Marketing Final

What are the main steps of the pricing framework?

1) set pricing objectives. 2) Estimate demand. 3) determine costs. 4) analyze factors affecting pricing decision. 5) determine pricing strategies and pricing policies for making price adjustments. 6) set initial prices. 7) offer and make price adjustments as needed

Name the 4 types of pricing objectives?

1- Earning a Targeted Return on Investment (ROI)2- Maximizing Profits 3- Maximizing Sales 4- Maximizing Market Share

What is a perceptual map?

A perceptual map displays, in two or more dimensions, the position of products or brands in the consumer's mind.

What are the four types of segmentation types in b2b markets?

A price-focused segment A quality and brand-focused segment A service-focused segment A partnership-focused segment

What is a push strategy?

A push strategy involves promoting a product to businesses (middlemen), such as wholesalers and retailers, who then push the product through the channel promoting it to final consumers.

What are shopping offerings? Mention an example for it.

A shopping offering is one for which the consumer will make an effort to compare and select a brand. ex: For example, if you prefer Tide laundry detergent, you postpone the shopping until the store brings it back.

What are the 5 components of product and service decisions?

Attributes, Branding, Packaging, Labeling, Support

What are some of the main factors that influence selection of promotion mix?

Budget Available, Stage in the product life cycle, Type of product and type of purchase decision, Target market characteristics and consumers' readiness to purchase, Consumers' preferences for various media, Regulations, rivals, and environmental factors, Availability of media,

Bargaining Power of Suppliers (porter)

Can suppliers capture more value or profit, or impact who gets business. ex: The bargaining power of suppliers in the airline industry can be considered very high. When looking at the major inputs that airline companies need, we see that they are especially dependent on fuel and aircrafts. These inputs however are very much affected by the external environment over which the airline companies themselves have little control. The price of aviation fuel is subject to the fluctuations in the global market for oil, which can change wildly because of geopolitical and other factors. In terms of aircrafts for example, only two major suppliers exist: Boeing and Airbus. Boeing and Airbus therefore have substantial bargaining power on the prices they charge.

What is a pull strategy?

Companies use a pull strategy when they target final consumers with promotions. In other words, a company promotes it products and services to final consumers to pull consumers into the stores or get the consumers asking for the product.

What are convenience offerings? Mention an example for it.

Convenience offerings are products and services consumers generally don't want to put much effort into shopping for because they see little difference between competing brands. ex: A consumer might choose the store in which to buy the bread but be willing to buy whatever brand of bread the store has available.

How are products classified based on "how consumers buy them"?

Convenience products Shopping products Specialty products Unsought products

How is market penetration rate calculated?

Customers who purchased a product in the category / Total population

Name different types of price-adjustment strategies

Discount and allowance pricing, Segmented pricing, Psychological pricing, Promotional pricing, Geographical pricing, Dynamic pricing, International pricing

What is diversification?

Diversification is a growth strategy of offering new products in new markets to take advantage of new opportunities

What are the main components of the AIDA model?

Get Attention Hold Interest Arouse Desire Obtain Action

Threat of New Entrants ( porter 5 force)

How easy is it for new competitors to come into the industry. Ex: The threat of new entrants in the airline industry can be considered as low to medium. It takes quite some upfront investments to start an airline company (e.g. purchasing aircrafts). Moreover, new entrants need licenses, insurances, distribution channels and other qualifications that are not easy to obtain when you are new to the industry (e.g. access to flight routes). Furthermore, it can be expected that existing players have built up a large base of experience over the years to cut costs and increase service levels. A new entrant is likely to not have this kind of expertise, therefore creating a competitive disadvantage right from the start. However, due to the liberalization of market access and the availability of leasing options and external finance from banks, investors, and aircraft manufacturers, new doors are opening for potential entrants.

Competitive Rivalry

How intense is the level of competition among industry members. Ex: When looking at the airline industry in the United States, we see that the industry is extremely competitive because of a number of reasons which include the entry of low cost carriers, the tight regulation of the industry wherein safety become paramount leading to high fixed costs and high barriers to exit, and the fact that the industry is very stagnant in terms of growth at the moment.

What is market penetration?

Is the growth strategy in which the company sells more of the existing products to customers in existing markets or segments.

What are some of the important questions to ask for selecting target markets?

It is sizeable (large) enough to be profitable given your operating cost. • It is growing. • It is not already swamped by competitors, or you have found a way to stand out in a crowd. • Either it is accessible or you can find a way to reach it. • The company has the resources to compete in it. • It "fits in" with your firm's mission and objectives.

What are the 7 traps resulting from a simplistic view of strategy execution?

Losing the plot, Metric obsession, Planning myopia, Missed learning opportunities, Tyranny of intermediate goals, Missing the forest for the trees, Tyranny of practicality

There are two main methods for new product pricing. What do each of these entail?

Market Skimming= is a strategy with high initial prices to "skim" revenue layers from the market, Market-penetration pricing= sets a low initial price in order to penetrate the market quickly and deeply to attract a large number of buyers quickly to gain market share

What is market development?

Market development involves identifying and reaching new segments or markets for existing products.

How do business markets differ to consumer markets?

Market structure and demand Nature of the buying unit Types of decisions and the decision process

What is an offering?

Offering are products and services designed to deliver value to customers—either to fulfill their needs, satisfy their "wants," or both.

What are different types of flows that connect a distribution channel?

Physical flow of products Flow of ownership Payment flow Information flow Promotion flow

What is product development?

Product development is a growth strategy in which the company sells new products to customers in existing markets or segments.

Name different types of product mix pricing strategies.

Product line pricing, optional-product pricing, Captive-product pricing, Product bundle pricing, By-product pricing

In selecting the message content, what are the three types of appeal that marketers can use?

Rational appeal relates to the audience's self-interest. Emotional appeal is an attempt to stir up positive or negative emotions to motivate a purchase. Moral appeal is directed to an audience's sense of what is right and proper.

What is relative market share and how is relative market share calculated?

Relative market share indicates a firm's or brand's market share against its biggest competitor. Relative Market Share = Brand's Market Share ($ or Units) / Largest Competitor's Market Share ($ or Units)

What are specialty offerings? Mention an example for it.

Specialty offerings are highly differentiated offerings, and the brands under which they are marketed are very different across companies, too. ex: exotic perfumes available only in exclusive outlets are considered

What is the Boston Consulting Group (BCG) matrix?

The BCG matrix helps managers make resource allocation decisions once different products are classified.

What are the main methods for setting the promotion budget?

The affordable method sets the promotion budget at the level management thinks the company can afford. The percentage-of-sales method sets the promotion budget at a certain percentage of current or forecasted sales or as a percentage of the unit sales price. The competitive-parity method sets the promotion budget to match competitors' outlays. The objective-and-task method develops the promotion budget by specific promotion objectives and the costs of tasks needed to achieve these objectives.

What is market concentration and how is it calculated?

The degree to which a relatively small number of firms accounts for a large proportion of the market. 3 or 4 Firm Concentration Ratio = Sum of the market shares of the leading 3 or 4 competitors in a market

What is a product position?

The place the product occupies in consumers' minds relative to competing products.

What are the five components of Porter's 5 forces model? Describe each of these components with an example.

Threat of New Entrants, Bargaining Power of Suppliers, Threat of Sub-stitutes, Power of Buyers, Competitive Rivalry

What are the main elements of a positioning statement? Provide an example.

To (target segment and need) our (brand) is (concept) that (point of difference). ex: For the young and young-at-heart, Walt Disney World is the theme park that best delivers on an immersive and magical experience because Walt Disney World, and only Walt Disney World, connects you to the characters and worlds you most desire.

How is market share calculated based on unit and revenue?

Unit Market Share = Unit Sales / Total Market Unit Sales Revenue Market Share = Sales Revenue / Total Market Sales Revenue

What are unsought offerings? Mention an example for it.

Unsought offerings are those that buyers do not generally want to have to shop for until they need them. ex: Towing services and funeral services are generally considered unsought offerings.

Draw the 4 capabilities leadership model. What do each of these components entail?

Visioning Sensemaking -- Building Credibility------relating Inventing

Threat of Substitutes

What alternative choices do customers have. Ex: in terms of the airline industry, it can be said that the general need of its customers is traveling. It may be clear that there are many alternatives for traveling besides going by airplane. Depending on the urgency and distance, customers could take the train or go by car.

What is nondisclosure agreement (NDA)?

a contract that specifies what information is proprietary, or owned by the partner, and how, if at all, the partner can use that information.

What are product features (attributes)?

competitive tool for differentiating a product from competitors' products

What is disintermediation?

cut the middlemen, or intermediaries out of the deal

What are some of the major influences on business buying behavior?

enviromental, organizational, interpersonal and invidiual

Power of Buyers

extent to which buyers influence market rivals. ex: Bargaining power of buyers in the airline industry is high. Customers are able to check prices of different airline companies fast through the many online price comparisons websites such as Skyscanner and Expedia. In addition, there aren't any switching costs involved in the process. Customers nowadays are likely to fly with different carriers to and from their destination if that would lower the costs.

Services are different from products. What are the four main characteristics of services?

inangibillity, inseprarabillity, variabillity, perishabillity.

In value delivery network, how are upstream partners defined?

include raw material suppliers, components, parts, information, finances, and expertise to create a product or service

In value delivery network, how are downstream partners defined?

include the marketing channels or distribution channels that look toward the customer

What are the marketing mix decisions based on different stages of product life cycle (PLC)?

intro Stage:The marketing mix during this stage of the product life cycle entails strategies to establish a market and create a demand for the product. Growth: Marketing tactics during the growth stage requires branding that differentiates the product from other products in the market. Marketing the product involves showing customers how this product benefits them over the products sold by the competition—also known as building a brand preference. maturity: The marketing mix during this stage involves efforts to build customer loyalty, typically accomplished with special promotions and incentives to customers who switch from a competitor's brand. Decline: the focus is generally on reinforcing the brand image of the product to stay in a positive light in the eyes of the product's loyal customers.

What is public relations?

involves building good relations with the company's various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events.

What are some of the important functions that packaging fulfills?

involves designing and producing the container or wrapper for a product

What do direct and digital marketing involve?

involves engaging directly with carefully targeted individual consumers and customer communities to both obtain an immediate response and build lasting customer relationships.

What is a product line?

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

What is sales promotion?

is a short-term incentive to encourage the purchase or sale of a product or service.

Define exclusive distribution.

is a strategy in which the producer gives only a limited number of dealers the exclusive right to distribute its products in their territories

Define intensive distribution

is a strategy used by producers of convenience products and common raw materials in which they stock their products in as many outlets as possible

Define selective distribution

is a strategy when a producer uses more than one but fewer than all of the intermediaries willing to carry the producer's products

Define advertising.

is any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor.

What is a brand?

is the name, term, sign, or design—or a combination of these—that identifies the maker or seller of a product or service

What is personal selling?

is the personal interaction by the firm's sales force for the purpose of engaging customers, making sales, and building customer relationships.

What is break-even point (BEP)? How is it calculated?

is the point at which total cost and total revenue are equal. first calculate the fixed and variable costs. Then, using the formulas below, calculate how many units the manufacturer must sell to break even. BEP = total fixed costs (FC) ÷ contribution per unit (CU)

What is a promotion mix?

is the specific blend of promotion tools that the company uses to persuasively communicate customer value and build customer relationships.

To be useful, market segments must have five characteristics. Name these characteristics.

measurable, accessible, substantial, actionable, differentiable

How do intermediaries create value?

offer producers greater efficiency in making goods available to target markets. Through their contacts, experience, specialization, and scale of operations, intermediaries usually offer the firm more than it can achieve on its own.

Define product's unique selling proposition (USP) and describe it with an example.

or specific benefit consumers will remember, ex: Domino's "Pizza delivered in 30 minutes or it's free" is a good example of a unique selling proposition.

Then fill in the following table: retail price: 100 Retail margin %: 10% Retail margin in $: Retail purchase price (RPP): 90 Distributor margin %: 10% Distributor margin in $: Distributor purchase price (DPP): Manufacturer sales price (MSP): Cost per unit: 51 Profit per unit sold: Manufacturer gross profit margin %:

retail price margin in $: 10 distributor margin in $: 9 DPP: 81 MSP: 81 profit per unit sold: 30 gross profit margin: 37%

What is the main function of product support and what are some of its examples?

services augment actual products, Warranty ,After-sale services, Delivery and credit