Exam 2 Flashcards
when a 1% decrease in price produces less than a 1% increase in quantity demanded thereby actually decreasing total revenue
inelastic demand
When establishing product line pricing, the lowest-priced item is typically positioned as
the traffic builder designed to capture the attention of hesitant or first-time buyers.
Process of having the sender transform an idea into a set of symbols
Encoding
Items that the consumer makes a special effort to search out and buy:
Specialty Products
Technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output
Break Even Analysis
setting prices for all items in a product line
product-line pricing
specifing a role of price in an organizations marketing and strategic plans
pricing objectives
New Product development process:
- New-Product strategy development
- idea generation
- screening and evaluation
- business analysis
- development
- market testing
- commercialization
Integrated Marketing Communications (IMC)
concept of designing marketing communications programs that coordinate all promotional activities to provide a consistent message across all audiences
A book on how to invest in collectibles spends several weeks on The New York Times bestseller list. The paperback book was originally released for $9.99. A reduction of the price to $8.99 pushed the sales up for 5%. This is due to the book having
inelastic demand
private branding
when a company manufactures products but sells them under the brand name of a wholesaler or retailer
When a manufacturer directs the promotional mix to channel members to gain their cooperation in ordering and stocking the product, it is using a(n) __________ strategy.
push
A budgeting method that allocates funds to a promotion as a percentage of past or anticipated sales, in terms of either dollars or units sold, is referred to as __________ budgeting.
percentage of sales
multibranding
company gives each product a distinct name
type of channel conflict that occurs when a channel member bypasses another member and sells or buys products direct
Disintermediation Channel Conflict
Introduction Marketing Objective
create consumer awareness and stimulate trial
consists of individuals and firms involved in the process of making a product or service available for use or consumption by consumers or industrial users
Marketing Channel
low-learning product shape
high to low curve
Advertising Strengths
efficient way to reach large number of people
a similar understanding and knowledge they apply to the message
Field of Experience
The terms continuous innovation, dynamically continuous innovation, and discontinuous innovation, are classifications based on:
degree of learning required by the consumer
Growth Promotional Activity
- personal selling to intermediaries
- advertixing to differentiate
When a retailer owns a manufacturing operation, it is referred to as
backward integration
a firm selects a few retailers in a specific geographical area to carry its products
Selective Distribution
Break-even point quantity
FC/ UP-UVC
Introduction Promotional Activity
- magazine publicity
- advertising
- saleforce calling
- sales promotions: free samples
selling a product below its customary price to attract attention to it
loss leader pricing
Continuous Innovation
consumers don’t need to learn new behaviors
low learning
Promotional expenditures at the introduction stage of the product life cycle are spent on:
creating primary demand
marketing of two or more products in a single package price
bundle pricing
Advertising Weaknesses
- high costs
- hard to receive good feedback
Factors that limit the range of prices a firm may set are referred to as:
pricing constraints
Products that are introduced, decline, and seem to return are characteristic of the __________ type of product life cycle.
fashion
Consists of all of the product lines offered by an organization:
product mix
when a producer owns the intermediary at the next level down in the channel
Forward Integration
Setting the low initial price on a new product to appeal immediately to the mass market
Penetration Pricing
high-learning product shape
gentle hill
Items which the consumer compares several alternatives on criteria such as price, quality or style:
shopping products
channel type when products and services available for consumption or use by consumers or organizational buyers while combining electronic and traditional intermediaries
Electronic Channel
Price Elasticity of Demand
% change in quanity / %change in price
a firm tries to place its products and services in as many outlets as possible Ex. convenience items
Intensive Distribution
Convenience products refer to:
products consumers purchase frequently, conveniently, and with a minimum of shopping effort.
Decline Promotional Activity
little money spent on promotion
multi-product branding
company uses one name for all its products in a product class
Channel conflict that arises when one member bypasses another member and sells or buys product directly is referred to as __________.
disintermediation
Promotional budget funds are allocated to promotion as a percentage of past or anticipated sales in terms of either dollars or units sold
percentage of sales
Setting prices a few dollars or cents under an even number
Odd-even pricing
Promotional Elements that are Customized Promotion
Personal Selling and Direct Marketing
directing the promotional mix to channel members to gain their cooperation in ordering and stocking the product
push strategy
Personal Selling Weaknesses
- very expensive per exposure
- message can vary between salesperson
discontinuous innovation
requires new learning and consumption patterns by consumers
high learning
__________ is the percentage change in quantity demanded relative to (divided by) the percentage change in price.
Price elasticity of demand
To place a new item on a retailer’s shelf manufacturers pay a:
slotting fee
Setting a high price so that quality-or status-conscious consumers will be attracted to the product and buy it is referred to as
prestige pricing
Promotional Elements that are Mass Promotion
Advertising, Public Relations, Sales Promotion
Process of having the receiver take a set of symbols the message and transform the symbols into an idea
Decoding
A restaurant review published in the local newspaper is an example of __________.
publicity
Decline Marketing Objective
deletion- dropping of the product
harvesting- retains but reduces marketing costs
Sales Promotion Weaknesses
- Easily abused
- can lead to promotion wars
- easily duplicated
Setting a market price for a product or product class based on a subjective feel for the competitors’ price or market price as the benchmark is referred to as
above-market pricing
at market pricing
below market pricing
when a 1% decrease in price produces more than a 1% increase in quantity demanded thereby actually increasing total revenue
elastic demand
Price equation
list price - incentives and allowances + extra fees
Setting the highest initial price that customers really desiring the product are willing to pay when introducing a new or innovative product is referred to as a
skimming strategy
practice of replacing promotion allowance with lower manufacturer list prices
Everyday Low Pricing
A new product does not achieve a predetermined sales target some retailers require a:
failure fee
A group of product or service items that are closely related because they satisfy a class of needs, are used together, are sold to the same customer group, are distributed through the same types of outlets, or fall within a given price range is referred to as a __________.
product line
Factors that limit the range of prices a firm may set are referred to as __________.
pricing constraints
dynamically continuous innovation
disrupts consumer’s normal routine but does not require totally new learning
medium learning
Maturity Marketing Objective
holding market share through further product differentiation and finding new buyers and uses.
Direct Marketing Weaknesses
- declining customer response
- database management is expensive
Public Relations Strengths
most credible source in the consumer’s mind
Promotional budget funds are allocated to promotion only after all other budget items are covered
All-You-Can-Afford
Three basic functions performed by intermediaries:
transactional, logistical and facilitating functions
Personal Selling Strengths
- very persuasive
- can select audience and give complex information
A marketing strategy that alters a product’s characteristic such as its quality, performance, or appearance to manage the length of product life cycle stagesis referred to as __________.
product modification
A product mix refers to
all of the different product lines offered by an organization
Penetration pricing refers to
setting a low initial price on a new product to appeal immediately to the mass market.
extraneous factors tha can work against effective communication by distorting a message or the feedback received
Noise
Direct Marketing Strengths
- can be prepared quicly
- facilitates relationship with customer
John Deere manufactures and distributes industrial and farm equipment. These types of equipment are considered to be specialty products. Which type of market coverage does John Deere likely use?
exclusive distribution
Setting the highest initial price that customers who really desire the product are willing to pay
Skimming Pricing
Marketers pay slotting fees to grocers in payment for space—or slots—on their retail shelves. Such slotting fees significantly increase the __________risk of the new-product process?
commercialization
Public Relations Weaknesses
difficult to get media cooperation
Schwan’s Sales Enterprises of Marshall, Minnesota, markets a full line of frozen foods in 49 states and parts of Canada using door-to-door salespeople who sell from refrigerated trucks. This particular method of distribution is called a:
direct channel
Sales Promotion Strenghts
- effective at changing behavior in short run
- very flexible
type of channel conflict that occurs between intermediaries at the same level in a marketing channel such as between two or more retailers
Horizontal Channel Conflict
The process of having the receiver take a set of symbols, the message, and transforming them back to an idea during the communication process is referred to as __________.
decoding
Growth Marketing Objective
stimulating selective demand
A firm’s profit equation demonstrates that profit equals __________.
Total revenue - Total cost
Companies can employ four general branding strategies, which include: (1) multiproduct branding; (2) __________; (3) private branding; and (4) mixed branding.
multibranding
channel type when intermediaries are inserted between the producer and consumers and perform numerous channel functions
Indirect Channel
Integrated marketing communications (IMC) programs coordinate a variety of promotion alternatives to provide
a consistent message across audiences
Dual distribution refers to
an arrangement whereby a firm reaches different buyers by employing two or more different
types of channels for the same basic product.
when a retailer owns the manufacturing operation
Backward Integration
Like personal selling, __________ has the advantage of being customized to match the needs of specific target markets. Messages can be developed and adapted quickly to facilitate one-to-one relationships with customers.
direct marketing
channel type when the producer and the ultimate consumers deal directly with each other
Direct Channel
directing the promotional mix at ultimate consumers to encourage them to ask the retailer for a product
pull strategy
Using competitors or market price as a benchmark
Above- At- or Below-Market Pricing
You have been asked to calculate the break-even point for a new line of souvenir T-shirts. The selling price will be $25 per shirt. The labor cost is $5 per shirt. The administrative costs of operating the company are estimated to be $60,000 annually and the sales and marketing expenses are $20,000 a year. Additionally, the cost of materials will be $10 per shirt.What is the break-even quantity?
8,000 shirts
type of channel conflict that occurs between different levels in a marketing channel
Vertical Channel Conflict
Product Life cycle:
introduction
growth
maturity
decline
firms products are only carried by one retailer in a specific geographical area
Exclusive Distribution
Reasons for Product Failure
- Insignificant point of difference
- Incomplete market and product protocol before product development starts
- Not satisfying customer needs on critical factors
- Bad timing
- No economical access to buyers
- Poor product quality
- Poor execution of the marketing mix
- Too little market attractiveness
channel type where an arrangement whereby a firm reaches different buyers by employing two or more different types of channels for the same basic product
Dual Distribution
Maturity Promotional Activity
- reminder advertising
- sales promotions: discounts, coupons, events
- limited personal selling
- direct mail reminder
