MAR3023 Final Exam

profit
reward to firm for the risk it undertakes in offering product for sale
strategy
long term course of action to deliver unique customer experience
corporate level
level in organziation at which top management directs overall strategy for entire organization
strategic business unit
subsidiary, division, or unit that markets a set of related offerings to a clearly defined target group of customers
functional level
level where groups of specialists actually create value for an organization (marketing, sales, operations, etc.)
cross-functional team
small number of people from different departments in an organization who are mutually accountable for common set of performance goals
core values
fundamental principles that guide an organization over time
mission
statement of organizations scope, identifies customers, market, products, technology, and values
organizational culture
set of values, ideas, and attitudes that are learned and shared among members of organization
market share
ratio of sales revenue of firm to the total sales revenue of all firms in the industry, including firm itself
marketing plan
road map for marketing actions of an organization or a specified future time period
marketing dashboard
visual display on a single computer screen of the essential information related to achieving a marketing objective
competencies
organization’s special capabilities, anything that distinguishes it from other organizations, together form competitive advantage
benchmarking
way to improve quality by discovering how other companies do something so they can imitate or leapfrog competition
business portfolio analysis
BCG’s strategy to evaluate business unites as separate investments of an organization, using market share and market growth rate (BCG matrix)
cash cows
dominant share in slow-growth market, generate a lot of cash
stars
dominant share in high growth market
question marks
small share of high growth market, management must decide whether to phase these SBUs out or invest in them to make them stars
dogs
small share of low growth market, usually get phased out
diversification analysis
search for growth opportunities in current and new markets as well as current and new products (through marketing penetration, market development, product development, diversification)
strategic marketing process
approach where an organization allocates its marketing mix resources to reach its target markets (3 phases: planning, implementation, evaluation)
situation analysis
determines where a product has been recently, where it is now, and where it is headed
SWOT analysis
appraisal of internal strengths, weaknesses, opportunities, and threats
market segmentation
involves aggregating prospective buyers into groups/segments that have common needs and will respond similarly to a marketing action
implementation
4 parts: obtain resources, design marketing organization, developing schedules, executing marketing plan from planning phase
action item lists
tools that organize task, person responsible for completing task, date to finish, what is to be delivered
marketing tactics
detailed, day to day operational decisions essential to overall success of marketing strategies
countertrade
practice of using barter rather than money for global sales (oil as payment for a shipment of cars)
GDP
monetary value of all goods and services produced in a country during a year
national competitive advantage
4 key elements: factor conditions (natural resources), demand conditions (size/sophistication of market and media exposure), related/supporting industries (supplier clusters that can accelerate innovation), company strategy/structure/rivalry (intensity of domestic competition, number companies in industry)
protectionism
practice of shielding one or more industries in country’s economy from foreign competition through use of tariffs or quotas (keeps domestic)
tariffs
government tax on goods or services, to raise prices of imports
quotas
restrictions placed on amount of product allowed to enter or leave a country, ensure high priced market for domestic suppliers
global competition
when firms originate, produce, and market products/services worldwide
strategic alliances
agreements among two or more independent firms to cooperate for the purpose of achieving common goals (competitive advantage, customer value)
multidomestic marketing strategy
have as many product variations/brand names/advertising programs as countries in which they did business
international firms
use same approach in foreign countries as domestic approach
multinational firms
treat every country with different approach
transnational firms
see world as one marketing, emphasize cultural similarities when appropriate, and adapt when cultures differ
global consumers
consumer groups living in many countries or regions of world with similar needs or who seek similar features of products
cross-cultural analysis
involves study of similarities and differences among consumers in two or more nations and societies
Foreign Corrupt Practices Act
makes it a crime for US corporation to bribe an official of a foreign government or political party to obtain or retain business in that country
semiotics
field dedicated to understanding correspondence between symbols and their assigned meanings
back translation
translated word or phrase is retranslated back into the original language by a different interpreter to identify any errors
cultural ethnocentricity
belief that your culture is superior to any other culture
consumer ethnocentrism
tendency to believe that it is inappropriate to purchase foreign made products
microfinance
practice of offering small, collateral free loans to individuals who wouldn’t have capital necessary to begin small businesses
global market-entry strategies
exporting, licensing, joint venture, direct investment
licensing
offering rights to trademark, patent, trade secret, or other similarly valued item of intellectual property for fee or royalty (contract manufacturing, contract assembly, franchising)
joint venture
when foreign company and local firm invest together to create a local business, sharing ownership, control and profits
direct investment
involves a domestic firm investing in and owning a foreign subsidiary or division
product/promotion strategy
product extension strategy (same form as home market) product adaptation strategy (selling product with some adaptations to make it more culture appropriate), product invention strategy (all new product)
dumping
when firm sells product in foreign country below its domestic price or actual cost to build company’s market share
gray market (parallel importing)
products are sold through unauthorized channels of distribution, legal in US illegal in Europe
price transparency
refers to consumer’s near instantaneous access to competitors prices for same offering
value-pricing
practice of simultaneously increasing product and service benefits while maintaining or decreasing price
pricing objectives
specifying role of price in an organization’s marketing and strategic plans
demand curve
relates quantity sold to price; price change = move along curve, factor other than price change = shift of whole curve
marginal revenue
change in total revenue that results from producing and marketing one additional unit
price elasticity of demand
responsiveness of quantity demanded to changes in price (elastic if 1% change in price causes > 1% change in quantity demanded, inelastic if <)
fixed costs
sum of expenses of firm that are stable and do not change with quantity of product that is produced and sold
variable costs
sum of expenses of firm that vary directly with the quantity of product that is produced and sold
total cost
fixed + variable costs
marginal cost
change in total cost/1 unit increase in Q
marginal analysis
continuous, concise trade off of incremental costs against incremental revenue
skimming pricing
high initial price, then gradually lowers price
penetration pricing
setting low initial price on new product to appeal immediately to mass market
price lining
setting price of a line of products at a number of different pricing points
odd-even pricing
11.99 vs 12
target pricing
estimating price that the ultimate consumer would be willing to pay for a product, working backward through markups to achieve target price
bundle pricing
marketing of two or more products in single package
yield management pricing
charging different pricing to maximize profits (airlines)
standard markup pricing
adding fixed percentage to cost of all items in a specific product class
cost-plus pricing
summing total unit cost of providing a product or service and adding a specific amount to the cost to arrive at a price
experience curve pricing
pricing based on learning effect which holds that unit cost of many products and services declining by 10 to 30 percent each time a firm’s experience at producing and selling them doubles (basically results in lower)
target profit pricing
setting annual target of specific dollar volume on profit
target return-on-sales pricing
setting price to achieve profit that is specific percentage of sales volume
target return on investment pricing
setting price to achieve an annual return on investment
customary pricing
setting price dictated by tradition, standardized channel of distribution, or other competitive factors
above, at or below market pricing
setting market price for product or product class based on subjective feel for competitors price or market price as benchmark
price premium
(dollar sales market share for brand/unit volume market share for brand) – 1; used to determine whether a company’s products are above, at, or below market
loss-leader pricing
deliberately selling a product below its customary price to attract consumers’ attention so they will buy other products (Target CD’s)
fixed-price policy (one price policy)
setting one price for all buyers
dynamic pricing policy (flexible price)
setting different prices for different situations (yield management, airlines)
Robinson-Patman Act
flexible price policy cannot be carried out to the extreme of price discrimination
price war
successive price cutting by competitors to increase or maintain their unit sales/market share
promotional allowances
cash payments or extra amounts of free goods awarded to sellers in the channel of distribution for undertaking certain advertising or selling activities to promote a product
FOB origin pricing
price the seller quotes that includes cost of loading the product onto vehicle (doesn’t include transport fees)
uniform delivered pricing
price seller quotes includes all transportation costs
basing point pricing
involves selecting one or more geographical locations (basing point) from which list price for products plus freight expenses are charged to buyer
price fixing
conspiracy among firms to set prices for a product; horizontal or vertical, called resale price maintenance and is illegal under Consumer Goods Pricing Act (only illegal if enforced through coercion)
direct channels
when producer and ultimate consumer deal directly with each other (no intermediaries)
indirect channels
intermediaries perform some of the channel functions between the producer and ultimate consumer
agent
sales force for the producer type of intermediary
industrial distributor
performs variety of marketing channel functions type of intermediary
direct marketing channels
allow consumer to buy products via direct advertising (mail orders, telemarketing, catalogs) without interacting in person with sales person
multichannel marketing
blending of different communication and delivery channels
dual distribution
firm reaches different buyers by employing 2 or more different types of channels for the same basic product
strategic channel alliances
uses one firm’s marketing channel to sell another firm’s products
vertical marketing systems
professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximize marketing impact
types of vertical marketing systems
corporate (single ownership), contractual (integrate efforts of independent production), administered vertical marketing (influential; Walmart)
types of contractual vertical marketing systems
wholesaler-sponsored voluntary chains, retailer sponsored cooperatives, franchising
kinds of franchise arrangements
manufacture sponsored retail franchise (car dealerships)
manufacture sponsored wholesale (soft drinks)
service sponsored retail franchise (McDonalds)
service sponsored franchise (H&R Block)
disintermediation
a channel member bypasses another member and sells or buys products directly
channel captain
channel member who coordinates directs and supports other channel members (most influential)
supply chain
sequence of firms that perform activities to create and deliver goods or services to consumers but include suppliers (marketing channel only cares about finished product)
total logistics cost
expenses associated with transportation, materials handling, inventory, order processing, etc.
vendor-managed inventory
tool suppliers use to determine the product amount customer needs to reduce effort buyer needs to do business with seller
reverse logistics
process of reclaiming recyclable and reusable materials; reduces operating costs and landfill waste
retailing
includes all activities involved in selling, renting, and providing goods/service to ultimate customers for their use; portion of distribution channel where customer and product come together
form of ownership
distinguishes retail outlets based on whether individuals (small stores), corporate chains (Walmart) or contractual systems (franchise) own outlet
level of service
self-service, limited service (Kmart), full-service (Nordstrom)
merchandise line
how many types and varieties of products store carries
depth: large assortment of each item, small # lines
breadth: variety of items, limited depth
scrambled merchandising
offering several unrelated product lines in a single store
hypermarkets
larger stores that offer everything in single outlet
intertype competition
competition between dissimilar types of retail outlets, makes retailer’s job more difficult
shopper marketing
use of brand communications like coupons and samples to influence a customer’s behavior in a store
category management
approach to managing the assortment of merchandise to limit substitution from multiple items in one category, maximizes sales
retail life cycle
process of growth and decline by retail outlets and products
early growth (high market share, low profit)
accelerated development (market share/profits grow, competition starts)
maturity (retailers price discount)
decline stage (market share and profits fall)
multichannel retailers
integrate combination of traditional store and non-store formats
merchant wholesalers
independently owned firms that retain title to the merchandise they handle (full service and limited service)
full service merchant wholesalers
general merchandise (full line) perform all functions of channel broad range of merch
specialty merchandise (limited line) perform all functions of channel narrow range of merch
limited service merchant wholesalers
rack jobbers: retain title to products they put on shelves and only bill retailers for what is sold
cash and carry: take title to limited product assortment and sell only to those who pay cash and have own transportation (grocery)
drop shippers/desk jobbers: own merch but never physically touch it (coal)
truck jobbers: small warehouses to stock trucks with perishable or fast-moving goods (dairy)
manufacturer’s agents
work for several producers and carry noncompetitive, complementary merchandise in exclusive territory
selling agents
represent single producer, usually used by small producers
brokers
independent firms or individuals whose principal function is to bring buyers and sellers together to make sales; no ongoing relationship with buyers and sellers
choiceboard
interactive internet enabled system that allows customers to design their own products and services by answering questions
collaborative filtering
process that automatically groups people with similar buying intentions to predict future purchases (customers who bought this also bought)
consumer lifestyles
click and mortar: women who buy in traditional retail outlets but browse online often
hunter gatherers: married couples w children who get info and compare prices online
brand loyalists: people who regularly visit fav websites
time sensitive materialists: people who use the internet for convenient purchases like books, music etc.
hooked, online single: young single affluent who spend a lot of time online
ebivalent newbies: new to internet, seek info online but rarely buy
showrooming
occurs when shopper visits retail store to inspect product but purchases it online
cross channel shopper
online customer who researches products online and purchases them at a retail store (high salaries, high education)
sales response function
relates expense of marketing effort to marketing results obtained (S shaped because sales are slow in beginning then flatten)
cost leadership strategy
focuses on reducing expenses and in turn lowering product prices while targeting broad array of market segments
differentiation
requires products to have significant points of difference to warrant charging higher price for broad market
cost focus strategy
controlling expenses and lowering prices to target narrow range of market segments
differentiation focus
significant points of difference to target narrow segments (Chobani yogurt)
synergy analysis
seeks opportunities for growth by finding optimum balance between marketing efficiencies and R&D manufacturing synergy
line positions
have authority and responsibility to issue orders to people who report to them
staff positions
have authority to advise but cannot issue direct orders
product line groupings
organizational groupings in which unit responsible for specific product offerings
functional groupings
groupings that represent different departments within a firm
geographical groupings
sales territories divided based on location
market based groupings
utilize specific customer segments
marketing return on investment
tool for controlling marketing programs using application of modern measurement technologies
RFID tag
radio frequency identification tag, contains more info than a bar code, important tool in just in time inventory
drop shipping
shipping product to retailer after agent coordinates transaction