Marketing test 5

Card Set Information

Marketing test 5
2014-05-11 22:40:17
ycp small marketing 100
spring 2014
Pricing, supply chain management, reselling
Show Answers:

  1. What is the pricing relationship to demand?
  2. What is the calculation for the price elasticity of demand?
    % delta quantity divided by % delta price
  3. What is the number model of price elastic?
    PDE< -1
  4. What is the model of Price inelastic?
  5. What is the model of negative price elastic?
  6. What is special about price elastic?
    very rare, find with luxury and and high end end goods, only because high prie makes the good more exclusive
  7. What else is negative price elastic called?
    Inverse demand, because the relationship is now backwards and more of the product sells at a higher price
  8. What is special about price inelastic?
    Price has a small impact on demand, means demand is driven by something other than price like quality, convenience or image etc.  A higher price would mean more revenue
  9. What is special about price elastic?
    Price has a large impact on demand, means you want to be very careful in setting price.  A higher price would mean less revenue
  10. What is a profit oriented strategy in a pricing objective?
    • Cost plus pricing, Price=cost +desired profit
    • current profit maximization, select price has on sales volume
  11. What is a sales oriented strategy of penetration of a Pricing objective?
    set the price to maximize the sales's volume, called penetration pricing because you are penetrating the market to take competition's customers
  12. What is a sales oriented strategy of skimming of a pricing objective?
    Don't worry about sales volume, instead just sell to customers willing to pay the higher price, called skimming because you are skimming off that part of the market willing to pay a high price
  13. What is the price stabilization of the status qo Oriented Strategy?
    try to keep the price the same by changing supply, if price is too high you would increase supply, if price is too low you would reduce supply, example OPEC with oil, can only be used if you have a large market share
  14. What is the competitive parity of the staus quo Oriented strategy?
    copy the competition's price
  15. What is the perceived value pricing of the status quo oriented strategy?
    set the price at the level the customer expects to pay, survey customers about what the price should be and use that price
  16. What is the break even analysis?
    there is no profit and there is no loss
  17. What is the break-even point?
    Sales volume at which you break even
  18. What is the break even price?
    price at which you break even, price = cost
  19. What is a cumulative quantity discount?
    the customer get to add up purchases over time, like loyalty programs
  20. What is a non cumulative quantity discount?
    the purchase must be made all at once in one transaction
  21. What is a functional discount?
    A trade discount, B2B only, extra discount given to a wholesaler
  22. What is a consumer cash discount?
    Discount for paying cash instead of charging
  23. what is a business cash discount?
    the cash discount is for prompt payment
  24. What is the dating and terms of a business cash discount?
    found on an invoice, a bill for a business customer, and they give the terms for the cash discount
  25. What is the ordinary description of a cash discount?
    the invoice would have today's date, terms might be 2%/10 net 30
  26. What is the end of period dating and terms for business discount?
    EOM, terms might be 2%/10 net 30 EOM, means the discount  period and the net period start from the last day of the month, invoice uses today's date
  27. What is the forward dating of the business discount?
    place some future date on the invoice, used to get the business customer to purchase early, example would be seasonal merchandise
  28. What are extra dating terms for businesses?
    2%/10 net 30 extra 30, means you add the extra days to both the discount period and the net period.
  29. What is a seasonal discount?
    for buying out of season
  30. What are promotional allowances?
    an allowance is different from a discount because an allowance requires the business to do something with it and a discount doesn't, usually requires the business to spend the allowance on promoting the producer's products.
  31. What is the Robinson-patman act?
    a federal law that requires that a discount offered to one business customer be offered to all.
  32. What are Geographic pricing tactics?
    who pays the shipping
  33. What is FOB shipping point?
    Free on board, point where ownership changes hands and the owner pays shipping, for example fob seller means the buyer pays shipping.
  34. What is uniform delivered pricing?
    All customers pay the same for shipping, common in consumer marketing
  35. What is zone pricing?
    Customers pay different amounts for shipping depending on how far away the customer is
  36. What is freight absorption?
    no shipping charge, free shipping
  37. What is the one price policy?
    charge all customers  the same price for the same thing like a supermarket
  38. What is the flexible price policy?
    Variable price policy, different customers pay different prices for the same thing, example used car dealer
  39. What is unit pricing?
    Give the price in terms of a standard unit of measure like per ounce or per pound or per quart
  40. What is leader pricing?
    price at less than list price, retailer is not losing money because price is still above their cost
  41. What are loss leaders?
    price at less than cost, brings people into the store
  42. What is an unfair sales act?
    state laws in a few states that make loss leaders illegal
  43. What is prestige pricing?
    the business will price something high so people will think it is higher quality, works with products where the consumer has little product knnowledge
  44. What  is multiple pricing?
    not $1 each but 2 for $2
  45. What is odd pricing?
    not 10.00 but 9.99 to make it look cheaper
  46. what is multiple/odd pricing?
    not $4 each but 2 for 7.99
  47. What is the formula for revenue?
    Revenue = total sales in $
  48. What is profit?
    Profit = Revenue - total costs, amount made in sales
  49. What is the Margin?
    Margin = price - cost, of just 1 unit
  50. What are the elements of total cost?
    transportation, warehousing, storage costs, inventory obsolescence, communication, information processing, production alternatives, customer service
  51. What is the transportation cost?
    Cost of shipping
  52. What is the warehousing cost?
    handling costs like the cost of loading and unloading, there are two basic warehousing activites
  53. what is the consolidation of warehousing?
    combining smaller shipments into larger ones
  54. what is the break bulk of warehousing?
    breaking down big shipments into smaller shipments
  55. What is inventory obsolescence of total cost?
    inventory becomes less valuable as it gets older, eventually could loose all value
  56. What is the information processing of total cost?
    computer tracking and inventory control
  57. What is the production alternative of batch of total cost?
    make a whole lot of the product at once
  58. What is the continuous production alternative of total cost?
    use assembly line approach so product is constantly being produced
  59. what is the customer service of total cost?
    costs of filling orders, etc
  60. What are the tradeoffs of the production alternatives?
    actions taken to reduce one cost often increase another, example batch production versus continuous production, continuous is cheaper way to produce but batch is the cheaper way to ship
  61. How are distribution policies a marketing tool?
    using distribution policies as a way to capture customers
  62. What is the length of the order cycle?
    how long it takes to fill an order, time from order placement to product being received by the customer
  63. What is the order cycle length consistency?
    how consistent is the length of time it takes for the customer to get their order
  64. What is the ease of order placement?
    how easy is it for a customer to place an order, could be improved by, accept web orders, accept phone orders, have catalogs, have salespeople call on customer, outside sales people, simple order for, store's customer's information
  65. What is the order formulation policy?
    rules for ordering, for example you could accept a smaller minimum order
  66. What is transportation of a product?
    The physical movement of the product
  67. What is a common carrier?
    they will ship for anyone
  68. What is a contract carrier?
    only have a limited set of customers that they ship for
  69. What is a private carrier?
    a business ships for itself, have their own trucks
  70. What is the piggyback of rail transportation?
    put truck trailers on a train, because it is cheaper
  71. what is the lcl or ltl of rail transportation?
    less than car load or less than truckload,  you have not filled up a train car, lcl shipments cost more
  72. what is the advantage of truck shipping?
    it is versatile
  73. What is the advantage of water shipping?
    it is the cheapest
  74. what is fishy back?
    with water transportation is like piggy back but on boats
  75. what is diversion in transit with water?
    Change the destination after the voyage has started
  76. What is container shipping with water?
    like fishyback except with big steel containers rather than truck trailers
  77. what is the disadvantage of air?
    fastest but most expensive
  78. what is the advantage of pipeline delivery?
    Most consistant.
  79. What is slurry?
    used with pipeline delivery, a solit that has been mashed up with water added so it can be sent through a pipeline
  80. What is the reorder point stock level?
    how much inventroy you have on hand, reorder point is the remaining quantity at which a business would order more
  81. What is the base stock level?
    how many you need in inventory
  82. What is the safety stock level?
    Some extra in case you need more
  83. What is the impact of interest rates on inventory size?
    most businesses borrow to pay for their inventory, if interest rates go up it is more expensive to borrow money, so businesses will borrow less money and inventory size will go down
  84. What is JIT?
    Just in time, strategy to have products that are needed arrive right when they are needed, so a business does not have to keep an inventory
  85. What are Channel Strategy Basics?
    A distribution channel diagrams how a product passes from the producer to the consumer, shows participants
  86. Describe Long and short channels.
    Length refers to number of middlemen, a long channel has a lot of middlemen and a short channel has one or none.
  87. What are merchant middlemen?
    takes ownership of the product like a wholesaler or retailer
  88. What are agent middlemen?
    does not take ownership like an agent or auctioneer or broker
  89. What is direct distribution?
    use no middlemen, shortest possible channel
  90. What is indirect distribution?
    The use of middlemen
  91. What is Multiple channel?
    Using more than one channel at the same time
  92. What are the market factors on channel length choice?
    Number of portential customers, geographic concentration of the market, and order size
  93. Describe the size of a distribution channel with many customers.
    Long channel
  94. Describe the size of a distribution channel with a concentrated geographical market?
    Short channel
  95. describe the distribution channel with a larger order size
    Short channel
  96. What are the product factors impacting a distribution channel
    Unit value, perishability, and technological complexity
  97. How does a higher price effect the middlemen?
    Fewer middlemen
  98. If a product has high perishability what is the effect on middlemen?
    fewer middlemen
  99. If a product is more complex technologically, what is the effect on middlemen?
    fewer middlemen
  100. Is there an availablity of middlemen?
    If not you can not use what doesn't exist
  101. What is channel control desire?
    If you want to control the channel use fewer middlemen
  102. What is the degree of management ability?
    It must match managerial ability
  103. What are the financial resources?
    It is cheaper for the producer to use a longer channel because the middlemen help pay for the promotion and distribution
  104. What is an intense distribution?
    try to make the product available as many places as possible, example, soft drink strategy is to maximize sales volume by making the product very easy to buy, but leads to lower price and lower margin
  105. What is exclusive distribution?
    limit product availability to one outlet per market, leads to better sales support from the resellers, leads to higher price, higher margin, lower sales volume
  106. What is selective distribution?
    Use only certain types of outlets, example, many fashion labels and cosmetics limit what types of stores their products are sold in, some are high end retailers only, strategy: to give a high end image
  107. What is a a same type of business horizontal conflict?
    between walmart and target or coke and pepsi
  108. What is a horizontal channel conflict with overlap between different types of businesses?
    Giant competing with pep boys for sales of motor oil
  109. What is scrambled merchandising?
    when a store carries a nontraditional product, like motor oil in a supermarket
  110. What is a vertical conflict?
    Between businesses at different levels, conflict is to become channel captain, the business able to dominate others
  111. What is the sell direct tactic of a vertical conflict?
    a producer could not use middlemen
  112. What is the form voluntary chains of tactics of a vertical conflict?
    a group of small retailers get together to pool purchasing power
  113. What is the development of private brands?
    a retailer has their own brand of a product, gives the retailer power because they can now choose who makes their products
  114. What is build brand loyalty?
    try to make consumers insist on your brands so the retailers have to carry them
  115. What is exclusive dealing?
    marketer prevents dealer from carrying competing products, example, if coke told giant they could only carry coke if Giant doesn't carry Pepsi, illegal except for very small deals
  116. What are tying contracts?
    Marketer requires middleman to carry other products from the same marketer in order to carry the product the retailer wants to carry, example if Coke told Giant, Giant could only carry Coke if Giant also carried Sprite, illegal except for parts and accessories
  117. What is Dealer selection?
    Marketer picks retailers who can carry the product, legal
  118. What is exclusive territory?
    Allow only one middleman per market
  119. What is service retailing?
    by definition retailing is a service because retailing does not make anything, a retailer buys things and then sells them to consumers
  120. Describe the labor intensive of retailing?
    requires alot of employees compared to other types of businesses
  121. How can a retailer be a two way distribution funnel?
    Funnels merchandise from all over the world into one location, the store, and consumers from all over a local market into one location, it brings the people and the merchandise together
  122. How can the time utitility be provided?
    making the product available when the consumer wants it, open 24/7
  123. How can the place utility be provided?
    making the product available where the consumer wants it, like having a gas station off a busy highway
  124. How can the ownership utility be provided?
    making the product easier to own, accepting credit cards
  125. What utility does retailing provide?
  126. Describe the product capacity of a department store.
    Broad and deep, focus on soft goods
  127. What is the array of services of a department store?
    Wide, like delivery or bridal registry or travel agencies
  128. What is the price competition of a department store?
    Competition is avoided, try to carry different brands than those found in a discount store
  129. What is the product capacity of a discount store?
    Broad, shallow; not as many products per line assortment, focus on hard goods
  130. What is the service at a discount store
  131. What price is emphasized at a discount store?
  132. What are limited line stores?
    narrow amount of product lines
  133. What are specialty stores?
    carries one type of product like super shoes
  134. What are off-price retailers?
    discount store with a narrow assortment; TJMaxx, Ross, Ollies
  135. What are category killers?
    very deep in a very narrow assortment, like office max or home depot
  136. What is a supermarket superstore?
    also carries nonfood items
  137. What is a combination store supermarket?
    Combines a pharmacy with a supermarket
  138. what is a hypermarket supermarket?
    combine a discount store with a supermarket, like a walmart supercenter
  139. What are convenience stores?
    appeal is ease of shopping rather than price - rutters or turkey hill
  140. What is club retailing?
    requires shoppers to have a membership like BJs or Sams club
  141. what is nonstore retailing?
    direct selling, telemarketing, automatic vending, direct marketing
  142. What is a full service strategy?
    rare, customer does nothing like high end clothing and bridal boutiques, restaurants
  143. What is a limited service strategy?
    Service is available, like most department stores
  144. What is a self service strategy?
    almost no service, like most supermarkets and fast food
  145. What is a strategy matrices?
    tool for analyzing retail strategies, margin is mark up and turn is how fast something sells
  146. What is a primary type of service?
    a service that the retailer makes money from, like a hair dresser in a department store, auto service at a discount store
  147. what is an ancillary type of service?
    a service the retailer does not make money off of, even though they may charge for it, like delivery, bridal registry, free estimates, free samples
  148. What is an interior design goal?
    Deciding what the floor plan of the store will look like, its layout
  149. What are the two rules of interior design?
    maximize exposure, try to get customers through as much of the store as possible, if they don't see something they can't buy it. And maximize shopping time
  150. What are the types of transactions considered wholesaling?
    sales to a business for resale, production, operation
  151. What is the economic justification for wholesaling?
    Reduce the number of transactions
  152. What is a merchant wholesaler?
    takes title, own what they sell, and is independent, from producer
  153. What is a full service merchant wholesaler?
    Offer all expected services, credit, delivery, sales force, inventory
  154. what are rack jobbers?
    Selling from a truck like snap on tools
  155. What is drop shipping?
    do not have inventory, just arrange shipment directly from the producer
  156. What are agent wholesalers?
    Do not take title, they don't own what they sell
  157. What is a manufacturer's agent?
    Really just a salesforce for hire
  158. What is a broker?
    try to connect a buyer and a seller and take a commission
  159. What is an auction house?
    Sell to the highest bidder but don't own what they sell
  160. What is a consignment wholesaling strategy?
    the retailer only pays for merchandise that gets sold
  161. What is memorandum selling wholesaling strategy?
    the retailer buy the merchandise but there is an agreement that the wholesaler will buy back anything that is unsold