MCE Exam 3
complicated system
-generally a well defined outcome or a set of criteria that signifies a successful outcome -factors are all known -rigid set of rules that must be followed to achieve a successful outcome
positive feedback loops
-generate either more or less of the same effect -leads to rapid change and instability -non linear exponential -divergent behavior
negative feedback loop
-has two variables in the opposite direction -counterbalance is somewhat proportional -zero sum relationships -leads to stability -breaks down in non-linear systems
complex system
-no set of rules can fully address situation -factors are not all known, but can identify general themes
simple system
-relatively easy to determine if a successful outcome has been achieved -factors are all known -steps don't have to be followed exactly to achieve acceptable outcome
Three basic requirements of production
1. Build and deliver products in response to the demands of the customer at a scheduled delivery time 2. Provide an acceptable quality level 3. Provide everything at the lowest possible cost
espoused purpose
A purpose that is defined and communicated
complexity mindset
Accepts... -Complexity exists -Complexity needs to be dealt with differently -There are certain limitations on what the managers can control -Welcomes the challenges and opportunities that come with complexity
customer relationship era
CRM emphasizes finding out everything possible about customers and using that information to satisfy or exceed expectations in order to build long-term customer loyalty.
Emerging Mobile/On-Demand Marketing Era
Digital Age is increasing consumers power and pushing marketing toward being on demand not just on.
fit test
How well does the strategy fit the company's situation?
competitive advantage test
Is the strategy helping the company achieve competitive advantage in a sustainable way?
performance test
Is the strategy producing superior company performance?
current purpose
a purpose that is currently being executed
systems thinking
ability to understand these interconnections in such a way as to achieve a desired purposes
general expenses
administrative expenses of the firm such as office salaries, insurance, and rent, utilities, and depreciation
demographic segmentation
age, income, education level
production management
all activities managers do to help their firms create goods
business to business (B2B)
all the individuals and organizations that want goods and services to use in producing other goods and services to sell, rent, or supply goods to others
consumer market (B2C)
all the individuals or households that want goods and services for personal consumption or use
promotion
all the techniques sellers use to inform people about and motivate them to buy their products
publicity
any information about an individual, product, or organization that is distributed to the public through media and that is not paid for or controlled by the seller
product
any physical good, service, or idea that satisfies a want or need plus anything that would enhance the product in the eyes of consumers
fixed assets
assets that are relatively permanent such as land, buildings, and equipment
competitive based pricing
based on what competitors are doing
production era
believed in a limitless market
focused low cost
best when firm can lower costs significantly by limiting its customer base to a well defined buyer segment
agents/ brokers
bring buyers and sellers together and assist in negotiating and exchange but don't take title to the goods
form utility
changing raw materials into useful products
place
channel, inventory, locations, logistics, distribution
geographic segmentation
cities, counties, states, regions
promotion mix
combination of promotional tools an organization uses
focused strategies
concentrated attention to a narrow piece of total market
consumer goods/ services
convenience, shopping, specialty, unsought
cost of goods sold
cost of raw materials and supplies used for producing items for resale
operating expenses
costs involved in operating the business and includes selling and general expenses
B2C sales promotions
coupons, cents-off promotions, sampling, premiums, sweepstakes, contests, BOGOs, catalogs
production
creation of finished goods and services using the factors of production
target costing
designing a product so that it satisfied customers and meets the profit margins desired by the firm
complicated
difficult or hard to solve with a lot of moving pieces that are known
market segmentation
dividing the total market into groups whose members have similar characteristics
possession utility
doing whatever necessary to transfer ownership from one party to another
cash budget
estimates cash inflows and outflows during a particular period like a month or quarter
total product offer
everything consumers evaluate when deciding whether to buy something
personal selling
face to face presentation and promotion of goods and services
balance sheet
financial statement that reports a firm's financial condition at a specific time
statement of cash flows
financial statement that reports cash receipts and disbursements related to a firm's three major activities (operations, investments, financing)
income statement
financial statement that shows a firm's profit after costs, expenses, and taxes
finance
function of business that acquires funds for the firm and manages the funds within the firm
public relations
function that evaluates public attitudes, changes policies and procedures in response to public's requests, and executes a program of action and information to earn public understanding and acceptance
debt financing
funds raised through various forms of borrowing that must be repaid
analysis
gain an understanding of a system by breaking it down into its constituent elements
synthesis
gain an understanding of an entity through the context of its relations within a whole that it is part of
non-linearity
governed by dynamics of positive feedback loops, not equilibrium
psychographic segmentation
group's values, attitudes, interests
place utility
having products where people want them
capital budget
highlights a firm's spending plans for major asset purchases that often require large sums of money
closeness centrality
how close any given node is to another
degree centrality
how many links are touching one node
gross profit
how much a firm earned by buying (or making) and selling merchandise
eigenvector centrality
how much change one node imposes on others
brand awareness
how quickly or easily a given brand name comes to mind when a product category is mentioned
Best-Cost Strategy (Hybrid)
incorporate upscale attributes into its product offering at a lower cost than rivals
networks
informal groups of people with common interests who interact for mutual assistance
support goods
installations, accessory equipment, supplies, service
system
interconnected set of elements that is coherently organized in a way that achieves something
product life cycle stages
introduction, growth, maturity, decline
complexity
involves unknowns and interrelated factors and cannot fully address with systems and processes
current assets
items that can or will be converted into cash within one year such as cash, accounts receivable, and inventory
financial management
job of managing the firm's resources so it can meet its goals and objectives
price
list price, discounts, bundling, payment options/ credit terms
continuous process
long production runs turn out finished goods over time
intangible assets
long term assets that have no physical form but do have value such as patents, trademarks, and copyrights
worse-before-better
long term success often requires short-term investment or sacrifice
time utility
making products available when they are needed
selling expenses
marketing and distribution of the firm's goods or services, such as advertising, salespeople's salaries, advertising, and supplies
target marketing
marketing directed toward those groups an organization decides it can serve profitably
revenue
monetary value of what a firm received for goods sold, services rendered, and other payments
net income (or loss)
money leftover after deducting all expenses
equity financing
money raised from within the firm, from operations or through the sale of ownership in the firm (stock or venture capital)
skimming price strategy
new product is priced high to make optimum profit while there is little competition
betweenness centrality
nodes that create a bridge between otherwise unconnected constellations in a network
price leadership
one or more dominant firms set the pricing practices that al competitors must follow
information utility
opening two way flows of information between marketing participants
self organization
order that emerges out of initially disordered states
marketing intermediaries
organizations that assist in moving products from B2B or B2C to create efficiency
advertising
paid, non personal communication through various media by organizations and individuals who are in some way identified in the message
selling era
persuading customers through advertising
marketing concept era
post WWII, consumer spending increased
demand based pricing
pricing based on the level of demand for the product
psychological pricing
pricing products at a price point that make the product appear less expensive than it is
financial control
process in which a firm periodically compares its actual revenues, costs, and expenses with its budget
break even analysis
process used to determine profitability at various levels of sales
penetration strategy
product is priced low to attract many customers and discourage competition
intermittent process
production run is short and the machines are changed frequently to make different products
industrial goods/ services
production, support
shopping good/ service
products consumer buys only after comparing value from multiple sellers
unsought goods/ service
products consumers haven't thought of or need to solve an unexpected problem
convenience good/ service
products consumers want to purchase frequently and with little effort
specialty good/ service
products with unique characteristics and brand identity
sales promotions
promotional tools that stimulate consumer purchasing and dealer activities by means of short-term activities
service utility
providing fast, friendly service during and after the sale and by teaching the customers how to best use products over time
production goods
raw materials, component parts, production materials
wholesalers
sells to other organizations
retailers
sells to ultimate consumers
budget
sets forth management's expectations and allocates the use of specific resources throughout the firm
high-low pricing strategies
setting prices higher than EDLP but running special sales that bring prices lower than competitors
everyday low pricing
setting prices lower than competitors and not having any special sales
better-before-worse
solutions that work in the short run often have negative long-term effects
operations management
specialized area in management that converts or transforms resources (including HR) into goods and services
financial statements
summary of all the transactions that have occurred over a particular period
focused differentiation
superior products tailored to unique preferences of narrow, well defined group of buyers
depreciation
systematic write-off of the cost of a tangible asset over its estimated useful life
marketing
the activities buyers and sellers perform to facilitate mutually satisfying exchanges
utility
the want-satisfying ability or value that organizations add to goods and services when the products are made more useful or accessible to consumers than they were before
product life cycle
theoretical model of what happens to sales and profits for a product class over time
operating (master) budget
ties together all the firm's other budgets and summarizes its proposed financial activities
B2B sales promotions
trade shows, portfolios for salespeople, deals (price reductions), catalogs, conventions
Try, Learn, Adapt
truly rare that strategy will work as intended so must allow for mistakes and risks
"Manage, don't solve"
use critical thinking and making quick decisions under uncertainty
cost based pricing
using costs as primary basis for setting price
liabilities
what the business owes to others (debts)
brand preference
when consumers prefer one brand over another
brand insistence
when consumers will not accept substitute brands
channel of distribution
whole set of marketing intermediaries that join together to transport and store goods in their path from producers to consumers