marketing 300 UW Madison final exam

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price
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the amount of money that is charged for something of value
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target return objective
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specific level of profit as an objective
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profit maximization objective
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objective to get as much profit as possible
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sales oriented objective
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objective to get some level of unit sales, dollar sales, or share of market WITHOUT referring to profit
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status quo objectives
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“don’t rock the pricing boat” objectives
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nonprice competition
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aggressive action on one or more of the P’s other than price
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skimming price policy
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trying to sell the top of the market (top of demand curve) at a high price before aiming at more price sensitive customers
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pentration pricing policy
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trying to sell the whole market at one low price
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basic list prices
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the prices that final customers or users are normally asked to pay for a product
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discounts
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reductions from list price given by a seller to buyers, who either give up some marketing function or provide the function themselves
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quantity discounts
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discounts offered to encourage buying in bulk
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cumulative quantity discounts
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reductions in price for larger purchases over a given time period
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noncumulative quantity discounts
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reductions in price when a customer purchases a larger quantity on an individual order
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seasonal discounts
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discounts offered to encourage buyers to buy earlier than present demand requires
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cash discounts
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discounts given for paying in cash
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2/10, net 30
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allows 2% discount off face value of the invoice if the invoice is paid in 10 days
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sale price
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temporary discount from the list price
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everday low pricing
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setting a low list price rather than relying on frequent sales or discounts
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allowances
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reductions in price given to final consumers, customers, or channel members for doing something or accepting less of something
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advertising allowances
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price reductions to firms in the channel to encourage them to advertise or otherwise promote the firm’s products locally
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stocking allowances
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allowances given to wholesalers or retailers to get shelf space for a product (aka slotting allowances)
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push money allowances
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allowances given to retailers by manufacturers or wholesalers to pass on to the retailers’ salesclerks for aggressively selling certain items
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trade in allowance
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a price reduction given for used products when similar new products are bought
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rebates
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refunds to customers after a purchase
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FOB
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transportation term meaning Free on Board, whoever has purchased the item is now responsible for paying transportation costs
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freight absorption pricing
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absorbing freight cost so that a firm’s delivered price meets the nearest competitor’s
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value pricing
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setting a fair price level for a marketing mix that really gives the target market superior customer value
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unfair trade practice acts
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put a lower limit on prices, especially at the wholesale & retail level
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dumping
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pricing a product sold in a foreign market below the cost of production or at a price lower than in its domestic market
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phony list prices
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misleading prices that customers are shown to suggest that the price they are to pay has been discounted from list
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Wheeler-Lea Amendment
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law that bans unfair or deceptive acts in commerce
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price fixing
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competitors illegally getting together to raise, lower, or stabilize prices
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price discrimination
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injuring competition by selling the same products to different buyers at different prices
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markup
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dollar amount added to the cost of products to get the selling price
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markup (percent)
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percentage of the selling price that is added to the cost to get the selling price
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markup chain
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sequence of markups firms use at different stages of the channel determining price structure in the whole channel
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stockturn rate
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number of times the average inventory is sold in a year
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average cost pricing
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adding a reasonable markup to the average cost of a product
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total fixed cost
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sum of those costs that are fixed in total no matter how much is produced
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total variable cost
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sum of those changing expenses that are closely related to output, such as expenses for parts and wages etc
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total cost
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sum of total fixed and total variable costs
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average cost per unit
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total cost divided by related quantity
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average fixed cost per unit
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total fixed cost divided by related quantity
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average variable cost per unit
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total variable costs divided by related quantity
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break even analysis
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figuring out whether or not a firm can break even with a certain cost
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break even point
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sales quantity where total cost will equal to total revenue Fixed costs/CM a unit
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fixed cost contribution per unit
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selling price per unit minus variable cost of unit
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value in use pricing
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setting prices that will capture some of what customers will save by substituting the firm’s product for the one currently being used
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reference price
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price a consumer expects to pay
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leader pricing
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setting some very low prices to get customers into retail stores
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bait pricing
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setting some low prices to attract customers but trying to sell more expensive models once the customer is in the store
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psychological pricing
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setting prices that have special appeal to target customers
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dynamic pricing
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setting prices on the fly in response to market demands
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surge pricing
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setting higher prices in response to higher demand
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odd even pricing
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setting prices that end in certain numbers
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price lining
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setting a few price levels for a product line and then marking all items at these prices
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demand backwards pricing
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setting an acceptable final consumer price then working backwards to what a producer can charge
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prestige pricing
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setting a high price to suggest high quality
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product bundle pricing
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setting one price for a set of products
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retailing
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all of the activities involved in the sale of products to final consumers
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specialty shop
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type of conventional limited line store that’s usually small with a distinct personality
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department stores
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larger stores that are organized into many separate departments with many product lines
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mass merchandising concept
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the idea that retailers should offer low prices to get faster turnover and greater sales volume by appealing to larger numbers
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supermarkets
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large stores specializing in groceries with self service and wide assortment
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discount houses
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stores that sell hard goods at substantial price cuts to customers who go to the discounter’s low rent store, pay cash and take care of any service or repair to the item
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mass merchandisers
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large self service stores with many departments that emphasize soft goods (fabrics) and staples and selling on lower margins to get faster turnover
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supercenters
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huge stores that try to stock everything a consumer regularly buys
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convenience stores
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convenience oriented variation of the conventional limited line food stores
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automatic vending
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selling and delivering products via vending machines
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wheel of retailing theory
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new retailers start as low status low margin low price operators and if successful evolve into more conventional retailers offering more services with higher operating costs and higher prices
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scrambled merchandising
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retailers carrying any product lines they think that can sell profitably
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corporate chain
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firm that owns and manages more than one store
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franchise operation
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a franchisor develops a good marketing strategy and the retail franchise holders carry out the strategy in their own units
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wholesalers
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firms whose main function is providing wholesaling activities
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merchant wholesalers
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wholesalers who own the products they sell
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agent wholesalers
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wholesalers who don’t own the products they sell
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place
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making goods and services available in the right quantities and locations when customers want them
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channel of distribution
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any series of firms or individuals who participate in the flow of products from producer to consumer
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direct marketing
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direct communication between the seller and buyer using a promo method other than face to face selling
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discrepancy of quantity
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difference between the quantity of products it is economical for a producer to make and the quantity consumers normally want
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discrepancy of assortment
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difference between the lines a producer makes and the assortment consumers want
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accumulating
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collecting products from many small producers
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bulk breaking
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divided larger quantities into smaller ones as products get closer to final sale
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sorting
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separating products into grades and qualities desired by different target markets
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assorting
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putting together a variety of products to give a target market what it wants
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channel captain
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manager who helps direct the activities of a whole channel to avoid conflict
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vertical marketing systems
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channel systems in which the entire channel focuses on the same target market in the end
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corporate channel systems
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corporate ownership throughout the entire channel
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vertical integration
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acquiring firms at different levels of channel activity
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contractual channel members
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various channel members agree to work together by contract
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ideal market exposure
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when a product is available exactly widely enough to satisfy target market’s needs
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intensive distribution
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selling a product through all responsible and suitable retailers who will stock or sell the product
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selective distribution
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selling through only intermediaries that will give product special attention
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exclusive distribution
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selling through only one intermediary in a geographic area
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multichannel distribution
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when a producer uses several competing channels to reach the same target market
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reverse channels
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channels used to retrieve products that consumers no longer want
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licensing
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selling the right to use some process trademark patent or other right for a fee
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logistics
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the transporting storing and handling of goods in ways that match target market’s needs with a firm’s marketing mix
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physical distribution
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the transporting storing and handling of goods in ways that match target market’s needs with a firm’s marketing mix
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customer service level
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how rapidly and well a firm responds to consumers’ needs
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physical distribution concept
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all logistics activities should be organized as one system to minimize mess ups and costs
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total cost approach
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evaluating all logistics systems’ costs against all other options
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supply chain
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complete set of firms and activities involved in getting materials, creating the product, and distributing the product
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electronic data interchange
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approach that puts info in a standardized format easily shared between computing systems
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transporting
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marketing function of moving goods
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containerization
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grouping items into an economical shipping quantity and packaging them. helped increase globalization because it made water freight so much cheaper
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piggyback service
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loading tractor trailers onto trains
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storing
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holding goods
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inventory
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amount of goods being stored
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private warehouses
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storing facilities owned by companies that use them
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public warehouses
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storing facilities open to many companies
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distribution center
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kind of warehouse to speed up flow of goods and to avoid unnecessary costs
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product advertising
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advertising that tries to sell a specific product
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institutional advertising
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advertising that tries to promote an organization’s image or rep
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pioneering advertising
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advertising that tries to create demand for a product category
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competitive advertising
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advertising that tried to create demand for a specific brand
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direct type advertising
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when a company tried to sell a product or get action out of a consumer
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Puffery Vs. Deception
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legal vs. illegal
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indirect type advertising
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when a company works on getting consumers to remember brand next time they go to a store
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comparative advertising
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advertising that makes direct product comparisons using brand names
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reminder advertising
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used to remind people of products that are in saturated markets or in sales decline phase
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corrective advertising
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ads to correct deceptive advertising
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innovators
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first group to adopt new tech
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early adopters
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follows the innovators in adoption
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early majority
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avoids risk and waits for early adopters to get new tech
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late majority
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comes after early majority in adoption
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laggards
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suspicious to new ideas and therefore and like the old way of doing things, late to adopt
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nonadopters
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don’t adopt new technologies
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primary demand
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demand for a general product idea, not just the company’s own brand
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selective demand
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demand for a specific brand
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qualifying dimensions
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relevant features that are required for your product to have in order to even be considered for a purchase in some industry
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determining dimensions
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affects customer’s end choice to purchase the product/brand
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marketing-oriented firm
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tries to offer customers what they NEED instead of just trying to get customers to buy what the firm has produced.

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