Wheaton College Marketing Exam 4

Price Elasticity

Measures how sensitive consumers are to changes in the price of a product. It is calculated as the percentage change in quantity demanded divided by the percentage change in price.

Break Even Point

The level of sales for a firm where all costs are covered. Below this point, the firm incurs losses, while above it, the firm makes a profit.

Channel of Distribution

The sequence of marketing organizations involved in bringing a product from the producer to the consumer, designed to facilitate the exchange process and reinforce the overall marketing strategy.

Markup

The difference between the selling price of a product and its cost, calculated as a percentage of the selling price. It is used to determine the selling price based on the desired margin.

Retail Marketing Mix

The combination of elements used by retailers to meet customer requirements profitably, including product assortment, services, store atmosphere, pricing, promotion, and place decisions.

Bulk-breaking

Breaking down large quantities of goods into smaller units for resale

Warehousing

Storage of goods before they are distributed for sale

Transportation

Movement of goods from one location to another

Financing

Providing funds or credit for purchasing goods

Risk bearing

Accepting the financial risks associated with buying and selling goods

Market information

Gathering and analyzing data about market trends and consumer behavior

Management services and advice

Providing guidance and support in managing business operations

Merchant Wholesaler

Largest group of wholesalers selling primarily to retailers

Full-service wholesalers

Offer a wide range of services to retailers

Limited-service wholesaler

Provide fewer services compared to full-service wholesalers

General merchandise wholesalers

Deal with a variety of products for retailers

Specialty wholesalers

Focus on specific product categories for retailers

Industrial Distributors

Sell industrial products to manufacturers and offer services like credit and delivery

Brokers and agents

Intermediaries who facilitate transactions between buyers and sellers without taking ownership of goods

Manufacturers sales branches and offices

Wholesaling done directly by manufacturers or buyers themselves

Cash and carry wholesalers

Sell limited goods to small retailers for cash

Truck wholesalers

Focus on selling and delivering goods via trucks

Drop shippers

Do not carry inventory or handle the product

Rack jobbers

Price goods, maintain inventory, and set up displays for retailers

Producers’ cooperatives

Farmer-owned groups that sell farm produce in local markets

Marketing Mix

Product assortment, price, promotion, and distribution strategies

Vertical marketing system (VMS)

Producers, wholesalers, and retailers act as a unified system

Corporate VMS

Combines production and distribution under single ownership

Contractual VMS

Independent entities join through contracts for mutual benefits

Franchises

Form of contractual VMS where independent businesses operate under a parent company's brand

Marketing Ethics

Guidelines for handling ethical issues in marketing practices

The Golden Rule

Ethical principle of treating others as you would like to be treated

The Utilitarian Principle

Doing the greatest good for the greatest number of people

Kant’s Categorical Imperative

Acting based on universal laws or rules of behavior

The Professional Ethic

Behaving in a manner acceptable to professional colleagues

Press Test

Evaluating actions based on how they would be perceived in the news

The Mom/Kid Test

Considering if actions would be explainable and acceptable to family members

The Jesus Test

Reflecting on actions as if Jesus were present and observing

2 Corinthians 5:10

Biblical reference emphasizing accountability for actions

Penetration Pricing:

Is offering a low price early in the life cycle and increasing the price as consumers get used to the product

PROFIT equation

Q(P-VC) - (FC)

To determine the dollar sales volume needed to break even, first compute break-even in units and then use this formula:

(Selling Price)x(Break Even) 

Break Even Point =

Total Fixed Costs /  Selling Price - Variable Cost

Markup

Selling Price - Cost

Margin (also called Markup Percentage)

Markup/Selling Price