Quiz 2 Prep Flashcards
What is a service in marketing terms?
A form of product that consists of activities, benefits, or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything.
What are the three levels of product?
- Core product (value of)
- Actual product (features)
- Augmented product (bonuses)
What are the two main classifications of products?
- Consumer products
- Industrial products
What type of products are bought by final consumers for personal consumption?
Consumer products.
What type of products are bought by individuals and organizations for further processing or for use in conducting a business?
Industrial products.
Poo
Yes
How does branding help buyers?
- Identify products
- Determine quality
What are the functions of packaging?
- Hold and protect
- Promote the product
- Differentiate the product
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, and are marketed through the same types of outlets.
What is line stretching?
Adding products that are higher or lower priced than the existing line.
What is line filling?
Adding more items within the present price range.
What does a product mix consist of?
All the product lines and items that a particular seller offers for sale.
True or False: Services account for 70% of Canada’s GDP.
True.
What are the four service characteristics? (InvInsVarPer)
- Intangibility
- Inseparability
- Variability
- Perishability
What is brand equity?
The positive differential effect that knowing the brand name has on customer response to the product or service.
What is brand value?
The total financial value of a brand.
What is customer equity?
The value of customer relationships that the brand creates.
What are the major branding decisions? Pnsd
- Brand positioning
- Brand name selection
- Brand sponsorship
- Brand development
What are the three levels of brand positioning? ( selling product without demand)
- Product attributes
- Benefits
- Beliefs and values
Fill in the blank: A good brand name should be _______.
[easy to pronounce, recognize, and remember]
What are the advantages of line extensions for a business?
- Lower marketing costs
- Leverage existing brand equity
What are the disadvantages of brand extensions?
- Risk of diluting the brand
- Potential negative impact on the parent brand
Difference betweeen Actual and Augmented product
Actual: actual product
Augmented; secondary benefit that comes with the purchase of the product
“Warranty”
4 unique characteristics of a service product
Intangibility
- experience
Inseparability
- service from employees
Variability
- employee variability
Perishability
- brewed coffee and seats cannot be saved for later use
8 steps to product market development (in order)
GST SAP TC
Idea generation
Idea screening
Development and testing
Marketing strategy
Business analysis
Production
Test marketing
Commercializations
What is crowdsourcing for product innovation
Getting public’s opinion on potential new product developments
What is concept development and testing
Development: detailed prototype/version of idea chosen
Testing: testing new product amongst group of target consumers to see if they want it
What is business analysis (8 steps)
Review of costs sales and profits to see if new product will be beneficial for the company
What is product development 2(8 steps)
Turning concept into physical product or prototype
May require large investment
What is TEST. MARKETING 8 steps (StanContSim)
What are the 3 types and what do they do
Standard test marketing:
Testing product and marketing program in realistic market setting; high cost but high representation
Controlled Test Market:
Choose 3 or 4 vendors instead of markets.
Faster response; cheaper costs
Simulated test market:
In a lab with test subjects. Maybe biased results.
Cheapest and fastest.
What is commercialization (8 stages) FIX
Last stage
Officially launch new product
Large investment
Consider where and when to launch
What are the 2 common PRICING mistakes
Dropping price too soon to sell more products
Pricing based on cost over customer value
What are the 3 major considerations in setting price (spectrum)
- Costs (basic)
- Competition and external factors (middle majority
- Consumer perception of value (ceiling)
Pricing Strategy: what is cost based; what is FORMULA for Unit cost and Price
Selling product at a fair rate based on fixed and variable costs
Unit cost = (Fixed/unit sales) + variable cost
PRICE= Unit cost/ (1- desired return)
Pricing strategy: customer value based pricing
Pricing based on buyers perceptions of value rather than sellers cost
Kinda difficult
Steps to cost based pricing vs value based
Cost: 1. design product 2. Determine costs 3. Set price based on costs 4. convince buyers of value
Value based:
1. Assess customer needs
2. Match price to perceived value
3.determine costs
4. Design product at desired value and target price
Pricing strategy; value based vs value added
Value based : quality and good service at fair price
Value added: used to differentiate from companies charging high prices
Pricing strategy; what is competition based pricing
Pricing based on competitors strategy/ cost
What are the 5 factors that affect pricing decision (2 internal, 3 external)
Internal:
Overall strategy and objectives
Organization considerations
External
Market and demand
Economy
Affect on other parties in environment
FORMULA FOR BREAK EVEN PRICE AND MARKUP PRICE: given: fixed cost, variable cost, expected sales, markup %
Break even: Unit cost= (fixed cost/unit sales) + variable cost per unit
Markup price = unit cost/(1-markup%)
FORMULA: Markup $ and %
Markup $ = selling price - cost
Markup %= markup$/cost OR $makrup/selling price
FORMULA: Supplier price
Wholesaler price before discount: MSRP-(%margin1 x msrp)
Wholesaler price with discount: wpbd- (% margin2 x wpbd)
FORMULA : Profit goal break even (units and $)
Unit volume = (fixed cost + profit goal)/ (unit price- variable cost)
Dollar sales= unit volume x unit price
FORMULA: Demand Market Potential
Give formula and definition of variables
Q = nqd
Q= total market demand
N=# of buyers in market
q = # of units purchased by average buyer per year
p = price of average unit
What is chain ratio method? Formula example
Estimating market demand by multiplying base market by nicher markets
Ex) total # of households in Canada * total % of CTV product owners * total % of households willing to buy CTV products
Pricing strategy: why bundle?
People have different value perceptions for different products, bundling helps them sell more of their products
Ex: idgaf about fries in the Wendy’s combo but the bundle allows me to get the drink and burger so I’ll buy the trio to get them all
What are marketing channels
Why are they useful
Set of INTERDEPENDENT organizations that make up the process of creating and delivering the product to the consumer
They deliver better value to both consumers, suppliers, and retailers by providing:
- maximizes contact efficiency
- Better matching of supply and demand
-bridges time and possession gaps between supplier retailer and distribution
True or false: Producers gain more control and ease with increases in channel levels
False: they lose control and gain complexity
Marketing channels: difference between direct and indirect channels
Direct:
B2C (eventually)
Indirect
B2B uses one or more levels of intermediaries to bring products to final consumers
Marketing channels: difference between direct and indirect channels
Direct:
B2C (eventually)
Indirect
B2B uses one or more levels of intermediaries to bring products to final consumers
Five flows of channel member connections
(PIPPO)
Payment flow
Information flow
Physical flow
Promotional flow
Ownership flow
Channel conflict: horizontal vs vertical
Horizontal : conflict among firms at the same channel level
Vertical: conflict at different levels
Conventional distribution channel vs Vertical Marketing system
Conventional: independent channels seeking to maximize profits
Vertical: unified system with contracts of contribution levels
3 types of Vertical Marketing System VMS
(CorConAdm)
Corporate vms:
Common whole ownership
Contract VMS: Indivdual firms that join through contracts ( franchise)
Administered VMS :
Ownership determined by size and power (size queen)
Def: Horizontal Marketing system
Companies work at same level as channel members
Def: multichannel distribution system
Firm uses two or more marketing channels (bodog)
Def: Disintermediation
Producers cut out market channel intermediaries
3 levels of distribution intensity and when to use them
Intensive; as many outlets as possible; convience goods
Selective; not all but some; retail
Exclusive ; one per market area; specialty
Big picture: 4 steps of channel design decision ASIE
Step 1: Analyze Consumer Needs (cost and feasability)
Step 2: Setting Channel Objectives (based on size and financials)
Step 3: Identifying Major Alternatives (intermediary decisions)
Step 4: Evaluating Major Alternatives (Threats)
