UW Madison marketing 300 exam 2

MRK 300

Marketing Research

Procedures that develop and analyze new information about a market

Scientific Method

Decision-making approach that focuses on being objective and orderly in testing ideas before accepting them

Experimental Method

Researchers compare the response of 2 or more groups that are similar except on the characteristic tested

Population

The total group they are interested in

Sample

A part of the relevant population

Validity

Extent to which data measures what it is intended to measure

Big Data

Data sets too large and complex to work with typical management tools

Confidence Interval

Range on either side of an estimate that is likely to contain the true value for the whole population

Hypotheses

Educated guesses about the relationships between things or about what will happen in the future

Marketing Research Process

5 step application of the scientific method.
(1) Define the problem
(2) Analyze the situation
(3) Get problem-specific data
(4) Interpret the data
(5) Solve the problem

Situation Analysis

An informal study of what information is already available in the problem area

Secondary Data

Information that has been already collected/published

Primary Data

Information specifically collected to solve a current problem

Research Proposal

A plan that specifies what information will be obtained and how

Qualitative Research

In depth, open-ended responses which do not have yes or no answers

Quantitative Research

Seek structured response that can be summarized in numbers

Focus Group Interview

Simultaneously interviewing 6-10 people in an informal group setting

Price

Amount of money that is charged for something of value

Target Return Objective

Sets a specific level of profit as an objective

Profit Maximization Objective

Seeks to get as much profit as possible

Sales-Oriented Objective

Seeks some level of unit sales, dollar sales or share of market without referring to profit

Status Quo Objectives

don't-rock-the-pricing boat objectives

Nonprice Competition

Aggressive overall marketing strategy on one or more of the P's rather than price

Skimming Price Policy

Tries to sell the top of a market at a high price before aiming at more price-sensitive customers

Penetration Pricing Policy

Tries to sell the whole market at one low price

Basic List Prices

Prices final customers are normally asked to pay for products

Discounts

Reductions from list price given by a seller to buyers who either give up some marketing function or provide the function themselves

Quantity Discounts

Discounts offered to encourage customers to buy in larger amounts

Cumulative Quantity Discounts

For purchases over a given period, the discount usually increases as the amount purchased increases

Noncumulative Quantity Discounts

Only individual orders are given a discount. Does not tie a buyer to the seller after that one purchase

Seasonal Discounts

Encourage buyers to buy earlier than present demand requires

Cash Discounts

A discount given in cash

2/10, net/30

Sales terms in which the buyer will receive a 2% discount if paid within 10 days, otherwise the bill must be paid in 30 days

Sale Price

Temporary discount from the list price

Everyday Low Pricing

Setting a low list pricing rather than relying on frequent sales, discounts or allowances

Allowances

Given for doing something or accepting less of something

Advertising Allowances

Price reductions given to firms in the channel to encourage them to advertise or otherwise promote the supplier's products locally

Stocking Allowances

Given to intermediary to get shelf space for a product

Push Money (or prize money) Allowances

Given to retailers by manufacturers/wholesalers to pass on to the retailers' sales clerks for aggressively selling certain items

Trade-in Allowance

Price reduction given for used products when similar new products are bought

Rebates

Refunds paid to consumers after a purchase

FOB

Free On Board

Freight absorption Pricing

Absorbing freight cost so that a firm's delivered price meets that of the near competitor

Value Pricing

setting a fair price level for a marketing mix that really gives the target market superior customer value

Unfair Trade Practice Acts

Lower limit on prices, especially at the wholesale and retail levels

Dumping

Pricing a product sold in a foreign market below the cost of producing it or at a price lower than in its domestic market

Wheeler-Lea Amendent

Bans "unfair or deceptive acts in commerce"

Price Fixing

Competitors getting together to raise, lower or stabilize prices (illegal in the US)

Robinson-Patman Act

Makes illegal any price discrimination if it injures competition

Price Discrimination

Selling the same products to get the selling price

Markup

Dollar amount added to the cost of products to get the selling price

Markup (percent)

Percentage of selling price that is added to the cost to get the selling price

Markup chain

Sequence of markups firms use at different levels in a chain-determines price structure in the whole channel

Stockturn Rate

Number of times the average inventory is sold in a year

Average-Cost pricing

Adding a reasonable markup to the average cost of a product (does not consider cost variations at different levels of output

Total Fixed Cost

Sum of those costs that are fixed in total no matter how much is produced

Total Variable Cost

Sum of those changing expenses that are closely related to output

Total Cost

Sum of total fixed and total variable costs

Average Cost (per unit)

Dividing total cost by the related quantity

Average Fixed Cost (per unit)

Dividing total fixed cost by the related quantity

Average Variable Cost (per unit)

Dividing total variable cost by the related quantity

Break-Even Analysis

Evaluates whether the firm will be able to break even with a particular price

Break-even Point (BEP)

Quantity where the firm's total cost will just equal its total revenue. \=Total Fixed Cost/Fixed Cost Contribution per Unit

Fixed-Cost (FC) Contribution Per Unit

Assumed selling price per unit - variable cost per unit

Value-In-Use Pricing

Setting prices that will capture some of what customers will save by substituting the firm's product for the one currently being used

Reference Price

Price customers expect to pay

Leader pricing

Setting some very low prices to get customers into retail stores

Bait Pricing

Setting some very low prices to attract customers but trying to sell more expensive models or brands once the customer is in the store. UNETHICAL

Psychological Pricing

Setting prices that have special appeal to target customers

Dynamic Pricing

Making items for sale more flexible to change in price to match consumers ability to pay

Odd-Even Pricing

Setting prices that end in certain numbers such as $49.95 or $99

Price Lining

Setting a few price levels for a product line and then marking all items at these prices. Assumes customers have a certain reference price in mind. Simple.

Demand-Backward Pricing

Setting an acceptable final consumer price and working backward to what a producer can charge

Prestige Pricing

Setting a rather high price to suggest high quality or high status

Product-Bundle Pricing

Setting one price for a set of products

Place

Making goods and services available in the right quantities and locations, when consumers want them

Channel of distribution

Any series of firms or individuals who participate in the flow of products from producer to final consumer

Direct Marketing

Direct communication between a seller and an individual customer using a promotion method other than face-to-face personal selling

Discrepancy of assortment

The difference between the lines a typical producer makes and the assortment final consumers want

Accumulating

Collecting products from many small producers

Bulk-breaking

Dividing larger quantities into smaller quantities as products get closer to the final market

Sorting

Separating products into grades and qualities desired by different target markets

Assorting

Putting together a variety of products to give a target market what it wants

Channel Captain

Manager who helps direct the activities of a whole channel and tries to avoid or solve channel conflicts

Vertical marketing systems

Channel systems in which the whole channel focuses on the same target market at the end of the channel

Vertical Integration

Acquiring firms at different channel activity levels

Ideal Marketing Exposure

Makes a product available widely enough to satisfy target customers needs but not exceed them

Intensive Distribution

Selling a product through all responsible and suitable wholesalers or retailers who will stock or sell the product

Selective Distribution

Selling through only those intermediaries who will give the product special attention

Exclusive Distribution

Selling through only one intermediary in a particular geographic area

Multichannel Distribution

Occurs when a producer uses several competing channels to reach the same target market

Reverse Channels

Channels used to retrieve products that customers no longer want

Licensing

Selling the right to use some process, trademark, patent, or other right for a fee or royalty

Logistics

Transporting, storing and handling of goods in ways that match target customers' needs with a firm's marketing mix

Physical Distribution

Another common name for logistics

Customer Service Level

How rapidly and dependably a firm can deliver what the customers want

Physical Distribution Concept

All transporting, storing and product handling activities of a business and a whole channel system should be coordinated as one system to optimize the total cost of distribution for a given customer service level

Total Cost Approach

Evaluating each possible PD system and identifying all of the costs of each alternative

Supply Chain

Complete set of firms and facilities and logistic activities that are involved in procuring materials, transforming them into intermediate or finished products and distributing them to customers

Electronic Data Interchange

An approach that puts information in a standardized format easily shared between different computer systems