Midterm 1 Flashcards
Marketing
Activities designed to provide goods and services that provide value and satisfy customers
What is work?
Investing energy to create something of value
What is competition?
Invisible hand of the market.
Vital part of private enterprise
What is the importance of competition?
Applies pressure for lower prices, efficiency, and new/better products
Transaction
An exchange for profit
Contract
Binding agreement to establish parameters of exchange
Private enterprise system requires existence of these four conditions:
Private property, freedom of choice, fair competition, right to keep profits
Stakeholders
Citizen, consumer, employee, business owner
Shareholders
business owner
Specialized economies has no sure success because of:
Uncertainty, Risk, Reward
Most successful innovations involve:
experimentation, feedback, openness, and has target market who will benefit
How is first mover and fast follower different?
First mover create new products. Fast follower creates a better/more efficient product
Management Process
Planning, Organize, Operate, Control
4 areas of management
Marketing, Production, Finance, Administrative
Asset
items (tangible and intangible) that have value
Economics
study of how society employs resources to produce goods/services for consumption
Macroeconomics
nation’s economy
Microeconomics
people/organization in markets
Resource development
study of how to increase resources and create conditions that will better use them
Invisible Hand Theory
self-directed gains lead to social and economic benefits
Who is Adam Smith?
He is considered the father of modern economics. Smith is most famous for his 1776 book, The Wealth of Nations and theory of the invisible hand
Capitalism
Land, factories, stores owned by individuals for profit
State Capitalism
All run by state or government
Free Market decisions
Decisions in free markets are made by buyers and sellers through signals of supply and demand
Supply
quantity of products businesses are willing to sell
Demand
quantity of products consumers are willing to buy
Equilibrium
market price determined by supply and demand, S = D
Four degrees of Competition:
Perfect, Monopolistic, Oligopoly, Monopoly
Perfect Competition
similar goods, commodities, can’t compete on product
Monopolistic Competition
similar goods but not identical, competes on product
Oligopoly
small group of competitors
Monopoly
only one supplier of goods/services (often regulated)
What are free market benefits and cons?
Allows competition, lowers prices, better goods/services, innovation, opportunity
But driven by greed
Gross Domestic Product
(GDP) total value of final goods/services produced in a country in a given year
Inflation
general rise in price
Deflation
general decline in price
Consumer Price Index
(CPI) monthly statistics that measures the pace of inflation or deflation by computing cost of goods/services
Business Cycles
- economic boom, 2. recession, 3. depression, 4. recovery
Fiscal Policy
government’s efforts to keep economy stable through taxes and government spending
Monetary Policy
management of money supply and interest rates by the Federal Reserve Bank
Customer Relationship Management
(CRM) learning as much as possible about customers to satisfy and meet expectations and build long-term relationships
Customer Perceived Value
customer’s evaluation of benefits and costs of a marketing offer
Marketing Mix
Product, Price, Place, Promotion
Role of marketing research:
process of planning, collecting, analyzing data relevant to marketing decision
Different types of market segmentation
Geography, demographics, psychographics, usage rate
Target Market
a group of people for which an organization designs, implements, and maintains a marketing mix intended to meet their needs
Customer Behavior
processes a consumer uses to make a purchase decision and use/dispose goods/services
Demographic Segmentation
Includes age, gender, income, family, life cycles
Psychographic Segmentation
personality, motives, lifestyles
Geo-demographic Segmentation
based on where you live and lifestyle
Environmental Scanning
process of identifying factors that affect market success (global, technological, sociocultural, etc)
Consumer Market (B2C)
individuals that want/purchase goods and services
Business 2 Business (B2B)
organizations that buy good/services to use in production
Niche Marketing
identifies small but profitable market segments
One to One marketing
develops unique mix of goods/services for individual consumers
Mass Marketing
developing products for large groups of people
Unemployment Rate
percent of people over 16 who are unemployed and tried to find a job within the past 4 weeks
Real Unemployment Rate
standard unemployment rate plus those who’re underemployed, discouraged, looked for a job within the last year
Frictional Unemployment
people who quit out of dislike and are still without job and those who are entering workforce for the first time
Structural Unemployment
caused by restructuring of firms or mismatch of skills/location and requirements of available jobs
Cyclical Unemployment
due to recession or downturn in business cycles (most serious)
Seasonal Unemployment
demand for labor varies over the year
Production Era
marketing was a distribution function. Produce as many good as possible
Selling Era
emphasis on selling and advertising
Marketing Concept
businesses recognized need to be responsive to consumers
Customer Relationship Era
focused on enhancing customer satisfaction and long-term loyalty
Cost
expense of obtaining materials for making products
Price
something given up in exchange for goods/services
Profit Maximization
setting prices so that total revenue is as large as possible relative to costs
What is revenue?
Price x Units sold
What is the relationship between supply and demand?
It is inverse. As supply decreases, demand increases, and as demand decreases, supply increases
Commodities
products that are similar without meaningful differentiation
What is the value of service?
Services provide differentiation; can be influential for commodity products
Total Product Offering
everything consumers evaluate when deciding whether to buy something or not
Product Lines
a group of products that are physically similar or intended for similar market
Product Mix
combination of all product lines offered by a manufacturer or service provider
Product Differentiation
creation of real/perceived product differences through pricing, advertising, and packaging
Why have a mix of products?
matches different customer preferences and allows companies to set prices (maximizes profit)
Positioning
brand meaning perceived by target market
Break Even Point
point at which cost = income
(no net gain, no net loss)
Break Even Analysis
process used to determine profitability at various levels of sales; revenue = costs
Total Fixed Costs
all costs remain the same
Variable Costs
costs that change according to level of production
Formula for Break Even Point
Fixed Cost/Contribution Margin
Contribution Margin
price - variable cost per unit
Distributed Product Development
handing off various parts of innovation process
Good packaging must:
attract attention, protect goods, easy to open/use, give info on product, explain benefits
Brand
name, symbol, design that identifies goods/services of sellers and distinguishes from competition
Brand Equity
value of brand name and associated symbols
Brand Manager
has direct responsibility for one brand/product line
Product Screening
determines whether product has good potential and is marketable
Product Analysis
making cost estimates and sale forecasts
Product Life Cycle
Introduction, Growth, Maturity, Decline
New Product Development Process:
idea generation, product screening, product analysis, development, testing, commercialization
Cost Based Pricing
market determines price, includes cost of updates, marketing objectives
Target Based Pricing
based on demand, satisfies customers and meets profit margin
Competition Based Pricing
based on competition, customer loyalty, perceived differences
Skimming Price Strategy
prices a new product very high to recover costs and make as much profit as possible while there’s little competition
Penetration Pricing
introduce low price for new products which undercuts competitors and attracts customers
Demand Oriented Pricing
marketers set price on basis of consumer demand, not costs
Non-Price Competition
marketers compete on factors other than price; product images, comfort, style, durability, convenience
What is the primary purpose of a business?
maximize revenue
What is a brand?
entire organization as seen through the eyes of stakeholders
Brand Loyalty
degree to which customers are satisfied and committed to further purchases
Brand Awareness
how quickly/easily a given brand name comes to mind
Introduction
introducing new product, keep mix small
Growth
product gains attention, improve product, keep mix limited
Maturity
profit peak, differentiate product, expand mix
Decline
demand goes down, cut product mix,
Place
how products get to our hands
Intermediaries
organizations that help move goods/services
Channel of Distribution
group of market intermediaries
Agents/Brokers
bring buyers and seller together, assist in negotiating an exchange
Wholesalers
sells products to other firms
Retailers
firm that sells products to costumers
What is the value of an intermediary?
perform marketing tasks quickly, lower costs, make markets more efficient by reducing transactions/contacts
Tasks and benefits of intermediaries include:
transport, store, sell, advertise, build relationships, inventory, stock, keep track of trends,
Faster and cheaper; provide value
Intensive Distribution
puts products into as many stores as possible
Selective Distribution
only preferred group of available retailers
Exclusive Distribution
only one retail outlet in a given geographic area
Direct selling
selling goods/services to customers in their homes/workplaces
Multi-leveling Marketing
uses salespeople who work as independent contractors, paid on sales not slary
Direct Marketing
directly links manufacturers/intermediaries to customers (online shopping)
Integrated Marketing Communications
combine promotional tools, creates a positive brand image, meets consumer needs, meets marketing and promotional goals
Channel of Distribution Order
Producer, Agents, Wholesalers, retailers, consumers
Utility
is the want-satisfying ability that organizations ad to goods/services by making them more useful and accessible
Time Utility
products are more available
Place Utility
products are where consumers want them
Possession Utility
delivery, installation, guarantees
Information Utility
opens 2-way flow of information
Service Utility
fast, friendly service and teaches customers how to best use products over time
Merchant Wholesalers
independently owned firms that take title to goods they handle
What is a disadvantage of Online Retailing?
traditional retailers have a price advantage since higher prices cover shipping
Corporate Distribution Systems
one firm owns all organizations in the channel of distribution
Contractual Distribution Systems
members are bound by agreements
Administered Distribution Systems
producers manage marketing functions
Supply Chains
linked activities organizations perform to move goods/services from materials to consumers
Logistics
planning, implementing, controlling physical flow of material, final goods, information, from origin to consumption to meet customer requirements
7 Right’s
right of product, place, customer, time, quantity, condition, price
Value
Function (scarcity and need)
