Marketing 11-15

The complete Set of all products offered by a firm is called its:

Product Mix

Service Gaps Model

knowledge gap, standards gap, delivery gap, communication gap

Dimensions of Service Quality

tangibles, reliability, responsiveness, assurance, empathy

Rebate

A consumer discount in which a portion of the purchase price is returned to the buyer in cash; the manufacturer, not the retailer, issues the refund.

Which of the following best describes when Johnson Johnson made a travel-sized package for its existing baby oil product?

Line Extension

Sales Orientated

A company objective based on the belief that increasing sales will help the firm more than will increasing profits.

Customer Orientated

A company objective based on the premise that the firm should measure itself primarily according to whether it meets its customers' needs.

Competitor Orientated

A company objective based on the premise that the firm should measure itself primarily against its competition.

Profit-Orientated

A company objective that can be implemented by focusing on target profit pricing, maximizing profits, or target return pricing.

penetration pricing strategy:

A new product or service pricing strategy in which the initial price is set relatively low with the objective of building sales, market share, and profits quickly and to deter competition from entering the market. price it low to buy NOW.

Everyday low pricing (EDLP)

A strategy companies use to emphasize the continuity of their retail prices at a level somewhere between the regular, nonsale price and the deep-discount sale prices their competitors may offer.

Standards gap

A type of service gap; pertains to the difference between the firm's perceptions of customers' expectations and the service standards it sets.

Communications gap

A type of service gap; refers to the difference between the actual service provided to customers and the service that the firm's promotion program promises.

Knowledge gap

A type of service gap; reflects the difference between customers' expectations and the firm's perception of those expectations.

Delivery Gap

A type of service gap; the difference between the firm's service standards and the actual service it provides to customers.

Cost of Ownership method

A value based method for setting prices that determine the total cost of owning the product over its useful life. example: buying something that will last longer, even if its more expensive because it saves money over time.

Competition-based pricing method

An approach that attempts to reflect how the firm wants consumers to interpret its products relative to the competitors' offerings. Example: Setting a price very close to a competitors price shows that the products may be similar, and making the product more expensive than competitors signals that it is higher quality.

Cost-based pricing method

An approach that determines the final price to charge by starting with the cost, without recognizing the role that consumers or competitors' prices play in the marketplace. Example: fixed costs to produce an item are 200,000. the variable costs add up to 100,000 and the estimated number of units to be produced is 30,000: (100,000 + 20,000) / 30,000 = 10 cost per unit.

All of the following are included in the main criteria used for determining how "good" a brand is, or how much equity it has except: Perceived Value Brand Loyalty Brand conceptualization brand associations brand awareness

Brand Conceptualization

When a restaurant chain launches its own brand of frozen meals, this is:

Brand Extension

In addition to extensive online advertisement, Under Armour has intensified it's ____ efforts by signing Washington Nationals star to biggest endorsement deal for MLB player.

Branding

When there is a significant difference between the service customers receive and the service the firm promotes, the firm has a ________ gap.

Communications

The Service Gaps Model is designed to highlight those areas where:

Customers believe they are getting less or poorer service than they should

Effective service recovery entails all of the following except: providing a fair solution. listening to the customer. estimating the damage. involving customers in the service recovery where possible. resolving the problem quickly.

Estimating the damage

Which of the following is Least likely to be a source of new product ideas? licensing agreements geodemographic segmentation brainstorming consumer research R&D efforts

Geodemographic segmentation

price skimming

HIGH PRICE NOW FOR AUTO BUYERS, LOWER PRICE LATER. A strategy of selling a new product or service at a high price that innovators and early adopters are willing to pay in order to obtain it; after the high-price market segment becomes saturated and sales begin to slow down, the firm generally lowers the price to capture (or skim) the next most price-sensitive segment.

Product Life Cycle:

Introduction: innovators start buying the product Growth: when the product gains acceptance, demand and sales increase, and competitors emerge in the product category. Maturity: when industry sales reach their peak, so firms try to rejuvenate their products by adding new features or repositioning them. Decline: when sales decline and the product eventually exits the market

Four levels of competition

Monopoly: one firm controls market Monopolistic: many firms, different products, different prices Oligopolistic competition: handful of firms control the market Pure competition: many firms same prices

Company Objectives and Pricing Strategy Implications:

Profit-orientated, Sales-Orientated, Competitor-orientated, Customer-orientated

All of the following are benefits of new product development to a firm EXCEPT: creating diversification and reducing risk. keeping up in a market with short product life cycles where sales come mostly from new products. reducing the costs of production. satisfying the changing needs of current and new customers. avoiding market saturation from products that have been on the market for a long time.

Reducing the costs of production

The marketing of services differs from product marketing because services are all of these except: intangible. inseparable. heterogeneous. renewable. perishable.

Renewable

Value-based methods

Setting prices that focus on the overall value of the product offering as perceived by the consumer. Such as:

pricing tactics

Short-term methods, in contrast to long-term pricing strategies, used to focus on company objectives, costs, customers, competition, or channel members; can be responses to competitive threats (e.g., lowering price temporarily to meet a competitor's price reduction) or broadly accepted methods of calculating a final price for the customer that is short term in nature.

Demand Curve

Shows how many units of a product or service consumers will demand during a specific period at different prices.

All of the following is part of the launch of a new product EXCEPT: determining the price for the product. finalizing the marketing mix variables. determining the marketing budget for the first year of the product. making decisions regarding positioning the product. starting to make preliminary decisions about the target market.

Starting to make preliminary decisions about the target market.

chapter 15:

Strategic pricing Methods and Tactics

Penetration strategy

The firm must have the capacity to satisfy a rapid rise in demand Low price does not signal high quality Firms should avoid penetration strategy if some segments of the market are willing to pay more.

break-even point

The point at which the number of units sold generates just enough revenue to equal the total costs; at this point, profits are zero.

By the time BMW and Mercedes-Benz entered the mini-SUV market, there were many competitors, sales had peaked, and profits were declining. These firms entered the market during the ________ stage of the product life cycle. introduction leveling growth maturity decline

UNKNOWN

price elasticity of demand

a measure of how much the quantity demanded of a good responds to a change in the price of that good, computed as the percentage change in quantity demanded divided by the percentage change in price

Quantity discount

a price reduction offered to buyers buying in multiple units or above a specified dollar amount

high/low pricing

a pricing strategy that relies on the promotion of sales, during which prices are temporarily reduced to encourage purchases

All of the following are included in the five Cs of pricing except: A. company objectives. B. customers. C. collaboration. D. channel members. E. cost.

collaboration.

The 5 Cs of Pricing

competition, costs, company objectives, customers, channel members

When it comes to measuring consumers' price sensitivity, product prices are viewed as either

elastic or inelastic.

Break-even analysis is useful because it allows managers to

estimate the quantity they will need to sell at a given price to break even.

In a(n) ________ pricing strategy, marketers rely on the promotion of sales, during which prices are temporarily reduced to encourage purchases.

high/low

The Product Development Process:

idea generation, concept testing, product development, market testing, product launch, evaluation of results

For marketers using a price skimming strategy, once the initial demand is met for new and innovative products, they will likely

lower the price to capture the next most sensitive market segment.

Firm A has set very low prices for its products in an attempt to drive its competitor, Firm B, out of business. This is known as

predatory pricing.

A demand curve shows the relationship between ________ during a specific period of time.

price and demand

When marketers establish a price floor and a price ceiling for an entire line of similar products and then set price points in between for differences in quality among the products, they are using a ________ pricing approach.

price lining

Markdowns

reductions retailers take on the initial selling price of the product or service

Improvement value method

represents an estimate of how much more (or less) consumers are willing to pay for a product relative to other comparable products

The more substitutes that exist in a market,

the more sensitive consumers will be to changes in the price of a particular product.

Service marketing managers have learned that more employees will support a quality-orientated process if:

they are involved in setting the goals

The improvement value method and the cost of ownership method are two approaches for setting prices that are ________ methods.

value-based