BUSERV exam 2
cost-plus percentage-of-cost pricing
- a fixed percentage is added to the total unit cost - used in one- or few-of a kind products
cost-plus fixed-fee pricing
- a supplier is reimbursed for all costs, regardless of what they turn out to be, but is allowed only a fixed fee as profit that is independent of the final cost of the project - popular with business to business
brand equity
- added value a brand name gives a product (Disney for kids' products) - consumers are often willing to pay more for a product with brand equity (Louis Vuitton luggage)
standard markup pricing
- adding a fixed percentage to the cost of all items in a specific product class - varies on type of store & product (groceries vs. concessions)
trading up
- adding value to the product with added features or higher-quality materials - ex. Target selling Gucci clothes
market segmentation
- aggregating prospective buyers into groups that have (1) common needs and (2) will respond similarly to marketing action - means to an end since it leads to marketing actions that can increase sales and profits - grouping on similarities is important & these similarities must be related to specific marketing actions firms can take
brand name
- any word, device, or combo of these to distinguish a seller's products and services - ex. symbols (Nike swoosh), logos (Apple apple), characters (Frosted Flakes tiger) are used
methods
- approaches used to solve all or part of a problem - usually in the form of asking people questions and observing them - ex. sampling & statistical inference
product repositioning
- changing the place a product occupies in a consumer's mind relative to competitive products
components
- classification of business products - items that become part of the final product including raw materials like lumber as well as assemblies like a car engine
support products
- classification of business products - items used to assist in producing other products - ex. installations (buildings & equipment), accessory equipment (tools & office equipment), supplies (paper clips & brooms), & industrial services (maintenance & legal services)
private branding
- company manufactures products but sells them under the brand name of a wholesaler/retailer - makes more products for manufacturers and resellers
multiproduct branding
- company uses one name for all of its products in a product class - ex. Microsoft, Sony, Samsung - capitalizes on brand equity - makes product line extensions, or practice of bringing a current brand name to enter a new market segment in its product class to take sales from competitors - lower ad costs with increased brand awareness - some brands employ subbranding combining family bran with new brand to distinguish itself (American Express Gold) - strong brand equity allows brand extention where a current brand name is used to enter a different product class - cobranding pairs two or more strong brands to facilitate marketing of a joint product/service - ingredient branding (Hershey & Betty Crocker cake mix), joint venture branding (Southwest & Visa credit cards), & sponsorships (AT&T & Master's Golf Tournament)
how is product newness determined
- compared to existing products - from consumer's perspective (innovations) - in legal terms (6 months after it enters regular distribution) - from organization's perspective (extensions)
packaging & labeling challenges & responses
- connecting with customers (must draw attention & stay interesting) - environmental concerns (use less plastic) - health, safety, & security (child locks, preventing spoilage) - cost reduction (as prices go up for metal and glass)
3 factors that affect demand
- consumer tastes - price & availability of similar products - consumer income
brand licensing
- contract where one company lets its brand name/trademark be used with products/services offered by another company for a royalty/fee - can go wrong with bad matches
marketing output data
- data showing results of marketing efforts - includes accounting records on shipments, sales & repeat sales broken down by geographic region, industry, etc., emails, phone calls, letters, & complaints from customers
marketing input data
- data showing the effort expended to make sales - includes marketing budget reports, ad expenditures, salespeople's call reports, who was called, what was discussed
internal secondary data
- data that is most accessible when collecting relevant information in the market research approach - marketing input & output data
external secondary data
- data used in the market research approach from sources like the Census - several marketing research companies pay households or businesses to record their purchases - syndicated panel data like Nielsen TV ratings - some data services give information lifestyle, product purchases, coupon redemptions, etc. - trade associations, universities, and business periodicals provide detailed data
five step marketing research approach
- define the problem - develop the research plan - collect relevant information - analyze data - take marketing actions
loss-leader pricing
- deliberately selling a product below its customary price not to increase sales but to attract customers attention in hopes that they will buy other products as well
classifying services
- delivery by people or equipment - people-based - unskilled labor (janitor) - skilled labor (plumber) - professionals (lawyer) - equipment-based - automated (ATMs) - operated by unskilled workers (taxis) - operated by skilled operators (airplanes) - delivery by business firms/nonprofit organizations - delivery by government agencies
pricing constraints
- demand for the product class, product, & brand (number of buyers affects price) - newness of product in PLC (newer -> more expensive) - cost of producing & marketing product - competitors' prices - legal & ethical considerations (price fixing, price discrimination, deceptive pricing, & predatory pricing are illegal)
creating brand equity
- develop positive brand awareness & association of the brand with a product class (Gatorade -> sports drink) - establish a brand's meaning in the mind of consumers based on functional dimension and abstract dimension (Nike -> peak athletic performance) - elicit proper consumer responses to a brand's identity and meaning with how they feel about a brand relative to competitors (Michelin -> safety) - create consumer-brand connection with loyalty (Apple)
gap analysis
- difference between the consumer's expectations & actual experiences - evaluated for services by asking customers about reliability, tangibility, & responsiveness - difficult to assess this when the service is observation (at the zoo, seeing a play)
product class
- entire product category/industry - ex. prerecorded music
inelastic demand
- exists when a 1 percent decrease in price produces less than a 1 percent increase in quantity demanded, thereby actually decreasing total revenue - slight decrease or increase in price doesn't significantly affect demand
observational data
- facts and figures for how people actually behave - type of primary data taken by watching people - personal, mechanical, and neuromarketing methods to this data collection
primary data
- facts and figures that are newly collected for a project - includes observational data (mechanical, personal, or neuromarketing), questionnaire data (interviews, surveys, & focus groups), social media, panels, experiments, etc.
questionnaire data
- facts are figures obtained by asking people about their attitudes, awareness, intentions, & behaviors - idea generation methods with interviews/focus groups and idea evaluation methods with surveys
mixed branding
- firm markets products under its own name and reseller's name because the segment attracted to the reseller is different from its own market
price fixing
- firms conspire to set prices for a product - horizontal when 2+ competitors do it - vertical when sellers have to sell product below a certain price
salesforce survey forecast
- forecast that asks firm's salespeople to estimate sales during a forthcoming period - can be unreliable
survey of buyers' intentions forecast
- forecast that asks prospective customers if they are likely to buy the product during some future time period - effective for industrial products (like airplanes) with few prospective buyers
direct forecast
- forecasting technique estimating the value to be forecast without intervening steps - ex. How many gallons of milk should I buy?
linear trend extrapolation
- forecasting technique form of trend extrapolation when the trend is a straight line - assumes past conditions continue
lost-horse forecast
- forecasting technique starting with the last known value of the item, listing factors that could affect the forecast, assessing whether factors have a positive or negative effect, & making final forecast
trend extrapolation
- forecasting technique that extends a pattern observed in past data into the future
head-to-head positioning
- form of product positioning that competes directly with competitors on similar product attributes in the same target market - ex. Dollar Rent A Car competes directly with Avis and Hertz
differentiation positioning
- form of product positioning that seeks a less-competitive, smaller market niche to locate their brand - ex. McDonald's low fat burger outside of competition with Wendy's and BK
multibranding
- gives each product a distinct name - useful when each product has different target markets - Marriot has high end and low end hotels all by different names - fighting brands focus on fighting competition - higher ad prices than multiproduct, but one bad product doesn't effect the entire brand
product line
- group of product/service items that are closely related because they satisfy a class of needs, are used together, are sold through the same outlets or to the same customers, or fall in a given price range - ex. Nike has shoes & clothing lines
steps in segmenting & targeting markets
- group potential buyers into segments - group products to be sold into categories - develop a market-product grid & estimate the size of markets - select target markets - take marketing actions to reach target markets
good
- has tangible attributes that a person's five senses can perceive - may also have intangible attributes in delivery/warranty or things like becoming healthier/wealthier - ex. Apple Watch
concepts
- ideas about products/services - used to find out about consumers' reactions to potential products, etc.
how to discover perceptions in potential customers' minds
- identify important attributes for a brand class/product - discover how target customers rate competing brands/products with respect to these attitudes - discover where company's brand/product is on these attributes in potential customers' minds - reposition the company's brand/product in potential customers' minds
organizational synergy
- increased customer value achieved through performing organizational functions like efficient marketing/manufacturing - customer should be better off
discontinuous innovation
- innovation that makes consumes learn an entirely new consumption pattern to use the product - ex. Alexa
dynamically continuous innovation
- innovation that makes only minor changes in behavior necessary - ex. Swiffer Wet Jet
continuous innovation
- innovation where consumers don't need to learn new behaviors - ex. toothpaste that now whitens teeth
reasons for new product failures
- insignificant points of difference - incomplete market & product protocol before product development starts (may be too vague) - not satisfying customer needs on critical factors - bad timing - no economic access to buyers (difficult to get product on shelves) - poor execution of marketing mix - too little market attractiveness (target market may be too small or too competitive - poor product quality
uniqueness of services
- intangibility: services can't be touched/seen before purchase decision, so they're more difficult to evaluate (this is why marketers try to make them tangible and show benefits) - inconsistency: services depend on the people who provide them (fixed with practice and training, like with sports teams who may have good then bad performances) - inseparability: customer can't distinguish service provider from the service itself - inventory: more subjective costs related to idle production capacity (physician is still paid their salary, even if their appointment cancels and they have a free hour during the work day)
services
- intangible activities/benefits an organization provides to satisfy customers' needs in exchange for money or something else of value - ex. AT&T is a wireless service network provider
capacity management
- integrating the service component of the marketing mix with efforts to influence consumer demand - must manage offering's availability so demand matches capacity over cycle & they maximize ROI
experiments
- involve obtaining data by manipulating factors under tightly controlled conditions to test cause & effect - independent variables are often marketing mix elements - ideal dependent variable is a change in the purchases of individuals, households, or organizations
product line extension
- least risk as an improvement of an existing product they sell in making a product new
3 aspects of product life cycle
- length - consumer product life cycles are much shorter than business product life cycles - technological changes can affect length - shape of the life-cycle curve - high-learning products, low-learning products, fashion products, and fad products - product level: class and form
role of product manager
- manages marketing efforts for close-knit family of products/brands - manages products through stages of life cycle - engaged in data analysis of sales, market share, & profit trends (category development index & brand development index helps find strong and weak market segments)
built-to-order
- manufacturing a product only when there's an order from a customer - quick delivery, but limited options
perceptual map
- map that displays in 2 dimensions the locations of brands/products in the customers' minds to let a manager see how consumers perceive competing brands/products & their own brand/product
mass customization
- market segmentation strategy tailoring products/services to the tastes of individual customers on a high-volume scale - next step beyond built-to-order
multiple products and multiple market segments
- market segmentation strategy where a firm has lots of products & market segments - ex. Ford has SUVs, trucks, hybrids, etc. all targeted at different customers - producing more products is more expensive, but effective if it meets customers' needs better, doesn't decrease quality or increase price, and adds to profits
one product and multiple market segments
- market segmentation strategy where an organization makes one single product/service and attempts to sell it in 2 or more market segments - avoids extra cost of making more versions of the product - ex. magazines often have 15 different regional covers with the same content inside - ex. books, movies, & services like Disney are marketed to children, parents, and grandparents in different ways
controlled test market
- market testing that contracts entire test program to outside test service which pays retailers for shelf space & can guarantee the specified % of test product's potential distribution volume
simulated test market
- market testing that replicates a full-scale test market - often run in malls to find consumers who use the product class being tested - participants are shown the product & asked about usage, important attributes, etc. - shown competitor & company's product ads for the test product - participants are given money to buy either firm or competitor's product - saves time and money
standard test market
- market testing where a company develops a product & attempts to sell it through normal distribution channels in a number of test market cities which must be demographically representative of markets targeted for the new product - producer sells product to distributors, wholesalers, & retailers like normal products - if product does well --> full national introduction - if product doesn't do well --> discontinued - can also do regional rollout where products are introduced sequentially in geographic areas to gradually build production & marketing
mechanical method
- method of observational data like Nielson's "people meter" measuring who watches and what they watch
neuromarketing method
- method of observational data observing responses to nonconscious stimuli - can give insight for media options, ad content, package labeling, etc.
personal method
- method of observational data watching people in person to discover what people do, but not why they do it - mystery shoppers are used for customer experience management efforts to evaluate all aspects of the store - ethnographic research
telephone interviews
- method of questionnaire data evaluating an idea by calling participants on the phone - allows flexibility of questions, but respondents may hang up
mall intercept interviews
- method of questionnaire data evaluating an idea by having personal interviews with customers visiting shopping centers
personal interview surveys
- method of questionnaire data evaluating an idea by interviewing individually
mail surveys
- method of questionnaire data evaluating an idea by sending questions through mail - usually biased because those most likely to respond have had especially positive or negative experiences
online surveys
- method of questionnaire data evaluating an idea with surveys on the internet - increasingly used because most consumers have email & internet - cheap & have quick turnaround, but consumers may block emails - consumers may be able to take surveys more than once, which leads to bias
individual interview
- method of questionnaire data where a single researcher is asking a single respondent questions - allows follow up questions, but it's very expensive
depth interview
- method of questionnaire data where lengthy, free-flowing questions are asked to find underlying ideas and feelings
focus groups
- method of questionnaire data with informal groups of 6-10 past/current/prospective customers where a moderator asks for opinions on first & competitors' products
new-product development process
- new-product strategy development - idea generation - screening & evaluation - business analysis - development - market testing - commercialization
groupthink
- people are afraid to voice their concerns - causes problems with organizational inertia and new product failures
ethnographic research
- personal method of observational data collection - observers look for subtle behavioral & emotional reactions as consumers encounter products in normalized environments like their homes or cars
deceptive pricing
- price deals that mislead consumers - bait and switch to switch for more expensive item
price equation
- pricing uses special fees because consumers are willing to pay more fees than a higher list price - final price = list price - allowances + extra fees
marketing of services
- product - exclusivity & brand name are important - price - could be hospital charges, ticket fares, legal fees - price should affect customer perceptions & be used in capacity management (don't trust $5 heart surgery) - off-peak pricing charges different prices during different times of the year/week/day to show variety in demand - place (distribution) - hair salons, tax offices, etc. use multiple locations for distribution of services - ex. ATMs are everywhere - promotion - advertising should show service's benefits - publicity & PSAs are often used for nonprofit organizations - people - employee interactions with customers are critical - physical environment - should be clean - process - actual procedures by which service is delivered (not what's created, but how) - most services have limited capacity
business products
- products organizations buy that assist in providing other products for resale - result from derived demand - classified as components or support products
consumer products
- products purchased by the ultimate consumer - include convenience, shopping, specialty, and unsought products
fashion products
- products that are introduced, decline, then eventually return
fad products
- products that have rapid sale & rapid decline - ex. fidget spinners
low-learning products
- products that start sales immediately resulting in short introduction period of PLC - try to broaden distribution quickly before competitors form - manufacturing must meet demand
pricing objectives
- profit (managing for long-run profits where companies forgo immediate profit by developing quality products to penetrate competitive markets in long term OR maximizing current profit which lets the target be set and performance measured quickly OR target return that has a firm set a profit goal) - sales - market share (firm's sales revenues over industry sales revenue) pursued when sales are flat or decreasing - unit volume - survival - social responsibility
profit equation
- profit = total revenue (or unit price x quantity sold) - total cost (or fixed costs + variable costs) - pricing affects total sales & total costs
open-ended
- questions used in collection of questionnaire data that allow respondents to express thoughts without predetermined responses
closed-end (fixed alternative)
- questions used in collection of questionnaire data that requires selection of predetermined responses - if it has 3+ choices, it uses a scale
dichotomous
- questions used in collection of questionnaire data with yes/no responses
trading down
- reducing a product's number of features, quality, or price - ex. Southwest decreasing leg room - downsizing reduces a package's content, but not price or size
discounts
- reductions from list price a seller rewards to a buyer with quantity, seasonal, trade, and cash discounts
allowances
- reductions from list price a seller rewards to a buyer with trade-ins or promotional allowances
high-learning products
- require customer education resulting in an extended introduction period of product life cycle - ex. computers
marketing synergies
- run horizontally on market-product grid - show opportunities for efficiency in terms of market segment - often comes at expense of product synergies since one customer segment may buy a variety of products meaning the company spends more money on production and saves on marketing
product synergies
- run vertically down market-product grid - show opportunities for efficiency in research and development & production - often comes at expense of marketing synergies because it will address concerns of a wide variety of customers costing more money for marketing
derived demand
- sale of business products results from the sale of consumer products - as consumer product sales increase, business product sales increase
demographic segmentation
- segmenting consumer markets according to household size - segmenting organization markets according to number of employees
psychographic segmentation
- segmenting consumer markets according to lifestyle
behavioral segmentation
- segmenting consumer markets according to product features (ex. MicroFridge for college students) or usage rate (ex. frequency marketing with 80/20 Rule) - segmenting organization markets according to usage rate
geographic segmentation
- segmenting consumer markets according to region - segmenting organization markets according to statistical area
setting a final price
- set an approximate price level - set list/quoted price (one-price policy like the dollar store, or dynamic policy that sets different prices for products) - make special adjustments to list/quoted price (discounts/allowances)
brand personality
- set of human characteristics associated with a brand name - customers choose brands whose personalities align with their own self-image - ex. Harley Davidson seen as manly & rebellious
penetration pricing
- setting a low initial price on a new product to appeal immediately to the mass market - effective when many markets segments are price sensitive, low price discourages competitors, and unit production and marketing costs fall dramatically as production volumes increase
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 - Rolex uses above, Revlon uses at, off-brand products use below
prestige pricing
- setting a rather high price to suggest high quality or high status
odd-even pricing
- setting prices a few dollars or cents under an even number
skimming pricing
- setting the highest initial price that customers really desiring the product are willing to pay - effective when enough customers are willing to pay it immediately, initial high price won't attract competitors, customers interpret high price as high quality, and lowering price only has a small effect on increasing sales volume & reducing costs
picking a good brand name
- should suggest product benefits (Glass plus) - should be positive, memorable, & distinctive - should fit company/product image (Duracell) - name should be simple and emotional (Bold laundry detergent) - name should have no legal/regulatory restrictions
criteria in forming market segments
- simplicity & cost effectiveness of assigning potential buyers into segments - potential for increased profit (or serving clients for effectively for non-profits) - similarity of needs of buyers within a segment - difference of needs of buyers within a segment - potential of a marketing action to reach a segment
brand extension
- something new for the organization with (1) putting an established brand name on a new product or (2) jumping in technology - ex. 3D printer
developing findings
- stage in marketing research approach - analyze data with big data, data mining, and predictive modeling - present the findings
new-product strategy development
- stage in new-product development process - defines the role for a new product in terms of the firm's overall objectives - uses SWOT analysis & environmental scanning - must be on the lookout for innovative products/technology that could disrupt its plans
idea generation
- stage in new-product development process - developing a pool of concepts for new products building upon previous stage's results - suggestions come from employees & friends - customer & supplier suggestions (crowdsourcing) - research & development labs - competitive products - smaller firms, universities, and inventors (Shark Tank)
market testing
- stage in new-product development process - exposes actual products to prospective customers under realistic conditions to see if they will buy it - done by test marketing putting a product for sale on a limited basis in a defined area for a specific time period - standard test markets, controlled test markets, & simulated test markets
screening & evaluation
- stage in new-product development process - internally & externally evaluates new-product ideas to eliminate those that warrant no further effort - internal approach - firm's employees evaluate technical feasibility of proposed ideas - new services must ensure employees are committed to satisfying customers & creating good customer experience management - external approach - use concept tests to evaluate with consumers with preliminary testing of ideas to see how they perceive the product
commercialization
- stage in new-product development process - positions and launches the new product in full-scale production and sales
business analysis
- stage in new-product development process - specifies the features of the product or service and the marketing strategy needed to bring it to market and make financial projections - create a prototype to assess if it fits with company mission & objectives - requires assessment of synergies to ensure it won't cannibalize and will increase sales
development
- stage in new-product development process - turns idea on paper into a prototype and ensures it meets set standards
introduction stage
- stage of product life cycle - product is introduced to intended target market - sales grow slowly & profit is minimal - marketing goal is to create customer awareness & stimulate trial or initial product purchase - spend heavily on advertising & promotional tools to stimulate primary demand, or the desire for the product class rather than specific brand since there are few competitors - once more competitors launch products, attention is turned to selective demand, or preference for a specific brand - may start with initial high price for skimming strategy to recover from development costs, or use penetration pricing by pricing items low to discourage competition
growth stage
- stage of product life cycle - rapid increase in sales where profit peaks - competitors begin to appear (begin to stimulate selective demand) - product sales increase exponentially with new purchasers and repeat purchasers - changes appear in the product as you find improvements and new features - important expand product's distribution
decline stage
- stage of product life cycle - sales drop not due to company failure, but environmental changes - deletion: drastic strategy of dropping the product - harvesting: retaining the product but reducing marketing for it
maturity stage
- stage of product life cycle - total sales in industry or product class revenue begin to slow - marginal competitors begin to leave the market - fewer new buyers enter the market - profit declines because of price competition - marketing aims to hold market share with differentiation and getting new buyers and uses for the product
protocol
- statement that (before product development starts) identifies (1) a well defined target market, (2) specific customers' wants, needs, & preferences, & (3) what the product will be & do to satisfy customers - needed for new products & services
positioning statement
- statement that identifies target market and needs satisfied, product/service class/category in which the organization's offering competes, & the offering's unique benefits/attributes provided - used internally & externally
take marketing actions
- step in market research analysis - make action recommendations - implement action recommendations - evaluate results (decision & decision process)
collect relevant information
- step in marketing research approach - internal secondary data, external secondary data, & primary data
define the problem
- step in marketing research approach - set research objectives - identify possible marketing actions - too broad objectives may not be researchable & too narrow may diminish the results' value
develop the research plan
- step in marketing research approach - specify constraints - identify data needed for marketing actions to help make a decision between designs - determine how to collect data (concepts and methods)
bundle pricing
- the marketing of two or more products in a single package price - ex. AT&T/DirecTV's bundle of TV, phone, & internet - lower total cost to buyers & marketing cost to sellers
product positioning
- the place a product occupies in consumers' minds based on important attributes relative to competitive products - by understanding this, managers can seek to change its future mental position
constraints
- the restrictions placed on potential solutions to a problem during a decision - ex. limitations on time/money
important functions of intermediaries
- transactional functions (buy & sell products/services which could provide risk for wholesalers) - logistical functions (gather, sort, disperse) - facilitating functions (make transactions easier for customers)
factors that affect consumer behavior (companies try to overcome these with free trials, instructions, etc.)
- usage barriers (product isn't compatible with existing habits) - value barriers (product provides no incentive to change) - risk barriers (social, physical, or economic) - psychological barriers (cultural differences or image)
Likert scale
- used in fixed alternative questions in collection of questionnaire data - indicates extent of agreement/disagreement with a statement
semantic differential scale
- used in fixed alternative questions in collection of questionnaire data - uses 5 point scale
information technology
- used in fourth stage of marketing research approach to analyze data - all computing resources that collect, store, & analyze data
big data
- used in fourth stage of marketing research approach to analyze data - describes large amounts of data taken from a variety of sources & analyzed with a sophisticated set of technologies - difficult to make useful
data mining
- used in fourth stage of marketing research approach to analyze data - examining large databases to find statistical relationships between customer purchasing patters - ex. beer and diapers are often purchased together
predictive modeling
- used in fourth stage of marketing research approach to analyze data - statistical models that use data mining & probability analysis to foretell outcomes - ex. Target sending ads to pregnant women
intelligent enterprises
- used in fourth stage of marketing research approach to analyze data - successfully find marketing actions from data & analytics
artificial intelligence
- used in fourth stage of marketing research approach to analyze data - undertakes reasoning & common sense tasks to allow computers to "behave" intelligently
product differentiation
- using different marketing mix actions to help consumers perceive a product as different & better than competing products
product form
- variations of a product within product class
open innovation
- way to prevent "not invented here" problem - practices & processes that encourage use of external & internal ideas & collaborations
cannibalization
- when new products steal customers & sales from older, existing products
80/20 Rule
80% of a firm's sales are obtained by 20% of its customers
total revenue
= unit price x quantity sold
direct channel for consumers
a distribution channel in which producers sell directly to consumers
idea
a thought that leads a to a product or action like a concept for a new invention or convincing people to vote
more flexible & specific
advantages of primary data
saves time and money & may provide more detail
advantages of secondary data
branding
an organization uses a name, phrase, design, symbols, or a combination of these to identify its products and distinguish them from those of their competitors
packaging
any container in which a product is offered for sale on which label information is conveyed
creating customer value and competitive advantage of labeling and packaging
communication benefits - conveys important information to customer - ex. nutritional information functional benefits - packaging gives storage, convenience, & protection - ex. Pringle's can keep chips from breaking perceptual benefits - look of package & label distinguish brands, convey their positioning, & build brand equity
market modification
company tries to - find new customers (LEGO for girls) - increase a product's use (OJ companies saying it can be drank all day) - creating a new use situation (Gillete razors used for manscaping) - changing the value offered (trading up or trading down) - reacting to a competitor's position (New Balance repositioning shoe's durability in response to Nike) - reaching a new market (baby aspirin marketed to adults with heart problems) - catching a rising trend (food companies being healthier)
product mix
consists of all the product lines offered by an organization
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
- market size - expected growth - competitive position - cost of reaching the segment - compatibility with organization's objectives & resources
criteria to use in selecting target markets
measures of success
criteria/standards used in evaluating proposed solutions to the problem
competition-oriented pricing approaches
customary, above at or below market, & loss leader
more expensive & time consumptive
disadvantages of primary data
data may be out of date or not fit project categories correctly
disadvantages of secondary data
elastic demand
exists when a 1 percent decrease in price produces more than a 1 percent increase in quantity demanded, thereby actually increasing total revenue
secondary data
facts and figures that have already been recorded prior to the project at hand
target profit pricing
firm sets an annual target of a specific dollar volume of profit
total cost
fixed costs plus variable costs
market-product grid
framework to relate the market segments of potential buyers to products offered or potential marketing actions
crowdsourcing
generating insights leading to actions based on ideas from massive numbers of people
product
good/service/idea consisting of a bundle of tangible & intangible attributes that satisfies customers' needs & is received in exchange for money or something else of value
demand curve
graph that relates the quantity sold & price showing max # of units to be sold at a certain price
label
identifies product/brand, who made it, where & when it was made, how it should be used, etc.
product classes
industries to which offerings belong
different types of consumers
innovators, early adopters, early majority, late majority, and laggards
convenience products
items a consumer purchases conveniently, frequently, & with minimum effort
shopping products
items for which the consumer compares several alternatives on prices/quality/etc.
unsought products
items the consumer doesn't know about or doesn't initially want
speciality products
items the consumer makes a special effort to search out and buy
break-even analysis
looks at relationship between total cost & total revenue to determine profitability at various levels of output
price discrimination
occurs when buyers are charged different prices for goods of like quality
shift in demand curve
occurs when other factors change besides price like increased demand meaning more products wanted for a given price
break even point
point where total cost = total revenue
usage rate
quantity consumed or patronage (store visits) during a specific period
value
ratio of perceived benefits to price
panels
samples of customers/stores from which researchers take measurements to collect primary data
predatory pricing
selling a product below cost to drive competitors out of the market, then increasing prices
target return-on-sales pricing
set typical prices that will give them a profit that's a specified % of sales volume
target return-on-investment pricing
setting prices to achieve an ROI target
customary pricing
setting things at same price they've always been at
movement along demand curve
shows how quantity sold is affected by changed price when other factors are unchanged
value pricing
simultaneously increasing product and service benefits while maintaining or decreasing price
demand oriented pricing approaches
skimming, penetration, prestige, odd-even, & bundle
sampling
special marketing method of selecting a group representative of the population to answer questions
statistical inference
special marketing method used to generalize results from the sample
product item
specific product that has a brand, size, or price
product forms
specific products
cost-oriented pricing approaches
standard markup pricing & cost-plus pricing
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
profit-oriented approaches
target profit, target return on sales, & target return on investment
price
the money or other considerations exchanged for the ownership or use of a product/service
price elasticity of demand
the percentage change in quantity demanded relative to a percentage change in price
consumer benefits from intermediaries
time utility place utility form utility possession utility
sales forecast
total sales of a product a firm expects to sell during a specified time period under specified environmental conditions & its own marketing efforts
- region - household size - lifestyle - product features - usage rate
ways to segment customer markets
- statistical area - number of employees - NAICS Code - usage rate
ways to segment organizational markets
idle production capacity
when the service provider is available, but there is no demand for service
