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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
Producersā 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
Kantās 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)Ā
Break Even Point =
Total Fixed Costs /Ā Selling Price - Variable Cost
Markup
Selling Price - Cost
Margin (also called Markup Percentage)
Markup/Selling Price
Note
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