Unit 3 Test Flashcards
Why is Product the primary P?
because the other marketing decisions (place, price, promotion) are based on the product decision
Types of Products
- A product can be anything that can be bought or sold (good, service, idea) or a product is whatever the business sells to satisfy customer needs
- Products can be for the consumer (consumer products) or sold to businesses (business product)
Product benefit
The need satisfying quality of a product
Tangible
Something that exists physically and can be touched (goods are tangible)
Intangible
Something that exists, but is not physical and cannot be touched (services and ideas are in tangible)
What are the characteristics of service?
- Intangible
Inseparable:
- production of the service cannot be separated from
• The use of the service
• The producer of the service
Example: the haircut does not exist until the hairdresser cuts your hair and the haircut does not exist without the hairdresser
Variable:
- A service only exists once and is never exactly repeated in the same way
Example: different hairdressers may give different quality haircuts
Perishable:
- Services cannot be stored for later use
- some goods are perishable, but most can be stored until needed
Example: unsold concert tickets cannot be stored and sold at a later time, once the concert is over, the tickets are worthless
What is the goods and service Continuum?
Many products are combinations of goods and services
- Example: a restaurant meal is a combination of a good and a service. (the food is the good and the preparation and serving is the service)
What is product life cycle?
The stages that a product or a product category goes through from beginning to end.
The four stages are:
1. Introduction.
2. Growth.
3. Maturity.
4. Decline.
Explain the purpose of a brand
- A brand helps communicate with the product is about
- Encompasses all aspects of the product
- A way to distinguish the product from competitors
Distinguish between a brand-name, slogan and a logo
Brand:
- Consists of words, numbers, or letters that can be spoken
- Example: Nike - brand-name for athletic shoes
Logo:
- Picture, design, or graphic image associated with the brand, sometimes called a brandmark
- Can include the brand-name
- Trade Character
Slogan:
- Phrase or sentence that summarizes some essential aspect of the product
- Also called a tagline
- Example: Nike’s “just do it”
Explain the concept of price
- often consider the dollar amount on a price tag
- also called admission, donation, dues, fare (as in bus fare), fee, interest, rate, rent, tip, toll and tuition
- Marketers use price to communicate the value of products
State and describe the nine factors that affect pricing
- Company goals.
- Expenses.
- Other marketing mix variables.
- Customer response.
- Competition.
- Economic conditions.
- Government regulations.
- Product lifecycle.
- Supply and demand.
Explain how expenses can affect profits
- Price of product must at least cover the cost of goods and operating expenses
- If expenses and costs can be reduced, profit will increase
Example: income - expenses = profit
Distinguish between price and non-price competition and give an example of each
Price competition:
- Low prices are used to attract customers
- Example: coca-Cola and Pepsi
Nonprice competition:
- Features other than price are used to attract customers, such as quality, service, and uniqueness
- Example: Advertising
Explain the two main purposes of government regulations
- Prevent monopolies.
- Promote fair competition.
What are government regulations?
Price Fixing:
- competitors meet and agree to sell a specific product for the same price
- Can a occur between retailers and customers between members of the supply chain
Price discrimination:
- Company charges lower prices to some companies for the same products
Explain how supply and demand effect price
Law of demand:
- when prices fall, demand will rise
- when prices rise, demand will fall
Law of supply:
- when prices are high, supply will rise
- when prices fall, supply will fall
Marketers keep these laws in mind when setting prices :
- If a product is not selling, they lower prices
- If a product is selling well and supply is falling, they raise prices
Explain five common objectives of pricing
- Maximize profit.
- Maximize sales.
- Increase market share.
- Meet competition.
- Return on investment.
Describe the impact of price on revenue
Lowering the price raises the revenue
Determine the break even point for a product with a given cost and selling price
- point at which the revenue from sales equals costs
- once you reach the break even point, any additional revenue is profit
List and explain five psychological pricing techniques
- Odd pricing: prices in an odd number and convey a bargain
- Even pricing: prices end in zero or an even number and convey an image of quality.
- Promotional pricing: prices are lowered for sales.
- Prestige pricing: prices are high and convey an image of status and high-quality.
- Price Lining: prices are set at different levels to indicate different quality levels or number of options for the same type of product.
List and explain five discount pricing techniques
- Cash discount: offered to retailers who pay their bills promptly.
- Promotional discount: offered to retailers and wholesalers in exchange for promotions to customers.
- Quantity discount: offered for purchasing large quantities of a product.
- Seasonal discount: taylor if they buy goods in advance of the season
- Trade discount: manufacturer offers the wholesaler or retailer percentage of the list price
Explain the purpose of channel distribution
Channel distribution is the route a good takes from its original source to its final customer
The most common of distribution for consumer goods includes:
- A producer
- A wholesaler
- A retailer
Explain the difference between a wholesaler and a retailer and why a business would use each
Wholesaler:
- B2B business
- Buys from producers
- Sells to another business
- Also called distributor
Retailer:
- B2C business
- Buys from producers or wholesalers
- sells to consumers
- includes stores, restaurants, theaters, etc.
- includes nonstore retailers
- Examples: e-tailers, TV shopping channels, mail order catalogues
Explain why a company would choose an agent or broker
- Another type of intermediary
- Connect buyers and sellers
- Never own or physically handle the product
- may be hired by the seller or buyer
- Know the market extremely well
- Often used in situations where it is hard for buyers and sellers to find each other
Distinguish between direct distribution and indirect distribution
Direct distribution:
- channel of distribution with no intermediaries
- many services have direct distribution
- The service producer “distributes” the service directly to the service user
Indirect distribution:
- channel of distribution with more than one intermediary
Describe the four components of physical distribution
Products
Products to be shipped include:
- Raw materials
- Manufactured goods
- Finish consumer goods
Products that are shipped are known as:
- freight
- cargo
- merchandise
- shipment
Channel members
- Businesses that need to distribute their products
- Usually own the products to be shipped
- May transport their own goods
- May hire transportation companies to move their goods for them
Transportation companies
- physically moving goods from buyer to seller
- Also called shipping carrier
- Company that provides the service of transportation for channel members
- Is not part of the distribution channel
- Does not own the goods shipped
- Example: Purolator
Warehouses
- products must be stored at various points along the channel of distribution
- building large quantities of products until needed for shipping
- products are often called inventory
Summarize the advantages and disadvantages of each of the five modes of transportation
- TRUCK
Advantages
- can deliver door-to-door
- flexibility in delivery times
- can be modified to carry specific cargo
Disadvantages
- delays due to traffic, weather, or maintenance
- SHIP
Advantages
- can move large quantities farther at a lower cost per item
- can be modified to carry specific cargo
Disadvantages
- slow speed
- requires another mode of transportation to get goods from the port to the delivery address
- TRAIN
Advantages
- can move large quantities a long distance at low cost
- good for heavy and bulky goods
- can be modified for specific cargo
Disadvantages
- no destination flexibility, can only go where there are tracks
- PLANE
Advantages
- speed
Disadvantages
- expensive
- delays due to weather
- requires another mode of transportation to get goods from airport to final destination
- PIPELINE
Advantages
- limited types of products can be transported this way
- products safe from damage and theft
- low operation costs
- not subject to delivery delays
Disadvantages
- expensive to build
- potential for environmental damage
Explain how businesses process orders
- Purchase order (PO):
- a sales contract between the buyer and seller
- authorizes the purchase and delivery of goods at specific prices and times
- starts the transfer of goods from supplier to buyer
- buyer sends signed PO to the supplier
- supplier receives and signs the PO
- supplier sends confirmation to buyer - Order Processing:
- the receiving and filling of orders
- pick ticket created after PO received
- pick ticket lists the items in one order - picked items collected in warehouse - items are packaged, labelled, and shipped
- bar-code scanning helps keep track of orders and inventory - Computerized Order Processing:
(Order processing can be automated through computer linkages)
- buyer sets up computer linkage with the supplier
- buyer’s computer sends message to supplier’s computer when inventory is low
- supplier’s computer orders enough goods to resupply the buyer
- supplier sends goods to buyer - Channel Management and Physical Distribution:
- The role of channel management is to oversee physical distribution related to factors such as:
• shipping mode
• warehouse storage
• inventory control
• risk - Inventory Control (Just-in-time (JIT)):
- distribution strategy
- allows for materials to be delivered the moment they are needed
Electronic data interchange (EDI)
- business-to-business exchange of data through computers
- examples: shipping notices, invoices - Review:
- List four place decisions.
- What is a channel of distribution?
- List the four elements of physical distribution.
- List the five modes of transportation.
- What is the difference between distribution of goods and the distribution of services and ideas?
State and explain the role of promotion and three goals of promotion
- Promotion is one of the Four Ps of the marketing mix.
- Promotion is the process of telling people about a product or the company that offers it.
- The goal of promotion is to help a business achieve its goals by communicating with customers and the public.
- Promotion: informs, expresses, persuades
Describe how the communication process works in promotion
- Promotion is communication from an organization to its customers, potential customers, and the public.
- Marketing communication is another term for promotion.
Distinguish between B2C and B2B Sales promotion
B2C strategy that focuses advertising on customers to create demand.
- E.x. Customers got retail stores and demand products then customer demand pulls the product through the supply chain.
B2B strategy focuses on wholesalers, distrubutors, and retailers.
- These intermediaries buy the product, then promote it to the next link in the supply chain.
- The last link, the retailer, promotes it to the customer.
- Intermediaries push the product through the supply chain.
Explain the AIDA promotional strategy
Four steps of the AIDA strategy consist of:
- Attention
- Interest
- Desire
- Action.
The steps provide information or motivation for customers at each stage of the decision process.
Explain the “Push” and “Pull” promotional strategy
Pull strategy: Helps a company increase its sales by focusing its attention on consumers
Push strategy: Helps a company increase its sales by focusing its attention on intermediaries.
Summarize the role of integrated marketing communications (IMC) in promotional activities.
The marketing mix is like a puzzle
- all the pieces have to fit together
Integrated marketing communications (IMC) is the process designed to convey a single, unified message through all promotional activities and includes online and off-line marketing activities
What are product elements? Why are they important?
Products have many elements that can be changed to meet customers needs
- Basic product: When you decide which product to sell, you need to make basic product decisions about
• quality - level of excellence (3 types)
• features - for a good it’s physical
- for a service it’s a task
• options - customer request (car) - Usage:
- Many products are designed to be assembled, installed, or used in some way.
- Part of the product decision is how to help the customer make the best use of the product.
- Product elements that help the customer with product usage
• Instructions
•Installation
•technical support - Protection:
- Protection consists of product elements that protect the product from harm, both before
and after purchase
- Protection includes
• grades and standards
• packaging
• warranties
• maintenance and repair services - Name:
- Name is a critical part of a product and includes:
• product name
• brand name
• product “personality”
Identify three ways branding helps the customer
- building trust
- credibility
- creating emotional connections
Describe and give an example of each of the four elements of promotion
- Sales promotion.
- public relations.
- Personal selling.
- Advertising.
Why is the marketing concept important in promotion
- the marketer is the sender
- the target market is the reciever
What are the three goals of branding for the marketer?
- Inform
- Express
- Persuade
