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42 Cards in this Set
- Front
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First Degree Price Discrimination |
Charging different customers different prices equal to Different Marginal Values (reservation price). These can come in the form of auctions, or college scholarships. |
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Second Degree Price Discrimination |
Practice of charging different prices per unit for different quantities of the same good or service. EX: Buy 3 tires, get the 4th free. EX 2: •Sodaprices, – medium: 16 oz. $ 1.09, .068125/oz. – large: 22 oz. $ 1.19, 6 oz. @ .0167/oz. – extra large:32 oz. $1.29, 10 oz. @ .01/oz. – gulp: 44 oz. $ 1.49, 12 oz. @ .0167/ oz. |
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Block Pricing |
Practice of charging different prices for different quantities or blocks of a good (not per unit). |
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Third Degree Price Discrimination |
Charging different prices to different groups according to different elasticity of Demand. - Identify Sub-groups of buyers with different price elasticity's - Find a way to collect a higher price from inelastic buyers, and a lower price from more elastic buyers EX: Airline fares/hotels, movies, theme park discounts for locals, doctors medical services, etc. |
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Necessary Conditions for Successful Price Discrimination |
1) Ability to identify and separate buyers by elasticity of demand. 2) Collect different prices from the different buyers. 3) Prevent Resale. |
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Two-Part Tariff |
A price discrimination technique in which the price of a product or service is composed of two parts - a lump-sum fee as well as a per-unit charge. In general, price discrimination techniques only occur in partially or fully monopolistic markets. |
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Two-Part Tariff (Two Consumers) |
- The profit-maximizing usage fee P* will exceed marginal cost. - The entry fee 7* is equal to the surplus of the consumer with the smaller demand. - The resulting profit is 27* (P* - MC)(Q1 - Q2). Note that this profit is larger than twice the area of triangle ABC |
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Marketing |
The activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. |
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Marketing Management Philosophies (Product Orientation) |
A philosophy that focuses on the internal capabilities of the firm rather than on the desires and needs of the marketplace. Management assesses its resources and asks these questions: "What do we do best?" "What can our engineers design?" "What is easy to produce, given our equipment?" If it's a service organization, then they ask the same questions but with services respectively. |
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Marketing Management Philosophies (Sales Orientation) |
The idea that people will buy more goods and services if aggressive sales techniques are used and that high sales result in high profits. Not only are sales to the final buyer emphasized, but intermediaries are also encourages to push manufacturers' products more aggressively. To sales oriented firms, marketing means selling products or services and collecting money in exchange. |
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Marketing Management Philosophies (Market Orientation) |
A philosophy that assumes that a sale does not depend on an aggressive sales force but rather on a customer's decision to purchase a product. It is synonymous with the marketing concept. What customers think they are buying - the perceived value - defines a business. The marketing concept includes the following: 1) Focusing on customer wants and needs so that the organization can distinguish its product(s) from competitors' offerings. 2) Integrating all the organization's activities, including production, to satisfy customer wants. 3) Achieving long-term goals for the organization by satisfying customer wants and needs legally and responsibly. |
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Marketing Concept |
The idea that people will buy more goods and services if aggressive sales techniques are used and that high sales result in high profits. |
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Marketing Management Philosophies (Societal Marketing Orientation) |
The idea that an organization exists not only to satisfy customer wants and needs and to meet organizational objectives, but also to preserve or enhance individuals' and society's long-term best interests. |
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Differences between Sales and Marketing orientations |
1) Both have different focuses: Sales - How can we sell more aggressively? Marketing - What do customers want and need? 2) Both contrast in their firm's business: Sale's firm - defines its business (or mission) in terms of goods and services. Market firm - defines its business in terms of the benefits its customers seek. 3) Both contrast in those to whom the product is directed: Sales - targets its products at "everybody" or "the average customer." Market - aims at specific groups of people. 4) Both contrast in their firm's primary goal: Sales - seeks to achieve profitability through sales volume and tries to convince potential customers to buy, even if the seller knows that the customer and product are mismatched. Market - Make a profit by creating customer value, providing customer satisfaction, and building long-term relationships with customers. 5) Tools used to achieve goals: Sales - seek to generate sales volume through intensive promotional activities, mainly personal selling and advertising. Market - recognizes that promotion decisions are only one of four basic marketing mix decisions that have to be made. |
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Strategic Plan |
The managerial process of creating and maintaining a fit between the organization's objectives and resources and evolving market opportunities. Used for long-term profitability and growth by writing a marketing plan. |
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Strategic Business Units (SBUs) |
A subgroup of a single business or a collection of related businesses within the larger organization. Each SBU has its own rate of return on investment, growth potential, and associated risks, and requires its own strategies and funding. They have these characteristics: - A distinct mission and specific target market - Control over its resources - Its own competitors - A single business or collection of related businesses - Plans independent of the other SBUs in the total organization. |
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Portfolio Matrix (Computer Manufacturer Example) |
Stars - High growth, High market share. Cash Cows - Low growth, High market share. Question Mark - High growth, Low market share. Dog - Low growth, Low market share. |
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Marketing Plan |
A written document that acts as a guidebook of marketing activities for the marketing manager. These are written to provide a basis by which actual and expected performance can be compared in a marketing plan. It allows you to examine the marketing environment in conjunction with the inner workings of the business. |
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Marketing Plan Elements |
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Business Mission Statement |
A statement of the firm's business based on a careful analysis of benefits sought by present and potential customers and an analysis of existing and anticipated environmental conditions. The firm's mission statement establishes boundaries for all subsequent decisions, objectives, and strategies. |
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Situation Analysis |
Involves a SWOT analysis which focuses on the businesses Strengths, Weaknesses, Opportunities, and Threats. Strengths and weaknesses are internal to the business, while opportunities and threats are external. |
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Competitive Advantage |
The set of unique features of a company and its products that is perceived by the target market as significant and superior to the competition. Comes in 3 forms: Cost, Product/Service Differentiation, and Niche Strategies. |
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Environmental Scanning |
Thecollection and interpretation of information about forces,events, and relationships in the external environmentthat may affectthe future of the organization or the implementationof the marketing plan. |
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Cost Competitive Advantage |
The set of unique features of a company and its products that is perceived by the target market as significant and superior to the competition. Other key aspects of Cost Competitive Adv.: - Obtaininexpensive raw materials - Createefficient plant operations - Designproducts for ease of manufacture - Controloverhead costs - Avoidmarginal customers |
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Product/Service Differentiation Competitive Advantage |
The provision of something that is unique and valuable to buyers beyond simply offering a lower price than the competitions. Examples: - Brand Names - Strong Dealer Network - Product Reliability - Image - Service |
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Niche Competitive Advantage |
Th advantage achieved when a firm seeks to target and effectively serve a small segment of the market. Other key aspects include: - Used by small companies with limited resources - May be used in a limited geographic market - Product line may be focused on a specific product category. |
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Sources of Competitive Advantage |
Patents, Copyrights, Locations, Equipment, Technology, Customer Service, Promotion |
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Marketing Objectives |
A statement of what is to be accomplished through marketing activities. To be useful, stated objectives should meet several criteria: 1) Realistic - managers should develop objectives that have a change of being met. 2) Measurable - managers need to be able to quantitatively measure whether or not an objective has been met. 3) Time-Specific - By what time should the objective be met? 4) Compared to a benchmark - If the objective is to increase sales by 15%, it is important to know the baseline against which the objective will be measured. |
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Target Marketing Strategy
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The activities of selecting and describing one or more target markets and developing and maintaining a market mix that will produce mutually satisfying exchanges with target markets. Steps for target marketing: 1) Segment the market based on groups with similar characteristics (market segments) 2) Analyze the market based on attractiveness of market segments 3) Select one or more target markets Other key attributes of Target Market Strategy: - Appeal to entire market with one marketing mix - Concentrate on one marketing segment - Appeal to multiple markets with multiple marketing mixes |
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Target Market |
a defined group most likely to buy a firm's product |
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Current Demographic Trends |
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Purchasing Power |
A comparison of the relative cost of a set of standard goods and services in different geographic areas |
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Inflation |
A measure of the decrease in the value of the money, expressed as the percentage reduction in a value since the previous year. |
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Recession |
A period of economic activity characterized by negative growth which reduce demand for goods and services |
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Technological Factors |
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Political and Legal Factors |
Laws and Regulations to Protect Interests:
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Regulatory Agencies |
1) Consumer Product Safety Commission - protects consumer safety in and around their homes. 2) Federal Trade Commission (FTC) - prevents unfair methods of competitions in commerce 3) Food & Drug Administration (FDA) - enforces safety regulations for food and drug products. |
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Social Factors |
- American values - Personality traits vary by region - The growth of component lifestyles - The changing role of families and working women - There is never enough time. |
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Component Lifestyles |
The practice of choosing goods and services that meet one's diverse needs and interests rather than conforming to a single, traditional lifestyle. |
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Marketing to African Americans |
- They are nearly 6 years younger than all consumers. 47% are between 18-49 years old, which is considered the top spending age. - Black households making $75,000+ have increased 47% in the last 5 years. - By 2015, more than half of all black Americans will live in the suburbs. - There are more African American households in the U.S. than Hispanic households, despite having smaller population. |
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Marketing to Asian Americans |
- Asian Americans only represent 4.2% of the US population, but have the highest average family income of all groups. - Approximately 48% have at least a bachelor's degree, and approximately 50% of the students at six University of California schools are Asian American. - Sometimes called a "marketer's dream" because of their high income and education. |
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Economic Factors |
1) Consumers' Incomes - As disposable (after tax) income rises, more families and individuals can afford the "good life." 2) Purchasing Power - a comparison versus the relative cost of a set standard of goods and services in different geographic areas. 3) Inflation - If inflation is 5%, you will need 5% more units of money than you would have needed last year to buy the same thing. 4) Recession - a period of economic activity characterized by negative growth, which reduces demand for goods and services |
