Study Marketing Quiz 3 Flash Cards

 
Pile Management Card
Marketing Quiz 3

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deceptive pricing (bait & switch)
a firm offers a very low price then persuades customer to pay more once at the store (illegal under FTC rules)
predatory pricing
charging a very low price with the intent to driving competitors out and creating a monopoly
price discrimination
the practice of charging different prices to different buyers for goods of like grade and quality (illegal under the Clayton Act, as amended by the Robinson-Patman Act)
price fixing
a conspiracy among firms to set prices for a product (illegal under Sherman Act)
geographic pricing adjustments
price changes based on cost of transportation
allowances
price reduction for an activity
-trade-in
-promotional
discounts
price reduction for an award
-quantity
-seasonal
-trade (functional)
-cash
break-even equation
fixed cost/ (unit price - unit variable cost)
break-even analysis
examines the relationship between total revenue and total cost to determine profitability at different levels of output
variable cost
additional charges that vary with quantity produced and sold
fixed cost
stable expenses that don't change with quantity produced and sold
total cost
total expenses incurred by a firm in producing and marketing a product (sum of fixed costs and variable costs)
When price changes affect volume, is the price elastic or inelastic?
elastic
3 factors to consider when estimating demand
-total potential market
-total amount each consumer will purchase
-market share of company
5 factors that cause a shift on the demand curve
-price of product
-consumer tastes
-price & availability of similar products
-consumer income
-advertising/promotions
6 pricing objectives
-profit
-sales
-market share
-volume
-survival
-social responsibility
loss-leader pricing
selling below customary price in order to attract attention in hopes customers will buy other products (NOT used only to increase sales)
above, at, or below market pricing
using competitors prices to set their own price depending on their target market needs and wants
customary pricing
standardized channel of distribution is used
competition-oriented approaches to pricing (3)
-customary pricing
-above, at, or below market pricing
-loss-leader pricing
profit-oriented approaches to pricing (3)
-target profit pricing
-target return-on-sales pricing
-target return-on-investment pricing
cost-plus pricing
involves summing the total unit cost of providing a product or service & adding a specific amount to the cost to arrive at a price (most commonly used to set business prices)
-standard mark-up pricing
adding a fixed percentage to the cost of all items in a specific product class (ex = grocery stores)
cost-oriented approaches to pricing (2)
-standard mark-up
-cost plus
yield management pricing
charging different prices to maximize revenue for a set amount to capacity at any given time
bundle pricing
marketing of two or more products in a single package price
target pricing
manufacturers estimate price based on what they think a consumer would be willing to pay
odd-even pricing
sets prices a few dollars or cents under an even number ($4.99 vs. $5)
prestige pricing
sets a high price so that quality or status-conscious consumers will be attracted to product
7 demand-oriented pricing strategies
-skimming
-penetration
-prestige
-odd-even
-target
-bundle
-yield management
value pricing
the practice of increasing product and service benefits while maintaining or decreasing price
price equation
price = list price - incentives & allowances + extra fees OR
price = total revenue - total cost
price
money or other considerations exchanged for the ownership or use of a good or service
When there are few well-known cues about a product or service, what factor is used to determine quality?
price
capacity management
integrating the service component of the marketing mix with efforts to influence consumer demand
3 benefits of packaging
-communication
-functional
-perceptual
mixed branding
firm markets products under its own name and that of a reseller because segments are different from one another
private-label branding
product sold under retailer/wholeseller, giving manufacturer another outlet to sell products
co-branding
pairing two brand names of two different manufacturers with one product (ex = Post Oreo O's Cereal)
multi-branding
manufacturer's branding strategy that gives each product a distinct name (useful for products that are intended for a different marketing segment)
benefits of multi-product branding (2)
-encourages line extension
-encourages brand extension
multi-product branding
manufacturer's branding strategy that uses one name for all products (other names include: family or corporate branding)
4 segments of brand equity pyramid
-brand importance
-brand performance & imagery
-consumer judgements & feelings
-consumer-brand connection
5 criteria for a good brand name
-describes product benefits
-memorable, distinctive and positive
-fit the product and company image
-no legal restrictions
-simple, appeal to emotions
brand equity
added value a given brand name gives to a product beyond the functional benefits provided
brand personality
set of human characteristics associated with a brand name
branding
organization's use of a name, phrase, design, symbol or combination of these to identify and distinguish its products
4 factors that trigger a repositioning act
-reacting to a competitor's position
-reaching a new market
-catching a rising trend
-changing the value offered (trading up/down or downsizing)
What are three ways to modify the market?
-find new users
-increase use
-create new use situations
3 ways to manage product life cycle
-modify product
-modify market
-reposition product
What are five methods used to overcome barriers?
-warrantees
-money-back guarantees
-extensive usage instructions
-demonstrations
-free samples
5 categories of product adopters
-innovators (2.5% of population)
-early adopters (13.5%)
-early majority (34%)
-late majority (34%)
-laggards (16%)
4 barriers of product resistance
-usage barriers
-value barriers
-risk barriers
-psychological barriers
diffusion of innovation
the manner a product spreads through the population
In what stage of the product life cycle do most customers purchase a product?
after a product has been on the market for some time (growth or maturity stage)
fad product
experiences rapid sales on introduction then equally rapid declines (novelties w/ short life cycles)
fashion product
a product that is introduced, declines, and returns at a later period
low-learning product
sales begin immediately (benefits and required knowledge are understood)
high-learning product
significant education of customer is required and there is an extended introductory period
5 types of life cycle curves
-generalized
-high-learning product
-low-learning product
-fashion product
-fad product
consumer products vs. business products
consumer products tend to have shorter life cycles than business products
2 important aspects of product life cycles
-length
-shape of curve
harvesting
when a company keeps the product but reduces marketing costs
deletion
product dropped from company's product line
3 characteristics of decline stage in the product life cycle (including marketing objective)
-sales & profits drop
-tends to be fueled by environmental changes
-marketing objective = deletion or harvesting
5 characteristics of maturity stage in the product life cycle (including marketing objective)
-slowing of total industry sales for product class
-fewer new customers
-focus on selective demand and niching
-profits drop, price competition
-marketing objective = maintain brand loyalty
5 characteristics of growth stage in product life cycle (including marketing objective)
-rapid increases in sales
-competitors enter, causing shift to selective demand
-more aggressive pricing
-gain as much distribution as possible
-marketing objective = stress differentiation
penetration pricing strategy
entering the market with a lower price in order to discourage competitive entry (helps build unit volume)
skimming pricing strategy
initial high price that lowers after time
selective demand
demand for a specific brand
primary demand
desire for the product class rather than for a specific brand since there are few competitors with the same product
4 characteristics of introductory stage in product life cycle (including marketing objective)
-sales grow slowly
-minimal profit (often result of large investments in product development)
-limited distribution
-marketing objective = gain awareness
axis on the product life cycle graph
time vs. sales
product life cycle
stages a new product goes through in the market place: introduction, growth maturity, and decline
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