Marketing 300 Exam 3

place
making goods and services available in the right quantities and locations, when customers want them
channel of distribution
any series of firms or individuals who participate in the flow of products from producer to final user or consumer
direct marketing
direct communications between a seller and an individual customer using a promotion method other than face-to-face personal selling
discrepancy of quantity
the difference between the quantity of products it is economical for a producer to make and the quantity final users or consumers normally want
discrepancy of assortment
the difference between the lines a typical producer makes and the assortment final consumers or users want
accumulating
collecting products from many small producers
bulk-breaking
dividing larger quantities into smaller quantities as products get closer to the final market
sorting
separating products into grades and quantities desired by different target markets
assorting
putting together a variety of products to give a target market what it wants
channel captain
a manager who helps direct the activities of a whole channel and tries to avoid or solve conflicts
vertical marketing systems
channel systems in which the whole channel focuses on the same target market at the end of the channel
corporate channel systems
corporate ownership all along the channel
vertical integration
acquiring firms at different levels of channel activity
contractual channel systems
the channel members agree by contract to cooperate with each other
ideal market exposure
makes a product available widely enough to satisfy target customers’ needs but not exceed them
intensive distribution
selling a product through all responsible and suitable wholesalers or retailers who will stock or sell the product
selective distribution
selling through only those intermediaries who will give the product special attention
exclusive distribution
selling through only one intermediary in a particular geographic area
multichannel distribution
occurs when a producer uses several competing channels to reach the same target market — perhaps using several intermediaries in addition to selling directly
reverse channels
channels used to retrieve products that customers no longer want
licensing
selling the right to use some process, trademark, patent, or other right for a fee or royalty
logistics
transporting, storing, and handling of goods in ways that match target
physical distribution
another common name for logistics
customer service level
how rapidly and dependably a firm can deliver what they, the customers, want
physical distribution concept
says that all transporting, storing, and product-handling activities of a business and a whole channel system should be coordinated as one system that seeks to minimize the cost of distribution for a given customer level
total cost approach
involves evaluating each possible PD system and identifying all of the costs of each alternative
supply chain
the complete set of firms and facilities and logistics activities that are involved in procuring materials, transforming them into intermediate or finished products, and distributing them to customers.
electronic data interchange (EDI)
an approach that puts information in a standardized format easily shared between different computer systems
transporting
the marketing function of moving goods
containerization
grouping individual items into an economical shipping quantity and sealing them in protective containers for transit to the final destination
piggyback service
loading truck trailers — or flatbed trailers carrying containers — on railcars to provide both speed and flexibility
storing
the marketing function of holding goods so they’re available when they’re needed
inventory
the amount of goods being stored
private warehouses
storing facilities owned or leased by companies for their own use
public warehouses
independent storing facilities
distribution center
a special kind of warehouse designed to speed the flow of goods and avoid unnecessary storing costs
retailing
covers all of the activities involved in the sale of products to final consumers
specialty shop
a type of conventional limited-line store — is usually small and has a distinct “personality”
department stores
larger stores that are organized into many separate departments and offer many product lines
mass-merchandising concept
says that retailers should offer low prices to get faster turnover and greater sales volumes by appealing to larger markets
supermarkets
large stores specializing in groceries with self-service and wide assortments, developed in the United States during the 1930s Depression
discount houses
offer “hard goods” (cameras, TVs, and appliances) at substantial price cuts to customers who would go to the discounter’s low-rent store, pay cash, and take care of any service or repair problems themselves
mass-merchandisers
large self-service stores with many departments that emphasize “soft goods” (housewares, clothing, and fabrics) and staples (like health and beauty aids) but still follow the discount house’s emphasis on lower margins to get fast turnover
supercenters
very large stores that try to carry not only food and drug items but all goods and services that the consumer purchases routinely
convenience (food) stores
convenience-oriented variation of the conventional limited-line food stores
automatic vending
selling and delivering products through vending machines
wheel of retailing theory
says that new types of retailers enter the market as low-status, low-margin, low-price operators and then, if successful, evolve into more conventional retailers offering more services with higher operating costs and higher prices
scrambled merchandising
carrying any product lines they think they can sell profitably
corporate chain
a firm that owns and manages more than one store — and often it’s many
franchise operation
the franchisor develops a good marketing strategy, and the retail franchise holders carry out the strategy in their own units
wholesalers
firms whose main function is providing wholesaling activities
merchant wholesalers
own (take title to) the products they sell
agent wholesalers
wholesalers who do not own the products they sell
Product advertising
tries to sell a product
Institutional advertising
promotes an organization’s image, reputation, or ideas rather than a specific product
Pioneering advertising
tries to develop primary demand for a product category rather than demand for a specific brand
Competitive advertising
tries to develop selective demand for a specific brand
Direct type advertising
aims for immediate buying action
Puffery
making a vague claim that cannot be proved or disproved — is acceptable by the FTC
Indirect type advertising
points out product advantages to affect future buying decisions
Comparative advertising
means making specific brand comparisons — using actual product names
Reminder advertising
tries to keep the product’s name before the public
Corrective advertising
ads to correct deceptive advertising
Innovators
first to adopt
Early adopters
well respected by their peers and often are opinion leaders
Early majority
avoids risk and waits to consider a new idea after many early adopters have tried it — and liked it
Late majority
cautious about new ideas
Laggards/non-adopters
prefer to do things the way they’ve been done in the past and are very suspicious of new ideas
Primary demand
demand for the general product idea — not just for the company’s own brand
Selective demand
demand for a company’s own brand
Price
the amount of money that is charged for “something of value”
Target return objective
sets a specific level of profit as an objective
Profit maximization objective
seeks to get as much profit as possible
Sales-oriented objective
seeks some level of unit sales, dollar sales, or share of market — without referring to profit
Status quo objectives
don’t rock the pricing boat objectives
Non-price competition
aggressive action on one or more of the Ps other than price
Skimming
tries to sell the top (skim the cream) of a market — the top of the demand curve — at a high price before aiming at more price-sensitive customers
Penetration policy
tries to sell the whole market at one low price
Basic list prices
the prices final consumers or users are normally asked to pay for products
Discounts
reductions from list price given by a seller to buyers who either give up some marketing function or provide the function themselves
Quantity discounts
discounts offered to encourage customers to buy in larger amounts
Cumulative quantity discounts
apply to purchases over a given period — such as a year — and the discount usually increases as the amount purchased increases
Noncumulative quantity discounts
apply only to individual orders
Seasonal discounts
discounts offered to encourage buyers to buy earlier than present demand requires
Cash discounts
reductions in price to encourage buyers to pay their bills quickly
2/10, net 30
means the buyer can take a 2 percent discount off the face value of the invoice if the invoice is paid within 10 days
Sale price
a temporary discount from the list price
Everyday low pricing
setting a low list price rather than relying on frequent sales, discounts, or allowances
Allowances
are given to final consumers, business customers, or channel members for doing something or accepting less of something
Advertising allowances
price reductions given to firms in the channel to encourage them to advertise or otherwise promote the suppliers products locally
Stocking allowances
are given to an intermediary to get shelf space for a product
Push money (prize money) allowances
are given to retailers by manufacturers or wholesalers to pass on to the retailers’ salesclerks for aggressively selling certain items
Trade-in allowance
a price reduction given for used products when similar new products are bought
Rebates
refunds paid to consumers after a purchase
FOB
“free on board” some vehicle at some place
Freight absorption pricing
absorbing freight cost so that a firm’s delivered price meets that of the nearest competitor
Value pricing
setting a fair price level for a marketing mix that really gives the target market superior customer value
Unfair trade practice acts
put a lower limit on prices, especially at the wholesale and retail levels
Dumping
pricing a product sold in a foreign market below the price of producing it or at a price lower than in its domestic market
Phony list prices
prices customers are shown to suggest that the price has been discounted from list
Wheeler-Lea Amendment
bans “unfair or deceptive acts in commerce”
Price fixing
competitors getting together to raise, lower, or stabilize prices — is common and relatively easy
Robinson-Patman Act
makes illegal any price discrimination
Price discrimination
selling the same products to different buyers at different prices — if it injures competition
markup
a dollar amount added to the cost of products to get the selling price
markup (percent)
means the percentage of selling price that is added to the cost to get the selling price
markup chain
the sequence of markups firms use at different levels in a channel — determines the price structure in the whole channel
stockturn rate
the number of times the average inventory is sold in a year
average-cost pricing
adding a reasonable markup to the average cost of a product
total fixed cost
the sum of those costs that are fixed in total — no matter how much is produced
total variable cost
the sum of those changing expenses that are closely related to output
total cost
the sum of total fixed and total variable costs
average cost (per unit)
total cost divided by quantity
average fixed cost (per unit)
total fixed cost divided by quantity
average variable cost (per unit)
total variable cost divided by quantity
breakeven analysis
evaluates whether the firm will be able to break even — that is, cover all its costs — with a particular price
breakeven point (BEP)
the quantity where the firm’s total cost will just equal its total revenue (total fixed cost divided by fixed cost contribution per unit)
fixed-cost contribution per unit
the assumed selling price per unit minus the variable cost per unit
value-in-use pricing
setting prices that will capture some of what customers will save by substituting the firm’s product for the one currently being used
reference price
the price they expect to pay for many of the products they purchase
leader pricing
setting some very low prices — real bargains — to get customers into retail stores
bait pricing
setting some very low prices to attract customers but trying to sell more expensive models or brands once the customer is in the store
psychological pricing
setting prices that have special appeal to target customers
dynamic pricing
a pricing strategy in which businesses set highly flexible prices for products or services based on current market demands
surge pricing
occurs when a company raises the price of its offering if there is an increase in demand
odd-even pricing
setting prices that end in certain numbers
price lining
setting a few price levels for a product line and then marking all items at these prices
demand-backward pricing
setting an acceptable final consumer price and working backward to what a producer can charge
prestige pricing
setting a rather high price to suggest high quality or high status
product-bundle pricing
setting one price for a set of products