MCE Exam 3

complicated system

-generally a well defined outcome or a set of criteria that signifies a successful outcome -factors are all known -rigid set of rules that must be followed to achieve a successful outcome

positive feedback loops

-generate either more or less of the same effect -leads to rapid change and instability -non linear exponential -divergent behavior

negative feedback loop

-has two variables in the opposite direction -counterbalance is somewhat proportional -zero sum relationships -leads to stability -breaks down in non-linear systems

complex system

-no set of rules can fully address situation -factors are not all known, but can identify general themes

simple system

-relatively easy to determine if a successful outcome has been achieved -factors are all known -steps don't have to be followed exactly to achieve acceptable outcome

Three basic requirements of production

1. Build and deliver products in response to the demands of the customer at a scheduled delivery time 2. Provide an acceptable quality level 3. Provide everything at the lowest possible cost

espoused purpose

A purpose that is defined and communicated

complexity mindset

Accepts... -Complexity exists -Complexity needs to be dealt with differently -There are certain limitations on what the managers can control -Welcomes the challenges and opportunities that come with complexity

customer relationship era

CRM emphasizes finding out everything possible about customers and using that information to satisfy or exceed expectations in order to build long-term customer loyalty.

Emerging Mobile/On-Demand Marketing Era

Digital Age is increasing consumers power and pushing marketing toward being on demand not just on.

fit test

How well does the strategy fit the company's situation?

competitive advantage test

Is the strategy helping the company achieve competitive advantage in a sustainable way?

performance test

Is the strategy producing superior company performance?

current purpose

a purpose that is currently being executed

systems thinking

ability to understand these interconnections in such a way as to achieve a desired purposes

general expenses

administrative expenses of the firm such as office salaries, insurance, and rent, utilities, and depreciation

demographic segmentation

age, income, education level

production management

all activities managers do to help their firms create goods

business to business (B2B)

all the individuals and organizations that want goods and services to use in producing other goods and services to sell, rent, or supply goods to others

consumer market (B2C)

all the individuals or households that want goods and services for personal consumption or use

promotion

all the techniques sellers use to inform people about and motivate them to buy their products

publicity

any information about an individual, product, or organization that is distributed to the public through media and that is not paid for or controlled by the seller

product

any physical good, service, or idea that satisfies a want or need plus anything that would enhance the product in the eyes of consumers

fixed assets

assets that are relatively permanent such as land, buildings, and equipment

competitive based pricing

based on what competitors are doing

production era

believed in a limitless market

focused low cost

best when firm can lower costs significantly by limiting its customer base to a well defined buyer segment

agents/ brokers

bring buyers and sellers together and assist in negotiating and exchange but don't take title to the goods

form utility

changing raw materials into useful products

place

channel, inventory, locations, logistics, distribution

geographic segmentation

cities, counties, states, regions

promotion mix

combination of promotional tools an organization uses

focused strategies

concentrated attention to a narrow piece of total market

consumer goods/ services

convenience, shopping, specialty, unsought

cost of goods sold

cost of raw materials and supplies used for producing items for resale

operating expenses

costs involved in operating the business and includes selling and general expenses

B2C sales promotions

coupons, cents-off promotions, sampling, premiums, sweepstakes, contests, BOGOs, catalogs

production

creation of finished goods and services using the factors of production

target costing

designing a product so that it satisfied customers and meets the profit margins desired by the firm

complicated

difficult or hard to solve with a lot of moving pieces that are known

market segmentation

dividing the total market into groups whose members have similar characteristics

possession utility

doing whatever necessary to transfer ownership from one party to another

cash budget

estimates cash inflows and outflows during a particular period like a month or quarter

total product offer

everything consumers evaluate when deciding whether to buy something

personal selling

face to face presentation and promotion of goods and services

balance sheet

financial statement that reports a firm's financial condition at a specific time

statement of cash flows

financial statement that reports cash receipts and disbursements related to a firm's three major activities (operations, investments, financing)

income statement

financial statement that shows a firm's profit after costs, expenses, and taxes

finance

function of business that acquires funds for the firm and manages the funds within the firm

public relations

function that evaluates public attitudes, changes policies and procedures in response to public's requests, and executes a program of action and information to earn public understanding and acceptance

debt financing

funds raised through various forms of borrowing that must be repaid

analysis

gain an understanding of a system by breaking it down into its constituent elements

synthesis

gain an understanding of an entity through the context of its relations within a whole that it is part of

non-linearity

governed by dynamics of positive feedback loops, not equilibrium

psychographic segmentation

group's values, attitudes, interests

place utility

having products where people want them

capital budget

highlights a firm's spending plans for major asset purchases that often require large sums of money

closeness centrality

how close any given node is to another

degree centrality

how many links are touching one node

gross profit

how much a firm earned by buying (or making) and selling merchandise

eigenvector centrality

how much change one node imposes on others

brand awareness

how quickly or easily a given brand name comes to mind when a product category is mentioned

Best-Cost Strategy (Hybrid)

incorporate upscale attributes into its product offering at a lower cost than rivals

networks

informal groups of people with common interests who interact for mutual assistance

support goods

installations, accessory equipment, supplies, service

system

interconnected set of elements that is coherently organized in a way that achieves something

product life cycle stages

introduction, growth, maturity, decline

complexity

involves unknowns and interrelated factors and cannot fully address with systems and processes

current assets

items that can or will be converted into cash within one year such as cash, accounts receivable, and inventory

financial management

job of managing the firm's resources so it can meet its goals and objectives

price

list price, discounts, bundling, payment options/ credit terms

continuous process

long production runs turn out finished goods over time

intangible assets

long term assets that have no physical form but do have value such as patents, trademarks, and copyrights

worse-before-better

long term success often requires short-term investment or sacrifice

time utility

making products available when they are needed

selling expenses

marketing and distribution of the firm's goods or services, such as advertising, salespeople's salaries, advertising, and supplies

target marketing

marketing directed toward those groups an organization decides it can serve profitably

revenue

monetary value of what a firm received for goods sold, services rendered, and other payments

net income (or loss)

money leftover after deducting all expenses

equity financing

money raised from within the firm, from operations or through the sale of ownership in the firm (stock or venture capital)

skimming price strategy

new product is priced high to make optimum profit while there is little competition

betweenness centrality

nodes that create a bridge between otherwise unconnected constellations in a network

price leadership

one or more dominant firms set the pricing practices that al competitors must follow

information utility

opening two way flows of information between marketing participants

self organization

order that emerges out of initially disordered states

marketing intermediaries

organizations that assist in moving products from B2B or B2C to create efficiency

advertising

paid, non personal communication through various media by organizations and individuals who are in some way identified in the message

selling era

persuading customers through advertising

marketing concept era

post WWII, consumer spending increased

demand based pricing

pricing based on the level of demand for the product

psychological pricing

pricing products at a price point that make the product appear less expensive than it is

financial control

process in which a firm periodically compares its actual revenues, costs, and expenses with its budget

break even analysis

process used to determine profitability at various levels of sales

penetration strategy

product is priced low to attract many customers and discourage competition

intermittent process

production run is short and the machines are changed frequently to make different products

industrial goods/ services

production, support

shopping good/ service

products consumer buys only after comparing value from multiple sellers

unsought goods/ service

products consumers haven't thought of or need to solve an unexpected problem

convenience good/ service

products consumers want to purchase frequently and with little effort

specialty good/ service

products with unique characteristics and brand identity

sales promotions

promotional tools that stimulate consumer purchasing and dealer activities by means of short-term activities

service utility

providing fast, friendly service during and after the sale and by teaching the customers how to best use products over time

production goods

raw materials, component parts, production materials

wholesalers

sells to other organizations

retailers

sells to ultimate consumers

budget

sets forth management's expectations and allocates the use of specific resources throughout the firm

high-low pricing strategies

setting prices higher than EDLP but running special sales that bring prices lower than competitors

everyday low pricing

setting prices lower than competitors and not having any special sales

better-before-worse

solutions that work in the short run often have negative long-term effects

operations management

specialized area in management that converts or transforms resources (including HR) into goods and services

financial statements

summary of all the transactions that have occurred over a particular period

focused differentiation

superior products tailored to unique preferences of narrow, well defined group of buyers

depreciation

systematic write-off of the cost of a tangible asset over its estimated useful life

marketing

the activities buyers and sellers perform to facilitate mutually satisfying exchanges

utility

the want-satisfying ability or value that organizations add to goods and services when the products are made more useful or accessible to consumers than they were before

product life cycle

theoretical model of what happens to sales and profits for a product class over time

operating (master) budget

ties together all the firm's other budgets and summarizes its proposed financial activities

B2B sales promotions

trade shows, portfolios for salespeople, deals (price reductions), catalogs, conventions

Try, Learn, Adapt

truly rare that strategy will work as intended so must allow for mistakes and risks

"Manage, don't solve"

use critical thinking and making quick decisions under uncertainty

cost based pricing

using costs as primary basis for setting price

liabilities

what the business owes to others (debts)

brand preference

when consumers prefer one brand over another

brand insistence

when consumers will not accept substitute brands

channel of distribution

whole set of marketing intermediaries that join together to transport and store goods in their path from producers to consumers