Intro to Marketing Concepts Practice test #2

Production Oriented Company

focuses on internal capabilities of the firm rather than the desires or needs of marketplace

Sales Oriented Company

company believes they will sell more products and service if aggressive sale methods are used to gain higher sales

Marketing Oriented Firm

firm exists to satisfy consumers wants and needs and provides shareholders and corporate benefits

Marketing Concept

philosophy that firms should analyze the needs of customers and then make decisions to satisfy those needs and make a profit

Functions of Marketing

Distribution, Financing, Marketing Information Management, Pricing, Product/Service Management, Promotion)

FoM: Distribution

deciding where and to whom products need to be sold in order to reach the final users

FoM: Financing

getting the money that is necessary to pay for the operation of a business

FoM: Marketing Information Management

getting the necessary information to make sound business decisions

FoM: Pricing

Deciding how much to charge for goods and services in order to maximize profits

FoM: Product/ Service Management

obtaining, developing, maintaining, and improving a product or a product mix in response to marketing opportunities

FoM: Promotion

communicating with potential customers to inform, persuade, or remind them about business products

FoM: Selling

provides customers with goods and services they want

Different types of business ownership

sole-proprietorship, partnership, corporation, franchise, and licensing

Sole proprietorship

business owned and operated by one person

Main Points of a Sole Proprietorship

1. Most common form of business ownership
2. Must provide the money and management skill to run the business
3. entitiled to all profits
4. relatively easy to start
5.owner is responsible for all business debts and legal judgements
6. owner has unlimited liability

Unlimited Liability

Indefinite extent of liability to pay a firm's debts or obligations, extending beyond the investments of the firm's owner(s), partners, or shareholder(s) to their personal assets.

Partnership

the legal agreement between two or more people to be jointly responsible for the success or failure of a business

Main Points of Partnership

1. least common form of business
2. partners share profits, successes, and failures
3. subject to relatively little regulation and fairly easy to establish
3. two kind of partnership(general and limited)
4. combines skill and voice of each partner
5. taxed less heavily than a corporation
6. business is dissolved if one partner dies
7. each partner is responsible for everything
8. assume and share debt

General Partnership

All general partners take active part in the firm's management, are jointly and severally liable for the firm's obligations, and are bound by the actions of the other general partners

Limited Partnership

Business structure that combines features of a limited company with that of a partnership for use as a tax shelter, but does not create a legal entity separate and distinct from its owners

Corporation

business is chartered by a state and legally operates apart from the owner or owners

Main Points of a Corporation

1. most complicated form of business organization
2. usually large
3. those who work for it don't necessarily own it
4. form of governing body called boards(hire directors and officers to manage the affairs of the business and interests of stockholders)
5. value is divided among shares of stock which are sold through the stock market to stock holders
6. liabitlity for losses belong to the stockholder only the the extent of his or her individual investment and theyre not responsible for debts
7. corporation can own assets, borrow money, and perform business functions
8. each owner has limited liability
9. Increased Gov. regulation

Limited Liability

The legal protection available to the shareholders of privately and publicly owned corporations under which the financial liability of each shareholder for the company's debts and obligations is limited to the par value of his or her fully paid-up shares

Franchise

a grant or right to sell a parent companies product or service within a given area or territory

License

done to protect the public from unqualified people practicing in a business and to maintain the health and wellness of citizens

Marketing mix

4 strategies that involve the decisions that a business must make

Four P's

Product, place, price, promotion

product

the good or service

price

what the consumers pays

place

the location where a product is marketed

promotion

the advertising

Product mix

(product assortment) refers to the total number of product lines a company offers to its customers. For example, your company may sell multiple lines of products. ... The four dimensions to a company's product mix include width, length, depth and consistency

New Product Development (NPD)

is the total process that takes a service or a product from conception to market

The steps in product development

include drafting the concept, creating the design, developing the product, and defining the marketing

Service development

is the end-to-end process of developing and launching a new service to be sold to customers

Elements of service development

market research, service strategy, customer experience, marketing, operations and launch of a new service

product line extension

the use of an established product brand name for a new item in the same product category

product line extension disadvantages

1. extension in unrelated markets may lead to loss of reliability if a brand name is extended too far
2. risk that the new product may generate implications that damage the image of the core/original brand

product line extension advantages

Established and loyal customer base.
Existing expertise.
Retailer relationships.
Low cost of production.
Low cost of development.
Provides market information.
Competitive barriers.
Easy to implement

Product line diversification

the practice of expanding the original market for a product. This strategy is used to increase the sales associated with an existing product line, which is especially useful for a business that has been experiencing stagnant or declining sales

product line diversification disadvantages

1. entity will lose out due to having limited investment in the specific segment
2. limits the growth opportunities for an entity
3. demand new skill sets

product line diversification advantages

1. provide an effective path to fast growth, as you sell more products to existing customers or establish new markets
2. Minimizing risk of loss - if one investment performs poorly over a certain period, other investments may perform better over that same period, reducing the potential losses of your investment portfolio from concentrating all your capital under one type of investment

legal aspects of product development

patents, copyrights, and trademarks

patents

grant of protection for an invention. It's granted by the U.S. Patent and Trademark Office (PTO) and has a term of 14 to 20 years. Owning a patent gives you the right to stop someone else from making, using or selling your invention without your permission

copyrights

Exclusive legal rights that protect works of authorship, composition or artistry. A copyright protects the publication, production or sale of the rights to a literary, dramatic, musical or artistic work or computer program or to the use of a commercial print or label

trademarks

Any symbol, word or combination thereof used to represent or identify a product. ... Trademarks and service marks are applied to a manufacturer's or a seller's products and services to distinguish them in the marketplace--a valuable marketing tool, in some circumstances

4 Important Functions of Packaging

Product Identification, product protection, convenience, product promotion

product identification

Packaging serves as an identification of the product. A product is packed in special sized, colored and shaped container for keeping its difference from the products of competitors. For example, the yellow and black colored pack of KODAK ROLL tells itself of its producer.

product protection

The main function of packaging is to provide protection to the product from dirt, insects, dampness and breakage. For example, the products like biscuit, jam, chips, etc., need to be protected from environmental contact. That is why they are tightly packed

convenience

Packaging provides convenience in the carriage of the product from one place to another, in stocking and in consuming. For example, the new pet bottles of COKE makes the carriage and stocking easier. Similarly, the pack of FROOTI provides convenience in its consumption

product promotion

Packaging simplifies the work of sales promotion. Packing material in the house reminds the consumers constantly about the product. In this way, the packaging performs the role of a passive salesman. Consequently, it increases the sales

importance of branding, labelling, and packaging

Labelling, branding, and packaging can be used by marketers to encourage potential buyers to purchase the product. Packaging is also used for convenience and information transmission. Packages and labels communicate how to use, transport, recycle or dispose of the package or product.

factors used by marketers to position product/business

features/benefits, price/quality, competition

features/benefits

product features- characteristics of product you offer

customer benefit- advantage customer gains from specific product features

price/quality

May stress high price as a sign of quality, or emphasize low price as an indication of value.

competition

the struggle among producers for the dollars of consumers

factors that influence a product's price

cost, quality, competition, and brand loyalty

cost

require the payment of (a specified sum of money) before it can be acquired or done

quality

consistently producing what the customer wants while reducing errors before and after delivery to the customer

brand loyalty

a favorable attitude toward and consistent purchase of a single brand over time

how consumer practices affect prices

shoplifting, improper returns, and product liability claims

shoplifting

businesses increase prices and add additional security measures in response to losses from shoplifting, consumers pay the final price, compensating for losses associated with shoplifting. ... A higher tax burden is placed on the consumer to recoup local and state taxes lost

improper returns

1. creates a "return profile" that catalogs and analyzes the customer's returns at the store
2. replace tags (they might switch the UPC code on a $600 faucet with a lower-cost code that rings up at $50. They buy the faucet, then replace the fake UPC tag with the original, higher-priced code, and return the faucet to the store without the receipt for a $600 store credit, which can later be sold online)

product liability claims

1. Negligence
2. Warranty
3. Strict Liability

ways that government regulations/laws affect pricing practices

price discrimination and collusion

price discrimination

the business practice of selling the same good at different prices to different customers

collusion

secret or illegal cooperation or conspiracy, especially in order to cheat or deceive others

influences of supply and demand on pricing

1. Demand Increase: price increases, quantity increases.
2. Demand Decrease: price decreases, quantity decreases.
3. Supply Increase: price decreases, quantity increases.
4. Supply Decrease: price increases, quantity decreases.

the concept of price elasticity

Price elasticity of demand (PED) is a measure of the responsiveness of demand for a product after a change in that product's price. ... A good is said to have price inelastic demand when a change in price results in a less than proportional change in quantity

distribution

the action of sharing something out among a number of recipients

direct distribution

the product or service leaves the producer and goes directly to the customer with no middlemen involved

indirect distribution (wholesaler, agent, and broker)

product passing through additional steps as it moves from the manufacturing business via distributors to wholesalers and then retail stores

wholesaler

A type of business that buys goods in large amounts and resells them to other businesses in smaller lots.

agent

a wholesaler who represents buyers or sellers on a relatively permanent basis, performs only a few functions, and does not take title to goods

broker

a wholesaler who does not take title to goods and whose function is to bring buyers and sellers together and assist in negotiation

means for distributing different types of products and services

cost benefit analysis

cost benefit analysis

a decision-making process in which you compare what you will sacrifice and gain by a specific action

Receiving process

The established system that a receiving manager uses to monitor and track goods arriving at a business. This process normally includes: inspecting containers for obvious physical damage, making sure that all the containers have arrived, assigning stock numbers (SKUs) to new items, and recording the location of each item (for example, warehouse, selling floor).

shipping process

1) create outbound deliveries (in reference to one or more sales orders)
2) picking (creating TO from deliveries and controlling the goods movements)
3) packing
4) planning and monitoring of transport
4) posting the goods issue - value based changes relevant in financial accounts

transportation systems and services used in distribution

motor, rail, water, air

storing options

cold storage, commodity, bulk

cold storage

Regularly check food temperatures in refrigerators. Keep food, particularly potentially hazardous food, in covered containers or properly wrapped. Remember: raw food should be stored below cooked or ready-to-eat foods, to prevent cross-contamination.

Commodity storage

the same as other products of the same type from other producers or manufacturers

bulk storage

The process of housing or storing materials and packages in larger quantities, generally using the original packaging or shipping containers or boxes.

warehousing options

distribution centers, public, and private

distribution centers

advanced warehouse facilities that specialize in collecting and shipping merchandise

public warehouses

storage space and related physical distribution facilities that can be leased by companies

private warehouses

storing facilities owned or leased by companies for their own use

procedures to store merchandise until needed

Schedule the Count Date
SELECT YOUR COUNTING METHOD
Human Resource Considerations
VISIT YOUR INVENTORY
BACK STOCK AND OUT-OF-SEASON MERCHANDISE
Do not move inventory while counting
Change your displays monthly . Holidays and seasons only last so long, and promotional goods have a short shelf life. ...
Show off the wants. ...
Look for one thing that makes a group . ...
Start closest to the door. ...
Pig in the window. ...
Showtime. ...
Put words to it. ...
Rotate them

the methods of handling merchandise and inventory control

Set Par Levels. Make inventory management easier by setting "par levels" for each of your products. ...
First-In First-Out (FIFO) "First-in, first-out" is an important principle of inventory management.
Manage Relationships. ...
Contingency Planning. ...
Regular Auditing. ...
Prioritize With ABC. ...
Accurate Forecasting. ...
Consider Dropshipping

the impact of specific marketing regulations/laws on domestic business

Taxation policy is one the government policies that affect businesses directly because taxation is based on the amount of money earned by all businesses

Production of certain goods and services Consumer protection Competition policy: control of monopolies

Protecting employees

Location of industry

the impact of specific marketing regulations/laws on international business

must abide by the Foreign Corrupt Practices Act (FCPA) Compliance Program

foreign legal systems may not be impartial or immune to political pressure when trying to resolve business or commercial disputes

thoroughly assess your risks with your international business operations

Study and maximize your Currency Exchange program for buying and selling inventory

ethical issues and their impact on marketing

ethical problems in market research are the invasion of privacy and stereotyping:any analysis of real populations needs to make approximations and place individuals into groups. However, if conducted irresponsibly, stereotyping can lead to a variety of ethically undesirable results.

Selective marketing is used to discourage demand from so-called undesirable market sectors or disenfranchise them altogether. Examples of unethical market exclusion are past industry attitudes to the gay, ethnic minority, and plus-size markets.

vulnerable audiences in emerging markets in developing countries, as the public there may not be sufficiently aware of skilled marketing ploys.

how special interest groups influence marketing

pressure from government: affected by the bills and laws passed by the various levels of government/cutting rates will discourage investors and companies from putting their money into fixed-income investments - the lower rates instead may encourage borrowing for investment purposes

labor groups: lobbying
advocate for the economic interests of workers and trade organizations
restricting labor supply and increasing labor demand

how changing cultural characteristics influence marketing

aging population: may affect financial markets if individuals tend to amass assets during their working years and spend them during retirement. ... If the age structure in the population affects the rate of productivity growth, this could swamp any asset price effects arising from demography-induced changes in asset demand

single-person households/mobility: set to grow steadily (influence the housing market)
may aid labor market mobility
make the labor market more mobile than it is today

social responsibility of marketing in society

environmental issues: The Political and Regulatory Environment. ...
The Economic Environment. ...
The Competitive Environment. ...
The Technological Environment. ...
The Social and Cultural Environment.

ethical decisions: tends to focus on the individual or marketing group decision, while social responsibility takes into consideration the total effect of marketing practices on society. ... Determine how the ethical approach to marketing will be implemented

community involvement: can be difficult for businesses to stand out from their competition, so marketing is important in part because it gives businesses traction in the public consciousness and because it helps consumers decide how to spend their money and allows them to interact with their customers

the role of federal regulatory agencies

Food and Drug Administration, Consumer Product Safety Commission, Environmental Protection Agency

Food and Drug Administration

a federal agency in the Department of Health and Human Services established to regulate the release of new foods and health-related products

Consumer Product Safety Commission

a governmental agency responsible for setting and monitoring safety standards for all consumer products

Environmental Protection Agency

an independent federal agency established to coordinate programs aimed at reducing pollution and protecting the environment