Marketing 370 FINAL

What are the different kinds of channel problems?

-Constraints may exist *established norms *players may be blocked from entry -difficult to change quickly -lost control over marketing fuction with longer channel -channel member downstream may carry competing brands

4. ratings

-Gross Ratings Points (GRP) GRP=reach as percentage x frequency *how many people am i reaching *how effective is this media choice over another media choice -CPM: cost per THOUSAND people or households (roman letter M=per 1000) *allows you to compare across all medium

3a. financial price deals

-a type of short term price reduction that can take several forms; such as featured price which is price lower than regular *Buy one get one offer *certain percentage more free offer contained in larger packaging -can involve a special financing arrangement, such as reduced percentage interest rates or extended repayment terms *quantity discounts (larger amounts) *consumer gets addicted to price deals and its hard to go back

What is the wheel of retailing?

-always a new competitive form *low scale/image at introduction *gain in prestige and price *then decline

6. effectiveness

-best way to measure is sals -we can get an idea of how effective an ad is when the person sees the ad online and then immediately buys (conversion rate) -really difficult to measure

5. financial incentives

-can get hazy in terms of ethics -slotting fees**VERY POP ANSWER CHOICE what companies pay for shelf space -financing terms -merchandise allowances for in store support

1. off price merchandisers (liquidators)

-clean the house -source in two ways *manufacturer overrun that they cant sell *retailers that want to get rid of inventory -usually pay by the pound -sometimes prices are higher than the price they were last at while at the retailer

3. competitive pairity

-company looks at what the competition is spending on promotion, both percentage of sales and actual dollar amount *the communication budget is set so that the firms share of communication expenses equals its share of the market *%of sales may vary with each players market share *does not allow firms to exploit the unique opportunities or problems they confront in a market *if all competitiors use this method to set communication budget, their market shares will stay approximately the sam over time

******1c. sweepstakes

-consumer doesnt have to do anything; open entry (ex: business card picked out of bowl)

4. merchandise

-extra volume purchases, case allowances -givaways, spiffs, support materials -buybacks

What are the service retailers?

-firms that primarily sell services rather than merch -are a large and growing part of the retail industry -EX: auto rental, health spa, vision center, bank

3. category killers

-first one was toys r us -havent been as successful lately because of superstores like walmart and target **THEY USE: -broad assortment of merch -highly trained employees -loyalty programs -a complete assortment in a specific category at low prices

What are the different media choices

-how to measure how effective the dollars im spending on the message and media choice are: 1. reach 2. frequency 3. selectivity 4. ratings 5. rate of forgetting 6. effectiveness

4. vending machine

-in japan there is a vending marchine for every 5 people -you can buy ANYTHING in them -limited space works well where cost of labor is high

*****g. jobber

-industry in which you have to have a large assortment to be successful -buy large quantity that the supplier wants to sell and would break bulk and sell smaller quantities to the small stores -did what the large suppliers didnt want to do and what the small stores couldnt afford to do (ex: buy 1000 twilight books, sell 2 or 3 to a bunch of different stores

5. direct marketing options

-internet sales: new merch, auctions -infomercials -door to door

5. association transfer

-lifestyle: show you someone life and make you feel like you fit into that life (ex most interesting man in the world dos equiss) -metaphor: budweiser kleidsales -celebrity transfer -americans arent good at seeing subtle associatin transfers -in japan almost all their ads use association trnasfers

During present day, what are logisitics and information systems?

-logistics: channel decisions, information system, distribution efficiency -information systems: technology and internet -walmart: the biggest company in the world *a lot of its competitors follow its logistics procedures *walmart foced their logistics strategy on to its suppliers *P&G changed their logistics to match walmart and then continue to use walmarts system when working with target, costco, etc (walmarts competitors) *largest supply chain network*

1. publicity

-news stories: marketing managers will write their own PR statements and email them out to local national publicity companies -timing is everything: send it out on a slow news day -change agents and innovators: oprah was one of the greatest change agents in america -offers greater credibility than paid ads cuz someone is talking about it

1a. merch sampling

-sampling risk free trial *delivered in another package, mailer, periodical *at special events

3. drama

-slice of life: see someone else use the product and vicariously assume thats what it would be like to use the product *significant number of broadcast ads are slice of life and a fair number of magazine ads are as well -theatrical, musical

1. education and training

-special classes, increased expertise, accommodations, etc ex: Mcdonalds hamburger university

What are the different pull promotions

-to consumer 1. merchandise a. sampling b. requested by consumers c. sweepstakes 2. premium 3. financial a. price deals b. coupon c. rebate 4. POP displays 5. loyalty or continuity programs

6. imagination or special effects

-very small portion of ads use this, it depends on the product -do work on a lot of particular products

7. What is the feedback loop

-we want some sort of feedback loop and are hoping that its positive -brand manager needs to know if consumers are not receiving the message so they can make a change

What are the different types of push promotions

-within channel; your employees, etc 1. education and training 2. trade shows vendor contests 3. co-op advertitisng 4. merchandise 5. financial incentives

PQ additional sales that are considered to be the result of an ad campaign is called

****Return on advertising

1b. requested by consumer

-full value coupon

1. product ads

-pioneering: stimulate primary demand -secondary demand appeals (techy shit) *informational:specific facts are important for techy shit *competitive ads -******UNIQUE SELLING PROPOSITION: something that is very difficult for competing brands to copy. even if someone does copy the feature, the usp usually sticks with brand that created it. -comparative ads: directly comparing you product to another product *competitor isnt always directly mentioned, sometimes its implicitly mentioned (make fun of)

**********1d. contest

-some skill is involved, purchase can be required

b. industry conditions

BARRIERS TO ENTRY: obstacles that make it difficult to enter a market or industry -high barriers to entry usually mean high barriers to exit -cost a lot to enter, patent is expensive POWER AND LEVERAGE DOWNSTREAM: who is in control? -more powerful companies have higher bargaining power over the prices that their suppliers charge them relative to the less powerful companies CAPACITY: is the company producing as much as they are capable of producing -if you can produce more than you are currently producing, your price is going to be substantially different, especially in industries with high fixed costs (ex: hotels half full, charge more) -amortization of facilities allows you to price lower -you cant actually operate at 100% capacity, usually only 96-98% because small percentage of the factory is going to be dedicated to adapting the system, cleaning etc *when you get close to 100% get another facility WARS BETWEEN CHALLENGER AND LEADER: pricing wars between competitors -in the summer there are price wars on 2 liters of sodas in the grocery sotres and the prices drop to their lowest

******OLD TEST Q Grape juice/milk indicatior; look how much they pay for gallon of milk and compare it to the income, what is that called

INCOME EFFECT

4. What is place helps determine price?

Saks V forever which is cheaper

1a. department stores

Department store chians can be categorized into 3 tiers: 1. the first tier include upscale, high fashion chains with exclusive designer merch and excellent customer service 2. the second tier of upscale traditional department stores, in which retailers sell more modestly priced merch with less customer service 3. the value oriented third tier, which includes caters to more price conscious customers TO BETTER COMPETE: -attempting to increase the amount of exclusive and private label merch that they sell -strenthening their customer loyalty programs -expanding their online presence

5. what is constrained by others decisions?

a. operations (EX costcos efficient operations allows them to lower the prices) b. finance (cost of development, need to break even) c. human resources (do you have the staff needed to dedicate this product at that price?)

1. What is predicated on supply and demand?

a. trade off and equilibrium point b. you can make the best product imaginable but if there is no demand then it is POINTLESS

1. reach

actual number of people who see the message

c. wholesaler

carry huge numbers of closely related products from competing vendors (1000 red t shirts from american apparel, forever etc)

4. what is cause related marketing

commercial activity in which businesses and charities form a partnership to market an image, product or service for their mutual benefit; type of promotional campaign

PQ a free pen with any purchase is an example of what form of sales promotion

continuous

2. trade shows

cost about 55% less to close a deal at trade shows rather than personally selling

PQ sometimes the description of an ad makes you immediately think its association transfer. which of these you choose instead? a. institutional b. rational c. informational d. emotional e. reminder

d. emotional

PQ translating international ads into the language of the country in which they are running the ads helps to fix which noise problem? a. incorrect medium b. competing messages c. incomplete feedback loop d. unclear message e. incorrect destination

d. unclear message

1. 1920s

department stores were unpopular

What are rational benefits?

economical

What is a distribution center?

facility for the receipt, storage, and redistribution of goods to company stores or customers may be operated by retailers, manufactureres or distrubtion centers Managed by dispatcher

a. Profit Orientation- What is it/

focus on target pricing, maximizing profits or target return on pricing *TARGET PROFIT PRICING: implemented when firms have a particular profit goal as their overriding concern -price is used to stimulate certain level of sales at certain profit per unit *MAXIMIZING PROFITS: if a firm can accurately specify a mathematical model that captures all the factors required to explain and predict sales and profits are maximized -for immediate maximization there needs to be limited competition/substitutes *TARGETED RETURNING PRICING: employ pricing strategies designed to produce a specific return on their investment -usually expressed as a percentage of sales

PQ in order to create a successful emotional ad appeal you must

get consumers to picture benefits in their own life

2. lesson

gives you a lesson on how to use the product -testimonials, endorsements (celebrities -demonstration, before and after -comparative ads: why product is better than competitors product -how to: how simple it is to use product

What are the different executional styles

how you actually put together the ad ****YOU DO NOT WANT TO BE IN THE SAME EXECUTIONAL STYLE AS YOUR DIRECT COMPETITOR 1. announcement 2. lesson 3. drama 4. entertainment 5. association transfer 6. imagination or special effects

4. entertainment

humor or music transfer -some product categories are reluctant to use entertainment while others are constantly using it

3. costs

in general, products should NOT be based on costs because consumers make purchase decision based on percieved value: care little about firms cost to product ******VARIABLE COSTS: costs that are primariliy labor and materials that vary with production volume -as a firm produces more or less of a good or service, the total varable costs increase or decrease at the same time FIXED COSTS: costs that remain essentially at the same level regardless of any changes in volume of production (rent) -total cost: sum of the variable and fixed costs

PQ pop up ads, blogs/vlogs, internet, tv, etc exemplify what

increasing number of communication channels

6. 1980s

infomercials -first infomercial on ginsu knives -tv station had an pen time slot that needed to be filled so they created a name and bought a set of knives and filmed the rediculous commercial and the knives ended up selling like crazy

6. just in time inventory systems (quick response)

inventory management systems designed to deliver less merchandise on a more frequent basis that traditional inventory systems -JIT lowers inventory investments, but product availability actually increases -the benefit of a JIT system includes: reduced lead time, increased product availability, and lower inventory investments

d. value based

involve a customer in the process of determining the price -bartering is the ultimate value based pricing -ask: what is it worth to the customer -applies to bazaar bargaining, auctions -more common with services -more common with B2B -not the most common approach to everyday situations

What is a multichannel strategy

involves selling in more than one channel

PQ what do successful retailers focus on providin

more value to best customers

5. 1970s

off place retailers -considered low status -big lots, dollar store, marshalls, ross

PQ what type of retailer gets their merch from manufacturer overruns

off price retailers, liquidators

PQ what decribes the movement of retailers to either large super centers or small boutiques

polarization of markets

What do suppliers furnish?

raw materials, components, and even labor

6. destination

receiver -potential buyer -not necessarily the final customer -ina pull this could be the wholesaler, distributor, etc

PQ what is perhaps the best method to measure the effectiveness of an ad campaign

sales

What is a marketing channel

set of institutions that transfer the ownership of and move goods from the point of production to the point of consumption -consists of all marketing activities -is a supply chain management channel -usually managed by the marketing department *focused on maximizing sales

7. extreme value retailers

small full time discount stores that offer a limited merch assortment at very low prices ex: 99 cent store

3. direct distribution

straight from the manufacturer to consumers (ex infomercials)

1. percentage of sales

the company establishes (usually mirroring industry standards) a percentage of sales to allocate to promotion -the communication budget is a FiXED PERCENTAGE of forecasted sales -the most common and easiest -assumes the same percentage used in the past or by competitors is for the firm -does not take into account new plans -may have an inverse effect becaue the years your selling selling less product, your promotion budget is decreasing

2. frequency

the number of times the same person is exposed to the ad *****-what is the point of diminishing returns? is it a value for the consumer to see it again or not for a while? (ex: annoying commerical that gets your attention; when it becomes too annoying, take it down) *flighting: refers to an advertising schedule implemented in spurts with periods of heavy advertising followed by periods of no advertising

What is a dispatcher/

the person who coordinates deliveries to the distribution center

1. What is price fixing?

the practice of colluding with other firms to control prices. can be horizontal or vertical a. HORIZONTAL- competing companies within an industry come together and decidied that they will not lower or increase prices -almost never happens because of strict consequences b. VERTICAL-channel captain goes to someone downstream and tells them that they cannnot change the price if purchased from them -downstream channel often doesnt report it because they dont want to lose account (EX 3M says you have to sell tape for 3.00 no less and you do it cuz you want to sell their tape) -customers arent aware of it

pkt 5 what is retailing

the set of business activities that add value to products and services to consumers for their personal or family use -marketing meets the consumer

PQ AIDA is a series of mental stages TRUE OR FALSE

true

4. mass customization

we provide a bunch of different parts and then let the customer pick and choose ex: subway and levis

b. distributor

2. distributor-> limited assortment of closely related products from competing vendors

On average, what percent push and pull across all markets?

60% push 40% pull

Soda is about how much percent pull

65%; when you go to a restaurant you ask for coke; but also 35% push -coke spends more on push that pepsi, thats why they have more fountains PUSH AND PULL IS RARELY 50/50

PQ in the growth stage, marketers should focus on ad advertising strategy that does what? What media should they use?

Distinguish features, mass media that they can afford

c. psychological factors

IMAGE OR PRESTIGE PRICING: the greater the price, the greater the status associated with the product -increase in price makes a product look more prestigious and improves demand *this occurs with chocolates, medical services, college tuition, etc *higher price makes consumers believe the product has higher quality ODD AND EVEN PRICING: pricing an item right under the threshold -americans are very sensitive to price thresholds (ex Costco and walmart taught american consumers abour prices, constantly aware of prices) -100 vs 99.95 usually involved with image pricing REFERENCE PRICES: benchmarks with future expectations -americans often have a very good sense of reference prices because prices are so obvious to us -people are treated fair and we want prices to be uniform -we want to set prices and we want to see the price before hand so that we know that its fair and because its convenient

11. effective multichannel retailing

INTEGRATED CRM: effective multichannel operations require an integrated CRM system with a centralized customer data warehouse that houses a complete history of each customers interaction with the retailer regardless of whether the sale occurred in a store, on internet or phone BRAND IMAGE: retailers need to provide a consistent brand image across all channels PRICING: customers expert pricing consistency for the same SKU across channels SUPPLY CHAIN: multichannel retailers struggle to provide an integrated shopping experience across all their channels, because unique skills and resources are needed to manage each channel

7. advantages of longer channels

PROVIDES UTILITY AND VALUE ADDED -location: reach more consumers -quantity: size and amount consumer needs -optimal assortment needed -matches time available with demand -purchase conditions ALLOWS FIRM TO FOCUS ON PRODUCTION *or other tasks -reduces investment and risk -may be required to enter foreign market -avoid antitrust suits

What is one of the first decisions a company has to make is what?

PUSh v pull -its a decision you make early on -you dont have to be 100% either way but you have to make relative allocations to each (how much push/pull)

PQ what are the tiny computer chips that transmit container and content information

RFIDs

b. demand oriented

TARGET PRICING: company knows what they want to sell the item for (ex-beanie baby costs .17 to make, kids make 6-7 so beanie baby is 5.95) -work backwards to figure out what the profit would be subtracting the cost from desired price -if there is low or no profit margin firms might adjust materials and labor to attain desired price (reduce size) -price is often determined by ease of payment (easy for the customer and easy to transfer funds *ease of payment is crucial for vending machines -price determined by customer need: what is a reasonable amount that the customer can afford? ex: beanie babies were set right below average allowance for target market YIELD MANAGEMENT: what the market will bear at different times -manage unveven deman via varied price -more common with services especially those with high fixed costs -find out what the breakeven point is and then any contribution above that is valid -****common in amusement parks, airlines, heavy traffic lanes/zones <-- know this is under yield management

What are the prohibited pricing tactics?

THE FTC regulates illegal pricing, they dont watch for it to happen they have to be informed 1. price fixing 2. price discrimination 3. bait n switch 4. predatory pricing 5. dumping

6. home improvement center

a category specialist offering equipment and material used by do it yourselfers and contractors to make home improvements -it is one one of the largest and most successful types of category specialists

What is franchising

a contractual agreement between a franchisor and a franchisee that allows the franchisee to operate a retail outlet usuing a name and forma developed and supported by the franchisor

**OLD TEST Q 3. What is bait n swithc?

a deceptive price advertising that occurs when sellers advertise items for a very low price without the intent to really sell any (black friday tvs)

What is a pick ticket

a document or display on a screen in a forklift truck indicating how much of each item to get from specific storage areas

What is a push supply chain

a less sophisticated approach in which merchandise is allocated to stores on the basis of forecasted demand. once a forecast is developed, specified quantities of merchandise are shipped (pushed) to distrobution centers and stores at predetermined time intervals *the marketing manager spend a lot of energy and resources within the trade *have to teach the trade how to sell it and promote it

1. convential supermarket

a self service retail food store offering groceries, meat, produce with limited sales of nonfood items such as health and beauty aids and general merch. -supermarkets carry about 30,000 individual items

What is supply chain management?

a set of approaches and techniques firms employee to efficiently and effectively integrate their supplier, manufactureres, warehouses, stores and transportation intermediaries into a seamless operation in which merchandise is produced and distributed in the right quantities, to the right locations, at the right time, as well as to minimize system wide costs while satisfying the service levels their customers require

What is the pull supply chain

a supply chain in which orders for merchandise are generated at the same level on the basis of sales data captured by POS systems **company spends most of its resources marketing DIRECTLY to the customer

3. selectivity

ability to reach those directly in the target

What is the IMC budget also called

advertising and promotion budget or a&P budget

What is ticketing and marking

affixing price and identification labels to the merchandise

6. What is value knowledge

american consumers know what value is and will let you know if they feel as though they havent gotten their monet's worth -caused by costco, mcdonalds, walmart

7. convenience motivation

americans are lazy, they dont want to learn new things and just want it to be easy -drive thrus: fast food, banks pharmacies, etc

2. premium

an item offered for free or at a bargain price to reward some type of behavior; such as buying, sampling, or testing -free: *continuous: every one that you buy you get another free (free pen with shirt) *intermittant: buy 5 and get the 6th free -self liquidating: purchase with purchase or gift with purchase

*************5. rate of forgetting

at what point do people start to forget -we want to overcome this by classical conditioning them to be more aware when they see our commercial -which kind of ads do i need to run so that people dont forget? a. continuous:runs steadily throughout the year -suited to products and services that are consumed at relatively steady rates and that require a steady level of persuasive and/or reminder advertising b. flighting: take the ad off and then bring it back -sometimes consumers have enough memory and dont realize that they havent seen it in a while so when the ad runs again it comes back to them quickly c. pulsing: combines continuous and flighting schedules -maintaining a base level of advertising but increasing advertising intensity during certain periods

PQ which of these is not considered PR a. social media b. annual report c. sponsoring a tv show d. appearing in a sitcome e. pres kits

b. annual report

Which of the following would be considered complementary goods? a. bacon and eggs b. macbook and charging cable c. pancakes and syrup d. scarves and gloves

b. macbook and charging cable

PQ Which area of business does the firm have the best opportunity to generate revenue? a. operations b. pricing c. finance/accouniting d. promotions

b. pricing

PQ which of the following involves automatic reorder for merchandise through POS terminals at the store level a. push b. pull c. both d. neither

b. pull

PQ: What is a deceptive price advertising that occurs when retailers advertise a very low price without intending to sell any?

bait n switch

2. Manufacturers outlet stores

began as remote outlet malls -now are mostly company owned stores in full value malls

b. Sales orientation-what is it?

belief that increasing sales will help the firm more than will increasing profit -some firms may be more concerned about their overall market share than about dollar sales per se (they often go hand in hand tho) becuause they believe that the market share better reflects their success relative to the market conditions thatn to sales alone ********- premium pricing: the firm deliberately prices a product aboce the prices set for competing products to capture those customers who always shop for the best or for whom price does not matter

What is the formula for value?

benefits/costs tradeoff of costs v benefits

The internet had increased the number of communication media and reaching the target market has become more complex because of what

blogs, vlogs pop up ads

PQ: what allows a firm to estimate the quantity of items they need to sell at a given price for revenue to equal toatl costs?

breakeven analysis or break even point

2. limited assortment (extreme value food retailers)

by trimming costs, limited assortment supermarkets offer merch at 40% lower prices than convential supermarkets -only carry 2,000 SKUs ex: save a lot

2. what is consumer prefrences?

commodity or specialty product? -brand loyal (apple) -variety seeking (evoked set) -commodity

********What is the AIDA model

common mondel of the series of mental stages through which consumers move as a result of marketing communications Awareness--> interests--> desire---> action

****5. What is dumping?

company is selling a product below their cost in order to gain market share in another company -very hard to figure out if this is happening?

PQ What has a high cost, low redemption rate and can be used to directly trace sales?

coupons

PQ: what is the percentage change in quantity demanded of product A divided by the percentage change in product B?

cross price elasticity

****PQ Why is reversing a price difficult

customers remember lowest price paid, quantifiable

PQ jack in the box allocated approximately the same amount of money annually on their IMC budget as Mcdonalds despite having 14% less in annual sales. what kind of budget are they probably using? a. percentage of sales b. all you can afford c. competitive pairity d. objective and task

c. competitive pairity

PQ target is always runnning ads throughout the year but during the holidays and back to school they greatly increase the frequency of their ads, what kind of ad schedule does target use? a. continuous b. flighting c. pulsing

c. pulsing

1. shifting channel captains

channel captain = position of power within the channel -Manufacturers were the channel captains for the most part during the 1960s-1980s ex: pillsbury told the grocery stores what shelf space they wanted and when they wanted end caps and such -Retailers have become the channel captains from 1990s to present IN SOME CASES a particular company within said institution can become the channel captiain a. fine expensive wines=costco b. toys=walmart c. jewlery= walmart d. computer industry= bill gates

Because supply chain management takes a system wide approach to coordinating the flow of merchandise, it includes ________ and _________

channel management, and logistics

PQ: Using keystoning: a. allows the difference between variable and total costs to be maximized b. elimiates pure competition c. creates complexity d. ignores price sensitivity

d. ignores price sensitivity

PQ Sometimes price skimming is necessary. Which of these shows why? a. in the introduction stage there are sometimes unknown costs due to unforeseen consequences b. manufacturers need extra cash on handto pay for slotting allowances c. cost of ownership pricing d. there is a high cost involved in producing a small volume when the firm is in the introduction stage e. the potential for price bundling in the future

d. there is a high cost involved in producing a small volume when the firm is in the introduction stage

PQ a non marketing major see a tv ad but by the end they oculdnt figure out what they were advertising. clearly they were unable to _______ the message

decode

5. transmission of message (decoded)

decoding: consumers must be able to interpret message

PQ: according to traditional demand curve, increasing price will (increase/decrease) the amount customers will purchase.

decrease

What is the lagged effect

delayed response to a marketing communication campaign

4. 1960s

discount houses -walmart and target were originally considered horribly trashy places

PQ: who manages a company's distrobution center

dispatcher

During the 1970s-90s, there was very little focus on channels of _______ and _______ strategy.

distrobution and placement -everyone had learned to be competitive and were now into the marketing mode

What is the key difference between dumping and predadory pricing?

dumping=foreign (international) predatory=domestic (in your country)

PQ marketers choosing a product placement need to be aware that: a. its illegal b. it often doesnt produce desired results c. its way too expensive d. a celebrity must be involved to be successful e. repeat exposures over long periods of time is a huge advantage

e. repeat exposures over long periods of time is a huge advantage

PQ as discussed walmart had indirectly changed some procedures of its competitors through forcing its logistics procedures on its suppliers. which of these can a retailer not control a. cost of merch b. delivery schedule c. product design d. order specs e. what other retailers they work with

e. what other retailers they work with

**************What is cross promoting?

efforts of two or more firms joining together to reach a specific target market

PQ where is the data collected at the POS terminals stored for later use

electronic data warehouse

2. transmission of message (encoded)

encoding: marketers have to formulate a way to say the message -greatest room for error because marketers have to anticipate how consumers are going to react to the message

3. sponsorship

events building institutions -increase brand or corporate image -sports- NASCAR music charities, education nascar has highest ROI

2. logistics and operations

every single product is going to be a little different in terms of the logisics and operations *has to do with the product: delicate fragile bulky perishable? TIME FRAME: the more intermediaries, the longer it takes to get from manufacturer to constumer MANAGEMENT OF CHANNELS: most of the time the biggest entity controls the channel

e. EDLP

everyday low prices are not price promotional; dont run a lot of specials or coupons or special sales -smooth demand, costs and effort -esaier on the overall operation and profitability to use EDLP

1. location and number of outlets

everywhere vs limited -Everywhere: a frequently purchased product (coca cola) -Limited: a product that consumers will search for (louis vouitton) TYPE AND # OF INSTITUTIONS USED/SEQUENCE OF OUTLETS TO WHICH SOLD -are you going to start at the high or low end -High End----> Tiffanys *started with company owned specialty stores *has begun to move down to the high end department stores (nordstrom) *exclusive market -Low End-----> Snuggie *began with infomercials *year 2: sold to stores (costco, walmart, etc) *more of a mass market

d. Customer orientaiton- what is it

explicitly invokes the concept of value -sometimes a firm may attempt to increase value by focusing on customer satisfaction and setting prices to match consumer expectations

PQ EDLP relies on continually offering sales on items TRUE OR FALSE

false

PQ coupons are a form of push promotions. TRUE OR FALSE

false

PQ coca colas print and tv ad featuring new products are designed to stimulate their push system TRUE OR FALSE

false, that is pull

e. transportation

fededx or UPS

********c. Competitor orientation- what is it

firms that strategize according to the premise that they should measure themselves primarily against competition -competitive pairity: when firms set prices that are similar to those of their major competitors (EX: set toy price at walmart to be same price as target) -status quo: changes prices only to meet those of the competition (walmart price matching)

3. 1950s

franchises introduced -Ray Krock *sold milkshake machines and dixie cups *wanted to own a chain of hamburger shops *invented the lid for the dixie cups because more people would buy milkshakes if they could take them to go *mcdonalds brothers had two stores when krock got involved *when they grew to 7 stores the mcdonalds bros through it had grown too big and wanted out *krock invented the idea of franchises

Vertical price fixing tends to fall where?

gray area

2. 1940s

grocery stores not favored -milkman, butcher, produce man would come to the house -grocery stores became popular when women began to learn how drive -it was hard to get consumers to use shopping carts

pkt 1 What is the definition of price?

he overall sacrifice a consumer is swilling to make to acquire a specific product or service

PQ vending machines are often used in places with what condition

high cost of labor, little space for retail stores, anything in vending machine

What doe marketers need to figure out?

how consumer subconsciously determine the costs

**********What is psychic costs?

how does this diminish my self concept and personality? emotional damage or mental anguish EX wearing a thong bikini, love it at first then wear it and feel self concious

8. consumer rights/consumer terrorism

increasingly americans know that they have consumer rights but it is turning into consumer terrorism: try to manipulate the system by demanding nearly anything and threaten to lobby a complaint

What is a contractual vertical marketing system

independent firms at different levels of the uspply chain join together through contracts to obtain economies of scale and coordination and to reduce conflict *debate about how much control one company can have *intermediaries can help reduce the chances of an antitrust suit

pkt 7 What is IMC

integrated marketing communications -combining all forms of communication to enhance brand identity and customer relationships *paid or non paid *hopefully improve brand equity -represents the promotion dimension of the 4 ps; encompasses a variety of communication disciplines-general advertising, personal selling, sales pormotion, public relations, direct marketing and electronic media- in combination to provite clairity, consistency, and maximum communicative impact MAIN GOAL is communicate value to target market

7. 1990s

internet and ecommerce

What country has the longest channels?

japan -11 intermediaries is not uncommon due to lack of space JIT Japan -JIT management (make it when they buy it) was created out of necessity

*********4. warehouse clubs

large retailers (100,000-150000 square feet) that offer a limited and irregular assortment of food and general merch, LITTLE SERVICE, and low prices to the general public and small businesses ex: costco, sams club

3. supercenters

large stores (185,000 sq feet) that combine a supermarket with a full line discount store -MORE THAN 80% of supercenters are walmart

5.convenience stores

limited variety and assortment or merch at a conventional location in 3000 to 5000 square foot stores with speedy checkout -convenience store assortments are limited in terms of depth and breadth, and they charge higher prices than supermarkets

c. competitive pairity

loook at that everyone else in the market is charging and then match the industry leader -problem is that different companies have different costs -especially needed in the maturity stage -competitive parity might be used in conjunction with another price strategy

3b. financial rebate

mail in certificate for money back on purchase -usually a few dollars -takes a while to get money -targeted at men

4. indirect distribution

majority of companies use indirect Use of intermediaries: a. agent b. distributor c. wholesaler d. inventoring e. transportation f. retailers g. jobber

5. Channel Members

manufacturers, wholesalers, and retailers (can have different perspectives when it comes to pricing strategies -channels can be very difficult to manage, and distribution outside normal channels does occur *Gray market: employs irregular but not necessarily illegal methods; legally circumvents authorized channels of distribution to sell goods at prices lower than those intended by manufacturer

c. price elasticity of demand-

measures how changes in price affect the quantity of the product demanded -ELASTIC: when the price elasticity is less that -1, that is when a 1% decrease in price produces more than a 1% increase in quantity sold (low price, more sold) -relatively small changes in price will generate fairly large changes in quatity demanded; firms want to increase sales, lower price (cheap beer: you buy cheapest brand) -INELASTIC: when the price elastictty is greater that -1, that is when a 1% decrease in price results in less that 1% increase in quantitiy sold (GASOLINE people buy it no matter the price) -raise inelastic product price FIRST

1. brand awareness

measures how many consumers in a market are familiar with the brand and what it stands for -created thorugh repeated exposures of the various brand elements (brand name, logo, symbol, characer, packaging, or slogan) in the firms communications to consumers

3. message

medium is the message -communication channel is the medium that carries the message *choose one that connects you to the target market

4. POP displays

merch display located at the point of purchase, such as the checkout counter in a grocery store -end caps, shelf takers, shelf extenders (ex salsa on the chip aisle) -videos, in store merch +signage, bags

What is floor ready merchandise

merchandise that is ready to be placed on the selling floor (after ticketing and marking)

a. cost oriented

more commonly used COST PLUS: define the total unit manufacturing price and add a certain % -often has a target ROI -well into the growth stage or maturity stage -standard mark up: channel members have a standard markup *varies by industry (manufacturer, seller, reseller all have different prices) *apply a fixed percentage to cost for all goods carried with slight variation ******KEYSTONE MARK UP: 100% (double the cost) (EX: costco never takes more than a 14% margin and doesnt allow their vendors to make more than 14% either, and on some staple items they sell it at cost (0%markup)

2. what is aided recall

occurs when consumers recognize a name (eg of a brand) that has been presenting to them

*****5. category specialists/big box retailers/category killers

offer a narrow but deep assortment of merchandise -by offering a complete assortment in a category at somewhat lower prices than their compeition, category specialists can "kill" a category of merch for other retailers, which is why they are frequently called category killers ex: home depot, toys r us

8. off price retailers (close out retailaers)

offer an inconsistent assortment of brand name merch at a significant discount from the manufacturers suggested retail price (MSRP) (liquidators) -irregulars: merch with minor mistake in construction -outlet stores: off price retialers owned by manufacturers or department or specialty store chains -factory outlet: outlet stores owned by manufacturers ex: TJ Maxx, ross

What is Placement Strategy?

originally physical distribution

5. advertising

paid form of communication from an identifiable source, delivered through a communication channel and designed to persuade the receiver to take some action now or in the future -print, broadcast, novelty ads

3. co-op advertising

pay someone downstream for some advertising -ex: Dell paying for advertising in staples and in return get discounts on orders

What are intermediaries

people who have something to do with moving the finished prodcuts down to the consumer

*****e. what is cross price elasticity

percentage change in the quantity of product A demanded compared with the percentage change in price in product B

** What does price sensitivity equal/

price elasticity

What is successive marginalization?

price increases as additional margins are added as the product moves through the channel

d. allowances

price is reduced due to prior buyer action -trade in (price of new car will be reduced with a trade in) -promotional or cooperative dollars *dell bought advertising from staples but instead of paying for the ad space they gave staples an allowance on their next order

PQ: A retailer sells 18 different makes/models of TVs. they sell 6 for 399-599, 6 for 699-899 and 6 for 999-1199. what kind of strategy are they employing?

price lines

PQ a way for retailers to differentiate themselves from their competition is

private label brands (kirkland)

Often there are a lot of intermediaries between who?

producer and consumer: wholesalers, retailers, etc

f. what are substitue prodcuts

products whose changes in their demand are negaitively related

3. what is top of the mind awareness

prominent place in people memories that triggers a response without them having to put any thought into it

3b. financial coupon

provides a stated discount to consumers on the final selling price of an item; retailer handles the discount **********legal price discrimination: person made extra effort to get coupon -usually less that $2 -coupon redemption rate is low, less than 3.5% *******targeted at women OLD TEST Q

PQ : a man purchases a muscle tank top that is quite revealing. at the time of the purchase he is very excited about the new tank. the first time he wears it, he feels incredibly self concious, doesnt take off jacket. The man later realized the ____________ costs of the tank.

psychic

What are emotional benefits?

psychological

5. Mcdonaldization of shopping, consuming

purchase and consumers role in the purchase is predicatable and standardized -usually incorporates buyer as part of the process -mcdonalds has trained consumer to walk up to the counter, pick up food, eat food, clean up after themselves etc

Pharmaceuticals used to only be marketed to pharmacists and doctors (change agents) making it a _________ strategy.

pure push -starting about 10 years ago tho, the industry has started more aggressibely marketing to sonsumers adding in part pull

PQ: variable costs change with ?

quantity being produced

c. discounting

reduce the selling price due to buying situation -commodities are rarely discounted SEASONAL ITEMS: -often super inflate price at the beginning of the season "Sucker Price" skimming price (ex: christmas decorations) QUANTITY DISCOUNT: if not borrowing from future periods and stockpiling (ex higher quantity tshirts are cheaper, 200 v 150) PAYING WITH CASH: -doctors will usually give a discount to patients paying cash since they get the money immediately instead of waiting for a check to come from the insurance company (ex: doctor will give cash discount of 120 if paid upfront cuz if paid through insurance they only get 80 for $250 session) FUNCTIONAL DISCOUNTS: performing channel services -DIY: consumer does a portion of the work ex: airfare is cheaper when you book online because airport doesnt have to pay an employee to do it

pkt 4 What is place

refers to the necessary actions to the the correct consumer the products they want when they want them

1. department stores

retailers that carry a broad variety and deep assortment, offer customer services, and organize their stores into distinct departments for displaying merch

******OLD TEST Q 2. full line discount stores

retailers that offer a broad variety of merch, limited service and low prices

What does price generate instead of costs?

revenue

2. direct marketing

sales and promotional techniquest that deliver promotional materials indiviudually to potential consumers -internet, infomercials, company websites, social media marketing -can be expensive -but if managed well can be inexpensive and yield very high results

4. Promotions

sales promotions: special incentives or excitement building programs that encourage the purchase of a product or service such as coupons, rebates, contests, free samples, and point of purchse displays (like gum and chapstick) -on average about 60% of a companys IMC budget is spent on promotions -push promotions: trade within the channel -pull promotions: consumer coupons, contests

b. Loss Leaders

sell an initial item below normal price (possibly at cost) to attract customers in the hopes that customers will buy additional items that day and return another day to purchase more items -ex: turkeys on thanksgiving, spend $75 on groceries get a free turkey NOT ILLEGAL

1. info source

sender -brand or firm that is trying to advertise -must be clearly identified to the intended audience

PQ: how is price determined in purely competitive markets?

set according to laws of supply and demand

4. objective and task

set goal based on segment and hierarchy of effects -an imc budgeting method that determines the cost required to undertake specific tasks to accomplish communication objectives; process entails settiing objective, choosing media, determing costs -budget cost is calculated based on what you need to spend in order to reach your objective

****OLD TEST Q Horizontal price fixing is clearly illegal under what?

sherman antitrust act

a. demand curve-what is it to customers

shows how many units of a product or service consumers will demand during a specific period of time at different prices -knowing the demand curve for a product of service enables firm to examine different prices in terms of resulting demand and relative to overall objective -not all products or services follow downward sloping demand curve fora ll levels of price **low price=more sold, high price=less sold

1. announcement

simply announcing what the product is -very straightforward -usually a print ad -pure presentation display -factual, informational, scientific -corporate image: conveying the identity of the company

PQ:When apple released the first iphone it was priced significantly higher than other phones and the ipod. this an example of:

skimming

What is disintermediation

solution to successive marginalization -take out middleman -costco and walmart do this -walmart will send their own trucks to pick up the products from the manufacturer and then takes them to their retail stores

OLD TEST Q: What kind of industry needs a jobber?

something with a lot of variety (bookstore)

d. inventoring

sometimes a separate entity, sometimes the manufacturer, retailer or wholesaler will have the inventory facilities

4. drugstores

specialty stores that concentrate on a limited number of pharmaceuticals and health and personal grooming merch

5. loyalty or continuity programs

specifically designed to retain customers by offering premiums or other incentives to customers who make multiple purchases over time. -begin as a spurious (fake) loyalty: hope to build true loyalty over time -if the rewards are good enough and the consumer gets enough it should become true loyalty -hotels, airlines, car rentals, co branded credit cards, grocery member cards

PQ: petsmart will match other stores prices as long as the customer brings in sufficient proof of the lower price. what is this called

status quo pricing

Every marketing decision is affected by and has an effect on the ?

supply chain

PQ: pricing of beanie babies at $6 despite the incredibly low cost is an example of what kind of pricing

target pricing

1. personal selling

the 2 way flow of communication between a buyer and a seller that is designed to influence the buyers purchase decision -within the channel to the conusmer -considered the most expensive way to communicate with consumers -BUT has one of the highest closure rates -some product categories require personal selling: high priced, complicated, high tech, complex, less frequently purchased ex: pharmaceutical companies are highly dependent on personal selling

What is the classical pricing model?

the demand curve

What is logistics management?

the integration of two or more activites for the purpose of planning, implementing, and controlling the fficient flow of raw materials, in process inventory, and finished goods from the point of origin to the point of consumption -specifically deals with moving physical prodcuts -usually managed by the operations department *focused on minimizing costs

What is distribution intensity?

the number of channel members to use at each level of the marketing channel. distrubition intensity is commonly divided into 3 level

3. PR

the organizational function that manages the firms communications to achienve a variety of objectives, including building and maintaing a positive image, handling or headin off unfacorable sotries or events, and maintaining positive relationships with the media -publicity -"free" dont have to pay for the media buy time slot -news article, tv interview etc that gives the company exposure -large corporations need to budget for PR because they have to be able to manage it *media buy might be free but company still needs to hire PR person to find the company the slots -companies have learned that they can get their message across through PR without spending as much money as their competition

4. noise

there is all kinds of noise that can distort message -still exists even if the message is perfectly encoded and the receiver can properly decode it

PQ what must be done for merchandise to be considered floor ready?

ticketing and marking

What is radio frequency identification RFID tags

tiny computer chips that automatically transmit to a special scanner all the information about a containers contents or individual products

PQ: EDLP provides value to customers by reducing their costs in terms of searching and decision making TRUE OR FALSE

true

*******PQ: cost based pricing ignores both consumers and the prices of competitors. TRUE OR FALSE

true; this is why cost based is flawed

OLD TEST Q: What is breakeven analysis:

useful technique that enables managers to examine the relationships among cost, price, revenue, and profit over different levels of productions and sales -breakeven point: point at which the number of units sold generates just enough revenue to equal total costs -contribution per unit: price less the variable cost per unit -break even analysis doesnt actually help managers set prices; helps them asses pricing strategies because it clarifies the conditions in which different prices may make a product or service profitable

f. retailers

usually the last intermediary before the product reaches the consumer

What does it signal from the seller to the buyer?

what the value is

2. all you can afford

whatever money is left after costs is put towards promotion -the communication budget is the money available after operating costs and profits have have been budgeted -effective for small businesses that are just starting out but beyond that its imppractical -assumes communication expenses do not stimulate sales and profit

PQ a retailer should alway be scanning the environment for new incoming retailers that may become more successful. what is this called

wheel of retailing

4. What is predatory pricing?

when a firm sets a very low price for one or more of its products with the intent to drive its competition out of business -illegal under both the sherman act and the federal trade commision act because it constrains free trade and represents a form of unfair competition -also tends to promote a concentrated market with a few dominant firms (oligopoly)

2. what is price discrimination?

when firms sell the same product to different buyers based on demographics that THE CONSUMER CANNOT CHANGE, different price under the SAME condition -women pay less: illegal -senior citizen discount: illegal -student discount: legal (anyone can enroll) -EX: victorias secret got in trouble for this because the catalogs being mailed to guys had higher prices than the catalog being sent to girls

What is a vertical channel conflict or (vertical supply chain conflict)

when supply chain members are not in agreement about their goals, roles and rewards

What is horizontal channel conflict (horizontal supply chain conflict)?

when there is disagreement or discord among members at the same level of marketing channel, such as two competing retailers or two competing manufacturers

Infomercials are what percent pull

100%

d. What is the subsitution effect

consumers ability to substitue other products for the focal brand -the greater the availability of substiture products, the higher the price elasticity of demand for any given product will be

******************Why is a price difficult to reverse?

consumers always remember lowest price they paid (.79 coke at mcdonalds one summer then went up to .99)

3. shoppertainment

consumers dont always go shopping to buy things, sometimes they jsut go to hang out. inorder to get consumers into the store and buy things, we have to entertain consumers -not just going there to shop but to be entertailed and enthralled ex: american girl

b. prestige products or services- what are they

consumers purchase a product or service for their status rather thatn their functionality -the higher the price, the greater exculsivity and status associated with it; few ppl can afford to get it -TEST Q: With prestige products/service, a higher price may lead to a greater quantity sold but only up to a certain point -when customers value the increase in prestige more than the price differential between prestige product and other products, the prestige product attains the greater value overall

a. agent

1. Agent-> importer or export agent, doesnt usually actually take ownership of the product

Proctor and gamble sells how many of its products through walmart?

1/5th

What is the evolution of retailing/what time eras are they a part of?

1. 1920s 2. 1940s 3. 1950s 4. 1960s 5. 1970s 6. 1980s 7. 1990s

4. competition (4 LEVELS)

1. MONOPOLY: less price competition, fewer firms -one firm provides the product or service in a particular industry, and as such results in less price competition 2. OLIGOPOLY: more price competition, fewer firms only few firms dominate -firms typically change prices in reaction to competition to avoid upsetting an otherwise stable competitive environment -price war- occurs when two or more firms compete primarily by lowering their prices (coke v pepsi) -Predatory Pricing- firms sets very low price to drive competition out of business- its ILLEGAL! 3. MONOPOLISTIC COMPETITION: less price competition, many firsms when so many firms compete, product differentiation rather than strict price competitoion tends to appeal to consumers -MOST ideal form of competiton 4. PURE COMPETITION: more price competition, many firms -there are a large number of seller of standardized products or commodities that consumers percieve as substitutable -******in such markets, price usually is set according to the laws of supply and demand

****What are the tasks simplified by EDI

1. receive sales data 2. initiate purchase orders 3. invoices 4. return documents

What are trends in retailing and logistics

1. shifting channel captains 2. polarization of markets 3. shoppertainment 4. mass customization 5. mcdonaldization 6. value knowledge 7. convenience motivation 8. consumer rights/consumer terrorism 9. benefits of stores for customers 10. benefits of the internet and multichannel retailing 11. effective multichannel retialing

PQ mark the following executional styles as true or false 1. announcement: describes the features of the new windows laptop 2. lesson: nutrisystem discusses the ease of losing weight while showing several customers before and after the product 3. association: dos equis commercials comparing people who drink their beer to the most interesting man in the world 4. drama: using a metaphor of a hammer pounding on a women's head to signify a migraine

1. true 2. true 3. true 4. false

PQ Mark the following true or false in relation to how the communication model applies to bacardi rum campaigns 1. sender-bacardi 2. encoding-marketers pitch an ad idea of showing the origination of the cuba libre complete with set and character plans 3. message: bacardi is an identifiable brand 4. noise: many consumers ignore or walk away from tv ads 5. decoding: the audience perceives bacardi as a drink that can transport them to paradise in cuba 6. receiver: the ad agency creating the bacardi campaign

1. true 2. true 3. true 4. true 5. true 6. false

PQ mark which of these do not match the stated distribution intensity 1. intensive: cocacola 2. exclusive: SDSU bball swag 3. selective: mars candy bars

1. yes 2. yes 3. no

What does an outlet start with?

1.low prices, low margins, low status -as time passes the outlet adds services 2. outlet now has: higher price, higher margins, higher status -as time passes the outlet adds still more services 3. outlet now has: still higher prices, still higher margins, still higher status -outlet begins to feel comfortable and unbeatable 4. new retailer enters retailing environment with characteristics from number one *When a retailer assumes they are invincible, they are in trouble. always look over shoulder to whats coming

what are the different types of awareness

1. brand 2. aided recall 3. top of mind

9. benefits of stores for consumers

1. browsing 2. touching and feeling products 3. personal service 4. cash and credit payment 5. entertainment and social experience 6. immediate gratification 7. risk reductioin

What are factors for establishing a relationship with reatilers?

1. choosing retailing partners 2. identifying types of retailers 3. developing retail strategy 4. managing a multichannel strategy

pkt 2 What are the 5 Cs of pricing?

1. company objectives 2. customers 3. costs 4. competition 5. channel members

What are the 3 elements of the IMC strategy

1. conusmer 2. channel 3. results

What are the different types of food retailers?

1. conventional supermarket 2. limited assortment (extreme value retailers 3. supercenters ****4. warehouse clubs 5. convenience stores

What are the 2 non mutually exclusive ways to manage a marketing channel or supply chain

1. coordinate the channel using a vertical marketing system 2. develop strong relationships with supply chain partners

10. benefits of the internet and multichannel retailling

1. deeper and broader selection 2. personalization 3. gain insight into consumer shopping behavior 4. increase customer satisfaction and loyalty 5. expand market presecnce

What are the different types of general merch retailers?

1. department stores 2. full line discount stores ****OLD TEST Q 3. specialty stores 4. drugstores 5. category specialists (big box retailers or category killers) ***** 6. Home improvement centers 7. extreme value retailers 8. off price retailers

pkt 3 **most important** What are the 4 steps in establishing price?

1. establish pricing objectives 2. analyze demand, profits, costs 3. choose a pricing strategy 4. fine tuning the price

What are the modifying factors of demand?

1. income 2. consumer prefrences 3. complimentary goods 4. substitute goods

pkt 6 communication model

1. information source 2. transmission of message (encoded) 3. message 4. noise 5. transmission of message (decoded) 6. destination 7. feedback loop

What are the 3 levels of distribution intensity

1. intensive-designed to place products in as many outlets as possible 2. exclusive- grants exclusive geographic terrotories to one or very few retail customers so no other retailers in the territory can sell a particular brand 3. selective-relies on a few selected retail customers in a territory to sell products

What are the different kinds of channel decisions

1. location and number of outlets 2. logistics and operations 3. direct distribution 4. indirect distribution 5. jobbers 6. just in time inventory systems 7. advantages on longer channels

PQ which of these is considered part of the supply chain? 1competitors 2manufacturers 3distribution 4ceo,cfo 5transportation 6customers 7buying centers 8retail stores 9suppliers

1. no 2. yes 3. yes 4. no 5. yes 6. no 7. no 8. yes 9. yes

How is price DIFFERENT from the other Ps?

1. only finite variable (EX 1.99 means 1.99, cant be misinterpreted) 2. easy to change; price can be negotiated (cars) ******3. difficult to reverse 4. only source of revenue

What are the determinants of IMC budget

1. percentage of sales 2. all you can afford 3. competive pairity 4. objective and task

What are IMC tools

1. personal selling 2. direct marketing 3. PR 4. promotions 5. advertising

*What are the two types of needs?

1. physiological 2. functional

How is price similar to the other Ps? (5)

1. predicated on supply and demand 2. dynamic not static 3. interactive with the other Ps 4. place helps determine the price 5. constrained by others decisions

What are the 3 strategic pricing gaps?

1. price ceiling- the upper limit at which people would stop buying the good/service if the price reached that point 2. price floor- lowest price you would pay for the product because prices lower than this are sketchy 3. price gap- the difference between the cost and price ceiling -YOU HAVE TO PRICE ABOVE COST TO MAKE A PROFIT

PQ: mark each of the following as primary or secondary demand: ____ ipod advertisements focused on what the mp3 player is and how it works during the introduction stage ______ loreal advertising its new mascara brush as revolutionary

1. primary: ALWAYS IN INTRODUCTION STAGE 2. secondary: BRAND

what are the different types of ads

1. product ads 2. institutional ads

What are the avenues for PR:

1. publicity 2. product placement 3. sponsorship 4. cause related marketing 5. event sponsorship

a. *stage in product life cycle

Looking at the stage of the PLC the product is in gives you guidelines for the necessary pricing strategy 1. INTRO STAGE- product is the only one in the market of its kind -very rarely use profit margins beacause it is the first product of its kind -Skimming: begin with very high prices and gruadually lower it over time; best for infrequent prices (ex: new iphone) - Penetration- start with a lower price to get consumers to try the product and gain market share and gradually raise it over time ex: ideal for repeat purchases like gym membership: $6 to start then higher 2. GROWTH STAGE-needs to distinguish the product from competitors -price is a factors that consumers use to differentiate similar products *****-go into mass media (tv, billboard, magazines) 3. MATURING STAGE- usually the fair price is being charged -fair pricing, usually reasonable profit margin -end of maturity-sometimes price wars can occur *sales in the industry start to decline so firms try to steal market share from the competition *good for consumers, not manufacturers *consumers are the only ones that benefit from price wars 4. DECLINE AND OBSOLESCENCE-many competitors exit the market leaving only one -Survival: firms are trying to make as much money as they can from the product *sometimes resorts liquifying inventory to get as much money out as possible (DIVESTING) -Captive Market: when all competitors exit and only one firm remains leaving them a group of customers *not uncommon for the last firm standing to increase price because there is no longer competition

*********3. what are complimentary goods?

NOT BACON AND EGGS! ********a. 2 things that go together, company sells BOTH products (macbook and charger cable) b. must buy another component to "use" first (ex: ipod priced lower (low profit margin) but they make their money selling the songs; kodak cameras/film/prints; vegas/lodging/buffets/$gambling$)

2. product placement

NOT ILLEGAL -always was an option but became popular starting in 1981 -now has become rampant -movies, tv, video games books -sometimes bartered for but usually paid *5 billion dollar industry ET was first paid product placement -movie was over budget and they needed more money -called mars to see if they owuld pay for m&ms to be used; said no -called reeses pieces and they paid 1 million for two shots with ET and the candy

** What marketing mix variable is the only source of revenue?

PRICE a. only the marketing department can create revenue b. if you mess up how you price a products, consumers have very long memeories and they will remember that price and then you're screwed

a. Price lines

PRICE LINES: these are NOT product line prices -if the prices range all over the place companies group assortment into different price categories (ex: mattresses grouped with like prices and then find an average price in the middle) -customers often use price to make a decision in industries where it is hard to differentiate the competitors from one another -more at the retail level -especially common with Complex Decision Making Goods -rather than giving the customers many different price options we collapse them down into group creating only 3 price options: budget, moderate, premium (big Tvs, pools) -when price lining some products are overpriced and some are underpriced but the customer will never know

PQ: One of the most difficult tasks in marketing is?

PRICING

The most competitive aspect of companies during what era?

PRODUCTION era -everyone was trying to produce goods as efficiently and cost effectively as possible -it was critical to get the finished good to the end consumer as cost effectively and in as timely a manner as possible -markets were originally segmented geographically making physical distrobution incredibly important

1. what is establishing the firm's pricing objective

a. PROFITABILITY target return on investment -based on the profit margin desired on each unit -ROI is most common profit objective -the normal desired profit margin is 10-30% -grocery industry= 2.5-3.5% -plush toys= 140-250% b. MARKET SHARE might be willing to set a lower price to increase market share -usually related to ROI -long term profitability is a result of high market share (OLD ANSWER CHOICE) -cigarette companies are trying to increase market share in Japan by using penetration pricing c. SALES VOLUME -more likely to be a short term pricing objective -Case Generation: useful for cash strapped situations (tiVo) -sales goals can be used to gain leverage within the channel (car dealers often do this)

3. Choosing a pricing strategy

a. cost oriented b. demand oriented c. competitive pairity d. value based

2. CUSTOMERS (a-f)

a. demand curve b. prestige product/service c. price elasticity of demand d. substitution effect **e. cross price elasticity f. substitute products

2. What is dynamic not static?

a. dont set a price and leave it for the next 20 years b. dont incorporate price into your name (EX motel 6 used to be 6 dollars a night but almost went out of business so they had to change price, made consumers mad) c. it can change A LOT

3. What is interactive with the other Ps?

a. product or service decisions precede other decisions, but all the rest work together

1. what are company objectives? (a-d)

a. profit orientation b. sales orientation c. competitor orientation d.customer orientation

2. analyze demand, profits, costs (a-c)

a. stage in product life cycle b. industry conditions c. psychological factors

PQ what is based on activities such as couponing, contests, sweepstakes, sampling, and rebates?

consumer sales promotion

PQ: Vons waits until Ralphs prices their produce in order to match their prices. What kind of pricing is this?

competitve pairity (competitor based pricing)

What is electronic data interchange? (EDI)

computer to computer exchange of business documents from a retailer to a vendor and back -The use of EDI provides 3 main benefits to supply chain members: 1. EDI reduced cycle time, or the time between the decision to place an order and the receipt of merchandise. info flows quicker using EDI which means that inventory turnover is higher. 2. EDI improved the overall quality of communications through better record keeping; fewer errors in inputting and receiving an order; and less human error in the interpretation of data 3. the data transmitted by EDI are in the computer readable format that can be easily analyzed and used for a variety of tasks ranging from evaluating vendor delivery performance to automated recorder process

3. specialty stores

concentrate on a limited number of complimentary merch categories and provide and provide high level of service

2. institutional ads

cost 1/5 to 1/6 the price of product ads -advocacy ads: trying to convince consumers of a whole campaign, concept or idea in one direction (ex: MADD mothers against drunk driving) -image ads: most common, just about the brand -reminder ads: maturity stage, remind to come back and purchase

PQ what is considered relatively simple compared to other pricing methods?

cost based

What is the only element of the marketing mix that does not generate what/

costs

c. psychological factors (pt 2)

percieved quality: country of origins effect, expectations PRODUCT LINE PRICING: divides the cost across all products in the line in order to bring the prices closer together (EX: collection of shirts and pants all around 15-20 but one leather jacket at 100; lower price of jacket, raise shirts and pants) -effects entire product line -Shared Costs: when a few items of a product line are very expensive or very cheap, the prices across the line are changed so that one item isnt in another pricing realm from the rest *if one item is much more expensice that the rest, companies will sometimes lower the price so that its more consistent with the rest while raising other prices to make up for loss GAMES CONSUMERS PLAY: companies need to speculate on what consumers do in order to counter them Stockpiling- if there is a price war going on and the price is much lower, the consumers will buy enough to hold them over for a while to save money PostPoned Purchase- if the consumer does not need the product they may wait to buy until it has been marked down

***2. polarization of markets

polarization=no longer have people in the middle; changed the way members of the marketing channel look at the market -markets used to be normally distributed *sears was the most popular *kmart was number 2 but one standard deviation lower than sears *macys right behind kmart but a standard deviation above sears -people now only go to sears to buy appliance or craftsman tools -market now has a bi model distrobution *sears and kmarts solutino to losing customers: merge *big lots and costco: value *saks and tiffanys: quality and image *we can no longer predict where a consumer is going to shop *conusmers want both value and prestige (quality, service, image) *also applies to services, restaurants, supercenter, small boutique

5. what is event sponsorship

popular PR tool -occurs when corportation support various actitivities (financially or otherwise) usually in the cultural or sports and entertainment sectors.

What is cross docked?

prepackaged by the vendor for a specific store -UPC labes on the carton indicate the store to which it is being sent -because merch is ready for sale, its placed on a conveyor system that routes it from the unloading dock at which is was received to the loading dock from the truck going to the specific store

What does price indicate?

value

Each participant in the supply chain adds ________ because they get the goods to the consumer ________

value; efficiently

PQ what store dominates the supercenter category

walmart

What are the new forms of distribution?

warehouse and membership clubs 1. off price merchandisers 2. manufacturers outlet stores 3. category killers 4. vending machines 5. direct marketing options

4. Fine Tuning (a-b)

we have the price but now we need to do a little bit of adjustment a. price lines b. loss leaders c. discounting d. allowances e. EDLP

4. What are substitute goods?

what alternative do people have? a. product category=primary demand (**DEMAND FOR INDUSTRY) b. Brand demand=secondary demand (DEMAND FOR BRAND)

1. What is income

what can they afford? ex: student might like better cuisine than top ramen