mkt 302 exam 3

what marketing mix variable is the only one that can be changed rapidly?

price####what is price directly related to?

what marketing mix variable is the only one that can be changed rapidly?

price

what is price directly related to?

total revenue and profit

how should company's price goods?

matching or beating competitors, lowest price = complete effectively

pricing objectives

goals that describe what a firm wants to achieve through pricing, must be explicitly stated and in measurable terms

Stages for Establishing Prices

1. Development of pricing objectives
2. Assessment of target market's evaluation of price
3. determination of demand
4. analysis of demand, cost, and profit relationships
5. evaluation of competitors' prices
6. selection of a basis of pricing
7. selection of a pricing strategy
8. determination of a specific price

Examples of pricing objectives

profit, ROI, increase sales, market share, cash flow, etc.

importance of price varies depending on:

type of product, target market, purchase situation

what should marketer's know about evaluation of price?

customers' quality and value expectations

demand curve

A graph of the quantity of products a firm expects to sell at various prices if other factors remain constant

demand depends on what factors in marketing mix?

quality, promotion, and distribution

what factors can influence demand?

changes in buyers' needs, variations in effectiveness of other marketing mix variables, presence of substitutes (competition), dynamic environment

how can organizations set prices effectively?

set prices by anticipating demand fluctuations

price elasticity of demand

a measure of the sensitivity of demand to changes in price

elasticity

the percentage change in quantity demanded or supplied as a result of a one percent change in price

elastic demand

change in price causes an opposite change in total revenue

inelastic demand

total revenue changes in the same direction as the price

marginal analysis

examines what happens to a firm's costs and revenues when production or sales changes by one unit

fixed costs

do not vary with change in number of units sold or produced

variable costs

vary directly with changes in the number of units produced or sold

Appropriate pricing basis is affected by:

-type of product
-market structure of the industry
-brand's market share position relative to competing brands
-customer characteristics

demand-based pricing

pricing based on the level of demand for the product

pricing strategy

a course of action designed to achieve pricing objectives

new-product pricing

price skimming, penetration pricing

differential pricing

negotiated pricing, secondary market pricing, periodic discounting, random discounting

psychological pricing

-Odd-number pricing
-Multiple-unit pricing
-Reference pricing
-Bundle pricing
-Everyday low prices
-Customary pricing

product line pricing

captive pricing, premium pricing, price lining

promotional pricing

Price leaders, Special-event pricing, Comparison discounting

price skimming

charging the highest possible price that buyers who most desire the product will pay

penetration pricing

setting prices below those of competing brands to penetrate a market and gain a significant market share quickly

differential pricing

charging different prices to different buyers for the same quality and quantity of product

negotiated pricing

establishing a final price through bargaining between seller and customer

periodic discounting

temporary reduction of prices on a patterned or systematic basis

random discounting pricing

temporary reduction of prices on an unsystematic basis

odd-number pricing

Setting prices using odd numbers that are slightly below whole-dollar amounts

multiple-unit pricing

packaging together two or more units of a product and selling them at a single price

reference pricing

pricing a product at a moderate level and displaying it next to a more expensive model or brand

bundle pricing

Packaging together two or more complementary products and selling them at a single price

everyday low prices (EDLP)

pricing products low on a consistent basis

customary pricing

pricing certain goods on the basis of tradition

captive pricing

selling the primary product cheaply and pricing refills high

price leaders

products priced below the usual markup, near cost, or below cost

special-event pricing

advertised sales or price cutting linked to a holiday, season, or event

comparison discounting

setting a price at a specific level and comparing it with a higher price

Distribution

The decisions and activities that make products available to customers when and where they want to purchase them

supply chain

activities associated with the flow and transformation of products from raw materials through to the end customer

Operations Management

The total set of managerial activities used by an organization to transform resource inputs into products, services, or both

logistics management

Planning, implementing, and controlling the efficient and effective flow and storage of products and information from the point of origin to consumption to meet customers' needs and wants

supply management

The processes that enable the progress of value from raw materials to final customer and back to redesign and final disposition

Supply Chain Management

A set of approaches used to integrate the functions of operations management, logistics management, supply management, and marketing channel management so products are produced and distributed in the right quantities, to the right locations, and at the right time

marketing channel

is a group of individuals and/or organizations that direct & manage the flow of producers from producers to customers within the supply chain

what is the primary role of supply chain?

make products available at the right time, at the right place, and in the right quantities

marketing intermediaries

Link producers to other intermediaries or to ultimate consumers through contractual arrangements or through the purchase and resale of products

utility

the state of being useful, profitable, or beneficial.

time utility

making products available when the customer wants them

place utility

making products available in locations where customers wish to purchase them

possession utility

customer has access to the product to use or to store for future use

form utility

assembling, preparing, or otherwise refining the product to suit individual customer needs

intensive distribution

uses all available outlets for distributing a product (convince products)

selective distribution

uses only some available outlets in an area to distribute a product (shopping products)

exclusive distribution

Uses a single outlet in a fairly large geographic (products purchased infrequently)

intensive distribution

convenience products such as Coke, Duracell, etc. available in many retail outlets

selective distribution

shopping products such as iPhones, TVs, etc. available in some retail outlets

exclusive distribution

specialty products such as Mercedes, Sephora, etc. available in very few specialized outlets

what are strategic issues in marketing channels?

competitive priorities in marketing channels, channel leadership/cooperation/conflict, channel integration

what are benefits of an effective supply chain?

can provide a competitive advantage for many marketers, can maintain a strong market orientation, use resources effectively

channel power

the ability of one channel member to influence another member's goal achievement & activities

channel captain

the dominant leadership of a marketing channel or a supply chain

what is channel cooperation?

enables retailers, wholesalers, suppliers, and logistics providers to speed up inventory replenishment, improve customer service, cut the costs of bringing products to customers

physcial distribution

(also known as logistics) activities used to move products from producers to consumers and other end users (supply chain and environmental impact)

cycle time

the time needed to complete a process

inventory management

developing and maintaining adequate assortments of products to meet customers' needs

stockouts

shortages of products

reorder point

inventory level that signals the need to place a new order (order lead time x usage rate) + safety stock

order lead time

average time lapse between placing the order and receiving it

usage rate

rate at which inventory is used/sold

safety stock

extra inventory a firm keeps

just-in-time (JIT)

supplies arrive just as they are needed for use in production or for resale

integrated marketing communications (IMC)

coordination between promotion and other marketing efforts in communicating with customers

what is the goal with IMC?

to send consistent messages to customers, enable synchronization of promotion elements, improve efficiency and effectiveness of promotion budgets, foster long-term customer relationships

IMC is

the right mix of communication vehicles and integration to accomplish your objectives, most cost-effective marketing program, and all messages/themes/ graphics are consistent and coordinated

synergy

the creation of a whole that is greater than the sum of its parts

communication

using words, sounds, symbols, signs or behaviors to deliver information to someone else

source

A person, group, or organization with a meaning it tries to share with a receiver or an audience

receiver

The individual, group, or organization that decodes a coded message

coding process

converting signs or symbols into specific meaning (interpretation, perception is reality)

communications vehicles (channel)

the way a coded message from the source is delivered to the reciever

decoding process

converting signs or symbols into concepts and ideas

noise

anything that reduces a communication's clarity and accuracy

feedback

receiver's response to a decoded message

vehicle (channel) capacity

limit on the volume of information a communications vehicle* can handle effectively

objectives of IMC

create awareness, stimulate demand, encourage product trial, identify prospects, stimulate word of mouth

create awareness

retain loyal customers and reach new ones

primary demand

demand for a product category rather than for a specific brand

selective demand

demand for a specific brand

encourage product trial

challenge competitors' promotions

identify prospects

reduce sales fluctuations

stimulate word of mouth

generate positive social media posts

why is reseller support important?

producers support resellers so resellers will sell their products throughout the supply chain

promotion mix

a combination of promotional methods used to promote a specific product