MKTG Quiz #2

line extension

extending an existing brand name to new forms, colors, sizes, ingredients, or flavors of an existing product category --> INCREASE DEPTH

Value of branding

facilitate purchasing, establish loyalty, protect from competition, reduce marketing costs, are assets, impact market value

Total Cost

fixed cost + variable cost

Exclusive Distribution

give a limited number of dealers the exclusive right to distribute the product (rolex, Tiffany and Co.)

price elasticity of demand

how a change in price affects the product demand (% change in quantity demanded of product X / % change in price of product)

unsought products

items that the consumer does not know about or knows about but does not initially want (innovative furniture, accident insurance)

speciality products

items with unique characteristics that buyers are willing to expend considerable effort to obtain, special purchase effort, strong brand preference and loyalty

BEP Profit

(Fixed costs + target profit) / (Price - variable cost per unit)

Perishable

Cannot be stored for later sale or use, hard to manage supply and demand

When Toyota introduced hybrid cars, there were waiting lists to buy them. Then Honda and a few other manufacturers entered the market, shifting the product life cycle for hybrid cars into the ________ stage of the product life cycle.

Growth

brand extension

the use of the same brand name for new products being introduced to the same or new markets --> INCREASE BREADTH

Innovators (2.5%)

those buyers who want to be the first to have the new product or service, stay very informed, spread WOM and help the new product gain market acceptance

BEP

Fixed costs / (Price - variable cost per unit)

High/low pricing

-price is temporarily reduced to encourage purchase -price discrimination based on searching cost

Why Bundle?

1-Cost reduction—reduce transaction costs 2-Maximize revenue (consumer heterogeneity) 3-Encourage consumers to stock up, so they won't purchase competing brands. 4-Encourage trial of a new product. 5-Provide an incentive to purchase a less desirable product.

Supply Chain

A set of individuals and organizations involved in the process of making a product or service available for use or consumption by the consumer or business user Makes the flow of goods from a producer, through intermediaries, to a buyer

Retailer

An intermediary who sells to consumers

Product

Anything that is of value to a consumer and that might satisfy a want or need through market exchange

Apple Watch (1st generation) is an example of __________.

Brand extension

Samsonite, the luggage manufacturer and retailer, is thinking about tapping into the clothing industry to manufacture outerwear for outdoor activities and travelers. This is an example of _____.

Brand extension

Ferrari and Lamborghini are manufacturers of very expensive automobiles. Their limited edition cars often sell for $300,000 or more. What pricing objective are they using?

Customer oriented

As personal computers became popular, the sale of typewriters decreased significantly and now typewriters are only used by a very small segment of consumers. Typewriters are in the _______ stage of the product life cycle.

Decline

Fixed costs

Don't vary with production or sales revenue (rent, utilities, executive salaries)

Inelastic Demand

E < 1, price insensitive (water, salt, electricity)

Elastic demand

E > 1, price sensitive (meat, movies, plane tickets)

What are the typical consumers to purchase a product at its "Growth" stage?

Early adopter and early majority

Early Adopters (13.5%)

Enjoy novelty, but wait and purchase the product after careful review If this group is small, ultimate adoption will likely be small.

break-even analysis

Examines the relationships among cost, price, revenue, and profit over different production level and sales

profit maximization

Increasing prices to the highest point possible -relies primarily on economic theory

The marketing manager at an upscale country club once offered a two-for-one happy hour price for all alcoholic beverages, but only to see very little response to the special. For these consumers, demand for alcoholic beverages is _____

Inelastic

Tiffany always asks Samantha about beauty supply products. She considers Samantha a well-informed friend who always knows the latest trends and stays ahead to purchase the new product. For Tiffany, Samantha is a(n) ___________

Innovator

What are the typical consumers to purchase a product at its "Introduction" stage?

Innovator

Services

Intangible activity that satisfies consumer or business user needs (hotel, skiing, flying)

Denise asked for Janet's e-mail address, but Janet said she didn't have one. Janet would probably be considered a(n) _______

Laggard

What are the typical consumers to purchase a product at its "Decline" stage?

Laggard

Late Majority (34%)

Last group to enter a new product market The product has achieved its full market potential

John, a lower-middle class consumer, typically approaches new and cutting-edge products with a high degree of skepticism. However, he would likely consider purchasing these products only after they were adopted by the mainstream population, and if he had the money to do so. He is a(n) ____

Late majority

What are the typical consumers to purchase a product at its "Maturity" stage?

Late majority

Apple Watch (2nd generation) is an example of

Line extension

Other than the existing undergraduate program, MBA program, and PhD program, the Lebow College of Business will offer Master of Marketing program in the future. This is ______.

Line extension

Premium pricing

Price is an indicator of quality A sign of status and prestige (Rolex, wine)

EDLP (everyday low pricing)

Price is constantly low, target price sensitive segment

Which type of competition does footwear/shoe industry have?

Monopolistic Competition

Break-even point

Number of units sold at which total revenue = total costs (profit = 0)

Which type of competition does airline industry in the U.S. have?

Oligopolistic Competition

Goods

Physical objects such as clothes or shoes

Which of the following is MOST likely to have inelastic demand?

Prescription Drugs

Which type of competition does wheat industry have?

Pure competition

Heterogenous

Quality of services depends on who provides then and when, where, and how, inconsistent service quality, you can use machines to provide service which allows the opportunity for micromarketing

Leader Pricing

Reduction in the price of a high-demand item in the hope that consumers will pick up other items while shopping

A new gym was recently opened in the neighborhood. They are trying to increase people's awareness of the gym and the market share, by offering a very low membership fee and even free trials. What pricing objective are they using?

Sales oriented

Bundle pricing

Selling more than one product for a single, lower price than all items' individual prices adding altogether (McDonald's)

Intangible

Services cannot be seen tastes, felt, heard, or smelled before purchase, difficult to convey benefits and is difficult to promote

Pure service

Services provided to consumers without the involvement of any tangible product (hair salon)

skimming pricing

Set a high initial price and then lower it gradually. The purpose is price discrimination.

Customer-oriented pricing

Setting premium pricing to meet specified expectations

What type of product does TV belong to?

Shopping product

Demand Curve

Shows a maximum number of products consumers will demand/buy at a given price --> buyer surveys, pricing experiments, analyze sales data

What type of product does BMV vehicle belong to?

Specialty product

Goods-services continuum

Spectrum along which goods and services fall according to their attributes, from pure good to pure service

introduction stage

The initial stage of a product's life cycle; its first appearance in the marketplace, when sales start at zero and profits are negative, low sales, high distribution and promotion expenses, create product awareness and trial

E = 1

Unitary Demand

What type of product does funeral service belong to?

Unsought product

Variable costs

Vary directly with the production volume (material used in production, labor)

Early Majority (34%)

Wait until bugs are worked out. Few new products can be profitable until this large group buys them.

Rebate

a cash refund given for the purchase of a product during a specific period

Coupon

a certificate that entitles consumers to an immediate price reduction when the product is purchased

Convenience product

a consumer product that customers usually buy frequently, immediately, and with minimal comparison and buying effort, don't invest a lot of time into decision making

Sales objective

a goal of increasing sales and controlling a specified market share

Product Line

a group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges

Brand

a name, term, symbol, design, or combination thereof that identifies a seller's products and differentiates them from competitors' products

Price cut

a reduction in price

Cost-plus pricing

add a fixed percentage (markup) to the cost

Wholesaler

an intermediary who sells to other intermediaries, usually to retailers; term usually applies to consumer markets

Shopping product

an item for which buyers are willing to expend considerable effort on planning and making the purchase, less frequent purchase, higher price (clothing, computer)

intermediary

any person or organization in the distribution channel that moves goods and services from the producer to the consumer

Laggards (16%)

avoid change and rely on traditional products

Actual Product

brand name, quality level, packaging, design, features

Direct channel

manufacturer to customer

Indirect channel (one intermediary)

manufacturer to retailer to customer

Indirect channel (two intermediaries)

manufacturer to wholesaler to retailer to customer

monopolistic competition

many firms selling differentiated products at different prices (fast food)

Pure competition

occurs when different companies sell commodity products that consumers perceive as substitutable; price usually is set according to the laws of supply and demand

oligopolistic competition

occurs when only a few firms dominate a market (cellphone companies ie, Verizon, Sprint, T Mobile)

Monopoly

occurs when there is only one seller of a product that has no close substitutes, DOMINATES the market

Target Profit

pricing to achieve a specified profit

Inseperable

produced and consumed at the same time, purchase risk is high for consumers

Pure good

products that do not include any services, physical object, tangible

Competitor-oriented pricing

set price in relation to competitors prices, to discourage more competitors from entering the market

Maturity Stage

stage of the product life cycle when industry sales reach their peak, so firms try to rejuvenate their products by adding new features or repositioning them, weaker competitors drop out

Decline Stage

stage of the product life cycle when sales decline and the product eventually exits the market, marketing objective is to determine whether to maintain, harvest, or drop declining products

Growth stage

stage of the product life cycle when the product gains acceptance, demand and sales increase, and competitors emerge in the product category, marketing objective is to maximize market growth and market share

penetrative pricing

start very low to build market share and discourage others from entering the market

intensive distribution

stocking the product in as many outlets as possible (Coca Cola, Kraft)

Selective Distribution

the use of more than one but fewer than all of the intermediaries that are willing to carry the company's products (Sony, electronics)

brand equity

the added value a brand name gives to a product beyond the functional benefits provided, people perceive them as more high quality because they invest more money into their promotions (Apple, Google, Amazon)

Core customer value

the basic problem solving benefits that customers are seeking, smartphone is you want to stay connected with the world

Associated services

the non-physical attributes of the product including product warranties, financing, product support, and after-sale service

Co-branding

the practice of marketing two or more brands together, on the same package or promotion

brand dilution

when the brand extension adversely affects consumer perceptions about the attributes the core brand is believed to hold