Marketing Exam 3

high/low sellers can create excitement and attract customers through the

"get them while they last" atmosphere that occurs during a sale

oligopoly

a handful of firms control the market

A __________ _______________ refers to the use of the same brand in a different product line.

brand extension

managers use break even analysis to

estimate the quantity at a given price they will need to sell to breakeven

one limitation associated with the break even analysis is that

it assumes there is only one price

customers who modify existing products according to their own ideas to suit their specific needs

lead users

________________ equals the number of products within a product line

product line depth

when marketers state that services are perishable, they are referring to the fact that

services cannot be stored for use in the future

cross price elasticity

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

explain the product life cycle

1. introduction- sales are low and profits are small or negative 2. growth- profits increase as sales increase, profits increase as economies of scale are attained, some new competitors may enter the market with similar products and some competitors may exit in an industry shakeout 3. maturity- typically marketing costs increase as firms defend their market share, there are many competitors, sales have peaked, and profits are declining. Some products may stay comfortable in the maturity phase until a new product emerges to replace them. an example would be refrigerators. competition intensifies in the maturity phase, because the only way a firm can gain customers is typically to take them away from the competition 4. decline- firms either position themselves for a niche segment of diehard customers or they completely exit the market

_________ is the most challenging of the 4 P's to manage, partly because ...

Price, it is often the least understood

price skimming

charging a relatively high price for new and innovative products to those consumers most willing and able to pay the high price (these consumers are innovators and early adopters)

the service gaps model is designed to

highlight those areas where customers believe they are getting less or poorer service than they should

What is CRM and why is it used?

Customer relationship management: a business philosophy and set of strategies, programs, and systems that focus on identifying and building loyalty among the firm's most valued customers

Because a market is saturated, firms may attempt to enter new geographical markets that may be less saturated. For example, pharmaceutical companies are realizing that they need to turn to BRIC countries for continued growth in the coming years.

TRUE

example of elastic product

a grocery store retailer would significantly decrease its sales of steaks by raising its price by a relatively small amount, because T bones are elastic

pure competition

a large number of sellers offers standardized products or commodities that consumers perceive as suitable (grains, gold, meat, spices, or minerals), price is set according to laws of supply and demand

Associated services such as warranties, financing support, and after-sale service are ______________ products

augmented

Marco tried a new fruit-flavored beverage and thought it was awful. He was especially disappointed because he had liked the dried fruit snacks marketed under the same brand name. Now he wasn't sure he even wanted to buy the snacks he had liked before. This highlights a problem in branding known as ____________ _____________.

brand dilution

___________ ____________ occurs when the brand extension adversely affects consumer perceptions about the attributes the core brand is believed to hold.

brand dilution

Efforts to change a brand's focus to target new markets or change the image of a brand are called

brand repositioning

when there is a significant difference between the service customers receive and the service the firm promotes

communications gap

Marketers selling milk, bread, and other consumer staples, know most customers do not spend much time searching or comparing alternatives. For most consumers, these are _____________ goods.

convenience

although they are relatively simple, compared with other methods used to set prices, _________________________ requires that all costs be identified and calculated on a per-unit basis.

cost-based pricing

cost-based pricing primarily considers the firm, and not its

customers or competitors

If the price for a product increases, the demand for the complementary product will

decrease

When travelers are bumped from overbooked flights, they are frequently offered vouchers good for future travel. The dollar value of the voucher is the airline's estimate of

distributive fairness

a customer's perception of the benefits he or she received compared with the costs

distributive fairness

the break even point is estimated by

dividing fixed costs by contribution per unit

when it comes to measuring consumer's price sensitivity, products are viewed as either

elastic or inelastic

Marketing expenditures allocated carefully can result in greater brand recognition, awareness, perceived value, and consumer loyalty for the brand, which all enhance a brand's __________

equity

a demand curve is built on the assumption that

everything but price and demand remains the same

When consumers associate a brand with a certain level of quality and familiar attributes, allowing consumers to make quick decisions, the brand ___________________ _____________________.

facilitates purchasing

by setting appropriate service standards and measuring service performance,

firms can attempt to close a standards gap

the delivery gap can be closed by

getting employees to meet or exceed standards when the service is being delivered by empowering service providers, providing support and incentives and using technology where appropriate

the market for a product is generally viewed as price insensitive, or inelastic, when its price elasticity is

greater than -1

"You are only as good as the last meal served" reflects the fact that services are

heterogeneous

a demand curve shows

how many units of a product or service consumers will demand during a specific period of time at different prices

diffusion of innovation curve

innovators: help the product gain market acceptance (2.5%) early adopters (13.5%) early majority (34%) late majority (34%) laggards (16%)

unlike products, services cannot be produced one at a time and consumed later, the two happen at the same time. this is referred to as

inseperability

a high/low strategy is appealing because

it attracts two distinct market segments: those who are not price sensitive and are willing to pay the "high" price and more price-sensitive customers who wait for the "low" sale price

One reason marketers of new, innovative products often start out with a price skimming strategy rather than a market penetration strategy is that

it is easier to lower prices than to raise them

One of the categories for which brand extension is especially logical is complementary goods. Johnson & Johnson introduces a travel-sized package for its existing baby oil product, this is an example of a _________ _________________.

line extension

the best first step with an angry customer is to

listen carefully and give the customer a chance to be heard

Because customers have different needs and expectations, the key to distributive fairness in service recovery is to

listen to the customer

effective service recovery entails

listening to the customers, providing a fair solution, resolving the problem quickly and involving customers in the service recovery where possible

For marketers using a price skimming strategy, once the initial demand is met for new and innovative products, they will likely

lower the price and capture the next most sensitive market segment

market penetration pricing strategy

marketers set a low initial price for the introduction of a product or service. the major objective with this strategy is to quickly build sales and market share

Firms can close knowledge gap by..

matching customer expectations with actual service through use of marketing metrics

What is brand awareness?

measures how many consumers in a market are familiar with the brand and what it stands for and have an opinion about it

example of inelastic product

milk, when the price of milk goes up people still buy it because they need it

one of the difficulties associated with value-based pricing is that it

necessitates a great deal of consumer research to be implemented successfully

What is brand loyalty?

occurs when a consumer buys the same brand's product or service repeatedly over time rather than buying from multiple suppliers within the same category

For a price skimming strategy to work, the product or service must

offer consumers some new benefit currently unavailable in alternative products

monopoly

one firm controls the market

complementary products' demands are _____________ related

positively (a percentage increase in quantity demanded for product A results in a percentage increase in quantity demanded for product B)

consumers generally believe that ______ is one of the most important factors in their purchase decisions

price

the perceived fairness of the process with which a firm handles customer complaints

procedural fairness

The complete set of all products offered by a firm is called its

product mix

prestige products or services are for consumers who

purchase for their status rather than for their functionality (the higher the price, the greater the status associated with it and the greater the exclusivity, because fewer people can afford to purchase it)

one approach marketers are using to reduce service heterogeneity is to

replace people with machines whenever appropriate

every other element in the marketing mix may be perfect, but with the wrong price,

sales and thus revenue will not accrue

when the delivery of a service fails to meet customers' expectations

service gap

private-label brands are developed and managed by retailers and are also referred to as

store brands

marketers should view pricing decisions as a

strategic opportunity to create value rather than as an afterthought to the rest of the marketing mix

everyday low pricing strategy

stresses continuity of retail prices at a level somewhere between the regular price and the deep-discount sale price of its competitors. also provides value to consumers by reducing their search costs

A method of determining the potential success of a new product. Introduces the offering to a limited geographical area (usually a few cities) prior to a national launch

test marketing

cost of ownership pricing considers not just the price initially paid but also

the cost of owning the product across its lifetime (LED lightbulbs)

heterogeneity

the fact that services tend to vary by time, location, or service provider

According to a typical demand curve, the higher the price,

the lower the quantity consumers will buy

The more substitutes that exist in a market,

the more sensitive consumers will be to changes in the price of a particular product.

diffusion of innovation

the process by which the use of an innovation, whether a product or a service, spreads throughout a market group over time and over various categories of adopters

value-based pricing can be difficult to implement because

the way consumers perceive value changes often

monopolistic competition

there are many firms competing for consumers in a given market, but their products are differentiated. product differentiation appeals to consumers rather than strict price competition (most common, sunglasses)

services are intangible, meaning ...

they cannot be physically touched or possessed, as a pure product can

complementary products

things that are used together

Companies whose brand name become synonymous with the product - like Kleenex tissues, Clorox bleach, Band-Aid adhesive bandages, and the Google search engine - must be vigilant in protecting their brand names because if they are used so generically, over time the brand itself can lose its ___________ ____________.

trademark status

because of high costs, many companies have altered their "no questions asked" return policies to include time limits, "restocking" fees, and store-credit-only refunds

true

customers want to be compensated a fair amount for a perceived loss that resulted from a service failure

true

at the breakeven point, profits are

zero