Prelim 2 Flashcards
1
Q
Psychographic segmentation divides buyers into different segments based on __________.
A
lifestyle and personality
2
Q
What are examples of behavioral segmentation?
A
Occasions (fall), Benefits Sought, user status (nonusers, ex-users, potential users, first-time users, and regular users), loyalty
3
Q
Which base of segmentation divides buyers into segments based on their knowledge, attitudes, uses, or responses to a product?
A
behavioral
4
Q
What are the 5 dimensions of effective segmentation requirements?
A
1) measurable
2) accessible
3) substantial
4) differentible
5) actionable
5
Q
What are the 3 aspects of evaluating market segments?
A
- segment size and growth
- segment structural attractiveness (i.e. less attractive if strong competitors, substitute products, easy for new entrants, high relative power of buyers compared to sellers, and powerful suppliers that can control prices)
- company objectives and resources
6
Q
What are the 3 aspects of evaluating market segments?
A
- segment size and growth
- segment structural attractiveness (i.e. less attractive if strong competitors, substitute products, easy for new entrants, high relative power of buyers compared to sellers, and powerful suppliers that can control prices)
- company objectives and resources
7
Q
What are the 3 targeting strategies?
A
undifferentiated (mass) marketing, Differentiated (segmented) marketing, and Concentrated (niche) marketing
8
Q
Define market demand (market size)
A
total volume that would be bought by a defined consumer group in a defined geographic area in a defined time period in a defined marketing environment under a defined level and mix of industry marketing effort
9
Q
What is TAM?
A
Total Adjustable/Available Market
10
Q
What is primary vs selective demand?
A
- primary ≈ target market size (i.e. students who can afford C2C bus and schedule lines up)
- selective ≈ served market size (i.e. students who actually use C2C bus and not a competitor)
11
Q
What is the Chain-Ratio Method?
A
used to estimate market segment size; multiplying a base number by a
chain of related percentages i.e. 100 students, .4 available, .2 qualified market, .1 target market, .05 served market; to estimate the # of buyers
12
Q
What is the Market Buildup Method?
A
• identifying all the potential buyers
and estimating their potential
purchases to estimate the total revenue
13
Q
What is a marketer-defined position?
A
Arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target customers.
14
Q
What is a customer-derived position?
A
Product position is the way that the
product is defined by consumers on
important attributes.
15
Q
What are the 4 steps to choosing a positioning strategy?
A
- identifying possible competitive advantages (low cost, differentiation, focus)
• differentiation by: product & service, branding, channels, price, etc. - choosing the right competitive advantages (how many, i.e. Target high quality & low prices vs Walmart low prices, which?)
• important, distinctive, superior, communicable, preemptive (competitors cannot easily copy the difference), affordable, profitable - selecting an overall positioning strategy and developing a positioning statement
- communicating and delivering the chosen position to the market
16
Q
Should you pick a position without competing brands in the perceptual map?
A
no, it’s dangerous; not all positions are profitable (value propositions)
17
Q
What are the 3 levels of a product?
A
Core product, Actual product, and Augmented product
18
Q
What is a core product?
A
the benefit of the product that makes it
valuable to you; real needs & wants; iPhone: being able to communicate with family and friends
19
Q
What is an actual product?
A
the tangible, physical product; features, designs, quality, etc; iPhone: the phone
20
Q
What is an augmented product?
A
Augmented product is the nonphysical
part of the product, consisting of added values; warranty, customer service, etc; iPhone: genius bar
21
Q
What are the consumer product categories?
A
Convenience: buy frequently without much buying effort, cheap; i.e. toothpaste
Shopping: less frequently purchased, customer compares carefully like furniture, cars, clothing; higher price; a lot of effort during decision
Specialty: Even higher price, market size is smaller; i.e. Rolex
Unsought: insurance, blood donation; aggressive advertising
22
Q
What is the product mix? What are its 4 features?
A
• Product mix consists of all the product lines and items that a particular
seller offers for sale.
• width: the number of different product lines
• lengths: the number of items within each product line
• depth: the number of versions offered of each product
• consistency: how closely the various product lines are in end use, production
requirements, or distribution channels
23
Q
What is a product line?
A
group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges i.e. Gain and Tide
24
Q
What are the 2 types of product line development?
A
• Product line filling involves adding
more items within the present
range (market penetration) wider
• Product line stretching occurs when a
company lengthens its product line beyond its current range − downward, upward, or both ways (market
development, same product in diff market)
25
What are the 2 product quality dimensions
Quality Dimensions
• level: performance quality
• consistency: conformance quality
26
What are the characteristics of a service? i.e. airplane
• Intangibility: services cannot be seen,
tasted, felt, heard, or smelled before
they are purchased.
• Inseparability: services cannot be
separated from their provider i.e. overbooking is a tool to deal w/this
• Variability: service quality depends
on who provides the services as well
as when, where, and how the
services are provided.
• Perishability: services cannot be stored
for later sale or use
27
Describe the service triangle
Internal: from company to staff
Interactive: marketing from staff to customers
External: from company to users/customers
28
Under the SERVQUAL Model, what are the 5 dimensions of service?
reliability (if they keep their promise), responsiveness, empathy, assurance (ability to provide information decision, correct knowledges, do you think your server really cares about you), tangibility (physical environment)
29
What are the five dimensions of the customer experience?
sense, feel, think, act, and relate
30
What are the 3 levels of branding strategies?
```
• corporate branding: promoting
products with a well-established
corporate entity’s brand name
• family branding: selling many related
products under a single brand name
• individual branding: products are given
brand names that are newly created
and not connected to the names of
existing brands in the company
```
31
What are the 4 types of brand sponsorship?
```
• national brands
• store brands
• licensing vs. franchising
--licensing is authorizing using names
or symbols, names of well-known
celebrities, or characters from
popular movies and books
--franchising is licensing the whole
business model and brand
• co-branding
```
32
What four choices does a copany have when it comes to brand development?
* line extension
* brand extension
* multibrands
* new brands
33
Describe the 2 x 2 matrix of brand development
brand name x product category
existing & existing- line extension
existing & new- brand extension
new & existing- multibrands
new & new- new brands
34
What is line extension?
```
• Extends existing brand names to
new forms, colors, sizes,
ingredients, or flavors of an
existing product category.
• A line extension works best when
it takes sales away from competing
brands, not when it “cannibalizes”
the company’s other items.
```
35
What is brand extension?
• Extends a current brand name to
new or modified products in a
new category i.e. Apple: first product was Mac, extended to phones, tablets, watch
• Potential Risks: confuse the image of the main brand (BMW clothing), inappropriate to a particular new product (Disney healthcare)
36
What ae multibrands?
```
• Market many different brands in a
given product category i.e. parent company Mars has twix, pedigree, orbit
• Offer a way to establish different
features that appeal to different
customer segments and capture
larger market share.
```
37
What are new brands?
```
• Create a new brand name when it
enters a new product category,
because the power of its existing
brand name is waning thus a new
brand name is needed i.e. Toyota --> Lexus
• Offering too many new brands
cab results in a company
spreading its resources too thin.
```
38
What is the new product development process? (8 steps)
1) idea generation
2) idea screening
3) concept development and testing
4) market strategy development
5) business analysis
6) product developent
7) test marketing
8) commercialization
39
Describe idea generation
```
• Systematically searching for new
product ideas
• internal sources refer to the company’s
own formal research and
development, management and
staff, and intrapreneurial programs;
• external sources refer to sources
outside the company such as
customers, competitors, distributors,
suppliers, and outside design firms.
```
40
Describe idea screening
```
• Identifying good ideas and drop
poor ideas
• R-W-W screening framework
Is it Real?
Can we Win?
Is it Worth doing?
```
41
Describe concept development and testing
```
• Developing attractive ideas into
product concepts and testing new
product concepts with groups of
target consumers
• product idea is an idea for a possible
product that the company can see
itself offering to the market;
• product concept is a detailed version of
the idea stated in meaningful
consumer terms.
```
42
Describe Marketing Strategy Development
```
• Designing an initial marketing
strategy for a new product based
on the product concept
• Marketing strategy statement
consists of
• target market description
• value proposition planned
• sales, share, and marketing mix
```
43
Describe Business Analysis
```
• Reviewing the sales, costs, and
profit projections for a new
product to find out whether these
factors satisfy the company’s
objectives:
• sales history of similar products
• conduct market surveys
• assess the range of risk
• estimate expected costs and profits
• analyze financial attractiveness
```
44
Describe Product Development
```
• Developing the product concept
into a physical product to ensure
that the product idea can be
turned into a workable market
offering:
• calls for a huge jump in investment
• undergo rigorous tests
• often involve actual customers
```
45
Describe Test Marketing
```
• Testing the product and its
proposed marketing program in
realistic market settings
• It is possible but sometimes risky
to shorten or skip test marketing
to take advantage of fast-changing
market developments.
```
46
Describe Commercialization
```
Introducing a new product into
the market
• When to launch?
• Where to launch?
• Planned market rollout?
```
47
How can you be successful in new product development? (3)
customer-centered, team-based (marketing, R&D, manufacturing), and systematic (don't skip steps)
48
What are the stages of the Product Life Cycle?
- product development
- introduction (still losing $)
- growth (after market accepts product, sales grow)
- maturity
- decline
49
Compare stages of Product Life Cycle to BCG matrix
Introduction is question mark, growth is star, maturity is cash cow, decline is like dog
50
What are the 3 major pricing strategies?
* Customer value-based pricing: customer value perception
* Cost-based pricing: product cost
* Competition-based pricing: competitors’ strategies and prices
51
Describe Customer Value-Based Pricing
```
• uses the buyers’ perceptions of
value rather than the seller’s cost
• customer driven
• to match perceived value
• Value does not merely mean low
price, but well-satisfying
customers’ needs and wants
```
52
Describe Cost-Based Pricing
```
• sets prices based on the costs for
producing, distributing, and selling
the product plus a fair rate of
return for effort and risk.
• product driven
• to ensure the business profit
```
53
What is good-value pricing?
```
• Offers just the right combination
of quality and good service at a
fair price. Cheaper than expected.
• Targets on the mass market, by:
• introducing less-expensive versions
• introducing new lower-price lines
• redesigning products to offer
---------better quality at the same price
---------the same quality for less
• offering less value at very low prices
```
54
What are 2 the good-value pricing tactics?
Everyday low pricing (EDLP) & High-low pricing
55
What is everyday low pricing?
involves charging a constant
everyday low price with few or no
temporary price discounts
56
What is High-low pricing?
involves charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items
57
What is value-added pricing?
Value-added: give more value to customer and you charge them more in return, more for more position strategy
58
Describe 3 cost estimations
• Fixed costs do not vary with production or sales level. Ex: constructions, machines, rents, interest, executive labors
• Variable costs vary directly with the level of production. Ex: raw materials, packaging, production labors
• Total costs are the sum of the fixed and variable costs for any given
level of production; • marginal cost: the change in total cost that comes from producing one additional item; •economies of scale: reduced costs per unit that arise from increased total output of a product;
• experience curve: drop in the average cost with accumulated production experience
59
What is markup/cost-plus pricing?
```
• adds a standard markup to the cost of the product. calculate the total & unit cost, decide reasonable markups
• Sellers are certain a/b costs and
avoids price competitions, but will
ignore the market demand and
competitor prices.
```
60
What is break-even/target return pricing?
sets price to break even on costs or to make a target return; if the demand line is on the left side of break-even point, you’re gonna lose money, HAS to be on right side of break-even point
61
What are internal pricing factors?
• Cost, strategy & mix, objectives
• Price is only one element of the
company’s broader marketing strategy. Price decisions must be coordinated with product design, distribution, and promotion decisions to form a consistent and effective marketing program.
• Pricing Objectives, including building profitable customer relationships (customer retention), preventing competitions, maintaining resellers relationships, avoiding gov't intervention (dumping pricing)
62
Who normally uses competition-based pricing?
usually market foreigners and challengers use this, market leaders do not use it
63
What are external factos affecting pricing?
customers (value perception) & market (structures/competitors [perfect competition, monopolistic competition, oligopolistic competition, pure monopoly] competitors’ strategies, price-demand aka elasticity)
64
What is market-skimming pricing?
```
• sets high initial prices to “skim”
revenue layers from the market; mostly in technological markets; market with inelastic demand; well differentiated product; profitable: cost < revenue
• When companies decrease the
price, they should consider early
purchasers’ feeling carefully.
```
65
What is market-penetration pricing?
sets a low price for a new product in order to attract a large number of buyers and a large market share; market with elastic demand (sensitive to lower price); high sales volume--> falling costs; no harm to the brand position
66
What is product-mix pricing?
```
• The firm looks for a set of prices
that maximizes its profits on the
total product mix.
• Various products have related
demands and costs, and face
different degrees of competition.
```
67
What is Product Line Pricing?
```
• decides prices for entire product
lines rather than single products
• Determine the price steps to set
between various products in a line,
based on customer evaluations of
the different features.
• Spotify: free vs. premium, how do
you value the differences?
```
68
What are the 5 product mix pricing strategies?
product line, optional product, captive product, by-product, bundle
69
What is Optional-Product Pricing?
```
• divides the total price into prices for
optional or accessory products and the price for the main product Ex: hotel rooms, PC…
• But which items to include in the
base price and which to offer as
options?
- the baseline reflects positioning
- options consider customer needs
- options introduce extra values
```
70
What is Captive-Product Pricing?
• also called two-part pricing, sets prices of products that must be used along with a main product Ex: Kindle, Nintendo Switch…
• The price is broken into a fixed fee plus a variable usage rate.
- the fixed fee is usually low
- the variable usage rate is usually high
71
What is By-Product Pricing?
• sets the price for the main product after deducting byproducts profits
--offsets the costs of disposing byproducts and makes the price of the main product more competitive
72
What is Bundle Pricing?
• combines several products at a
| reduced price; promote the sales of products consumers may not otherwise buy i.e. McDonalds family bundle
73
Companies usually adjust their
basic prices to account for various
______ _____ and _____ _____
customer differences; changing
| situations
74
What is segmented pricing?
involves selling a product or service at two or more prices, where the difference in prices is not based on differences in costs.
• customer-segment, product-form,
location-based, & time-based
• international pricing
75
How can segmented pricing be effective?
it must be segmentable, have differences in demand, be profitable & legal
76
What are the 5 strategies for geographical price adjustment?
* FOB-origin: ship-deliver (goods are placed free on board a carrier; the customer pays the freight from the factory to the destination.)
* uniform-delivered: average (opposite of FOB; company charges the same price plus freight to all customers, regardless of their location)
* zone: multiple averages (company sets up two or more zones. All customers within a zone pay the same total price; the more distant the zone, the higher the price.)
* basing-point: base-deliver (seller designates some city as a basing point and charges all customers the freight cost from that city to the customer.)
* freight-absorption: no freight charge (seller absorbs all or part of the freight charges in order to get the desired business.)
77
What are reasons for initiating a price change?
* price cuts occur due to excess capacity, increased market share
* price increases occur due to cost inflation, increased demand, lack of supply
78
What are Buyers’ reaction to price changes?
* when price drops new models will be available, current models are not selling well, quality issues
* when price increases the product is “hot”, the company is greedy
79
What does Price fixing legislation do?
requires sellers to set prices without talking to competitors.
80
What does Predatory pricing legislation
| do?
it prohibits selling below cost with the intention of punishing a competitor or gaining higher long-term profits by putting competitors out of business.
81
What does Unfair price discrimination legislation do?
it ensures that the seller offer the same
price terms to customers at a given
level of trade.
82
When is price discrimination allowed?
if sellers
• can prove that costs differ when selling
to different retailers;
• manufactures different qualities of the
same product for different retailers.
83
What does Retail price maintenance legislation do?
it requires a dealer to charge a specific retail price for its product.
84
When does Deceptive pricing occur?
when a seller states prices or price savings that mislead consumers or are not actually available to consumers.
• artificial regular price (then marking it down arbitrarily)
• scanner fraud (over-charging)
85
How do channel members add value?
```
create efficiency
• less total transactions
• specific skills
provide economies
• transform the assortment of products
into assortments wanted by consumers
• bridge major time, place, and possession
gaps that separate goods and services
from users
```
86
What are Conventional Distribution Systems?
consist of independent producers,
wholesalers, and retailers.
• each separate business seeks to maximize its own profits;
• no member has the power to control over other members.
• producers set prices independently;
they negotiate on distribution markups and commissions.
87
What are Vertical Marketing Systems (VMS)?
```
• consist of producers, wholesalers,
and retailers acting as a unified
system with a dominant member
• Major types of VMS, by different
means for setting up leaderships
corporate – ownership
contractual – contracts
administered – size & power
```
88
What are Horizontal Marketing Systems?
channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity.
• competitors corporation
• the same level co-branding
i.e. FedEx, ups, postal service
89
What is disintermediation?
Disintermediation makes channel more efficient, cuts intermediaries
90
What are Multichannel distribution systems?
systems in which a single firm sets up two or more marketing channels to reach one or more customer segments.
91
What are the types of intermediaries?
```
• refers to channel members that
are available to carry out the
channel work.
• Three strategies to determine the
number of channel members to
use at each level.
• intensive distribution
• exclusive distribution
• selective distribution
```
Intensive is selling product in as many stores as possible, exclusive is in one stores (probably your own), selective picks certain amount of retailers
