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The observation that consumers are generally more sensitive to price increases than to price decreases, suggests:

it is easier to lose customers with a price increase than gain customers with a price decrease.

For which of the following is demand likely to be most sensitive to price increases?

One brand of soft drink beverage.

Marketers spend millions of dollars annually trying to create or reinforce brand loyalty. Brand loyalty changes the demand curve for the firm's products:

reducing the price elasticity of demand for their product.

Assume the demand for electricity, a necessity good with few substitutes, is -0.2. If the electric company raised its rates by 10 percent, we would expect:

a 2 percent decrease in quantity demanded.

Which of the following is the most logical example of complementary products?

Hot dogs and hot dog rolls

When making a purchase decision, consumers do not care what costs a firm incurs. They weigh:

the sacrifice they must incur versus the benefits they expect to receive.

If a 1 percent decrease in price results in more than a 1 percent increase in quantity demand, demand is:

price elastic.

If the Amador County Pest Control Association got together and all members agreed to charge 3 percent of the value of a home for a termite inspection letter, the association members would be engaging in:

horizontal price fixing.

A reference price might be considered deceptive if:

the reference point has been inflated or is fictitious.

_______________ is the practice of colluding with other firms to control prices.

Price fixing

sometimes, what consumers perceive as bait and switch marketing, advertising a low priced product and then only having a higher priced models, is in fact:

a miscommunication in the supply chain

there is no faster way to lose credibility with customers than to promise deliveries or run a promotion and not have the item when the customer expects it.

the importance of place in the four P's is best illustrated by what statement?

by reducing the number of transactions needed to move a product from the manufacturer to the customer, wholesalers and retailers make a supply chain:

more efficient

the reduce the need for inventory, EDI systems can reduce_____, the amount of time between the recognition that an order needs to be placed and the arrival of merchandise ready for sale

lead times

when Brian took over the position of puchasing manager for Gray Lumber Co, a regional retail and contractor's building materials supply company, he found a JIT system in place, but frequent problems. shipments were often late and without communication from the company's vendors and only superficial attempts to address problems. for companies like gray lumber, the critical factor in having a successful JIT system is

cooperation

the overall sacrifice a consumer is willing to make--money, time, energy--to acquire a specific product or service

price

a company objective that can be implemented by focusing on target profit pricing, maximizing profits, or target return pricing

profit orientation

A pricing strategy implemented by firms when they have a particular profit goal as their overriding concern; uses price to stimulate a certain level of sales at a certain profit per unit

target profit pricing

a profit strategy that relies primarily on economic theory. if a firm can accurately specify a mathematical model that captures all the factors required to explain and predict sales and profits, it should be able to identify the price at which its profits are maximized

maximizing profit

a pricing strategy implemented by firms less concerned with the absolute level of profits and more interested in the rate at which their profits are generated relative to their investments; designed to produce a specific return on investment, usually expressed as a percentage of sales

target return pricing

a company objective based on the belief that increasing sales will help the firm more than will increasing profits

sales orientation

a competitor based pricing method by which the firm deliberately prices a product above the prices set for competing products to capture those consumers who always shop for the best or for whom price does no matter

premium pricing

a company objective based on the premise that the firm should measure itself primarily against its competition

competitor orientation

a firm's strategy of setting prices that are similar to those of major competitors

competitive parity

a competitor oriented strategy in which a firm changes prices only to meet those of the competition

status quo pricing

a company objective based on the premise that the firm should measure itself primarily according to whether it meets its customers' needs

customer orientation

shows how many units of a product or service consumers will demand during a specific period at different prices

demand curve

those that consumers purchase for status rather than functionality

prestige products or services

measures how changes in a price affect the quantity of the product demanded; specifically, the ratio f the percentage change in quantity demanded to the percentage change in price

price elasticity of demand

refers to a market for a product or service that is price sensitive; that is, relatively small changes in price will generate fairly large changes in the quantity demanded

elastic

refers to a market for a product or service that is price insensitive; that is, relatively small changes in price will not generate large changes in the quantity demanded

inelastic

refers to the change in the quantity of a product demanded by consumers due to a change in their income

income effect

refers to consumers' ability to substitute other products for the focal brand, thus increasing the price elasticity of demand for the focal brand

substitution effect

the percentage change in demand for product A that occurs in response to a percentage change in price of product B; see complementary products

cross price elasticity

products whose demand curves are positively related, such that they rise or fall together; a percentage increase in demand for one results in a percentage increase in demand for the other

complementary products

products for which changes in demand are negatively related; that is, a percentage increase in the quantity demanded for a product A results in a percentage decrease in the quantity demanded for product B

substitute products

those costs, primarily labor and materials, that vary with production volume

variable costs

those costs that remain essentially at the same level, regardless of any changes in the volume of production

fixed costs

the sum of the variable and fixed costs

total cost

technique used to examine the relationships among cost, price, revenue and profit over different levels of production and sales to determine the break even point

break-even analysis

the point at which the number of units sold generates just enough revenue to equal the total costs; at this point, profits are zero

break even point

equals the price less the variable cost per unit. variable used to determine the break-even point in units

contribution per unit

occurs when only a few firms dominate a market

oligopolistic competition

occurs when two or more firms compete primarily by lowering their prices

price war

occurs when there are many firms that sell closely related but not homogeneous products these products may be viewed as substitutes but are not perfect substitutes

monopolistic competition

occurs when different companies sell commodity products that consumers perceive as substitutable; price usually is set according to the laws of supple and demand

pure competition

a socially responsible movement that ensures that producers receive fair prices for their products

fair trade

employs irregular but not necessarily illegal methods; generally, it legally circumvents authorized channels of distribution to sell goods at prices lower than those intended by their manufacturer

gray market

an attempt by a vendor to dictate or control the retail price

retail price maintenance (RPM)

the pattern of buying both premium and low priced merchandise or patronized both expensive, status-oriented retailers and price orientated retailers

cross-shopping

loss leader pricing take the tactic of leader pricign one step further by lowering the price below the stores cost

loss leader pricing

a deceptive practice of luring customers into the store with a very low advertised price on an item (the bait), only aggressively pressure them into purchasing a higher priced model (the switch) by disparaging the low priced item, comparing it unfavorably with the higher priced model, or professing an inadequate supply of the lower priced item

bait and switch

a firm's practice of setting a very ow price for one or more of its products with the intent to drive its competition out of business; illegal under botht he Sherman Act and the Federal Trade Commission Act

predatory pricing

the practice of selling the same product to different resellers (wholesalers, distributors, or retailers) or to the ultimate consumer at different prices; some, but not all, forms of price discrimination are illegal

price discrimination

the practice of colluding with other firms to control prices

price fixing

occurs when competitors that produce and sell competing products collude, or work together, to control prices, effectively taking price out of the decision process for consumers

horizontal price fixing

occurs when parties at different levels of the same marketing channel (e.g. manufacturers and retailers) collude to control the prices passed to consumers

vertical price fixing

refers to a set of approaches and techniques firms employ to efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores, and transportation intermediaries into a seamless value chain in which merchandise is produced and distributed in the right quantities, to the right locations, and at the right time, as well as to minimize system-wide costs while satisfying the service levels their customers require

supply chain management

those firms engaged in buying, taking title to, often storing, and physically handling goods in large quantities, then reselling the goods (usually in smaller quantities) to retailers or industrial or business users

wholesalers

the set of institutions that transfer the ownership ofand move goods from the point of production to the point of consumption; consists of all the institutions and marketing activities in the marketing process

marketing channel

the integration of two or more activities for the purpose of planning, implementing, and controlling the efficient flow of raw materials, in process inventory, and finished goods from the point of origin to the point of consumption

logistic management

a facility for the receipt, storage, and redistribution of goods to company stores or customers; may be operated by retailers, manufacturing, or distribution specialists

distribution channel

the black and white bar code found on most merchandise

universal product code (UPC)

an electronic document that the supplier sends the retailer in advance of a shipment to tell the retailer exactly what to expect in the shipment

advanced shipping notice

the computer to computer exchange of business documents from a retailer to a vendor and back

electronic data interchange (EDI)

a secure communication system contained within one company, such as between the firms buyers and distribution centers

intranet

a collaborative network that uses internet technology to link businesses with their suppliers, customers, or other businesses

extranet

the time between the decision to place an order and the receipt of merchandise

cycle time

an approach for improving supply chain efficiency in which the manufacturer is responsible for maintaining the retailers inventory levels in each of its stores

vendor managed inventory (VMI)

the stock level at which a new order is placed

reorder point

an inventory management system that uses an EDI throuh which a retailer sends sales information to a manufacturer

collaborative planning, forecasting, and replenishment (CPFR)

strategy in which orders for merchandise are generated at the store level on the basis of demand data captured by POS terminals

pull supply chain

strategy in which merchandise is allocated to stores on the basis of historical demand, the inventory position at the distribution center, and the stores' needs

push supply chain

the person who coordinates deliveries to distribution centers

dispatcher

the process of recording the receipt of merchandise as it arrives at a distribution center or store

receiving

the process of going through the goods upon receipt to ensure they arrived undamaged and that the merchandise ordered was the merchandise received

checking

tiny computer chips that automatically transmit to a special scanner all the information about a containers contents or individual products

radio frequency identification (RFID) tags

cross-docked

a distribution method whereby merchandise is unloaded from the shippers' truck and within a few hours reloaded onto trucks going to stores. these items are prepackaged by the vendor for a specific store

floor ready merchandise

merchandise that is ready to be placed on the selling floor immediately

ticketing and marking

creating price identification labels and placing them on the merchandise

pick ticket

a document or display on a screen in a forklift truck indicating how much of each item to get from specific storage areas

just in time (JIT) inventory systems

inventory management systems designed to deliver less merchandise on a more frequent basis than traditional inventory systems; the firm gets the merchandise "just in time" for it to be used in the manufacture of another product, in the case of parts or components, or for sale when the customer wants it, in the case of consumer goods; aka quick response(QR) systems in retailing

quick response

an inventory management system used in retailing; merchandise is received just in time for sale when the customer wants it; see JIT systems

lead time

the amount of time between the recognition that an order needs to be placed and the arrival of the needed merchandise at the seller's store, ready for sale

supply chain

the group of firms that make and deliver a give set of goods and services

channel conflict:

the conflict occurs when supply chain members are not in agreement about their goals, roles or rewards

independent (conventional) supple chain

a loose coalition of several independently owned and operated supply chain members--a manufacturer, a wholesaler, and a reailer--all attempting to satisfy their own objectives and maximize their own profits, often at the expense of the other members

vertical marketing system

a supply chain in which the members act as a unified system; there are 3 types: administrated, contractual, and corporate

administered vertical marketing system

a supply chain system in which there is no common ownership and no contractual relationships, but the dominant channel member controls the channel relationship

contractual vertical marketing system

a system in which independent firms at different levels of the supply chain join together through contracts to obtain economies of scale and coordination and to reduce conflict

franchising

a contractual agreement between a franchisor and a franshisee that allows the franchisee to operate a business using a name and format developed and supported by the franchisor

corporate vertical marketing system

a system in which the parent company has complete control and can dictate the priorities and objectives of the supply chain; it may own facilities, retail outlets, and design studios

strategic relationship (partnering relationship)

a supply chain relationship that the members are committed to maintaining long term, investing in opportunities that are mutually beneficial; requires mutual trust, open communication, common goals, and credible commitments

CPFR.

General Mills (manufacturer of a variety of food products) might engage Target, Costco, Wal-Mart and Kroger in a:

each party wants something from the other.

The basic motivating factor in designing supply chains is:

reduce inventories needed to satisfy retailers' demand.

Because manufacturers with JIT systems produce merchandise closer to the time of sale, they can

quick-response

In retailing, a just-in-time delivery system is called a _____________ system.

Customers will send and receive information from stores and manufacturers.

In addition to merchandise and payments, information flows throughout a supply chain. Which of the following is NOT a good characterization of the flow of information in a supply chain?

Noise

Which of the following is NOT a communication channel used in the IMC process?

focus his efforts on his customer target markets.

Gerald knows which IMC communication channels are available and knows how he will measure the results of his IMC efforts. To implement his IMC efforts, Gerald also needs to:

receiver

In the IMC communication process, the _____________________ is the person who reads, hears, or sees and processes the message being communicated

Awareness stage.

In the AIDA model, the "think" stage is the:

transmitter

In the IMC communication process, the _____________________ develops the marketing communication message.

have customers post reviews and comments about the products and services

Companies can gain a competitive advantage using the Internet to:

Direct marketing

Darren wanted to develop an Internet marketing effort for his small publishing firm. He knew, however, that he did not want to use the kind of advertising that would look like spam, so he was looking at other IMC components. Which would give him the best opportunity to generate responses and transactions?

free samples and point-of-purchase displays

Karen manages cosmetic counters in a regional department store chain. She wants to increase sales during the summer, hoping that will generate repeat business during the holiday season. Because Karen is selling personal care products in a department store, she will most likely use __________________ sales promotions.

corporate blog

A _________________ can be used to create positive word of mouth, help customers form a community and develop long-term relationships between customers and the company.

Personal selling

______________________ could involve face-to-face, video teleconferencing, telephone or Internet communication and interaction between a buyer and a seller.

Integrated marketing communications (IMC)

represents the promotion dimensions of the four Ps; encompasses a variety of communication disciplines--general advertising, personal selling, sales promotion, public relations, direct marketing, and electronic media--in combination to provide clarity, consistency, and maximum communicative impact

sender

the firm from which an IMC message originates; the sender must be clearly identified to the intended audience

transmitter

an agent or intermediary with which the sender works to develop the marketing communications; for example, a firm's creative department or an advertising agency

encoding

the process of converting the sender's ideas into a message, which could be verbal, visual or both

communication channel

the medium--print, broadcast, the internet--that carries the message

receiver

the person who reads, hears, or sees and processes the information contained in the message or advertisement

decoding

the process by which the receiver interprets the senders message

noise

any interference that stems from competing messages, a lack of clarity in the message, or a flaw in the medium; a problem for all communication channels

feedback loop

allows the receiver to communicate with tender and thereby informs the sender whether the message was received and decoded properly

AIDA model

a common model of the series of mental stages through which consumers move as a result of marketing communications: awareness leads to interests, which leads to desires which leads to actions

Brand awareness

measures how many consumers in a market are familiar with the brand and what it stands for; created through repeated exposures of the various brand elements (brand name, logo, symbol, character, packaging, or slogan) in the firm's communications to consumers

aided recall

occurs when consumers recognize a name (e.g. of a brand) that has been presented to them

top-of-the-mind awareness

a prominent place in people's memories that triggers a response without them having to put any thought into it

lagged effect

a delayed response to a marketing communication campaign

advertising

a paid form of communication from an identifiable source, delivered through a communication channel, and designed to persuade the receiver to take some action, now or in the future

personal selling

the 2 way flow of communication between a buyer and a seller that is designed to influence the buyer's purchase decision

sales promotions

special incentives or excitement-building programs that encourage the purchase of a productt or service, such as coupons, rebates, contests, free samples, and point of purchase displays

direct marketing

sales and promotional techniques that deliver promotional materials individually to potential customers

m-commerce (mobile commerce)

communicating with or selling to consumers through wireless hand-held devices such as cellular phones

public relations

the organizational function that manages the firm's communications to achieve a variety of objectives, including building and maintaining a positive image, handling or heading off unfavorable stories or events, and maintaining positive relationships with the media

blog (weblog or web log)

a web page that contains periodic posts; corporate blogs are a new form of marketing communications

social shopping

the use of the internet to communicate about product preferences with other shoppers

objective-and -task method

an IMC budgeting method that determines the cost required to undertake specific tasks to accomplish communication objectives; process entails setting objectives, choosing media, and determining costs

rule-of-thumb

budgeting methods that base the IMC budget on either the firm's share of the market in relation to competition, a fixed percentage of forecasted sales, or what is left after other operating costs and forecasted sales have been budgeted

competitive parity

a firm's strategy of setting prices that are similar to those of major competitors

percentage of sales

a method of setting an IMC budget based on a fixed percentage of forecasted sales

affordable budget

a method of setting an IMC budget in which the firm first forecasts their sales and expenses, excluding IMC. the difference between the forecasted sales and expenses plus desired profit is reserved for the IMC budget

frequency

measure of how often the audience is exposed to a communication within a specific period of time

reach

measure of consumers' exposure to marketing communications; the percentage of the target population exposed to a specific marketing communication, such as an advertisement, at least once

gross rating points (GRP)

measure used for various media advertising--print, radio, or TV; GRP= reach X frequency

web tracking software

used to assess how much time viewers spend on particular Web pages and the number of pages they view

Click-through tracking

a way to measure how many times users click on banner advertising on Web sites

online couponing

a promotional web technique in which consumers print a coupon directly from a site and then redeem the coupon in a store

online referring

a promotional web technique in which consumers fill out an interest or order form and are referred to an offline dealer or firm that offers the product or service of interest

search engine marketing (SEM)

a tool that allows firms to show up in searches based on the keywords potential customers use

click-through rate (CTR)

an online measure of reach, CTR equals the number of times a potential customer clicks on an ad divided by the number of impressions

impressions

the number of times and online ad appears in front of a user

relevance

describes how useful an ad message is to a consumer doing an internet search

networking.

It is not easy to break into markets where trust between the seller and buyer is extremely important. An effective way to generate leads used by professionals and those selling services is:

Follow-up

________________ stage in the personal selling process corresponds to the performance assessment stage in the B2B selling process.

where the customer is in their buying process.

Like any effective salesperson, Frazer walks into a customer's office, shakes hands, looks the customer in the eye, and smiles. After exchanging pleasantries, Frazer will try to create interest his company's product, and establish:

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