MGMT 105 1st EditionExam# 4 Study Guide Lectures: 24-28- A. Value- relative comparison of a product’s benefits versus the costo Value = Benefit/Costs- B. Utility- ability to satisfy a human want or need o Formo Time o Place o Possession- pride you feel in purchasing - C. Four P’s of Marketingo 1. Product: (most important P) good, service, or idea that is marketed to fill consumer’s needs and wants Product Differentiation- creation of a product feature or product image that differs enough from existing products to attract customerso 2. Pricing: process of determining the best price at which to sell a product psychological pricing Example: buying a wedding ringo 3. Place (distribution): part of the marketing mix concerned with getting products from producers to consumerso 4. Promotion: aspect of the marketing mix concerned with the most effective techniques for communicating information about products how am I going to let people know about the product- D. Competitive Environmento substitute producto brand competition o international competition- E. Target Market: people with similar wants and needs- F. Market Segmentation: process of dividing a market into categories of customer types, or segments - G. Demographic Variables: Age, Education, Family Life Cycle, FamilySize, Income, Nationality, Race, Religion, or sex- H. Influences on Consumer Behavioro Psychologicalo Personalo Socialo Cultural- Consumer Buying Process *PowerPoint picture*o stages of the consumer buying process Problem/need recognition (need to replace old shoes) Information seeking (search for shares, styles, prices, opinions of others) Evaluation of alternatives (which are comfortable/affordable? how will others react to them?) Purchasing decisions (choose rationally or emotionally) Post-purchase evaluation (observe reactions of others, test durability, compare with older shoes)- What is a product?o product features: tangible and intangible qualities that a company builds into its productso value package: product marketed as a bundle of value adding attributes, including reasonable cost- Categories of consumer products *PowerPoint picture*- Product life cycle *PowerPoint picture*: series of stages in a product’scommercial life. o Introduction: 1/50 ideas generated actually make it to stage oneo growtho Maturity: sales have escalated and peaked. No need to come out with the new and improvedo decline- Pricing: process of determining what a company will receive in exchange for its products /what to chargeo 1. price skimming: setting an initially high price to cover new products costs and generate a profit Example: apple uses this when releasing new iPhoneo 2. penetration pricing: setting an initially low price to establish a new product in the market Example: planet fitness, no sign up cost, only $9.95 a month to get a huge volume of customers Example: introducing a new candy baro 3. price lining: setting a limited number of prices for certain categories of products (Price-points)  Example: $19.99 or less Example: dollar storeo 4. dynamic pricing: price fluctuation can work out hugely beneficial - Example: eBay- Example: auctionso 5. Psychological pricing: people do not respond rationally. I gotta have it!o 6. odd even pricing: psychological pricing tactic based on the premise that customers prefer prices not stated in even dollar amountso 7. Discount: price reduction offered as an incentive to purchaseo 8. Promotion: communicating information through different waves or wayso 9. promotional mix: combination of tools used to promote a producto 10. Advertising: non personal communication used by an identified sponsor to inform an audience about a product Example: get something to stick in your head Example: branding- Abercrombie and Fitch is exclusionary in his market- Doctors promoting cigarettes - 67% of shoppers are overweight- NFL wants performers to pay to play due to exposure- H&M adds normal size models instead of size 1- McDonald’s sales are declining super-size meals to help promote healthy eating habits- Blue Bell ice cream and contamination- The power of marketing - Cocoa Krispies said would safeguard children from swine flu (H1N1) - The power of advertising - Transportation Modeso Truck: less packaging and breakage; faster in cityo Plane: expensive; quick delivery (ship seafood to Utah)o Water Carriers: the slowest but cheapest way to transport somethingo Railroad: (“piggyback”) agricultural productso Pipeline: unaffected by the weather (oil and water)o Digital Transmission- Lysol used to be used in feminine hygiene but now clearing product- Cigarettes used to be promoted by health professionals- Personal Selling: selling the product 1-on-1- What’s the most critical stage in personal selling?o Closing the sale- Sales Promotion: short-term promotional activity designed to encourage consumer buying, or cooperation from distributors o Coupons  senior citizens look for this is in the Sunday papero Premium: gift with purchase Tiffany’s child a 2 karat diamond necklace with a tickle-meElmoo Point-of-Sales Display “end cap” of aisle; baby diapers and hair dryers - Public Relations: good reputation of the company- Publicity: attract public attention- Television is the highest percentage of advertising outlays and most expensive- Direct mail – the biggest weakness is it’s easily discarded- Newspapers – a very wide coverage, but easily discarded and flexible- Magazines are highly segmented- Radio has a variety of ready market segmentation (musical, concert)- Internet targets an audience; easy to ignore- Outdoor – inexpensive, difficult to ignore, repeat exposure but gives limited info and little control over audience- Advocacy Advertisement: “Billboard to toast a friend” and the other side of the billboard has a car lit in flames- Most powerful means of advertising is word of