AGBM 302 Exam

1. What ways are promotional budgets typically determined?

-% of sales -Competitive budgeting -Affordability -Objective and Task Spending

1. What are the characteristics of long distribution channels?

-Small orders -little technical knowledge and regular servicing not required. -standardized -manufacturer lacks adequate resources to perform channel functions.

1. What factors often affect promo budgets?

-Stage in the life-cycle -Market share ---High market share producer usually needs more promotional spending as a percent of sales than low-share brands. -Competition and clutter ---In a mkt w many competitors and high spending, a brand must promote more heavily to be heard through the clutter and noise -Product differentiation ---A brand that is similar to other brands in its product class requires heavy promoting to differentiate itself.

1. What effect do purchase maximums have on demand?

"12 unit maximum" -increases demand, suggests that it is a great price.

1. What is suggestive selling and what effect does it have on demand?

"Buy 18 for your freezer" -essentially sets an anchor and increases demand.

1. What stage in the product life-cycle is A.1.?

A.1. is at maturity.

1. What are the advantages and disadvantages of applying breakeven analysis?

ADVANTAGES -easy to understand -relates to profit -motivates revenue goals DISADVANTAGES -does not consider demand -assumes constant fixed costs -considers 1 price at a time

1. What are AIO statements and what popular AIO system did we look at in class?

AIO Statements: researchers ask consumers of a product group a series of questions to elicit their Activities, Interests, and Opinions. -VALS - "Values and Lifestyles" is one of the most popular psychographic systems.

1. What are attributes, consequences and values?

ATTRIBUTES are physical characteristics of a product -CONSEQUENCES are outcomes that consumers associate w/ the use of the product -VALUES are derived from associating consequences and the personal value system.

1. What aspects of the marketing mix should you tailor to your target market?

Choosing a Target 1. Product Concept 2. Hypothesize a suitable target 3. Acquire market data 4. Refine marketing plan 5. Acquire market data

1. During which stage is it time to think about revitalizing the brand?

Decline

1. Do demand elasticities reflect the demand or supply side?

Demand side

1. What is the purpose of segmenting by demographics?

Demographic factors such as age, language, and educational level all affect how marketers appeal to different segments of the population.

1. What is a desire? Be able to provide examples.

Desire- a particular choice that people make to satisfy their needs. (you are hungry for something but nothing too filling and you don't want to spend the time preparing food so you get a banana)

1. Why is stockpiling a problem for food marketers?

Difficult to stockpile foods with little shelf life, easy to stockpile things like tomato soup.

1. What is psychographic segmentation?

Divides a population into groups that have similar psychological characteristics, values, and lifestyles.

1. When does direct selling make sense?

Does not eliminate the functions of intermediaries, rather producers perform them themselves. -Good strategy only if the producer can perform those functions.

1. What characteristics make food products a good choice of loss leader?

Frequently purchased items are used. Fast food restaurant discount menu items are loss leaders. Gas is a loss leader for many gas stations.

1. Describe the prices and level of consumer involvement typically associated with specialty products.

Goods or services with unique characteristics causing the buyer to value it and make a special effort to obtain it. -usually higher end items.

1. How would you market towards heavy users versus light users?

Heavy users -buy more in response to quantity discounts -purchase large package sizes -respond to ads showing heavy usage -be different in some crucial way from light users Ex. Budweiser markets toward heavy users, Dos Equis seems to be targeting light users.

1. What is a mental map and how are they constructed?

Hierarchical organization of consumers perceptions and product knowledge. Consists of -ATTRIBUTES -CONSEQUENCES -VALUES

1. What is a products margin?

How much the product sells for above the actual cost of the product itself.

1. What is vertical integration?

Involves ownership of multiple nodes in the food chain. (ex. a supermarket that owns its own bakery)

1. What would TruEarth's pizza competition be?

Kraft, Nestle, Digiorno, California Pizza Kitchen, other frozen pizza brands.

1. What is a luxury good? What is an inferior good? What are food examples of these?

LUXURY GOOD- goods whose share of expenditure rises with income. (organics, skinless bone chicken, higher quality foods, restaurants) INFERIOR GOOD- goods that people purchase more of when incomes decrease. (beer, lower quality foods, potatoes, canned veggies)

1. What prevents new competitors from challenging A.1. in the steak sauce market?

Loyalty in steak sauce is high and competition is limited.

1. What are the four product development strategies as characterized by the ages of the products and markets?

MARKET PENETRATION (old product, old market) MARKET DEVELOPMENT (old product, new market) PRODUCT DEVELOPMENT (new product, old market) PRODUCT DIVERSIFICATION (new product, new market)

1. Why do retailers show unit pricing?

Makes it easier to compare prices across different sizes.

1. What is a pay-for-performance promotional agreement?

Manufacturers giving cash or a discount to retailers in hopes that the retailer will in turn discount or promote their product to consumers.

1. What is market myopia and when is it likely to occur?

Market myopia- is management's failure to recognize the scope of their business. -Occurs when a company identifies identifies with their product or past structure instead of consumer needs.

1. What is multiple pricing and what effect does it have on demand?

Multiple pricing: "10 for $5" (instead of 50 cents each) -increased sales of grocery items by 32%.

1. How have people's value of time changed and how has that affected their desires and needs?

People's value of time has been increasing -more convenience food -increasing home sizes lead to more space ---more stockpiling (costco)

1. What is the best promotional objective for products that are in the introductory stage?

Promotional campaigns stress attributes, explains what the product is.

1. What is pass-through?

The amount of a manufacturer's discount that is passed through the retailer to the consumer.

1. Why did Lawry's enter the steak sauce market?

To directly compete with A.1.

1. What is the point of the "Nutritionist and Consumers Opinions about Foods" and "A Closer Look at Granola" presentations?

To show that people think that certain foods are healthy when they are actually not.

1. How are household's changing and what consequences does this have for food marketers?

Todays US households are very diverse. - Greater opportunity for segmenting the market and product differentiation - Many more single parent households • More convenient. ready-to-eat meals - More young couples without children • eat out more, spend more on luxury foods - More single person households • more single person portioned foods

1. Describe the three dimensions of a product mix.

WIDTH- the # of product lines offered. (yogurt, milk, frozen dairy) DEPTH- the # of variations in each product line that a firm markets in its mix. (# of greek yogurt flavors) LENGTH- the # of different products the firm sells (total)

1. What retailer is by far the largest?

Walmart

1. What is bundling?

When 2 or more goods and services are sold together at a price that is less than the sum of their separate prices.

1. What is stockpiling?

When consumers purchase an atypically large amount of a product in response to temporarily low unit prices, without increasing their consumption rate.

1. What is anchoring?

When the initial reference value is used as the basis for a quantity decision.

1. What is the food storage "danger zone"?

When the temp is at 41 F- 135 F

1. What is a confounding factor?

a factor that affects the dependent and independent variable. -ex. your healthful product will sell well in highly educated neighborhoods (even if it's not because of what's learned in school).

1. What is pricing efficiency?

a measure of how close retail prices are to those that would be observed under perfect competition at all levels in the food chain.

1. What is technical efficiency?

a measure of how low costs are relative to output.

1. What is return on marketing investment (ROMI)?

a metric used to measure the overall effectiveness of a marketing campaign.

1. What shape glass will people pour more into on average?

a short, wide glass

1. Approximately what percentage of food expenditures is on food-away-from-home (FAFH)?

about 50%

1. What is an open market channel?

activities are carried out by independent companies.

1. When is cannibalism likely to be most concerning?

after introducing a new product.

1. What is the underlying idea behind the levels of marketing relationships?

based on mutually beneficial connections to others.

1. Why have marketing margins increased over time?

because our food is more processed and more widely distributed.

1. How do manufacturers exercise control in distribution channels?

by using an open market or administered channel

1. What is channel conflict?

can occur when you do business with competitors.

1. Consumers might not be willing to try a new product they are not familiar with. What is this an example of?

consumer elusivity

1. What is breakeven analysis?

finds the # of units that needs to be sold in order to make a profit at a hypothetical price.

1. In what part of the life-cycle is time most scarce? How does this interact with bounded rationality? What consequences does this have for food marketers?

-Time is most scarce in the age range 30-44. -??

1. Why keep customary pricing?

firms try to keep prices constant to avoid consumer's from experiencing negative disconfirmation.

1. What products are likely to be charged the highest slotting fees?

frozen/refrigerated products because of high cost of expansion and a product class characterized by a lot of new products.

1. What type of consumer segment would a "California-types" be?

have higher demands for fresh, organic and healthier foods.

1. Why do retailers charge slotting fees?

helps retailers defray the costs from lost sales from the established product(s) that lose shelf-space (possibly removed).

1. What is Hi-Lo pricing?

high prices with short periods of sales.

1. Why offer quantity discounts?

-a way to implement a multi-segmentation strategy to product-related market segments. -reflects potential per item production/marketing cost savings from larger orders. -accommodates decreasing marginal rates of substitution of consumer utility (diminishing returns).

1. What are the advantages of a product line?

-advertising economies -uniform quality meet consumer expectations -marketing efficiencies, such as distribution -don't have to negotiate for shelf space for each product in the line -uniform packaging allows for lower costs and increases salience -allows for greater market capture

1. What costs must be balanced to effectively manage inventory?

holding costs - cost per unit per day of holding inventory - stock-out costs - cost of losing business because you do not have a wanted product • includes loss of goodwill and loss of repeat purchases - fixed order cost - the cost of making an order that is independent of the quantity ordered • ex: cost of a truck being sent to a facility

1. Why is the paleolithic a useful benchmark for diet?

-because our species evolved to function in the paleolithic environment. -fossils suggest that a paleolithic man was in good health.

1. Besides short-term demand, what other factors might be important to customers?

-brand equity -product selection

1. What is non-personal selling?

includes: advertising, product placement, sales promotion, direct marketing, public relations, publicity, guerrilla mktg.

1. What is markup?

increase the price at different stages in the food chain to cover operating expenses and potentially make a profit.

1. What is personal selling?

interepersonal promotional process involving a seller's person-to -person presentation to a prospective buyer

1. What factors led to the rise of chicken consumption (and decline of some other meats)?

-chicken became a symbol of wealth -changing sensibilities -anti-fat and anti-carb culture -growing unpopularity of beef

1. Same for concentration strategy.

2. Concentration Strategy - use only 1 marketing mix for 1 target segment • Pros - Smaller focus allows smaller firms to compete with larger firms - Production cost savings from specialization - Requires only 1 marketing mix • Cons - Risky due to a lack of product portfolio diversification - If the target market changes in number or preferences, then sales will drop

1. Same for multi-segment strategy.

3. Multi-segment Strategy - Use multiple marketing mixes to target multiple target markets • Pros - Increased market coverage - Diversified product (marketing mix) portfolio (less risk) - Differential pricing maintainable - Premiums can be levied from differentiating for each target market (higher willingness to pay) - Changes in the target market may simply result in shifts to one of the other targets segment • Cons - Expensive to maintain many market mixes - Production costs are higher - Cannibalism

1. Same for customization strategy.

4. Customization Strategy - treat each consumer as a segment • Costly to produce, promote, and distribute - direct to consumer distribution • Requires a high level of customer involvement

1. How persistent is "brand loyalty?"

40% can be explained by a person's past experiences

1. How often is odd pricing applied?

60-90% of products have odd retail prices.

1. How much do retailers typically pass through?

62% pass-through, or greater than 60%.

1. What percentage of consumers will typically account for 80% of a brand's sales?

80% of sales come from 20% of clients ("Pareto's Principle")

1. What distribution network has proven to be especially efficient?

82% of US commodities rely entirely on trucking for delivery.

1. Who makes most of a household's food purchases?

90% of food purchases are made by women.

1. What is the difference between a consumer and customer?

A consumer uses goods or services purchased for personal use. A customer is just someone who engages in some form of transaction.

1. What is a product line?

A group of closely related products. (yoplait's greek yogurt selection)

1. Why is too much market power (viz. concentration) seen as especially bad in food industries?

too much market power results in social welfare loss from high prices. - especially in food economies because food is a necessity.

1. What is it called when a manufacturer sells their product to retailers for a temporarily discounted price?

trade allowances

1. How expensive are slotting fees typically?

typically between $2300 and $22000

1. Consumers were unaware of Cucina Fresca when it was first launched. What kind of product does that make it?

unsought product

1. Which physical dimension appears larger than they are relative to the other dimensions?

vertical lengths are perceived to be greater relative to horizontal lengths.

1. What is brand tarnishing?

when an event (e.g. a promotion) negatively effects a brand's equity.

1. What is direct selling?

when goods are carried directly from producer to consumer.

1. When might stockpiling increase consumption rates?

when the product is salient -frequently used -product has recently been consumed other factors -versatile foods -highly perishable -perceived as having been bought on promotion -perceived as having high storage costs -is a stand-alone product, not an ingredient

1. Be able to identify profit maximization prices and quantities from cost and revenue curves.

where marginal revenue=marginal costs

1. Same for social network strategy.

• Sell through representatives who throw a party - Ex: Pampered Chef, Tupperware - Word-of-mouth endorsements are powerful - Makes buying a social obligation - Seller assumes the risks and promo costs • Social Media Marketing - Target individuals on Facebook - Target influential "nodes" of social networks - Demo-, Geo-, Psycho-graphic, and usage patterns may be shared or inferred. • Allows accurate targeting

1. What are the effects of larger package sizes?

larger package size accelerates in home consumption rates. -total long run sales increase

1. What is the relationship between price and consumer sensations?

low prices may result in lower taste evaluations and satisfaction.

1. Who are producers of private labels?

many wholesalers develop their own private labels.

1. What are some examples of unsought products?

marketed to consumers who may not yet recognize the need for it or know of it. -often unique new products. -often unfamiliar or ethnic products.

1. Why do food marketers segment markets?

marketing efforts need to focus on target market,

1. TruEarth identified more with its product's characteristics versus the needs their products satisfy. What is that an example of?

marketing myopia

1. What do brokers and agents do?

matches buyer and seller.

1. During which stage(s) will brand managers start to think of increasing repeat purchase rates (as opposed to attracting new customers)?

maturity?

1. What is the necessary condition for a value-added food chain to exist? What marketing eras underlying philosophy reflects this condition?

maybe many links in the chain??

1. How is breakeven analysis often modified?

modified breakeven analysis- do breakeven analysis for an array of hypothetical prices. -can include consumer responses (demand)

1. What types of products are most likely to be promoted using personal selling?

more important for food manufacturers or food processors.

1. What flavor profile is best for products that are intended to be consumed often?

no strong flavors - not too sweet, not too spicy, not too flavorful. Ex. Coke provides a balanced mouthfeel and is bland.

1. What is a slotting allowance (aka slotting fees)?

one-time payments a supplier makes to a retailer as a condition for the initial placement of the supplier's product on the retailer's store shelves or for initial access to the retailer's warehouse space.

1. Approximately what is the market share of A.1.?

over 50%.

1. What is a marketing contract?

prices are established for a commodity before harvest or before the commodity is ready for marketing.

1. Which type of efficiency is the Federal Trade Commission concerned with when they determine an antitrust case?

pricing efficiency?

1. How do supercenter prices compare to other formats?

products are typically cheaper.

1. What is retailer forward-buying?

purchasing more materials than immediately needed in order to take advantage of special discounts.

1. What is the relationship between price and consumer expectations?

quality expectations have a powerful effect on taste perception.

1. What is step-out and is it illegal?

raising prices to see if competitors follow. not illegal.

1. What does the USDA do?

regulates livestock and poultry products, raw ag. products. -organic labeling -meat inspection -food assistance programs

1. What is a marketing margin?

retail price minus farm gate price divided by retail prices. NOT a measure of pricing efficiency. MKTG margins ignore the value added by marketing intermediaries and producers.

1. What component of the marketing environment do aspects of biological growth fall under?

Special features?

1. What is the #1 ingredient consumers are trying to avoid? (See "A Closer Look at Granola" slides)

Sugar

1. What types of food retailers have been rapidly gaining market share?

Supercenters

1. What is a loss leader?

Products that are offered below supplier costs to attract consumers to the store.

1. What types of retailers are most likely to charge slotting fees?

Supercenters, grocery stores, supermarkets etc.

1. Know how to apply breakeven analysis.

(breakeven point in units) x (per-units contribution to fixed costs)= Total Fixed Costs

1. How can anchoring be applied in food product marketing?

(ex. expensive wines are often mixed in not to be sold, but to anchor prices higher)

1. What effect does unit pricing have?

(listing the price in terms of dollars per physical quantities) -reduces total expenditures by 1-3%. -profits are converted to consumer welfare.

1. Whom are you competing against when you employ direct, indirect, and all consumer competitive strategies?

- Direct - battle of the brands usually hurts both brands o Example: DiGiorno's pizza is direct competitors with Tombstone, Tony's, and California Pizza Kitchen which are other pizza brands at the grocery stores - Indirect - product-type competition among substitutes o Example: competition between milk and juice o Example: DiGiorno's pizza is indirect competitors with take-out/delivery/restaurants - All Consumer Purchases - competition for disposable income; competing against the decision to not make a purchase whatsoever o Less relevant in food economies as manufactures compete for "stomach share" o Consumers don't simply consume more food just because there are more good food products. Nobody decides to stop off for a second dinner after having a first.

1. What are the different types of wholesalers?

-Assemblers -Brokers/Agents -Merchant wholesalers

1. What is the basis for forming a consumer (market) oriented description versus a myopic description?

-Consumer-oriented description is a need based description. -A myopic description is a product based description.

1. What is disruptive advertising?

-Consumers become overwhelmed and bored with marketers' efforts. -More dramatic and engaging methods are needed to overcome this (guerrilla mktg, interactive ads).

1. What does it mean if demand is elastic or inelastic?

-Elastic- means people are sensitive to price changes. -Inelastic- means people are not sensitive to price changes.

1. What are some of the advantages of segmenting geographically?

-lower promotional costs per customer -lower distributional costs -growing populations and economies provide strategic opportunities -most brands get 40-80% of their sales from what are called core regions.

1. How is full-cost pricing different from incremental cost pricing?

-FULL-COST Pricing uses average total costs as the basis -INCREMENTAL COST Pricing considers only costs attributable to production(not overhead, fixed, and sunk costs)

1. How do food consumers change as they get older and go through the life-cycle?

-Families form in 20's and 30's. -Then comes a very busy time period w children present. -Eventually households become "empty nests" -Today's US households are very diverse

1. When it comes to marketing healthy and novel products such as yogurt and soy products, whom should be targeted?

-Focus solely on health not taste -Target segments that are food gate-keepers

1. What are the types of new products?

1. Line extensions 2. Repositioning of existing products 3. New form or size of existing products 4. Repackaging of existing products 5. Reformulation of existing products 6. Innovative products 7. Creative products going from 1-7, the effort and risk increase.

1. What are the characteristics of the current marketing era?

-firms increasingly think of marketing exchanges as cooperative arrangements that benefit a long-term broad marketing concept. -place higher value on connections with business partners. -relationships are a big emphasis

1. What are the primary ways markets are segmented?

-geographic -demographic -psychographic -product-related

1. What are some of the food marketing trends that are based in our social-cultural environment?

-green marketing -nutrition marketing -buy American -social consumer activism -locavore -convenience

1. Why should these people be targeted?

-have greater predisposition to adopt and continue to use' -influence over others' eating habits -eat the food as a means in and of itself (not a means to an end)

1. How do demand elasticities affect prices?

-higher prices when inelastic -lower prices when elastic

1. Does odd pricing work?

-historically, evidence has been weak -odd pricing results in people recalling lower prices -recent, well designed studies have shown significant increases in demand.

1. How would a food marketer decide whether a hot dog is a sandwich?

-how do consumers use it? -what are its substitutes? -what do consumers associate with it?

1. What are some examples of convenience products?

-impulse goods and services- purchased on teh spur of the moment -staples- convenience goods and services that consumers constantly replenish to maintain a ready inventory. -emergency goods and services- bought in response to unexpected and urgent needs.

1. What are the purposes of loyalty cards?

-induces a sense of membership and loyalty -make people feel like they're getting a deal -serves as a "billboard" in the wallet that reminds you of the store -some have special rewards

1. What constitutes a "product"?

-ingredients, associated feelings and ideas - goods and services, package design, the idea of the goods, customer service, brand names, product lifecycle, warranties, etc.

1. What are the characteristics of short distribution channels?

-large orders -extensive technical knowledge and regular servicing required. -complex -manufacturer has adequate resources to perform channel functions.

1. What problems prevent firms from using economic price theory to determine their price?

-many firms don't attempt to maximize profit -estimating demand curves is a difficult process -dynamic effects such as habit formation are really hard to measure -requires a lot of consumer behavior data -relationships that existed yesterday might not exist today

1. What are some common food ad motifs?

-medical miracle -mood alteration -scarcity/desperation/addiction -glamour -you're the boss/power/entitlement -trickery

1. What are the components of the competitive environment?

-monopoly -oligopoly -perfect competition

1. In what ways is food different from other types of products and how do these differences affect the way foods are marketed?

-nondurable -perishable -scalable -usage variant -high frequency necessary good -input to household production -cultural significance

1. Many of the most dramatic trends in food marketing originate from consumer reactions to ag and food system practices. What are some examples of these?

-organics -health -higher quality -more labels -gmo free -"natural" -gluten free

1. What sort of claims are popular with new products?

-premium/upscale -natural -single serving -private label -fresh -organic -low or no sugar -no preservatives -quicl -low or no trans fat -no gluten -high-vitamin

1. What are the different types of non-personal selling?

-product placement -outside advertising (billboards, signs) -direct marketing (mailed coupons, emails) -public relations -publicity -guerrilla mktg (designed to get consumers' attn in unusual ways) -advertising

1. What consumer needs does pizza likely satisfy?

-quick and easy -comfort food

1. What consumer trends made TruEarth's Cucina Fresca pasta a success?

-quick home meal replacements -refrigerated pasta -whole grain food options that did not sacrifice taste

1. What does the FDA do?

-regulates -food safety -food identity -labels -nutritional info

1. What is an own-price elasticity?

-the price elasticity of demand -describes how sensitive demand is for good x to the price of x.

1. What are the 3 categories of difficulties that newly introduced products must overcome?

1. Marketplace complexity 2. Technical complexity 3. Consumer elusivity

1. Why is penetration pricing used?

-used when increasing volume or market share are the objectives -not a long-term strategy

1. What are the 6 factors that should be considered when determining the effectiveness of a promotion?

1. Contemporaneous- the immediate inc in demand 2. Carry-over effects- inc in demand may persist in the future as customers remember the past promotions 3. Purchase reinforcement- because a purchase is made, repeat purchasing is likely to occur to some extent. 4. Feedback effects- promo spending is influenced by current sales which depend on past promos. 5. Firm-specific decision rules- past and future expenditure patterns will affect the immediate impact of current promotional activities. 6. Competitive reactions- competitors will observe your promotional activity and may respond in such a way that your promo's long-term effect is nullified or even negative.

1. What are the steps to forming a market segment strategy?

1. Develop a relevant profile for each segment 2. Forecast market potential 3. Forecast probable market share 4. Select specific market segments

1. What are the 5 stages of a product's life-cycle?

1. Introduction 2. Growth 3. Saturation 4. Maturity 5. Decline

1. What 3 things must a successful communication accomplish?

1. It gains the receiver's attention. 2. Shared meaning -persuade and/or inform 3. It stimulated the receiver's needs and suggests an appropriate method of satisfying them.

1. What is mass marketing, what are its advantages and disadvantages, and what are some examples of foods that are mass marketed?

1. Mass Marketing - treat the entire market as one big segment • Good strategy when - consumer needs are homogenous - the market is small (segments would be too small) - differentiation of the product is difficult • Still may require positioning within the market's distribution • Requires only 1 marketing mix • Low cost way to produce and market products • Ex: food staples (milk, rice, fresh produce) • Becoming less common of a strategy - increased heterogeneity in consumer needs - expansion of markets - lower media and distribution costs

1. What are the functions of a distribution channel?

1. Physical changes and movements (producers change inputs to products, wholesalers move products to retailers) 2. Flow of info (downstream info is transmitted back to the producers) 3. Change of ownership (as products move down a channel, they are bought)

1. What factors determine the profit maximizing price?

1. Price theory 2. Cost-oriented analysis consumer psychology competition regulation

1. What are the 4 P's of marketing?

1. Product 2. Price 3. Promotion 4. Place

1. What were the 4 marketing eras and what was their underlying philosophies?

1. Production o Assumed the customer would find the product o Many great ideas lost o Product focused o "A good product will sell itself." 2. Sales o Assumed customers simply needed to be found and/or persuaded o Marketing and sales were thought of as the same o Product/desire focused o "Simple marketing and selling will overcome consumers' resistance and convince them to buy." 3. Marketing o Geared all aspects of the business to customer focused marketing concepts o "The consumer is king! Find a need and fill it." 4. Relationship o Marketing concept plays an increasingly important role o Realization that it is easier to retain customers than it is to attract new ones o "Long-term relationship with customers and other partners lead to success."

1. What are the possible objectives of promotion?

1. Provide info 2. Increase demand 3. Differentiate the product 4. Accentuate the product's value 5. Stabilize sales 6. Deter entry

1. What are the elements of the logistic mix?

1. Storage facilities 2. Inventory 3. Transportation 4. Utilization and packaging 5. Communications

1. What are the criteria for a market segment to be useful for targeting?

1. The mkt segments must be measurable in terms of both purchasing power and size. 2. Marketers must be able to effectively promote and serve a mkt segment. 3. Mkt segments must be sufficiently large to be potentially profitable. 4. The # of segments must match the firm's capabilities. 5. Stable enough to be worth targeting over time.

1. Why have distribution channels become more administered?

1. risk management 2. quality assurance 3. raw-product utilization 4. efficient plant utilization 5. ensuring retail assortments

1. What is a venture capitalist?

A person who invests in a business venture, providing capital for start-up or expansion.

1. What is a positioning map?

A positioning map uses the attribute-space to compare different products in relation to each other.

1. Why did Birdseye need to be vertically integrated early on?

Because of the frozen fish and meat- more resources to keep frozen.

1. What is Engel's Law?

As family income increases, -a smaller percentage of expenditure goes to food -low income households tend not to purchase... ---fresh produce ---luxury items ---foods w low calorie/$

1. What ethnic group is growing the fastest in the U.S.?

Asian-American consumers.

1. Who benefits from a high degree of technical efficiency?

Both industry and consumer.

1. What is meant by "bounded rationality" and why is it crucially important in food marketing?

Bounded rationality- when an economic agent is unable to make a fully informed decision because they do not have the time or ability. -- Crucially important to food marketing because people tend to buy the same thing over and over again to avoid the repeated high burden of thinking critically about every little purchase. Because of this, if a consumer purchases your product they are likely to continue to in the future

1. Who cares about food marketing?

Businesses all along the food chain Consumers Policy makers

1. Does a manufacturer set its retail price?

Can suggest retail prices.

1. What is a cohort effect and how is it different from age effects?

Cohort effect- the tendency of generation members to be influenced and bound together by significant events in their lives. AGE EFFECTS are how people change as they get older.

1. What do assemblers do?

Combine small lots into large lots, carry out commodity grading (determine product characteristics and value).

1. How do companies apply product life-cycle theory to lower risk and maximize profits?

Companies can launch new products / extend product lines to revive sale trends which are wearing off---> positive profits for a product in the growth stage can be reinvested in launching new products to keep profitability alive.

1. How is market myopia avoided?

Companies must broadly define organizational goals toward consumer needs.

1. How was the paleolithic diet different from current diets and what is the consequence of this difference?

Compared to paleolitic humans, we eat: -43% less protein -22% less fat -57% more carbohydrates Consequences -33% chance of developing diabetes. -childhood obesity

1. What is the most common way firms set their prices?

Competitive pricing strategy- simply matching the prices of comparable competitors.

1. How did TruEarth conduct its market research during product development of its pizza?

Conducted 300 mall intercept interviews comparing the TruEarth concept with takeout and other refrigerated pizzas.

1. What are the defining characteristics of the various retailer formats?

Conventional Supermarket - a format offering a full line of groceries, meat, and produce with at least $2 million in annual sales. Typically carries approximately 15,000 items and frequently offers a service deli and a bakery. • Superstore - a larger supermarket (at least 40,000 square feet in total selling area and 25,000 items) offering an expanded selection of nonfood items. - Ex: Fred Meyer, Food 4 Less & Foods Co. • Combination Food/Drug Store - a combination of a superstore and drug store, but with 85 percent of sales still from food products. - Ex: Jewel-Osco • Warehouse Store - a low-margin grocery store offering reduced variety, lower service levels, and a streamlined merchandising presentation, and lower prices. - Ex: WinCo Foods, Super Saver Foods • Super Warehouse - a high-volume, hybrid format of a superstore and a warehouse store. Offer a full range of service departments, quality perishables, and reduced prices. • Limited-Assortment Foodstore - a low-priced grocery store providing limited services and carrying fewer than 2,000 items with limited perishable products. - Ex: Aldi's • Specialty/Gourmet Retailers - Specializes in a specific food category, such as organic, locally grown or produced, ethnic/international, or health focused.

1. When are correlations, as opposed to causations, useful for food marketers?

Even if a cofounding factor obscures the causal relationship, a correlation can be used for prediction.

1. What is EDLP?

Everyday Low Pricing (EDLP) uses continuously low and stable prices rather than short-term price cuts.

1. What is an example of a contractual agreement in an administered distribution channel?

Ex. Frozen peas must be processed immediately after picking. Processors make contractual agreements with farmers that allow them to tell them exactly when to start picking.

1. How has A.1. maintained such high market share?

Extremely high brand awareness.

1. What are the first and second mover advantages?

FIRST MOVER ADVANTAGE- the often large advantage that the first firm to market a product, service, or address a customer need has over subsequent entries. SECOND MOVER ADVANTAGE- the advantage gained when another firm enters a market first. -allows the second firm to avoid mistakes made by the first firm.

1. As a product advances through its life-cycle, what kind of advertising becomes more/less prevalent?

First, there is a lot of informative advertising with the most at introductory, and then it tapers off throughout the cycle. Reminder advertising is most prevalent in the decline stage and less prevalent in the previous stages.

1. What is an extrinsic ad message and are they common?

Food ads about the extrinsic attributes of food. Themes emerged that appeal to social status, fears, consumer insecurities, values, and needs.

1. What products are most often used to set opening price points? Why?

Grocers increasingly use their private labels to set opening price points. Gives the impression the entire store is full of bargains. -private labels are tightly tied to the store's brand image.

1. What condition must hold for a firm to be in a distribution channel?

If they do not add value, they would not exist.

1. How might a manufacturer acquire influence in a distribution channel?

If they sell to retailers and directly to consumers. -creates direct comp. b/w the manufacturer and retailer.

1. How did the value-added food chain change in frozen foods throughout since frozen foods emerged?

In 1955, Birds Eye added values beyond the physical and functional ones that contributed to a clear and likeable personality for the brand.

1. Is FAFH expenditure share increasing or decreasing?

Increasing

1. What brands are most vulnerable to brand tarnishing?

Marketers of premium brands promote very selectively to avoid tarnishing their brands.

1. As an industry becomes more concentrated, what happens to the price markup?

More concentrated results in higher prices.

1. Why have most public health initiatives to get people to eat healthier failed?

Most have used a "just tell 'em it's healthy" marketing approach. -what does work is an in-depth analysis of the market, market segmentation, and well-targeted marketing.

1. What pricing strategy was did Lawry's use for their steak sauce?

Penetration pricing

What is a need? Be able to provide examples.

Need- the difference between customers' actual conditions and their desired conditions. -security -social connection -self-esteem -personal ability -caring for others

1. Are pay-to-stay fees common?

No, they are rare.

1. What is the relationship between price and objective quality?

Prices and objective quality measures are not often correlated.

1. Which product development strategy is likely to have the most difficulties?

Product diversification because of unfamiliarity with market and there are inherent uncertainty with new products.

1. Products are more than physical things. What else constitutes a product?

Product- bundle of physical, service, and symbolic attributes designed to enhance buyers' "want satisfaction"

1. What are push and pull strategies?

Push strategies- producers use sales promotions to push products through the food distribution channel. Pull strategies- aim to induce consumers to purchase and request more.

1. Can a product be sold at different prices to different buyers at the same level of the food chain for the purpose of harming competition?

Robinson-Patman Act (1936)- Cannot have different prices for different buyers that are at the same level of the food chain.

1. In the Natureview case study, what were the differences between the supermarkets and natural food stores?

SUPERMARKETS -suppliers to supermarkets typically sent products to a large distribution center, which then shipped directly to the supermarket. -charge one-time "slotting fees" -required regular trade promotions (usually every 3 months) NATURAL FOOD STORES -typically charged higher retail prices for the same products than supermarkets did -Distribution involves 4, not 3 parties. There is a natural foods distributor. -dont charge slotting fees, but do charge a one-time allotment of one free case of product for every new SKU authorized for distribution in its first year.

1. What stage in the product life-cycles was Cucina Fresca in in the TruEarth case study?

Saturation ?

1. What are some common product-related segments?

Segmenting can be based on: -Consumers' brand loyalty toward a product -Benefits that people seek when they buy -Usage rates for a product -Tastes

1. What are the three ways a channel can be an administered channel?

Sequential activities are under the control of one organization. 1. Vertical integration 2. Contractual agreements 3. Influence

1. What is penetration pricing?

Sets an artificially low price as a marketing weapon.

1. What effect does prestige pricing have?

Setting high prices to maintain a desirable image. -direct increase in social prestige -change perception of the product through individual factors

1. What is cost-plus pricing?

Takes some measure of costs and adds a percentage to it. -many variations that differ in complexity -not consistent with price theory methods Is especially effective for low-cost producers.

1. What is a target market and why is it useful to have one?

Target Market- group of people whom the firm decides to direct its marketing efforts. -useful because different people have different needs.

1. What is an opening price point?

The practice of retailers setting a low price for an item within a category thereby giving consumers a high value option.

1. What types of products will have high marketing margins?

The transport for low-value, bulky goods, such as wheat, results in high margins because the quasi-fixed transportation cost is a large % of its retail price.

1. What advantages does A.1. have with retailers?

They have a trusted relationship w retailers, can guarantee performance.

1. What is off-invoice pricing?

Type of sales promotion where the manufacturer offers the retailer a price reduction on the product price at the time of billing.

1. How might stockpiling lead marketers to miscalculate the effect of a promotion?

Undermines promotions designed to increase long-term sales -can cause price promotions to decrease long-term revenue.

1. What are the effects of coupons?

Used to give temporary price reductions w minimal effect on consumer price expectations. -allows for targeted discounts -increases own-price elasticities -used to induce repeat purchases

1. Why are positioning maps useful?

Useful to decide a competitive position and enables them to distinguish one product from those of the competition (position strategy).

1. What are wholesalers and what are their functions?

Wholesalers take title of goods from manufacturers and distributes them to retailers. They eliminate redundancy in the system. Directly provide economies of scale.

1. When will a push strategy be best applied?

Work well for lower cost items, or items where customers may make a decision on the spot.

1. What is cooperative advertising?

a cash contribution from producer to the retailer's ad budget

1. What is odd pricing?

setting prices to odd numbers just under round whole numbers.

1. What is skimming and when is it best applied?

skimming is setting prices initially high and slowly decreasing prices to attract people without decreasing willingness-to-pay. -typically used w new and novel products -most effective w durable goods but can be useful for food

1. Know how to apply cost-plus and incremental cost pricing.

slides 10 and 11 on pricing strategy

1. How often do supermarkets typically charge slotting fees?

slotting occurs 70-90% of all new grocery products.

1. Why make larger quantities more expensive per ounce?

sometimes larger sizes provide convenience or are desired by inelastic segments.

1. What is a production contract?

specifies who supplies the production inputs, the equality and quantity of the commodity to be produced, and the compensation for the producer.

1. What are merchant wholesalers?

store an assortment of market ready goods that can be bought from retailers.

1. If you put equal quantities in wide/short and narrow/tall bowls, which one will consumers think has more?

tall skinny packages appear to contain more (cereal boxes)

1. What is cannibalism?

the negative impact of a company's new product on the sales performance of its existing and related products.

1. What has been given increasingly more emphasis in the history of food marketing (particularly in the last 2 eras)?

the relationship with consumers and putting consumers first.

1. What and who are food gate-keepers?

they are opinion leaders who can influence others' eating habits.