4Ps

Question 1

What is a Product?

Answer 1

A product is anything that can be offered to a market to satisfy a want or a need

Question 2

The future is…

Answer 2

hard to forecast

Question 3

What are the common assumptions about products?

Answer 3

Products have a limited life
Products sales pass through distinct stages, each posing different challenges, opportunities, problems
Products require different marketing, financial, manufacturing strategies in each life-cycle stage

Question 4

What are the 4 stages of PLC

Answer 4

Introduction
Growth
Maturity
Decline

Question 5

What is the introduction stage?

Answer 5

A period of slow sales growth as product is introduced in the market where profits are nonexistent

Question 6

What is the growth stage?

Answer 6

A period of rapid market acceptance and substantial profit improvement

Question 7

What is the maturity stage?

Answer 7

A slowdown in sales growth because the product has achieved acceptance by most potential buyers

Question 8

What is the decline stage

Answer 8

Sales and profits decline and Focus turns to profit rather than sales or share

Question 9

What are the 3 attributes that consumers use to evaluate a product

Answer 9

Search Attributes
Experience Attributes
Credence Attributes

Question 10

Brands can serve as…

Answer 10

a surrogate for quality information

Question 11

Logos can also…

Answer 11

convey attributes

Question 12

Product:

Answer 12

Change quality, design, packaging, sizes, warranties, return policies

Question 13

Price:

Answer 13

Change list price, discounts, repayment period, financing terms

Question 14

Promotion:

Answer 14

Change size of sales force, advertising campaign

Question 15

Place:

Answer 15

Change numbers of intermediaries

Question 16

What are the 3 kinds of surplus?

Answer 16

Producer Surplus
Consumer Surplus
Unrealized Surplus

Question 17

Unrealized surplus when

Answer 17

true value>perceived value

Question 18

No unrealized surplus

Answer 18

when perceived value>true value

Question 19

What is the 3 options to make more profit?

Answer 19

Cut UVC (Unit Variable Cost)
Increasing price cutting into consumer surplus
Increasing WTP (cutting into unrealized surplus)

Question 20

One Caveat to this conceptualization of unrealized surplus:

Answer 20

There will not always be unrealized surplus to cut into.

Question 21

Ideally, price =

Answer 21

max WTP for each person (a form of price discrimination)

Question 22

What is Price Discrimination?

Answer 22

Selling a product/service at two or more prices that do not completely reflect a difference in costs.

Question 23

Some factors leading to Less Price Sensitivity

Answer 23

When buyers are less aware of substitutes
Or buyers cannot easily compare quality of substitutes
The purchase is small compared to buyer’s income/budget
Part of cost is borne by another party
Prestige products
Individual differences (tightwads and spendthrifts)

Question 24

Price Sensitivity and Modern Payment Methods

Answer 24

New payments methods reduce the pain of paying, making consumers less price sensitive and spend more

Question 25

Loss leader pricing:

Answer 25

Offer good at or below cost to entice customers to come in and buy other, higher-margin goods

Question 26

Competitive Pricing

Answer 26

Using price to steal share (rather than increasing surplus)

Question 27

Perhaps the simplest pricing method: the Markup Pricing

Answer 27

Adding a markup to the product’s cost Ignores current demand, perceived value, and competition Cost easier to determine rather than demand Despite non-optimality, remains popular

Question 28

Some Pricing Takeaways

Answer 28

Pricing and different types of surplus Forms of price Discrimination Estimating demand and price sensitivity Common pricing tactics

Question 29

What is a Place/Distribution?

Answer 29

Where you buy something. It can affect the perceived value.

Question 30

What is a Channel?

Answer 30

A set of interdependent organizations involved in the process of product or a service available to the final consumer

Question 31

How do Wholesalers (a.k.a. Distributors) add value for producers and retailers?

Answer 31

Have sales forces that help manufacturer reach many small business customers at low cost. Hold inventories, reducing inventory costs and risk to retailers. Achieve savings for retail clients by buying in discounted bulks, and breaking down into smaller units.

Question 32

What are the advantages of a Wholesaler?

Answer 32

add value for consumers Reducing consumers’ search time Reducing the discrepancy between the assortment of good produced and demanded Manufacturers produce a large quantity of a limited variety of goods Consumers generally desire a small quantity of a wide variety of goods

Question 33

What does Vertical Integration?

Answer 33

Gain control over other elements of the distribution channel

Question 34

Some problems with Vertical Integration

Answer 34

Reduces variety, makes shopping less convenient Manufacturers and retailers perform specialized functions with associated economies of scale When the manufacturer and retailer by a central Decision-Maker, the D-M may not have the know-how to manage both functions efficiently

Question 35

Two types of integrations

Answer 35

Vertical and Horizontal Integration

Question 36

What are the two types of Vertical Integration?

Answer 36

Forward vertical integration: incorporating distribution activities (“going direct”) Backward vertical integration: Incorporating production of supplies

Question 37

Horizontal integration:

Answer 37

merging with/acquiring peers who perform similar functions

Question 38

What is Promotion?

Answer 38

Marketing communications All means of promotion share common goals Make customers aware of offerings Make offerings attractive to customers

Question 39

Common Misconceptions of Promotion

Answer 39

Commercials = Advertising = Marketing Communications

Question 40

Who articulates the consumer proposition?

Answer 40

Manufacturers often work with ad agency’s account managers to develop a creative brief Ad agency’s creative team (e.g., writers, art directors) interprets creative brief and proposes a campaign

Question 41

Framework of Objectives?

Answer 41

Is this a good objective? To make Rotterdam residents aware that the Erasmus Medical Center offers free blood-pressure checkups How about this In one year, to make 70%of Rotterdam residents who are over 50 aware that the Erasmus Medical Center offers free blood-pressure checkups Key elements: Time horizon Target Communication Effect Wanted

Question 42

Benefit of Having a Clear Objective

Answer 42

Helps determine your creative (type of media, content of communication, location etc). A clear objective helps you evaluate your strategy

Question 43

Customer Funnel

Answer 43

Awareness Interest Consideration Intent Evaluation Purchase

Question 44

Advertising Objectives:

Answer 44

Awareness Consideration Remind (Repeat)

Question 45

Marketing communication mix

Answer 45

Advertising Consumer promotions Events and experiences Public Relations

Question 46

Common Marketing Communications Goals

Answer 46

Achieve an information goal Achieve an image goal Achieve a behavior goal

Question 47

Product placement

Answer 47

Because mere exposure helps… The placement of advertisements into other forms Tailor message to your segment