Principles of Marketing Test 3- msstate- Melissa Moore

price (narrow)

amount of money charged for a product or service

price (broad)

the sum of all the values that customers give up in order to gain the benefits of having/using the product/service

price floor

set by sellers. no profits below this price.

price ceiling.

set by consumers. no demand about this price.

cost plus pricing

based on cost of producing, distributing, and selling product plus a fair rate of return.

competition based pricing

based on competitors strategies, prices, cost, and market offerings.

customer value based pricing

based on buyers perception of value rather than cost

fixed cost

cost that doesn't change depending on level of production

variable cost

a cost that rises or falls depending on level of production

total cost

fixed costs plus variable costs

inelastic demand curve

demand hardly changes with small change in price

elastic demand curve

demand changes greatly with small changes in price

market penetration pricing

setting a low price for a new product in order to attract a large number of buyers and a large market share

market-skimming pricing

setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales

captive product pricing

pricing products that must be used with the main product

by-product pricing

a product made during the manufacture of something else. priced low to get rid of product.

product bundle pricing

pricing bundles of products sold together

product line product

setting prices amongst whole product line

optional product pricing

the pricing of optional or accessory products to be sold along with a main product

seasonal discounts

discounts offered at certain times of the year to encourage buyers to buy earlier than present demand requires

functional discounts

discounts on price because the buyer agrees to perform or take over particular functions involved with the product or service. like paying early.

promotional allowances

cash payments or an extra amount of "free goods" awarded sellers in the marketing channel for undertaking certain advertising or selling activities to promote a product

trade-in allowances

price reductions given for turning in an old item when buying a new one

psychological pricing

pricing that considers the psychology of prices and not simply the economics; the price is used to say something about the product

reference price

prices buyers carry in their minds and refer to when they look at a given product

segmented price

selling a product or service at two or more prices, where the difference in prices is not based on differences in costs

dynamic pricing

adjusting prices continually to meet the characteristics and needs of individual customers and situations. legal as long as there is no discrimination.

pure competition

many buyers and many sellers

monopolistic competition

many buyers and sellers with a range of prices

oligopolistic competition

few but large sellers

pure monopoly

one seller

supply chain

raw materials -> parts supplier -> manufacturer -> reseller -> consumer

supplier network

raw materials -> parts supplier -> manufacturer

channel of distribution

manufacturer -> reseller ->consumer

value delivery network

Company, suppliers, distributors, and customers who partner with each other to improve the performance of the entire system

upstream partners

supply the raw materials, components, parts, information, finances, and expertise needed to create a product or service

downstream partnets

serve as distribution channels that link the firm and its customers.

intermediaries

create greater efficiency in making goods available to target markets. solves issue of producers with narrow assortments in large quantities and consumers with broad assortments in small quantities.

retailer

a channel intermediary that sells mainly to consumers in small quantities.

wholesaler

a marketing intermediary that sells to other organizations in large quantities.

channel members

transform assortments of products made by producers into the assortments wanted by customers. functions are to inform, promote, contact, match, negotiate, distribute, finance, and risk take.

direct channel

no intermediary levels

indirect channel

one or more intermediary levels

vertical conflict

occurs between different levels of the same channel

horizontal conflict

a channel conflict that occurs among channel members on the same level

conventional distribution channel

consists of one or more independent producers, wholesalers, and retailers. each member is separate seeking to maximize own profits at expense of system as a whole.

vertical distribution system

producers, wholesalers, and retailers as a unified system.

horizontal marketing system

two or more companies at one level join together to follow a new marketing opportunity

disintermediation

occurs when product or service producers cut out intermediaries and go directly to final buyers, or when radically new types of channel intermediaries displace traditional ones

intensive distribution

company sells at as many outlets as possible

selective distribution

using few distributors to sell products

exclusive distribution

using one distributor to sell products

logistics

planning, implementing, and controlling the physical flow of materials, final goods, and released information from points of origin to points of consumption. functions are forecasting, info systems, purchasing, production, and planning.

inbound logistics

suppliers to company

outbound logistics

company to resellers

reverse logistics

consumers back to suppliers, company, and resellers

just in time systems (JIT)

carry small inventory, new stock arrives when needed.

radio frequency identification (RFID)

small tag technology gives physical location of product

modes of transportation

trucks, railroads, water carriers, pipelines, air carriers, and the Internet

promotion mix

the specific blend of promotion tools that the company uses to ENGAGE customers, persuasively COMMUNICATE customer value and BUILD customer relationships

promotional mix tools

1. advertising

2. personal selling

3. sales promotion

4. public relations

5. direct and digital marketing

advertising

any paid form of non personal presentation and promotion of ideas by an identified sponsor.

pros of advertising

lots of people, low cost, builds long term image, triggers quick sales, viewed as legitamate

cons of advertising

expressive, impersonal, lacks direct persuasion

personal selling

personal customer interactions by the firm's sales force for the purpose of making sales and building customer relationships

pros of personal selling

personal, allows variety of relationships, buyer feels great need to respond

cons of personal selling

time consuming, expensive

sales promotion

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

pros of sales promotion

wide assortment of tools with unique qualities, attracts attention

cons of sales promotion

short term effects, dramatized

public relations

building good relations with the company's various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events

pros of public relations

believable, reaches many prospects, effective and economical

cons of public relations

difficult to control, effectiveness is hard to measure

direct and digital marketing

engaging directly with carefully targeted individual consumers and customer communities to both obtain an immediate response and build lasting customer relationships

pros of direct and digital marketing

more targeted and interactive, immediate and personalized

integrated marketing communications

carefully integrating and coordinating the company's many communications channels to deliver a clear, consistent, and compelling message about the organization and its products

content marketing

creating, inspiring, and sharing brand messages and conversations for targeted audience online.

push strategy

producers -> retailers & wholesalers -> consumers (with market strategies)

pull strategy

producers <- retailers & wholesalers <- consumers (with demand and producer marketing activities)

major advertising decisions

objectives setting, budget decisions, message decisions, media decisions, advertising evaluation

objectives setting

communication objectives, sales objectives. inform, persuade, and remind.

budget setting

allocation of funds needed to implement the strategies

informative advertising

communicating customer value, build brand and customer image, explain product, describe suppliers

persuasive advertising

building brand preference, create customer engagement, change customer perceptions

reminder advertising

maintaining customer relationships, remind consumers of need, reminding consumers where to buy the product, keeping the brand in a customer's mind

advertising budget methods

affordable method, percentage of sales method, competitive parity method, objective and task method

affordable method

setting the promotion budget at the level management thinks the company can afford

competitive parity

a firm's strategy of setting prices that are similar to those of major competitors

percent of sales

budget is some percent of past or projected sales

object and task

determine objective and calculate cost needed to accomplish objectives (BEST METHOD)

media types

TV, radio, newspaper, magazine, Internet, direct mail, etc.

evaluating advertising effectiveness

communication effects and sales and profit effects

key tools of public relations

news and special events, written and audiovisual materials, and public service activities

publicity

attention given to company by media

crisis management

organizations methods to deal with disruptive and unexpected event that could tarnish organizations reputation

sales person

represents a company to customers by

1. prospecting and communicating

2. selling and servicing

3. gathering information and building relationships

boundary spanner

links customers and company and coordinates marketing and sales

steps in sales management

1. design sales force strategy and structure

2. recruiting and selecting sales people

3. training salespeople

4. compensating salespeople

5. supervising salespeople

6. evaluate salespeople

sales force structures

territorial, product, customer

territorial sales force structure

selling responsibilities divided by geographic region