Marketing Exam 2

*Primary Data

Information you collect yourself for a specific purpose

*Secondary Data

Information that already exists and was collected by someone else

External Data

Information that comes from outside your business

Questionnaire Data

Information collected by asking people questions (usually through surveys)

*Quantitative Data

Data you can measure in numbers

*Qualitative Data

Data that describes opinions, feelings, or experiences

*Geographic segmentation

Where customers live or work.

*Demographic segmentation

Objective classification.

*Psychographic segmentation

Subjective attributes.

*Behavioral segmentation

Observable action.

*80/20 Rule

The 80/20 rule is a concept that suggests that 80 percent of a firm’s sales come from 20 percent of its customers.

*Usage Rate

How many people use something, or how often they visit a store during a certain time. Frequency marketing is about getting people to use or visit more often.

*Customer Lifetime Value (CLV)

How much money a business expects to earn from a customer over the entire time that person stays a customer.

*Segmentation Steps

Group buyers into segments, Group products to be sold into categories, Develop a market grid and estimate the market size, Select target market, Take targeting actions to reach target markets

*Target Market Criteria

Market size, Expected growth, Competitive position, Cost of reaching the segment, Compatibility with the organization’s objectives and resources.

*Product Positioning

The place a product occupies in consumers’ minds based on important attributes relative to competitive products.

*Product Repositioning

Changing the place a product occupies in a consumer’s mind relative to competitive products.

*A perceptual map to reposition chocolate milk for adults

Identify important attributes for adult drinks, Discover how adults see competing drinks, Discover how customers see chocolate milk, Reposition chocolate milk to make it more appealing to adults.

*3 Different types of Products

Goods, services, ideas.

*Product item

Stock-keeping unit (SKU)

*Product line

A closely related group of items.

*Product mix

All of the product lines offered by a company.

*Continuous Innovation

A bit better version of the product that was sold before (New iPhone).

*Dynamically Continuous Innovation

The very first product (the first iPhone).

*Discontinuous Innovation

Completely new product category (Apple Vision Pro).

*Total Profit

Profit x Quantity

*Demand-oriented approaches

Skimming, Penetration, Prestige, Odd-even, Bundle

*Cost-oriented approaches

Figure out the cost + make a percentage = the retail price

*Profit-oriented approaches

The amount of money a company is trying to make + the target market = calculating the price

*Competition-oriented approaches

Customary, Above, at, or below market, Loss leader

*Loss leader

Costco selling hot dogs at the same prices for years to get returning customers.

*Demand Curve

Demand for the product is linked to price. When we increase the price, there is a decrease in demand.

*Elastic demand

When a 1 percent price decrease generates more than a 1 percent quantity increase.

*Inelastic demand

When a 1 percent decrease produces less than a 1 percent quantity increase.

*Break-even Point

Fixed cost / Unit Price - Unit Variable Cost = Fixed Cost / Price - Unit variable Cost

*Discount

Price decrease.

*Allowance

Requires consumer activity to decrease price.

*Product Life Cycle

Introduction, Growth, Maturity, Decline.

*Product (Life Cycle Stage)

Starts as one product, Expands to more versions, Becomes a full product line, Ends with only the best-sellers remaining

*Price (Life Cycle Stage)

Begin with skimming (high) or penetration (low) pricing, Adjust to gain market share, Later focus on protecting profits, End by staying profitable.

*Place (Life Cycle Stage)

Starts with limited availability, Expands to more outlets, Reaches maximum distribution, Then reduces to fewer outlets.

*Promotion (Life Cycle Stage)

First inform and educate, Then highlight differences from competitors, Later remind customers to stay loyal, Finally, use minimal promotion.

*Product Class

All products that exist in a category.

*Product Form

A specific type of product within a product class.

*Usage Barrier

Habits built around products.

*Value Barrier

Questioning. Is it worth my money? Is it useful?

*Risk Barrier

Physical, economic, and social risk.

*Psychological Risk

Culture and image.

Brand Personality

Creating human characteristics for branding (Mr. Clean).

Brand Equity

Image of the brand.

*Multiproduct Branding

Same brand name for all product categories.

*Multibranding

Different brands for different products.

*Private Branding

Sells products made by another manufacturer under its own brand name.

*Mixed Branding

Sells some products under its own brand and others under different brands.

*Middleman

Anyone in between the company that makes a product and the person who buys it (everyone).

*Agent or broker

Someone who sells or negotiates for the manufacturer and is allowed to act on their behalf.

*Wholesaler

A business that buys products in bulk and sells them to other businesses (like shops), not directly to customers.

*Retailer

A business that sells products directly to customers.

*Distributor

A business that handles getting products from the manufacturer to others—this can include storing, selling, and delivering them.

*Dealer

A general term for someone who buys and sells products; can mean wholesaler, retailer, or distributor depending on the situation.

Transactional function

Buying, Selling, Risk taking

*Assorting

Putting together a mix of products from different sources for customers.

*Sorting

Buying in bulk and splitting into smaller amounts for customers.

Logistical function

Assorting, Storing, Sorting, Transporting

Facilitating function

Financing, Grading, Marketing information and research

Marketing Channel

The method a business uses to promote, sell, and deliver its products or services to customers.

*Vertical Marketing Systems

A supply chain arrangement where producers, wholesalers, and retailers work together as a group to serve customer needs.

*Franchising

A way of doing business where one company lets another person or business use its brand, products, and system in exchange for a fee and usually a share of the profits.

*Forward integration

A company gains control over its distributors or retailers to get closer to the final customer

*Backward integration

Retailer owns manufacturing operation.

*Logistics

Product transportation in the most convenient way.

*Supply Chain Management

How products get from raw material to manufacturers to consumers.

*Skimming

Selling at the highest possible price

*Penetration

Selling at the lowest possible price

*Prestige

Increased price = increased demand

*Odd-even

Selling 1.99 instead of 2.00

*Bundle

Selling bundled products at a lower price

The five-step marketing research process

defining the problem

developing a research plan

collecting data

analyzing results

implementing findings