BUS 321 Exam 2

Test Marketing

Stage of new product development in which the product and its proposed marketing program are tested in realistic market settings. Companies often shorten or skip this stage

Target Costing

Starts with an ideal selling price based on consumer value considerations and then targets costs that will ensure the price is met

Total Costs

Sum of the fixed and variable costs for any given level of production

Positioning Statement

Summarizes company or brand positioning using this form: to _______ is _______ that ______________.

What is included in the first part of a marketing strategy statement?

Target Market Description

At Fantastic Flavors, a large regional chain of candy stores, employees from marketing, design, production, and finance work in cross-functioning groups to save time and money in the new product development process. Fantastic Flavors uses a ___________ approach.

Team-based new product development

Brand Equity

The differential effect that knowing the brand name has on a customer response to the product or its marketing

Product Line Depth

The number of versions offered of each product in the line

Which of the following is true of product like pricing?

The price steps take cost differences between products in the line into account

Brand Value

Total financial value of a brand

Value-based Pricing

Uses the buyers' perceptions of value rather than the seller's cost. This is customer driven

Variable Costs

Vary directly with the level of production. Raw materials, packaging

Product Position

Way the product is defined by consumers on important attributes

Elastic Demand

When demand changes greatly with a small change in price

Inelastic Demand

When demand hardly changes with a small change in price

When is test marketing used?

With a new product with a large investment or uncertainty about product or marketing program

If Detroit DLX charges the same price for the delivery of its product to customers located in the states near the Great Lakes, but a different price to customers elsewhere, the company is using ____________________.

Zone Pricing

The augmented product is the actual product plus the various services and benefits offered with it, such as a warranty, free delivery, installation, and maintenance. (True or false)

true

List market-targeting strategies from broad to narrow

-Undifferentiated mass marketing -Differentiated segmented marketing -Concentrated niche marketing -Micromarketing

List the steps to develop strong brands

1. Brand Positioning- beliefs and values 2. Brand Name Selection- selection and protection 3. Brand Sponsorship- Licensing and co-branding 4. Brand Development- line extensions, new brands

What are the 4 segments of consumer markets?

1. Geographic (location) 2. Demographic (economic factors) 3. Pyschographic (political and legal factors) 4.Behavioral (cultural factors)

What are the 4 types of product marketing?

1. Organization 2. Person 3. Place 4. Social

Product and Service Decisions

1. Product Attributes 2. Branding 3. Packaging 4. Labeling 5. Product Support Services

What is the product life-cycle strategies?

1. Product development- zero sales and increasing investment costs 2. Introduction- slow sales and nonexistent profits 3. Growth- rapid market acceptance and increasing profits 4. Maturity- slow sales growth and profits level off or decline, many suppliers 5. Decline- sales fall off and profits drop

Fixed Costs

AKA overhead, costs that do not vary with production or sales levels. Rent, heat, interest, executive salaries

What are the two ways to obtain new products?

Acquisition and new product development

Cost-plus Pricing

Adds a standard markup to the cost of the product. Benefits are that sellers are certain about costs, buyers feel its fair, and price competition is minimized. Disadvantages are that it ignores demand and competitor prices.

Competitive Advantage

Advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices

Product Mix

All product lines and items that a particular seller offers for sale.

Price

Amount of money charged for a product or service, or sum of all the values that customers exchange for the benefits of having or using the product or service

Product

Anything offered in a market for attention, acquisition, use or consumption that might satisfy a need or want.

Value-added Pricing

Attaches value-added features and services to differentiate the companies offers and thus their higher prices

Socially Responsible Target Marketing

Benefits customers with specific needs, concern for vulnerable segments

Whats the difference between new brands and a brand extension?

Brand extensions would keep the same name

Everyday low Pricing (EDLP)

Charging a constant everyday low price with few or no temporary discounts

Which of the following is an internal source for new product ideas?

Company Executives

What does choosing a targeting strategy depend on?

Company resources, product variability, product life cycle stage, market variability, competitors

What things impact the price of a product?

Competitors strategies and prices, marketing strategy, objectives, nature of the market and demand

A detailed version of a new idea stated in meaningful customer terms is called a product ____________________.

Concept

What determines the price ceiling?

Consumer perceptions of value

The advertising slogan, "We bring good things to life," used by General Electric to market itself is an example of ________ marketing.

Corporate Image

What cases price increases?

Cost inflation, increased demand, lack of supply

________________ involves setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk.

Cost-based pricing

What should successful new product developments be?

Customer centered, team based, systematic

Effective ______________________ pricing involves understanding how much value consumers place on the benefits they receive from the product and setting a price that captures that value.

Customer-oriented pricing

Which of the following price adjustment strategies involves reducing prices to reward customer responses such as volume purchases, paying early, or participating in sales-support programs?

Discount and allowance pricing

Price Adjustment Strategies

Discount and allowance pricing, segmented pricing, psychological pricing, promotional pricing, geographic pricing, dynamic pricing, and international pricing

Market Segmentation

Dividing a market into smaller segments with distinct needs, characteristics, or behaviors that might require separate marketing strategies or mixes.

Bon Vivant offers an assortment of exclusive French wines at incredibly low prices. These prices are neither limited-time offers nor special discounts, but represent the daily prices of products sold by Bon Vivant. This reflects ___________- pricing strategy.

Everyday low

What causes price cuts?

Excess capacity, increased market share

Intermarket Segmentation

Forming segments of consumers who have similar needs and buying behaviors even though they are located in different countries

Value Proposition

Full mix of benefits upon which a brand is positioned

______ calls for dividing the market into regions, states, counties, cities, or even neighborhoods.

Geographic segmentation

Product Line

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

Product Line Consistency

How closely various product lines are in end us, production requirements, or distribution channels

JoAnn Fabrics Inc. has created a new combination of colors, fabric types. The firm wants to know how customers will perceive the new product. The firm is concerned with product _________________.

Image

What are the nature and characteristics of a service?

Intangibility, variability, inseparability, and perishability

Teen Mania Inc., a company marketing adventure sports merchandise for teenagers targets the world's teenagers, who have similar needs and buying behavior even though they are located in different countries. Which market segmentation is evident here?

Intermarket segmentation

High-low Pricing

Involves charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items

Commercialization

Involves introducing a new product into the market. When to launch, where to launch, planned market rollout

Market-Penetration Pricing

Involves setting a low price for a new product in order to attract a large number of buyers and a large market share

What involves dividing a market into smaller segments of buyers with distinct needs, characteristics, or behaviors that might require separate marketing strategies or mixes?

Market Segmentation

When marketers at Fair & Leigh Inc. selected millennials, a demographic group that includes many college students, as an untapped group of potential customers for their new line of products, they were engaging in _________?

Market Targeting

When a company sets a high price for a new product with the intention of reducing the price in the future, it is using the ______________ pricing strategy.

Market-skimming

Price Elasticity

Measures the sensitivity of demand to changes in price

Whats the difference between multibrands and line extensions?

Multibrands would have a new brand name, but same product category

What is the buyer reaction when price gets cut?

New models will be available and models will not sell as well, along with quality issues

Product Line Width

Number of different product lines the company carries

Product Line Length

Number of items in the product line

Good-value Pricing

Offering just the right combination of quality and good service at a fair price

_________ are industrial products.

Office Supplies

What type of graph would be used if you wanted to know perceptions of brands versus competing products?

Positioning Map

________________ refers to the amount of money charged for a product or service.

Price

What determines the price floor?

Product costs

Cost-based Pricing

Product driven, have to convince buyers of product's value. Sets prices based on the costs for producing the product plus a fair rate of return for effort and risk

What is the buyer reaction when price increases?

Product is "hot" and there is company greed

Service

Product that consists of activities, benefits, or satisfactions and that is essentially intangible and does not result in ownership.

Consumer Products

Products and services bought by final consumers for personal consumption.

Which of the following is true with regard to products?

Products include services, events, persons, places, organizations, ideas, or a mixture of these

Marketers who use ______ often segment their markets by consumer lifestyles and base their marketing strategies on lifestyle appeal.

Psychographic segmentation

Types of markets that influence pricing

Pure competition, monopolistic competition, oligopolistic competition, pure monopoly

Define variability of a service?

Quality of services depends on who provides them and when, where, and how

What are some effective action responses to price change?

Reduce price to match competition, maintain price but raise the perceived value, improve quality and increase price, launch a lower-price brand

Define New Product Development

Refers to original products, product improvements, product modifications, and new brands developed from the firm's own research and development

Define acquisition

Refers to the buying of a whole company, a patent, or a license to produce someone else's product

Overhead costs _________________ as the number of units produced increases.

Remain the same

Which of the following is true of market-penetration pricing?

Results in drawing in large numbers of buyers quickly, wining a large market share

Define perishability of a service?

Services cannot be stored for later sale or use

Define intangibility of a service?

Services that cannot be seen, tasted, felt, heard, or smelled before purchase

Define inseparability of a service?

Services that cannot be separated from their providers

Target Market

Set of buyers who share common needs or characteristics that the company decides to serve

Market-Skimming Pricing

Sets high initial prices to skim revenue layers from the market. Product quality and image must support the price and buyers must want the product at the price

Break-even Pricing or Target Return Pricing

Setting price to break even on costs or to make a target return

Competition-based Pricing

Setting prices based on competitors' strategies, costs, prices, and market offerings

________are less frequently purchased consumer products and services that customers compare carefully on suitability, quality, price, and style.

Shopping Products

Demand Curve

Shows the number of units the market will buy in a given period at different prices

Advertising campaigns involving issues ranging from health care, education, and environmental sustainability to human rights and personal safety can be classified under _________ marketing.

Social