Marketing Test 3

Steps in setting up the right prices

1. establish price objectives 2.estimate demand costs and profits 3.choose strategy 4.fine-tune base prices 5. get to the right price

If Washburn Guitars were to lower the price of the Maya Pro DD75 to $2,499 from $2,699, sales of the guitar would increase 30%. This illustrates a product with elastic demand. a product with inelastic demand. an increase in the unit variable cost. a shift in the demand curve.

A product with elastic demand is one in which a slight decrease in price results in a relatively large increase in demand, or units sold. The reverse is also true: with elastic demand, a slight increase in price results in a relatively large decrease in demand.

Transactional function

Buying and Risk Taking

Facilitating function

Financing and Info research

Logistical function

Sorting, Storing and Transportation

How do services differ from goods?

They are intangible, heterogeneous, inseparable and perishable

Selection of marketing channel

factors that impact the selection of marketing - market factors, product factors, etc.

Budget - percentage- of- sales method

promo budget is set as a predetermined dollar amount for each unit sold or produced.

Components of service quality

reliability, responsiveness, assurance, empathy and tangibles.

A(n) ____________ is an intermediary who sells Hope Springs' bottled water to retailers such as the Coffee Collective. wholesaler retailer agent broker

wholesaler

If Young Explorers realizes that Gabbie reacts better to social media than traditional marketing methods because of the ability to post relevant messages instantaneously, this would represent which difference between traditional and social media platforms? Access Credibility Permanence Social authority Time to delivery

Social media allows organizations to post content almost immediately as compared to the significant amount of time needed to deliver traditional content.

Martha decides that __________ advertising is the best way to reach customers to tell them about the event and her outdoor patio as it is low cost, can target specific audiences, can use sound and humor—given that her message doesn't need any visual element—and doesn't include any complex information. radio direct mail yellow pages television outdoor

Radio Advertising media can range significantly and marketers must decide which format is most effective for reaching their customers. Radio provides a low cost alternative that can use sounds, humor and intimacy effectively—especially for messages that don't require visual aids, and are simple in their message.

When communicating with its target audience, Taco Bell considered each of its _________ including social media channels, packaging, point of purchase displays, and advertising. These places of contact between a firm and its customers are critical elements for building an integrated marketing communication plan. sources products touch points traffic generators noises

Touch points are points during which the firm and customer come into contact with one another. Taco Bell's touch points can be found in the restaurant itself in the form of product packaging, physical location and point of purchase displays. Touch points also occur outside of the restaurant in the form of advertising, promotion and social media.

IMC Plan

objectives Budget Key decisions - target audience, content, planned brand contacts, promo mix Creative execution Implementation and Evaluation

Promotional mix

combination of promotion tools - advertising, social media, PR, personal selling and sales promotion

Contests vs sweepstakes

Contest - requires entrants to solve problems or write essays - they may also require proofs of purchase Sweepstakes - select winners by chance - no product purchase is necessary

Task-objective method

Once marketers determine their specific, promotional objectives, the amount of promotional spending needed to achieve them is determined.

If Young Explorers wants to only pay for those marketing initiatives that are successful in building the size of its membership, which of the following metrics would it use? Cost per click (CPC) Average engagement cost (AEC) Visitor frequency rate (VFR) Cost per action (CPA) Cost per thousand (CPM)

While difficult and more expensive than measuring cost per click (CPC), the cost per action (CPA) metric allows organizations to only pay for what works.

Needs filled by marketing Channels

- specialization and division of labor - overcoming discrepancies -Contact efficiencies

Channels of Distribution

- the combination of institutions through which a seller markets products to the user or ultimate consumer - can be viewed as a pipeline for products

Skimming Pricing

-pricing strategy involving the use of high price relative to competitive offerings -Used for high end goods and services -used when you have a distinct good with almost no competition

Social media objectives

1. LISTEN and learn 2. Build relationships and awareness 3. Promote products and services 4. manage your reputation 5. Improve customer service

Price objectives

1. profitability - setting up the right price for profit (profit maximization) 2. Volume - sales maximization (min profit to meant to maximize sales) 3. Meet competition - seeking to meet competitors price - value pricing (emphasizes benefits vs price) 4. Prestige - prices set high to represent quality or exclusiveness

Most new Carmex products are priced between $0.99 and $2.99, well within reach of the price sensitive mass consumer market. Carmex is utilizing a _________ strategy with its lip balm products. prestige pricing price lining skimming pricing penetration pricing

Penetration pricing, a demand-oriented strategy, involves setting the initial price low on a new product to appeal immediately to the mass market

By offering a free dog biscuit with each cup of coffee, the Coffee Collective entices customers to visit its shop during the pet adoption event. This represents what type of sales promotion? Sample Contest Premium Deal Coupon

Premiums are a promotional tool often used with consumers that consists of merchandise offered for free or at a significant savings over its retail price.

Psychological pricing strategy

pricing policy based on the belief that certain prices or price ranges make a good or service more appealing than other to buyers

Psychological pricing strategy - odd pricing

pricing policy based on the idea that odd numbers make the price more appealing. $9.99, $1.99

Promotional pricing

pricing policy in which a lower than normal price is used as temporary ingredient in the marketing strategy - Buy one, get one free

Fixed sum per unit method

promotional budget is set a predetermined dollar amount for each unit sold or produced

Competitive comparison

promotional budget is set to match competitor's promotional outlays on either absolute or relative basis

Advertising vs. Sales Promotion

Advertising - reason to buy Sales Promotion - incentive to buy

Ju Li believes that her sales force should sell in a conventional sense by identifying prospective clients, such as the Coffee Collective, providing them with information, persuading them to buy, closing the deal, and then following up with them after the purchase. This type of salesperson is referred to as a(n) _______. inside order taker consultant closer order clerk order getter

An order getter sells in a conventional sense and identifies prospective customers, provides them with information, persuades them to buy, closes sales, and follows up on customers' use of a product or service.

Channel arrangements

Direct - no intermediaries Indirect - wholesalers, retailers, agents/ brokers Alternative - multiple or dual distribution, strategic alliances, reverse channels

Modifying the Market

Increase the consumption of the current product. How? -Look for new users and market segments -Reposition the brand to appeal to larger or faster-growing segment -Look for ways to increase usage among present customers

Competitive Pricing Strategy

Pricing strategy that de-emphasizes price as a competitive variable - and make prices similar to those of competitors - firms focus their own marketing efforts on the product, distribution and promotion elements of the marketing mix

Washburn has four distinct price points for its guitar lines: entry, intermediate, professional, and collectors based on the fact that each line has very different production costs, market demand, and sales level. Thus, Washburn has implemented a _______ pricing objective. social responsibility unit volume survival market share

Unit volume, the quantity produced or sold, is a common pricing objective. These firms sell multiple products at very different price points, matching volume demanded with price and production capacity

The number of silver sticks ordered for the Moisture Plus product is much lower than the number of yellow tubes ordered for the original Carmex product. With a lower purchase volume, Carmex does not receive a significant discount on the silver tubes from its suppliers. Carmex managers will use a ______ pricing approach to incorporate the price of the packaging into Moisture Plus' final price. value-oriented cost-oriented competition-oriented demand-oriented

With cost-oriented approaches, a price setter stresses the cost side of the pricing problem, not the demand side

Pull Strategy

by directing its promotional mix at ultimate consumers to encourage them to ask the retailer for a product. Seeing demand from ultimate consumers, retailers order the product from wholesalers and thus the item is pulled through the intermediaries

Integrated Marketing Communications

coordinating all promotional messages to assure the consistency of messages at every point where a company meets the consumer

By satisfying the customer service factor of ___________, the distributor will ensure that deliveries of Hope Springs' bottled water to the Coffee Collective are consistent in lead-time, will arrive safely, and are complete. dependability warehousing convenience communication time

dependability

Push Strategy

directing the promotional mix to channel members to gain their cooperation in ordering and stocking the product. In this approach, personal selling and sales promotions play major roles

Exclusive distribution

is the extreme opposite of intensive distribution because only one retailer in a specific geographical area carries the firm's products. Exclusive distribution is typically chosen for specialty products or services, such as some women's fragrances and men's and women's apparel and accessories.

Premiums

items given free or at a reduced cost, with purchases of other products. Good for getting consumers to try new products or different brands

Selective distribution

lies between these two extremes and means that a firm selects a few retailers in a specific geographical area to carry its products. Selective distribution weds some of the market coverage benefits of intensive distribution to the control over resale evident with exclusive distribution

The ______________ function represents the role that Hope Spring's distributors have in storing, sorting and transporting bottled water to the Coffee Collective logistical transactional enhancement organizational facilitating

logistical

A high-low retailer like Walgreens might temporarily cut the price of Carmex tubes to $0.49, well below its customary price to attract attention to the product and customers to the store. This temporary price reduction is an example of__________. customary pricing loss-leader pricing skimming pricing standard markup pricing

loss-leader pricing For a special promotion, retail stores deliberately sell a product below its customers' price to attract attention to it and drive traffic into the store. The purpose of this loss-leader pricing is not to increase sales but to attract customers in hopes they will buy other products as well

Intensive distribution

means that a firm tries to place its products and services in as many outlets as possible. Intensive distribution is usually chosen for convenience products or services such as candy, fast food, newspapers, and soft drinks

During the creative process, Taco Bell considered a number of different slogans, finally setting on Live Mas! The Live Mas! campaign reinforces Taco Bell's position as a dynamic brand whose customers enjoy experiencing the world and trying things first. Live Mas! is Taco Bell's _______ in the communication process. message noise channel of communication feedback response

message

Product line pricing

practice of marketing different lines of merchandise at a limited number of prices - example 4 lines of coats at 4 different prices

Flexibility Pricing Policy

pricing policy that permits variable prices for goods and services - car dealerships are a good example

Psychological pricing strategy - unit pricing

pricing policy where the prices are stated in terms of a recognized unit of measurement - example: gallon of milk, one dozen eggs

Penetration Pricing

pricing strategy involving the use of relatively low entry price as compared to competitive offerings - low price will secure market acceptance

Given Hope Springs' focus on the environment, it actively practices __________ to support retailers water bottle recycling initiatives by collecting their used water bottles and reusing or disposing the plastic whenever possible. disintermediation reverse logistics logistics management horizontal channel management green supply management

reverse logistics

When the humane society creates and distributes a news release outlining its pet adoption event with the Coffee Collective, it is considered a form of _________. promotion advertising targeting public relations segmentation

Public relations is a form of communications management that seeks to influence the image of an organization and its products or services

In order for Hope Springs to effectively sell its bottled water, the company needs to be effective at ________, which is the practice of building ties to customers through a salesperson's attention and commitment to customer needs over time. sales management customer development relationship selling science selling direct selling

Relationship selling represents a dynamic of customer relationship management where salespeople build ties with customers through the attention and commitment to customer needs over time.

If Green Team wants to understand the costs associated with simply building awareness within the student body, which of the following metrics would it use? Cost per thousand (CPM) Visitor frequency rate (VFR) Cost per click (CPC) Cost per action (CPA) Average engagement cost (AEC)

By tracking cost per thousand (CPM), a simple to use metric, advertisers can track initiatives related to building awareness of a product or service within the market.

In order to effectively classify social media channels and locate the right channel to increase overall influence, Green Team needs to understand the type of social interaction and the media ________, which is the degree of personal contact between the organization and potential members. richness depth method type extent

In order to classify social media channels, one of the factors used to classify available channels include media richness. The higher the media richness, the greater level of influence that communication partners have on behaviors

When the Coffee Collective purchases advertisements on the radio announcing its new patio for dog-loving coffee drinkers, this would be a form of _________ advertisement. informational reminder demonstration competitive bandwagon

Informational Informational, or pioneering ads, are used at the introductory stage of selling a product or service to tell people what the product is, what it does, and where it can be found.

Taco Bell allocates its promotional budget to 70% traditional media, which includes television advertising; 20% to digital media, which includes website development; and 10% to new media channels. The fact that the message consumers receive is the same regardless of which channel delivers it reflects Taco Bell's dedication to ___________. push strategies integrated marketing communications hierarchy of effects promotional budgeting lead generation

Integrated marketing communications is the concept of designing marketing communications programs that coordinate all promotional activities to provide a consistent message across all audiences

Martha decides that ________ advertising is the best way to reach customers about the event and outdoor patio since this form of advertising has video capabilities, animation to capture the audience's attention and ads that can be interactive even though she isn't quite sure of the effectiveness of this new medium. Internet television newspaper magazine radio

Internet, Advertising media can range significantly and marketers must decide which format is most effective for reaching their customers. Internet advertising allows for video audio capabilities while providing an opportunity for ads to be interactive even though the large file sizes may limit some consumers and its effectiveness is still uncertain

Because consumers respond more favorably to Carmex when priced at $0.99 versus $1.00, many Carmex product prices end with a 9. This demand-oriented approach is known as ________. price lining odd-even pricing target pricing bundle pricing

Odd-even pricing involves setting a price a few dollars or cents below an even number. In theory, demand would increase as the price drops from $1.00 to $0.99 for a jar of Carmex.

To give consumers an incentive to try its new Doritos Locos Tacos, Taco Bell gave out free samples of the new tacos to its customers. The free Doritos Locos tacos giveaway is an example of ________. direct marketing personal selling advertising public relations sales promotion

Sales promotion is a short term inducement of value offered to arouse interest in buying a product. In this extreme case the product was given away free!

To accomplish a successful repositioning of the brand, Taco Bell needed to inform its consumers that Taco Bell food should be thought of as an experience rather than as just fuel. In the communication process, Taco Bell would be the ______ and the consumer would be the ________. message, receiver encoder, receiver source, receiver source, decoder encoder, decoder

Taco Bell is the source while the consumer is the receiver. The communication process has six elements in total: source, message, channel of communication, receiver and the process of encoding and decoding

Carmex Moisture Plus is priced between $2.49 and $2.99, a high price compared the $0.99 Carmex tube. Carmex managers estimated that female consumers would be willing to pay more for the sleek packaging, benefits, and additional ingredients found in the Moisture Plus line and set the price accordingly. Which demand-oriented approach is best reflected in the price of the Moisture Plus line? Target pricing Yield management pricing Price setting Quantity pricing Bundle pricing

Target Pricing When managers estimate the price that the ultimate consumer would be willing to pay and adjust the composition and features of the product to achieve the target price to the consumers, this is known as target pricing.

As part of its integrated marketing communication strategy, Taco Bell utilized commercials aired during the Super Bowl. This form of _________ has an extremely large reach and hefty price tag. personal selling advertising direct marketing sales promotion public relations

Television commercials are a form of advertising which often carry high costs for air time and production but can be an effective way of reaching a large, diverse audience

As Hope Springs continues to grow and establish its business-to-business market, Ju Li is considering changing her sales force philosophy to focus on _______ salespeople who simply processes orders and reorders for products that that were already sold by Hope Springs. order getter consultant order taker closer relational

The primary responsibility of order takers is to preserve an ongoing relationship with existing customers and maintain sales. They can do this through outside order takers, those who visit the Coffee Collective, and inside order takers who answer questions and complete customer transactions.

Washburn Guitars makes signature series guitars to enhance the credibility of the Washburn brand. Creating signature series guitars would have a positive effect on all of the following except: unit variable cost brand loyalty brand awareness demand

Unit Variable Cost Producing signature series guitars may affect demand for the product, as well as brand awareness and brand loyalty. However, it would have no effect on unit variable cost (i.e., variable cost expressed on a per-unit-basis for a product).

Sales Promotion

activity that adds to the basic value of the product for a limited time and directly stimulates consumer purchasing, seller effectiveness, or the effort of the sales force

Advertising

any controlled form of nonpersonal presentation of ideas, goods or services used to inform, remind, or persuade selected audiences through various media

Which of the following should the shop owners do first before they decide on a promotional program? Identify the target audience. Schedule the promotions. Pretest the promotions.

identify target audience The first decision in developing a promotion program involves identifying the target audience, which is the group of prospective buyers toward which the promotion program is directed.