Marketing Exam 3
high/low sellers can create excitement and attract customers through the
"get them while they last" atmosphere that occurs during a sale
oligopoly
a handful of firms control the market
A __________ _______________ refers to the use of the same brand in a different product line.
brand extension
managers use break even analysis to
estimate the quantity at a given price they will need to sell to breakeven
one limitation associated with the break even analysis is that
it assumes there is only one price
customers who modify existing products according to their own ideas to suit their specific needs
lead users
________________ equals the number of products within a product line
product line depth
when marketers state that services are perishable, they are referring to the fact that
services cannot be stored for use in the future
cross price elasticity
the percentage change in the quantity of Product A demanded compared with the percentage change in price in Product B
explain the product life cycle
1. introduction- sales are low and profits are small or negative 2. growth- profits increase as sales increase, profits increase as economies of scale are attained, some new competitors may enter the market with similar products and some competitors may exit in an industry shakeout 3. maturity- typically marketing costs increase as firms defend their market share, there are many competitors, sales have peaked, and profits are declining. Some products may stay comfortable in the maturity phase until a new product emerges to replace them. an example would be refrigerators. competition intensifies in the maturity phase, because the only way a firm can gain customers is typically to take them away from the competition 4. decline- firms either position themselves for a niche segment of diehard customers or they completely exit the market
_________ is the most challenging of the 4 P's to manage, partly because ...
Price, it is often the least understood
price skimming
charging a relatively high price for new and innovative products to those consumers most willing and able to pay the high price (these consumers are innovators and early adopters)
the service gaps model is designed to
highlight those areas where customers believe they are getting less or poorer service than they should
What is CRM and why is it used?
Customer relationship management: a business philosophy and set of strategies, programs, and systems that focus on identifying and building loyalty among the firm's most valued customers
Because a market is saturated, firms may attempt to enter new geographical markets that may be less saturated. For example, pharmaceutical companies are realizing that they need to turn to BRIC countries for continued growth in the coming years.
TRUE
example of elastic product
a grocery store retailer would significantly decrease its sales of steaks by raising its price by a relatively small amount, because T bones are elastic
pure competition
a large number of sellers offers standardized products or commodities that consumers perceive as suitable (grains, gold, meat, spices, or minerals), price is set according to laws of supply and demand
Associated services such as warranties, financing support, and after-sale service are ______________ products
augmented
Marco tried a new fruit-flavored beverage and thought it was awful. He was especially disappointed because he had liked the dried fruit snacks marketed under the same brand name. Now he wasn't sure he even wanted to buy the snacks he had liked before. This highlights a problem in branding known as ____________ _____________.
brand dilution
___________ ____________ occurs when the brand extension adversely affects consumer perceptions about the attributes the core brand is believed to hold.
brand dilution
Efforts to change a brand's focus to target new markets or change the image of a brand are called
brand repositioning
when there is a significant difference between the service customers receive and the service the firm promotes
communications gap
Marketers selling milk, bread, and other consumer staples, know most customers do not spend much time searching or comparing alternatives. For most consumers, these are _____________ goods.
convenience
although they are relatively simple, compared with other methods used to set prices, _________________________ requires that all costs be identified and calculated on a per-unit basis.
cost-based pricing
cost-based pricing primarily considers the firm, and not its
customers or competitors
If the price for a product increases, the demand for the complementary product will
decrease
When travelers are bumped from overbooked flights, they are frequently offered vouchers good for future travel. The dollar value of the voucher is the airline's estimate of
distributive fairness
a customer's perception of the benefits he or she received compared with the costs
distributive fairness
the break even point is estimated by
dividing fixed costs by contribution per unit
when it comes to measuring consumer's price sensitivity, products are viewed as either
elastic or inelastic
Marketing expenditures allocated carefully can result in greater brand recognition, awareness, perceived value, and consumer loyalty for the brand, which all enhance a brand's __________
equity
a demand curve is built on the assumption that
everything but price and demand remains the same
When consumers associate a brand with a certain level of quality and familiar attributes, allowing consumers to make quick decisions, the brand ___________________ _____________________.
facilitates purchasing
by setting appropriate service standards and measuring service performance,
firms can attempt to close a standards gap
the delivery gap can be closed by
getting employees to meet or exceed standards when the service is being delivered by empowering service providers, providing support and incentives and using technology where appropriate
the market for a product is generally viewed as price insensitive, or inelastic, when its price elasticity is
greater than -1
"You are only as good as the last meal served" reflects the fact that services are
heterogeneous
a demand curve shows
how many units of a product or service consumers will demand during a specific period of time at different prices
diffusion of innovation curve
innovators: help the product gain market acceptance (2.5%) early adopters (13.5%) early majority (34%) late majority (34%) laggards (16%)
unlike products, services cannot be produced one at a time and consumed later, the two happen at the same time. this is referred to as
inseperability
a high/low strategy is appealing because
it attracts two distinct market segments: those who are not price sensitive and are willing to pay the "high" price and more price-sensitive customers who wait for the "low" sale price
One reason marketers of new, innovative products often start out with a price skimming strategy rather than a market penetration strategy is that
it is easier to lower prices than to raise them
One of the categories for which brand extension is especially logical is complementary goods. Johnson & Johnson introduces a travel-sized package for its existing baby oil product, this is an example of a _________ _________________.
line extension
the best first step with an angry customer is to
listen carefully and give the customer a chance to be heard
Because customers have different needs and expectations, the key to distributive fairness in service recovery is to
listen to the customer
effective service recovery entails
listening to the customers, providing a fair solution, resolving the problem quickly and involving customers in the service recovery where possible
For marketers using a price skimming strategy, once the initial demand is met for new and innovative products, they will likely
lower the price and capture the next most sensitive market segment
market penetration pricing strategy
marketers set a low initial price for the introduction of a product or service. the major objective with this strategy is to quickly build sales and market share
Firms can close knowledge gap by..
matching customer expectations with actual service through use of marketing metrics
What is brand awareness?
measures how many consumers in a market are familiar with the brand and what it stands for and have an opinion about it
example of inelastic product
milk, when the price of milk goes up people still buy it because they need it
one of the difficulties associated with value-based pricing is that it
necessitates a great deal of consumer research to be implemented successfully
What is brand loyalty?
occurs when a consumer buys the same brand's product or service repeatedly over time rather than buying from multiple suppliers within the same category
For a price skimming strategy to work, the product or service must
offer consumers some new benefit currently unavailable in alternative products
monopoly
one firm controls the market
complementary products' demands are _____________ related
positively (a percentage increase in quantity demanded for product A results in a percentage increase in quantity demanded for product B)
consumers generally believe that ______ is one of the most important factors in their purchase decisions
price
the perceived fairness of the process with which a firm handles customer complaints
procedural fairness
The complete set of all products offered by a firm is called its
product mix
prestige products or services are for consumers who
purchase for their status rather than for their functionality (the higher the price, the greater the status associated with it and the greater the exclusivity, because fewer people can afford to purchase it)
one approach marketers are using to reduce service heterogeneity is to
replace people with machines whenever appropriate
every other element in the marketing mix may be perfect, but with the wrong price,
sales and thus revenue will not accrue
when the delivery of a service fails to meet customers' expectations
service gap
private-label brands are developed and managed by retailers and are also referred to as
store brands
marketers should view pricing decisions as a
strategic opportunity to create value rather than as an afterthought to the rest of the marketing mix
everyday low pricing strategy
stresses continuity of retail prices at a level somewhere between the regular price and the deep-discount sale price of its competitors. also provides value to consumers by reducing their search costs
A method of determining the potential success of a new product. Introduces the offering to a limited geographical area (usually a few cities) prior to a national launch
test marketing
cost of ownership pricing considers not just the price initially paid but also
the cost of owning the product across its lifetime (LED lightbulbs)
heterogeneity
the fact that services tend to vary by time, location, or service provider
According to a typical demand curve, the higher the price,
the lower the quantity consumers will buy
The more substitutes that exist in a market,
the more sensitive consumers will be to changes in the price of a particular product.
diffusion of innovation
the process by which the use of an innovation, whether a product or a service, spreads throughout a market group over time and over various categories of adopters
value-based pricing can be difficult to implement because
the way consumers perceive value changes often
monopolistic competition
there are many firms competing for consumers in a given market, but their products are differentiated. product differentiation appeals to consumers rather than strict price competition (most common, sunglasses)
services are intangible, meaning ...
they cannot be physically touched or possessed, as a pure product can
complementary products
things that are used together
Companies whose brand name become synonymous with the product - like Kleenex tissues, Clorox bleach, Band-Aid adhesive bandages, and the Google search engine - must be vigilant in protecting their brand names because if they are used so generically, over time the brand itself can lose its ___________ ____________.
trademark status
because of high costs, many companies have altered their "no questions asked" return policies to include time limits, "restocking" fees, and store-credit-only refunds
true
customers want to be compensated a fair amount for a perceived loss that resulted from a service failure
true
at the breakeven point, profits are
zero