Principles of Marketing – Quiz 2

market segmentation
dividing a market into smaller segments with distinct needs, characteristics, or behavior that might require separate marketing strategies or mixes
market targeting
the process of evaluating each market segment’s attractiveness and selecting one or more segments to enter
actually differentiating the market offering to create superior customer value
arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target customers
geographic segmentation
dividing a market into different geographical units, such as nations, states, regions, counties, cities, or even neighborhoods
demographic segmentation
dividing the market into segments based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality
age and life-cycle segmentation
dividing a market into different age and life-cycle groups
gender segmentation
dividing a market into segments based on gender
income segmentation
dividing a market into different income segments
psychographic segmentation
dividing a market into different segments based on social class, lifestyle, or personality characteristics
behavioral segmentation
dividing a market into segments based on consumer knowledge, attitudes, uses, or responses to a product
occasion segmentation
dividing the market into segments according to occasions when buyers get the idea to buy, actually make their purchase, or use the purchased item
benefit segmentation
dividing the market into segments according to the different benefits that consumers seek from the product
intermarket segmentation (cross-market segmentation)
forming segments of consumers who have similar needs and buying behaviors event though they are located in different countries
target market
a set of buyers sharing common needs or characteristics that the company decides to serve
undifferentiated (mass) marketing
a market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer
differentiated (segmented) marketing
a market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each
concentrated (niche) marketing
a market-coverage strategy in which a firm goes after a large share of one or a few segments or niches
tailoring products and marketing programs to the needs and wants of specific individuals and local customer segments
it includes local marketing and individual marketing
local marketing
tailoring brands and promotions to the needs and wants of local customer segments – cities, neighborhoods, and even specific stores
individual marketing
tailoring products and marketing programs to the needs and preferences of individual customers
also called one-to-one marketing, customized marketing, and markets-of-one marketing
product position
the way the product is defined by consumers on important attributes – the place the product occupies in consumers’ minds relative to competing products
competitive advantage
an advantage over competitors gained by offering greater customer value, either by having lower prices or providing more benefits that justify higher prices
value proposition
the full positioning of a brand – the full mix of benefits on which it is positioned
positioning statement
a statement that summarizes company or brand positioning:
To (target segment and need) our (brand) is (concept) that (point of difference).
anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need
an activity, benefit, or satisfaction offered for sale that is essentially intangible and does not result in the ownership of anything
consumer product
a product bought by final consumers for personal consumption
convenience product
a consumer product that customers usually buy frequently, immediately, and with minimal comparison and buying effort
shopping product
a consumer product that the customer, in the process of selecting and purchasing, usually compares on such attributes as suitability, quality, price, and style
specialty product
a consumer product with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort
unsought product
a consumer product that the consumer either does not know about or knows about but does not normally consider buying
industrial product
a product brought by individuals and organizations for further processing or for use in conducting a business
social marketing
the use of commercial marketing concepts and tools in programs designed to influence individuals’ behavior to improve their well-being and that of soceity
product quality
the characteristics of a product or service that bear on its ability to satisfy stated or implied
a name, term, sign, symbol, design, or a combination of these, that identifies the products or services of one seller or group of sellers and differentiates them from those of competitors
the activities of designing and producing the container or wrapper for a product
product line
a group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within give price ranges
product mix (or product portfolio)
the set of all product lines and items that a particular seller offers for sale
service intangibility
services cannot be seen, tasted, felt, heard, or smelled before they are bought
service inseparability
services are produced and consumed at the same time and cannot be separated from their providers
service variability
the quality of services may vary greatly depending on who provides them and when, where, and how
service perishability
services cannot be stored for later sale or use
service profit chain
the chain that links service firm profits with employee and customer satisfaction
internal marketing
orienting and motivating customer-contact employees and supporting service people to work as a team to provide customer satisfaction
interactive marketing
training service employees in the fine art of interacting with customers to satisfy their needs
brand equity
the differential effect that knowing the brand name has on customer response to the product or its marketing
store brand (or private brand)
a brand created and owned by a reseller of a product or service
the practice of using the established brand names of two different companies on the same product
line extension
extending an existing brand name to new forms, colors, sizes, ingredients, or flavors of an existing product category
brand extension
extending an existing brand name to new product categories
new-product development
the development of original products, product improvements, product modifications, and new brands through the firm’s own product development efforts
idea generation
the systematic search for new-product ideas
inviting broad communities of people – customers, employees, independent scientists and researchers, and even the public at large – into the new-product innovation process
idea screening
screening new-product ideas to spot good ideas and drop poor ones as soon as possible
product concept
a detailed version of the new-product idea stated in meaningful consumer terms
concept testing
testing new-product concepts with a group of target consumers to find out if the concepts have strong consumer appeal
marketing strategy development
designing an initial marketing strategy for a new product based on the product concept
business analysis
a review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the company’s objectives
product development
developing the product concept into a physical product to ensure that the product idea can be turned into a workable market offering
test marketing
the stage of new-product development in which the product and its proposed marketing program are tested in realistic market settings
introducing a new product into the market
customer-centered new-product development
new-product development that focuses on finding new ways to solve customer problems and create more customer-satisying experiences
team-based new-product development
an approach to developing new products in which various company departments work closely together, overlapping the steps in the product development process to save time and increase effectiveness
product life cycle
the course of a product’s sales and profits over its lifetime; it involves five distinct stages: product development, introduction, growth, maturity, and decline
a basic and distinctive mode of expression
a currently accepted or popular style in a given field
a temporary period of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity
introduction stage
the PLC stage in which a new product is first distributed and made available for purchase
growth stage
the PLC stage in which a product’s sales start climbing quickly
maturity stage
the PLC stage in which a product’s sales growth slows or levels off
decline stage
the PLC stage in which a product’s sales decline
the amount of money charged for a product or service; the sum of the values that customers exchange for the benefits of having or using the product or service
customer value-based pricing
setting price based on buyers’ perceptions of value rather than on the seller’s cost
cost-based pricing
setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk
fixed costs (overhead)
costs that do not vary with production or sales levels
variable costs
costs that vary directly with the level of production
total costs
the sum of the fixed and variable costs for any given level of production
experience curve (learning curve)
the drop in the average per-unit production cost that comes with accumulated production experience
cost-plus pricing (markup pricing)
adding a standard markup to the cost of the product
break-even pricing (target return pricing)
setting price to break even on the costs of making and marketing a product or setting price to make a target return
competition-based pricing
setting prices based on competitors’ strategies, prices, costs, and market offerings
target costing
pricing that starts with an ideal selling price and then targets costs that will ensure that the price is met
demand curve
a curve that shows the number of units the market will buy in a given time period at different prices that might be charged
price elasticity
a measure of the sensitivity of demand to changes in price
good-value pricing
offering the right combination of quality and good service at a fair price
value-added pricing
attaching value-added features and services to differentiate a company’s offers and charging higher prices
value delivery network
a network composed of the company, suppliers, distributors, and, ultimately, customers who “partner” with each other to improve the performance of the entire system in delivering customer value
marketing channel (distribution channel)
a set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user
channel level
a layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer
direct marketing channel
a marketing channel that has no intermediary levels
indirect marketing channel
channel containing one or more intermediary levels
channel conflict
disagreement among marketing channel members on goals, roles, and rewards – who should do what and for what rewards
conventional distribution channel
a channel consisting of one or more independent producers, wholesalers, and retailers, each a separate business seeking to maximize its own profits, even at the expense of profits for the system as a whole
vertical marketing system (VMS)
a distribution channel structure in which producers, wholesalers, and retailers act as a unified system; one channel member owns the others, has contracts with them, or has so much power that they all cooperate
corporate VMS
a vertical marketing system that combines successive stages of production and distribution under single ownership – channel leadership is established through common ownership
contractual VMS
a vertical marketing system in which independent firms at different levels of production and distribution join together through contracts
franchise organization
a contractual vertical marketing system in which a channel member, called a franchisor, links several stages in the production-distribution process
administered VMS
a vertical marketing system that coordinates successive stages of production and distribution through the size and power of one of the parties
horizontal marketing system
a channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity
multichannel distribution system
a distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segments
the cutting out of marketing channel intermediaries by product or service producers or the displacement of traditional resellers by radical new types of intermediaries
marketing channel design
designing effective marketing channels by analyzing customer needs, setting channel objectives, identifying major channel alternatives, and evaluating those alternatives
intensive distribution
stocking the product in as many outlets as possible
exclusive distribution
giving a limited number of dealers the exclusive right to distribute the company’s products in their territories
selective distribution
the use of more than one but fewer than all the intermediaries who are willing to carry the company’s products
marketing channel management
selecting, managing, and motivating individual channel members and evaluating their performance over time
marketing logistics (physical distribution)
planning, implementing, and controlling the physical flow of materials, final goods, and related information from points of origin to points of consumption to meet customer requirements at a profit
supply chain management
managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers
distribution center
a large, highly automated warehouse designed to receive goods from various plants and suppliers, take orders, fill them efficiently, and deliver goods to customers as quickly as possible
intermodal transportation
combining two or more modes of transportation
integrated logistics management
the logistics concept that emphasizes teamwork – both inside the company and among all the marketing channel organizations – to maximize the performance of the entire distribution system
third-party logistics provider
an independent logistics provider that performs any or all of the functions required to get a client’s product to market