exam 2

government sector

courts, hospitals, military, police/fire departments

private nonprofit sector

museums, charities, churches, colleges, hospitals

business sector

airlines, banks, hotels, law firms etc

manufacturing sector

accountants/legal staff (service providers)

retail sector

cashiers, sales people, customer service representativess

service

any act or performance one party can offer to another (intangible)

what are the 5 categories of service mix?

pure intangible good

tangibnle good with accompanying services

hybrid

major service with accompanying minor goods and services

pure service

examples of a pure tangible good

soap, toothpaste

example of a tangible good with accompanying services

car/computer/cell phone with a warranty/ customer service contract

example of a hybrid (service mix)

restaurant ( equal parts goods and services)

example of a major service with accompanying minor goods and services

air travel with supporting goods (snacks and drinks)

search qualities

characteristics the buyer can evaluate before purchase

credence qualities

characteristics the buyer normally finds hard to evaluate even after conusmption

what are the 4 distinctive service characteristics that affect the design of marketing programs

intangibilities, inseparability, variability, and perishability

services cannont be seen, tasted, felt, heard, or smelled before they are bought

intangibility

services are typically produced and consumed simultaneously

inseparability

services are highly variable (quality depends on who provides them, when, where and to whom

variability

services cannot be stored

perishability

why are customers pressing for unbundled services

so they can select the elements they want

external marketing describes

the normal work of preparing, pricing, distributing and promoting the service to customers

internal marketing describes

trainig and motivating employees to serve customers well int

interactive marketing describes

the employee skill in service the client

technical quality (?)

was the surgery successful?

functional quality

did the surgeon show concern and inspire confidence

in interactive marketing what is key?

teamwork

what are the 5 gaps that can prevent successful service delivery

gap between consumer expectation and management perception

gap between management perception and service quality specification

gap between service quality specifications and service delivery

gap between service delivery and external communiations

gap between perceived service and expected service

what are the five determinants of service quality

reliability, responsiveness, assurance, empathy, and tangibles s

zone of tolerance

rance in which a service dimension would be deemed satisfactory

selt service technologies (SST) are intented to provide _____

convenience

traditionally, what are the three specific worries about product service

reliability/failure frequency, downtimes, and out of pocket costs

the longer the downtime the ____ the cost

higher

life cycle cost

products purchase cost + the discounted cost of maintenance and repair - the discounted salvage value

what is the one element of marketing mix that produces revenue

price

price has operated as a major determnant of ___ ____

buyer choice c

sharing economy

consumers share to extract more value to what we already own

research suggests that pricing performance_____ (increase/decrease)when pricing authority is spread horizontally across the sales, marketing, and finance units

increases

purchase decisions are based on…

how customers percieve price and what they considerscurrent price to be

what are three key topics for understanding how consumers arrive at their perceptions of price

reference prices, price quality inferences, and price endings

reference prices

observed price to an internal reference price or external frame of reference (suggested price)

price quality inferences

price as an indicator of quality

price endings

percieve an item prices at 299 to be in the 200 rane

endingthe pricing of products in “9” suggests a

discount

what are five major pricing objectives

survival, maximum current profit, maximum market share, maximum market skimming, and product quality leadershipsurv

survival

major objective if plagued with overcapacity, competition or changing of consumer wants

maximuze current proficts

firm estimates the demand associated with alternative prices and chooses the price that produces maximum profitmaxi

belief that higher sales volume will lead to lower unit costs and higher long run profit

maximuze market share

market penetration pricing

firm sets the lowest price (assuming market if price sensitive)

when is market penetration priving appropriate

1) the market is highly price sensitive and a low price stimulates market growth

2) production and distribution costs fall with accumulated production experience

3) low price discourages actual and potential competition

companies unveiling a new technology favor setting high prices to ____ ___ ___

maximize market skimming mar

maket skimming pricing

prices start high and slowly drop over time w

when does market skimming pricing make sense

1) sufficient number of buyers have a high current demand

2) unit costs of producint small volume are not so high they cancel the advantage of charging what the traffic will bear

3) high initial price does not attract more competitors to the market

4) high price communicates the image of a superior product

the relationship between price and demand is typically

inverse

generally, customers are ____ sensitive to low cost items or items they buy infrequently

less

what must markets need to know about demand in order to change a prive

how responsive( elastic) demand is

inelastic demand

hardlt changes with a small change in prive

elastic demand

changes significantly with a small change in privethe

the higher the elasticiy of demand, the

greater the volume of growth i

if demand is _____ sellers will consider lowering the price to produce more total revenue

elastic

demand sets the ___ on a price

ceiling

costs sets the ___ for a price

floor

fixed costs (overhead)

costs that do not vary with level of production or sales revenue

examples of fixed costs

rent, salaries

variable cost

vary directly with the level of production to

tal costs

fixed + variable costsavera

average cost

cost per unit at that level of production a

average cost formula

total cost/ production

experience curve/learning curve

decline in the average cost with accumulated productoion experience

target return pricing

firm determines the price that yields its target rate of return on investment

formula for target return pricing

unit cot + [(desired return X invested capital)/unit sales]

what is percieved value made up of

buyer image of product performance, deliverbales, qarrany quality, cusomter support, etc

value pricing

fairly low price for a high quality offering

everyday low pricing

charges constant low price with little or no price promotion or special sales

high low pricing

retailer charges higher prices on everyday basis but runs frequent promotos with prives demporarilty lower than the edlp level

going rate pricing

firm bases its price largely on compeitors prices

english auctions

one seller and many buyers biddingse

sealed bid auctions

supplies only submit one bidd (cant know what the other bids are)

geological pricing

company decides how to price its products to dufferent customers in different locations and countries

countertrade

offer other items as a form of payment

barter

buyer and seller directly echange goods, with no money or third party involved

compensation deal

seller recieves some percentage of the payment in cash and the rest in products

buyback agreeement

firm sells to a company in another country and agrees to accept as partial payment products manufactured with the supplied equipment off

set

firm recieves full payment in cah for the sale overseas but agrees to spend a substantial amount of the month in that country within a stated time period