Principles of Marketing (complete)
Card Set Information
Principles of Marketing (complete)
What is a simulation?
Computer based programs to assess the alternantive marketing strategies.
What is an advantage of a simulation?
No contact w/consumer.
What is the Markeing Information System (MIS)?
People, equiptment, and procedures used to analyze,evaluate & distribute accurate info to marketing decision
What is forecasting?
A function of MIS- estimating demand for a brand or product using qualitative & quantitative techniques.
What are short-term forecasts used for?
Predicting sales for the next month or quarter- used for production scheduling & evaluating the impact of short-term promotions.
What are mid-term forecasts used for?
Providing input to annual marketing plan review & revision.
What are long-term forecasts used for?
5 year period- strategic planning.
What are personal demographics?
Identifiable characteristics of individuals and groups (age, sex, religion)
What are geographic demographics?
Identifiable characteristics of towns, cities, states (county size, population density, climate)
What are behavioral dimensions?
Purchase occasion, user status, user rate, customer attitudes, and brand loyalty.
What are psychographics?
Factors that influence consumers' patterns of living, such as activities, interests, opinions (AIOs), social class, and values.
What are AIOs?
Activies, interests, and opinions
What is an advantage of marketing segmentation?
It allows marketers to better match products to the needs of different customers.
What are the 2 steps in Segmenting?
1- Variables are chosen and market is divided among dimensions.
2- Segments are profiled.
What is Market Targeting?
After segmenting- where segments are evaluated in terms of attractiveness.
What are the three requirements of a homogenous segment?
1- Dimensions must be measurable
2- Market segment must be
accessible/reachable through existing channels (media, distribution, sales force)
3- Each segment must be large enough to be profitable.
What is the best type of segmentation?
Segmentation that identifies meaningful differences b/t groups.
What is the difference between single-variable & multi-variable segmentation?
Single-variable segmentation is one segmentation variable, while multi-variable involves 2 or more variables.
Multi-variable segmentation shows interrelationships b/t factors that define market segments. (typical buyer behavior)
What is the single segment concentration strategy?
Decision to focus on one segment as the target market.
What is the differeniated/mutiple segmentation strategy?
Where more than 1 market is targeted.
What is undifferentiated/Mass Marketing?
Treating the total potential market as a whole.
What are consumer buying-related behaviors?
Purchasing, spending time researching, and comparing products.
What are the factors of high involvement decision making?
1- Product perceived as personally important
2- Relatively expensive 3-
Consumer lacks relavant info
4- risks w/making bad decision are high
5- Products offer great benefits to buyer
What are the 5 stages of high - involvement decision making?
- need or problem recognition
- search for relevant info
- identification & evaluation of alternatives
- purchase decision
- post purchase behavior
What are the 3 stages of low involvement decision making?
- need/problem recognition
- purchase decision
- post purchase decision
How do organizational markets differ from consumer markets?
Organizational buyers purchase materials for resale, operational needs, & for use in production.
Fewer in number.
Consumers purchase finished goods for final consumption.
How does an organization derive demand?
From anticipated demand by consumers for finished goods.
What 3 things are needed to segment non-consumer markets?
1- customer type ( manufacturer, retailers, government ) 2- customer size ($)
3- buying situation ( new task, straight rebuy, modified
Who are the 5 people w/in an organization that influence buying decisions?
What is a buying center?
Entity comprised of all people who participate in decision making process.
What does product planning entail?
All phases of decision making related to new product development & management of existing products.
What are convenience goods?
Purchased frequently w/little effort
What are shopping goods?
Need price / quality comparison at several stores before purchase.
What are specialty goods?
High involvement decision making - no substitutes
What are unsought goods?
No demand exists
Process of planning & executing development, pricing, promotion, & distribution of goods & services.
What are products?
Goods, services, ideas, places, or persons
What is the marketing concept?
A customer oriented business philosophy that stresses customer satisfaction.
What are the 6 marketing functions?
What are the 4p's that make up the marketing mix?
Product, price, promotion, planning
What is market segmentation?
Dividing total market into submarkets based on similarities
What are market segments?
A group of customers with similar interests who will respond to marketing mix.
What is a target market?
One group of potential customers - could be segments or mass market
What is product differentiation?
When a product / brand is seen as different from competitors.
What is product positioning?
Shaping a products image in a customers mind.
What is a marketing plan?
Where a firm identifies target markets & provides guidelines for developing market mix.
What is a situation analysis?
An analysis that identifies a company's strengths, weaknesses, & threats.
What are marketing objectives?
Quantitative & qualitative goals of a firm. Must be measurable & have timeframe.
What 2 factors make up the marketing environment?
Factors an organization can & can't control.
What are the 6 uncontrollable forces in a market?
Social & cultural factors
Political & legal factors
What are the 3 micro-environmental factors that affect each firm uniquely?
What is a marketing strategy?
Ways that a marketing mix can be used to satisfy the needs of a target market
What are the 4 components of the product / market opportunity matrix?
Market penetration - increase sales of existing market
Market development - increase sales of existing to new market
Product development - new products to current market
Diversification - new products to new market
What is the SWOT matrix?
A tool used to asses potential value & fit of new opportunities.
Define marketing research
Planning, collecting, analyzing, & communicating relevant info to make better marketing decisions.
What are the 9 areas that a situation analysis examines?
1- economic growth
2- tech. Development
3- social changes & buying behavior
4- legal & political development
5- size of existing market & potential market
6- rate of market growth
7- brand loyalty
8- competitive behavior
9- market share trends
What 3 questions does strategy development answer?
-what business should we be in?
-how will we compete?
-what are the goals for the business?
What is marketing plan development?
Focuses on How the marketing mix can most effectively be used
How do you monitor performance?
Collect qualitative or quantitative info, measure effectiveness of sales, customer satisfaction, or brand switching.
What are the 6 steps of the marketing research process?
1-define research objective
2-determine research type (exploratory, descriptive, casual cause effect relationship)
3- determine qualitative or quantitative research approach
4- select data collection method
5- analyze results
What is the research design?
A plan for collecting & analyzing data
What is sampling?
Gathering data from a selected group from the population of interest
What are probability samples?
Selecting persons from designated population at random
What are non-probability sampling?
Nonrandom sampling from chosen population of interest.
What is primary data?
Info collected for current research study
What is secondary data?
Info already collected & Not relevant to current study
What are the 2 types of secondary data?
Internal - data from info w/in the company
External - data from published sources
What is survey research?
Systematically acquiring info from individuals through direct communication.
What is a focus group?
In person data collection - 5-10 ppl
What is observation?
Subjects behavior observed w/out their knowledge (videotaping at checkout )
What is experimental research?
Compares impact of marketing variables on individuals responses in a controlled setting.
What are examples of industrial/business products?
Services are intangible because:
A service cannot be touched, smelled, heard, or tasted.
Why are services parishable?
Service is rendered during a specific time.
Why are services inseparable?
The consumer is inseparable from the producer/servicer.
What is a tangible product?
Precisely defined (size, color, weight)
What is an extended product?
Both tangible and intangible. Intangible features: brand image and service features
What is a product line?
A set of closely related items
What is a product mix?
All product lines offered by a firm
What is product screening?
Where potential products are sorted by strengths/weaknesses. Remaining products tested.
What is concept testing?
Test to see if new products have sufficient customer interest
What is a business analysis?
Evaluation of a concepts commercial feasibility
What is product development?
Stage where ideas first produced in tangible form after initial market strategy.
What is test marketing?
Series of commericial experiments to test acceptance of new product. Done in solated geographic markets.
What is commericalization?
Full-scale production of complete market plan- corresponds to introduction stage in product life cycle.
What is Product Adoption?
Buyer decides to use product regularly.
What are the 5 categories of the diffusion process?
2- early adopters
3- early majority
4- late majority
What is product positioning?
Developing brand image in a customer's mind
What are idea points?
The consumer's perception of the perfect combo of qualities
What is mix expansion?
Provides firm w/new growth opportunities
What is contracting?
Reducing product mix
What is wide product mix?
What is a deep product mix?
Focus of the firm's resources on a smaller # of product lines
What is the product life cycle?
What is brand management?
Diff. brands classified according to their origin.
What are manufactuer/National Brands?
Created by product manufacturers
What are dealer/private brands?
created by retailers/intermediaries
What are characteristics of a good brand name?
-short & simple
-easy to spell/read/pronounce
What are the 5 levels of brand familiarity?
: no substitutes
: 1 brand over others
: when consumers remember brand name
: consumers don't know brand
: refuse to buy
What is the family brand strategy?
Same brand over several products
What are individual brands?
Can be assigned to each product when variation exists
What is a licensed brand?
Well established brand name that sellers pay to use
What are trademarks?
Brand names or charaters used to identify products. Registered trademarks legally for use by owners only.
What are the 3 primary functions of packaging?
What is service marketing?
Differs from marketing goods- example: legal & medical services
4 ways service marketing different from marketing goods?
-intangible:difficult to understand
: services cannot be seperated from provider
: cannot be inventoried/resold
: not performed same way each time
What are channels?
Physical distribution of products
What is sorting?
Separating goods by quality, color, size.
What is accumulation?
Grouping small shipments for transport
What is assorting?
Getting a wide variety of merchandise to meet diverse consumer preference
What are direct channels?
Moving goods from producer to consumer WITHOUT intermediaries
What are indirect channels?
Moving goods w/help of intermediaries
What is channel width?
# of independent members at 1 level of the distribution channel (ex. producer, wholesaler, retailer, final consumer)
What is channel length?
# of levels used to create distribution channel
What are the 3 distribution strategies?
: firm sells through every potential outlet
: many, but not all
: 1 to 2 intermediaries in each market
What are the 3 systems used to coordinate distribution functions?
: firm owns all channel members
: acquiring firms that opperate at diff. channel levels
: acquiring firms that opperate at same channel level
What are multiple channels/dual distribution?
When a firm develops 2+ separate distribution channels
What is channel control?
Ability to influence channel members
What are the 2 types of channel conflict?
-Horizontal conflict- b/t firms at same channel
-Vertical conflict- b/t firms at diff. distribution levels
What is pushing?
Using promotional efforts to secure intermediary cooperationg
What is pulling?
Generating consumer demand- used for new products
What are the 4 fundamentals of physicial distribution?
What is total costs concept?
Where minimizing costs conflicts with satisfying consumer demand
What is the distribution center concept?
Where the most effective strategy is the lower costs, satisfy demand and use distribution centers.
What is sub-optimization?
Reducing costs in one distribution function that increase costs overall
What is the customer service standard?
Different customer require different levels of service
What is the electronic data interchange (EDI)?
Allows integrated order processing, production, inventory planning, and transportation into single system.
What is materials handling?
Physical handling of goods in both warehouse & transportation.
What is unit loading?
Grouping boxes on a pallet or skid.
What is containerization?
grouping many items into 1 container
What is warehousing?
Designing & operating facilities for both storing & moving goods
What are the types of warehouses?
-public & private
What is order leadtime?
average length of time b/t customer placing order & receipt
What is the reorder point?
Inventory level where new orders need to be placed to avoid stockout.
What is stockout?
Shortage of product
What is the usage rate?
inventory sold/time period
What is safety stock?
What is just-in-time (JIT)?
Making products available just as needed
What are the 5 transportation modes?
What are megacarriers?
Freight transport with several shipping modes
What is intermodal transportation?
2 + transporation modes used in combination
What are freight forwarders?
Specialized agencies that provide alternative transporation
What is wholesaling?
All activities related to the resale of products to organizational buyers & retailers
What is manufacturer wholesaling?
When the product's producter performs the wholesaling functions.
What is merchant (distributors/jobbers) wholesaling?
Independent firms that take title & posession of products they sell.
What is the difference between a full and limited service merchant wholesalers?
Full service- extend credit
Limited Service- doesnt extend credit
Who are rack jobbers?
Full-service merchant wholesalers that provide display racks
Who are drop shippers?
Limited-service merchant wholesalers that buy products and arrange for delivery. Take title of merchandise, but not physical posession.
Who are agents?
Independent wholesalers- do not take title. Paid through commission.
Who are brokers?
Temporary wholesalers that bring buyers & sellers together- do not take title
What is retailing?
All activities related to the sale of products to final consumers.
What are the 3 forms of ownership?
: 10+ stores owned by same firm
2- Vertical market systems
: individually owned and linked together
3- Independent stores- no affiliated w/corporate- higher prices.
What is non-store retailing?
Retail transactions that occur outside traditional store settings- direct selling, direct marketing, internet, catalog, tv. 20% of retail sales.
What is scrambled merchandising?
Adding products not related to tradition lines to sell quickly, increase profits, and build store traffic.
What is the wheel of retailing?
New retailers enter market w/low prices --> evolve into traditional store & add customers --> raise prices to meet higher operating costs --> move up & create opening for new retailer
What are the 3 components of promotion planning?
What is a promotion Mix?
Elements that contribute to the firm's communications- advertising, personal selling, publicity
What is Integrated Marketing Communications? (IMC)
-who is the target market?
-what are the objectives?
When should the promotions run?
-Which media should be used?
What are the 3 goals of promotion objectives?
-Inform both intermediaries & users
-Remind buyers about the availability
What are communication channels?
how promotional messages are sent
What is noise?
Poor messages or weak audience response
What 4 techniques can be used to establish promotion budgets?
-% of Sales
-Objective & task
-All available funds
What objectives might be included in advertising?
new product introduction, establishing brand preference, enhancing firm's image and sales
What is media planning?
Choice and type of media
What are examples of alternative media?
TV, radio, newspapers, magazines, direct mail
What is reach?
% of a target audience exposed to an ad w/in timeframe. Usually 4 weeks
What is cost per thousand?
Advertising costs per thousand prospects
What is frequency?
Average # of times that target market is exposed to an ad- typically 4 weeks.
What are gross rate points? (GRPs)
Reach x Frequency = GRP
GRP = total weight of advertising delivered over 4 week period
What is the creative platform?
Overall concept & theme for an advertising campaign.
How do you gage advertising effectiveness?
Sales, store traffic, coupon redemption rates
What is publicity?
Communication not paid for by a sponsor
What are the 3 types of salespeople?
What is sales force allocation?
allocation of sales people should match talent w/territory.
What is prospecting?
Seeking prospective buyers/leads. Prospect must be qualified to buy.
What is the pre-approach?
Prior to meeting prospect- salesperson must decide how to intiate face to face
What is the approach?
When the seller 1st meets the prospective buyer
What are meeting objectives?
Important sales skill- objectives raised by prospect that indicate need for clarification & info
What are canned?
What are 3 types of salesforce compensation?
What is the drawing account method?
Commissions credited to drawing account- can withdraw at a fixed rate or get an advance.
What is a gauranteed draw?
not obligated to pay back difference.
What is direct marketing?
catalogs, direct mail, telemarketing, infomercials
What is price elasticity of demand?
% of Change in teh # of units demanded/ % of change in the price product
Price Elasticity of Demand = (Q1-Q2) / (Q1+Q2)
(P1-P2) / (P1+P2)
Q1= Initial quantity demanded
Q2= New quantity demanded
P1= intial price
P2= new price
What is elastic demand?
When the value of price elasticity of demand formula is less than -1.
Tot. Revenue = Price x Number of Units Sold
What is the difference between elastic and inelastic demand?
-If demand is elastic, increase in price produces a decrease in demand and decrease in total revenue
- If demand is inelastic, an increase in price produces a decrease in demand and an increase in total revenue.
What is inelastic demand?
When the value of price elasticity of demand is greater than -1
What is perfect inelastic?
When demand doesn't decrease at all in response to price increases.
What is unitary elasticity?
When the value of price elasticity of demand formula is -1
Change in demand proportional to change in price.
Total revenue doesn't change in response to price increase/decrease.
What is the price elasticity of demand coefficient (E
Equal to the absolute value or non-negative value of price elasticity of demand formula.
What is the 1980 Sherman act?
Prevents businesses from restraining trade & interstate commerce (predatory monopolizing)
What is the robinson-patman act (1936)?
Prohibits price discrimination that reduces competition. Also prohibits producers from providing a higher level of service to large customers.
What is price skimming?
Introducing new product at high prices to offset production and firm costs
What is penetration pricing?
Using low intro prices to gain large share of market more quickly
What are the 3 categories of pricing decisions?
3- competition based
What is the one price policy?
same price to all customers in similar situations
What is flexible pricing?
Seller can change diff. prices to diff. buyers in similar situations
What is geographic pricing?
reflects transportation and other costs.- zone pricing & free on board (no shipping)
What is unit pricing?
Provides consumers w/info on alternate pricing to simplify comparison shopping.
What are alternative pricing objectives?
Where pricing strategy may reflect short-term goals & profit maximization
What is the price-quantity correlation?
Buyers believe higher prices = superior quality.
What is prestige pricing?
Retail prices for similar items that are higher than other brands
What is odd-even pricing?
Sets price just below even dollar values
How do marketers try to maintain customary prices?
By reducing size of packaging or changing ingredients to keep price the same
What is price lining?
Limited # of price poins for groups of lines or products- $24, $29, $36
What is leader pricing?
When a firm sells products below usual price to gain attention
Formula Markup %
Markup % = Selling Price - Product Cost / Selling Price
Selling Price = Markup amount + product cost
Markup amount = product cost x markup %
Markdown% = Orig. Selling Price- Red.Price / Ori.Selling Price
Break Even formula
Tot. Revenue = Price x Quantity Sold
Tot. Costs= Fixed Costs + (Variable Cost/Unit x Quantity Sold)
Break Even Points (Units) = Tot. Fixed Costs/ Price
What is non-profit marketing?
Marketing of persons, ideas, and organizations for nonfinancial/social objectives.
When was the production era?
2nd half of 19th century- mass production concepts made it possible to manufacture goods more efficiently
When was the sales era?
Mid 1920s-1950s: Personal selling & advertising boom
When was the marketing era?
Early 1950s- Many businesses - focus on customer service
What is the code of conduct?
Eliminates unethical behavior
What is compensatory ethics?
Where moral right or wrong determined by consequences the action produces
What is non-compensatory ethics?
Maintain a universally true moral principle w/no exceptions
What is social responsibility?
Firm's economic, legal, ethical, and philanthropic obligation to society
What is a green market?
Using and making products that don't harm environment
What is reverse logistics?
Responsibility of the firm to make products that dispose well. Recycling.