Chapter 5 Miller

marketing

all of the process – planning, pricing, promoting, distributing, and selling – used by a company to place its products in the hands of potential customers  

product mix

the different products and services that a business sells 

positioning

Creating an image for a product in the customer’s mind using the features of the product, price and quality. 

Return On Investment

The amount earned as a result of the investment; usually expressed as a percentage.  

Market share

A business’s percentage of the total sales generated by all companies in the same market/industry sector

Demand-based pricing

Determined by how much customers are willing to pay for a product or service 

Cost-based pricing

Determined by using the wholesale cost of an item (the cost of the item the business owner paid the manufacturer) as the basis for the price charged 

Competition-based pricing

Determined by considering what competitors charge for the same product or service

Licensing

process of selling your idea to a company for the development and launch of a new product 

Price skimming

used with new products. Price starts high to recover development costs and then drops after the product is established or similar products enter market 

Penetration pricing

Low introductory price to “penetrate” the market. Goal is to build a customer base and discourage competition. 

Psychological Pricing  

Based on the belief that certain prices have an impact on how customers perceive a product. Most often used in retail.  

Discount pricing

Offers customers a reduced price to encourage them to buy 

What are the 4P’s of marketing. Give 1 examples for each P. 

1. Product: design  

2. Price: List Price 

3. Place: Locations 

4. Promotion: advertising 

Explain the difference between a Product-driven market vs. Consumer-driven market in terms of number of options for the consumer. 

Product: the company is dedicated to one form of product and focus their market on people that are interested in said specific product 

Consumer: A company 

Explain why a business owner expands their product mix.  

To reach more markets to increase business revenue. 

Give an original example of product positioning between two products in the same market. (Not BMW vs. Ford) Explain the differences between these products and the differences between their target markets.  

Starbucks and Dunkin' both of these companies use the product of coffee. Starbucks is more on the side of quality and experience to offer an area to relax. To where Dunkin' is more leaning towards the side of coinvent and fast, while also being affordable option. The target market for Starbucks is the middle class/upper because they are willing to pay for the experience. While with Dunkin's target market is for the more budget friendly people and everyday coffee drinkers  

  

Know the formula and be able to find the Return on Investment. 

amount invested X the percentage you want to make  

Know the formula to find the market share for a business 

Amount of Sales ÷ Total Market Size = Market Share  

 markup formula

 Markup amount = wholesale cost  X  percentage markup 

markdown formula

Markdown amount = retail price  X  percentage markdown 

What are two parts that you must account for when determining how to price an idea or a service? 

 Time spent 

Products used 

Name and define the 5 types of psychological pricing. 

Odd/even pricing: appear lower than it actually is. 4.99 vs 5 

Price lining: offering different pricing based on features/ quality 

Promotional pricing: limited time pricing to increase sales 

Multiple-unit pricing:  10 for $10 offers suggest a bargain – people buy more 

What are the advantages for a business to use seasonal discounts? 

During seasonal discounts for example using the lawn mower care and snow blowing in the winter can help you gain customers throughout the whole year and seasons 

Be able to explain in your own words synergy marketing and give an original example (Not the McDonald’s example.

Synergy marketing is when two businesses come together to work together that can benefit both of them. Ex. When Disney drops attraction from the films 

Be able to explain in your own words guerilla marketing and give 2-3 examples 

Guerilla marketing is finding inexpensive ways to promote your product. 

Ex-Product placement- putting your product in a movie or show where it can be seen or they talk about your brand  

Street Marketing- going out on the street giving out sales or giving stuff out for free to expose your brand