Marketing Exam 2 Study Guide

Situational Analysis (5 C’s)

Company, Context, Customers, Collaborators, Competition

Company

Products, Competitive Advantages, Brands, Objectives, Performance

Context

Laws & Regulations, Social trends, Economic trends, Technological trends

Customers

Target Audience, Motivations & Behaviors, Communication Channels, Customer Perceptions

Collaborators

Suppliers, Partners, Investors, Distributors

Competition

Direct & Indirect Competitors, Competitive Positioning, Strategies & Tactics, Strengths and Weaknesses

SWOT Analysis

Part of the first stage of the market process, which is analysis, Strengths, Weaknesses, Opportunities, Threats

Market Research

1) Define the problem

2) Develop the Research Plan

3) Collect Relevant Information

4) Develop Findings

5) Take Marketing Actions

Primary Research

facts and figures that are newly collected for the project (observational study, questionnaire)

Secondary Research

facts and figures that have already been recorded prior to the project at hand (internal data, external data)

Market Segmentation

aggregating prospective buyers into groups that (1) have common needs and (2) will respond similarly to a marketing action

Market Segments

the relatively homogenous groups of prospective buyers

Target Market

one or more specific groups of potential consumers toward which an organization directs its marketing program

Product Differentiation

a marketing strategy that involves a firm using different marketing mix actions to help consumers perceive a product as being different and better than competing products

Mass Customization

tailoring products or services to the tastes of individual customers on a high-volume scale

Build-to-Order

manufacturing a product only when there is an order from a customer

Cannibalization

when new products or new chain of stores is stealing customer and sales from the older, existing ones

Geographic Segmentation

based on where prospective customers live or work

Demographic Segmentation

based on some objective physical, measurable, or other classification attribute of prospective customers

Psychographic Segmentation

based on some subjective mental or emotional attributes, aspirations, or needs of prospective customers

Behavioral Segmentation

based on some observable actions or attitudes by prospective customers

80/20 Rule

concept that suggests 80% of a firm’s sales are obtained from 20% of its customers

Customer Lifetime Value

represents the financial worth of a customer to a company over the course of their relationship

Personas

character descriptions of a typical customer in the form of fictional character narratives, complete with images that capture the personalities, values, attitudes, beliefs, demographics, and expected interactions with the brand

Product Positioning

the place a product occupies in consumers’ minds based on important attributes relative to competitive products

Product Repositioning

changing the place a product occupies in a consumer’s mind relative to competitive products

Positioning Statement

statements derived from the company’s customer value proposition, which identifies the target market and needs satisfied, the product class or category, and the offering’s unique benefits or attributes provided

Perceptual Maps

a means of displaying in two dimensions the location of products or brands in the minds of consumers

Usage Rate

the quantity consumed or store visits during a specific period

Product

good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers’ needs and is received in exchange for money or something else of value

Nondurable Good

an item consumed in one or a few uses

Durable Good

an item that usually lasts over many uses

Services

intangible activities or benefits that an organization provides to satisfy consumers’ needs in exchange for money or something else of value

Consumer Products

products purchased by the ultimate consumer

Business Products

products organizations buy that assist in providing other products for resale

Convenience products

items that the consumer purchases frequently, conveniently, and with a minimum of shopping effort

Shopping Products

items for which the consumer compares several alternatives on criteria such as price, quality, or style

Specialty Products

items that the consumer makes a special effort to search out and buy

Unsought Products

items that the consumer does not know about or knows about but does not initially want

Derived Demand

sales of business products frequently result from the sale of consumer prodcuts

Product Line

a group of product or service items that are closely related because they satisfy a class of needs, are used together, are sold to the same customer group, are distributed through the same outlets, or fall within a given price range

Product Mix

consists of all product lines offered by an organization

Product Line Extension

when a company uses an existing brand name to introduce a new item within the same product category

Brand Extension

when a company uses an established, well-known brand name to launch a new product or service in a different or new category

Open Innovation

practices and processes that encourage the use of external as well as internal ideas and internal as well external collaboration when conceiving, producing, and marketing new products and services

Stage-Gate (refer to lecture)

Standard Test Market

when a company develops a product and then attempts to sell it through normal distribution channels in a number of test-market cities

Controlled Test Market

involves contracting the entire test program to an outside service

Product Life Cycle (all stages)

the stages a new product goes through in the marketplace: introduction (gain awareness), growth (stress differentiation), maturity (maintain brand loyalty), and decline (harvesting deletion)

Trial

the initial purchase of a product by a consumer

Repeat Purchasers

people who tried the product, were satisfied, and bought again

Deletion

dropping the product from the company’s product line

Harvesting

when a company retains the product but reduces marketing costs

Diffusion of Innovation

a product spreads through the population over the course of the life stages

Brand/Product Manager

manages the marketing efforts for a close-knit family of products or brands

Product Modification

altering one or more of a product’s characteristics to increase the product’s value to customers and increase sales

Product Bundling

the sale of two or more separate products in one package

Market Modification

strategies by which a company tries to find new customers, increase a product’s use among existing customers, or create new use situations

Product Repositioning

changes the place a product occupies in a consumer’s mind relative to competitive products

Trading Up

adding value to the product through additional features or higher-quality materials

Trading Down

reducing a product’s number of features, quality, or price

Shrinkflation

reducing the package content without changing package size and maintaining or increasing the package price

Branding

marketing decision in which an organization uses a name, phrase, design, symbols, or combo of these to identify its products and distinguish them from those of competitors

Brand Name

any word, deivce, or combination of these used to distinguish a seller’s products or services

Trademark

identifies that a firm has legally registered

Brand Personality

a set of human characteristics associated with a brand name

Brand Equity

the added value a brand name gives to a product beyond the functional benefits provided

Brand Purpose

the reason why a brand exists, the place it has in consumers’ lives, the solution it provides to consumers, and the brand’s role in making society better off

Brand Licensing

contractual agreement whereby one company allows its brand name or trademark to be used with products or services offered by another company for a royalty or fee

Private Branding

when a company manufactures products but sells them under the brand name of a wholesaler or retailer

Packaging

refers to any container in which the product is offered for sale and on which label information is conveyed

Labelling

part of the package that identifies the product or brand, who made it, where and when it was made, how it is used, and package contents and ingredients

Competitive Advantage

packaging and labeling are essential because both provide a competitive advantage

Price

money or other considerations exchanged for the ownership or use of a product or service

Price Equation

Price = List Price - Incentives and Allowances + Extra Fees

Value

the ratio of perceived benefits to price (Perceived Benefits / Price)

Value Pricing

the practice of simultaneously increasing product and service benefits while maintaining or decreasing price

Profit Equation

Profit = (Unit price x Quantity Sold) - (Fixed cost + Variable Cost)

Six Steps in Setting Price

1) Identify pricing objectives and constraints

2) Estimate demand and revenue

3) Determine cost, volume, and profit relationships

4) Select an approximate price level

5) Set list or quoted price

6) Make special adjustments to list or quoted price

Pricing Objectives

specifying the role of price in an organization’s marketing and strategic plans

Profit

three different objectives relate to a firm’s profit:

1) managing for long-run profits

2) maximizing current profit

3) target return objective

Sales Revenue

increasing sales revenue can lead to an increase in market share and profit

Market Share

the ratio of the firm’s sales revenues or unit sales to those of the industry

Unit Volume

the quantity produced or sold

Demand Curve

a graph that relates the quantity sold and price, showing the max number of units that will be sold at a given price

Demand Factors

factors that determine consumers’ willingness and ability to pay for products and services

Price Elasticity of Demand

the percentage change in quantity demanded relative to a percentage change in price

Elastic Demand

a slight decrease in price results in a relatively large increase in demand or units sold

Inelastic Demand

slight increases or decreases in price will not significantly affect the demand

Total Revenue

the total money received from the sale of a product (P x Q)

Total Cost

the total expense incurred by a firm in producing and marketing a product (FC + VC)

Fixed Cost

sum of the expenses of the firm that are stable and do not change with the quantity of a product sold

Variable Cost

sum of the expenses of the firm that vary directly with the quantity of a product that is produced and sold

Unit Variable Cost

variable cost expressed on a per unit basis for a product

Contribution Margin

expressed on a per unit basis as the difference between unit selling price and unit variable cost

Break-Even Analysis

technique to analyze the relationship between total revenue and total cost

Break-Even Point

the quantity at which total revenue and total cost are equal

Break-Even Chart

a graph of the break-even analysis that shows when total revenue and total cost intersect to identify profit or loss for a given quantity sold

Demand-Oriented Pricing

weigh factors underlying expected customer tastes and preferences more heavily

Skimming

setting the highest initial price that customers really desiring the product are willing to pay when introducing a new or innovative product