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Marketing Exam 4
| Question | Answer |
|---|---|
| marketing channel (aka channel of distribution) | a set of interdependent organizations that ease the transfer of ownership as products move from producer to business user or consumer. facilitate the physical movement of goods through the supply chain, representing "place" or "distribution" in mktg mix |
| channel members (aka intermediaries, resellers, and middlemen) | all parties in the marketing channel that negotiate with one another, buy and sell products, and facilitate the change of ownership between buyer and seller in the course of moving the product from the manufacturer into the hand of the final consumer |
| supply chain | the connected chain of the business entities, both internal and external to the company, that perform or support the logistics function |
| channel members facilitate the distribution process in 3 ways | providing specialization and division of labor, overcoming discrepancies, and providing contact efficiency |
| concept of specialization and division of labor | breaking down a complex task into smaller, simpler ones and allocating them to specialists will create greater efficiency and lower average production costs. manufacturers achieve economies of scale through the use of efficient equipment |
| discrepancy of quantity | the difference between the amount of product produced and the amount an end user wants to buy |
| discrepancy of assortment | the lack of all the items a customer needs to receive full satisfaction from a product or products |
| temporal discrepancy | a situation that occurs when a product is produced but a customer is not ready to buy it |
| spatial discrepancy | the difference between the location of a producer and the location of widely scattered markets |
| taking title | ownership of merchandise and control over the terms of sale |
| retailers | a channel intermediary that sells mainly to consumers |
| merchant wholesaler | an institution that buys goods from manufacturers and resells them to businesses, government agencies, and other wholesalers or retailers and that receives and takes title to goods, stores them in its own warehouses, and later ships them |
| agents and brokers | wholesaling intermediaries who do not take title to a product but facilitate its sale from producer to end user by representing retailers, wholesalers, and manufacturers |
| 3 things that determine the type of intermediary the manufacturer should use | product characteristics, buyer considerations, and market considerations |
| product characteristics | include whether the product is standardized or customized, the complexity of the product, and the gross margin of the product |
| buyer considerations | include how often the product is purchased and how long the buyer is willing to wait to receive the product |
| market characterisitics | include how many buyers are in the market and whether they are concentrated in general location or are widely dispersed |
| 3 basic functions that intermediaries perform | transactional functions, logistical functions, and facilitating functions |
| transactional functions | involve contacting and communicating with prospective buyers to make them aware of existing products and explain their features, advantages, and benefits |
| logistics | the process of strategically managing the efficient flow and storage of raw materials, in-process inventory, and finished goods from point of origin to point of consumption |
| logistical functions | include transporting, storing, sorting out, accumulating, allocating, and assorting products into either homogeneous or heterogeneous collections |
| facilitating functions | include research and financing |
| 4 ways manufacturer can route products to consumers | direct channel, retailer channel, wholesaler channel, agent/broker channel |
| direct channel | a distribution channel in which producers sell directly to consumers |
| agent/broker channel | involves a fairly complicated process. typically used in markets with many small manufacturers and many retailers that lack the resources to find each other. agents and brokers bring manufacturers and wholesalers together for negotiations |
| retailer channel | the most common when the retailer is large and can buy in large quantities directly from the manufacturer |
| wholesaler channel | commonly used for low-cost items that are frequently purchased, such as candy, cigarettes, and magazines |
| 5 channel structures that are common in business and industrial markets | 2 forms of direct channels (typical), industrial distributor, agent/broker channel, and agent/broker-industrial distributer |
| industrial distributors | companies selling standardized items of moderate or low value often rely on these. wholesalers and channel members that buy and take title to products. they usually keep inventories of their products and sell and service them. |
| 3 types of alternative channel arrangements | multiple channels, nontraditional channels, and strategic channel allianecs |
| dual distribution (aka multiple distributon) | the use of 2 or more channels to distribute the same product to target markets |
| nontraditional channels | help differentiate a firm's product from the competition. ex: internet, mail-order channels, infomercials. may limit a brand's coverage but give a producer serving a niche market a way to gain market access and customer attention w/o having intermediaries |
| strategic channel alliance | a cooperative agreement between business firms to use the other's already established distribution channel |
| supply chain management | a management system that coordinates and integrates all of the activities performed by supply chain members into a seamless process, from the source to the point of consmption, resulting in enhanced customer and economic value. completely customer driven. |
| 2 roles that supply chain management plays | communicator of customer demand that extends form the point of sale all the way back to the supplier. physical flow process that engineers the timely and cost-effective movement of goods through the entire supply pipeline |
| responsibilities of supply chain managers | directing raw materials and parts to the production department and the finished or semifinished product through warehouses and eventually to the intermediary or end user. supply chain management begins and ends with the customer. |
| benefits of supply chain management | lower inventory, transportation, warehousing, and packaging costs; greater supply chain flexibility; improved customer service; and higher revenues. there exisits a relationship between supply chain management and profitability. |
| 3 factors that affect channel choice | market factors, product factors, and producer factors |
| market factors | target customer considerations, whether the producer is selling to consumers or to industrial customers, geographic location and size of market |
| product factors | how complex, customized, and expensive products are. product's life cycle. delicacy of the product. |
| producer factors | the size of financial, managerial, and marketing resources. producer's desire to control pricing, positioning, brand image, and customer support. |
| organizations have 3 options for intensity of distribution | intensive distribution, selective distribution, or exclusive distribution |
| intensive distribution | a form of distribution aimed at having a product available in every outlet where target customers might want to buy it. most manufacturers pursuing an intensive distribution strategy sell to a large percentage of wholesalers willing to stock their product |
| selective distribution | a form of distribution achieved by screening dealers to eliminate all but a few in any single area. because only a few are chosen, the consumer must seek out the product. hinge on a manufacturer's desire to maintain a superior product image |
| exclusive distribution | a form of distribution that establishes one or a few dealers within a given area. usually confined to consumer specialty goods, a few shopping goods, and major industrial equipment. can also take place within a retailer's store with no competing brands |
| basic social dimensions of channels | power, control, leadership, conflict, and partnering |
| channel power | the capacity of a particular marketing channel member to control or influence the behavior of other channel members |
| channel control | a situation that occurs when one marketing channel member intentionally affects another member's behavior |
| channel leader (aka channel captain) | a member of a marketing channel that exercises authority and power over the activities of other channel members |
| channel conflict | a clash of goals and methods between distribution channel members. |
| horizontal conflict | a channel conflict that occurs among channel members on the same level |
| vertical conflict | a channel conflict that occurs between different levels in a marketing channel, most typically between the manufacturer and wholesaler or between the manufacturer and retailer |
| channel partnering (aka channel cooperation) | the joint effort of all channel members to create a supply chain that serves customers and creates a competitive advantage. can speed up inventory replenishment, improve customer service,and reduce the total costs of the marketing channel |
| ideal market exposure | makes a product available widely enough to satisfy target consumers' needs, but not to exceed them |
| 3 trends in supply chain management | advanced computer technology, outsourcing logisitc functions, and electronic distribution |
| retailing | all the activities directly related to the sale of goods and services to the ultimate consumer for personal, nonbusiness use |
| a retail establishment can be classified according to | its ownership, level of service, product assortment, and price. specifically retailers use the latter 3 variables to position themselves in the competitive marketplace |
| independent retailers | retailers owned by a single person or partnership and not operated as part of a larger retail institution |
| chain stores | stores owned and operated as a group by a single organization |
| franchise | the right to operate a business or to sell a product. they are owned and operated by individuals but are licensed by a larger supporting organization |
| gross margin | the amount of money the retailer makes as a percentage of sales after the cost of goods sold is subtracted |
| department store | a store housing several departments under one roof. carries a wide variety of shopping and specialty goods, including apparel, cosmetics, housewares, electronics, and sometimes furniture. Sears, JCPenney. each dept is treated as a seperate buying center. |
| buyer | a department head who selects the merchandise for his or her department and may also be responsible for promotion and personnel |
| specialty store | a retail store specializing in a given type of merchandise. this format allows retailers to refine their segmentation strategies and tailor their merchandise to specific target markets. Disney Store, Foot Locker. knowledgable sales people, many choices. |
| supermarket | a large, departmentalized, self-service retailer that specializes in food and some nonfood items. experienced sales decline in recent years. |
| scrambled merchandising | the tendency to offer a wide variety of nontraditional goods and services under one roof. Albertson's supermarkets which feature liqour stores, floral departments, pharmacies. Lease space to Starbucks. |
| loyalty marketing programs | market strategy to appeal to specific consumer segments by rewarding loyal customers carrying frequent shopper cards with discounts or gifts |
| drugstore | a retail store that stocks pharmacy related products and services as its main draw. attractions: pharmacy/pharmacist, convenience. the demographic trend is favorable - medical care for baby boomers. |
| convenience store | a miniature supermarket, carrying only a limited line of high-turnover convenience goods. attraction: location, long hours, quick service. an increasing range of products and services. some are going "upscale". |
| discount store | a retailer that competes on the basis of low prices, high turnover, and high volume |
| 4 major categories of discount stores | full-line discount stores, specialty discount stores, warehouse clubs, and off-price discount retailers |
| full-line discount stores | a retailer that offers consumers very limited service and carries a broad assortment of well-known, nationally branded "hard goods" including housewares, toys, automotive parts, hardware, sporting goods, garden items, clothing, linen. Wal-Mart. |
| mass merchandising | a retailing strategy using moderate to low prices on large quantities of merchandise and lower service to stimulate high turnover of products |
| supercenter | a retail store that combines groceries and general merchandise goods with a wide range of services. Super Wal-Mart, Super Target. |
| extreme-value retailing | dollar stores such as Dollar General and Family Dollar |
| specialty discount store | a retail store that offers a nearly complete selection of single-line merchandise and uses self-service, discount prices, high volume, and high turnover. Stores selling sporting goods, electronics, auto parts, office supplies, housewares, or toys. |
| category killers | specialty discount stores that heavily dominate their narrow merchandise segment. Toys "R" Us, Circuit City, Best Buy, Staples, Office Depot, Home Depot, Lowe's, IKEA, Linens N Things, Bed, Bath & Beyond |
| warehouse membership clubs | a limited-service merchant wholesaler that sells a limited selection of brand-name appliances, household items, and groceries on a cash-and-carry basis to members, usually small businesses and groups. Sam's Club, Costco, BJ's Wholesale Club. |
| off-price retailer | a retailer that sells at prices 25% or more below traditional department store prices because it pays cash for its stock and usually doens't ask for return privileges. supplies from overrun, bankrupt stores, end season. T.J. Maxx, Ross Stores, Marshalls |
| factory outlet | an off-price retailer that is owned and operated by a manufacturer. outlet malls: Gap, J. Crew, Calvin Klein, Pottery Barn, Crate & Barrel, Oneida silversmiths. |
| restaurants | straddle the line between retailing establishments and service establishments. they sell tangible products, but they also provide a valuable service for consumers thorugh food prep and service. most could even be classified as specialty retailer |
| nonstore retailing | shopping without visiting a store |
| 4 major forms of nonstore retailing | automatic vending, direct retailing, direct marketing, and electornic retailing |
| automatic vending | the use of machines to offer goods for sale. cola, candy, snack vending machines. |
| direct retailing | the selling of products by representatives who work door-to-door, office-to-office, or at home parties. Avon, Mary Kay Cosmetics, The Pampered Chef, Usbourne Books, World Book Encyclopedia. |
| direct marketing (aka direct-response marketing) | techniques used to get consumers to make a purchase from their home, office, or other nonretail setting. direct mail, catalogs, and mail order, telemarketing, electronic retailing. provides coverage. you can compete against everyone in market. |
| telemarketing | the use of the telephone to sell directly to consumers. consists of outbound sales calls, usually unsolicited, and inbound calls - that is, order through toll-free 800 numbers or fee-based 900 numbers |
| outbound telemarketing | an attractive direct-marketing technique because of rising postage rates and decreasing long-distance phone rates |
| inbound telemarketing | use 800 and 900 numbers to mainly take orders, generate leads, and provide customer service |
| 2 forms of electronic retailing | 24-hour, shop-at-home television networks (Home Shopping Network and the QVC network) and online retailing |
| online retailing (aka e-tailing) | a type of shopping available to consumers with personal computers and access to the Internet. Amazon.com. |
| franchiser | the originator of a trade name, product, methods of operation, and so on, that grants operating rights to another party to sell its product |
| franchisee | an individual or business that is granted the right to sell another party's product |
| franchise | a continuing relationship in which a franchiser grants to a franchisee the business rights to operate or to sella products. 2 forms: product and trade name franchising - auto dealers, tire dealers, soft drink bottling. & business format franchising |
| business format franchising | an ongoing business relationship between a franchiser and a franchisee. typically, a franchiser "sells" a franchisee the rights to use the franchiser's format or approach to doing business. fast food restaurants, hotel and motel, real estate franchises. |
| struggle of department stores | specialty stores have deeper product lines, and prices are cheaper at discounters. department stores are suffering in the middle. they can fight back based on competitors' strategies: sales, designer brands |
| advertising | any form of impersonal, paid communication in which the sponsor or company is indentified. it is a popular form of promotion, especially for consumer packaged goods and services. |
| advertising response function | a phenomenon in which spending for advertising and sales promotion increases sales or market share up to a certain level but then produces diminishing returns |
| institutional advertising (aka corporate advertising) | a form of advertising designed to enhance a company's image rather than promote a particular product |
| product advertising | a form of advertising that touts the benefits of a specific good or service |
| advocacy advertising | a form of advertising in which an organization expresses its views on controversial issues or responds to media attacks |
| pioneering advertising | a form of advertising designed to stimulate primary demand for a new product or product category. heavily used during the introductory stage of the product life cycle. offers consumer in-depth info about the benefits of the product class. |
| competitive advertising | a form of advertising designed to influence demand for a specific brand. often promotion becomes less informative and appeals more to emotions. may begin to stress subtle differences between brands, w/ heavy emphasis on brand name. Automobile advertising. |
| comparative advertising | a form of advertising that compares 2 or more specifically named or shown competing brands on one or more specific attributes. products experiencing sluggish growth or those entering the marketplace against strong competitors are likely to use comparative |
| advertising campaign | a series of related advertisements focusing on a common theme, slogan, and set of advertising appeals. it is a specific advertising effort for a particular product that extends for a defined period of time. |
| advertising objective | a specific communication task that a campaign should accomplish for a specified target audience during a specified period. often depend on the overall corporate objectives and the product being advertised. |
| DAGMAR approach (defining advertising goals for measured advertising results) | one method of setting advertising objectives. all advertising objectives should precisely define the target audience, the desired percentage change in some specified measure of effectiveness, and the time frame in which that change is to occur. |
| advertising appeal | a reason for a person to buy a product. typically play off consumers' emotions, such as fear or love, or address some need or want the consumer has, such as a need for convenience or the desire to save money |
| unique selling proposition | a desirable, exclusive, and believable advertising appeal selected as the theme for a campaign. Usually becomes the campaign's slogan. |
| medium | the channel used to convey a message to a target market |
| media planning | the series of decisions advertisers make regarding the selection and use of media, allowing the marketer to optimally and cost-effectively communicate the message to the target audience |
| 7 major advertising media | newspapers, magazines, radio, television, outdoor media, Yellow Pages, and the Internet |
| newspaper advertising | benefits include geographic flexibility and timeliness. drawbacks include difficulty of reaching a narrow market, distractions from competing ads and news stories. main sources of newspaper ad revenue are local retailers, classified ads, & cooperative ad |
| cooperative advertising | an arrangement in which the manufacturer and the retailer split the costs of advertising the manufacturer's brand |
| magazines | benefits: market selectivity therefore cost per potential customer may be lower. drawbacks: cost per contact in magazine advertising is usually high |
| radio | strengths: selectivity and audience segmentation, a large out-of-home audience, low unit and production costs, timeliness, and geographic flexibility. |
| infomercial | a 30-minute or longer advertisement that looks more like a TV talk show than a sales pitch. attractive because of cheap airtime and relatively small production costs. an ideal way to present complicated info. |
| outdoor media (aka out-of-home advertising) | flexible, low-cost medium that may take a variety of forms. billboards, skywriting, giant inflatables, mini-billboards. reaches a broad and diverse market. ideal for promoting convenience products & services, local businesses. high exposure frequency. |
| alternative media vehicles | include shopping carts, computer screen savers, CD-ROMs, interactive kiosks, advertisments before movies and DVDs, and "advertainments" - "mini movies" via the Internet |
| media mix | the combination of media to be used for a promotional campaign. media mix decisions are typically based on several factors: costs per contact, reach, frequency, target audience considerations, flexibility of the medium, noise level, and med life span |
| cost per contact | the cost of reaching one member of the target market. enables an advertiser to compare media vehicles such as television vs. radio or magazine vs. newpaper |
| reach | the number of target consumers exposed to a commercial at least once during a specific period, usually four weeks. related to a medium's ratings, generally referred to in the industry as gross ratings points, or GRP. |
| frequency | the number of times an individual is exposed to a message during a specific period. advertisers use average frequency to measure the intensity of a specific medium's coverage. |
| audience selectivity | the ability of an advertising medium to reach a precisely defined market |
| noise level | the level of distraction to the target audience in a medium |
| life span | means that messages can either quickly fade or persist as tangible copy to be carefully studied |
| flexibility | ability of medium to adapt to changing market conditions |
| qualitative factors for media selection | attention to the commercial and the program, involvement, program liking, lack of distractions, and other audience behaviors that affect the likelihood that a commercial message is being seen and hopefully absorbed |
| price | that which is given up in an exchange to acquire a good or service |
| Revenue | gthe price charged to customers multiplied by the number of units sold |
| Profit | Revenue - Expenses |
| 2 main effects of advertising | maintain brand awareness and market share (advertising response function). informing consumers about products and services and influencing their attitudes, beliefs and ultimately their puchases (change & reinforce positive attitude, affect brand rank) |
| 3 categories of advertising appeals | rational appeals, emotional appeals, and moral appeals |
| rational appeals | show the desired benefits such as function, quality, economy, etc. |
| emotional appeals | use positive emotions such as love, pride, joy, and humor. be careful with negative emotions such as fear, guilt, and shame. |
| moral appeals | directed at the sense of "right" and "wrong" |
| executional styles in ads | slice of life, mood or image, spokesperson or testimonial, fantasy, scientific, etc. |
| tones in ads | serious? humorous? |
| words in ads | to make it attention-getting and memorable |
| format in ads | size, shape, color, sound, words, dress |
| public relations | the element in the promotional mix that evaluates public attitudes, identifies issues that may elicit public concern, and executes programs to gain public understanding and acceptance |
| publicity | the effort to capture media attention - for example, through articles or editorials in publications or through human-interest stories on radio or television programs |
| press relations | placing positive, newsworthy information in the news media to attract attention to a product, a service, or a person associated with the firm or institution |
| product publicity | publicizing specific products or services |
| corporate communication | creating internal and external messages to promote a positive image of the firm or institution |
| public affairs | building and maintaining national or local community relations |
| lobbying | influencing legislators and government officials to promote or defeat legislation and regulation |
| employee and investor relations | maintaining positive relationships with employees, shareholders, and others in the financial community |
| crisis management | responding to unfavorable publicity or a negative event |
| 6 tools that PR professionals commonly use | new-product publicity, product placement, consumer education, event sponsorship, issue sponsorship, and Web sites |
| Sales Maximization | Max sales ignores profits competition and marketing environment as long as sales are rising |
| Status Quo Pricing | seeks to maintain existing prices or to meet the competitions prices requires little planning |
| Demand | the qty of a product that will be sold in the market at various prices for a specified period |
| Supply | the Qty of a product that will be offered to the market by a supplier at various prices for a specified period |
| Elasticity of Demand | is the consumers responsiveness or sensitivity to changes in price |
| inelastic demand | an increase or decrease in price will not significantly affect demand for the product |
| Factors affecting elasticity | availability of substitutes, price relative to purchasing power, product durability, other uses of the product if it has many uses the Prod. demand is more elastic |
| Yield Management Systems | a technique for adjusting prices that uses complex mathematical software to profitably fill unused capacity by discounting early purchases limiting early sales at these discounted prices and overbooking capacity |
| Purpose YMS | maximize capacity usage and revenue. AAirlines was the pioneer in the 1980's |
| The cost determinant of Price | variable cost, fixed cost,markup pricing Break even pricing |
| crisis management | a coordinated effort to handle all the effects of unfavorable publicity or of another unexpected unfavorable event |
| sales promotion | marketing communication activities, other than ads, personal slling, and PR, in which a short-term incentive motivates consumer or members of the distribution channel to purchase a good or service immediately, either by lowering price or by adding value |
| consumer sales promotion | sales promotion activities targeting the ultimate consumer |
| trade sales promotion | sales promotion activities targeting a channel member, such as a wholesaler or retailer |
| 6 popular toosl for consumer sales promotion | coupons and rebates, premiums, loyalty marketing programs, contests and sweepstakes, sampling, and point-of-purchase promotion |
| coupon | a certificate that entitles consumers to an immediate price reduction when they buy the product. particulary good way to encourage product trial and respurchase. likely to increase the amount of a product bought. |
| rebate | a cash refund given for the purchase of a product during a specific period. manufacturers prefer rebates b/c they allow manufacturers to offer price cuts directly to consumers and manufacturers have more control over rebate promos |
| premium | an extra item offered to the consumer, usually in exchange for some proof of purchase of the promoted product. premiums reinforce the consumer's purchase decision, increase consumption, and persuade nonusers to switch brands. |
| loyalty marketing program | a promotional program designed to build lont-term, mutually beneficial relationships between a company and its key customers. popularized by the airline industry |
| frequent buyer program | a loyalty program in which loyal consumers are rewarded for making multiple purchases of a particular good or service |
| contests | are promotions in which participants use some skill or ability to compete for prizes. a consumer contest usually requires entrants to answer questions, complete sentences, or write a paragraph about the product and submit proof of purchase |
| sweepstakes | winning depends on chance or luck, and participation is free. usually draw about 10 times more entries than contests do |
| sampling | a promotional program that allows the consumer the opportunity to try a product or service for free. directly mailing the sample to the customer, delivering the sample door-to-door, packaging the sample with another product, or demos or sampling at stores |
| point-of-purchase promotion | a promotional display set up at the retailer's loaction to build traffic, advertise the product, or induce impluse buying. include shelf "talkers", shelf extenders, ads on grocery carts and bags, end-aisle and floor-stand displays, television monitors |
| trade allowance | a price reduction offered by manufacturers to intermediaries, such as wholesalers and retailers |
| push money | money offered to channel intermediaries to encourage them to "push" products - that is, to encourage other members of the channel to sell the products |
| training | sometimes a manufacturer will train an intermediary's personnel if the product is rather complex |
| free merchandise | often a manufacturer offers retailers free merchandise in lieu of quantity discounts |
| store demonstrations | manufacturers can also arrange with retailers to perform an in-store demostration. food manufacturers and sampling. |
| business meetings, conventions, and trade shows | at these shows, vendors have the chance to display their goods or describe their services to customers and potential customers |
| Markup Pricing | the cost of buying the product from the producer plus amounts for profit and for expenses not otherwise |
| Variable Cost | cost varies with changes in the level of output |
| Fixed Cost | a cost that does not change as output is increased or decreased |
| Break Even Analysis | a method of determining what sales volume must be reached before total revenue equals total costs |
| Other determinants of price | competition distribution strategy stages in the product cycle, internet and extranets promotion strategy demands of large customers, the relationship of price to quality |
| Stages in the Product life cycle | introductory state price is usually high to recover development costs quikly; Growth prices stabilize bc. competitors have entered the Mkt.; Maturity prices further decrease distribution channels become a cost factor,; Decline prices may decrease. |
| Competition | varies through the Life cycle and affects pricing decisions |
| Distribution Strategy | Adequate Dist can be attained by offering a larger than usual profit margin to distributors. Give dealers a large trade allowance to help offset promotion costs |
| internet and extranet | Internet auctions |
| Promotion Strategy | Price is used as a promotional tool |
| personal selling | direct communication between a sales representative and one or more prospective buyers in an attempt to influence each other in purchase situation |
| advantages of personal selling over other forms of promotion | provides a detailed explantion or demo of the product; sales message can be varied according to the motives and interests of each customer; can be directed only to qualified prospects; costs can be controlled by adjusting size of sales force; more effectv |
| relationship selling (aka consultative selling) | a sales process that involves builiding, maintaining, and enhancing interactions with customers in order to devleop long-term satisfaction through mutually beneficial partnerships. End result is loyal customers. Typical for industrial-type goods. |
| sales process (aka sales cycle) | the set of steps a salesperson goes through in a particular organization to sell a particular product or service |
| 7 basic steps in the personal selling process | 1. generating leads 2. qualifying leads 3. approaching the customer and probing needs 4. developing and proposing solutions 5. handling objections 6. closing the sale 7. following up |
| lead generation (aka prospecting) | identification of those firms and people most likely to buy the seller's offerings. can be obtained through advertising, trade shows and conventions, or direct-mail and tele-marketing programs. |
| referral | a recommendation to a salesperson from a customer or business associate |
| networking | a process of finding out about potential clients from friends, business contacts, coworkers, acquaintances, and fellow members in professional and civic organizations |
| cold calling | a form of lead generation in which the salesperson approaches potential buyers without any prior knowledge of the prospects' needs or financial status |
| lead qualification | determination of a sales prospect's (1) recognized need, (2) buying power, and (3) receptivity and accessibility |
| demand of large consumers | large customers like Walmart make specific pricing demands to cover discounts and markdowns |
| Relationship of Price and Quality | high price is a predictor to good quality |
| prestige pricing | charging a high price to help promote a high quality image |
| Price Strategy | a basic long term pricing framework which estrablishes the initial price for a product and the intended direction for price movements over the product life cycle |
| Setting a price for a product | Establish pricing goals, estimate demand costs and profits, choose a price strategy |
| Establish Pricing Goals | depends on the organizations objectives and its pricing objectives |
| Price skimming | a pricing policy whereby a firm charges a high introductory price often coupled with heavy promotion. High price to get high profit margin, fewer but more profitable sales, reduce price overtime |
| penetration pricing | a policy whereby a firm charges a relatively low price for a product initially as a way to reach the mass market |
| when to use Price skimming | the product must have unique advantage, legal protection (patent) technological know how |
| When to use Penetration Pricing | if market share is very important. Pros it discourages competitors to enter the market (entry barrier) Cons price cannot be easily increased, brand image may be damaged |
| preapproach | a process that describes the "homework" that must be done by a salesperson before he or she contact a prospect |
| needs assessment | a determination of the customer's specific needs and wants and the range of options the customer has for satisfying them. sales rep must know: the product or service, customers and their needs, competition, the industry |
| competitive intelligence | includes many factors: who the competitors are and what is known about them; how their products and services compare; advantages and disadvantages; and strengths and weaknesses |
| sales proposal | a formal written document or professional presentation that outlines how the salesperson's product or service will meet or exceed the prospect's needs |
| sales presentation | a formal meeting in which the salesperson presents a sales proposal to a prospective buyer |
| negotiation | the process during which both the salesperson and the prospect offer special concessions in an attempt to arrive at a sales agreement |
| follow-up | the final step of the selling process, in which the salesperson ensures that delivery schedules are met, that the goods or services perform as promised, and that the buyers' employees are properly trained to use the products |
| pros of sales promotions | encourage new trial; break down loyalty to other brands; can be implemented quickly, and gets results faster than advertising; influence trade and channel members |
| cons of sales promotion | consumers stockpile; usually short-term effects (advertising tends to have long-term effects); increased consumer price sensitivity; negative brand image |
| Unfair trade practice acts | laws that prohibit wholesales and retailers from selling below cost |
| Price fixing | a collusive agreement between 2 or more firms on the price they will change for the products |
| Price Discrimination | Cost, market conditions, Competition |
| Predatory Pricing | the practice of charging a very low price for a product with the intent of driving competitors our of business or out of the market |
| Discounts Rebates and value based pricing | qty discounts, cash discounts, functional disc, seasonal disc, promotional allowances, rebates, zero % financing |
| Qty discount | a price reduction offered to buyers buying in multiple units or above a specified dollar amount |
| cumulative QTY disc | a deduction from list price that applies to the buyers total purchases made during a specified period |
| non cumulative qty disc | deduction from list price that applies to single order rather than total volume of orders placed during a certain period |
| cash discount | a price reduction offered to a consumer and industrial user or a marketing intermediary in return for prompt payment of a bill |
| Functional disc ( trade Discount) | a discount to wholesalers and retailers for performing channel functions |
| seasonal discount | a price reductionfor buying merchandise out of season |
| Trade allowance ( promotional All) | a payment to a dealer for promoting the manufacturer's products |
| Rebate | a cash refund given for the purchase of a product during a specific period |
| value based pricing | setting the price at a level that seems to the customer to be a good price compared to the prices of other options |
| FOB origin pricing | a price tactic that requires the buyer to absorb the freight costs from the shipping point ( free on board) |
| uniform delivered pricing | a price tactic in which the seller pays the actual freight charges and bills every purchaser an identical flat freight charge |
| zone pricing | a modification of uniform delivered pricing that divides the US into segments or zones and charges a flat freight rate to all customers in a given zone |
| Freight absorption pricing | pricing tactic where the seller pays all or part of the actual freight charges and does not pass them on to the buyer |
| Basing point pricing | a price tactic that charges freight from a given point regardless of the city from which the goods are shipped |
| Other pricing tactics | single price, flexible , professional services, leader pricing, bait, odd-even , price bundling , two part |
| single price tactic | offers all goods and services at the same price or 2 or 3 |
| flexible price tactic | different customers pay different prices for essentially the same merchandise bought in equal qtys. |
| Leader pricing | a product is sold near or even below cost in the hope that shoppers will buy other items once they are in the store |
| bait pricing | tries to get consumers into a store through false price advertisement and then uses high pressure selling to persuade consumers to buy more expensive merchandise |
| price bundling | marketing 2 or more products in a single package for a special price |
| unbundling | reducing the bundle of services that comes with the basic product |
| two-part pricing | charges 2 separate amounts to consume a single good or service |
| consumer penalty | an extra fee paid by the consumer for violating the terms of the purchase agreement |
Created by:
lauralo8
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