Marketing Final Terms
Ultimate Goal of Channel Strategy
"Make product/services available WHEREVER the customer wants to buy it"
Reach
# exposed at least once during a specified time period
Average Cost
Total costs divided by units produced
Integrated Marketing Communications
An approach to achieving the objectives of a marketing campaign by efficiently coordinating different promotional methods intended to reinforce each other.
Profit-Maximizing Pricing
An attempt to price products to maximize the profit they generate by taking into account the varying price elasticities of different products.
Customer Loyalty
Likelihood of previous customers to continue to buy from a specific organization.
Additions to existing product lines
Line extensions and flankers that flesh out the product line in current markets
Click-Through Rates
The percentage of customers who click on an ad or link of interest to them.
Public Relations
The profession or practice of creating and maintaining goodwill toward an organization, usually through publicity and other non paid forms of communication.
Intangibility
Services cannot be seen, tasted, felt, heard, or smelled before purchase
People
An additional P for service businesses, referring to ways front-line employees should represent the business and interact with customers.
Frequency
# of exposures during specified time period
Evolved Product
- "augmented product" - value wrapped around the product
Core Product
- "basic product" - basic value prop - essential features
Enhanced Product
- "expected product" - feature add-ons - additional attributes
Materials and Parts
- Enter the manufacturer's product completely - Raw Materials - Manufacture Materials
Packaging Objectives
- Identify the brand - Convey descriptive and persuasive information - Facilitate transportation and protection - Assist at-home storage - Aid product consumption
Capital Items
- Long lasting goods - Installations - Equipment
Market-Skimming
- Set a high price for a new product to "skim" revenues layer by layer from the market - Company makes fewer sales, but more profitable sales
Market Penetration
- Set a low initial price in order to "penetrate" the market quickly and deeply - Can attract a large number of buyers and win a market share
Supplies and Business Services
- Short term goods and services - Supplies - Business
Classification of Products
- durability - tangibility - use
Services (Durability and Tangibility)
- intangible, variable, perishable - require more quality control, adaptability
Nondurable Goods
- tangible goods, purchased frequently - normally consumed in one/few uses
Durable Goods
- tangible goods, purchased infrequently - normally survive many uses
Fixed Costs
A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses that have to be paid by a company independent of any business activity.
Stages in the adoption process
1) Awareness 2) Interest 3) Evaluation 4) Trial 5) Adoption
The Customer-Value Hierarchy
1) Core benefit 2) Basic product 3) Expected product 4) Augmented product 5) Potential product
New-Product Development (NPD) Process
1) Idea generation 2) Idea screening 3) Concept development and testing 4) Marketing strategy development 5) Business analysis 6) Product development 7) Market testing 8) Commercialization
Classic Five Adopter Groups
1) Innovators 2) Early adopters 3) Early majority 4) Late majority 5) Laggards
Product Hierarchy
1) Need family 2) Product family 3) Product class 4) Product line 5) Product type 6) Item
Variable Costs
A cost that varies with the level of output.
Penetration Pricing Strategy
An aggressive pricing strategy that seeks to undercut the competition with an aggressive pricing structure.
Universal Product Code (UPC)
A bar code that is widely used for tracking trade items in stores.
Bottom-Up Budgeting
A budgeting method that requires a marketer to develop strategies necessary to achieve set corporate goals, estimate a cost for each goal, and build a budget accordingly. Upper management then must approve the proposed expenditures.
Sales Promotion
A collection of incentive tools, mostly short term, designed to stimulate quicker or greater purchase of particular products or services
Cost-Plus Pricing
A cost-based method for setting prices. Under this approach, you add together direct material costs, direct labor costs, and overhead costs for a product and add to it a markup percentage (to create a profit margin) in order to derive the price of the product.
Product System
A group of diverse but related items that function in a compatible manner
Profit Margin
A measure of profitability determined by dividing net income by revenue or by dividing net profits by sales.
Price Elasticity
A measure of the relationship between a change in the quantity demanded of a particular good and a change in its price. The term is often used in economics when discussing price sensitivity.
Top-Down Budgeting
A method of budgeting in which upper management sets the budget limit for advertising, and the marketing manager develops a plan for how to best utilize the budgeted dollars to achieve marketing goals.
Keystoning
A pricing method that doubles the wholesale price of a product.
Competitive Pricing Strategy
A pricing strategy in which a business sets a price point similar to competing products.
Skimming Pricing Strategy
A pricing strategy that sets a high price point to indicate quality to the customer and creates a large profit margin.
SERVIQUAL
A service-quality framework developed in the 1980s by Zeithami, Parasuraman, and Berry aimed at measuring the scale of quality in the service sectors.
Brand
A unique design, sign, symbol, words, or a combination of these employed in creating an image that identifies a product and differentiates it from its competitors.
Services
Activities, benefits, or satisfaction that are offered for sale or provided in connection with the sale of goods.
Packaging
All the activities of designing and producing the container for a product
Process
An additional P for service businesses, describing how the flow or delivery of the service should be mapped out for employees to readily follow.
Goods
As opposed to a service, a good is an item that can be physically examined and mass produced, inventoried, and stored for future consumption.
Brand Loyalty
Brand loyalty is a pattern of consumer behavior in which consumers become committed to brands and repeatedly purchase the same brands. Loyal customers consistently purchase products from their preferred brands, regardless of convenience or price.
Ingredient Branding
Co-branding that creates brand equity for parts that are necessarily contained within other branded products
Direct Marketing
Contacting and influencing carefully chosen prospects using such means as telemarketing and mail.
The innovation imperative
Continuous innovation is a necessity
CPM
Cost per thousand impressions, a measure of the relative expense of each form of advertising.
Improvements and revisions to existing products
Current products made better
Price Discrimination
Different market prices with no associated cost difference
Fixed Costs (Slides Definition)
Do not vary with production level
Warranties
Formal statements of expected product performance by the manufacturer
Product Life Cycle (PLC)
Four distinct but not wholly predictable stages every product goes through, from its introduction withdrawal from the market.
Product Mix Consistency
How related in terms of use, production requirements, channels
Labeling
Identifies, grades, describes, and promotes the product
Discretionary (disposable) Income
Income remaining after deduction of taxes, other mandatory charges, and expenditures on necessary items.
New-product success
Incremental innovation vs. disruptive technologies
New-to-the-world (really-new) products
Inventions that create a whole new market
Dilution
Marketers must be careful not to dilute their brands through inappropriate channels
Sunk Costs
Money already spent.
Product Mix Width/Breadth
Number of product lines
Product Mix Depth
Number of variants per product line
Cannibalization
One channel eats business from another
Physical Evidence
Physical cues that help customers evaluate a product before they buy it.
Price Elasticity (Slides Definition)
Price elasticity measures how responsive or sensitive demand is to a change in price elasticity = sensitivity
Re-positionings
Products retargeted for a new use or application
New-to-the-firm products
Products that take a firm into a category new to it
Guarantees
Promise of general or complete satisfaction
Impact
Qualitative value of each exposure
Variability
Quality of services depends on who provides them and when, where, and how
Tangible
Refers to something that is capable of being touched.
Intangible
Refers to something that is not capable of being touched.
Hetergeneity
Refers to things that are different, like a service that varies each time it is delivered.
Inseparability
Services cannot be separated from their providers
Perishability (Slides Definition)
Services cannot be stored for later sale or use
Cost reductions
Similar performance but at a lower cost
Brand Equity
The commercial value that derives from consumers' perception of the brand name of a particular product or service rather than from the product or service itself.
Production Expenses
The costs associated with creating an ad, such as graphic design and printing.
Media Expenses
The costs for placing a media buy with a print publication, radio or television station, social media or other website, or any number of the nontraditional media options available.
Ideation
The creative process of generating, developing, and communicating new ideas, where an idea is understood as a basic element of thought that can be either visual, concrete, or abstract.
Price Sensitivity
The degree to which the price of a product affects the consumers' purchasing behaviors. In economics, price sensitivity is commonly measured using the price elasticity of demand.
Innovators
The group of consumers who are the first to try new ideas, processes, goods, and services. Although not numerous (Typically 2% of the population), the members of this most venturesome group are urbane, have money (to take risks) and higher education, are attracted to change and new experiences, and use multiple information sources for making a purchase decision.
Revenue
The income generated from sales of goods or services before any costs or expenses are deducted.
The Consumer-Adoption Process
The marketer's challenge is to elicit movement from stage to stage
Marketing Communications
The means by which firms attempt to inform, persuade, ad remind consumers about the products and brands they sell
Reach
The number of unduplicated individuals or households exposed to an advertising medium over a specified period.
Product Mix
The set of all products and items a particular seller offers for a sale. A product mix consists of various product lines
Profit
The surplus remaining after total costs are deducted from total revenue.
Product Mix Length
Total # of items in the mix
Total Costs
Total Cost = Fixed Costs + Variable Cost
Co-Branding
Two or more well-known brands are combined into a joint product or marketed together in some fashion
Variable Costs
Vary directly with changes in production
Perishability
When something is subject to decay or highly consumable; its value is often fleeting.
