MKT FINAL

AMA Definition of Marketing

Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

Marketing Mix

Product, Price, Place, Promotion

Product

functionality, features, design, packaging, availability, etc. of a product

Place

The location, channels, logistics, coverage, etc. of a product

Price

The pricing strategy, cost, terms, discounts, etc. of a product

Promotion

The advertising, sales deals, PR, social media, and other information that persuades customers to purchase

Market Segmentation

The process of dividing the market into meaningful, relatively smaller, and identifiable segments.

Geographic Bases

Segmentation based on where a market is, how big it is, how dense it is, and the climate of the market.

Demographic Bases

Segmentation based on gender, age, race/ethnicity, income/social class.

Psychographic Bases

Segmentation based on personality characteristics, motives, lifestyles.

Benefits Sought

Segmentation based on the benefits the consumers seek from the product.

Usage-Rate Segmentation

Segmentation based on the differences among heavy, medium, and light users of a given product.

Target Market

A group of people or organizations for which an organization designs, implements, and maintains a marketing mix intended to meet the needs of that group, resulting in mutually satisfying exchanges.

Undifferentiated Targeting Strategy

A marketing approach that views the market as one big market with no individual segments and thus uses a single marketing mix.

Concentrated Targeting Strategy

A marketing strategy of selecting a single, primary target market and focusing all energies on providing a product to fit that market's needs.

Multisegmented Targeting Strategy

A strategy that chooses two or more well-defined market segments and develops a distinct marketing mix for each.

Price (chapter 19)

What is given up to acquire a good or service.

Information Effect on Price

People infer quality information based on price.

Price and Value

"Reasonable price" means "perceived reasonable value".

Profit Oriented Pricing Objective

Profit maximization, satisfactory profits, target return on investment.

Profit Maximization Orientation

High prices, low competition, maybe patent protected, demand is inelastic.

Satisfactory Profit Orientation

Competitive prices, high competition, demand is inelastic.

Target ROI Orientation

Specific percentage of investment must be made back.

Target ROI Formula

Sales Oriented Pricing Objective

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

Market Share Orientation

A strategy that focuses on the ratio of sales revenue of the firm to the total sales revenue of all firms in the industry, including the firm itself.

Maximizing Sales Orientation

A strategy focused on moving units, usually for the short term with less focus on profit.

Status Quo Pricing Objective

A pricing objective that maintains existing prices or meets the competition's prices.

Price Elasticity

A measure of the sensitivity of demand to changes in price.

Markup Pricing

The cost of buying the product from the producer, plus amounts for profit and for expenses not otherwise accounted for.

Dollar Markup Formula

Selling Price - Cost

Percentage Markup Formula

Dollar Markup / Selling Price

Retail Price Formula

Cost / 1 - Desired Return on Sales

Price Skimming Strategy

A technique that sets very high prices for a limited period before reducing them to more competitive levels.

Penetration Price Strategy

Pricing products low with the hope of reaching the mass market and discouraging other companies from competing in the market.

Status Quo Pricing Strategy

Charging a price identical to or very close to the competition's price.

Dynamic Pricing

Companies change prices in real time based on the consumer's behavior, such as how long they spend on a website or if they click on an ad.

Introductory Stage (PLC)

The full-scale launch of new product into marketplace with a high failure rate, little competition, limited distribution, high marketing costs, frequent product modification.

Growth Stage (PLC)

When sales and profits are increasing, competition is aware of the product success and advertising focuses on customer satisfaction.

Maturity Stage (PLC)

When sales level off and a company spends more of its marketing dollars fighting off competition.

Decline Stage (PLC)

When sales fall and profits may be smaller than the costs.

Quantity Discount

A price reduction offered to buyers buying in multiple units or above a specified dollar amount.

Cumulative Quantity Discount

A deduction from list price that applies to the buyer's total purchases made during a specific period.

Noncumulative Quantity Discount

A deduction from list price that applies to a single order rather than to the total volume of orders placed during a certain period.

Cash Discounts

Reductions in price to encourage buyers to pay their bills quickly.

Seasonal Discounts

Discounts offered during specific times of year to encourage buyers to buy earlier than present demand requires.

Geographic Pricing

The setting of different prices depending on a geographical division of the areas, accounting for regional differences like COLA.

Promotional Allowances

Payments or price reductions that reward dealers for participating in advertising and sales support programs.

Rebates

Refunds paid to consumers after a purchase.

Functional Discounts

A discount to wholesalers and retailers for performing channel functions.

Zero Percent Financing

A type of loan that enables purchasers to borrow money to pay for products with no interest charge.

Value-Based Pricing

Setting the price at a level that seems to the customer to be a good price compared to the prices of other options.

Single-Price Tactic

All goods offered at the same price

Trade ins

Exchanging one item for a credit towards another.

Professional Services Pricing

Used by professionals with experience, training or certification

Bait Pricing

lure customers through false or misleading price advertising

Price Bundling

Combining two or more products in a single package

Two-Part Pricing

Two separate charges to consume a single good

Promotion

Communication by marketers that informs, persuades, and reminds potential buyers of a product in order to influence an opinion or elicit a response.

Promotional Mix

the combination of promotional tools—including advertising, public relations, personal selling, sales promotion, and social media—used to reach the target market and fulfill the organization's overall goals

Advertising

A written or spoken media message designed to interest consumers in purchasing a product or service

Public Relations

the element in the promotional mix that evaluates public attitudes, identifies issues that may elicit public concern, and executes programs to gain public understanding and acceptance

Personal Selling

The two-way flow of communication between a buyer and a seller that is designed to influence the buyer's purchase decision.

Sales Promotion

Short-term incentives to encourage the purchase or sale of a product or service

Social Media

the practice of using social media to generate consumer interest in a product, service, or idea

Promotional Strategy

A plan for the optimal use of the elements of promotion: advertising, public relations, personal selling, sales promotion, and social media

Competitive Advantage

a set of unique features of a company and its products that are perceived by the target market as significant and superior to those of the competition

Informing

A goal of promotion that increases awareness, explains the product, suggests new uses, and builds a company image.

Reminding

A goal of promotion that reminds customers that they may need the product, where to buy the product, and maintains customer awareness.

Connecting

A goal of promotion that forms relationships through social media, encourages the exchange of information, and where consumers become brand advocates.

Persuading

A goal of promotion where companies explain why their product is the better option and compares their advantages over others.

Push Marketing Strategy

When a brand tries to sell themselves to the retailers and wholesalers to get their product to the public.

Pull Marketing Strategy

When a brand targets the consumers to try and stimulate demand so retailers and wholesalers seek the product.

Sales Promotion

a short-term inducement of value offered to arouse interest in buying a product or service

Contest vs Sweepstakes

Contest: you have to do something to win.

Sweepstakes: all random; you don't compete.

Consumer Sales Promotion

promotion activities targeted to the ultimate consumer market, using a pull strategy

Trade Sales Promotion

promotion activities directed to members of the marketing channel, such as wholesalers and retailers, using a push strategy