Physical Surroundings
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time of day; amount of time available
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Temporal Effects
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consumers' mood; amount of cash on hand
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Antecedent States
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What are the 4 marketing mix influences?
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Product, Price, Promotion, Place
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What are the 6 Psychological Influences?
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Motivation, Personality, Perception, Learning, Values Beleifs and Attitudes, Lifestyle
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Energizing force that stimulates behavior to satisfy a need...
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Motivation; Psychological Influences
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Guides and directs behavior; refers to a person's consistent behaviors or responses to recurring situations...
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Personality; Psychological Influences
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process by which an individual selects, organizes, and interprets of exposure, comprehension, and retention; includes subliminal risk and perceived risk
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Perception; Psychological Influences
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See or hear messages w/out being aware of them
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Subliminal Perception
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anxieties felt because the consumer cannot anticipate the outcomes of a purchase but believes that there may be negative consequences
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Perceived Risk
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refers to those behaviors that result from 1)repeated experience and 2) reasoning; includes behavioral learning and cognititve learning
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Learning; Psychological Influences
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developing automatic responses to a situation built up through repeated exposure to it
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Behavioral Learning
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thinking, reasoning, and mental problem solving without direct expsoure, connections between two or more ideas
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Cognitive Learning
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try to change beliefs about the extent to which a brand has certain attributes, changing the perceived importance of attributes, adding new attributes
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Values, Beliefs and Attitudes; Psychological Influences
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mode of living identified by how people spend their time and resources, what they consider important, what they think of themselves, psychographics
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Lifestyle; Psychological Influences
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the analysis of consumer lifestyle which provides insight into consumer needs and wants
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Psychographics
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What are the 4 Sociocultural Influences?
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Personal Influence, Reference Groups, Family Influence, Culture and Subculture
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individuals who exert direct or indrect social influence
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Opinion Leaders; Personal Influence; Sociocultural Influences
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the influencing of people during conversations & most powerful and authentic info source bc it involves friends viewed as trustworthy
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Word of Mouth; Personal Influence; Sociocultural Influences
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individual looks as a basis for self-appraisal or as a source of personal standards; influence info, attitudes, and aspiration levels
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Reference Groups
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process by which people acquire the skills, knowledge, and attitudes necessary to function as consumers
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Consumer socialization; Family Influence
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the distinct phases that a family progresses though from formation to retirement
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Family Life Cycle; Family Influence
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Most decisions are made by both husband and wife; common for cars, vacations, houses, home appliances, electornics, medical care
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Joint decision making; family decision making; family influence
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decision for which either the husband or the wife is responsible for; groceries, children's toys, clothing, medicines, home and car maintenance
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spouse-dominant decision making; family decision making; family influence
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What are the 5 roles of the family members in the purchase process element of family decision making?
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info gatherer, influencer, decision maker, purchaser, user
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a basis for identifying and reaching particularly good prospects for the products and services; EX: JCPenny appeals to the middle class
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Social class; family influence
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subgroups within the larger, or national, culture within unique values, ideas and attitudes
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subculture
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List Maslow's Hierarchy of Needs from bottom to top
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Physiological Needs, Safety Needs, Social Needs, Personal Needs, Self-actualization Needs
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What are the 4 different types of Organizational Markets?
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Industrial Firm, Reseller Market, Govt. Markets, Global Organizational Markets
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reprocess a product or service they buy before selling it again to the next buyer
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Industrial Firms
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first four types of buyers- manufacturers, mining, construction, and farm/timber/fisheries...
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sell products and represent 26% of all industrial firms
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Service markets sells diverse services as _____, ______, and ______ about 73%.
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legal advice, auto repair, dry cleaning
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wholesalers and reatils that buy physical products and resell them again w/out reprocessing
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Reseller Markets
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____units are the federal, state and local agencies that buy goods and services for the consitituents they are in
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Government markets
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industrial, reseller and govt markets exist on a ____ scale mostly buying goods and services for their own use or for resale
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Global Organizational Markets
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What are the 4 characteristics of organizational buying?
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Market, Product or Service, Buying Process, Marketing Mix
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demand for industrial products and services is derived; few customers; purchase orders are large
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Market Characteristics in Organizational Buying
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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.
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Product/Service Characterisitics in Organizational Buying
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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
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Buying Process Characteristics in Organizational Buying
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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
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Marketing Mix Characteristics in Organizational Buying
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the demand for industrial products and services is driven by demand for consumer products and services; often based on expectations of future consumer demand
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Derived Demad
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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
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Reciprocity
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Who are the participants in the Buying Center?
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Users, Influencers, Buyers, Deciders, Gatekeepers
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actually use the product or service in buying center; EX: secretary for word processor
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Users
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affect buying decision; help define the specifications for what is bought; EX: information systems manager for a new mainframe computer
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Influencer
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formal authority; select supplier and negotiate terms of contract; Purchasing Manager
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Buyers
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formal or informal power to select or approve the suppier that receives contract; EX: R&D, engineering, quality control
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Deciders
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contorl the flow of info in the buying center
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Gatekeepers
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What are the 3 types of Buying Situations?
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Straight rebuy, modified rebuy, new buy
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reorders an existing product/service from list of acceptable suppliers w/out even checking w/ anyone; EX: office supplies
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Straight Rebuy
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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
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Modified Rebuy
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first-time buyer; involves greater potential risk so buying center is enlarged
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New Buy
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What are the 5 stages in the Business Purchase Decision Process?
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problem recognition, information search, alternative evaluation, purchase decision, postpurchase behavior
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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.
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Problem Recognition
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design and production engineers draft specifications for product. The purchasing department identifies suppliers of product.
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Information search
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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.
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Alternative Evaluation
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they use quality, price, delivery, and technical capability as key buying crtieria to select a supplier. Then they negotiate terms and award a contract.
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Purchase Decision
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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.
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Postpurcahse Behavior
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the practice of suing barter rather than money for making global sales and it accounts for an estimated 15 to 20% of world trade
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Countertrade
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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
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Balance of Trade
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all products involved in balance of trade and adds all other monetary transactions
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balance of payments
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explains why some companies and industries in an country suceed globall and others lose or fail
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Competitive Advantage Theory
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What are the 4 key elements in the Competitive Advantage Theory?
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factor conditions, demand conditions, related and supporting industries
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natural resources, educaiton and skills levels, wage rates- affect a nation's ability to turn its natural resources, education, and infrastructure into an advantage
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factor conditions
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size of market, sophisticaiton of consumers, media exposure of products- includes number and sophistication of domestic customers for an industry's product
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Demand Conditions
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Existence of supplier clusters- firma nd industries seeking leadership in global markets need clusters of world-class suppliers that accelerate innovation
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Related and Supporting Industries
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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
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Company strategy, structure, and rivalry
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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
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Protectionism
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Government tax on goods or services entering a country.
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Tarriff
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restriciotn placed on the amount of a product allowed to enter or leave a country
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quota
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What are the 3 levels a company goes thruogh to becoming a global economy?
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International firm, Multinational firm, transational firm
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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
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Internaional firm
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views the world as consisting of unique parts and markets to each part differently; different product variations as countries in which they do business
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Multinational Firm
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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
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Transnational Firm
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What are the 4 options for global market entry?
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exporting, licensing, joint venture, direct investments
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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
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Exporting
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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
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Indirect exporting
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firm sells its domestically produced goods in a foreign country w/out intermeidaries; more risk taking and opens the door to increased profit
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Direct exporting
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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
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Licensing
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when a foreign company and a local firm invest together to create a local business...
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joint venture
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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
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Direct Investment
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What are the 5 stages in the Research Process?
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define the problem, develop the plan, collect relevant info by specifying, develop findings, take marketing action
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set research objectives; identify possible marketing actions
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define the problem; research process
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specify constraints; identify data; how to collect data
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develop the plan; research process
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secondary and primary data
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collect relevant info by specifying; research process
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analyze data; present findings
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develop findings; research process
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make action recommendations; implement actions, evaluate results
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take marketing actions; research process
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financial statements, research reports, file, customer letters, sales call reports, customer lists
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internal data; secondary data
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US Census reports, trade association studies and magazines, business periodicals
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external data; secondary data
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mechanical and electronic approaches, personal approaches
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observational data; primary data
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in depth interviews, focus groups, mail, online, telephone, surveys
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questionnaire data; primary data
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Advantages of Secondary Data; Disadvantages of Secondary Data
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time savings, low cost; out of date, definitions might not be right
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Advantages of Primary Data; Disadvantages of Primary Data
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more specific to the problem; more costly and time consuming
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What are the 4 different kinds of surveys?
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personal interview surveys, mail surveys, telephone interviews, email fax Internet surveys
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Advantage of Personal Interview Surveys; Disadvantages of Personal Interview Surveys
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enables the interviewer to be flexible in asking probing questions; very costly
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Mail Surveys are....
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biased bc most likely to respond have had especially positive or negative experiences w/ the product or brand
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allow flexibility, are increasingly difficult to complete bc respondents may hang up on the interviewer
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Telephone Interviews
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restricted to respondents having the technologies but are expanding rapidly
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Email, fax, and Internet surveys
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What is the 5 criteria for segmenting a market?
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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
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What are the 8 different ways of segmenting a market?
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geographic, demographic, personality, psychographic, outlet type, benefits sought, usage/patrongage, awareness/intentions, behavior
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Usage rate is known as this rule; ____% of a firm's sales are obtained from ____% of its customers. Not fixed.
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80%; 20%
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What 5 criteria is used in actually selecting the target segment?
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market size, expected growth, competitive position, cost of reaching the segment; compatibility with the organization's objectives and resources
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the place an offering occupies in consumers' minds on important attributes relative to competitive products
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Product Positioning
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competing directly with competitors on similar product attributes in the same target market
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head to head positioning
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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
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Differenitation positioning
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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
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sales (company) forecast
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judgement of the person who must act on the results; individual decision maker
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judgements of the decision maker
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involves estimating the value to be forescast without any intervening steps
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direct judgement of decision maker
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involves making a forecast using the last known value and modifying it according to positive or negative factors expected in the future
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Lost horse judgement of decision maker
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involves asking prospective customers if they are likely to buy the product in the future
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buyers intentions; surveys of knowledgeable groups
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involves asking the firm's salespeople to estimate sales during a comoing period
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salesforce survey; surveys of knowledgeable groups
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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
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trend extrapolation; statistical methods
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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
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product line
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a specified product as noted by unique brand, size or price
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product item
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# of product lines offered by a company; EX: Fortune Brands has sporting equipment and office products
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Product Mix
|
|
|
What are the 2 classifications of products?
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Type of User, Degree of Tangibility
|
|
|
products purchased by the ultimate consumer
|
Consumer goods; type of user
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products that assist directly/indirectly in providing products for resale; some products considered both consumer and business
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Business goods (B2B, industrial, organizational); type of user
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item consumed in one or few uses, such as food and fuel; its inexpensive and purchased frequently; wide distribution
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nondurable good; degree of tangibility
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one that usually lasts over an extended # of uses; EX: appliances, autos and stereos; generally goest more and last longer; personal selling is important
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Durable goods; degree of tangibility
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|
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activities, benefits, or satisfactions offered for sale; intangible, special marketing effort is usually needed
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services; degree of tangibility
|
|
|
What are the 4 classifications of consumer goods?
|
convenience goods, shopping goods, specialty goods, unsought goods
|
|
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consumer purchases frequently, conveniently, w/ minimum of shopping effort, inexpensive, widespread, price/availability/awareness stressed, will accept substitutes; EX: grocery store stuff
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convenience goods; consumer goods
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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
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shopping goods
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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
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Specialty goods
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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
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Unsought goods
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|
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sales of ________goods frequently result from the sale of consumer goods
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business/ industrial
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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
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Production goods
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used to assist in producing other goods/services; includes installations, accessory equipment, supplies and services
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Support goods
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buildings, fixed equipment, buyers deals directly w/ construction company and manufacturers through sales reps
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installations
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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
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buyers of supplies
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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
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Industrial services
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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
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Continuous Innovation
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only minor changes in behavior required for use; marketing strategy is to educate prospective buyers; EX: built-in, fold down seats
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Dynamically continuous innovation
|
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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
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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....
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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
|
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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
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|
purpose is to separate good product ideas from bad ones inexpensivly; marketing methods used are screening critieria, concept tests, and weight point systems
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Screening and Evaluation stage
|
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|
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
|
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|
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
|
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|
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
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Introduction stage in Product Life Cycle
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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
|
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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
|
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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
|
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|
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
|
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|
Venturesome, higher educated, use multiple info sources; makes up 2.5% of population; type of product adopter
|
Innovators
|
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|
Leaders in social setting, slightly above average education; make up 13.5% of population; type of product adopter
|
Early Adopters
|
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|
Deliberate, many informal social contacts; makes up 34% of population; type of product adopter
|
Early Majority
|
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|
Skeptical, below average social status; make up 34% of population; type of product adopter
|
Late Majority
|
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|
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
|
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|
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
|
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work for several producers and carry noncompetitive, complementary merchandise
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manufacturer's agent
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represent a single producer and are responsible for the entire marketing function of that producer
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selling agent
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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
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Vertical Marketing Systems
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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
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Corporate systems
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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
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Contractual Systems
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achieve coordination by the size and influence of one channel member rather than thru ownership
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Administered Systems
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convenience goods, means that a firm tries to place its products and services in as many outlets as possible
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Intensive Market Coverage Distribution
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is the extreme opposite of intensive bc only one retail outlet in a specified geographical area carries the product; usually specialty goods
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Exclusive Market Coverage Distribution
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lies between two extremes and means that firm selects a few retail outlets in a geographical area to carry produts, shopping goods, most common
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Selective Market Coverage Distribution
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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
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Just-in-time logistic system
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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
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Form of Ownership retail outlets
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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)
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Level of Service retail outlet
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how many different types of products a store carries in what assortment
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merchandise line
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what are the 3 ways to classify retail outlets?
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form of ownership, level of service, merchandise lin
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warehouse, gas station, some grocery stores, airlines, camera/photo stores, hotels examples of....
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self service retailers
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provides some services, like credit and merchandise return; walmart, kmart, target....
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Limited Service retailers
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provides many services; neiman marcus, nordstroms, saks, most specialty stores and dept. stores....
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Full service retailers
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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
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Depth
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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
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Breadth
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What are the 6 types of non store retailing?
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automatic vending, direct mail and catalogs, television home shopping, online retailing, telemarketing, direct selling
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positions retail outlets on two dimensions; breadth of a product line and value added
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retail positioning matrix
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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
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keys to positioning
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includes retail pricing, store location, retail communcation and merchandise
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retailing mix
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decids on markup, mark down, and timing for markdowns
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retail pricing
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oldest retail setting, the downtown area; less convenient bc of lack of parking, higher crime, exposure to weather, suburban pop. has grown
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central business district
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50 to 100 stores that attract customers who live/work in the area(5 to 10 mile range)
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regional shopping centers
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clusters of stores(5 to 10 miles in range) where composition of stores is unplaned
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strip location or power centers
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one primary store and often 30outles(10 to 20mile range)
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community shopping center
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deciding on image and the store's atmosphere or ambiance
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retail communication
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managing the breadth and depth requires retail buyers who are familiar w/ the needs of the target market and alternative products available
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merchandise
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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
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Wheel of Retailing
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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
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Retailing Life Cycle
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someon who has info to convey; the info sent and is conveyed by means of a channel of comm. such as a sales person
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source; message
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