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Why is cost-plus pricing wrong?
it does not factor in the prices charged by competitors. Thus, this method is likely to result in a seriously overpriced product.
What is the role of costs in pricing decisions?
Price determines the cost that may be Incurred.
how should a cost increase be reflected in pricing decisions
higher cost, higher price
What is a demand curve? The relationship between what two variables does it capture(what is on the X-axis, what is on the Y-axis)?
A demand curve or a supply curve is a relationship between two, and only two, variables: quantity on the horizontal axis and price on the vertical axis.
What is the shape of the demand curve? Does demand always decrease with price?
the demand curve is almost always represented as downward-sloping. This means that as price decreases, consumers will buy more of the good. If the price goes up, the quantity demanded goes down but demand itself stays the same).
Does lowering price increase or decrease revenues? What about profit?
Decreasing Prices to Get More Sales Can Result in Lower Profits.
How should you determine price to maximize profit? What information do you need?
compare marginal revenue and marginal cost
What is targeted pricing? Why should you use it?
Target pricing is the process of estimating a competitive price in the marketplace and applying a firm's standard profit margin to that price in order to arrive at the maximum cost that a new product can have
Why is it wrong to allocate resources (e.g., sales force, advertising budget) proportional to revenues generated (e.g., from a territory / advertising channel)?
You may put too little or too much on a focus that is not doing well which may further hinder it;s success.
What is a sales response curve? The relationship between what two variables does it capture (what is on the X-axis, what is on the Y-axis)?
shows the cause-and-effect relationship between commercial activity and sales for a particular time period. he number of sales people in a territory on the X-axis, and the revenue generated from that territory for each salesforce level in the Y-axis.
What are possible shapes of the sales response curve?
Linear, concave, convex, and S-shape
Why might the sales response curve be S-shaped?
How should you decide the optimal allocation of a fixed number of salespeople / fixed amount of advertising budget? What information do you need?
Create a marketing budget and determine your short-term and long-term marketing goals
How should you decide the optimal size of the sales force to maximize profit? What information do you need?
Divide the total revenue your sales team generates by the costs directly related to their efforts
Decision Making Under Uncertainty
Understanding probabilities as likelihood of different outcomes
Using expected value of outcomes to make decisions
What are goal hierarchies? How are they useful to understand consumer buying behaviors? How are they useful for marketing decisions?
that can be used to define the scope of your project. This by setting goals that can be brought up to date as knowledge expands. The method consists of a hierarchy with a main goal on top followed by sub-goals, project-goals, deliveries, and success criteria
What are the steps in the buying process? Do consumers go through all steps every purchase occasion? Do consumers go through the steps in the exact same sequence?
Stage #2: Information Search.
Stage #3: Evaluation of Alternatives.
Stage #4: Purchase Decision.
Stage #5: Purchase.
Stage #6: Post-Purchase Evaluation.
What is consumer purchase funnel? How is it useful?
The purchase funnel is a consumer-focused marketing model that illustrates the journey your buyers take. Most leads are not instant customers; they travel down the funnel researching, comparing, and evaluating before deciding your product or service is the one they want to use
What are perceptual maps? What are they useful for? What information is used to generate perceptual maps?
A perceptual map is a chart used by market researchers and businesses to depict and understand how target customers view and feel about a given brand or product. ... These useful charts allow organizations to understand their brand or product's competitive positioning.
Are brands that are closer to each other on the perceptual map competing more closely with one another?
What is the ideal position for a brand to be on the perceptual map? Should it be as far away as possible from all other brands?
Do perceptual maps capture importance of attributes to consumers? If not, why not and how would you capture it?
Yes they do
Does it capture consumer's preferred product? If not, why not and how would you capture it?
How are these different aspects of consumer behavior captured in Pharmasim? Which reports capture buying process? Consumer preferences? Purchase funnel?
consumer shopping reports, consumer analysis report,
What are the four key elements of a positioning statement? Given a positioning statement, you have to be able to determine whether it addresses these four key elements.
the target, the category, the differentiator, and the payoff.
Why is customer demographics not a good basis for segmenting the market?
Demographics don't predict needs and values within a particular product or service category very well. Our needs, values and preferences are much less a function of our demographic characteristics and much more a function of individual hard wiring and developmental influences.
What are the three key components of a proper segmentation scheme?
demographic, psychographic, geographic,
What is aggregation bias in the context of segmentation? How do you avoid it?
the conclusion that what is true for the group must be true for the sub-group or individual. It's called aggregation bias because you're using aggregated data and extrapolating it
What is customer lifetime value? How is it different from one-time value? What is the information needed to calculate customer lifetime value?
CLTV is the present value of the future cash flows or the value of business attributed to the customer during his or her entire relationship with the company.
What is share of wallet? How is it different from market share?
Market share is the percentage of a market that a single company controls by revenue or number of customers. Share of wallet is how much a specific customer spends on a brand relative to its competitors.
What were the two key insights Harrah's obtained from analyzing its customer reward card data?
What customers were playing which machines in Las vegas
In what ways was Harrah's tiered-reward program different than a traditional reward program? How does the tiered reward program improve customer share of wallet?
Each tier was designed to aspire customers to reach the next tier for better service.
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