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Unit 3 Exam
| Question | Answer |
|---|---|
| Skimming Pricing | Setting the highest initial price that customers really desiring the product are willing to pay when introducing a new or innovative product. |
| 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 and buy it. |
| Price lining | Setting the price of a line of products 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 that ult. consumers would be willing to pay for a product, working backward through markups taken by retailers and wholesalers to determine what to charge wholesalers, and then deliberately adjusting the features of the product to ac |
| Bundle pricing | Marketing two or more products in a single package price. |
| yield management pricing | Charging 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 | Setting an annual target of a specific dollar volume of profit. |
| Target return-on-sales pricing | Setting a price to achieve a profit that is a specified percentage of the sales volume. |
| Target return-on-investment pricing | Setting a price to achieve an annual target return on investment (ROI). |
| 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 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 | Deliberately selling a product below its customary price, not to increase sales, but to attract customers’ attention to it in hopes that they will buy other products with large markups as well. |
| Fixed-price policy | Setting one price for all buyers of a product or service. Also called a one-price policy. |
| dynamic pricing policy | Setting different prices for products and services in real time in response to supply and demand conditions. Also called a flexible-price policy. |
| Product-line pricing | Setting 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 | 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 (EDLP) | The practice of replacing promotional allowances with lower manufacturer list prices. |
| Price fixing | A conspiracy among firms to set prices for a product |
| Price discrimination | Charging different prices to different buyers for products of like grade and quality. |
| Predatory pricing | Charging a very low price for a product with the intent of driving competitors out of business |
| Four I's of service | consists of the four unique elements to services: intangibility, inconsistency, inseparability, and inventory. |
| Intangibility | One of the 4 I's, a service cannot be held, touched, or seen before purchase |
| Inconsistency | One of the 4 I's, services depend on people, which means that quality varies Ex. haircut, oil change, chef in a restaurant |
| Inseparability | One of the 4 I's, cannot separate the deliverer of the service from the service itself Ex. K-state has bad advisors, -> one bad expereince with an advisor |
| Inventory | One of the 4 I's, cost is paying the person even if no customers are using the service, idle production capacity |
| Idle production capacity | occurs when the service provider is available but there is no demand for the service. |
| Introduction stage | Profit starts in a deficit (negative) in this stage, gain awareness, one product (iteration), Skimming (initially high), penetrations (initially low), limited distribution, competition is few, promotion is to inform, educate |
| Growth stage (competitors first appear in growth phase) | Sales grow in growth phase, profit levels out, whoever is first in market usually wins most market share, stress differentiation, more competition & versions, gain market share, more outlets, stress points of difference > why is diff from others on market |
| Maturity Stage | Sales level off in maturity phase, maintain brand loyalty, many competition, full product line, defend marketshare, maximum outlets, reminder advertising, slowing of total sales and total revenue Ex. Reeses, gatorade |
| Decline stage | harvesting, (making a product as long as it is profitable -> no new product lines, less promotion) deletion, reduced competition, best sellers, stay profitable, fewer outlets, minimal promotion |
| Skimming | HIGH initial price - attract competition |
| Penetration | LOW initial price - discourage competition |
| Harvesting | A company keeps a product (still ordered and produced) but does not advertise it or market it in anyway, they keep the product as long as it is profitable, no new product lines |
| Deletion | Dropping the product from the company's product line, is the most drastic strategy. |
| Fashion Product | a style of the times, the graph is a squiggly line, a wave that goes up and down |
| Fad Product | Short life cycle, dies as fast as it got popular. Ex, fidget spinner |
| 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. |
| Innovators | Sleep outside to get product, they buy in the earliest stage of life cycle |
| Product/Brand Manager | Manage product life cycle, New-product development, marketing plan implementation, extensive data analysis, (They modify the product) |
| Product modification | involves altering 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 | are strategies by which a company tries to find new customers, increase a product’s use among existing customers, or create new use situations. (changing the people, who buys the product) Ex. cream of chicken soup -> can add to recipes, its not just soup! |
| Product bundling | the sale of two or more separate products in one package |
| Trading up | involves adding value to the product (or line) through additional features or higher quality materials. |
| Trading down | involves reducing a product’s number of features, quality, or price. |
| Branding | is a MARKETING DECSION 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 | is 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 associated with a brand name. |
| brand equity | is the ADDED VALUE a brand name gives to a product beyond the functional benefits provided. |
| brand licensing | is 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.) |
| Packaging | is a component of a product that refers to any container in which it is offered for sale on which label information is conveyed. |
| Label | is 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. Last attempt at giving consumer info (communication) |
| Price | is the money or other considerations (including other products and services) exchanged for the ownership or use of a product or service. |
| Barter | is 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 list price is the sticker on the car window, Ex, Tuition, buying a car |
| Value | is the ratio of perceived benefits to price; or Value = (Perceived benefits divided by Price). |
| Value pricing | is the practice of simultaneously increasing product and service benefits while maintaining or decreasing price. |
| Profit equation | Profit = (unit price x quantity sold) - (fixed cost + variable cost) |
| Identify pricing objectives and constraints | Step 1 in price-setting process, objectives like profit, market share, and survival, constraints like demand for product class and brand, newness, costs, and competition |
| Estimate demand and revenue | Step 2 in price-setting process, demand estimation, sales revenue estimation, price elasticity estimation. |
| Determine cost, volume, and profit relationships | Step 3 in price-setting process, 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. EXAM: market goal % question, stay in business = sruvival |
| Pricing constraints | are factors that limit the range of prices a firm may set. |
| demand curve | is 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 | determine consumers’ willingness and ability to pay for products and services. 1. Consumer tastes. 2. Price and availability of similar products. 3. ͏Consumer income. |
| Elastic | When 1 percent price decrease generates more than 1 percent quantity increase. EXAM question, if increasing/decreasing by $1 = price elasticity Anything in the grocery store, food |
| Ineslastic | When 1 percent price decrease produces less than 1 percent quantity increase. People buy this regardless of cost Ex. gas, baby diapers |
| total revenue | is the total money received from the sale of a product. How much did we sell? |
| 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 salaries, rent, 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. |
| Break even equation | (fixed cost)/(unit price-unit variable cost) = BEP |
| Marketing channel | consists of individuals and firms involved in the process of making a product or service available for use or consumption by consumers or industrial users. |
| Intermediary | anything that happens between a product being produced and sold |
| Transactional function | Buying, selling, risk taking, you make the product, sell it -> that person takes the risk of the product possibly failing, but you loose control of the product. |
| Logistical function | Assorting, storing, sorting, and transporting, buy food from companies and break them down Ex. walmart |
| Facilitating function | Financing, grading, marketing, people have expertise and make things run smoother and easier., help with industry knowledge |
| direct channel | Producer-> consumer |
| indirect channels | producer->retailers->consumer (toyota, or a car dealership) producer->wholesalers->retailers->consumers (mars) producer->agents->wholesalers->retailers->consumer (mansar products) |
| Business channels | direct: Producer->industrial user (IBM) Indirect channels: Producer → Industrial Distributor → Industrial User (caterpillar) Producer → Agents → Industrial User (stake fastener company) Producer → Agents → Industrial Distributors → Industrial User |
| Digital channels | producer->consumer (dell inc) Producer->virtual agent->consumer (commercial airline) producer->auto dealer->virtual broker->consumer (auto manufacturer) book publisher->book wholesaler->virtual retailer (amazon) ->consumer |
| DIrect-to-consumer marketing channels | allow consumers to buy products by interacting with various print or electronllow consumers to buy products by interacting with various print or electronic media without a face-to-face meeting with a salesperson. |
| Multichannel marketing | involves the 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. omnichannel marketing. |
| Dual distribution | reach different buyers by different channels, Ex. dish washer from builder or lowes |
| Vertical marketing system | Lead to contractual vertical marketing system, leads to franchise program. are professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact. |
| intensive distribution | is a level of distribution density whereby a firm tries to place its products and services in as many outlets as possible. Ex. tide |
| exclusive distribution | is a level of distribution density whereby only one retailer in a specific geographical area carries the firm’s products. Ex. rolex |
| Selective distribution | is a level of distribution density whereby a firm selects a few retailers in a specific geographical area to carry its products. Ex. Nike |
| Buyer requirements when deciding on a channel | 1. information 2. convenience, 3. variety 4. pre- or post sale service |
| Channel conflict | arises when one channel member believes another channel member is engaged in behavior that prevents it from achieving its goals. |
| Vertical conflict | conflict between different levels in the channel |
| Horizontal conflict | conflict between intermediaries at the same level in the channel |
| disintermediation | involves channel conflict that arises when a channel member bypasses another member and sells or buys products direct. |
| Logistics | involves channel conflict that arises when a channel member bypasses another member and sells or buys products direct. Activities that get the right things, logistics has to do with place |
| Supply chain | involves channel conflict that arises when a channel member bypasses another member and sells or buys products direct. business that do logistics |
| GDP | Comes from services rather than goods |
| Inventory carrying costs of services | low cost -> real estate agency, hair salon meduim -> restaurant, auto repair center high-> airline, hospital |
| 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. service dominated offering -> teaching, balanced -> fastfood product dominated offering -> dog food |
| Search properties | clothing, jewelry, furtniture, houses, automobiles |
| experience properties | restaurant meals, vacation, haircuts, child care |
| credence properties | television repair, legal services, root canal, auto repair, medical diagnosis |
| gap analysis | is 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. |
| customer contact audit | is a flowchart of the points of interaction or “service encounters” between consumers and a service provider. |
| 7 p's | product, price, promotion, place, people, physical environment, process |
| off-peak pricing | involves charging different prices during different times of the day or during different days of the week to reflect variations in demand for the service. |
| Internal marketing | is the notion that a service organization must focus on its employees, or internal market, before successful programs can be directed at customers. |
| capacity management | integrates the service component of the marketing mix with efforts to influence consumer demand. |
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