MRKT 341Midterm3

price

the amount of money charged for a product or service; the sum of the values that customers exchange for the benefits of having or using the product or service

customer-value-based pricing

setting price based on buyers' perceptions of value rather than on the seller's cost

good-value pricing

offering the right combination of quality and good service at a fair price

value-added pricing

attaching value-added features and services to differentiate a company's offers while charging higher prices

cost-based pricing

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

fixed costs (overhead)

costs that do not vary with production or sales level

variable costs

costs that vary directly with the level of production

total costs

the sum of the fixed and variable costs for any given level of production

cost-plus pricing (markup pricing)

adding a standard markup to the cost of the product

break-even pricing (target return pricing)

setting price to break even on the costs of making and marketing a product, or setting price to make a target return

competition-based pricing

setting prices based on competitors' strategies, prices, cots, and market offerings

target costing

pricing that starts with an ideal selling price and then targets costs that will ensure that the price is met

demand curve

a curve that shows the number of units the market will buy in a given time period, at different prices that might be charged

price elasticity

a measure of the sensitivity of demand to changes in price

market-skimming pricing (price skimming)

setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes few but more profitable sales

market-penetration pricing

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

product line pricing

setting the price steps between various products in a product line based on cost differences between the products, customer evaluation of different features, and competitors' prices

optional product pricing

the pricing of optional or accessory products along with a main product

captive product pricing

setting a price for products that must be used along with a main product, such as blades for a razor and games for a videogame console

by-product pricing

setting a price for by-products to make the main product's price more competitive

product bundle pricing

combining several products and offering the bundle at a reduced price

discount

a straight reduction in price on purchases made during a stated period of time or in larger quantities

allowance

a reduction from the list price for buyer actions such as trade-ins or promotional and sales support

segmented pricing

selling a product or service at two or more prices, where the difference in prices is not based on differences in costs

psychological pricing

pricing that considers the psychology of prices, not simply the economics; the price says something about the product

reference prices

prices that buyers carry in their minds and refer to when they look at a given product

promotional pricing

temporarily pricing products below the list price, and sometimes even below cost, to increase short-run sales

dynamic pricing

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

value delivery network

a network composed of the company, suppliers, distributors, and, ultimately, customers who partner to help the entire system deliver customer value

marketing channel (distribution channel)

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

channel level

a layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer

direct marketing channel

a marketing channel that has no intermediary levels

indirect marketing channel

a marketing channel containing one or more intermediary levels

channel conflict

disagreements among marketing channel members on goals, roles, and rewards - who should do what and for what rewards

conventional distribution channel

a channel consisting of one or more independent producers, wholesalers, and retailers, each a separate business seeking to maximize its own profits for the system as a whole

vertical marketing system (VMS)

a channel structure in which producers, wholesalers, and retailers act as a unified system; one channel member owns the others, has contracts with them, or has so much power that they all cooperate

corporate VMS

a vertical marketing system that combines successive stages of production and distribution under single ownership - channel leadership is established through common ownership

contractual VMS

a vertical marketing system in which independent firms at different levels of production and distribution join together through contracts

franchise organization

a contractual vertical marketing system in which a channel member, called a franchisor, links several stages in the production-distribution process

administered VMS

a vertical marketing system that coordinates successive stages of production and distribution through the size and power of one of the parties

horizontal marketing system

a channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity

multichannel distribution system

a distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segments

disintermediation

the cutting out of marketing channel intermediaries by product or service producers or the displacement of traditional resellers by radical new types of intermediaries

marketing channel design

designing effective marketing channels by analyzing customer needs, setting channel objectives, identifying major channel alternatives, and evaluating those alternatives

intensive distribution

stocking the product in as many outlets

exclusive distribution

giving a limited number of dealers the exclusive right to distribute the company's products in their territories

selective distribution

the use of more than one but fewer than all of the intermediaries who are willing to carry the company's products

marketing channel management

selecting, managing, and motivating individual channel members and evaluating their performance over time

marketing logistics (physical distribution)

planning, implementing, and controlling the physical flow of materials, final goods, and related information from points of origin to point of consumption to meet customer requirements at a profit

supply chain management

managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers

distribution center

a large, highly automated warehouse designed to receive goods from various plants and suppliers, take orders, fill them efficiently, and eliver goods to customers as quickly as possible

intermodal transportation

combining two or more modes of transportation

integrated logistics management

the logistics concept that emphasizes teamwork - both inside the company and among all the marketing channel organization - to maximize the performance of the entire distribution system

third-party logistic (3PL) provider

an independent logistics provide that performs any or all of the functions required to get a client's product to market

retailing

all the activities involved in selling goods or services directly to final consumers for their personal, nonbusiness use

retailer

a business whose sales come primarily from retailing

shopper marketing

using point-of-sale promotions and advertising to extend brand equity to "the last mile" and encourage favorable in-store purchase decisions

specialty store

a retail store that carries a narrow product line with a deep assortment within that line

department store

a retail store that carries a wide variety of product lines, each operated as a separate department managed by specialist buyers or merchandisers

supermarket

a large, low-cost, low-margin, high-volume, self-service store that carries a wide variety of grocer and household products

convenience store

a small store, located near a residential area, that is open long hours seven days a week and caries a limited line, of high-turnover convenience goods

superstore

a store much larger than a regular supermarket that offers a large assortment of routinely purchased food products, nonfood items, and services

category killer

a giant specialty store that carries a very deep assortment of a particular line

service retailer

a retailer whose product line is actually a service; examples include hotels, airlines, banks, colleges, and many others

discount store

a retail operation that sells standard merchandise at lower prices by accepting lower margins and selling at higher volume

off-price retailer

a retailer that buys at less-than-regular wholesale prices and sells at less than retail

independent off-price retailer

an off-price retailer that is either independently owned and run or is a division of a larger retail corporation

factory outlet

an off-price retailing operation that is owned and operated by a manufacturer and normally carries the manufacturer's surplus, discontinued, or irregular goods

warehouse club

an off-price retailer that sells a limited selection of brand name grocery items, appliances, clothing, and other goods at deep discounts to members who pay annual membership fees

corporate chains

two or more outlets that are commonly owned and controlled

franchise

a contractual association between a manufacturer, wholesaler, or service organization (a franchiser) and independent businesspeople (franchises) who buy the right to own and operate one or more units in the franchise system

shopping center

a group of retail businesses built on a site that is planned, developed, owned, and managed as a unit

wheel-of-retailing concept

a concept that suggests new types of retailers usually begin as low-margin, low-price, low-status operations but later evolve into higher-priced, higher-service operations, eventually becoming like the conventional retailers they replaced

wholesaling

all the activities involved in selling goods and services to those buying for resale or business use

wholesaler

a firm engaged primarily in wholesaling activities

merchant wholesaler

an independently owned wholesale business that takes title to the merchandise it handles

broker

a wholesaler who does not take title to goods and whose function is to bring buyers and sellers together and assist in negotiation

agent

a wholesaler who represents buyers or sellers on a relatively permanent basis, performs only a few functions, and does not take title to goods

manufacturers' sales branches and offices

wholesaling by sellers or buyers themselves rather than through independent wholesalers

promotion mix (marketing communications mix)

the specific blend of promotion tools that the company uses to persuasively communicated customer value and build customer relationships

advertising

any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor

sales promotion

short-term incentives to encourage the purchase or sale of a product or service

personal selling

personal presentation by the firm's sales force for the purpose of making sales and building customer relationships

public relations

building good relations with the company's various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events

direct marketing

direct connections with carefully targeting individual consumers to both obtain an immediate response and cultivate lasting customer relationships

integrated marketing communications (IMC)

carefully integrating and coordinating the company's many communications channels to deliver a clear, consistent, and compelling message about the organization and its products

push strategy

a promotion strategy in which the sales force and trade promotion are used to \__ the product through channels by promoting the product to channel members who in turn promote it to final consumers

pull strategy

a promotion strategy in which a company spends a lot of money on consumer advertising and promotion to induce final consumers t buy the product, creating a demand vacuum that \__ the product through the channel

advertising objective

a specific communication task to be accomplished with a specific target audience during a specific period of time

advertising budget

the dollars and other resources allocated to a product or a company advertising program

affordable method

setting the promotion budget at the level management thinks the company can afford

percentage-of-sales method

setting the promotion budget at a certain percentage of current or forecasted sales or as a percentage of the unit sales price

competitive-parity method

setting the promotion budget to match competitors' outlays

objective-and-task method

developing the promotion budget by defining specific objectives, determining the tasks that must be performed to achieve these objectives, and estimating the costs of performing these tasks

advertising strategy

the plan by which the company accomplishes its advertising objectives; consists of two major elements: creating advertising messages and selecting advertising media

Madison & Vine

a term that has come to represent the merging of advertising and entertainment in an effort to break through the clutter and create new avenues for reaching consumers with more engaging messages

creative concept

the compelling big idea that will bring the advertising message strategy to life in a distinctive and memorable way

execution style

the approach, style, tone, words, and format used for executing (properly conveying) an advertising message

advertising media

the vehicles through which advertising messages are delivered to their intended audiences

return on advertising investment

the net return on advertising investment dividing by the costs of the advertising investment