Final Exam Flashcards
Marketing
the activitiy, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large
Market segments
relatively homogeneous groups of prospective buyers that 1) have common needs and 2) will respond similarly to a marketing action
target market
one or more specific groups of potential customers toward which an organization directs its marketing program
Marketing Mix
Product: good, service, or idea designed to satisfy customers’ needs
Price: what is exchanged for the product - usually money
Place: distribution channel used to get the product to the customer
Promotion: communication between the seller and buyer – including advertising, public relations, sales promotions, and personal selling
customer lifetime value
a metric that represents the total net profit a company can expect to generate from a customer throughout their entire relationship
customer value
the unique combination of benefits received by targeted buyers that includes quality, convenience, on-time delivery, and both before-sale and after-sale service at a specific price
Product
bundle of tangible and intangible attributes that satisfies consumers’ needs and is received in exchange for money or something else of value
difference between intangible and tangible product
tangible: physical
intangible: isn’t physical (ex: patents, copyrights)
difference between durable vs nondurable good
durable: can be used multiple times
nondurable: used a couple of time or one time use
need
feeling deprived of a basic necessity such as food, clothing, or shelter
want
need that is shaped by a person’s knowledge, culture, and personality
strategy
an organization’s long-term course of action designed to deliver a unique customer experience while achieving its goals
organization
legal entity that consists of people who share a common mission
Three types of organizations
for-profit business firms
nonprofit: Nongovernmental organization that serves its customers but does not have profit as an organizational goal.
government agencies: Federal, state, or local unit that provides a specific service to its constituents
organizational culture
the set of values, ideas, attitudes, and norms of behavior that is learned and shared among the members of an organization
core values
the fundamental, passionate, and enduring principles of an organization that guide its conduct over time
mission
a statement of the organization’s function in society that often identifies its customers, markets, products, and technologies
Business Portfolio Analysis
A technique that managers use to quantify performance measures and growth targets to analyze their firms’ strategic business units (SBUs) as though they were a collection of separate investments
Four Quadrants
Question marks: SBUs with a low share of high-growth markets. They require large injections of cash just to maintain their market share, much less increase it.
Stars: SBU with a high market share in a high-growth market.
- They may need extra cash to finance their rapid future growth.
- When their growth slows, they are likely to become cash cows.
Cash cows: a dominant share in a slow-growth market.
- It generates large amounts of cash. Far more than it can use.
- Cash cows provide funds to cover the organization’s overhead, and to invest in other SBUs.
Dogs:
Diversification Analysis: Market Penetration
Current products in current markets
- promotional campaigns
- price changes
Diversification Analysis: Diversification
New products in new markets
- internal expansion
- joint ventures
- mergers/acquistions
SWOT
strengths, weaknesses, opportunities, threats
build, correct, exploit, avoid
Environmental forces
the uncontrollable forces in a marketing decision involving social, economic, technological, competitive, and regulatory forces
What are the five environmental forces
Social, economic, technological, competitive, regulatory
social forces
the demographic and its cultural characteristics of the population
demographics
describing a population on characteristics such as age, gender, ethnicity, income, and occupation
culture
the set of values, ideas, and attitudes that are learned and shared among the members of a group
Three types of income
Gross income: the total amount of money made in one year by a person or household
Disposable income: the money a consumer has left after paying taxes to use for necessities
Discretionary income: the money a consumer has after paying for taxes and necessities to put towards savings and to purchase luxuries
Alternative Forms of Competition
- Pure Competition: many sellers with similar products
- Monopolistic competition: many sellers with substitutable products in a price range
- Oligopoly: few sellers control the majority of sales
- Pure monopoly: only one seller
Social responsibility
the idea that organizations are part of a larger society and are accountable to that society for their actions
Triple bottom line
the recognition of the need for organization to improve the state of people, the planet, and profit simultaneously if they are to achieve sustainable, long-term growth
Societal marketing concept
The view that holds an organization should satisfy the needs of consumers in a way that also provides for society’s well being
Green marketing
marketing efforts to produce, promote, and reclaim environmentally sensitive products
Cause Marketing
Occurs when the charitable contributions of a firm are tied directly to the customer revenues produced through the promotion of one of its products
Consumer Problem-Solving Variations
Extended Problem Solving: high-involvement purchase situations; Considerable time and effort are devoted to the search for external information
Limited Problem Solving: used for purchases that do not require a great deal of time or effort; consumers typically seek some information or rely on a friend to help them evaluate alternatives.
Routine Problem Solving: consumers may spend little to no time seeking external information and evaluating alternatives; virtually a habit and typifies low-involvement decision making.
Consumer Journey Maps
All of the touchpoint a consumer before during and after a purchase
problem recognition - information search - alternative evaluation - purchase decision - post purchase behavior
brand loyalty
A favorable attitude toward and consistent purchase of a single brand over time
psychographics
the analysis of consumer lifestyles
- provides insights into consumer needs and wants
- useful in segmenting and targeting consumers for new and existing products
Four Types of Opinion leadership
Opinion leaders: Individuals who exert direct or indirect social influence over others.
Influencer marketing: The recruitment of individuals to advocate for products and brands rather than focusing exclusively on prospective buyers.
Word of mouth: Influencing of people during conversations.
Buzz: Popularity created by consumer word of mouth.
Marketing Research
the process of defining a marketing problem or opportunity, systematically collecting and analyzing information, and recommending actions
Data
facts and figures related to the project
secondary data
facts and figures recorded PRIOR to the project
Primary data
facts and figures NEWLY collected for the project
observational data
Facts and figures obtained by watching how people behave, using personal observation, mechanical methods, or neuromarketing techniques.
open-ended questions
questions that allow respondents to express opinions and ideas or describe behaviors in their own words
closed-end (or fixed alternative questions)
Questions that require respondents to select one or more response options from a set of predetermined choices.
Dichotomous questions: typically “yes” or “no”
Semantic differential questions: measure the perceptions associated with a concept using pairs of opposing adjectives
Likert scale questions:measure respondents’ attitudes, opinions, or perceptions by asking them to rate statements on a scale from “Strongly Agree” to “Strongly Disagree”.
sales forecast
the total sales of a product that a firm expects during a specified time period under specified conditions and its own marketing efforts
direct forecast
Type of forecast that involves estimating the value to be forecast without intervening steps
lost-horse forecast
A forecast made by starting with the last known value of the item, listing the factors that could cause changes in that value, estimating the degree of impact that each of those factors would have, and adjusting the base level to arrive at the final amount
market segmentation
Involves aggregating prospective buyers into groups, or segments, that (1) have common needs and (2) will respond similarly to a marketing action
product differentiation
A marketing strategy that involves a firm using different marketing mix actions to help consumers perceive the product as being different and better than competing products
Bases of Segmentation for Consumer Markets
Geography—where prospective customers live or work.
Demographics—physical characteristics, measurable characteristics, and other classification attributes of individuals and households.
Psychographics—subjective mental or emotional attributes of prospective customers.
Behaviors—observable actions. ( Usage rates, 80/20 Rule)
Product positioning
the place a product occupies in consumers’ minds based on important attributes relative to competitive products
product repositioning
changing the place an offering occupies in consumers’ minds relative to competitive products
points of difference
those characteristics of a product that make it superior to competitive substitutes
head-to-head positioning
competing directly with competitors on similar product attributes in the same target market
differentiation positioning
targeting a less competitive, smaller market niche with unique product benefits
perceptual map
visual representation of the locations of products in the minds of consumers relative to competing products
- Identify the important attributes for the product class.
- Determine how target customers perceive competing products on those attributes
Seven P’s of Services Marketing
- Product
- Price
- Promotion
- Place
- People
- Physical environment
- process
types of consumer products
Convenience product: frequent purchases, little time and effort spent shopping
shopping product: infrequent purchases, much comparison time
speciality product: infrequent purchases, extensive search and decision time
unsought product: very infrequent purchases, some comparison shopping
product item
a specific product with a unique brand, size, or price (SKU or stock keeping unit)
product line
a group of closely related products sold by one company that share similar characteristics and serve similar customer needs
product mix
all the product lines offered by an organization
Four I’s of Services
intangibility
inconsistency
inseparability
inventory (perishability)
Degree of Innovations
Continuous Innovation: low, no new learning or behavior changes
Dynamically continuous innovation: some learning and disruptions to normal routine
Discontinuous innovation: high, extensive learning and entirely new consumption patterns
New-product development process
The seven stages an organization goes through to identify opportunities and convert them into salable products.
What are the seven stages of the new-product development process
- new-product strategy development
- idea generation
- screening and evaluation
- business analysis
- development
- market testing
- commercialization
Screening and evaluation
internal and external evaluation of new-product ideas to eliminate those that warrant no further effort
concept test
preliminary test of a new-product idea with customers using written descriptions and sketches rather than a prototype or actual finished product
development
turning a new-product idea into a prototype
prototype
full-scale operating model of the product
closed innovation
Relying primarily on its internal resources, research, and development teams to create new products and technologies.
open innovation
Collaborating with external stakeholders, including customers, suppliers, research institutions, startups, and even competitors, to access a broader pool of ideas and resources.
crowdsourcing
process of obtaining ideas, content, or solutions by soliciting contributions from a large group of people, typically via the internet
product life cycle
describe the stages a new product goes through in the marketplace - introduction, growth, maturity, and decline
skimming pricing
Setting a high initial price to help the company recover development costs and capitalize on the price insensitivity of early buyers
penetration pricing
Setting a low initial price to discourage competitive entry and build unit volume
freebie
:)
freebie again
:))
product modification
altering one or more of a product’s characteristics to increase the product’s value to customers and increase sales
market modification
strategies companies use to find new customers, increase a product’s use among existing customers, and create new use situations
Freebie #3
:)))
branding
Using a name, phrase, design, symbol, or combination of these to identify a company’s products and distinguish them from those of competitors
brand equity
the added value a brand name gives to a product beyond the functional benefits provided
value
ratio of perceived benefits to price
value pricing
the practice of simultaneously increasing product benefits while maintaining or decreasing price
Different approximate price levels
Demand-oriented
cost-oriented
profit-oriented
competition-oriented
Demand-oriented
Penetration: low initial price
Skimming: highest initial price
Prestige: setting a high pice so that quality- or status- conscious consumers will be attracted to the product and buy it
Odd-even: setting prices a few dollars or cents under an even number
bundle: marketing two or more products for a single package price
cost-oriented pricing approaches
methods for setting price that stress costs
profit-oriented pricing approaches
methods for setting price that balance revenue and cost
competition-oriented pricing approaches
methods for setting price that focus on competition
customary pricing
Setting a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors
above-, at-, or below-market pricing
Setting a market price for a product or product class using the average market price as the benchmark—pricing above, at, or below market level
loss-leader pricing
Selling a product below its customary price, not to increase sales, but to attract customers’ attention to it in hopes that they will buy other products with large markups as well
demand curve
A graph that relates the quantity sold and price, showing the maximum number of units that will be sold at a given price
elastic demand
(E > 1) A 1% price decrease generates more than 1% increase in quantity sold—increasing total revenue.
inelastic demand
(E < 1) A 1% price decrease generates less than 1% increase in quantity sold—decreasing total revenue.
Total profit Equation
Total Profit = Total Revenue - Total Cost
fixed cost
the sum expenses that do not change with the quantity sold
variable cost
the sum of the expenses that vary directly with the quantity of a product that is produced and sold
unit variable cost
variable cost expressed on a per unit basis
break-even analysis
a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output
break-even point (BEP)
the quantity at which total revenue equals total cost - profit is zero
market share
the ratio of the firms sales revenues or unit sales to those of the industry (competitors plus firm itself)
Legal and Ethical constraints on pricing
Price fixing: A conspiracy among firms to set prices for a product.
Price discrimination: The practice of charging different prices to different buyers for goods of like grade and quality.
Deceptive pricing: Price deals that mislead consumers.
Bait and switch: When a firm offers a very low price on a product (the bait) to attract customers to a store and then tricks the customer into purchasing a higher-priced (the switch).
Predatory pricing: Charging a very low price for a product with the intent of driving competitors out of business.
Types of Marketing Intermediaries
Wholesaler: an intermediary who sells to other intermediaries, usually retailers
Retailer: an intermediary who sells to consumers
Agent or broker: an intermediary with the legal authority to act on behalf of the manufacturer - their role is to bring buyers and sellers together
logistics
the actives required to move product inputs and finished products through the supply chain
supply chain
network of individuals and firms that create and deliver a product to end users - includes the supplier network and marketing channel
promotional mix
The combination of communication tools to (1) inform prospective buyers about the benefits of the product, (2) persuade them to try it, and (3) remind them later about the benefits they enjoyed by using the product
Elements of the promotional mix
(1) advertising, (2) personal selling, (3) sales promotion, (4) public relations, and (5) direct marketing
Integrated marketing communications (IMC)
the concept of designing marketing communications programs that coordinate all promotional actives to provide a consistent message across all audiences
pull strategy
Flow of promotion, mainly advertising and consumer promotions, directed to consumers
push strategy
Flow of promotion, mainly personal selling and trade promotions, directed to intermediaries
Promotion budgets type
Competitive parity budgeting: Spending is set to match competitors absolute spending or spending relative to market share.
All-you-can-afford budgeting: Spending on promotion occurs only after all other expenses are covered.
Percentage of sales budgeting: Spending is set as a percentage of past or anticipated sales.
Objective and task budgeting: Budget is determined by setting promotion objectives, outlining the tasks needed to accomplish those objectives, and then determining the cost of performing those tasks.
direct marketing
a promotion alternative that uses direct communication with consumers to generate a response in the form of traffic generation, lead generation, and direct orders
lead generation
the result of a direct marketing offer designed to generate interest in a product and request additional information
advertising
any paid form of non personal communication by an identified sponsor about an organization or a product
product advertisement
advertisement that focuses on selling a product
institutional advertisement
advertisement designed to build goodwill or a positive image for an organization rather than to promote a specific product
Types of Product Advertisements
Pioneering (or informational) advertisements: Advertisement used to launch a new product category by informing people what a product is, what it can do, and where it can be found.
Competitive (or persuasive) advertisement: focuses on developing secondary demand ,or demand for a specific brand rather than a competitor’s brand.
Comparative advertisement: Form of a competitive advertisement that shows a brand’s strengths relative to those of competitors.
Reminder advertisements: used to reinforce previous knowledge of a product.
Reinforcement advertisement: Form of reminder advertisement used to assure users of the product that they made the right choice.
Sample
Product—usually a smaller, trail-size version—offered for free or at a greatly reduced price
Encourage product trial of new products.
Premium
Item—other than the product being marketed—offered for free or at significant savings with the purchase of the product being marketed.
- Encourage return purchases and increased product use.
loyalty program
Promotion that offers a premium as a customer accumulates purchases.
- Encourage repeat purchases and develop brand loyalty.
publicity
A nonpersonal, indirectly paid presentation of an organization, product, or service that can take the form of news release, news conference, PSA
Fear Appeal
An approach to communication that suggest consumers can avoid some negative experience through the purchase and use of a product, a change in behavior, or a reduction in the use of a product
sex appeal
An approach to communication that suggests a product will increase the attractiveness of the user
humorous appeal
An approach to communication that implies the product is more fun or exciting than competitors’ offerings
Basic Media Terms
Reach: The number of different people or households exposed to an advertisement.
Rating: The percentage of households in a market that watch a particular TV show or listen to a particular radio program.
Frequency: The average number of times a person in the target audience is exposed to an advertisement.
Gross rating points (GRPs): Reach (expressed as a percentage of the total market) multiplied by frequency.
Cost per thousand Impressions(CPM): Cost of reaching 1,000 individuals or households with the advertising message using a specific vehicle.
CPM = (Cost of the ad/audience size) x 1,000.
approaches to scheduling advertising
Continuous (or steady) schedule: Advertising is run on a steady schedule throughout the year.
Flighting (or intermittent) schedule: Periods of advertising are scheduled between periods of no advertising to reflect seasonal demand.
Pulse (or burst) schedule: A flighting schedule is combined with a continuous schedule to reflect increases in demand, heavy periods of promotion, or the introduction of a new product.
Types of advertising agencies
Full-service agency: An agency that provides a complete range of advertising services, including marketing research, media selection, copy development, artwork, and production.
Limited-service agency: An agency that specializes in one aspect of advertising such as creative work, media, or digital advertising.
In-house agency: A company’s own staff providing a limited range or full range of advertising services.
