Marketing 490 Exam 1

Profit Impact

(unit contribution x units sold) - fixed costs

Criteria for Effective Segmentation

1. Is the segment of sufficient size? 2. Is the segment readily identifiable and can it be measured? 3. Is the segment clearly differentiated on one or more important dimensions? 4. Can the segment be reached in order to deliver the value of the product?

Marketing

Creating, communicating, delivering, and exchanging offerings that have value for customers

Contribution Analysis (unit)

Difference between unit selling price and unit variable costs

Target Marketing

Evaluating the market segments, then making decisions about which amount them is most worth of investment for development

Relevant Cost

Expenditures that are expected to occur in the future as a result of some marketing action and differ among other potential marketing alternatives

Underpositioning

Failing ever to position the company at all

Value may be defined as the want-satisfying power of a good or service

False

Differentiated Target Marketing

Involves developing different value offerings for different targeted segments.

Benefits Sought

Looks to identify the crucial value-adding properties of an offering

Marketing Planning

Ongoing process of developing and implementing market-driven strategies for an organization

Opportunity Identification

Opportunities arise from: Identifying new types of buyers • Uncovering unsatisfied needs of buyers • Creating new ways or means for satisfying buyer needs

Liquidity

Organizations ability to meet short term financial obligations. Working capital is key

Customer Lifetime Value

Present value of future cash flows arising from a customers relationship

Data collected specifically for the research question under consideration is called ________ data

Primary

Cannibalization

Process by which one product or service sold by a firm gains a portion of its revenue by diverting sales from another product or service also sold by the same firm

Value

Ratio of benefits to costs, as viewed from the eyes of the beholder (the customer)

Net Profit Margin (before taxes)

Remainder after costs of goods sold, other variable costs, and fixed costs have been subtracted from sales revenue

Quantitative Research

Research that collects and reports data primarily in numerical form

Causual Research

The most sophisticated, tries to determine the extent to which the change in one factor changes another

Break-Even Formula

Total dollar fixed cost / unit selling price - unit variable costs

According to the BCG matrix, a business that is classified as a cash cow has high market share and low growth

True

Portfolio Analysis

Views SBUs and sometimes even product lines as a series of investments from which it expects maximization of returns

Utility

Want-satisfying power of a good or service 1. Form utility 2. Time utility 3. Place utility 4. Ownership utility

Doubtful Positioning

When the claims made for the product or brand are not regarded as credible by consumers

Demographic Segmentation

• Age • Generational group • Gender • Family and household • Race and ethnicity • Income • Occupation • Education • Social class • Geodemographics

Geographic Segmentation

• By region • By density of population • By size of population • By growth in population • By climate

Marketing Strategies

• Market penetration strategies • Product development strategies • Market development strategies • Diversification strategies

Opportunity Analysis

• Opportunity identification • Opportunity evaluation • Opportunity organization matching

Exploratory Research

• Clarify the research problem • Develop hypotheses for testing in descriptive or causal research • Gain additional insight to help in survey development or to identify other research variables for study • Answers the research question

Support Activities

• Firm infrastructure • Human resource management • Technology development • Procurement

Descriptive Research

• Identify the characteristics of our target market • Assess competitor actions in the marketplace • Determine how customers use our products • Discover differences across demographic characteristics (age, education, income) with respect to the use of our products or our competitors

Primary Activities

• Inbound logistics • Operations • Outbound logistics • Marketing and sales • Service

Usage Patterns

• Light, medium or heavy users • 80/20 rule

Market Research Process

1. Define the research problem 2. Establish research design 3. Search secondary sources 4. Collect the data 5. Report the findings

Framework for Marketing Planning

1. Marketing plan is connected to the firm's business plan 2. Conduct a situation analysis 3. Perform any needed market research 4. Establish marketing goals and objectives 5. Develop marketing strategies 6. Marketing mix strategies 7. Develop implementation plans 8. Provide for contingency planning

BCG Matrix

A means of evaluating strategic business units on the basis of their business growth rates and their share of the market

GE Business Screen

A method of evaluating businesses along two dimensions: 1. Industry attractiveness and 2. Competitive position The more attractive the industry and the more competitive the position, the more an organization should invest in a business

Dividing consumer groups according to similarities in benefits sought or product usage patterns is called __________ segmentation

Behavioral

Riverside Senior living has a campus with living arrangements for independent living, assisted living, rehabilitation, memory care, and skilled nursing. What type of segmentation is Riverside using

Behavioral

Internal Sources

Collecting information inside the company: • Information is used to identify the problem • Information is used to proactively address issues before they become a problem

External Sources

Collecting information outside the company

Positioning

Communicating one or more sources of value to customers in ways that connect needs and wants to what the product has to offer

Opportunity Evaluation - Quantitative

Consists of: • Market sales • Sales forecasts • Budgets

Overpositioning

Consumers have too narrow of an understanding of company, product or brand

Contribution Margin Ratio

Contribution Margin / Sales

Marketing ___________ is the processor measuring marketing results and adjusting the marketing plan as needed

Control

Sabeen didn't have time to shop for Christmas gifts, so she ordered everything from Amazon. This shows how Amazon's _______ leadership is one way the company creates differentiation in its offerings

Convenience

Opportunity-Organization Matching

Determines whether an identified market opportunity is consistent with the definition of the firm's business, mission statement, and distinctive competencies

Margin

Difference between selling price and the cost of a product or service

Gross Margin

Difference between total sales revenue and total cost of goods sold Total sales revenue - Cost of goods sold

Contribution Analysis ($)

Difference between total sales revenue and total variable costs

Trade Margin

Difference between unit sales price and unit cost at each level of a marketing channel

Pro Forma Income Statement

Displays projected revenues, budgeted expenses, and estimated net profit for an organization, product, or service during a specific planning period, usually a year

Market Segmentation

Dividing a market into meaningful smaller markets or submarkets based on common characteristics

Davido's Pizza promised delivery in 30 minutes, but it averaged closer to 60-minute deliveries. Eventually Davido's began to lose customers to other pizza restaurants because they didn't trust Davido's promise of quick delivery. What positioning error did Davido's make

Doubtful Positioning

Variable Cost

Expenses that are uniform per unit of output within a relevant time period

Fixed Cost

Expenses that do not fluctuate with output volume within relevant time period

Operating Leverage

Extent to which fixed cost and variable cost are used in the production and marketing of products and services

Brad's company is in the process of determining the best way to get enough wood to build the furniture that they need to manufacture. This represents the value-creating activity of inbound logistics

False

When McDonald's introduced Happy Meals, it was segmenting the market by primarily considering the demographic variables of gender and income

False

When State Farm retired the "Auto-Fire-Life" ovals from its logo to create the impression of a more modern company, it was focusing on segmentation

False

When consumers order a newspaper subscription, they want the paper delivered early in the morning so that they can read it before setting out for the day. It appears that newspaper publishers are offering form, time, and place utility, but not ownership utility

False

Value Proposition

Firm's communication of the unique value of its products to its customers 1. Customer satisfaction 2. Customer loyalty 3. Customer retention increases 4. Customer switching decreases

It is important to remember that a marketing plan should be able to change as customers change, competitors develop new products, or there is a change in the external environment. In other words, a marketing plan should be ________ to be successful

Flexible

Discounted Cash Flow

Future cash flows expressed in terms of their present value

__________ are general statements of what the firm wishes to accomplish and eventually become refined into specific measurable and hopefully attainable aims for the future

Goals

Concentrated Target Marketing

Involves targeting a large portion of a small market.

Market Information System (MIS)

Is not a software package but a continuing process of identifying, collecting, analyzing, accumulating and dispensing critical information to marketing decision makers

Opportunity Evaluation - Qualitative

Matches the attractiveness of an opportunity with the potential for uncovering a market niche, which depends on: • Competitive activity • Buyer requirements • Market demand • Supplier sources • Environmental forces • Organizational capabilities

Market Research

Methodological identification, collection, analysis, and distribution of data related to discovering and then solving marketing problems or opportunities and enhancing good decision making

Marketing Intelligence

Most companies engage in collecting, analyzing, and storing data from the macro environment on a continuous basis

Jeffie completed his mission statement for his marketing plan and has written down company goals; now he is focusing on his business's ________, or how he will be able to attain these goals in specific, measurable ways

Objectives

__________ are specific, measurable, and hopefully attainable aims that measure what the firm wishes to accomplish

Objectives

Sunk Cost

Past expenditures for a given activity and are typically irrelevant in whole or in part to future decisions

________ can be very useful in helping visualize where to make strategic changes to either move your product closer to the main market or further differentiate your product away from the competitive cluster and into more unique market space

Perceptual Maps

Qualitative Research

Research that relies on what is seen in field or naturalistic settings more than on statistical data

The choice of generic strategy is usually driven by ________ capabilities of the firm, as well as the ________

Resource/competitive landscape

________ target markets are those segments that have reasonable potential but for one reason or another are not best suited for development immediately

Secondary

Value Chain

Serves as a means for firms to identify ways to create, communicate, and deliver more customer value within a firm

Benefit

Some type of utility that a company and its products (and services) provide its customers

Sensitivity Analysis

Special case of what-if analysis, is the study of the impact on other variables when one variable is changed repeatedly

Undifferentiated Target Marketing

The broadest approach to target marketing that involves offering a product or service that can be perceived as valuable to a very generalized group of consumers

A beer manufacturer has noticed that the cost of hops has increased four times in the last year. A description of this would be found in the ________ section of the SWOT analysis

Threats

In terms of segmentation, strategic marketing includes both identifying existing segments and creating new ones

True

The GE Business Screen portfolio analysis uses three levels—high, medium, and low—to rank business position and market attractiveness

True

When Jon and Nathan opened their bakery in a small, rural midwestern town, they knew that their limited customer base could be a problem. To attract more customers they created character cookies for children, cupcakes for teenagers' birthday and graduation parties, and cakes for weddings and anniversaries. They even designed a special "welcome" cake for seniors moving to senior living centers. Jon and Nathan used differentiated target marketing to reach their customers

True

When analyzing segment attractiveness, one of the three factors to consider is the segment's strategic fit to the company's goals

True

Break-Even Analysis

Unit or dollar sales volume at which an organization neither makes a profit nor insures a loss

Market-Driven Strategic Planning

Used to describe the process at the corporate or strategic business unit (SBU) level of marshaling the various resource and functional areas of the firm toward a central purpose around the customer