Marketing 350 exam 3

Step 4: Convey the Message

- Positioning: provides clear understanding of what product is - Value proposition: communicated product benefits and reasons to buy - Unique selling proposition (USP): a creative version of value proposition (EX: "15 min. could save you 15% on car insurance- Geico) - convey the message using informational or emotional appeal Red Bull-Gives you wings Nike... Just Do it State Farm Insurance.... Like a goodneighbor, State Farm is There

Understanding Customer Expectations

-Expectations are based on knowledge and experience -Expectations vary according to type of service -Expectations vary depending on the situation

Step 2: Preapproach and the Use of CRM Systems

-extends the qualification procedure -set goals for what is to be accomplished -Conduct additional research and develop plans for meeting with the customer.

The Scope and Nature of Personal Selling

-internet -face to face -telephone -teleconference

Choosing Retailing Partners

1. Channel Structure 2. Customer Expectations 3. Channel Member Characteristics 4. Distribution Intensity

The 5 Cs of Pricing

1. Competition 2. Costs 3. Company Objectives 4. Customers 5. Channel Members -> creating value

The Price Setting Process

1. Define the pricing objectives 2. Evaluate demand 3. Determine the costs 4. Analyze the competitive price environment 5. Choose a price 6. Monitor and evaluate the effectiveness of the price

The Personal Selling Process

1. Generate and qualify leads 2. Preapproach 3. Sales presentation and overcoming reservations 4. Closing the sale 5. Follow-up

Steps in Planning and Executing an Ad Campaign

1. Identify target audience 2. Set advertising objectives 3. Determine the advertising budget 4. Convey the message 5. Evaluate and select media 6. Create advertisements 7. Assess impact

Step 5: Evaluate and Select Media

1. Media Planning 2. Media Mix 3. Media Buy

The early majority represents approximately Blank______ of the total consumer market and is crucial to the profitability of a product or service. Without them, the product or service will typically fail.

34%

Markup and Target Return Pricing

A firm might want to achieve a standard percentage markup on the costs of the product. Markup pricing, or cost-plus pricing, is a pricing method in which a certain amount is added to the cost of the product to set the final price. Traditionally jewelers, furniture stores, and gift shops will mark up the products they sell by 50 percent. A ring that costs a jeweler $500would be sold for $750 [$500 cost +$250 markup ($500 × 50%) = $750selling price]. A target return price is then calculated based on variable and fixed costs, expected sales, and the target return markup.

What is Advertising?

A paid form of communication delivered through media from an identifiable source about an organization, product, service, or idea designed to persuade the receiver.

Sales Orientation

A sales-oriented pricing strategy is where you set the product price based on a particular sales target or sales goal. Focus on increasing sales• Units sold or gainingmarket share• Heavily concerned with overall market share Why would firms choose this type of pricingstructure?• Set low prices to gain market share• Attract even the most price sensitivecustomers

inelastic demand

A situation in which an increase or a decrease in price will not significantly affect demand for the product

Inventory Management through Just-In-Time Systems

Also known as quick response(QR) inventory systems• Less merchandise on amore frequent basis.• Many firms, such as H&M, Zara, Mango, and Forever21, have adopted a QR inventory system. How Barcodes Changed the Modern Economy

Service

Any intangible offering that involves a deed, performance, or effort that cannot be physically possessed. By providing good customer service, firms add value totheir products and services.

The AIDA Model

Awareness, Interest, Desire, Action

___ of innovation is 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. (Enter one word in each blank.)

Blank 1: Diffusion, Difusion, Diffussion, or Difussion

___ generation refers to the first stage in the process by which firms develop a new product.

Blank 1: Idea or Concept

Early ___ are the category of consumers who begin to use a product or service immediately following innovators. (Remember to type only one word in the blank.)

Blank 1: adopters, adoptors, adapters, adoption, or adopter

The ___ ___ of users representing approximately 34 percent of the population on the diffusion of innovation curve is crucial because few new products and services can be profitable until this large group buys them. (Enter one word in each blank.)

Blank 1: early Blank 2: majority

The ___ stage of the product life cycle is characterized by initial losses to the firm due to its high start-up costs and low levels of sales revenue as the product begins to take off.

Blank 1: introduction, introductory, or intro

Which of the following is a way by which risk can be diversified?

By creating a broader portfolio of products through innovation

Step 3: Determine the Advertising Budget

Considerations: -Role that advertising plays in their attempt to meet their overall promotional objectives -Expenditures vary over the course of the Product Life Cycle -Nature of the market and the product influence the size of the budget

Without innovation, what options would be available to firms? (Choose every correct answer.)

Continue to market current products to current customers Take current products to new markets

Listening to the Customers and Involving Them in Service Recovery

Customers can get emotional over a service failure. Often customers just want someone to listen.

The Ultimate Outcomes of Dynamic Pricing

Dynamic pricing for MLB game tickets can lead to customers willing to pay more and more customer satisfaction. StubHub arose to help customers buy and sell unused tickets. MLB and other leagueslearned to collaborate with theresale site. Fans have gained a greater familiarity with shifting price tickets

Product development or product design entails a process of balancing which types of considerations? (Choose every correct answer.)

Engineering Manufacturing Marketing

Product development entails a variety of processes and considerations to determine which aspects of a product or service?

Form and features

Persuasive Advertising

Generally, occurs in the growth and early maturity stages of the PLC when competition is most intense.• May be used to re-position an established brand in the later stage of the PLC.

Distribution Intensity

Intensive: places products in as many places as possible. Selective: relies on a few selected retail customers in a territory. Exclusive: grants exclusive geographic territories

The Importance of Marketing Channel/Supply Chain Management

Merchandise is produced and distributed: 1. in the right quantities 2. to the right locations 3. at the right times

Odd pricing

Odd pricing is a pricing tactic in which a firm prices its products a few cents below the next dollar amount. Everything from hamburgers to cars are sold at prices that end in 3, ($2.93 for dish soap atWalmart), 5 ($4.95 for a drink at Starbucks), 7 ($12.97 for sandals at Target), or 9 ($14.99 for a pizza deal at Papa Johns). This tactic draws upon a basic human processing error, which is based on mental calculations that tend to see the price of$1.97 as much lower than $2.

Power in the Marketing Channel Bases of Power

Power in a marketing channel exists when one firm has themeans or ability to dictate the actions of another memberat a different level of distribution.

Prestige Pricing

Prestige pricing is a pricing strategy that involves pricing a product higher than competitors to signal that it is of higher quality. Firms that want to promote an image of superior quality and exclusivity to customers may pursue a strategy of prestige pricing. Luxury brands, such as Louis Vuitton, Cartier, and Mercedes-Benz use high prices to suggest their products are of high quality and stylish.

The Importance of Pricing Strategy

Price is the amount of something—money, time, or effort—that a buyer exchanges with a seller to obtain a product. Pricing is one of the most important strategic decisions a firm faces. Pricing is the essential element for capturing revenue and profits. Revenue is the result of the price charged to customers multiplied bythe number of units sold. Profits are simply revenue minus total cost.

Customer Orientation

Pricing strategy based on preciselydetermining and balancing what pricethe customer is willing to pay, takinginto account the price that thecompany wants to achieve for thegoods. The main focus in the development of the price is on the customer. Pricing strategy based on how the firm can addvalue to its products and services.• Match prices to customer expectations.

Focus of Advertisements

Product-focused advertisements inform, persuade, orremind consumers about a product or service• Institutional advertisements promote a company,corporation, business, institution (e.g. PSAs)

Define the Pricing Objectives

Profit maximization or price skimming - This pricing strategy involves setting a relatively high price for a period of time after the product launches.• Volume maximization or penetration pricing - This pricing strategy is designed to maximize volume and revenue fora firm, as well as encourage a greater volume of purchases.• Survival pricing - This pricing strategy involves lowering prices to the point at which revenue just covers costs, allowing the firm to endure during a difficult time.

What are key characteristics of the introduction stage? (Choose every correct answer.)

Profits are low Start-up costs are high

Integrated Marketing Communications

Represents the PROMOTION dimension of the P's• Consumer• Communication channels• Results of the communication

Which of the following processes could be considered an acceptable method for generating ideas? (Choose every correct answer.)

Researching competitors' products and services Brainstorming within the firm Conducting consumer research Communicating with a firm's R&D department

Perishable

Services are perishable in that they cannot be stored for use in the future. Ski areas, airlines, cruise ships, movie theaters, andrestaurants must find ways to deal with the challengesof perishability

Intangible

Services cannot be touched, tasted, or seen. Requires using cues to aid customers. Atmosphere is important to convey value. Images are used to convey benefit of value

Step 2: Evaluate Demand

The concept of supply and demand sits at the heart of setting prices.• Marginal revenue is the change in total revenue that results from selling one additional unit of product.• Marginal cost is the change in total cost that results from producing oneadditional unit of product.• What is the optimal price that maximizes marginal revenue while minimizingmarginal costs?

price sensitivity

The degree to which the price of a product affects consumers' purchasing behavior.

Step 1: Generate and Qualify Leads

The first step in the selling process is to generate a list of potential customers (leads) and assess their potential (qualify).

Variability

The more humans are needed to provide a service, the more likely there is to be heterogeneity or variability in the service's quality. ex. haircut Solutions• Technology• Training• Automation

Step 2: Set Advertising Objectives

The objectives of an advertising campaign are derived from the overall objectives of the marketing program and clarify the specific goals that the ads are designed to accomplish. Pull strategy- get consumers to pull the product into marketing channel Push strategy- increase demand by focusing on wholesalers, retailers, salespeople

The Customer Adoption Process

The process through which a product is adopted and spreads acrossvarious types of adopters is called diffusion—how their new productsare likely to be adopted, the rate at which they will be adopted, and theprocess through which their products will spread into markets.Product adoption comprises five stages: 1. Awareness 2. Interest 3. Evaluation 4. Trial 5. Adoption

______ defines the stages products move through as they enter, get established in, and ultimately leave the marketplace.

The product life cycle

What is Retailing?

The set of business activities that add value to products and services sold to consumers for their personal or family use

What objectives do firms have in adding new products, services, and processes to their offerings? (Choose every correct answer.)

To keep customers from getting bored with existing products To satisfy the changing needs of consumers

Adding new products is MOST likely to prompt consumers to purchase in which of the following industries?

Video games

Solve a Problem

Your value comes with solving a problem for a customer. Rather than selling a product, research the customer and see how your products can make their lives easier. Examples:• Inventory issues• Quality problems• Employee limitations• Revenue increase

Reminder Advertising

communication used to remind consumers of a product or to prompt repurchases, especially for products that have gained market acceptance and are in the maturity stage of their life cycle

The process by which the use of an innovation, whether it be a product or service, is spread throughout a market group over time and over various categories of adopters, is known as Blank______.

diffusion of innovation

Designing Marketing Channels

direct channel: manufacturer -> customer direct channel one intermediary: manufacturer -> retailer -> customer direct channel two intermediaries: manufacturer -> wholesaler -> retailer -> customer

Profit Orientation

focusing on target profit pricing, maximizing profits, or target return pricing

A company that develops a new merchandise tracking technology that automatically notifies suppliers when a new shipment is needed is using its new product to:

improve business relationships.

While the Blank______ is first to adopt the item, the Blank______ adopts next.

innovator; early adopter

Price Elasticity of Demand

is a measure of price sensitivity that gives the percentage change in quantity demanded in response to a percentage change in price.

Elastic Demand

is where demand changes significantly due to a small change in price.

Channel Member Characteristics

larger and more sophisticated channel members are less likely to use supply chain intermediaries (i.e. Walmart) in order to gain more control, be more efficient, and save money

pioneers

or breakthroughs establishcompletely new markets or radically changecompetition and consumer preferences Pioneers have the advantage of being first movers.

Seasonal Discounts

price reductions given to customers purchasing goods or services out of season

Inseparable Production and Consumption

production and consumption are simultaneous, little opportunity to test a service before use, lower risk by offering guarantees or warranties

New product and service innovation is important because the longer a product or service exists in a given marketplace, the more likely that the market will become Blank______.

saturated

Price Bundling

selling two or more goods or services as a single package for one price

Cross-Price Elasticity

the percentage change in the quantity of Product A demanded compared with the percentage change in price in Product B Meet Kendra, a self-supporting college student: Buys a new printer on sale for a great price• Learns it requires special ink cartridges that cost more than the printer Complementary products vs.substitute products

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

Informative Advertising

used when introducing a new product category to build primary demand