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MKTG exam 3
| Question | Answer |
|---|---|
| Product life cycle | describes the stages a new product goes through in the marketplace: introduction, growth, maturity and decline |
| A brand that has maintained continuous product development and brand repositioning | Gatorade |
| The 4 stages in the product life cycle | Introduction, growth, maturity, decline |
| Total industry sales revenue in product life cycle (2 points) | sales grow in the GROWTH phase, level off in MATURITY phase |
| Total industry profit in product life cycle (2 points) | starts at a DEFICIT in the INTRODUCTORY phase, levels out in the GROWTH phase |
| Marketing objective for introduction phase (PLC) | gain awareness |
| Marketing objective for growth phase (PLC) | stress differentiation |
| Marketing objective for maturity phase (PLC) | MAINTAIN brand loyalty |
| Marketing objective for decline phase (PLC) | harvesting, deletion |
| Pricing strategy for introduction phase | skimming (high initial price for new product) or penetration (price super low to encourage people to try the product) |
| Pricing strategy for growth phase | GAIN market share, profit |
| Pricing strategy for maturity phase | DEFEND market share, profit |
| Pricing strategy for decline phase | STAY profitable |
| Skimming | HIGH initial price for a new product to profit |
| Penetration | LOW price to encourage people to buy new product |
| what phase of the product life cycle do the smaller businesses fade? | maturity |
| what phase of the product life cycle is when different versions are created? | growth |
| Harvesting (marketing objective in decline phase of product life cycle) | keep a product on a market as long as it makes money but nothing is being added or modified to it (cut marketing costs) |
| fashion product | sign of the times - popular that comes back around (squiggly headband vibe) |
| fad product | popular but dies then never comes back around |
| Product class | refers to the ENTIRE product category or industry, such as prerecorded music |
| Product form | pertains to VARIATIONS of a product within the product class (cassettes) |
| Innovators | venturesome, HIGHER educated, use MULTIPLE information sources, buy earliest |
| Early adopters | LEADERS in social setting, SLIGHTLY above average education |
| Early majority | DELIBERATE, MANY informal social contacts |
| Product/Brand manager | used interchangeably, the cheerleader of the brand |
| product/brand manager responsibilities | manage product life cycle stages, new product development, marketing program implementation |
| Market modification | a company tries to find new CUSTOMERS, increase a product's use among EXISTING customers, or create NEW USE situations |
| Product modification | involves altering one or more of a PRODUCTS characteristics, such as quality, performance, or appearance to increase the products value to customers and increase sales |
| Trading up | adding value to the product through additional features or higher quality materials |
| Trading down | reducing a products number of features, quality or price |
| Downsizing | reducing content in package but charging same amount |
| Branding | basic DECISION in marketing products where an organization uses a name, phrase, design, symbols or combo of these to identify its products and distinguish them from those of competitors (nike swoosh) |
| Brand name | word, device or combo of these used to distinguish a sellers products or services (just do it) |
| Brand personality | set of human characteristics associated with a brand name (yeti - heavy duty) |
| Brand equity | the ADDED VALUE a brand name gives to a product beyond the functional benefits provided |
| Brand licensing | a contractual agreement whereby one company allows its brand names or trademarks to be used with products or services offered by another company (basically paying for clout) |
| Packaging | component of a product that refers to any container in which it is offered for sale on which label information is conveyed |
| Label | integral part of the package that typically identifies the product or brand, who made it, where and when it was made, how it is to be used, and package contents and ingredients |
| Benefits of packing and label | communication and functional benefits |
| functional benefits of packing and labeling | storage, convenience, protection |
| Services | INTANGIBLE activities or benefits that an organiZation provides to satisfy customers needs |
| Four I’s of services | intangibility, inconsistency, inseparability, and inventory |
| Intangibility (four i's) | cannot hold a service before purchase - haircut, accounting, etc. |
| Inconsistency (four i's) | services depend on people and quality varies - going to same haircut person but different sometimes |
| Inseparability (four i's) | cannot separate the deliverer of the service from the service itself - a server giving bad service and saying the whole company has bad service |
| Inventory (four i's) | cost is paying the person even if there's no customers |
| Idle production capacity | occurs when the service provider is available but there is no demand for the service |
| Low cost of inventory | real estate agency, hair salon, insurance company |
| High cost of inventory | airline, hospital, amusement park |
| Service continuum | the RANGE of product dominant to service dominant offerings that companies bring to the market whether tangible or intangible |
| Product dominated in service continuum (tangible) | salt, necktie, dog food |
| Service dominated in service continuum (intangible) | teaching, nursing, movie theater |
| Balanced between service and product dominated in service continuum | fast food restaurant |
| High in search properties (easy to evaluate) - can easily find stuff online about it | clothing, jewelry, furniture, houses, automobiles |
| High in experience properties (medium to evaluate) - want to hear from someone who has been there | restaurant meals, vacation, haircuts, childcare |
| High in credence properties (hard to evaluate) - other people's experiences are too individual to make a census | TV repair, legal service, root canal, auto repair, medical diagnosis |
| Gap analysis | type of analysis that compares the differences between the consumers EXPECTATIONS about and EXPERIENCES with a service based on dimensions of service quality |
| Customer contact audit | FLOWCHART of the points of interaction or service encounters between CONSUMERS and a service PROVIDER |
| Seven P's of services marketing | expanded marketing mix concept for services that includes the four Ps (product, price, promotion and place) as well as people, physical environment and process |
| Off peak pricing | charging different prices during different times of the day or days of the week to reflect variations in demand for the service |
| Internal marketing | take care of employees so they can take good care of customers |
| Capacity management | the SERVICE component of the marketing mix being integrated with efforts to influence consumer DEMAND |
| People (added part of seven P's) | all of the people included in the service process |
| Physical environment (added part of seven P's) | the intangible things about a service - clean, smell, music, etc. |
| Process (added part of seven P's) | the service itself - what happens when you go in |
| Customer experience management (CEM) | process of managing the ENTIRE customer experience within the company |
| Price | the money or other considerations exchanged for the ownership or use of a product or service |
| Barter | exchanging products and services for other products and services instead of money |
| Final price equation | list price - (incentives + allowances) + extra fees |
| examples of price | College tuition and buying a new car |
| Value | the ratio of perceived benefits to price or (perceived benefits/ divided by price) |
| Value pricing | simultaneously increasing product and service benefits while maintaining or decreasing price |
| Profit equation | unit price x quantity sold - fixed cost + variable cost |
| 3 important steps of setting price - KNOW THESE and order | identify pricing objectives and constraints, estimate demand and revenue, determine cost, volume and profit relationships |
| Examples of pricing constraints (a lot) | demand for product class, product group, and brand; newness of product; newer products usually priced higher; cost of producing and marketing the product; profit for channel members |
| Examples of pricing constraints (other a lot) | cost of changing prices and the time period they apply; single product vs product line; type of competition; Competitors’ prices and consumers’ awareness and ability to easily purchase them, legal and ethical |
| Pricing constraints | factors that limit the range of prices a firm may set |
| Pricing objectives | specify role of price in an organizations marketing and strategic plans |
| Examples of pricing objectives (6) | profit, market share (%), sales revenue, unit volume (#), survival and social responsibility |
| Demand curve | a graph that relates the quantity sold and price, showing the maximum number of units that will be sold at a given price |
| Demand factors | factors that determine consumers willingness and ability to pay for products and services |
| 3 demand factors - KNOW | consumer tastes, price and availability of similar products, consumer income |
| Price elasticity of demand | percentage change in quantity DEMANDED relative to a percentage change in PRICE |
| price elastic | price decreases by 1 percent and you get a MORE than 1 percent quantity increase (putting on sale people buy more) |
| price inelastic | price decreases by 1 percent and you get LESS than 1 percent quantity increase (people will buy regardless) |
| 2 products that are inelastic | baby products and gasoline |
| Total revenue | total money received from the sale of a product |
| total cost and equation | total expense incurred by a firm in producing and marketing a product - fixed cost plus variable cost |
| fixed cost | sum of expenses of firm that do NOT change (for about a year) with the quantity of a product that is produced and sold - rent and insurance |
| variable cost | sum of expenses of firm that VARY directly with quantity of a product that is produced and sold - direct labor, materials and gas prices |
| break even analysis | technique that analyzes the relationship between total REVENUE and total COST to determine profitability at various levels of output |
| Skimming pricing | setting the highest initial price that customers who really desire the product are willing to pay |
| Penetration pricing | setting a low initial price on a new product to appeal immediately to the mass market |
| Price lining | when a firm is selling a line of products and prices them at a number of different specific pricing points |
| Odd even pricing | setting prices a few dollars or cents under an even number |
| Target pricing | estimating the price ultimate consumers are willing to pay for a product, working through markups taken by retailers and wholesalers to determine what price to charge wholesalers, and adjusting the composition and features of product to reach target price |
| Bundle pricing | marketing of two or more products in a single package price |
| Yield management pricing | charging of different prices to maximize revenue for a set amount of capacity at any given time |
| Standard markup pricing | adding a fixed percentage to the cost of all items in a specific product class |
| Cost plus pricing | summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at a price |
| target profit pricing | annual target of a specific dollar volume of profit |
| Target return on sales pricing | set typical prices that will give them a profit that is a specified percentage of the sales volume |
| Target return on investment pricing | setting prices to achieve target |
| Customary pricing | setting a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors |
| Above, at, or below market pricing | setting market price for a product or product class based on a subjective feel for the competitors price or market price as the benchmark |
| Loss leader pricing | the goal of not increasing sales, but to ATTRACT customers in hopes they will buy other products with large markups |
| Fixed price policy | setting one price for all buyers of a product or service |
| Dynamic pricing policy | setting different prices for products and services in real time in response to supply and demand conditions |
| Product line pricing | the setting of prices for all items in a product line |
| Price war | successive price cutting by competitors to increase or maintain their unit sales or market share |
| Quantity discounts | reductions in unit costs for a larger order |
| Promotional allowances | cash payments or an extra amount of free goods awarded sellers in the marketing channel for undertaking certain advertising or selling activities to promote a product |
| Everyday low pricing | replacing promotional allowances with lower manufacturer list prices |
| Price fixing | a CONSPIRACY among firms to set prices for a product |
| Price discrimination | the practice of charging different prices to different buyers for goods of like GRADE and QUALITY |
| Predatory pricing | charging at a very low price for a product with the intent of driving competitors out of business |
| Marketing channel | consists of individuals and firms involved in process of making a product or service available for use or consumption by consumers or industrial users |
| CH. 15 is over what of the 4 ps | Place |
| 3 functions of intermediaries | transactional, logistical, and facilitating functions |
| transactional function activities | buying, selling, and risk taking |
| logistical function activities | assorting, storing sorting, transporting |
| facilitating function activities | financing, grading, marketing info and research |
| Direct channel example in CONSUMER products | Schwans |
| Indirect channel | uses intermediaries |
| Direct channel example in BUSINESS products | IBM |
| Direct channel example in DIGITAL products | Dell |
| Direct to consumer marketing channels | allow consumers to buy products by interacting with various print or electronic media without face to face interaction |
| Multichannel marketing | BLENDING of different communication and delivery channels that are MUTUALLY reinforcing in attracting, retaining and building relationships with consumers who shop and buy in traditional intermediaries and online |
| Dual distribution | reach different buyers by different channels |
| Vertical marketing systems lead to | contractual vertical marketing system which leads to franchises |
| Vertical marketing system | professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact |
| Intensive distribution | a firm tries to place its products and services in as many outlets as possible |
| Exclusive distribution | only one retailer in a specific geographical area carries the firm's products (rolex) |
| Selective distribution | a firm selects a few retailers in a specific geographical area to carry its products (apple) |
| Buyer requirements when deciding on channels (4) | information, convenience, variety, pre or post-sale service |
| Channel conflict | when one channel member believes another channel member is engaged in behavior that prevents it from achieving its goals |
| 3 types of channel conflict | vertical (within), horizontal (two wholesalers or two retailers), disintermediation |
| Disintermediation | channel conflict that arises when a channel member BYPASSES another member and sells or buys product direct |
| Logistics | PLACE - involves ACTIVITIES that focus on getting the right amount of the right products to the right place at right time at lowest possible cost |
| Supply chain | various FIRMS involved in performing the activities required to create and deliver a product or service to consumers or industrial users |
| fad product example | fidget spinner |
| profit reaches peak in this phase | growth |
| sales reach peak in this phase | maturity |
| phase where you have fullest product line | maturity |
| phase where the slowing of total industry sales or slowing of revenue of product class | maturity |
| GDP comes from more services or goods? | Services |
| examples of fixed cost | rent, salaries, insurance |
| market share pricing goal on test | %%%%% |
| pricing to stay in business | pricing for survival |
| reason why washburn guitars has success | different product lines at different price points for different segments |
| the goal of selling 50,000 guitars | unit volume |
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