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Terms in this set (174)
The amount of money charged for a product or service
Supply and Demand
Price is determined by:
Customer value-based pricing
Setting price based on buyers' perceptions of value rather than on the seller's cost.
Good value pricing
Offering just the right combination of quality and good service at a fair price.
Every Day Low Pricing
charging a constant, everyday low price with few or no temporary price discounts
Ex: Walmart, Aldi's
High Low Pricing
charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items
Attaching value-added features and services to differentiate a company's offers and charging higher prices.
Setting prices based on the costs of producing, distributing, and selling the product plus a fair rate of return for effort and risk.
Sellers are certain about costs
Price competition is minimized
Buyers feel it is fair
Pros of cost-based pricing method
Ignores demand and competitor pricing
Doesn't cover customer's value perception
Cons of cost-based pricing methods
Fixed costs (overhead)
costs that do not vary with production or sales level
fixed cost + variable cost
Total cost = ___________ + _____________
Costs that vary directly with the level of production
The sum of the fixed and variable costs for any given level of production
Experience (learning) curve
The drop in the average per-unit production cost that comes with accumulated production experience
Cost-plus pricing (markup pricing)
Adding a standard markup to the cost of the product
Variable cost + (fixed cost/unit sales)
With the Cost-plus pricing method, unit cost =
unit cost/(1 - desired return on sales)
With the Cost-plus pricing method, markup price =
Setting price to break even on the costs of making and marketing a product or setting price to make a target return.
The amount of units needed to be sold in order for total revenue to cover total cost
Competition based pricing
Setting prices based on competitors' strategies, prices, costs, and market offerings
Marketing skimming pricing
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 fewer but more profitable sales
Market penetration pricing
Setting a low price for a new product in order to attract a large number of buyers and a large market share
Product line pricing
Product bundle pricing
Product Mix pricing strategies
Demand is sensitive to price changes means it has
Demand is not sensitive to price changes means it has
Price Adjustment Strategies
A straight reduction in price on purchases during a stated period or time or larger quantities
Promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer's products in some way
Selling a product or service at two or more prices, where the difference in prices is not based on differences in costs
Pricing that considers the psychology for prices and not simply the economics; the price is used to say something about the product.
Prices that buyers carry in their minds and refer to when they look at a given product.
Temporarily pricing products below the list price, and sometimes even below cost, to increase short-run sales
Setting prices for customers located in different parts of the country or world
FOB origin pricing
Pricing in which goods are placed free on board a carrier; the customer pays the freight from the factory to the destination.
Pricing in which the company charges the same price plus freight to all customers, regardless of their location.
Pricing in which the company sets up two or more zones. All customers within a zone pay the same total price; the more distant the zone, the higher the price.
Pricing in which the seller designates some city as a basing point and charges all customers the freight cost from that city to the customer.
Pricing in which the seller absorbs all or part of the freight charges in order to get the desired business.
Adjusting prices continually to meet the characteristics and needs of individual customers and situations.
The specific blend of promotion tools that the company uses to persuasively communicate customer value and build customer relationships.
Any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor
Short-term incentives to encourage the purchase or sale of a product or a service.
Personal presentation by the firm's sales force for the purpose of engaging customers, making sales, and building customer relationships.
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 and digital marketing
Engaging directly with carefully targeted individual consumers and customer communities to both obtain an immediate response and build lasting customer relationships.
Creating, inspiring, and sharing brand messages and conversations with and among consumers across a fluid mix of paid, owned, earned, and shared channels.
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.
Paid, owned, earned, shared
Four major types of media:
Promotional channels are paid for by marketer
Promotional channels are owned by the marketer
PR media channels, such as television, newspapers, blogs, online video sites, and other media not directly paid for or controlled by the marketer but that include the content because of viewer, reader, or user interest.
Media shared by consumers with other consumers, such as social media, blogs, mobile media, and viral channels as well as traditional word-of-mouth.
Elements in the communication process
the party sending the message to another party
the process of putting thoughts into symbols, most commonly words
the set of symbols that the sender transmits
The communication channels through which the message moves from the sender to the receiver
The process by which the receiver assigns meaning to the symbols encoded by the sender
The party receiving the message sent by another party
The reactions of the receiver after being exposed to the message
The part of the receiver's response communicated back to the sender
The unplanned static or distortion during the communication process, which results in the receiver getting a different message than the one the sender sent
Process buyer goes through on their way towards a purchase
Buyer Readiness Stages
'AIDA' in the AIDA model stands for
personal communication channels
Channels through which two or more people communicate directly with each other, including face-to-face, on the phone, via mail or email, or even through an internet "chat."
Word of mouth influence
The impact of the personal words and recommendations of trusted friends, family, associates, and other consumers on buying behavior.
Cultivating opinion leaders and getting them to spread information about a product or a service to others in their communities.
Nonpersonal Communication Channels
Media that carry messages without personal contact or feedback, including major media, atmospheres, and events.
Percentage of sales method
Competitive parity method
Promotional budget methods
Affordable method (promotional budget)
Setting the promotion budget at the level management thinks the company can afford
Often prioritizes marketing as last
Hard to set long-term market plans
Percentage of sales method (promotional budget)
Setting the promotion budget at a certain percentage of current or forecasted sales or as a percentage of the unit sales price.
Sees profit/sales as the cause of promotion, when it should be the effect of promotion
Based on availability of funds, not opportunities
Competitive-parity method (promotional budget)
Setting the promotion budget to match competitors' outlays
Objective-and-task method (promotional budget)
Developing the promotion budget by
(1) defining specific promotion objectives
(2) determining the tasks needed to achieve these objectives
(3) estimating the costs of performing these tasks.
The sum of these costs is the proposed promotion budget
'Push' promotion mix strategy
A promotion strategy that calls for using the sales force and trade promotion to push the product through channels. The producer promotes the product to channel members who in turn promote it to final consumers.
'Pull' promotion mix strategy
A promotion strategy that calls for spending a lot on consumer advertising and promotion to induce final consumers to buy the product, creating a demand vacuum that "pulls" the product through the channel.
Digital and social media marketing
Using digital marketing tools such as websites, social media, mobile apps and ads, online video, email, and blogs that engage consumers anywhere, anytime via their digital devices.
Marketing via the internet using company websites, online ads and promotions, email, online video, and blogs.
A website that engages consumers to move them closer to a direct purchase or other marketing outcome.
Brand community websites
A website that presents brand content that engages consumers and creates customer community around a brand.
Advertising that appears while consumers are browsing online, including display ads, search-related ads, online classifieds, and other forms
Sending highly targeted, highly personalized, relationship-building marketing messages via email.
Unsolicited, unwanted commercial email messages.
The digital version of word-of-mouth marketing: videos, ads, and other marketing content that is so infectious that customers will seek it out or pass it along to friends.
Online forums where people and companies post their thoughts and other content, usually related to narrowly defined topics.
Independent and commercial online social networks where people congregate to socialize and share messages, opinions, pictures, videos, and other content.
Marketing messages, promotions, and other content delivered to on-the-go consumers through their mobile devices.
Identify target audience
Design the message
Choose media to send message
Collect feedback and improve the plan
Integrated marketing communications (IMC) steps
All the activities involved in selling goods or services directly to final consumers for their personal, nonbusiness use
A business whose sales come primarily from retailing.
Focusing the entire marketing process on turning shoppers into buyers as they approach the point of sale, whether during in-store, online, or mobile-shopping
Creating a seamless cross-channel buying experience that integrates in-store, online, and mobile shopping
serve customers who are willing to perform their own locate-compare-select process to save time or money
Limited service retailers
provide more sales assistance because they carry more shopping goods about which customers need information; increased operating costs thus higher prices; examples - Sears, JCPenny
Full service retailers
assist customers in every phase of the shopping process; usually carry more specialty goods; examples - Nordstrom, Neiman Marcus
A retail store that carries a narrow product line with a deep assortment within that line.
A retail store that carries a wide variety of product lines, each operated as a separate department managed by specialist buyers or merchandisers
A large, low-cost, low-margin, high-volume, self-service store that carries a wide variety of grocery and household products.
A small store, located near a residential area, that is open long hours seven days a week and carries a limited line of high-turnover convenience goods
A store much larger than a regular supermarket that offers a large assortment of routinely purchased food products, nonfood items, and services
A giant specialty store that carries a very deep assortment of a particular line; examples - BestBuy, Petco, Bed Bath N Beyond
A retailer whose product line is actually a service; examples include hotels, airlines, banks, colleges, and many others.
A retail operation that sells standard merchandise at lower prices by accepting lower margins and selling at higher volume;
Ex: dollar general
Off price retailers
A retailer that buys at less-than-regular wholesale prices and sells at less than retail
Ex: TJMaxx, Homegoods, Marshalls
An off-price retailing operation that is owned and operated by a manufacturer and normal carries the manufacturers surplus, discounted, or irregular goods
An off-price retailer that sells a limited selection of brand name grocery items, appliance, clothing, and other goods at deep discounts to members who pay annual membership fees
Types of Retail Organizations
Two or more outlets that are commonly owned and controlled.
a wholesaler-sponsored group of independent retailers that engages in group buying and common merchandising;
Ex: Western Auto, Independent Grocer Association, True Value Hardware Stores
a group of independent retailers that bands together to set up a jointly owned, central wholesale operation and conduct joint merchandising and promotion efforts;
Ex: Associated Grocers, Ace Hardware
A contractual association between a manufacturer, wholesaler, or service organization (a franchisor) and independent businesspeople (franchisees) who buy the right to own and operate one or more units in the franchise system
A group of retail businesses built on a site that is planned, developed, owned, and managed as a unit.
Merging of consumers, products, prices, and retailers
The shopping practice of coming into retail store showrooms to check out merchandise and prices but instead buying from an online-only rival, sometimes while in the store
Value delivery network
A network composed of the company, suppliers, distributors, and, ultimately, customers who partner with each other to improve the performance of the entire system in delivering 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.
Information - Gathering/analyzing research and intelligence
Promotion - Persuading consumers to buy product
Contact - Meeting potential buyers
Matching - Adjusting product offer to meet buyer's needs
Negotiation - Reaching agreement on price
Members of the marketing channel help complete transactions by
Physical distribution - Transporting goods
Financing - Funding the costs of the channel work
Risk taking - Assuming risks/responsibility of channel work
Members of the marketing channel help fulfill completed transactions by:
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
Ex: Geico, AMWAY
Indirect marketing channel
A marketing channel containing one or more intermediary levels.
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.
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.
Stocking the product in as many outlets as possible
Giving a limited number of dealers the exclusive right to distribute the company's products in their territories.
The use of more than one but fewer than all of the intermediaries that are willing to carry the company's products.
Marketing channel management
Selecting, managing, and motivating individual channel members and evaluating their performance over time.
The number of intermediaries that a product has to go through before it reaches the final consumer.
How easy it is for retailer to connect to consumer
The number of outlets available to consumers.
Customer's willingness to travel and search for product.
Retailers are the ______ to the customer
True/False: Retailers have leverage over vendors
In retail marketing, retailers should _______ and _______ their target markets, then _________ and _________ themselves in those markets
When making marketing decisions, retailers must decide on three major product variables that helped differentiate themselves from competitors:
Retailing approach that encompasses all contemporary methods used to engage customers at emotional, sensory, and participatory levels as they shop
Retailer promotion tools:
Retail service strategies:
High mark ups on low volume
Specialty stores usually use this pricing strategy:
Low markups on high volume
Mass merchandiser and discount stores usually use this pricing strategy:
Number/assortment of product lines
Amount of product information
Amount of product customization
Complexity of product offering is determined by:
New Product Development
The development of original products, product improvements, product modifications, and new brands through the firm's own product development efforts.
Radically new innovations
A new product introduced to the world
Sequential product development
involves one team conducting all of the stages in development, making it easy to undertake complex/risky projects
The systematic search for new product ideas.
Research and Development
Sources for Internal Ideas
Sources for External Ideas
Inviting broad communities of people—customers, employees, independent scientists and researchers, and even the public at large—into the new product innovation process.
Screening new product ideas to spot good ones and drop poor ones as soon as possible.
an idea for a possible product that the company can see itself offering to the market
a detailed version of the idea stated in meaningful consumer terms
the way consumers perceive an actual or potential product
Testing new product concepts with a group of target consumers to find out if the concepts have strong consumer appeal.
Marketing strategy development
Designing an initial marketing strategy for a new product based on the product concept
Product's planned price
Planned sales and profit goals
Three parts of market strategy development
A review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the company's objectives.
Developing the product concept into a physical product to ensure that the product idea can be turned into a workable market offering.
The stage of new product development in which the product and its proposed marketing program are tested in realistic market settings.
Simulated test markets
Researchers measure consumer responses to new products and marketing tactics in laboratory stores or simulated online shopping environments
Overestimate Market Size
Incorrectly positioned in market
Product developments costs are too high
Competitors fight back harder than expected
Why do most products fail?
Customer centered new product development
New product development that focuses on finding new ways to solve customer problems and create more customer-satisfying experiences
Product life cycle
The course of a product's sales and profits over its lifetime.
Introduction phase (PLC)
Period of slow sales growth; no profits at this stage
Focus on increasing brand awareness
Growth phase (PLC)
Period of rapid market acceptance and increasing profits
Maturity phase (PLC)
period of slowdown in sales growth because the product has achieved acceptance by most potential buyers.
Decline phase (PLC)
When sales fall off and profits drop
A basic and distinctive mode of expression.
A currently accepted or popular style in a given field.
A temporary period of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity.
1. Idea generation
2. Idea screening
3. Concept development & testing
4. Marketing strategy development
5. Business analysis
6. Product development
7. Test marketing
Major Stages in New Product Development
True/False: Team-based product development is slower than sequential product development
Capital investments required to commercialize
Business analysis includes a detailed review of:
Standard test markets
Small representative markets where the firm conducts a full marketing campaign and uses store audits, consumer and distributor surveys, and other measures to gauge product performance
Results are used to forecast national sales and profits, discover product problems, and fine-tune the marketing program.
Controlled test markets
Panels of stores that have agreed to carry new products for a fee.
Less expensive and faster
But competitors gain access to the new product
OTHER SETS BY THIS CREATOR
Week 8 (Module 10)
Marketing Module 14
Marketing Module 13