Marketing Final Terms

Ultimate Goal of Channel Strategy

"Make product/services available WHEREVER the customer wants to buy it"

Reach

# exposed at least once during a specified time period

Average Cost

Total costs divided by units produced

Integrated Marketing Communications

An approach to achieving the objectives of a marketing campaign by efficiently coordinating different promotional methods intended to reinforce each other.

Profit-Maximizing Pricing

An attempt to price products to maximize the profit they generate by taking into account the varying price elasticities of different products.

Customer Loyalty

Likelihood of previous customers to continue to buy from a specific organization.

Additions to existing product lines

Line extensions and flankers that flesh out the product line in current markets

Click-Through Rates

The percentage of customers who click on an ad or link of interest to them.

Public Relations

The profession or practice of creating and maintaining goodwill toward an organization, usually through publicity and other non paid forms of communication.

Intangibility

Services cannot be seen, tasted, felt, heard, or smelled before purchase

People

An additional P for service businesses, referring to ways front-line employees should represent the business and interact with customers.

Frequency

# of exposures during specified time period

Evolved Product

- "augmented product" - value wrapped around the product

Core Product

- "basic product" - basic value prop - essential features

Enhanced Product

- "expected product" - feature add-ons - additional attributes

Materials and Parts

- Enter the manufacturer's product completely - Raw Materials - Manufacture Materials

Packaging Objectives

- Identify the brand - Convey descriptive and persuasive information - Facilitate transportation and protection - Assist at-home storage - Aid product consumption

Capital Items

- Long lasting goods - Installations - Equipment

Market-Skimming

- Set a high price for a new product to "skim" revenues layer by layer from the market - Company makes fewer sales, but more profitable sales

Market Penetration

- Set a low initial price in order to "penetrate" the market quickly and deeply - Can attract a large number of buyers and win a market share

Supplies and Business Services

- Short term goods and services - Supplies - Business

Classification of Products

- durability - tangibility - use

Services (Durability and Tangibility)

- intangible, variable, perishable - require more quality control, adaptability

Nondurable Goods

- tangible goods, purchased frequently - normally consumed in one/few uses

Durable Goods

- tangible goods, purchased infrequently - normally survive many uses

Fixed Costs

A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses that have to be paid by a company independent of any business activity.

Stages in the adoption process

1) Awareness 2) Interest 3) Evaluation 4) Trial 5) Adoption

The Customer-Value Hierarchy

1) Core benefit 2) Basic product 3) Expected product 4) Augmented product 5) Potential product

New-Product Development (NPD) Process

1) Idea generation 2) Idea screening 3) Concept development and testing 4) Marketing strategy development 5) Business analysis 6) Product development 7) Market testing 8) Commercialization

Classic Five Adopter Groups

1) Innovators 2) Early adopters 3) Early majority 4) Late majority 5) Laggards

Product Hierarchy

1) Need family 2) Product family 3) Product class 4) Product line 5) Product type 6) Item

Variable Costs

A cost that varies with the level of output.

Penetration Pricing Strategy

An aggressive pricing strategy that seeks to undercut the competition with an aggressive pricing structure.

Universal Product Code (UPC)

A bar code that is widely used for tracking trade items in stores.

Bottom-Up Budgeting

A budgeting method that requires a marketer to develop strategies necessary to achieve set corporate goals, estimate a cost for each goal, and build a budget accordingly. Upper management then must approve the proposed expenditures.

Sales Promotion

A collection of incentive tools, mostly short term, designed to stimulate quicker or greater purchase of particular products or services

Cost-Plus Pricing

A cost-based method for setting prices. Under this approach, you add together direct material costs, direct labor costs, and overhead costs for a product and add to it a markup percentage (to create a profit margin) in order to derive the price of the product.

Product System

A group of diverse but related items that function in a compatible manner

Profit Margin

A measure of profitability determined by dividing net income by revenue or by dividing net profits by sales.

Price Elasticity

A measure of the relationship between a change in the quantity demanded of a particular good and a change in its price. The term is often used in economics when discussing price sensitivity.

Top-Down Budgeting

A method of budgeting in which upper management sets the budget limit for advertising, and the marketing manager develops a plan for how to best utilize the budgeted dollars to achieve marketing goals.

Keystoning

A pricing method that doubles the wholesale price of a product.

Competitive Pricing Strategy

A pricing strategy in which a business sets a price point similar to competing products.

Skimming Pricing Strategy

A pricing strategy that sets a high price point to indicate quality to the customer and creates a large profit margin.

SERVIQUAL

A service-quality framework developed in the 1980s by Zeithami, Parasuraman, and Berry aimed at measuring the scale of quality in the service sectors.

Brand

A unique design, sign, symbol, words, or a combination of these employed in creating an image that identifies a product and differentiates it from its competitors.

Services

Activities, benefits, or satisfaction that are offered for sale or provided in connection with the sale of goods.

Packaging

All the activities of designing and producing the container for a product

Process

An additional P for service businesses, describing how the flow or delivery of the service should be mapped out for employees to readily follow.

Goods

As opposed to a service, a good is an item that can be physically examined and mass produced, inventoried, and stored for future consumption.

Brand Loyalty

Brand loyalty is a pattern of consumer behavior in which consumers become committed to brands and repeatedly purchase the same brands. Loyal customers consistently purchase products from their preferred brands, regardless of convenience or price.

Ingredient Branding

Co-branding that creates brand equity for parts that are necessarily contained within other branded products

Direct Marketing

Contacting and influencing carefully chosen prospects using such means as telemarketing and mail.

The innovation imperative

Continuous innovation is a necessity

CPM

Cost per thousand impressions, a measure of the relative expense of each form of advertising.

Improvements and revisions to existing products

Current products made better

Price Discrimination

Different market prices with no associated cost difference

Fixed Costs (Slides Definition)

Do not vary with production level

Warranties

Formal statements of expected product performance by the manufacturer

Product Life Cycle (PLC)

Four distinct but not wholly predictable stages every product goes through, from its introduction withdrawal from the market.

Product Mix Consistency

How related in terms of use, production requirements, channels

Labeling

Identifies, grades, describes, and promotes the product

Discretionary (disposable) Income

Income remaining after deduction of taxes, other mandatory charges, and expenditures on necessary items.

New-product success

Incremental innovation vs. disruptive technologies

New-to-the-world (really-new) products

Inventions that create a whole new market

Dilution

Marketers must be careful not to dilute their brands through inappropriate channels

Sunk Costs

Money already spent.

Product Mix Width/Breadth

Number of product lines

Product Mix Depth

Number of variants per product line

Cannibalization

One channel eats business from another

Physical Evidence

Physical cues that help customers evaluate a product before they buy it.

Price Elasticity (Slides Definition)

Price elasticity measures how responsive or sensitive demand is to a change in price elasticity = sensitivity

Re-positionings

Products retargeted for a new use or application

New-to-the-firm products

Products that take a firm into a category new to it

Guarantees

Promise of general or complete satisfaction

Impact

Qualitative value of each exposure

Variability

Quality of services depends on who provides them and when, where, and how

Tangible

Refers to something that is capable of being touched.

Intangible

Refers to something that is not capable of being touched.

Hetergeneity

Refers to things that are different, like a service that varies each time it is delivered.

Inseparability

Services cannot be separated from their providers

Perishability (Slides Definition)

Services cannot be stored for later sale or use

Cost reductions

Similar performance but at a lower cost

Brand Equity

The commercial value that derives from consumers' perception of the brand name of a particular product or service rather than from the product or service itself.

Production Expenses

The costs associated with creating an ad, such as graphic design and printing.

Media Expenses

The costs for placing a media buy with a print publication, radio or television station, social media or other website, or any number of the nontraditional media options available.

Ideation

The creative process of generating, developing, and communicating new ideas, where an idea is understood as a basic element of thought that can be either visual, concrete, or abstract.

Price Sensitivity

The degree to which the price of a product affects the consumers' purchasing behaviors. In economics, price sensitivity is commonly measured using the price elasticity of demand.

Innovators

The group of consumers who are the first to try new ideas, processes, goods, and services. Although not numerous (Typically 2% of the population), the members of this most venturesome group are urbane, have money (to take risks) and higher education, are attracted to change and new experiences, and use multiple information sources for making a purchase decision.

Revenue

The income generated from sales of goods or services before any costs or expenses are deducted.

The Consumer-Adoption Process

The marketer's challenge is to elicit movement from stage to stage

Marketing Communications

The means by which firms attempt to inform, persuade, ad remind consumers about the products and brands they sell

Reach

The number of unduplicated individuals or households exposed to an advertising medium over a specified period.

Product Mix

The set of all products and items a particular seller offers for a sale. A product mix consists of various product lines

Profit

The surplus remaining after total costs are deducted from total revenue.

Product Mix Length

Total # of items in the mix

Total Costs

Total Cost = Fixed Costs + Variable Cost

Co-Branding

Two or more well-known brands are combined into a joint product or marketed together in some fashion

Variable Costs

Vary directly with changes in production

Perishability

When something is subject to decay or highly consumable; its value is often fleeting.