Marketing Final Short Answer, Marketing Final Exam - Study Guide

Buyer readiness stages

McKinsey approach: awareness, consideration, purchase, retention, and advocacy

Types of ad message execution (e.g. slice of life, testimonial, etc)

Message strategy is the general message that will be communicated to consumers - identifies consumer benefits. Major steps include: deciding on reach-frequency-impact, selecting media vehicles, and deciding on media timing.

Advertising objectives (e.g. gain attention) and determining the ad type to use (e.g. reminder, informative, perusasive)

is a specific communication task to be accomplished with a specific target audience during a specific time - objectives are classified by primary purpose - connect/resonate/bond Which product life cycle stage matches ad type (maturity -- reminder and growth -- informative)

Roles of intermediaries (e.g. assortment), how they add value

(Information, Promotion, Contact, Negotiation, Financing, Physical distribution, and risk taking). Intermediaries offer producers greater efficiency in making goods available to target markets.. Through contacts, experience, specialization, and scale of operations, they can offer the firm more than it can achieve on its own; they bridge gaps. They are also a HUGE source of information about their consumers to upstream companies.

Steps in the process of new product development

1. Idea generation 2. Idea screening 3. Concept development and testing 4. Marketing strategy development 5. Business analysis 6. Product development 7. Test marketing 8. Commercialization

Stages of the product life cycle and their characteristics (in terms of sales volume, promotional expenditures, etc.)

1. Introduction: period of slow sales growth as the product is introduced in the market 2. Growth: period of rapid market acceptance and increasing profits 3. Maturity: period of slowdown on sales growth because the product has achieved acceptance by most potential buyers 4. Decline: when sales fall off and profits drop

Reasons to raise prices

1. Price high, and justify people's expectations 2. You can bundle in more items that people want and need 3. You have changed/evolved since you set your current prices and want to label yourself differently now 4. People expect price increases 5. Your operating costs have increased 6. Your price isn't equal to the value you are now providing 7. You need to hire more people 8. You want to do more high quality work, but less of it 9. People appreciate things more when they pay more 10. You can't produce anymore physically than you're producing now

Madison-and-Vine (merge of advertising & entertainment)

A phrase that represents the merging of advertising and entertainment in order to reach consumers with a more engaging message -- branded entertainment

What is a product line; product line strength (stretching vs. filling); product mix (width, length, depth, consistency)

A product line is a group of products that are closely related because they function in a similar manner, sold to same customer group, marketed through same outlets, or fall within given price ranges Product line strength is stretching vs. filling. Product stretching is an expanding strategy where the new product are launched in the same product line but beyond the current product range with some additional or different features. Product filling is a business strategy that involves increasing the number of products in an existing product line to take advantage of marketplace gaps and reduce competition. A product mix consists of all the product lines and items that a particular seller offers for sales. Product width is the products a business produces separated into different categories. Product length is the total number of items in the product line. Product depth is the amount of sub-products offered by a business within a particular line of products. Product consistency is how closely related the product lines are in terms of end use, production requirements, and distribution channels, or in any other way.

Pull vs. push promotional mix strategies

A push strategy *places the product in front of the customer to make sure the consumer is aware of the existence of the product.* This can work well when manufacturers have an established relationship with customers or when the product is an impulse purchase-type item. A pull strategy *motivates customers to actively seek out a specific product* and it best for new products or in the case when a manufacturer has a strong and visible brand.

Hybrid Marketing System (aka multi-channel)

A system that uses a number of different channels and communication methods to serve a target market

Ways to obtain new products

Acquisition: buying a whole company, patent, or license to produce another company's product New Product Development: develop new original products, product improvements, product modifications, new brands

Ways to set IMC/advertising budget

Affordable budget method sets the budget at an affordable level, ignores the effects of promotion on sales. Percentage of Sales Method: sets the budget at a certain percentage of current or forecasted sales or unit sales price - easy to use & helps mgmt think about the relationship between promotion, selling price, and profit per unit - wrongly views sales as the cause rather than the result of promo Competitive-parity method sets the budget to match competitor outlets - represents industry standards - avoids promotion wars. OBJECTIVE-AND-TASK method sets the budget based on what the firm wants to accomplish with promotion - includes: defining promotion objectives, determine tasks to achieve them, and estimating costs - IS THE PREFERRED METHOD (because it allows the possibility to change status quo - challenge the market leader and gain market share)

Experience vs. demand curves

An experience curve is the drop in the average cost with accumulated production experience. A demand curve is the relationship between the price charged and the resulting demand level

Pricing transportation (FOB-origin, zone pricing, freight absorption)

Basing-Point Pricing: seller selects a given city as a "basing point" and charges all customers the freight cost from that city to the customer location, regardless of the city from which the goods are actually shipped FOB-Origin Pricing: ask each customer to pay the shipping cost of a product. Means that goods are placed "Free on Board" (FOB) Freight-Absorption Pricing: sellers absorbs all or part of the actual freight charges to get the desired business Uniform-Delivered Pricing: company changes the same price plus freight to all customers, regardless of their location Zone Pricing: company sets up zones with different zones paying different shipping costs

Pricing approaches (i.e. EDP. high-low pricing, cost-plus pricing, value added pricing, etc.)

Break-even Pricing (Target Return Pricing): firm tries to determine the price at which it will break even or make the target return it is seeking By-product Pricing: company seeks a market for by-products to help offset the costs of disposing of them and help make the price of the main product more competitive Captive-Product Pricing: companies that make products that must be used along with a main product Competition-based pricing: setting prices based on a competitor's strategies, costs, prices, and market offerings Cost-Based Pricing: involves setting prices based on the costs of producing, distributing, and selling the product, plus a fair rate of return for the company's effort and risk Cost-Plus Pricing: adding a standard markup to the cost of product Customer Value-Based Pricing: uses buyer's perceptions of value as the key to pricing Deceptive Pricing: occurs when a seller states prices or price savings that mislead consumers or are not actually available to consumers Dynamic Pricing: adjusting price continually to meet the characteristics and needs of individual customers and situations Everyday Low Pricing: involves charging a constant everyday low price with few or no temporary price discounts Good-Value Pricing: offering the right combination of quality and good service at a fair price High-Low Pricing: involves charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items International Pricing: when prices are set in a specific country based on country-specific factors: Economic conditions Competitive conditions Laws and regulations Infrastructure Company marketing objective Market-Penetration Pricing: set a low initial price to penetrate the market quickly and deeply Market Skimming Pricing: set high initial prices to skim revenues layer by layer from the market Optional-Product Pricing: offering to sell optional or accessory products along with a main product Predatory Pricing: selling below cost with the intention of punishing a competitor or gaining higher long-term profits by putting competitors out of business Product Line Pricing: management must determine the price steps to set between the various products in a line Promotional Pricing: companies temporarily price their products below list price Psychological Pricing: sellers consider the phycology of prices, not simply economics ($1.99 vs. $2.00) Reference Prices: prices that buyers carry in their minds and refer to when looking at a given product Segmented Pricing: company sells a product or service at two or more prices, even though the difference in prices is not based on differences in costs Two-Part Pricing: involves breaking the price into a fixed fee and variable usage fee Uniform-Delivered Pricing: company changes the same price plus freight to all customers, regardless of their location Value-Added Pricing: attach value-added features and services to differentiate their offers and thus support their higher prices Geographical Pricing: pricing based on location

Channel conflicts (horizontal vs. vertical)

Channel conflict refers to disagreement over goals, roles, and rewards by channel members.

Price War

Companies undercut each other. This hurts margins

How can products be classified in terms of the process through which consumers acquire them (convenience, shopping, speciality, unsought)?

Convenience products are products bought most frequently. Shopping products are a consumer product that the customer usually compares on attributes such as quality, price, and still in the process of selecting and purchasing. Speciality products are consumer products and services with unique characteristics or brand identification for which a significant group of consumers is willing to make a special purchase effort. Unsought products are those consumer products that a consumer either does not know about or knows about but does not consider buying under normal conditions.

Buzz marketing

Cultivating opinion leaders and getting them to spread information about your product

Upstream vs. Downstream Partners

Downstream: involves advertising, promotion, brand-building and communicating with customers through public relations, trade shows and in-store displays. While these activities are extremely important — they are primarily downstream in nature — that is, *they enhance the acceptance of a product or service that already exists.* Further, companies spend an inordinate amount of money on downstream marketing activities and ignore critical upstream marketing activities. Upstream Partners: *refers to the strategic process of identifying and fulfilling customer needs. Upstream marketing takes place at a much earlier stage by developing a clear market segmentation map and then identifying and precisely defining which customer segments to focus on.* It analyzes how the end-users uses the product or service and what competitive advantage will be required to win the customer and at what price point. It is done very early in the product or service development cycle, and is one of the missing links for generating revenue growth at many companies.

Dynamic and captive product pricing

Dynamic pricing is adjusting price continually to meet the characteristics and needs of individual customers and situations while captive product pricing is when companies that make products that must be used along with a main product

Branded entertainment

Entertainment-based vehicle that is funded by and complementary to a brand's marketing strategy." Ultimately, the content gives the brand an opportunity to connect with its audience in a unique, engaging way

Sources of new product ideas

External Sources: sources outside the company such as customers, competitors, distributors, suppliers, and outside design firms Internal Sources: the company's own formal research and development, management and staff, and intrapreneurial programs

Fixed vs. variable costs

Fixed costs are costs that do not vary with production or sales value while variable costs vary directly with the level of production

Price-quality inference

Higher prices = higher quality

Demand elasticity

How response demand is to changes in price of a given good

Communication process - importance of message encoding and decoding

Identify the target audience, determine the communication objectives, design the message, choose the media, and select the message source

Types of marketing logistics (inbound, outbound, and reverse)

Inbound: refers to the transport, storage and delivery of goods coming into a business Outbound: outbound logistics refers to the same for goods going out of a business Reverse: the process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal. Remanufacturing and refurbishing activities also may be included in the definition of reverse logistic (customer returns product, return faulty product from distributor to manufacturer)

What is IMC?

Integrated Marketing Communication: a strategic marketing process designed to ensure that all messaging and communication strategies are unified amongst all channels and are centered on the customer.

Market-penetration vs. price skimming pricing approach

Market penetration pricing is setting a low initial price to penetrate the market quickly and deeply while market skimming pricing is setting high initial prices to skim revenues layer by layer from the market

Broadcasting vs. Narrowcasting

Narrowcasting focuses the message on selected market segments: lowers cost, targets more effectively, and engaged customers better. Because customers are so fragmented.

Potential reasons for new product failure

Overestimation of market size, poor design, incorrect positioning, wrong timing, priced too high, ineffective promotion, management influence, high development costs, completion

What are the dimensions of product quality? (level and consistency)

Performance, features, reliability, conformance, durability, serviceability, aesthetics, perceived quality

Price-fixing and predatory pricing

Price fixing is illegal. You collude with your competitors and set a price. Predatory pricing is selling below cost with the intention of punishing a competitor or gaining higher long-term profits by putting competitors out of business

Price floor and price ceiling

Price floor is determined by cost to produce. Price ceiling is determined by customer perceived value

Reference prices (including their sources)

Prices that buyers carry in their minds and refer to when looking at a given product. Sources: 1. Memories of past prices 2. Prices set by market leaders with the most brand loyalty 3. Price of related products and services 4. Nature of industry (i.e. large discounts at clothing shops) 5. Other products in the line

Product idea vs. product concepts

Product idea is an idea for a possible product that the company can see itself offering to the market while a product concept is a detailed version of the idea stated in meaningful consumer terms

Promotional allowance

Providing payments or price reductions to retailers as reward for participating in advertising and sales support programs

Message appeals (rational, emotional, moral, etc)

Rational Appeal: attempts to prove the product's quality and usefulness to the consumer Emotional Appeal: human beings are emotional creatures. Businesses use a variety of techniques to appeal to consumer emotions Moral Appeal: directed to the audience's sense of what is right and proper

Reach, frequency, and other ways to evaluate ad effectiveness

Reach is the percentage of people that have seen it once, the frequency is the amount of times one has seen it (ideally 3-10 times)

Retailing vs. wholesaling

Retailing: act as buying agents for customers rather than selling agents to suppliers, enjoy substantial channel power, often operate on LOW PRICE/LOW MARGIN MODEL, operate in saturated markets and fight for market share. Retailers are businesses whose sales come primarily from retailing. Retailing includes all the activities in selling products or services directly to final consumers for their personal, non-business use. Wholesaling includes all activities involved in selling goods and services to those buying for resale or business use.

Retailer types (category killer, convenience, discount, etc)

Speciality Stores: Narrow product line with deep assortment Department stores: Wide variety of product lines Convenience Stores: Limited line of high turnover goods Superstores: Non-food goods Category Killers: Deep in category with sales staff

Wheel-of-retailing concept

States the new types of retailers usually begin as low-margin, low-price, low-status operations and evolve into the higher priced, higher service companies they replaced, suggests when a retailer first develops, starts small and efficient and then grows larger and loses efficiency.

What are some characteristics of a good brand name?

Suggests benefits, easy to pronounce/remember, distinctive, extendable, translatable, possible to register/protect legally)

Pricing power

The ability to escape price competition and to justify higher prices and margins without losing market share

What is the product from the marketers perspective (3 levels of product?)

The core product (benefit), the actual product (quality, fashion, style, branding, color), and the final augmented product (finance, services, warranties, delivery, customer care)

Selecting media vehicles

The media is the channel such as television and the vehicle is the specific program/newscast.

Promotional mix (advertising, PR, direct marketing, sales promotions, personal selling) *understand the differences, strengths, and weaknesses*

The promotion mix is the specific blend of advertising, public relations, personal selling, and direct-marketing tools that the company uses to persuasively communicate customer value and build customer relationships. Advertising: any paid form of non-personal presentation and promotion or sale of a product or service PR: 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 Direct Marketing: Non-public, immediate, customized, and interactive promotional tool that includes direct mail, catalogs, telemarketing, and online marketing Sales Promotions: The short-term incentives to encourage the purchase or sale of a product or service Personal Selling: personal customer interactions by the firm's sales force for the purpose of engaging customers, making sales, and building customer relationships

Value-based/cost-based/target costing pricing

Value-based pricing is based off of buyer's perceptions of value as the key to pricing. Cost-based pricing involves setting prices based on the costs of producing, distributing, and selling the product, plus a fair rate of return for the company's effort and risk. Target cost pricing starts with ideal selling price based on customer value considerations and then targets costs that will ensure that price is met

Vertical vs. Horizontal Marketing Systems

Vertical Marketing Systems (VMSs) provide channel leadership and consist of producers, wholesalers, and retailers acting as a unified system and consist of: corporate, contractual, and administered marketing systems. Horizontal marketing systems are when two or more companies at one level join together to follow a new marketing opportunity.

Contractual vertical marketing systems

consist of independent firms at different levels of production and distribution who join together through contracts to obtain more economies or sales impact than each could achieve alone

Administered vertical marketing systems

have a few dominant channel members without common ownership; leadership comes from size and power.

Corporate vertical marketing systems

integrate successive stages of production and distribution under single ownership