Marketing Fundamentals Final Exam Study Guide

Comprehensive vocabulary flashcards covering marketing fundamentals, including branding, product decisions, pricing formulas, market structures, and promotion strategies.

Brand Equity

The impact of knowing the brand name of a product on customers' evaluation of the product; basically the extra value the brand name adds or subtracts versus an unbranded version.

Manufacturer-Sponsored Brand

Also known as a National Brand; the manufacturer puts their own brand name on their product, such as Sunkist juice made and sold by Sunkist.

Reseller-Sponsored Brand

Also known as a Store Brand or Private Brand; the manufacturer lets the retailer put the store's brand name on the product, such as Trader Joe's Orange Juice.

Licensed Brand

A situation where a manufacturer pays another brand to put that brand's name or logo on the product, such as a t-shirt company paying Disney to use Mickey Mouse.

Co-Sponsored Brand

Also known as Co-Branding; the manufacturer puts both its own brand name and another brand's name on a product, such as Disney x Pandora jewelry.

Line Extension

Developing products of new styles, ingredients, or flavors within an existing product category using an existing brand name, such as Cheerios to Fruity Cheerios.

Brand Extension

Developing products of a new category using an existing brand name, such as Cheerios moving from cereal to snack bars.

Multibrands

Developing products of new styles, ingredients, or flavors within an existing product category using a new brand name, such as General Mills making Cheerios and Lucky Charms.

New Brands

Developing products of a new category using a new brand name, such as General Mills owning Blue Buffalo pet food.

Individual Product

A single specific model of a product that a company sells, such as an iPhone 17 Pro.

Product Line

A group of closely related products that a company sells, such as all iPhone models combined.

Product Mix

The combination of all the product lines that a company sells, such as Apple's mix of Mac, iPad, iPhone, Watch, and AirPods.

Line Length

The total number of models being sold in a product line.

Line Depth

The number of versions of each model being sold in a product line, such as variations in color and storage size.

Line Filling

Adding more models within the current range of the product line.

Line Stretching

Adding more models outside the current range of the product line.

Product Mix Width

The number of different product lines a company carries in its mix.

Product Mix Consistency

How closely related the various product lines are in terms of end-use, production, and distribution requirements.

Product Life Cycle (PLC)

The course of a product's sales and profits over its lifetime, consisting of 5 stages: Development, Introduction, Growth, Maturity, and Decline.

Price Floor

Determined by product costs; represents the level where there are no profits below this price.

Price Ceiling

Determined by consumer perceptions of value; represents the level where there is no demand above this price.

Fixed Cost

Costs that do not vary with sales volume, such as rent, machinery, and salaries.

Variable Cost

Costs that vary with sales volume, calculated as $\text{Unit Variable Cost} \times \text{Sales Volume}$.

Unit Cost

The total cost per one unit of product, calculated as $\text{Fixed Cost} / \text{Sales Volume} + \text{Unit Variable Cost}$.

Sales Price Formula (Markup on Price)

Calculated as $\text{Unit Cost} / (1 - \text{Markup Rate})$.

Break-even Volume

The sales volume at which total revenue equals total cost, calculated as $\text{Fixed Cost} / (\text{Price} - \text{Unit Variable Cost})$.

Target-Return Volume

The units a company must sell to achieve a specific profit, calculated as $(\text{Fixed Cost} + \text{Target Return}) / (\text{Price} - \text{Unit Variable Cost})$.

Target Unit Cost

The maximum cost a company can afford to incur to earn a target markup, calculated as $\text{Target Price} \times (1 - \text{Markup Rate})$.

Good-value Pricing

Offering good products at fair prices to achieve a balance where quality and benefits are worth the price paid.

Value-added Pricing

Offering extra benefits at higher prices rather than cutting prices to compete.

Pure Competition

A market structure with many buyers and sellers trading at a single market price at the same point in time, such as wheat or copper.

Monopolistic Competition

A market with many buyers and sellers trading over a range of prices due to product differentiation and branding.

Oligopolistic Competition

A market structure consisting of only a few large sellers who are alert and responsive to each other's pricing strategies.

Pure Monopoly

A market dominated by one seller, such as the U.S. Postal Service or De Beers.

Elasticity of Demand

The responsiveness of demand to a change in price, calculated as $\text{\% Change in Quantity Demanded} / \text{\% Change in Price}$.

Inelastic Demand

Demand that changes very little when price changes, typically for unique, high-quality, necessary, or addictive products.

Market-skimming Pricing

Setting a high initial price to capture revenue from innovators and early adopters before reducing the price later.

Market-penetration Pricing

Setting a low initial price to rapidly gain market share and build brand recognition.

Captive Pricing

Setting prices for products that must be used along with a main product, such as Kindle books for a Kindle reader.

Product Bundle Pricing

Combining several products and offering them at a single price, which is often lower than buying them separately.

Promotion Mix

Also called marketing communication mix; the specific blend of personal selling, sales promotion, PR, advertising, and direct marketing handles.

Public Relations (PR)

Building a good corporate image and obtaining favorable publicity while handling unfavorable rumors or events.

Direct Marketing

Engaging remotely with targeted customers using customized content for immediate responses, such as email or social media marketing.

Advertainment

Making an advertisement so entertaining that consumers actually want to watch it.

Brand Integration

Making a brand a part of some other form of entertainment or content.

Native Advertising

Ad content that appears to be native to the website or social media platform where it is placed.

Shared Media

Media channels shared by consumers with other consumers, such as viral channels or word of mouth.

The Five A's

The objectives of marketing communication: Awareness, Appeal, Ask, Act, and Advocacy.

Value Delivery Network

A network of the company, suppliers, distributors, and consumers who partner to improve the performance of the entire system.

Upstream Partners

Firms that supply the raw materials, components, and expertise needed to produce a product.

Downstream Partners

Organizations like wholesalers and retailers that help make a product available to final consumers.

Conventional Marketing System

A system where producers, wholesalers, and retailers work independently to maximize their own profits.

Vertical Marketing System (VMS)

A system where producers, wholesalers, and retailers act as a unified system because one member owns the others or has contracts/power.

Horizontal Marketing System

Occurs when two or more companies at the same channel level join together to pursue a new marketing opportunity.

Production Concept

The management belief that consumers will buy products that are cheap and widely available, focusing on efficiency.

Product Concept

The belief that customers will buy products with the best quality, performance, and features, leading to continuous improvements.

Selling Concept

The belief that customers will only buy if the firm pushes the product through aggressive selling and promotion.

Marketing Concept

The belief that achieving goals depends on knowing the needs and wants of target markets and delivering satisfaction better than competitors.

Societal Marketing Concept

The belief that marketing decisions should consider consumers' wants, the company's requirements, and society's long-term interests.

Customer Lifetime Value (CLV)

The present value of total profits expected from a single customer over their lifetime, calculated as $M \times r / (1 + i - r)$.

True Friends

Customers with high potential profitability and high projected loyalty whom the company works to maintain and protect.

Barnacles

Customers with high loyalty but low profitability for whom companies try to increase spending or usage.

BCG Matrix: Star

A strong business unit in a fast-growing market with high market share and high market growth.

Cash Cow

A strong business unit in a mature market with high market share but low market growth, used to fund other units.

Market Penetration

Growth strategy based on selling existing products to existing markets.

Diversification

Growth strategy based on creating or acquiring new products for new markets.

Need Recognition

The first step where a consumer realizes a gap between their current state and a desired state.

Complex Buying Behavior

Characterized by high involvement and significant perceived differences between brands.

Dissonance-Reducing Buying Behavior

Characterized by high involvement and few perceived differences between brands, often leading to post-purchase regret.

Variety-Seeking Buying Behavior

Characterized by low involvement but significant perceived differences between brands, leading to frequent brand switching.

Experimental Research

Primary data collection method used to check cause-and-effect by giving different treatments to matched groups.

Stratified Sampling

A probability sampling method where the population is divided into groups and random samples are drawn proportionally from each group.

Concentrated (Niche) Marketing

A targeting strategy where a company focuses on serving one or a few small, specialized segments.

Specialty Products

Consumer products with unique characteristics or brand identification for which buyers are willing to make special purchase efforts.