BMGT350 Exam 2 Ch 7-14

consumer products

bought by final consumers for personal consumption

industrial products

bought by individuals and organizations for further processing or for use in conducting a business (ex: materials and parts, capital items, suppliers and services)

homogeneous

customer thinks product options basically the same and wants the lowest price

heterogeneous

customer thinks differences in product options and considers other attributes in addition to price

product line

closely related products that have similar functions and customer groups and are sold through similar outlets or fall within given price ranges

width (product mix decision)

number of different product lines the company carries

length (product mix decision)

total number of items a company carries within its product lines

depth (product mix decision)

number of versions offered for each product in the line

consistency (product mix decision)

relativity of the various product lines in end use, product requirements, distribution channels, or some other aspect

brand equity

the differential effect that knowing the brand name has on customer response to the product or its marketing

shopping products

less frequently purchased consumer products and services that customers gather information about and compare carefully on suitability, quality, price, and style before making a purchase decision

social marketing

using traditional business marketing concepts and tools to encourage behaviors that will create individual and societal well-being

service profit chain

connects service customer satisfaction and firm profits with employee satisfaction through internal service quality, satisfied and productive employees, greater service value, satisfied and loyal customers, and healthy service profits and growth

- services characterized by intangible, inseparable, variable, and perishable

stages in new product development

idea generation -> idea screening -> concept development and testing -> marketing strategy development -> business analysis -> product development -> test marketing -> commercialization

internal idea sources

intrapreneurial programs, internal social networks, R&D research centers, repurposing existing products, using technology

external idea sources

learning from competitors, customers, distributors and suppliers

crowdsourcing

inviting broad communities of people into the new product innovation process

marketing strategy statement

describes the target market, planned value proposition, sales, market-share, and profit goals for first few years

business analysis

review of sales, costs, and profit projections for a new product to find out whether projections satisfy company objectives

sales and profits over the product life cycle

product concept development

detailed version of the new product idea stated in terms that are meaningful to the customer

product life cycle

introduction stage, growth stage, maturity stage, decline stage

style

basic and distinctive mode of expression

fashion

currently accepted or popular style in a given field

fads

temporary period of unusually high sales or interest driven by consumer enthusiasm and immediate product or brand popularity

cost-based pricing

setting prices based on costs of producing, distributing, and selling the product plus a fair rate of return for effort and risk

design a good product -> determine product costs -> set price based on cost -> convince buyers of product's value

value-based pricing

attaching value-added features and services to differentiate a company's offers and charging higher prices, most logical and profitable way

assess customer needs and value perceptions -> set target price to match customer perceived value -> determine costs that can be incurred -> design product to deliver desired value at target price

organizational considerations

determine who should set the price depending on size and type of the company

- small companies = top management

- large companies = divisional or product managers

- industries with price as the key factor = pricing departments

internal price decision factors

marketing strategy, objectives, marketing mix, organizational considerations

external price decision factors

nature of market, demand, economy, reseller needs, and government actions

market skimming

setting a high price to skim maximum revenues layer by layer from the segments willing to pay the high price

market penetration

setting a low price to attract a large number of buyers and a large market share

product line pricing

setting prices across an entire product line

optional-product pricing

pricing optional or accessory products sold with the main product

captive-product pricing

pricing products that must be used with the main product

by-product pricing

pricing low-value by-products to get rid of or make money on them

product bundle pricing

pricing bundles of products sold together

segmented pricing

selling a product or service at two or more prices, where the difference isn't based on differences in costs (ex: customer-segmented, product form, location-based, time-based)

psychological pricing

adjusting for psychological effect

reference prices: buyers carry in their minds and refer to when looking at a given product

compromise effect: tendency to avoid an extreme choice resulting in middle ground option

promotional pricing

temporarily pricing products below the list price to increase short-run sales (ex: discounts and special-event, limited-time offers, free maintenance, longer warranties, low-interest financing)

personalized pricing

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

dynamic pricing

adjusting prices continually to meet the characteristics and needs of individual customers and situations

international pricing

break even volume

fixed costs / (price-variable costs)

pure competition

market consists of many buyers and sellers trading in a uniform commodity, no single buyer or seller has much effect on the going market price

monopolistic competition

market consists of many buyers and sellers trading over a range of prices rather than a single market price

oligopolistic competition

market consists of only a few large sellers so each one is alert and responsive to competitors' pricing strategies and marketing moves

pure monopoly

market is dominated by one seller

predatory pricing

sellers prohibited from this - selling below cost with intention of punishing competitor or gaining higher long-run profits by putting competitors out of business

price discrimination

sought to be prevented by Robinson-Patman Act by ensuring sellers offer same price terms to customers at given level of trade

supply chains

- upstream partners supply the raw materials, components, parts, information, finances, and expertise needed to create a product or service

- downstream partners serve as distribution channels that link the firm and its customers

marketing channel

set of interdependent intermediary organizations that help make a product or service available for user or consumption by consumer or business user

- channel members perform information, promotion, contact, matching, and negotiation functions to bridge gaps that separate goods and services from users

types of flows

physical flow of products, flow of ownership, payment flow, information flow, and promotion flow

vertical marketing system

channel structure in which producers, wholesalers, and retailers act as unified system (one owns others and has strong contracts with them)

franchise organization

contractual VMS in which franchisor links several stages in production-distribution process by operating through licensed franchisees

horizontal marketing system

two or more companies at one level join together to follow new marketing opportunity

omnichannel distribution systems

single firm sets up two or more channels to reach one or more customer segments, coordinating strategies to maximize total profits across channels

marketing logistics

planning, implementing, and controlling flow of materials, final goods, services, and related information from points of origin to points of consumption to meet customer requirements at a profit, involves outbound (products from factory to resellers and ultimately to customers) and inbound (moving products and materials from suppliers to factory) and reverse (reusing, recycling, refurbishing, or disposing)

integrated logistics management

emphasizes teamwork to maximize performance of logistics system

multimodal transportation

combining two or more modes of transportation, 3% of nation's goods transported

omni-channel retailing

creating a seamless cross-channel buying experience that integrates in-store, online, and mobile shopping, consumers readily research products and prices

self-service retailers

serve customers who are willing to perform their own locate-compare-select process

limited service retailers

carry more shopping goods about which customers need information, provide more sales assistance

full-service retailers

carry more specialty goods, assist customers in every phase of the shopping process

off-price retailers

sells merchandise bought at less-than-regular wholesale prices and sold at less than retail

corporate chain

two or more outlets that are commonly owned and controlled

voluntary chain

independent retailers engaged in group buying and merchandising, sponsored by wholesaler

retailer cooperative

group of independent retailers who jointly establish a central buying organization and conduct joint promotion efforts

retailer strategy

target markets must be segmented and defined, retailers then decide how to differentiate and position themselves in those markets

promotion tools

advertising, personal selling, sales promotion, public relations, direct and social media marketing

power centers

huge unenclosed shopping centers consisting of long strip of retail stores

retail media networks

retailer-owned ad services that led marketers and brands buy ad space across all retailers' interconnected digital touchpoint

recent retails trends

shorter life cycles, rise of mega retailers, retail convergence, rise of new retail forms

integrated marketing communications

integrates and coordinates company's many communications channels, delivers clear/consistent/compelling message about organization and its brands

advertising

reaches masses of buyers at a low cost per exposure, builds long-term image for product, can trigger quick sales, impersonal and lacks direct persuasiveness of salespeople

personal selling

personal interaction, allows customer relationships, buyer feels greater need to listen and respond, most expensive

sales promotion

wide assortment of tools with unique qualities, attracts consumer attention, offers strong incentives, short-lived effects, invites and rewards quick response

targets: final buyers, retailers and wholesalers, business customers, members of the sales force

public relations

very believable to readers, reaches many prospects, effective and economical when well thought out, can dramatize company or product by making consumers part of brand story

functions: press relations, public affairs, lobbying, development, press relations

major tools: news, special events, audiovisual materials, public service activities, company's website, social media

encoding

source decides what it wants to say and translates it into words or symbols that will have the same meaning to the receiver

decoding

the receiver translates the message

push strategy

promotion strategy that calls for using the sales force and trade promotion to push the product through channels

pull strategy

promotion strategy that calls for targeting consumer advertising, promotion, and other content at final consumers to induce them to engage with and buy the product, creating a demand vacuum, that "pulls the product through the channel

selling process

prospecting and qualifying, pre approach, approach, presentation and demonstration, handling objections, closing, follow-up

trade promotions

used to persuade resellers to carry a brand, give it shelf space, and promote it in ads

tools: contests, premiums, displays, free goods, discounts

misinformation

false or inaccurate information

disinformation

false information which is deliberately intended to mislead

sales force management

designing sales force strategy and structure, recruiting and selecting salespeople, training salespeople, setting compensation terms for salespeople, supervising salespeople, and evaluating salespeople

digital marketing process

understanding digital marketing -> preparing for a digital marketing campaign -> employing digital channels in an omni channel strategy -> addressing public policy issues in digital marketing

metaverse

immersive digital environment, often using virtual- augmented-, or mixed-reality technology where people or their virtual avatars can work, play, learn, socialize, shop, and communicate with one another

phishing

type of identity theft that uses deceptive emails and fraudulent online sites to fool users into divulging personal data

category killers

recent years have seen the rapid growth of superstores that are actually giant specialty​ stores

three product variables for retailers to decide on

product assortment, services mix, store atmosphere

retail convergence

different types of retailers now selling the same products at the same prices to the same consumers

broker

type of wholesaler that does not take title to​ goods, brings buyers and sellers​ together, and assists in​ negotiations

three major groups of wholesalers

merchant wholesalers, brokers and agents, manufacturers' and retailers' branches and offices

rack jobbers

type of wholesalers that price the​ goods, keep them​ fresh, set up​ point-of-purchase displays, and keep inventory​ records

types of sales promotion tools

consumer, trade, business, sales force