Exam 2 Flashcards by Rachel Graham

when a 1% decrease in price produces less than a 1% increase in quantity demanded thereby actually decreasing total revenue

inelastic demand

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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.

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Process of having the sender transform an idea into a set of symbols

Encoding

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Items that the consumer makes a special effort to search out and buy:

Specialty Products

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

Break Even Analysis

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setting prices for all items in a product line

product-line pricing

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specifing a role of price in an organizations marketing and strategic plans

pricing objectives

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New Product development process:

New-Product strategy development
idea generation
screening and evaluation
business analysis
development
market testing
commercialization

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Integrated Marketing Communications (IMC)

concept of designing marketing communications programs that coordinate all promotional activities to provide a consistent message across all audiences

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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

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private branding

when a company manufactures products but sells them under the brand name of a wholesaler or retailer

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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

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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

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multibranding

company gives each product a distinct name

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type of channel conflict that occurs when a channel member bypasses another member and sells or buys products direct

Disintermediation Channel Conflict

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Introduction Marketing Objective

create consumer awareness and stimulate trial

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

Marketing Channel

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low-learning product shape

high to low curve

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Advertising Strengths

efficient way to reach large number of people

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a similar understanding and knowledge they apply to the message

Field of Experience

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The terms continuous innovation, dynamically continuous innovation, and discontinuous innovation, are classifications based on:

degree of learning required by the consumer

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Growth Promotional Activity

personal selling to intermediaries

- advertixing to differentiate

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When a retailer owns a manufacturing operation, it is referred to as

backward integration

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

Selective Distribution

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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

Exam 2 Flashcards

(105 cards)