JMU: MKTG Exam Final

Gizem Atav, James Madison University

What are the four P’s of the Marketing Mix?

product, price, place, and promotion

What is the value of product?

Creates value

What is the value of price?

Captures value

What is the value of place?

Delivers value

What is the value of promotion?

Communicates value

Why is price unique?

Only P that makes money, others are an expense

What is supply chain management?

Integrate suppliers, warehouses, stores, and transportation

Evolution of marketing era

production, sales, market, and value-oriented era

What is the production era?

Product innovation, little concern about customer needs

What is the sales era?

Overproduction, mass selling and advertising

What is the market era?

Discovered MKTG, focused on consumer wants/needs

What is the value era?

Value has to be greater than their competitors

What is value?

Reflects relationships of benefits to cost

What is the technology-augmented era?

Using digital to augment value

What are the four ways to develop customer value? (excellence)

Customer, Product, Operational, Locational Excellence

What is customer excellence?

retain loyal customers, great service (CRM: lifetime value)

What is operational excellence?

Efficient ops, supply chain & HR mgmt.

What is product excellence?

High perceived value, effective branding and positioning

What is locational excellence?

good physical location and internet presence

What is a marketing plan?

written document with analysis of marketing situation, opportunities, threats, objectives and strategies. 

What are the three phases of a marketing plan?

Planning, Implementation, Control

What is the first step of the planning phase of the marketing plan?

Define mission and vision of business

What is the second step of the planning phase of the marketing plan? ***

Conduct a situation analysis using SWOT

What is the first step of the STP process?

Market segment - divide the market into groups

What is SBU?

Strategic Business Unit or Product Line

What is SBU?

division of firm that is managed somewhat independently. 

What are the four BCG matrix?

Stars, Question Marks, Cash Cows, Dogs

What are stars?

High growth, high market share - invest heavy

What are question marks?

High growth, low market share - significant resources needed

What are cash cows?

Low growth, high market share - excess resources

What are dogs?

Low growth, low market share - phased out soon

What are the four growth strategies?

Market penetration, Market Development, Product Development, Diversification

What is the market penetration?

current market, current products

What is market development?

new market, current products

What is product development?

existing market, new products

What is diversification?

new markets, new products

What is the first step of segmentation?

Establish strategy or objectives

What is the second step of segmentation?

Use segmentation methods (think: geographic, demographic, psycho,geodemo, occassion)

What is geographical seg?

group basis on where they live

What is demographic seg?

group based on characteristics

What is psychographic seg?

consumers describe themselves and behavior, lifestyle, self-concept, self-values

What is benefit seg?

basis of benefits they derive from product/service

What is behavior seg?

occasion, loyalty. (80/20 rule)

What is geodemographic seg?

geographic, demographic, and lifestyle

STP 3rd step: The five (5) attractiveness

Identifiable, Reachable, Substantial, Profitable, Responsive

What is identifiable?

Who is in our market

What is Substantial?

Is the market size big enough?

What is Reachable?

Know it exists and how to buy it

What is Profitable?

Market growth, competition, and market access

What is responsive?

react similarly and positively

What is the profit margin %?

(selling price - avg variable cost)/selling price

STP 4th step: What are the four targeting strategies?

Differentiated, Undifferentiated, Concentrated (Niche), Micromarketing

What is undifferentiated (mass marketing) targeting strategy?

everyone can buy, same benefits

What is differentiated targeting strategy?

target several markets

What is micromarketing?

one-to-one, customization

What is concentrated (niche) targeting strategy?

Single, primary target market

STP 5th step: What is marketing positioning?

Define marketing mix variables so customers have a clear, distinctive, desirable understanding of product

What is value proposition?

How firm is meeting customer needs/wants

What are the five C’s of pricing?

Company objectives, cost, customers, competition, and channel members

What are the four pricing orientations for company objectives?

Profit, Sales, Competitive, Customer Oriented

What is the profit-oriented?

max profits and target return pricing

What is the sales-oriented?

obtain market share, increase sales

What is competitor-oriented?

Measure pricing based on competitors

What is customer-oriented?

Sets pricing based on added value

Price elasticity of demand =

% change of quantity demanded/% change in price

If elasticity is over |1|, 

it is elastic, price sensitive

If elasticity is under |1|,

it is inelastic, price insensitive

Income effect

income change = spending behavior change

Substitution Effect

Ability to substitute other products

Cross price elasticity

change in demand from product A to another product’s price

Formula cross price elasticity

% change of demand of Product A / $ change of price of Product B

Complementary products (-)

demands are related, rise and fall together

Substitute products (+)

demands not related, increase one, decrease another

Break even units =

fixed costs/contribution margin

Target profit =

(fixed costs + target profit) / contribution margin

What are the four competition sectors?

Monopoly, Oligopoly, Monopolistic competition, Pure competition

What is monopoly?

one firm controls (apple, google)

What is monopolistic competition?

many firms, differentiation in products (oakley, rayban)

What is oligopolistic competition?

handful firms, price war (airlines)

What is pure competition?

many firms selling commodities for same price (gold, meat, spices)

What are the three pricing strategies?

cost based, competition based, and value based pricing

Cost based pricing

determine final price by finding total cost

Competitor based pricing

set pricing to how product compares with competitors

Value based pricing

set prices that focus on overall value

Everyday low pricing (EDLP)

higher customer base, saves search cost

High/Low pricing

sell high when trending, sell low when not. (both customer bases)

Price Skimming

Start high and then lower, ROI quick because they die out or get copied.

Market Penetration Pricing

Increase prices along the way, sales-oriented, capture market share quick

Price Bundling

sell more of things you are not selling much of

Price Lining

many products released at the same time, different price points. (ex. iPhone lineup)

Leader pricing

low pricing, hoping they will buy other items while shopping

Predatory Pricing

low price to drive out competition (illegal)

Price Discrimination

firm sell same product at different prices

Price Fixing

competitors agree to control pricing

Cost-based pricing

determine the final price to charge by starting with the cost

Cons on Cost-based pricing

Does not recognize customers or competitors, cost based on per-unit

Competition-based pricing

set prices to signal information on how the product compares with competitors

Competition-based pricing info

above market pricing, below market pricing

Above market pricing (premium pricing)

signals that it’s high quality/value