Test 3 marketing 101 Sac State

Question 1

Promotional mix

Answer 1

advertising, personal selling, sales promo, publicity

Question 2

advertising

Answer 2

any form of non-personal selling through established media

Question 3

advertising advantages

Answer 3

o inexpensive on a cost per household reach basis
o can do things quickly
o good visual display

Question 4

advertising disadvantages

Answer 4

o expensive
o wasted coverage
o spill out – say its for woman and men hear it
o a lot of interference – DVR, bathroom
o you cant close the sale – unless its internet

Question 5

personal selling

Answer 5

any paid form of promotion involving direct contact between the buyer and seller including their agents

Question 6

personal selling advantages

Answer 6

o adapt the message

o can close the sale

Question 7

personal selling disadvantages

Answer 7

o most expensive every $1 on advertising you will spend $3 on personal selling
o fluctuating quality
o hard to get good sales people

Question 8

sales promo

Answer 8

(catch all) – any paid form of promotion other than advertising and personal selling - includes…coupons, special packages

Question 9

sales promo advantages

Answer 9

o can be creative

o inexpensive

Question 10

sales promo disadvantages

Answer 10

o not strong enough to stand on its own
o limited life span – 3-6 months, hard to eliminate
o easy to duplicate

Question 11

publicity

Answer 11

any non paid form of promotion – cant be focal point of promo

Question 12

publicity advantages

Answer 12

o can be inexpensive

o It can have great credibility

Question 13

publicity disadvantages

Answer 13

o can be very expensive
o you never know what you’re going to get – could be bad, good, or nothing
o You don’t know the timing – don’t know when it is going to come out

Question 14

Goals in promotion

Answer 14

a. increase awareness
b. increase sales (key- most important)
c. increase market share (very important to company) companies with higher market share can charge more for share
d. keep or maintain market share – as it goes higher and higher its harder to keep it going (realistic goal)
e. ward off competition
f. respond to competitor claims – gives more attention to claim 9could be bad)
g. liquidate merchandise
h. change image of company or product

Question 15

general principals of promotion

Answer 15

a. decay constant – sales of other products decline at a constant rate
b. thresholds in promotion
c. timing is all important – timing within the year, timing within the day,

Question 16

Promotion

Answer 16

2. Goals in promotion
3. what methods
4. what is budgets
5. timing of promotion
6. what is your message

Question 17

every product needs to be promoted

Answer 17

• How
• How much and
• when

Question 18

De-market profit

Answer 18

o Price the product higher to reduce demand for a while

o Higher charges in peak usage times - smud and pg&e

Question 19

desensitizing customers to price

Answer 19

o Price jump after years of having the product available
o Raise prices over time –
o Desensitizing price over time make it go up and down all the time – gas – doesn’t work for most products

Question 20

stabilize the market

Answer 20

price at competitive level

o Don’t run the risk of screwing up price

Question 21

Cost base pricing

Answer 21

problem is you come up with strange prices
o Cost plus pricing – cost +(some% x cost)= price or 1.00 + (.40% x 1.00)=1.40
o Mark down on price – price =[ % x price – price = cost]
• 1.00 = 20% (.20) - 1.00 = pay .80
• set the price and profit margin then figure out the what you’re willing to pay for product
o return on investment pricing
• Q = 100
• VC = $20 = $2000
• FC = 500 = 500/2500+1250=3750/100
• Profit = $37.50
o problem with CBM - all cover cost but don’t consider demand

Question 22

Demand base pricing

Answer 22

elasticity of demand – doesn’t take cost into consideration.
o	E>1 = elastic
o	E<1 = inelastic
o	E = 1 = unitary = max revenue
o	R = P x Q = [revenue = price x quantity]  
o	BEP(break even point) =
o	 Total fixed price/price(unit)- VC(unit)

Question 23

psychology in pricing

Answer 23

o favorite # in pricing – 8!!

Question 24

Prestige pricing

Answer 24

o If you want a high status product you have to pay/charge a high price
o Whole number pricing – you don’t charge 7.99 you charge 9.00
o odd, even pricing – even whole #, odd is .99

Question 25

Price lining

Answer 25

department store use the most

group products by price

Question 26

Special pricing

Answer 26

Different # showing discount

Question 27

adjustment to price

Answer 27

o cash discount –
o non cumulative quantity discount – goal is to make you purchase a lot at one time ex. 2 for .99
o buy over time – punch card
o build customer loyalty sell pig sizes avoid brand switch
o Seasonal discounts
o promotional allowances
o rebates

Question 28

problems in pricing

Answer 28

• price too high
• price too low – gives bad image, price will go down in maturity stage then it could screw up profit margin
• price differentials between items in a line are too large or to small
• too many prices
• change price too often or not often enough
• prices seem higher then they actually are

Question 29

who pays transportation cost

Answer 29

• fob plant – free on board, price does not include shipping prices
• freight absorption price
• uniform delivered price or postage stamp pricing
• zone pricing - brake country into zones
• basing point – say one point where stuff comes from ex everything shipped from Reno

Question 30

Threshold pricing

Answer 30

need to look up