BUS 160 JMU(2024) exam 2 fadi

Product, Price, Place, Promotion

Four ps

Product

should solve a customers problem. Is the entire bundle including the experience

Price

A product must be priced low enough so customers will buy it and high enough for the business to make a profit. should also reflect your marketing vision.

Place

The location where you choose to market your product—whether in a retail storefront, in a customer's home, on an online store, or from a cart on the street—must be where customers shop.

Promotion

the development of the popularity and sales of a product or service through advertising, publicity, or other promotions, such as coupons or giveaways

process, people, physical evidence

Extended marketing mix (7 P's)

process

How the service is delivered is vitally important to customers

people

Every company relies on this. It is essential to have the right people in the right roles doing the right things.

Physical evidence

Even services typically include some type of physical elements, and these are significant for customers. Most of what the customer receives is intangible, but not all of it.

product

something that exists in nature or is made by human industry, usually to be sold, whereas a service is intangible—work, skills, or expertise provided in exchange for a fee.

physical attributes (e.g.,size, color, weight, shape), its performance characteristics(e.g., speed, strength, efficiency, durability), and its pricing, branding, and delivery.

your product will be defined by its...

your product/service and its branding

critical part of marketing mix

key to building successful brand

focus tightly on the primary benefit you want customers to associate with your business

Logo

a companies trademark or sign

Trademark

the exclusive right to use a brand or part of a brand

high quality product, treat employees well, high standards, define product, charity, etc.

how to build your brand

number one influence on buying patterns

confidence in the product

the psychology of pricing

entrepreneurs should not just consider econmics but also..

value pricing

"MORE FOR LESS"

Prestige pricing

high prices on its products or services to send a message of uniqueness or premium quality

cost-plus pricing

takes the organization's product cost and adds a desired markup

Markup pricing

a cost-plus pricing strategy in which a predetermined percentage is applied to a product's cost to obtain its selling price

Penetration pricing

a low price during the early stages ofa product's life cycle to gain market share

skimming pricing strategy

A high initial price that companies set when introducing new products in order to get back money invested.

Meet-or-beat-the-competition pricing

constantly matching or undercutting the prices of the competition

Follow the leader pricing

Using a particular competitor as a model in setting prices.

personalized pricing

adjusting prices in real time to fit individual customer needs, situations, locations, and buying behaviors

variable pricing strategy

provides different prices for a single product or service

Price lining

the process of creating distinctive pricing levels.

Percentage of sales method

the simplest method to use because the budget will be derived either from the prior year's sales or anticipated sales

Competitive spending method

entails researching your competitors to determine their level of spending

Excess funds approach

determining what is left over after other expenses are calculated, and allocating funds based on the results

objective and task method

budget expenditures according to the strategies and tactics developed to reach specific promotional objectives.

unique selling proposition (USP)

valuable to your organization when it is successfully communicated to your target customers and motivates initial and repeat purchasing decisions.

institutional advertising

provides information about an organization, rather than a specific product, and is intended to create awareness about a firm and enhance its image

product advertising

is designed to create awareness, interest, purchasing behavior, and post-purchase satisfaction for specific products and services

guerilla marketing

original, unconventional, and inexpensive small-business promotional strategies

buzz marketing

another name for word-of-mouth marketing

edutainment

a promotion that combines education and entertainment to make a more lasting impression upon an audience

e active marketing

when the two major components of Internet marketing—e-commerce and interactive marketing—combine

brand spiraling

integrating a company's conventional offline branding strategy with its Internet strategy by using conventional approaches to drive traffic to its online sites

blog

(short for Web log) a journal that appears on the Internet periodically (perhaps daily) and is intended for the public

blogosphere

the collective term used for all the blogs on the Internet.

stealth marketing

undercover, or deceptive, marketing efforts that are intended to appear as if they happened naturally

viral marketing

the process of promoting a brand, product, or service through an existing social network, where a message is passed from one individual to another

publicity

sometimes referred to as public relations, the planned and sustained effort to establish and maintain goodwill and mutual understanding between an organization and its public."

philanthropy

a concern for human and social welfare that is expressed by giving money through charities and foundations

foundation

a not-for-profit organization that manages donated funds, which it distributes through grants to individuals or to other nonprofit organizations that help people and social causes

not-for-profit organizations

an entity formed with the intention of addressing social or other issues, with any profits going back into the organization to support its mission.

cause related marketing

promotional efforts inspired by a commitment to a social, environmental, or political cause.

breakeven

the point at which fixed costs are recovered by sales, but variable costs are not included and no profit has yet been made. fixed cost/gross profit per unit=breakeven units

personal selling

dealing with potential customers face to face and trying to convince them to make a purchase

benefits

teach customers how your features of product/service are...

prospect

a person or organization that may be receptive to a sales pitch

three call behaviors

1. Let the customer talk more than you

2. Ask the right questions

3. wait to offer products and solutions until later in the call

1. price

2. performance

3.follow-up service

4.competition

5. support

6. warranties & assurances

6 characteristics of objectives

customer service

everything a business does to keep the customer happy

costs of losing a customer

1. Loss of current dollars 2. Loss of jobs 3. Loss of reputation 4. Loss of future business

Customer Relationship Management (CRM)

company-wide policies, practices, and processes a business uses with its customers to generate maximum customer satisfaction and optimal profitability

65% percent business comes from existing customers

why does CRM matter?

3 golden rules of CRM

1. put customer first 2. stay close to your customers 3.pay attention to details

Economics of one unit (EOU)

It tells an entrepreneur if the business is earning a profit on each individual unit.

seed capital

the one-time expense of opening a business

prototype

a model or pattern that serves as an example of how a product would look and operate if it were produced

Cash reserve

emergency funds and a pool of cash resources

payback period

estimated time required to earn sufficient net cash flow to cover the start-up investment

payback=start up investment/net cash flow per month

payback equation

Net present value (NPV)

the present value of current and future benefits minus the present value of current and future costs

Variable costs

expenses that vary directly with changes in the production or sales volume

Fixed costs

expenses that must be paid regardless of whether sales are being generated

Cost of Goods sold

cost of the materials used to create goods, labor charges, distribution costs, etc. Also referred to as "cost of sales"

contribution margin

gross profit per unit—the selling price minus total variable costs plus other variable costs

figure out the gross profit per unit

by using the EOU you can...

Inventory costs

expenses associated with materials and direct labor for production until the product is sold

fixed operating costs

expenses that do not vary with changes in the volume of production or sales. DO NOT CHANGE BASED ON SALES ACTIVITY

depreciation

the percentage of value of an asset subtracted periodically to reflect the declining value

stands for insurance, salaries, advertising, interest, depreciation, utilities, rent, other fixed expenses

I SAID U R + other FXs

net profit

the remainder of revenues minus fixed and variable costs and taxes

audit

a review of financial and business records to ascertain integrity and compliance with standards and laws,particularly by the U.S. Internal Revenue Service

cash accounting method

a system wherein transactions are recorded when cash is paid out or received

accrual method

accounting method where in transactions are recorded at the time of occurrence, regardless of the transfer of cash.

income statement, statement of retained earnings, balance sheet, statement of cash flows

Financial statement flow

Net revenue

Income from sales of the company's products or services. For companies using the cash method of accounting, sales are recorded when payment is received

COGS

These are the costs of materials used to make the product plus the costs of the direct labor used to make the product used in production, plus any indirect costs allocated to it

gross profit

The result of revenues minus COGS.

operating expenses

the indirect costs associated with operating a business that have not been allocated to the COGS (rent, salaries, utilities, advertising, and insurance).

Operating Income or Earnings before Interest andTaxes (EBIT)

The result of gross profit minus operating expenses (interest and taxes are not subtracted here)

net income/profit

This is the business's profit or losses after taxes.

balance sheet

a financial statement that shows the assets (what the business owns), liabilities (debts), and net worth of a business.

assets

what the business owns

liabilities

debts

net worth/owners equity

assets minus liabilities

net worth equation

owners equity-difference bt assets and liabilities

fiscal year

the financial reporting year for a company.

current assets

cash or items that can be quickly converted to cash or will be used within one year

long term assets

those that will take more than one year to use.

current liabilities

debts that are scheduled for payment within one year

long-term liabilities

debts that are due in over one year.

balance sheet equations

Assets = Liabilities + Owner's Equity

or Assets − Liabilities = Owner's Equity

or Assets − Owner's Equity = Liabilities

operating ratio

When the ratio of expenses versus sales is used to express expenses as a percentage of sales,