MGT 491 Exam 3

Break-Even Analysis

-A comparison of alternative cost and revenue estimates in order to determine the acceptability of each price -Equation: total fixed costs and expenses / (selling price - unit variable costs and expenses)

Evoked Set (Stage 2: Information Search and Evaluation)

-A group of brands that a consumer is both aware of and willing to consider as a solution to a purchase need -Gaining inclusion into an evoked set requires creating market awareness of a product or service

Current Debt

-Accounts payable: trade credit payable to suppliers -Accrued expenses: liabilities incurred but not paid -Short-term notes: Cash amounts borrowed that must be repaid within a short period of time

Benefits of CRM with maintaining current customers:

-Acquisition costs for new customers are high -Long-time customers spend more money than new ones -Happy customers refer their friends and colleagues -Order-processing costs are lower for established customers -Current customers are willing to pay more for products

Customer Experience Management (CEM)

-An approach that recognizes that with every interaction, customers learn something about a firm that will affect their desire to do business there in the future -Having a positive experience with a business becomes part of the firm's value equation

Trade Dress

-Are elements of a firm's distinctive image ("look") -Can be protected under trademark law

Building the Total Product

-Branding -Brand Name -Brand Mark -Brand Image

Purchase Decision (Stage 3)

-Brands in the evoked set (Brand Advertising) -Purchase setting: store or non-store outlet (store, catalogs, TV shopping channels, the internet) -Intention to purchase: planned or spontaneous (store layout, sales personnel, and point-of-purchase displays AND ease of use of web site)

Examining Cost and Revenue Relationships

-Breakeven point -Contribution margin

5 C's of Credit

-Character -Condition -Capacity -Capital -Collateral

Understanding Sociological Influences on CUSTOMERS

-Culture -Social Classes -Opinion Leaders -Reference Groups

Focus of CRM

-Customers rather than products -Changes in processes, systems, and culture -All channels and media involved in the marketing effort, from the internet to field sales

Knowledge of Customer Behavior (Successful CRM Program)

-Decision making -Psychological influences -Sociological influences

Ways to Provide Extraordinary Service

-Do business on first-name basis -Keep in touch -Find ways to help -Provide custom service -Address problems promptly

Outstanding Transactional Relationships with Customers (Successful CRM Program)

-Extraordinary customer service -Technology support -Customer databases

To Grow or Not to Grow

-Growth sufficient to maintain the status quo is a goal or some entrepreneurs -Growing a business too quickly can be stressful for the small firm -A "Growth trap" may occur when a firm's growth soaks up cash faster than it can be generated -Growth also puts pressure on a small firm's personnel

Attitude (Psychological Influence on Customers)

-Is an enduring opinion based on knowledge, feeling, and behavioral tendency -Can discourage or foster behavioral tendencies to purchase a product

Post-Purchase Dissonance

-Is the anxiety that occurs when a customer has second thoughts immediately following a purchase -Can lead to customer complaints, brand switching, or discontinuing use of the product

Perceptual Categorization (Psychological Influence on Customers)

-Is the process of grouping similar things so as to manage huge quantities of incoming stimuli -Can crate a barrier (brand loyalty) to competing brands

Customer Service Strategies

-Listen to customers and respond accordingly -Stand behind products/services -Treat customers as family members and best friends -Stay in the hearts and minds of customers

Need recognition (Stage 1)

-Occurs when a consumer realizes that her or his current state of affairs differs significantly from some ideal state -A consumer must recognize a need before purchase behavior can begin -Many factors can influence recognition of a need -Marketing strategy can be used to influence need recognition

Successful CRM Program

-Outstanding Transactional Relationships with Customers -Knowledge of Customer Behavior

Pricing Strategies

-Penetration Pricing -Follow-the-Leader Pricing -Dynamic Pricing -What the Market Will Bear: Adaptive Pricing -Price Lining -Variable Pricing -Skimming Pricing

Pro Forma

-Project a firm's financial performance and condition -Usually 5 years forward

Customer Service Strategies

-Provide an exceptional experience throughout every transaction -Provide sales materials that are clear and easy to understand -Respond promptly to customers' requests and concerns

Key Elements of Customer Satisfaction

-Providing the most basic benefits of the product or service -Offering general support services, such as customer assistance -Setting up a system to counteract customers' bad experiences -Delivering extraordinary services that excel in meeting customers' preferences and make the product and/or service seems customized

Product/Service Dissatisfacton

-Publicly take legal action against business -Privately complain to business -Stop buying product or service -Take no action

Post-Purchase Dissonance

-Reassurance by salespersons -Guarantees and trial periods -Customer follow-ups -Confirming information from other users

Prestige Pricing

-Setting a high price to convey an image of high quality or uniqueness (competitive advantage) - Customers associate price with quality -Markets with low levels of product knowledge are candidates for prestige pricing

Patent Protection

-The registered, exclusive right of an inventor to make, use, or sell and invention -Utility patent -Design patent -Plant patent

Term Loans

5 to 10 year maturities

Brand Name (Building the Total Product)

A brand that CAN be spoken (tangible)

Brand Mark (Building the Total Product)

A brand that CANNOT be spoken (tangible)

Customer Relationship Management (CRM)

A company-wide business strategy designed to optimize profitability and customer satisfaction by focusing on highly defined and precise customer groups

Product Life Cycle

A detailed picture of what happens to a specific product's sales and profits over time -Promotion, pricing, and distribution policies must be adjusted to the product's position on the curve -It is importance to revitalize product lines before they lose their commercial potential -The life cycle of a product rises then falls - innovation is necessary for a firm's survival

Statement of Cash Flows

A financial report showing a firm's income (cash) when it is received and expenses when they are paid.

Warranties

A promise that the product will perform at a certain level or meet certain standards -Implied and written warranties -Policy Considerations: Cost, service capability, competitive practices, customer perceptions, legal implications

Price

A specification of what a seller requires in exchange for transferring ownership or use of a product or service - Prices set too low, loss revenue - Price set too high, loss in revenue - Price and demand are related for many goods and services

Product

A total bundle of satisfaction - a service, a good, or both - offered to consumers in an exchange transaction -Includes both the main element (physical product or core service) and complementary components (features)

Sustainable Competitive Advantage

A value-creating position that endures over time -Is difficult to imitate -Creates high barriers to market entry -Can be patented or copyrighted -Is renewable at higher performance capabilities

Branding (Building the Total Product)

A verbal and/or symbolic means of identifying a product

What the Market Will Bear: Adaptive Pricing

Adaptive pricing

Credit

An agreement between a buyer and a seller that provides for delayed payment for a product or service

Transactional Relationship

An association between a business and a customer that relates to a purchase or a business deal

Trademark

An identifying feature used to distinguish a manufacturer's product

Skimming Pricing

Apple Products - When they first come out with a new iPhone the price is high but as it's in the market longer the price becomes less and less

Perceptions (Psychological Influence on Customers)

Are individual processes that give meaning to the stimuli confronting consumers -Whatever is perceived depends on the characteristics of the stimulus and the perceiver

Needs (Psychological Influence on Customers)

Are the starting point for all behavior -Need categories: physiological, social, psychological, and spiritual Are seldom completely or permanently satisfied (daily newspaper) Function together (the desire for status clothing) -Consumers may purchase the same product to satisfy different needs (Internet access)

Loan Covenants

Bank-imposed restrictions on a borrower -Financial statements -Loan use restrictions and salary limits -Equity requirements -Personal guarantees by borrower

Unhappy Customers

Buy from a competitor next time

Packaging

Color, design, and protection for the product

Fixed Costs

Costs that remain constant as the quantity product or sold varies

Variable Costs

Costs that vary with the quantity produced or sold

Pricing and a Firm's Competitive Advantage

Customers will demand and pay more for a product or service that they perceive as important to their needs

Competitive Advantage Life Cycle Stage 3

Decline (starts high then gets low over time)

Elastic Demand

Demand that changes significantly when there is a change in the price of the product

Inelastic Demand

Demand that does not change significantly when there is a change in the price of the product

Competitive Advantage Life Cycle Stage 2

Deploy (reaches a peak and then begins to decline)

Competitive Advantage Life Cycle Stage 1

Develop (Starts low then begins to increase as the stage progresses)

Follow-the-leader Pricing

Do as others do

New Customers

Have high acquisition costs and order-processing costs

Supply Chain Management

Integrates and coordinates the means by which a firm creates or develops a product or service and delivers it to customers

Long-Term Debt

Loans and mortgages with maturities greater than one year

Trademark Protection

Loss of Rights -If the mark enters into use as a generic term -If the mark is not labeled with the symbols ™ or ® or the phrase "Registered in the U.S. Patent and __________ Office."

Penetration Pricing

Low prices so you can gain a market share (Hyundai)

Happy Customers

Pay more to buy product Refer friends and colleagues

Distribution

Physically moving products and establishing intermediary relationships to support such movement

Business Angels

Private individual who invest in others' entrepreneurial ventures

Product Life Cycle

Profit curve is the highest in the growth stage

Utility Patent

Registered protection for a new process or product's function

Plant Patent

Registered protection for any distinct and new variety of plant

Design Patent

Registered protection for the appearance of a product and its inseparable parts

Product Life Cycle

Sales curve is the highest in the maturity stage

Labeling

Shows the brand and informs the consumer about product features, correct use, and care

Beliefs about Exceptional Customer Service

Small firms possess greater potential for providing superior customer service than do large firms -Positive relationships lead to increased firm profits

Accounts payable

Supplier-provided financing of inventory to a firm, which sets up an account payable for the amount-Short-duration financing (30 days) -Amount of credit available depends on type of firm and supplier's willingness to extend credit

Brand Image (Building the Total Product)

Symbolic (Intangible)

Trademark Protection

The Lanham ____________ Act grants exclusive rights of use of a registered non-generic name, symbol, or other mark to identify a product or service -____________ are researched and then registered with the U.S. Patent and Trademark Office (PTO)

Physical Distribution (Logistics)

The activities of distribution involved in the physical relocation or products

Cost of Goods Sold

The cost of producing or acquiring goods or services to be sold by a firm

Elasticity of Demand

The degree to which a change in price affects the quantity demanded

Liquidity

The degree to which a firm has working capital available to meet maturing debt obligations

Contribution Margin

The difference between the unit selling price and the unit variable costs and expenses

Copyright

The exclusive right of a creator to reproduce, publish, perform, display, or sell his or her works -Copyright notice (copyright symbol, year the work was published, and copyright owner's name)

Evaluative Criteria (Stage 2: Information Search and Evaluation)

The features or characteristics of a product or service that customers use to compare brands

Dynamic Pricing

The more full the higher the prices (Airlines)

Breakeven point

The sales volume at which total sales revenue equals total costs (fixed and variable)- the total point at which profitability starts and losses cease

Total Cost

The sum of cost of goods sold, selling expenses, and overhead costs

Price Lining

Tiered pricing points for products

Variable Pricing

Varies depending on when you buy things (Happy hour or black friday/cyber monday)