AICE Business Unit 3 Test "Marketing" Review

Ch 17. Describe sample size

Influences the reliability of research results because the larger the sample, the more representative of the total population is likely to be and greater confidence can be placed in the final results. The cost of research increases greatly with sample sizes.

Dynamic Pricing

Offering goods at a price that changes according to the level of demand and the customers ability to pay

Sponsorship

Payment by a company to the organizers of an event or team/individuals so that the company name becomes associated with the event/team/individual

Ch 17. Describe the difference between primary and secondary research

Primary research collects first-hand data and secondary research is the use and analysis of data that already exists.

Ch 18. What are links between the 4Ps and 4Cs

Product-customer solution price-cost to customer promotion-communication with customers place-convenience to customer New product development is necessary for the customer's new needs or wants. Determining the price of a product within the range a customer can pay for is mandatory for a business to be successful. Communication with customer is providing up to date information to promote the product and receive market research information. Place refers to how the product is distributed to customers and convenience to customer provides easy access to products.

Ch 19. Why might a business advertise an existing product

Promote a new offer, reinforce brand, and persuade new customers

Below the Line Promotion

Promotion that is not a directly paid for means of communication, but based on short-term incentives to purchase

Qualitative Research

Research into the in-depth motivations behind consumer buying behavior or opinions

Quantitative Research

Research that leads to numerical results that can be statistically analyzed

Ch 17. Describe what is sampling used for

Sampling is frequently used in consumer surveys because it involves directly asking consumers or potential consumers for their opinions and preferences. It helps obtain qualitative and quantitative research. The more closely the sample reflects the characteristics of the survey population, then the more accurate the survey is likely to be.

Mass marketing

Selling the same products to the whole market with no attempt to target groups within it

Market Skimming

Setting a high price for a new product when a firm has a unique or highly differentiated product when a firm is unique with low price elasticity of demand

Ch 18. Describe psychological pricing

Setting prices just below key price levels in order to make price appear lower than it is. ex: $9.99 It is common for manufacturers and retailers to set prices just below key price levels in order to make the price appear much lower than it is.

Penetration Pricing

Setting relatively low price often supported by strong promotion in order to achieve a high volume of sales

Product Positioning

The consumer perception of a product or service as compared to its competitors

Equilibrium Price

The market price that equates supply and demand for a product

An MP3 manufacturer recently launched a promotional campaign costing $3 million. Its marketing objective was to increase sales by at least 30% during the campaign. Sales actually increased form $20 million to $29 million. it can be concluded that

The marketing objective was met, but the impact on profits cannot be determined

Viral Marketing

The use of social media sites or text messages to increase brand awareness or sell products

Societal Marketing

This approach considers not only the demands of consumers but also the effect on all members of the public involved in some way when firms meet these demands

Ch 18. Describe customer relationship marketing

Using marketing activités to establish successful customer relationships so that existing customer loyalty can be maintained. Customer information such as income and buying habits are important parts of the process of CRM. Once information is gathered, the 4Ps should be adapted to meet the needs of the customer.

Median

Value of the middle item when data has been ordered/ranked. Divides data into two equal parts

Brand Extension

a common method used by companies to launch a new product by using an existing brand name on a new product in a different category

in the marketing mix, place is concerned with

channels of distribution

Which of the following is an advantage of probability sampling relative to non probability sampling

confidence levels can be calculated

A bank conducting primary research into consumer opinions about different types of banking charges decides to send a researcher into a shopping mall. She is instructed to conduct a questionnaire survey with whoever happens to be passing. This is an example of what type of sampling method

convenience

The 4Cs is one view of the key elements of successful marketing. Which of the following is not one of the 4Cs

customer loyalty

Which of the following is not generally considered to be an advantage of primary research relative to secondary research

it is cheaper to collect

Which of the following is not generally considered to be a benefit of branding

it reduces costs

A firm decides to set its promotional budget using objective-based budgeting. What does this mean

it will be se at a level required to achieve a sales target

The product life cycle is illustrated below If a product is at point x, what stage of its life cycle has it reached

maturity

Which of the following forms of data collection is an example of a business conducting primary research

observation

A firm estimates that the demand for its product is price elastic, it decides to reduce the price of its product. assuming that the firm is correct in its estimate of price elasticity of demand,w which of the following outcomes will apply to the firm as a consequence of the price reduction

only ii, there will be an increase in revenue

Which of the following is not one of the traditional 4Ps

packaging

Ch 19. Describe Advertising

paid for communication, with potential and existing customers, to inform and/or persuade. Sales promotions are in-house incentives to enervate increased sales

Ch 18. What is the formula for price elasticity of demand

percentage change in quantity demanded/ percent change in price

A large firm selling industrial goods is least likely to use which of the following forms of promotion

personal selling

Which of the following is not an example of a sales promotion

personal selling

Qualitative research is best defined as

research into the underlying motivation behind consumer buying behavior

When selling price, a baker uses marginal-cost pricing with the aim that each unit of sales provides a contribution of $0.20. The baker faces the following costs for producing a particular type of bread The bread is baked in batches of ten loaves at a time. The bakery has fixed costs of $1,000 per month and at full capacity is able to produce 10,000 loaves of bread. What will the selling price be

$0.37

A car retailer conducted research into the household income of all customers making a new-car purchase over the period of one week. The table below shows the findings What is the modal income of household within the survey

$10,000 to less than $20,000

A car retailer conducted research into the household income of all customers making a new-car purchase over the period of one week. The table below shows the findings What is the mean income of households within the survey

$20,000 to less than $30,000

A car retailer conducted research into the household income of all customers making a new-car purchase over the period of one week. The table below shows the findings A cumulative frequency curve for the data is shown below What is the approximate median household income

$24,000

A retailer currently charging $10 for its Kangaroo soft toy has a monthly revenue of $30,000 form its sales. If price elasticity of demand is -2, what will be the revenue from Kangaroo sales if price is reduced by 10%

$32,400

A firm has fixed costs of $20,000 per year and unit variable costs of $6. Production is currently 4,000 units per year. Assuming that the firm uses full-cost pricing and adds a profit margin of 200%, what is the selling price

$33

Ch 19. How can promotion can be used to extend a product's life

1. Regenerate interest in a product 2. target a new market 3. persuade towards alternative uses

Ch 16. Explain two advantages of mass marketing

1. can target a larger market so increased sales reduce costs per unit as larger market is spread over more consumers 2. small market niches do not allow economies of scale and it runs fewer risks than niche strategies.

Ch 19. Describe three methods a business may use to assess the effectiveness of a promotional campaign

1. increase in hits on a website 2. increased number of inquiries 3. Increase in market share

Ch 16. List and give examples of 2 factors that could lead to a business experiencing declining market share in growing economy

1. product does not meet the needs of the market due to poor product development 2. increased level of competition sees consumers swap to substitute products

Consumer Profile

A quantified picture of consumers of a firm's products, showing proportions of age groups, income levels, location, gender and social class

Ch 17. Explain the difference between quota and stratified sampling

A quota sampling is similar to stratified sampling but in this method the interviewers are selected according to the different proportions that certain consumer groups make up of the whole target population. Stratified sampling is the method that recognizes that the target population may be made up of many different groups with many different opinions

Ch 17. List the advantages and disadvantages of using a small sample

Advantages: 1. low cost for research because not as many participants 2. less time is wasted on searching for results Disadvantages: 1. Less representative of the total population 2. Lower confidence level for final results

Ch 18. What are the 4Cs

An alternative view of 4Ps: customer solution, cost to customer, communication with customer, and convenience to customer

Asset Led Marketing

An approach to marketing that bases strategy on the firm's existing strengths and assets instead of purely on what the customer wants

Product Orientation

An inward-looking approach that focuses on making products that can be made - or have been made for a long time - and then trying to sell them

Market Orientation

An outward-looking approach basing product decisions on consumer demand, as established by market research

Marketing Mix

Four key decisions that must be taken in the effective marketing of a product: Price Product Promotion Place

Random Sample

Group of people taking part in a market research survey selected to be representative of the overall target market

Brand

Identifying symbol, name, image or trademark that distinguishes a product from its competitors

A small independent retailer of DVDs estimates that it faces the following demand schedule If the retailer reduces its price from $20 to $15, the PED will be

-0.8

Ch 19. Why is packaging an important aspect of marketing

1. Attracts customer attention 2. stands out from competitors 3. provides valuable information

Ch 16. List factors that could lead to an overall decline in the size of a market

1. Changes in taste 2. Increase in substitute products 3. Decline in consumer incomes

Ch 17. What are three features of effective questionnaire design

1. Making the objectives clear 2. Avoiding certain questions 3. Including other questions Questionnaires should make the objectives of the research clear, in this ay the questions would focus on these goals. Another effective feature is avoiding questions that seem to point to one particular answer because bias would then be introduced. Finally, include some questions that will allow a classification of results by gender, area lived in, and occupation.

Ch 19. What are functions performed by wholesalers in a traditional channel of communication

Break bulk, allow smaller retailers to enjoy some economies of scale.

Promotional Mix

Combination of promotional techniques that a firm uses to sell a product

Promotions may be defined as

Communication with actual or potential customers

Ch 19. Why is it important to measure the impact on sales following an advertising campaign

Evaluate the appropriateness of the amount spent, inform future decisions. By comparing the sales of the product before the campaign was launched with the daily and weekly sales during and after the campaign, some results could be formed and then analyzed. The results could then be used to calculate the promotional elasticity of demand.

Integrated Marketing Mix

Key marketing decisions complement each other and work together to give customers a consistent messages about the product

Ch 16. Explain the different between market orientation and product orientation. Use examples

Market orientation is the outward-loping approach basing product decisions on consumer demand. It gives a business customer focus. Increasing consumer awareness of competitor's products, prices and image can result in fluctuations in popularity of goods and services. For example, with the huge cost of developing new products, like cars, there is convincing evidence for most businesses to use the market-oriented approach. Product orientation is an inward-looking approach that focuses on making products that can be made and then trying to sell them. For example, the development of the WAP mobile phone was driven more by technical innovation than by consumer needs.

Customer Relationship Management (CRM)

Marketing activités used to establish successful customer relationships so that existing customer loyalty can be maintained

Ch 18. Why should pricing decision not be taken i isolation from other marketing mix decisions.

Need to be integrated, price reflects quality, attracts target market. if the product does not meet customer expectations regarding quality, durability, performance, and appearance then no matter the price it will not sell successfully in the long term. Pricing is significant in the marketing mix because if it is wrong then the work put into market research is at risk.

Which of the following is an example of above-the-line promotion

advertising in a magazine

A firm that wishes to conduct qualitative research should use which of the following research methods

focus groups

Which of the following factors will act as a constraint on promotion

i, ii, iii, iv all of them

Niche Marketing

identifying and exploiting a small segment of a larger market by developing products to suit it

which of the following is the most likely disadvantage of direct selling

storage and stock costs have to be paid for by the producer

Price elasticity of demand measures

the responsiveness of quantity demanded to a change in price

Viral marketing includes

the use of ams text messages.