Wheaton College Marketing Exam 4

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Price Elasticity

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Marketing

45 Terms

1

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.

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2

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.

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3

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.

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4

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.

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5

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.

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6

Bulk-breaking

Breaking down large quantities of goods into smaller units for resale

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7

Warehousing

Storage of goods before they are distributed for sale

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8

Transportation

Movement of goods from one location to another

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9

Financing

Providing funds or credit for purchasing goods

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10

Risk bearing

Accepting the financial risks associated with buying and selling goods

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11

Market information

Gathering and analyzing data about market trends and consumer behavior

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12

Management services and advice

Providing guidance and support in managing business operations

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13

Merchant Wholesaler

Largest group of wholesalers selling primarily to retailers

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14

Full-service wholesalers

Offer a wide range of services to retailers

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15

Limited-service wholesaler

Provide fewer services compared to full-service wholesalers

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16

General merchandise wholesalers

Deal with a variety of products for retailers

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17

Specialty wholesalers

Focus on specific product categories for retailers

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18

Industrial Distributors

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

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19

Brokers and agents

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

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20

Manufacturers sales branches and offices

Wholesaling done directly by manufacturers or buyers themselves

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21

Cash and carry wholesalers

Sell limited goods to small retailers for cash

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22

Truck wholesalers

Focus on selling and delivering goods via trucks

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23

Drop shippers

Do not carry inventory or handle the product

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24

Rack jobbers

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

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25

Producers’ cooperatives

Farmer-owned groups that sell farm produce in local markets

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26

Marketing Mix

Product assortment, price, promotion, and distribution strategies

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27

Vertical marketing system (VMS)

Producers, wholesalers, and retailers act as a unified system

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28

Corporate VMS

Combines production and distribution under single ownership

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29

Contractual VMS

Independent entities join through contracts for mutual benefits

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30

Franchises

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

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31

Marketing Ethics

Guidelines for handling ethical issues in marketing practices

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32

The Golden Rule

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

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33

The Utilitarian Principle

Doing the greatest good for the greatest number of people

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34

Kant’s Categorical Imperative

Acting based on universal laws or rules of behavior

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35

The Professional Ethic

Behaving in a manner acceptable to professional colleagues

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36

Press Test

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

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37

The Mom/Kid Test

Considering if actions would be explainable and acceptable to family members

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38

The Jesus Test

Reflecting on actions as if Jesus were present and observing

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39

2 Corinthians 5:10

Biblical reference emphasizing accountability for actions

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40

Penetration Pricing:

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

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41

PROFIT equation

Q(P-VC) - (FC)

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42

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) 

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43

Break Even Point =

Total Fixed Costs /  Selling Price - Variable Cost

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44

Markup

Selling Price - Cost

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45

Margin (also called Markup Percentage)

Markup/Selling Price

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