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Unit 3 Exam
| Term | Definition |
|---|---|
| Product Life Cycle: | The four stages a new product goes through in the marketplace: Introduction, Growth, Maturity, Decline |
| Introduction Stage/ Gain Awareness: | Skimming: High Price | Penetration: Low Price | Profit starts at a negative/ deficit |
| Growth Phase / Stress Differentiation | Competition: Differentiation | Product: More Versions | Price: Gain market share with Pricing Strategy Sales growth | Profit levels off/ reaches peak |
| Maturity Phase / Maintain Brand Loyalty | Competition: Fewer Competitors ( **The marginal competitors leave the market! ) Product: Full product line ( are they done yet, no ) Price: Defend market share, profit Promotion: Reminder Marketing Sales level off |
| What happens to sales in the growth phase? | Sales grow |
| What happens to profit in growth phase? | Profit peaks in growth phase |
| Who are the innovators | The people who buy earliest in the product Life cycle |
| Pricing objectives | Profit, sales revenue ( $ ), market share ( % ), unit volume ( # ), survival , social responsibility |
| Demand for a product is more likely to be more price elastic if it | Has many substitutes |
| Elastic | when a small change in price results in a relatively large change in the quantity demanded |
| Inelastic | when a change in price has a relatively small effect on the quantity demanded |
| What are examples of fixed cost? | Insurance, Salaries, building a facility |
| What are examples of variable cost? | Shipping costs, raw materials, Labor costs |
| Profit equation | ( Unit price x Quantity sold ) - ( Fixed cost + Variable Cost ) |
| All of the following are pricing objectives: | Profit, sales revenue, market share, unit volume, survival, social responsibility |
| What are the three Demand Factors? | Consumer taste, Price and availability, consumer income |
| One of the reasons that Washburn has success is that: | They have different product lines, at different price points, for different segments |
| Setting prices a few dollars or cents under an even number is preferred to as | Odd-even pricing |
| The practice of replacing promortional allowances with lower list prices is preferred to as | everyday list prices |
| When producers and ultimate consumers deal with each other one-on-one, it is preferred to as | A direct channel |
| Intensive | Convenience products |
| Idle Production Capacity | Occurs when the service provider is available but there is no demand for the service. |
| Service Continuum | The range of offerings from tangible (product-dominant) to intangible (service-dominant). |
| Gap Analysis | Comparing the differences between a consumer’s expectations and their actual experiences with a service. |
| Customer Contact Audit | A flowchart of the points of interaction or "service encounters" between consumers and a provider. |
| Seven P’s of Services | Expanded marketing mix including product, price, promotion, place, people, physical environment, and process. |
| Off-Peak Pricing | Charging different prices during different times or days to reflect variations in demand. |
| Internal Marketing | The notion that a service organization must focus on its employees before successful programs reach customers. |
| Customer Experience Management (CEM | The process of managing the entire customer experience within the company. |
| Capacity Management | Integrating the service component of the marketing mix with efforts to influence consumer demand. |
| Price (P) | Money or other considerations 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 money. |
| Value | The ratio of perceived benefits to price. |
| Value Pricing | Simultaneously increasing product and service benefits while maintaining or decreasing price. |
| Profit Equation | Profit = (Unit Price x Quantity Sold) - (Fixed Cost + Variable Cost). |
| Pricing Objectives | The role of price in an organization’s marketing and strategic plans (e.g., profit, market share). |
| Pricing Constraints | Factors that limit the range of prices a firm may set, such as demand and competition. |
| Demand Curve | A graph relating the quantity sold and price, showing the maximum units sold at a given price. |
| Price Elasticity of Demand | The percentage change in quantity demanded relative to a percentage change in price. |
| Total Revenue (TR) | Total Revenue (TR) The total money received from the sale of a product (P x Q). |
| Total Cost (TC) | The total expense incurred in producing and marketing a product (Fixed Cost + Variable Cost). |
| Break-Even Analysis | A technique analyzing the relationship between total revenue and total cost to determine profitability. |
| Skimming Pricing | Setting a high initial price for a new product to "skim" revenues from those willing to pay more. |
| Penetration Pricing | Setting a low initial price on a new product to appeal immediately to the mass market. |
| Prestige Pricing | Setting a high price so that quality- or status-conscious consumers will be attracted to the product. |
| Bundle Pricing | The marketing of two or more products in a single package price. |
| Yield Management Pricing | Charging different prices to maximize revenue for a set amount of capacity (e.g., airline seats). |
| 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 a product and adding a specific amount to arrive at a price. |
| Fixed-Price Policy | Setting one price for all buyers of a product or service. |
| Dynamic Pricing Policy | Setting different prices in real time in response to supply and demand conditions. |
| Price War | Successive price cutting by competitors to increase or maintain unit sales or market share. |
| Quantity Discounts | Reductions in unit costs for a larger order. |
| Everyday Low Pricing (EDLP) | Replacing promotional allowances with lower manufacturer list prices. |
| Price Fixing | A conspiracy among firms to set prices for a product. |
| Predatory Pricing | Charging a very low price with the intent of driving competitors out of business. |
| Marketing Channel | Individuals and firms involved in making a product available for use by consumers or industrial users. |
| Direct-to-Consumer Channel | Allowing consumers to buy products via print or electronic media without face-to-face sales. |
| Multichannel Marketing | Blending different communication and delivery channels that are mutually reinforcing. |
| Vertical Marketing Systems | Professionally managed and centrally coordinated channels designed for maximum impact. Leads to contractual marketing which leads to franchising. |
| Intensive Distribution | Density level where a firm tries to place products in as many outlets as possible. |
| Exclusive Distribution | Density level where only one retailer in a specific area carries the firm’s products. |
| Selective Distribution | Density level where a firm selects a few retailers in a specific area to carry its products. |
| Channel Conflict | Arises when one member believes another is engaging in behavior that prevents goal achievement. |
| Disintermediation | Conflict arising when a channel member bypasses another and sells or buys products direct. |
| Logistics | Activities focusing on getting the right products to the right place at the right time at the lowest cost. |
| Supply Chain | Various firms involved in creating and delivering a product or service to ultimate users. |
| Total Logistics Cost | Expenses for transportation, materials handling, warehousing, inventory, stockouts, and order processing. |
| Bullwhip Effect | Tendency for supply chain managers to exaggerate inventory needs in response to demand variations. |
| Vendor-Managed Inventory (VMI) | System where the supplier determines and automatically delivers appropriate product amounts to a customer. |
| Reverse Logistics | Reclaiming recyclable materials, returns, and reworks from the point of consumption. |
| Product and Brand Managers responsibilities are to | Manage Product life cycle stages New-product development Marketing program implementation |
| Branding | a marketing decision in which an organization uses a name, phrase, design, or symbols, 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 | set of human characteristics associated with a brand name |
| Brand Equity | added value brand name gives to a product beyond functional benefits provided |
| Brand Licensing | 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.) |
| Benefits of packaging and labeling | Communication and functional benefit |
| Four I's of Services | intangibility, inconsistency, inseparability, and inventory |
| Target Profit Pricing | |
| Step 1 of Price Setting Process | Identify Pricing objectives and constraints |
| Step 2 of Price Setting Process | Estimate demand and revenue |
| Step 3 of Price Setting Process | Determined cost, volume, and profit relationships |
| Transactional Function | Buying, selling, risk taking |
| Logistical Function | Assorting, Storing, Sorting, Transporting |
| Facilitating Function | Financing, Grading, Marketing Information and Research |
| Buyer Requirements | Information, convenience, variety, pre or post sale service |
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