MKT 300: FINAL EXAM
96 Cards in this Set
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3 internal factors of price
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1. marketing objectives(to maximize profits, to gain market share, to infer level of quality, to survive
2. Marketing Mix Strategy
3. Costs
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3 external factors of price
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1. Demand for your product
2.Competition
3.Economy
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Pricing Objectives
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Profit Oriented, Sales, Oriented, Status Quo
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Profit Oriented
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Charging higher than average price
(ROI and Profit Maximization)
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Sales Oriented
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Low prices to sell as you can Ex. Walmart
(Market Share and Sales Maximization)
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Status Quo
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Charging Average Price
(Maintain Price and meet competitions price)
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Price Elasticity tell us how much _______ for a product will with a change in __________
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Demand, Price
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Price Elasticity calculated with
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(quantity demanded of Good A/ Change in price of good A)
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3 Methods for Cast Based Pricing
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1.Markup Pricing(keystoning,(double the cost)
2.Break even pricing
3. Profit Maximization
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Break Even Pricing is and you need ____,____,_____
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setting price to cover fixed costs
fixed cost, selling price, variable cost
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Break Even Quantity= (____)/(_______)
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total fixed costs/fixed cost contribution
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Fixed Cost contribution= (____)-(____)
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price-average variable cost
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Profit Maximization Pricing(_________=_________)
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marginal cost=marginal revenue
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Market Skimming pricing: set above the marketplace price for similar products or services, usually with the objective of maximizing ________ or _________
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revenue, profit
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Market Penetration Pricing: the product or service is offered at a ______ price compared to its _______
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low, competition
(Prices Fall over Time as competitors enter the market
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Status Quo: suggests _____quality and ______ as competition
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quality and value
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Premium Strategy: ______ quality ________price
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high, high
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Good Value Strategy: _____ quality _____price
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High, low
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Overcharging(price skimming)inelastic: ______quality ______price
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low, high
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Economic Strategy(Penetration Pricing)elastic: ________quality, ______price
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low , low
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When the pricing objective for an inelastic product is to attract new customers based on Quality, what strategy should be used.
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Premium
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What does Portfolio Pricing include
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different levels of price points
pay more for extra features
Ex.Honda Civic, hotel Rooms
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Captive product pricing
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one item low price, in order to increase sales of a complementary product. (Swiffers----Cleaning Fluid)
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Price Bundling:
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Combine related goods and sell them for one price
"Package Deals"
co-branding
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Flexible (Variable) Pricing
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Different segments pay different rates
Off peak daily rate changes
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When a decrease in price on one product results in a decrease in sales of second product, the two products are:
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Substitute
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Advertising offer a ____ to buy, sales Promotions offers an _________ to buy
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reason, incentive
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Sales promotions impact _________not _________
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behavior, attitudes
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Designed to motivate consumers to try a product or buy it again by offering an economic incentive.
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Consumer promitions
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Encourages consumers to try a new product or keep buying an existing product at a limited tim discount
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coupons
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Allow consumers to try an evaluate a good or service for free or at a low price
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Sample and trial offers
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Return some or the entire purchase price to buyer to encourage trial or repurchase
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refunds rebates
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Loyalty programs
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designed for long term customers
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Give buyers free (or low cost) items in the product package, in the store, or by mail to encourage buying
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premiums
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draw shoppers attention to particular products with eye-catching in-store displays
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point of purchase displays
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Redemption Rate
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% responding to incentives
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Displacement Rate
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% of thsoe who would of bought anyway
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Acquisition rate
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% of purchase by non regular buyer
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conversion rate
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number of future purchases by new customers
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product line effect
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the impact the promotions have on related products
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Engagement:
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a measure of how much attention an audience pays to a particular media(evaluate how affectivley audiences read, watch, or listen to media)Ex. Corona Success
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Audience Selectivity
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the ability of an advertising medium to reach a precisley defined market
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Television household
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number of HH with access to their own TV
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program rating:
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the percentage of TV HH tuned in to a show
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Household Using TV (HUT)
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percentage of homes in an area watching TV at a given time
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Share of audience is:
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percentage HUT tuned into a show
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Program Rating
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Rating=(HH tuned to a show)/(Total US HH)
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Share of Audience is calculated with:
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(HH tuned into a show)/(US HH using TV)
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Across all major American industries: firms that did not cut back sold_____ more than those that did cut back during the recesssion and sold ______ more in the 2 years follwing
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50%, 60%
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Slice of Life
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everyone, polar opposite to lifestyle--shows the real life people using a product in a normal setting, such as a family sitting at a dinner table . everyone.
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Lifestyle
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shows how a product relates to the lifestyle of the target market. Brand (cool people)
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New brands with small market share spend ____________ more for advertising than those with large market share
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proportionally
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Sales or market share decrease no matter how much is spent on advertising.
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advertising response function
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Increase spending if: the increased cost is _________ than the incremental (marginal) return
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less
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Decrease spending if: the increased cost is ______ than the marginal return
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more
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Hold spending if: the increased cost is ____ to the marginal return
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equal
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Primary effect
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having higher recall percentage in the beginning of a presentation order
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comparative advertising
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used if growth is sluggish comparing yourself with another company
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Product Placement
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the integration of brands or brand messages into entertainment media
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Affordable Method
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What we have to spare. Whats left to spend
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Arbitrary Allocation Method
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There is no system. Seemed like a good idea at the time
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Percentage of Sales Method:
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set percentage of sales or amount per unit
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competitive Parity MEthod
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match competitor or industry average spending
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return on investment method
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spending is treated as a capital investment
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Pulsing Media Schedule
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advertising combines continuous scheduling with flighting Example: back to school sales
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Recency planning
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the main premise is that advertising works by influencing brand choice of people who are ready to buy
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integrated marketing communication
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carefully coordinating all promotional messages to assure the consistency at every point between a company and the consumers.
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AIDA
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model that outlines the process for achieving promotional goals in terms of stages of consumer involvement with the message
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Attention (Awareness)
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advertising
public relations
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interest (Affective Feeling)
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focus and advantages and benefits
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desire(affective feeling)
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convince customer they want and desire
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action(conative doing)
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personal selling
sales promotions....leads customer towards purchasing
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Marketing communication process:
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the way in which a sender encodes a marketing idea and conveys it through message and medium so receivers can decode and understand it, and then respond with feedback
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sender-->_____-->medium-->______-->receiver
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encoding, decoding
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PLC stages, introduction and early growth
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informing
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PLC stages: Growth Maturity
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persuading
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PLC stages: Maturity
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reminding
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4 ps
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promotion, price, place, product
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PErsonal selling is best when:
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push strategy, complex product, infrequent purchase, expensive, time, custom product, post service, negotiate
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lead generating (prospecting)
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is the identification of those most likely to buy the sellers offerings
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Qualifying leads
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when a prospect shows interest, sales person has opportunity to qualify the lead.
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market orientation
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a customer centric focus on the market environment
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4 C's Model
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Customer Value(instead of product)
Cost (instead of Price)
Convenience(instead of place)
Communication (instead of promotion
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7P's model
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people, physical, process, product,place, promotion, price (booms and bitner)
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the average business loses ___ of its customers each year
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10%
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acquisition of customers can cost ______ more than retaining current customers
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5 times
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improving customer retention by __________ can decrease costs by as much as 10%
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2 %
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the average business does not hear from_____ of its unhappy customers
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96%
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20% of the customers are responsible for ____ of the profits
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80%
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20% of profits come from ____ of the customers
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60%
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Dissatisfied
defect
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Negative
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Satisfied
Switchable
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Neutral
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Delighted
Loyal
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Positive
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______ and ____ of segmenting and targeting markets, determine positioning
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art and science
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when someone asks how to better reach customers and you automatically think _____,_____, and_______
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segment, target and position
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when someone discusses customer demographics and you suggest investigating their _________
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physchographics
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MKT 300: Exam 2