Marketing Exam 3

Marketing Channel

Consists of individuals and firms involved in the process of making a product or service available for use or consumption by consumers or industrial users

Multichannel Marketing

The blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop and buy in traditional intermediaries and online

Vertical Marketing Systems

Professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact

Exclusive Distribution

A level of distribution density whereby only one retailer in a specific geographical area carries the firm's products

Intensive Distribution

A level of distribution density whereby a firm tries to place its products and services in as many outlets as possible

Selective Distribution

A level of distribution density whereby a firm selects a few retailers in a specific geographical area to carry its products

Channel Conflict

Arises when one channel member believes another channel member is engaged in behavior that prevents it from achieving its goals

Disintermediation

Channel conflict that arises when a channel member bypasses another member and sells or buys products directly

Logistics

Those activities that focus on getting the right amount of the right products to the place at the right time at the lowest possible cost

Supply Chain

The various firms involved in performing the activities required to create and deliver a product or service to ultimate consumers or industrial users

Customer Service

The ability of logistics management to satisfy users in terms of time, dependability, communication, and convenience

Total Logistics Cost

The expenses associated with transportation, materials, handling and warehousing, inventory, stockouts (being out of inventory), order processing, and return products handling

Vendor-Managed Inventory (VMI)

An inventory management system whereby the supplier determines the product amount and assortment a customer (such as a retailer) needs and automatically delivers the appropriate items

Reverse Logistics

A process of reclaiming recyclable and reusable materials, returns, and reworks from the point of consumption or use for repair, remanufacturing, redistribution, or disposal

Direct to Consumer Marketing Channels

Channels that allow consumers to buy products by interacting with print or electronic media and without a face-to-face meeting with a salesperson

Bullwhip Effect

The tendency for chain managers at different levels to exaggerate the need to increase or decrease inventory in response to variation in customer demand

Retailing

All activities involved in selling, renting, and providing products and services to ultimate consumers for personal, family, or household use

Form of Ownership

Distinguishes retail outlets based on whether independent retailers, corporate chains, or contractual systems own the outlet

Level of Service

Describes the degree of service provided to the customer from three types of retailers: self-service, limited-service, and full-service

Merchandise Line

Describes how many different types of products a store carries and in what assortment

Breadth of Product Line

The variety of different product items a store carries

Depth of Product Line

The store carries a large assortment of each product item

Hypermarket

A form of scrambled merchandising, which consists of a large store (more than 200,000 square feet) that offers everything in a single outlet, eliminating the need for consumers to shop at more than one location

Scrambled Merchandising

Offering several unrelated product lines in a single store

Intertype Competition

Competition between very dissimilar types of retail outlets that results from a scrambled merchandising policy

Telemarketing

Using the phone to interact with and sell directly to consumers

Retail Positioning Matrix

A matrix that positions retail outlets on two dimensions: breadth of product line and value-added, such as location, product reliability, or prestige

Retailing Mix

The activities related to managing the store and the merchandise in the store, which includes retail pricing, store location, retail communication, and merchandise

Off-Price Retailing

Selling brand-name merchandise at lower than regular prices

Central Business District

The oldest retail setting, usually located in the community's downtown area

Community Shopping Center

A retail location that typically has one primary store (usually a department store branch) and often 20 to 40 smaller outlets, serving a population of consumers who are within a 10- to 20- minute drive

Power Center

A retail location consisting of a huge shopping strip with multiple anchor (or national) stores

Regional Shopping Centers

A retail location consisting of 50 to 150 stores that typically attract customers who live or work within a 5- to 10- mile range, often containing two or three more anchor stores

Shopper Marketing

The use of displays, coupons, product samples, and other brand communications to influence shopping behavior in a store

Strip Mall

A retail location consisting of a cluster of neighborhood stores to serve people who are within a 5- to 10- minute drive

Category Management

An approach to managing the assortment of merchandise in which a manager is assigned the responsibility for selecting all products that consumers in a market segment might view as substitutes for each other, with the objective of maximizing sales and profits in a category

Wheel of Retailing

A concept that describes how new forms of retail outlets enter the market

Retail Life Cycle

The process of growth and decline that retail stores, like products, experience, consisting of the early growth, accelerated development, maturity, and decline stages

Multichannel Retailers

Retailers that utilize and integrate a combination of tradition store formats and non-store formats such as catalogs, television home shopping, and online retailing

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

(Total Revenue - Total Cost) OR (Unit Price X Quantity Sold) - (FC + VC)

Pricing Objectives

Specifying the role of price in an organization's marketing and strategic plans

Pricing Constraints

Factors that limit the range of price a firm may set

Demand Curve

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

Average Revenue (AR)

The average amount of money received for selling one unit of a product, or simply the price of that unit

Total Revenue (TR)

The total money received from the sales of a product

Price Elasticity of Demand

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

Fixed Cost (FC)

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

Total Cost (TC)

The total expense incurred by a firm in producing and marketing a product; the sum of fixed and variable cost

Unit Variable Cost (UVC)

Variable cost expressed on a per unit basis for a product

Variable Cost (VC)

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

Breakeven Analysis

A technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output

Breakeven Point (BEP)

The quantity at which total revenue and total cost are equal

Contribution Margin

Expressed per unit as the difference between the unit selling price and unit variable cost (P - UVC), or as a percent (UVS ÷ P x 100)

Skimming Pricing

Setting the highest initial price that customers who really desire the product are willing to pay when introducing a new or innovative product

Penetration Pricing

Setting a low initial price on a new product to appeal immediately to the mass market

Prestige Pricing

Setting a high price so that quality-conscious or status-conscious consumers will be attracted to the product and buy it

Odd-Even Pricing

Setting prices a few dollars or cents under an even number

Price Lining

Setting the price of a line of products at a number of different specific pricing points

Bundle Pricing

The marketing of two or more products in a single package price

Standard Markup Pricing

Adding a fixed percentage to the cost of all items in a specific product class

Target Pricing

Consists of (1) estimating the price that ultimate consumers would be willing to pay for a product, (2) working backward through markups taken by retailers and wholesalers to determine what price to charge wholesalers, and then (3) deliberately adjusting the composition and features of the product to achieve the target price to consumers.

Yield Management Pricing

The charging of different prices to maximize revenue for a set amount of capacity at any given time

Cost-Plus Pricing

Summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at a price

Experience Curve Pricing

A method of pricing based on the learning effect, which holds that the unit cost of many products and services declines by 10% to 30% each time a firm's experience at producing and selling them doubles

Target-Profit Pricing

Setting an annual target of a specific dollar volume of profit

Target-ROI Pricing

Setting a price to achieve an annual target return on investment (ROI)

Target Return-on-Sales Pricing

Setting a price to achieve a profit that is a specified percentage of the sales volume

Customary Pricing

Setting a price that is dictated by tradition, a standardized channel of distribution, or other competitive forces

Above-, At-, or Below-market pricing

Setting a market price for a product or product class based on a subjective feel for the competitor's price or market price as the benchmark

Loss-Leader Pricing

Deliberately selling a product below its customary price, not to increase sales, but to attract customers' attention to it in hopes that they will buy other products with large markups as well

Fixed-Price Policy

Setting one price for all buyers of a product or service; also called one-price policy

Dynamic Pricing Policy

Setting different prices for products and services in real-time in response to supply and demand conditions; also called flexible-price policy

Product-Line Pricing

The setting of prices for all items in a product line to cover the total cost and product a profit for the complete line, not necessarily for each item

Price War

Successive price cutting by competitors to increase or maintain their unit sales or market share

Quantity Discounts

Reductions in unit costs for a larger order

Everyday Low Pricing (EDLP)

The practice of replacing promotional allowances with lower manufacturer list prices

FOB Origin Pricing

The 'free on board' price the seller quotes that includes only the cost of loading the product onto the vehicle and specifies the name of the location where the loading is to occur (seller's factory or warehouse)

Promotional Allowances

cash payments or an extra amount of "free goods" awarded to sellers in the marketing channel for undertaking certain advertising or selling activities to promote a product

Uniform Delivered Pricing

The price the seller quotes that includes all transportation costs

Basing-Point Pricing

Selecting one or more geographical location (basing points) from which the list price for products plus freight expenses are charged to the buyer

Price Fixing

A conspiracy among firms to set prices for a product

Price Discrimination

The practice of charging different prices to different buyers for products of like grade and quality

Predatory Pricing

The practice of charging a very low price for a product with the intent of driving competitors out of business

Sales Response Function

Relates the expense of the marketing effort to the marketing results obtained

Share Points

An analysis that uses percentage points of market share as the common basis of comparison to allocate marketing resources effectively for different product lines within the same firm

Generic Business Strategy

A strategy that can be adopted by any firm, regardless of the product or industry involved, to achieve a competitive advantage.

Cost Focus Strategy

One of Porter's generic business strategies that involves controlling expenses and, in turn, lowering product prices targeted at a narrow range of market segments

Cost Leadership Strategy

One of Porter's generic business strategies that focuses on reducing expenses and, in turn, lowers product prices while targeting a broad array of market segments.

Differentiation Focus Strategy

One of Porter's generic business strategies that requires products to have significant points of difference to target one or only a few market segments.

Differentiation Strategy

One of Porter's generic business strategies that requires products to have significant points of difference to charge a higher price while targeting a broad array of market segments

Blue Ocean Strategy

emphasizes the simultaneous pursuit of both differentiation and lower cost in newly configured industries and markets

Program Champion

A person who is able and willing to 'cut the red tape' to move the program forward

Marketing ROI

the application of modern measurement technologies to understand, quantify, and optimize marketing spending

Profit

The money left after a for-profit organization subtracts its total expenses from its total revenues and is the reward for the risk it undertakes in marketing its offerings

Strategy

An organization's long-term course of action designed to deliver a unique customer experience while achieving its goals

Organizational Purpose

Expresses why an organization exists, what problems it wishes to solve, and who it wants to be to every person it touches through its work

Core Values

The fundamental, passionate, and enduring principles of an organization that guide its conduct over time

Mission

A statement of the organization's function in society that often identifies its customers, markets, products, and technologies