MARKETING EXAM 2

distribution

a product passes from producer to consumer

transactional distribution

buying, selling, and risk taking (negotiating)

logistical distribution

concentration, storing & sorting (stealing), physical distribution

what is an example of logistical distribution?

eggs

facilitating distribution

financing and grading

facilitating distribution is the collection and

dissemination of information to and from the producer and the consumer

examples of facilitating distribution?

best buy, department stores, credit cards

informing distribution

retailers give information to companies, companies give info to consumers

marketing research goes to?

companies

in informing distribution, companies provide information to?

consumers

intermediary

things inbetween buying/consuming

risk taking

parishing, change in taste, destroyed products (flood/burn)

channel depth

the number of intermediaries between the producer of a good and the consumer

when is there no depth?

when the producer sells directly to the customer

what type of channels do smaller manufacturers use?

deep channels

what is an example of channel depth?

items in university bookstores

what is the chain for depth?

producer > wholesales > retailer > consumer

if a company is overseas?

may have to add another intermediary

channel width (or coverage)

number of outlets offering a product in a particular geographic area

selecting channel width/coverage is based on?

consumers buying process and brans desired competitive position

what provides for the widest coverage?

intensive distribution

what is an example of intensive distribution?

gum or soft drinks

most extreme value of intensive distribution?

vending machines

why is intensive distribution used?

for items that involve a routine buying decision where proximity to the customer is paramount

routine & -?

low-price

intensive distribution is dependent on?

being seen or in front of consumers

what is the trade of intensive distribution?

coverage and point of sale

is a sales person needed for intensive distribution?

no - sells well with no need for sales effort

selective distribution

providing an offering in selective (only some) outlets

as a firm widens the products coverage?

costs go up

the more outlets carrying products?

lower percentage of sales

what is an example of selective distribution?

electronics, appliances, watches, other “moderately” priced goods

medium trade off for selective distribution?

coverage and sales effort

½ and ½ for selective distribution…

exposure/coverage and sales effort

exclusive distribution

maximizes sales effort while maximizing coverage

where are exclusively distributed products offered?

only one outlet within a particular geographic area

example of exclusive distribution?

waterworks

who uses exclusive distribution?

firms offering luxury goods or specialty products

what can be especially rewarding for a retailer?

exclusive distribution agreements

exclusively distributed products typically..

are higher priced than competitive offerings

licensing can?

generate revenue flow with little new investment

advantages to licensing?

enables companies to circumvent tariffs, quotas or similar export barriers. also free to adapt licensed goods to local tastes

disadvantages to licensing?

agreements offer limited market control, could have a short life

joint venture

a type of strategic alliance where partners share equity investment in an entity. the opportunity to share risk and combine complementary strengths

department stores

a set-up that offers a wide range of products to the end users under one roof

examples of department stores?

nordstrom, macy’s, bloomingdales

discount stores

huge range of products at a discounted rate

what is bad about discount stores?

limited range of products and inferior quality

example of discount stores

walmart, kmart, target

warehouse store

limited stock of products in bulk at a discounted rate

example of warehouse stores

costco and sam’s club

category killer

a retailer that discount specialty products making it almost impossible for department stores to compete due to narrow focus

examples of category killers

home depot and best buy

specialty or boutique stores

narrow focus but smaller than category killers

examples of specialty or boutique stores

chloe (paris), build-a-bear workshop, alcala western wear (chicago)

retail store

generally sells food products or household items

examples of retail stores

hyvee, albertsons, PIGGLY WIGGLY

convenience (mom & pop) stores

small stores ran by individuals that cater to the daily needs of customers

examples of convenience stores

7-11, circle k, QT

omnichannel

emerged as a solution to instant gratification, allows stores to serve as a fulfillment center

buying is

convenience-oriented

shopping is

social/experimental

last mile delivery

up to 28% of a shipments cost is borne by the last mile of delivery

errors in distribution are spent where?

last mile delivery

price

the value placed on what is exchanged

why is something exchanged?

for satisfaction and utility

pricing has what two factors?

tangible (functional) and intangible (prestige) factors

what must buyers decide?

if the utility gained from the exchange is worth the buying power sacrificed

price represents?

the value of a good or service to potential purchasers

price ensures?

competition among sellers in an open market economy

financial pricing objectives

profit or some other desirable financial target

market share objectives are used to?

increase or maintain market share

market share objectives are

a strategic response to specific industry conditions

example of market share objectives?

US airline industry

price to the target market depends on

perception

price perceptions are linked to

positioning perceptions

price elasticity

responsiveness or quantity demanded to price changed

inelastic demand

changing prices don’t significantly affect quantity demanded

when demand is inelastic, what strategy may be used?

price skimming

price skimming

firm changes the highest price possible that buyers who most desire the product will pay

example of price skimming

new patented pharmaceuticals

a penetration strategy may be used when?

demand is elastic and there is a high degree of price sensitivity

penetration pricing strategy

pricing lower than competition

new products use?

penetration strategy to initially gain market share and weaken competition

commoditization

perception of little distant difference between alternative products

if a competitor cuts price?

others are forced to follow

how do you have more pricing power?

coming out with a new distinct product with no direct competition

what type of pricing strategy do perishable items have?

flexible pricing strategy

can services be perishable?

YES (unsold airline tickets)

discount and allowance pricing

adjusted price to reward customer for certain responses

cash discounts

a price reduction to buyers who pay bills promptly

example of cash discount

2/10 net 30 (2% reduced if paid within 10 days)

quantity discount

reduction to buyers who buy large volumes

quantity discounts give what incentive?

to buy more from one seller rather than from multiple sources

non cumulative quantity discount

given for one single purchase

what is an example of a non cumulative quantity discount?

buy 3 get 1 free

cumulative quantity discount

given over a number of purchases or overtime

functional (trade) discount

offered by seller to trade-channel members who perform certain functions

seasonal discount

reduction to buyers who buy merchandise/services out of season

two types of allowances?

trade-in or promo