Marketing 250 Final Exam

Major PR tools

news, speeches, special events, written materials, corporate identity materials, public service activities, buzz marketing, social networking, internet

Disintermediation

occurs when product or service products cut out intermediaries and go directly to final buyers, or when radically new types of channel intermediaries displace traditional ones

Market-penetration pricing

sets low initial price in order to penetrate market quickly and deeply to attract large number of buyers quickly to gain market share

Objective-and-task method

sets the budget based on what the firms wants to accomplish with promotion and includes: -defining promotion objectives -determining tasks to achieve objectives -estimating costs

Income statement

shows how profitable an organization has been over a specific time frame, summaries all revenues and all expenses

Steps in developing effective marketing communication

-identify target audience -determine communication objective (who/what/where/when/how will say it), design message, choose media, select message source

Tying agreements

agreement where dealer must take most or all of line

Operating expenses

all costs of operation that are not included under costs of goods sold

Channel conflict

disagreement over goals, roles, and reward by channel members (horizontal and vertical)

_________ sell standard merchandise at lower prices by accepting lower margins and selling higher volume.

discount stores

Price cuts occur due to:

excess capacity, increased market share reaction: new models will be available, models aren't selling well, quality issues

T/F: The "Matching Principle" of accounting states that the total at the bottom of the two sides of a balance sheet will always be the same

false

At Neiman Marcus, a first-class department store, customers shop for high-end products and they are assisted in every phase of the shopping process. Neiman Marcus is a ________.

full service retailer

Freight-absorption pricing is used for _____________.

holding on to increasingly competitive markets

Conflict which occurs among firms at the same level of the marketing channel is known as ________ conflict.

horizontal

Conflict which occurs among firms at the same level of the marketing channel is known as ___________ conflict

horizontal

Creative concept

idea that will bring message strategy to life and guide specific appeals to be used in an advertising campaign. characteristics of appeals include: -meaningful -believable -distinctive

Wholesaling

includes all activities involved in selling goods and services to those buying for resale or business use

Channel members add value by/through:

information, promotion, contact, matching, negotiation, physical distribution, financing, and risk taking

3 Types of advertising

informative: used when introducing new product category to build primary demand like Coke in 1961 persuasive: important w/ increased competition to build selective demand like Coke vs. Pepsi reminder: important w/ mature products to help maintain customer relationship and keep customers thinking about product like Geico final countdown

Integrated marketing communications

integration by the company of its communication channels to deliver a clear, consistent, and compelling message about the organization and its brands

The distribution approach followed by Coca-Cola and Pepsi would be best classified as:

intensive distribution

3 Types of distribution

intensive: candy/ toothpaste exclusive: luxury cars/clothing selective: tv/home appliances

Direct marketing

involves making direct connections with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships- through the use of direct mail, telephone, direct-response tv, e-mail, and the Internet to communicate directly with specific consumers -catalog, telemarketing, kiosks

Retail convergence

involves merging of consumers, producers, prices, and retailers, creating greater competition for retailers and greater difficulty differentiating offerings

Hearth & Home, a store which sells household products, has announced a one-week sale on its new carpet line. This is an example of ___________

promotional pricing

Vertical marketing systems (VMS)

provide channel leadership and consist of producers, wholesalers, and retailers acting as a unified system and consist of: -corporate marketing systems -contractual marketing systems -administered marketing systems

A supermarket places its store brand of blackberry jam priced at $5 per jar in the fruit preserves aisle, alongside the jam jars of a better known brand whose products are priced at $8 apiece. Store managers reason that customers are more likely to choose the store brand instead of the better known brand when they realize the price difference. What price adjustment strategy is evident in the supermarket's reasoning?

psychological pricing

Impact

qualitative value of a message exposure through a given medium

Types of appeals

rational: audience self-interest emotional: attempt to stir up positive or negative emotions to motivate a purchase moral: direct at audience's sense of right and proper

Discount and allowance pricing

reduces prices to reward customer responses such as paying early or promoting the product (discounts: cash, quantity, seasonal) (allowances: trade-in, promotional)

Which term refers to prices that buyers carry in their minds and check with when they look at a given product?

reference prices

Channel management decisions

selecting channel members --> manage channel members --> motivate channel members --> evaluate channel members

Price discrimination is legal when a ____________.

seller can prove its costs are different when selling to different retailers

Balance sheet

snapshot of financial position on a particular date, includes assets, liabilities, and owner's equity

Promotion mix

specific blend of advertising, public relations, personal selling, and direct marketing, tools that the company uses to persuasively communicate customer value and build customer relationships

Market-skiming pricing

strategy with high initial prices to "skim" revenue layers from market

Companies set not a single price, but a pricing ______________ which covers different items in its line and changes over time as products move through their life cycles.

structure

When KFC came into conflict with its franchisees over the brand's "Unthink KFC" repositioning, which emphasized grilled chicken over its traditional Kentucky fried chicken, KFC experienced ________ conflict.

vertical

Major logistic functions

warehousing (how many, what types, where), transportation (affects price, what mode), inventory management (just-in-time systems, knowing exact product location, smart shelves), logistics information management

Multichannel distribution systems (hybrid marketing channels)

when a single firm sets up 2 or more marketing channels to reach one or more customer segments

Dynamic pricing

when prices are adjusted continually to meet characteristics and needs of individual customer and situations (hammerpress)

International pricing

when prices are set in a specific country based on country-specific factors (economic conditions, competitive conditions, laws/regulations, infrastructure, company marketing objectives)

Promotional pricing

when prices are temporarily priced below list price or cost to increase demand

Exclusive distribution

when seller allows only certain outlets to carry its products

Exclusive dealing

when seller requires that sellers not handle competitor's products

Exclusive territorial agreements

where producer or seller limit territory

A market-skimming pricing strategy should NOT be used for a new product when:

competitors can undercut prices easily

Consumer generated messages

-youtube videos -brand website contests -positives: low expense, new creative ideas, fresh perspective on brand, boost consumer involvement

2 fundamental accounting concepts

1. accounting equation- liabilities + owner's equity = assets 2. matching principle= expenses incurred in producing revenues be deducted from that revenue

Types of retailers (organizational approach)

1. corporate chains- two or more outlets that are commonly owned/ controlled like Sears 2. voluntary chains- wholesale-sponsored groups of independent retailers that engage in group buying and common merchandising like Western Auto 3. retailer cooperatives- group of independent retailers that band together to set up a joint-owned, central wholesale operation + conduct joint merchandising + promotion effort like Ace Hardware 4. franchise organizations- based on some unique product or service; on a method of doing business; or on the trade name, good will, or patent that the franchisor has developed

Product mix pricing strategies

1. product line pricing- takes into account cost alternatives between products in the line, customer evaluation of features, and competitors' prices 2. optional-product pricing: takes into account optional or accessory products along with main product 3. captive-product pricing: involves products that must be used along with main product 4. by-producing pricing: refers to products with little or no value produced as a result of main product. Producers will seek little or no profit other than cost to cover storage and delivery 5. product bundle pricing: combines several products at reduced price

9 Aspects of wholesaling

1. sell + promote: involved wholesaler's sales force helping manufacturer reach any smaller customers at lower cost 2. buying assortment: building involves selection of items and building of assortments needed by their customers, saving the customers work 3. bulk breaking: involves wholesaler buying in larger quantity and breaking into smaller lots for its customers 4. warehousing: involves wholesaler holding inventory, re-reducing its customers' inventory cost and risks 5. transportation: involves wholesaler providing quick delivery due to its proximity to the buyer 6. financing: involves wholesaler providing credit and financing supplier by ordering earlier and paying on time 7. risk bearing: involves wholesaler absorbing risk by taking title and bearing cost of theft, damage, spoilage, and obsolescence 8. marketing info: involves wholesaler providing info to suppliers and customers about competitor's new products and price developments 9. management services and advice: involves wholesalers helping retailers train their sales clerks, improve store layouts, and set up account and inventory control systems

Types of stores

1. specialty (narrow product line, deep assortment like williams sonoma) 2. department stores (wide variety of product lines, like Macy's) 3. Convenience stores (limited line of high-turnover goods) 4. Superstores (food/non-food, like Wal Mart) 5. Category Killers (deep in category w/ sales staff, like Barnes and Noble)

If a company's profit margin is 3 percent of sales, a 1 percent price increase will boost profits by _______ percent, assuming sales volume is unaffected

33%

Gross Profit

amount remaining when cost of goods sold is deducted from net sales; also known as gross margin

Which of the following should be a manufacturer's first step when designing an effective marketing channel?

analyze consumer needs

Advertising

any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor -broadcast, print, internet, outdoor

Cost of Goods Sold

beginning inventory + net purchases - ending inventory

Which type of store carries a deep assortment of a particular product line, has knowledgeable staff, and can be viewed as a giant specialty store?

category killer

Marketing channel

consists of firms that have partnered for their common good with each member playing a specialized role

Price increase from:

cost inflation, increased demand, lack of supply reaction: product is "hot", company greed

Sparkling Valley, a luxury resort, prices cottages facing the lake higher than cottages that do not, even though the cottages and service offered are identical in every other aspect. This form of pricing is called ____________

location-based pricing

Wheel-of-retailing concept

many new types of retailing forms begin as low-margin, low-price, low-status operations, and challenge established retailers -as they succeed, they upgrade facilities and offer more services, increasing their costs and prices, eventually becoming retailers they replace

Companies facing the challenge of setting prices for the first time can choose between two broad strategies: market-penetration pricing and ________.

market-skimming pricing

A ________ is a set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user.

marketing channel

Which of the following are the 3 characteristics that an advertising appeal should have?

meaningful, believable, distinctive

Frequency

measure of how many times the average person in the target market is exposed to the message

Reach

measure of percentage of people in the target market who are exposed to the ad campaign during a given time period

The decisions about reach, frequency, and impact of an advertisement fall into the category of ____________ decisions

media

Psychological pricing

occurs when sellers consider psychology of prices and not simply the economic

Intermediaries

offer producers greater efficiency in making goods available to target markets. through their contacts, experience, specializations and scale of operations, intermediaries usually offer the firm more than it can achieve on its own

Liabilities + Owner's Equity =

total assets

Geographic pricing

used for customers in different parts of country or world (FOB, uniform delivered, zone, basing point, freight absorption)

Segmented pricing

used when company sells a product at 2 or more prices even though difference is not based on cost (customer- segment, product-form, location-based, time-based)