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MKT 300 Exam 3 Flashcards > MKT 300 Exam 4 Flashcards > Flashcards

MKT 300 Exam 4 Flashcards

1
Q

Internal/External Factors of Price

A

Internal:
Marketing Objectives: Maximize profit, gain market share, infer a level of quality, survive
Marketing Mix Strategy: Price needs to be consistent with other 3 P’s
Costs: Costs affect your profit, so set the optimal price
External:
Demand for your product
Competition: Competitors prices, Strength of competition
Economy: Cost of components (natural resources), Economic conditions

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2
Q

Price Elasticity

A

Tells us how much the demand for a product will change with a change in price.
E=%change in quantity demanded of good A/%change in price of good A

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3
Q

Elastic

A

If demand is greatly changes with a price change. E>1

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4
Q

Inelastic

A

If demand hardly changes with a price change. E<1

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5
Q

Unitary elasticity – never the right answer on my exam

A

An increase in sales exactly offsets a decrease in prices, and revenue is unchanged

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6
Q

Know what happens to price/revenue when the demand is elastic/inelastic

A

Elastic:
Price goes: Up | Revenue goes: Down
Price goes: Down | Revenue goes: Up
Inelastic:
Price goes: Up | Revenue goes: Up
Price goes: Down | Revenue goes: Down

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7
Q

Stages for Establishing Prices
Develop pricing objectives (profit, status quo, market share)

A

Profit: Identify price and cost levels that allow the firm to maximize profit per product
Status Quo: Identify price levels similar to competitor average price.
Market Share: Adjust price levels so that the firm can maintain or increase sales relative to competitors sales.

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8
Q

Selecting a Basis for Pricing (cost, competition, demand, new product)

A
  • Cost
    Adding a specified dollar amount to the seller’s costs.
    Markup: Adding to the price of the product a predetermined percentage of the variable cost.
    Margin: Adding to the price of the product a predetermined percentage of the total price.
    (Selling price-cost)/selling price
  • Demand
    Customers pay a higher price when demand for the product is strong and lower price when demand is weak.
    Off peak cheaper price
    Different segments pay different rates
  • Competition
    Pricing is influenced primarily by competitors’ prices. Method importance increases when:
    Competing products are homogeneous resulting in elastic demand
    Organization is serving markets in which price is a key consideration
  • New Product
    Price skimming: Charging the highest possible price that buyers who desire the product will pay.
    Penetration pricing: Setting prices below those of competing brands to penetrate a market and gain a significant market share quickly.
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9
Q

Markup pricing (formula)

A

Selling Price = Markup in dollars + Cost

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10
Q

New Product Pricing Strategies (market skimming, premium, overcharging, market penetration, good value, economic)

A

Market Skimming
Charging the highest possible price that buyers who desire the product will pay.
- Premium
Price: High Quality: High
- Overcharging
Price: High Quality: Low
- Market Penetration
Setting prices below those of competing brands to penetrate a market and gain a significant market share quickly.
- Good-value
Price: Low Quality: High
- Economic
Price: Low Quality: High

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11
Q
A

Other Pricing Strategies
- Everyday low prices
Settling a low price for products on a consistent basis
- Reference pricing – in
particular, Selling against the
Brand
Pricing a product at a moderate level and positioning it next to a more expensive model or brand.
- Portfolio Pricing
Different levels of price points across a product category where consumers are willing to pay for extras.
- Price bundling
Packaging together two or more complementary products and selling them for a single price.
- Captive-product pricing
Designed specifically for use with another product. Many are necessary to function of core products.
- Multiple-unit pricing
Packaging together two or more identical products and selling them for a single price.
- Single-price
All customers are charged the same price for all goods and services offered for sale within that product category.
- Bait pricing
Illegal practice of advertising unrealistically low prices to bring customers into the store.
- Loss leader same as Leader
pricing
Products price below the usual markup, near cost, or below cost to bring people in.

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12
Q

Substitutes and Complements
If price goes up for one product and the sales of a second product go up, are these substitutes or complements?

A

Compliments.

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13
Q

Marketing Channels

A

Group of individuals and organizations directing the flow of products from producers to customers.

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14
Q

Intensity of Distribution (intensive, selective, exclusive)

A

Intensive: Uses all available outlets to distribute a product, appropriate for convenience products with high replacement rates. Provides availability and reduces search time, everywhere.
Selective: Uses only some available outlets to distribute a product, appropriate for shopping products and durable goods with low replacement rates, desirable when special effort - such as customer service - is important. Several, not everywhere.
Exclusive: Uses a single outlet in a fairly large geographic area to distribute a product, appropriate for expensive, high-quality products purchased infrequently, one.

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15
Q

Channel Choice Factors
(Product, producer, market factors)

A

Market Factors: Customer profiles, consumer or industrial consumer, size of market, geographic location, competition, environmental forces (can’t control)
Product Factors: Product complexity, Product price, Product standardization, Product life cycle, Product delicacy.
Producer Factors: Producer resources, number of product lines, desire for channel control.

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16
Q

Modes of Transportation (cheapest? Most accessible? Most reliable?)

A

Cheapest mode of transportation: Water
Most accessible: Truck
Most reliable: Pipe

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17
Q

Push/pull Strategies
(Which is promoting to consumers? To others in the distribution channel?)

A

Push: Advertising and promotional strategies geared toward your distribution partners to encourage them to promote your product.
Pull: Advertising and promotional strategies geared toward consumers to increase desire for the product.

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18
Q

Retailing Definition

A

All the activities involved in selling goods directly to the final consumer for their use.

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19
Q

Retailing Trends

A

Personalized in-store experiences, convenience/speed as technology integration continues to grow, privacy concerns are retailers use data to predict shopping behavior, mobile wallet usage, omni-channel retailing (connected customers can shop for/purchase the same items across different channels)

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20
Q

Direct Retailing vs Direct Marketing

A

Direct retailing: Face to face.
Direct marketing: Contacting end users not face to face.

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21
Q

Retailing Mix, Customer Service

A

Customer service, merchandise, promotion, location, atmosphere, pricing

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22
Q

Atmospherics

A

Atmosphere: Layout, design, textures, senses,
Emotional response: pleasure/displeasure/heightened senses
Behavior: Time spent in store, affiliation with people, buying actions.

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23
Q

Integrated Marketing Communications

A

Consistent, unified message.

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24
Q

Marketing Communications Process

A

The way in which a sender encodes a marketing idea and conveys it through message and medium so receivers can decode and understand it, and then respond with feedback.

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25
Q

AIDA Concept

A

Model that outlines the process of achieving promotional goals in terms of consumer involvement with the message. Attention-Interest-Desire-Action.

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26
Q

Goals and Tasks of Promotion
(informing, reminding, persuading)

A

Explains how products work. PLC Stage Introduction & Early Growth
Reminding
Reminds customers a product may be needed. PLC Stage Growth and Maturity
Persuading
Encourages brand switching. PLC Stage Maturity

27
Q

Promotional Mix Elements

A

Advertising, personal selling, sales promotion, public relations, direct marketing, and public relations.

28
Q

Promotional mix elements strengths/weaknesses

A

Advertising:
Strengths: cost-efficient per person, can enhance brand image, repeatable
Weaknesses: total cost can be high, slow feedback, one-way message, not flexible

Personal Selling:
Strengths: more influential, immediate feedback, flexible
Weaknesses: high cost per person, time-intensive

Sales Promotion:
Strengths: can be implemented quickly, help to move seasonal items, enhance the effectiveness of other promotional mix elements
Weaknesses: Not good for luxury products

Public Relations:
Strengths: publicity can help build brand image, support other promotional efforts
Weaknesses: firm cannot control what news agencies and other outlets say

Direct Marketing:
Strengths: messages can be tailored to match the consumer, many consumers request these materials
Weaknesses: customers can feel as if their privacy has been invaded

Events/Experiences:
Strengths: help build brand community and buzz around the brand
Weaknesses: more skeptical consumers might see efforts as inauthentic

29
Q

Which promotional mix element do we have the most control over?

A

Direct Marketing

30
Q

Sales promotions: What impacts attitude/ behavior?

A

Advertising impacts attitudes, best at the beginning of the process (reason to buy)
Sales Promotions impact behavior, best at the end of the process (incentive to buy)

31
Q

Definitions/where is most money spent (trade promotions, consumer promotions)

A
  • Trade promotions
    B2B Push, most money spent.
  • Consumer promotions
    B2C Pull, contests/sweepstakes, coupons, rebates, loyalty programs, premiums (bonus items)
32
Q

Sales Promotion Rates (redemption, displacement, acquisition, conversion)

A
  • Redemption
    Percentage of people responding to incentive
  • Displacement
    Percentage of people who would buy at the regular price, would buy anyways
  • Acquisition
    Percent of purchases by people who only bought because of the incentive
  • Conversion
    Number of people who would buy it at full price after trying it because of the sales promotion
33
Q

Which of the sales promotional rates are the best indicator of success?

A

Conversion

34
Q

Sales Promotion Dilemma

A

All other firms vs our firm, maintaining vs cutting back promotions and their results for each (market share, profits)

35
Q

Personal selling advantages

A

One-to-one Interaction:
* Address Specific Customer Needs
* Alter Message
* Provide Additional Information

36
Q

Personal Selling Process

A

Prospecting, pre approach, approach, presentation, close, follow up.

37
Q

Generating vs Qualifying Leads

A

Generating leads: cold calling, direct mail/telemarketing, web site
Qualifying leads: Recognized need, buying power, receptivity and accessibility

38
Q

Relationship vs. Traditional Selling

A

Tradition selling: Sell products, focus on closing sales, with a product pricing focus.
Relationship selling: Sell advice and assistance, focus on customer’s bottom line, with a discovery in scope of customers operations.

39
Q

Pros and Cons of Advertising

A

Pros: Cost-effective, creative, educate, unique selling, proposition.
Cons: Unnoticed, misinterpret, intrusive, offend.

40
Q

Evaluating Media (clutter, impact, efficiency, engagement)

A

Clutter
How many other ads will our customers see at the same time?
Impact
How credible is the medium? How credible is the source? How well does the product fit with the users of the medium?
Efficiency
How much does each impression cost?
Engagement
How much do customers pay attention to that form of media?

41
Q

Media selection considerations (cost per contact, reach, frequency, audience selectivity)

A
  • Cost per contact (CPM)
    Cost of Ad Space / Reach x 1000
  • Reach
    The number of target consumers exposed to a commercial at least once during a time period.
  • Frequency
    The number of .times an individual is exposed to a message during a time period.
  • Audience Selectivity
    The ability of an advertising medium to reach a precisely defined market.
42
Q

Ratings vs. Shares

A

Rating: Likability of the particular show over time.
Share: Market share at a particular time in the day.

43
Q

Advertising campaigns

A

A series of related advertisements focusing on a common theme, slogan, and set of advertising appeals

44
Q

Unique Selling Proposition

A

A desirable, exclusive, and believable advertising appeal selected as the theme for a campaign.

45
Q

Attributes vs Benefits

A

Attribute: A characteristic of the product.
Benefit: What’s in it for me?

46
Q

Major types of advertising (institutional, product, pioneering, competitive, comparative)

A

Institutional
Enhances a company’s image rather than promotes a particular product.
Product
Touts the benefits of a specific good or service.
Pioneering
Stimulates primary demand for new product or category (PLC Introductory)
Competitive
Influences demand for the brand, often uses emotional appeal (PLC Growth)
Comparative
Compares two or more competing brands’ product attributes (Used when growth is sluggish or competition is strong).

47
Q

Additional Advertising types (event creation, guerilla marketing, stealth marketing, branded entertainment)

A
  • Event Creation
    Designing an event that features sponsorship.
  • Guerilla Marketing
    Unconventional promotions on a low budget.
  • Stealth Marketing
    Undercover marketing.
  • Branded Entertainment
    The integration of brands or brand messages into entertainment media.
48
Q

Marginal Analysis: When should we increase/decrease our spending?

A

Increase spending if: the increased cost is less than the incremental (marginal) return
Decrease spending if: the increased cost is more than the incremental (marginal) return.

49
Q

Advertising/Sales Response Functions
Specifically, the S-Shaped Response Function

A

Exemplifies diminishing returns. Initial and high spending have little effect, but the middle level has a big effect.

50
Q

Common Execution Styles
Focus on differences between scientific, slice-of-life, and lifestyle

A

Lifestyle: exclusive, only coolest people can wear this brand.
Slice-of-life: meant for everyone, inclusive, basic product such as orange juice.
Scientific: third-party data is used, automobile company rated by JD Power.

51
Q

Message Recall

A

Primacy Effect: beginning
Recency Effect: end

52
Q

Ethical Issues (bait and switch, puffery)

A

Bait and switch: Similar to bait pricing, telling someone a cheap price and switch it last second. Drawn in under false pretenses.
Puffery: Exaggerations with lies that an audience can tell are not true “not an option”

53
Q

Budget Approaches (Arbitrary Allocation Method, Percentage of Sales Method, Competitive Parity Method, Objective and Task Method)

A

Arbitrary Allocation Method
No system. seemed like a good idea at the time.
Percentage of Sales Method
Set percentage of sales or amount per system
Competitive Parity Method
Match competitor or industry average spending
Objective and Task Method
Establish objectives, determine tasks, estimate costs.

54
Q

7Ps and 4Cs

A

7 P’s: Price, Product, Place, Promotion, Physical Environment, People, Process.
4 C’s: Customer Value, Cost, Convenience, Communication.

55
Q

CRM

A

Activities that are used to establish, develop, and maintain customer sales. Customizing product and service offerings based on data generated through interactions between the customer and the company.

56
Q

Recency-Frequency-Monetary

A
  1. Identifies customers most likely to purchase again
  2. Identifies and ranks “best customers”
  3. Identifies most profitable customers
57
Q

Lifetime Value of a Customer

A

Quantity purchased in a given time frame x price/unit

58
Q

Complaint Behaviour

A

Level of dissatisfaction, personality of customer, amount of benefit to be gained

59
Q

Attribution Theory – when are we likely the most upset?

A

How the satisfaction level of the consumer is affected by a company;
Is the service normally stable? internal(consumer)/external(provider) focus, blame?
Controllability, could something have been done to prevent this?

60
Q

Service Recovery

A

What do you do when something goes wrong? listen to the customer, resolve problems quickly, provide a fair solution

61
Q

Power of We

A

Seeing someone perform a certain action makes you more likely to behave in that same way.

62
Q

Experiential Marketing

A

How can we make something an experience? Connect with the customer.

63
Q

The Number One Thing to Remember from MKT 300

A

It’s what you learn after you know it all that counts.

MKT 300 Exam 3 Flashcards (3 decks)

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