Marketing Quiz Chapter 5-8

The marketing program
-Strategic combination of the four marketing mix elements
-The product receives the most attention because it is most responsible for fulfilling the customer’s needs and wants.
1. Involves creating an offering that is an array of physical(Tangible), Service(Intangible), and symbolic(Perceptual) Attributes designed to satisfy customers needs and wants
2. Due to commoditization, the core product typically becomes incapable of differentiating the offering
3.Most Organizations work to enhance the service and symbolic elements of their offerings to stand
Product Strategy
-Defines what the organization does and why it exists
-A product offering’s real value comes from its ability to deliver benefits that enhance a customer’s situation or solve a customer’s problem
-Products fall into two general categories:
1. Consumer products – for personal use and enjoyment
2.Business products- for resale, use in making other products,or use in a firm’s operations
Type of Consumer Products
-Convenience products
-Shopping Products
-Specialty products
-Unsought products
Types of Business products
-Raw Materials
-Component parts
-Process paterials
-Maintenance, Repair and operating products
The product portfolio
-Product line: A Group of closely related product items
-Product Mix of portfolio: The total group of products offered by the firm
Strategic Decisions
-Variety-Number of product lines offered
-Assortment: Depth of each product line
Potential benefits of offering a large product portfolio
-Economies of scale
-Package Uniformity
-Sales and Distribution Efficiency
-Equivalent Quality beliefs
The Challenges of Services
-Balancing Supply(Capacity) With demand
-Time and place dependency of demand
-Difficulty evaluating service quality prior to purchase
-Inconsistency of service Quality
-Difficulty in tying offerings to customers’ needs(Ex. The need is not always apparent to customers)
Unique Characteristics of Services
-Simultaneous production and consumption
-Client-based relationships
Developing new products
-A vital part of a firm’s effort to sustain growth and profits
-Depends on the firm’s ability to create a differential advantage for the new product
-Customer perception of newness is critical
Strategic options for Newness
-New to the world products
-New product lines
-Product line extensions
-Improvements or revisions of existing products
-Cost reductions
New product development process
-Idea Generation
-Screening and evaluation
-Test Marketing
Pricing Strategy
-Key in producing revenue for the firm
-Is the easiest of all marketing variables change
-Is an important consideration in competitive intelligence
-Is considered to be the only real means of differentiation in highly commoditized markets
Key issues in pricing strategy
-The firm’s cost structure
-Perceived value
-The price/Revenue Relationship
-Pricing objectives
-Price Elasticity
Breakeven in Units
BE= Total fixed cost/( Unit price-Unit variable cost)
Selling Price: Avg unit cost/ 1-markup%(Decimal)
Perceived value
-Value is a customer’s subjective evaluation of benefits relative to costs to determine the worth of a firm’s product offering relative to other products offerings.
Benefits: Everything the customer obtains from the offering
Costs: Everything the customer must give up
-Value is intricately tied to every element in the marketing program
Price/Revenue relationship
-Myth#1 When business is good, a price cut will capture greater market share
-Myth#2 When business is bad, a price cut will simulate sales
-Price cutting is generally not in the best interest of the firm unless sales volume will increase
-A better strategy is to build value into the product offering at the same( or even a higher ) price.
Common Pricing Objectives
Market demand
Market share
Cash flow
Competative matching
Status que
Price Elasticity
– Refers to customers sensitivity to changes in price
-The relative impact on the demand of a product, given specific increases or decreases in the price charged for that product
-Perhaps the most important overall consideration in setting effective prices
Situations that increase price snsitivity
-Availability of substitute products
-Higher total expenditure
-Noticeable price differences
-Easy price comparisons
Situations that decrease price sensitivity
-Lack of Substitues
-Real or Percieved necessities
-Complementary products
-Perceived products benefits
-Situational influences
-Product differentiation
Pricing Service products
Service pricing is critical
– Hard when cost is hard to find
-When consumer can do it him self
-customer unaware
-brand name is not there
-advertising is limitied
-Service quality hard to predict prior to purchase
Service pricing and yield management
-Service pricing becomes a key issue in balancing supply and demand during peak and off-peak demand times
-Yield management allows the firm to simultaneously control capacity and demand
Control capacity by limiting available capacity at certain price points.
Control demands through price changes and overbooking
Base pricing strategies
– Price skimming
– Price penetration
-Prestige pricing
-Value-based pricing(EDLP)
-Competitive matching
-Non-price strategies
Adjusting the base price
-Reference pricing
-Price Lining
-Odd pricing
-Price bundling
Price Strategies in Business Markets
– Trade discounts
-Discounts and allowences
-Geographic pricing
-Transfer pricing
-barter and countertrade
-Price discrimination
Supply chain strategy
-Marketing channels
-Physical distribution
-supply chain
Supply Chain integration
-Connectivity: Informational and technological linkages among firms
-Community: Compatible goals and objectives among firms
-Collaboration: Recognition of mutual independence among firms
-The most seamlessly integrated supply chain blur the boundaries between firms
Factors in successful supply chain integration
Mutual benefits
Strategic supply chain issus: Marketing channel funct