Midterm II

Question 1

Gap Analysis

Answer 1

A technique businesses use to determine what steps need to be taken in order to move from its current state to desire, future state. Forces them to reflect on who they are and what they want to be. Consists of: 1. listing of characteristic factors (attributes, competencies, etc.) 2. listing factors needed to achieve future objectives 3. highlighting the gaps that exist and need to be filled.

Question 2

Value

Answer 2

1. Low price -discounting, penetration pricing 2. Everything I want in a service -prestige pricing, skimming pricing 3. Quality I get for the price I pay -market segmentation pricing 4. All that I get for all that I give -results-based pricing

Question 3

Value-based pricing

Answer 3

Pricing strategy which sets prices primarily on the perceived value by the customer rather on the cost of the product or historical prices

Question 4

Value-added pricing

Answer 4

Attaches value-added features and services to differentiate product, giving it a greater sense of value

Question 5

Integrated marketing communications

Answer 5

The application of consistent brand messaging across both traditional and non-traditional marketing channels and using different promotional methods to reinforce each other

Question 6

Permission marketing

Answer 6

Aims to sell good and serves only when the prospect gives consent in advance to receive the marketing information (i.e.opt-in email)

Question 7

Niche (market)

Answer 7

Subset of the market on which a specific product is focused. Market niche defines the product features to satisfy specific market needs as well as price range, production quality, and the demographics that it is intended to impact

Question 8

Product line filling

Answer 8

Strategy that involves increasing the number of products in an existing product line to take advantage of marketplace gaps and reduce competition

Question 9

Push & Pull Strategy

Answer 9

Push- involves taking the product directly to the consumer, ensuring that they are aware of your brand at the point of purchase Pull- involves motivating customers to seek out your brand in an active process

Question 10

Repositioning

Answer 10

Changing a brand’s status in comparison to that of the competing brands. Has to change the target market’s understanding of the product.

Question 11

Blue Ocean Strategy

Answer 11

Business consists of two space- red and blue oceans. Blue oceans are all the industries not in existence today - untainted by competition Create blue oceans by companies giving rise to new industries, and create it from a red ocean (alter boundaries of an exiting industry)

Question 12

Brand personality

Answer 12

A set of human characteristics associated with a brand. Gives the consumer something to relate to. Will increase brand equity by having a consistent set of traits.

Question 13

Fixed vs. Variable cost

Answer 13

Fixed - includes items such as sales and marketing staff salaries, national campaigns, and promotional materials (not dependent on level of goods or services produced) Variable - costs that change in proportion to the good or service

Question 14

Profit

Answer 14

The difference between the amount earned and the amount spent in buying, operating, or producing something

Question 15

7 P’s of Service Marketing

Answer 15

1. Product
2. Price
3. Promotion
4. Place
5. People (the service customers receive from staff)
6. Process (systems used to deliver service - efficiency)
7. Physical evidence (what the environment looks and feels like where you are receiving the service)

Question 16

Distribution Strategies

Answer 16

Method used to get your product or service through various channels to the ultimate purchaser.

A. Customer marketing channels

1. producer –> consumer
2. producer –> retailer –> consumer
3. producer –> wholesaler –> retailer –> consumer

B. Business Marketing Channels

1. producer –> business customer
2. producer –> business distributor –> business customer
3. producer –> manufacturer’s representatives –> business distributor –> business customer

Question 17

Product Life Cycle

Answer 17

1. Product development-sales are zero and investment costs mount
2. Introduction-slow sales growth and profits are nonexistent; high distribution and promotion expense
3. Growth-rapid market acceptance and increasing profits
4. Maturity-slowdown in sales growth and profits level off or decline (many suppliers, overcapacity leads to competition)
5. Decline-sales fall off and profits drop

Question 18

Reasons for new product failure

Answer 18

1. Overestimation of market size
2. Poor design
3. Incorrect positioning
4. Wrong timing
5. Priced too high
6. Ineffective promotion
7. Management influence
8. High development costs
9. Competition

Question 19

Business vs. Marketing Decisions

Answer 19

• Business focuses on finance, which usually means cutting products
• Marketing focuses on the Ps and typically adds products

Question 20

Affordable budget

Answer 20

Affordable budget method sets the budget at an affordable level. Ignores the effects of promotion on sales

Question 21

Percentage of sales method

Answer 21

Percentage of sales method sets the budget at a certain percentage of current or forecasted sales or unit sales price

• Easy to use and helps management think about the relationship between promotion, selling price, and profit per unit
• Wrongly views sales as the cause than the result of promotion

Question 22

Competitive parity method

Answer 22

Competitive parity method sets the budget to match competitor outlays

• Represents industry standards
• Avoids promotion wars

Question 23

Objective-and-task method

Answer 23

Objective-and-task method sets the budget based on what the firm wants to accomplish with promotion and includes:

• Defining promotion objectives
• Determining tasks to achieve the objectives
• Estimating costs

Forces management to spell out its assumption about the relationship between outlays and results but is difficult to use