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MTKG 250 Unit 3 Exam
| Term | Definition |
|---|---|
| What phase is Gatorade in? | The maturity phase |
| Product Life Cycle | - Introduction - Growth - Maturity - Decline - Sales - Profit |
| Introduction Stage in PLC | Starts at or below 0, the most expensive stage, profit is at a negative stage |
| Growth Stage in PLC | This is where profit levels out, it will reach its peak Infrastructure grows, more workers, spends more money on brand than we have |
| Sales Stage in PLC | Sales grow in the growth phase Sales level off in the maturity phase |
| Profit | How much money is brought in - what is spent |
| Skimming | Pricing High |
| Penetration | Pricing low |
| Harvesting | Cutting marketing costs (keep the best sellers, not making new advertising) |
| Deletion | Dropping the product (getting rid of the product) |
| Product Life Cycle | Describes the stages a new product goes through in the marketplace: introduction, growth, maturity, and decline |
| Fashion Product | A sign of the times; something popular that comes back around multiple times (Ex: Headbands, New Balances) |
| Fad Product | A product that gets popular quickly and then fades away quickly (Ex: Fidget Spinners, Silly Bands) |
| Product Class | Refers to the entire product category or industry (Ex: Prerecorded music and running shoes) |
| Product Form | Pertains to variations of a product within the product class (Ex: Stability Running Shoes, Diet Coke, and Vinyl records) |
| Innovators | Innovators are the first group to adopt a new product. They are willing to take risks and try new things (venturesome), highly educated, and rely on multiple information sources |
| Sales grow when? | In the growth phase |
| Profit starts when? | Below 0 |
| Sales reaches peak when? | In the maturity phase |
| Profit reaches its peak when? | In the growth phase |
| Product/Brand Manager responsibilities | - Manage product life cycle stages - New-product development - Marketing program implementation |
| Product Modification | Changing/Alternating one or more of a product's characteristics, such as its quality, performance, or appearance, to increase the product's value to customers and increase sales |
| Market Modification | Strategies by which a company tries to find new customers, increase a product's use among existing customers, or create new use situations |
| Product Bundling | Combing two or more products together and selling them as a single package for one price (Ex: Value Meals: Fries and Drink) |
| Product Repositioning | Changing the place the product occupies in the consumer's mind |
| Trade Up | Involves adding value to the product (or line) through additional features or higher quality materials |
| Trade Down | Involves reducing a product's number of features, quality, or price |
| Branding | A marketing decision in which an organization uses a name, phrase, design, or symbol, or combination of these to identify its products and distinguish them from those of competitors |
| Brand Name | Any word, device (design, shape, sound, or color), or combination of these used to distinguish a seller's products or services |
| Brand Personality | A set of human characteristics associate with a brand name (Ex: |
| Brand Equity | The added value a brand name gives to a product beyond the functional benefits provided |
| Brand Liscensing | A contractual agreement whereby one company (licensor) allows its brand name (s) or trademark (s) to be used with products or services offered by another company (licensee) for a royalty or fee. (Ex: NFL licenses team names and logos) |
| Label | An 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. |
| Packaging | A component of a product that refers to any container in which it is offered for sale on which label information is conveyed |
| Packaging Communication Benefits | Information for consumers |
| Packaging Functional Benefits | Storage, Convivence, or Protection |
| What is Chapter 12 about? | Price |
| Services | The intangible activities or benefits that an organization provides to satisfy consumers' needs in exchange for money or something else of value (Ex: Travel and Transportation) |
| Four I's of Services | Consists of the four unique elements of services: intangibility, inconsistency, inseparability, and inventory |
| Idle Production Capacity | Occurs when the service provider is available but there is no demand for the service |
| Service Continuum | Consists of the range of offerings companies bring to the market, from the tangible to the intangible or product-dominant to service-dominant |
| Intangibility | Cannot hold a service before purchase: Nothing to put your hands on (EX: College Class, Therapy Session) |
| Inconsistency | Services depend on people and quality varies (Ex: Haircut, Oil Changes) |
| Inseparability | Cannot separate the deliverer of the service from the service itself: Separate the company from the actual paid server (EX: Massage, medical appointment; Service is produced and consumed at the same time) |
| Inventory | Cost is paying the person (EX: Airline seats, Hotel rooms, Concert Tickets; Cannot be stored once time passes it's gone) |
| Gross Domestic Product comes from... | services not goods |
| Low Cost | A service is low inventory cost when it doesn't lose much money if no one shows up (Ex: Real Estate Agency, Hair Salon, and Insurance Company) |
| Cost of Inventory | Unused resources still cost money (Ex: Auto repair center and restaurant) |
| High Cost | A service is high inventory cost when it loses a lot of money if capacity goes unused (Ex: Amusement park and airline) |
| Service Continuum | Consists of the range of offerings companies bring to the market, from the tangible to the intangible or product-dominant to service-dominant |
| Customer Contact Audit | A flowchart of the points of interaction or "service encounters" between consumers and a service provider |
| Gap Analysis | A type of analysis that compares the differences between the consumer's expectations about and experiences with a service based on dimensions of service quality |
| Seven P's of service marketing | An expanded marketing mix concept for services that includes the four P's: Product, price, promotion, and place/distribution, people, physical environment, and process |
| Off-Peak Pricing | Involves charging different prices during different times of the day or different days of the week to reflect variations in demand for the service |
| Internal Marketing | The notion that a service organization must focus on its employees, or internal market, before successful programs can be directed at customers |
| Customer Experience Management (CEM) | The process of managing the entire customer experience within the company |
| Capacity Management | Integrates the service component of the marketing mix with efforts to influence consumer demand |
| Price | The money or other considerations (including other products and services) exchanged for the ownership or use of a product or service |
| Barter | The practice of exchanging products and services for other products and services, rather than for money |
| Price Equation | Final Price = List Price - (Incentives + Allowances) + Extra Fees |
| Value | The ratio of perceived benefits to price; Value = Perceived benefits/Price |
| Value Pricing | The practice of simultaneously increasing product and service benefit while maintaining or decreasing price |
| Profit Equation | Profit = (Unit Price x Quantity Sold) - (Fixed Cost + Variable Cost) |
| Price Setting Process: Steps 1-3 | Step 1: Identify the pricing objectives and constraints Step 2: Estimate demand and revenue Step 3: Determine cost, volume, and profit relationships |
| Step 1: Identify the pricing objective and constraints | - Objectives like profit, market share, and survival - Constraints like demand for product class and brand, newness, costs, and competition |
| Step 2: Estimate demand and revenue | - Demand estimation - Sales revenue estimation - Price elasticity estimation |
| Step 3: Determine cost, volume, and profit relationships | - Cost estimation - Marginal analysis in relation to profit - Break-even analysis, in relation to profit |
| Pricing objectives | Specify the role of price in an organization's marketing and strategic plans |
| Pricing Constraints | Factors that limit the range of prices a firm may set |
| 4 pricing constraints | - Demand for the product class, product group, and the brand - Newness of the product: Stage in the product life cycle - Newer products usually priced higher - Cost of producing and marketing the product |
| Demand Curve | A graph relating the quantity sold and price, which shows the maximum number of units that will be sold at a given price |
| Demand Factors | These determine consumers' willingness and ability to pay for products and services |
| The three demand factors are... | 1. Consumer Tastes 2. Price and availability of similar products 3. Consumer income |
| Price Elasticity of Demand | The percentage change in quantity demanded relative to a percentage change in price |
| Elastic Demand | When 1 percent price decrease generates more than 1 percent quantity increase (Ex: Designer clothing, Snack Foods, Soda brands, Grocery Store items) If prices increase, consumers will switch brands or cut back on buying |
| Inelastic Demand | When 1 percent price decrease produces less than 1 percent quantity increase; People will buy these products no matter what (Ex: Baby Product and Gasoline) |
| Total Revenue | The total money received from the sale of a product |
| Fixed Cost | The sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold (EX: Rent on a building, executive salaries, and insurance) |
| Variable Cost | The sum of the expenses of the firm that vary directly with the quantity of a product that is produced and sold (EX: As the quantity sold doubles, the variable cost doubles) |
| Shipping Cost | Fee a business pays to deliver a product to the customer; unexpected or high shipping costs are one of the main reasons customers abandon their carts |
| Break Even Analysis | BEP = Fixed Cost/ Unit price - Unit Variable Cost |
| Skimming Pricing | Involves setting the highest initial price that customers who really desire the product are willing to pay when introducing a new product |
| Penetration Pricing | Involves setting a low initial price on a new product to appeal immediately to the mass market |
| Prestige Pricing | Involves setting a high price so that quality-or status-conscious consumers will be attracted to the product and buy it |
| Price Lining | Involves setting the price of a line of products at a number of different specific pricing points |
| Odd-Even Pricing | Involves setting prices a few dollars or cents under an even number |
| Target Pricing | A pricing method where a company estimates what consumers will pay, works backward through retailer and wholesaler markups, and adjusts the product so it can be sold at that final target price |
| Bundle Pricing | Involves the marketing of two or more products in a single package price |
| Yield Management Pricing | Involves the charging of different prices to maximize revenue for a set amount of capacity at any given time |
| Standard Markup Pricing | Involves adding a fixed percentage to the cost of all items in a specific product class |
| Cost-Plus Pricing | Involves 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 | Involves setting an annual target of a specific dollar volume of profit |
| Target return-on-sales pricing | Involves setting a price to achieve a profit that is specified percentage of the sales volume |
| Target return-on-Investment pricing | Involves setting a price to achieve an annual target return on investment (ROI) |
| Customary Pricing | Involves setting a price that is dictated by tradition, a standardize channel of distribution or other competitive factors |
| Above-, At-, or Below-Marketing Pricing | Involves setting a 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 | Involves selling a product below its customary price, not to increase sales, but to attract customers' attention in hopes they will buy the products with large costs as well |
| Fixed-Price Policy | Involves setting one price for all buyers of a product or service (Also known as one-price policy) |
| Dynamic Pricing Policy | Involves setting different prices for products and services in real time in response to supply and demand conditions (Also known as flexible price policy) |
| Product line Pricing | Involves the setting of prices for all items in a product line to cover the total cost and produce a profit for the complete line, not necessarily for each item |
| Price war | Involves 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 extra amount of "free goods" awarded to sellers in the channel of distribution for undertaking certain advertising or selling activities to promote a product |
| Everyday low pricing | The practice of replacing promotional allowances with lower manufacturer list prices |
| Price Fixing | Involves a conspiracy among firms to set prices for a product |
| Price Discrimination | The practice of charging different prices to different buyers for products of like grade and quality |
| Predatory Pricing | The practice of charging a very low price for a product with the intent of driving competitors out of business |
| What is chapter 15 over? | Place |
| Types of Marketing Channels | - Transactional Function - Logistical Function - Facilitating Function |
| Transactional Function | - Buying - Selling - Risk Taking |
| Logistical Function | - Assorting: - Storing - Sorting - Transporting |
| Facilitating Function | - Financing - Grading: Inspecting/ Testing - Marketing Information and Research - Experts in this field normally have a lot of money |
| Marketing Channels | - Direct Channel - Indirect Channel |
| Intermediaries | Anything that is between where the products are made and where the products are sold |
| Marketing Channel | Consists of individuals and firms involved in the process of making a product or service available for use by consumers |
| Direct Channel | Producer to Consumer (Ex: Schwan's) |
| Indirect Channel | Producer to Intermediaries to Consumer (Ex: Toyota, Mars, Mansar) |
| Dual Distribution | Reach different buyers by different channels |
| Multichannel Marketing | Involves blending different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers who stop and buy in traditional intermediaries and online |
| Vertical Marketing Systems | Professionally managed and centrally coordinated marketing channels designed to achieve channel economies maximum marketing impact |
| Vertical marketing systems ___ Contractual Vertical Marketing System ___ Franchise programs | LEAD TO; LEAD TO |
| Intensive Distribution | A level of distribution density whereby a firm tries to place its products and services in as many outlets as possible (EX: Red bull, Snickers, and Tide) |
| Exclusive Distribution | A level of distribution density whereby only one retailer in a specific geographical area carries the firm's products (EX: Coach handbags, Sony electronics; avaliable at some but not all) |
| Selective Distribution | A level of distribution density whereby a firm selects a few retailers in a specific geographical area to carry its products (EX: Ferrari, Louis Vuitton, and Tesla Vehicles) |
| Buyer Requirements that are important: | - Information - Convenience - Variety - Pre- or postsale service |
| Franchising | Arrangement between parent company and individual firms for operating a specific business |
| Channel Conflict | Arises when one channel member believes another channel member is engaged in behavior that prevents it from achieving its goals |
| Two sources of conflicts | - Vertical Conflict - Horizontal Conflict |
| Disintermediation | Involves channel conflict that arises when a channel member bypasses another member and sells or buys products direct |
| Vertical Conflict | Wholesaler and Retailer competing with each other |
| Horizontal Conflict | Two wholesalers mad at each other |
| Logistics | Consists of activities that focus on getting the right amount of the right products to the right place at the right time at the lowest possible cost |
| Supply Chain | Consists of various firms involved in performing the activities required to create and deliver a product or service to ultimate consumers or industrial users |
| How is Washburn successful? | They have different product line at different price points for different segments |
| Introduction Stage Characteristics in PLC | Gain Awareness of product: Sales are low and slowly increasing; Profit is negative or very low; One product; Little Competition |
| Growth Stage Characteristics in PLC | Stress Differentiation: Sales are rapidly increasing; Profit is rising quickly (competition enters, but demand is strong); More competition in this stage; More versions of a product |
| Maturity Stage Characteristics in PLC | Maintain Brand Loyalty: Sales reaches its peak level; Profit reaches it maximum; Full product line; Many competitors |
| Decline Stage Characteristics in PLC | When Harvesting or Deletion Happens: Sales fall and decline; Profit starts to decline rapidly; Reduced Competition; Best-Seller products |
| High in Search Properties | Thing s you can judge before buying just by looking, comparing, or reading (EX: Clothing, Jewelry, Furniture, Houses, and Automobiles) |
| High in Experience Properties | Things you want different opinions on, don't know until you try (EX: Restaurant meals, Vacation, Haircuts, and Childcare) |
| High in Credence Properties | Require expert knowledge; Difficult to judge after it is done (EX: Television repair, legal services, root canal, and auto repairs) |
| 4 I's of Service | - Intangibility - Inconsistency - Inseparability - Inventory |
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