Ch 13: The Marketing Mix- Product, Place, Promotion, and Price – Flashcards
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Product mix
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a business's portfolio of product lines
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product line
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is a group of similar products
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consumer products
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are products that are sold to consumers, categorized by how the consumer perceive and purchase such products 1. convenience 2.shopping 3.specialty
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convenience products
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are products that consumers by frequently, instinctually, with minimum thought. low price and consumed in large quantities
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shopping products
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are products that consumers buy carefully and less frequently. cost more and are consumed less frequently
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unsought products
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are products consumers did not initially or readily recognize they need or want. buy them only after they are shown a need or want exist
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business products
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are products sold to a business and are categorized by the product's purpose 1.materials and parts 2.capital items 3.supplies and services
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materials and parts
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are products businesses resell or use to create other products
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capital items
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are products businesses buy that have a life longer than one year and are used in acquiring, manufacturing, and selling of products and services
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supplies and services
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are products businesses buy to operate the business that are not classified as materials and parts or capital items
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product features
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relate to the physical and mental attributes that provide customers satisfaction when they use the product
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product quality
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relates to a product's lack of defects. - dependability ie. durability, comfort level, or response
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branding
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relates to a business's attempt to differentiate its products from the products of competitors with a brand
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brand
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is a name, term, symbol, design, or combination thereof that identifies product or business
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trademark
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is said to be owned by a business when it registers its brand with the law
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brand equity
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is a term used to describe the ability of the brand to create value.
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generic products
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unbranded products
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packaging
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relates to designing and producing the container in which a product is sold or delivered. promotes and protects the product. can create benefits such as convenience and storage
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labeling
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entails a business attaching printed words or graphics to its products to educate the customer.
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labels
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identify, describe, and/or inform the customer about the content, benefits, dangers, an proper use of the product. attempt to reduce risk for the buyer and seller
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warranty
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can be expressed or implicit. is a seller's promise regarding the property's quantity and quality
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guarantee
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is a promise, by the business to the customer, that the customer will be satisfied with the product. if not satisfied, the customer has certain rights
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support services
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relate to the at-sale or post-sale services that a seller promises to the buyer ie. training and repair
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What's a generic product worth?
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branding creates value by increasing the certainty about the product's attributes and lowering risk to the consumer, for which the customer pays more... lower price is a key incentive to buy generic products
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UPC codes
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Uniform Product Codes, are the bar codes on product's packaging which contain the information needed to identify brand names, package size, and price. help manage sales and inventory
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distribution
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is how and when a business delivers its products to its customer. is often a critical factor in creating customer value and sale. is more than the physical means used to deliver a product. is about distribution channels also known as marketing channels
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marketing channel/distribution channel
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is composed of organizations that help the business make its products available for ultimate consumption.
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marketing intermediaries
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organizations that help the business with its products that are members of the business's marketing channel
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direct marketing channel
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is where the business does not use a marketing intermediary
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indirect marketing channel
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is where the businesses uses one or more marketing intermediaries
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retailer
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are businesses that sell products to the final consumer. some target markets based on product lines and brand
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specialty store
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type of retailer carries a limited product line
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department store
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type of retailer carries several product lines
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supermarkets
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type of retailer carry numerous lines of food and household products
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convenience stores
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type of retailer are relatively small and located in easily accessible places, which sell a limited number of products used in everyday life
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discount stores
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type of retailer sell numerous product lines of household products to price-concious customers
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deep discount stores
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type of retailer sell product lines at very low prices
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non-store retailers
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type of retailer that have a limited or no physical presence
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wholesalers
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are businesses that sell products to businesses for resale or business use
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merchant wholesalers
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buy and resell products
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broker
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brings the buyer and seller together, helping both the buyer and seller in negotiating the deal
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agent
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represents either a buyer or seller
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variable costs
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vary directly with the amount sold
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fixed costs
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are costs that do not vary with the amount sold
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contribution margin
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is defined as the amount the business earns from each sale after paying its variable costs
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EQ 13.1 contribution margin p- price per unit of sales VC- variable cost per unit of sales
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CM= P-VC
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break even point
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is the number of sales a business must achieve to generate a zero operating profit
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EQ 13.2 break even point FC- fixed costs CM- contribution margin
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BE= FC/CM
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cost-volume-profit analysis
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the analysis of different pricing alternatives on the business's profitability is called this
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cost-plus pricing
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is designed to provide the business sufficient sales revenue 1) pay its costs 2) create a sufficient operating profit challenge: is determining and allocating the cost of acquiring or producing a product, delivering the product, selling the product, and operating the business
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pricing the margin
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when a business only focuses on variable costs businesses that price on the margin require a higher contribution margin to cover the unallocated fixed costs
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marginal cost
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variable cost
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marginal revenue
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price per sale
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total costs
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when the business can allocate fixed costs to products variable costs plus fixed costs
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the average cost of sale
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when the business divides the total costs by the number of sales, which is used to price the products it produces
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EQ 13.3 Average cost per sale AC- average cost per sale TC- total costs (variable plus fixed) Sales- number of sales
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AC= TC/Sales
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price elastic
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when price does matter, higher prices means customers will buy less of the product and lower prices mean customers will buy more of the product
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price inelastic
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when prices do not matter, customers will buy the product regardless of the price
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cyclicality
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deals with the overall state of an economy
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cyclical product
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when the state of the economy affects the demand for the product. good economy = high demand ex. lobster
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non-cyclical product
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if the state of the economy does not affect the demand for the product
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counter-cyclical products
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when the state of the economy inversely effects the demand for a product. bad economic times = more demand and vice versa ex. hamburgers and chicken
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seasonality
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deals with the time of year a product is produced and sold
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seasonal products
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are products that are affected by the seasons of the year. i.e..bathing suits
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non-seasonal products
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are products that are not affected by seasonality ie. medical services
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perceived "absolute" value of the product
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customers create a reception of a product's value based on perceived benefits from owning the product. they compare the perceived value with the product's price
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perceived "relative" value of the product
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customers perceive a product has absolute value, customers then compare the benefits and costs of that product with the benefits and costs of alternative or competing products
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promotion
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is the process of communicating to customers the absolute and relative values of the product
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the communication process (exhibit 13.7)
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sender --> encoding --> decoding --> receiver senderreciever noise-feedback
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promotion process (exhibit 13.8)
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1. target a market segment and customer 2. determine the communication objective 3. design the message to be communicated 4. choose a medium to communicate the message 5. execute by delivering the designed message though the selected medium 6. collect feedback, review the feedback, and make adjustments as needed
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AIDA model
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the message should focus on customer attention, interest, desire, and act
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infomercials
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interesting and entertaining program that is focused on selling a product typically 30 minute programs that provide knowledge, entertain, and target a customer for a sale.
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promotional/ marketing communications mix
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is the mix of advertising, sales promotion, personal selling, direct-market techniques, and public relations used by a business to communicate a marketing message
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advertising
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is defined as any non-personal presentation of ideas about a product or product line delivered though media
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sales promotions
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are techniques used to encourage the customer to buy the product in the short term. intended to create an immediate sale. ie. coupons
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personal selling
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is defined as the personal interactions, intended to create a sale, between a business's sales force and potential customers
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personal selling process (exhibit 13.9)
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1. prospecting and qualifying potential customers 2. researching and understanding how to approach targeted customer 3. approaching targeted customer 4. presenting and demonstrating the product 5. dealing with customer concerns 6. completing or closing the sale 7. following up the sale to ensure customer satisfaction
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direct marketing
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refers to the techniques used to get customers to purchase products from their home, office, or other non-retail settings. ie. catalog
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public relations
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refers to the process of communicating to the public that the business creates value for the public as a whole , create a positive image
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publicity
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is information that creates an image of a business and its products; ideally publicity is positive
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promotional pull strategy
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is where the product producer uses a lot of advertising focused on the ultimate consumer. creates a demand in the consumer that pulls retailers and other marketing channel members into offering the product
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promotional push strategy
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is where the producer's promotional efforts are focused on retailers and other channel members. these marketing channel members then promote the product to the ultimate consumer. this is intended to push the product from the producer through the retailer to the ultimate consumer
