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test 1 Flashcards

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1
Q

What is the primary purpose of marketing?

A

To create long-term and mutually beneficial exchange relationships between an entity and the public with which it interacts

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2
Q

What does it mean that marketing is a way of doing business?

A

Everything that everyone does with the organization is marketing (ex: hotel – front desk “worked for marketing” // how you do business)

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3
Q

What is the importance of defining the businesses mission and goals?

A

Mission defines the vision and philosophy of the company and goals turn the mission into tangible actions and results to be achieved

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4
Q

• What is the best way to define a business? Remember that from a strategic perspective you define by 3 things?

A

o Define your business by the type of customer you want to serve
o Needs and wants of that customer
o Look at the means we have to satisfy that customer

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5
Q

What does it mean if you define yourself as a customer satisfying endeavor?

A

o You focus on your customers’ needs and wants

o Look at the means we have (do we have the means to provide the customer with those needs and wants)

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6
Q

• What is a business’ mission?

A

It underscores the scope of an organization’s operations
 Who we are doing it for
 How we are going to do it

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7
Q

What benefits does a company‘s mission provide?

A
  • Crystallizes the vision & long-term direction of the company
  • Provides guidance
  • Inspires and challenges
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8
Q

What do goals do for a company?

A

Turns the mission into tangible actions and results to be achieved

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9
Q

What are the three categories of goals? Remember that they must complement each other.

A
  1. Production goals/Quality Goals
    “How many cups of coffee are we going to make? Quality of the coffee?

2.Financial Goals
“How much money are we going to make?”

3.Marketing Goals
“What market share do we want to achieve? Level of customer satisfaction? Productivity levels? etc.”

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10
Q

What does it mean that goal setting must be problems centered and future oriented?

A

A goal must be focused on the direct problem (not on a symptom) and oriented on the future

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11
Q

• What are the organizational growth opportunities?

A

Converting environmental opportunities into organizational opportunities (ex: no couples therapy business  open couples therapy business in town)

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12
Q

What are three questions that help us to decide if environmental opportunities represent viable organizational growth opportunities?

A

What might we do? (Opportunities!)

What do we do best? (Distinctive Competency!)

What must we do?

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13
Q

Why is it important to ask what do we do best? Remember the concept of distinctive competency.

A

o What we do best – how we beat our competitors
 Distinctive competency: how are you different

Our distinctive competencies distinguish us from our competition

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14
Q

What were the two criteria to be satisfied if something is a distinctive competency?

A
  1. Imperfectly inimitable (can’t be imitated)
  2. Significant contribution to the benefits we provide
    Remember - benefits are perceived by the customer!
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15
Q

Whyy must we ask what must we do? Remember what key success factors are. Also remember that what must be done has to match the what can be done

A

o What might we do, what do we do best – make sure we know these things and the opportunities to know what we must do (ex: technology industry)

“What we do” = tasks we must perform to be successful => Key Success Factors
What must be done must match what can be done (?)

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16
Q

What is swot analysis

A

Compilation of company’s strengths, weaknesses, opportunities, and threats that are utilized to help a company develop a full awareness of all of the factors involved in business decisions

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17
Q

What are the components of swot analysis? Which are internal which are external?

A

Internal: Strengths and Weaknesses (financial, technical, HR, product line)

External: Opportunities and Threats (technology, competition, economic, political, legal, social trends)

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18
Q

What are the four product market strategies?

A

Market penetration, market development, diversification, new offering development

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19
Q

Market: Existing
Offerings: existing

A

Market penetration

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20
Q

Market: New
Offerings: Existing

A

Market development

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21
Q

Market: Existing
Offerings: New

A

New offering development

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22
Q

Market: New
Offerings: New

A

Diversification

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23
Q

Market Penetration (>50% Success rate)

A

Seeking to gain greater dominance in a market where we already have an offering/are already in

  1. Can increase buyer usage and consumption rate
  2. Attracts new customers from competition
  3. Lowering prices below competitions’
  4. Expand distribution
  5. Heavier promotions
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24
Q

Market Development (25% success rate)

A

Offering existing products to new markets

  1. Move into different geographic areas or new buying publics
  2. Varying the marketing mix
  3. We must make sure that we have the internal factors & adaptability necessary to go after somebody new
  4. Exporting, licensing, joint ventures, direct investment
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25
New offering development (50% success rate)
I. Creating new offerings for existing markets ii. Product Innovation 1. Enhancing the value to our customers of something we already offer (augmentation) 2. Or new stuff - product line extension (new chip flavors) 3. There must be a significant point of difference 4. What we must worry about: cannibalism - competing with yourself
26
Diversification (5% success rate)
I. New products in a new market 1. Most difficult and expensive 2. Market success requirements linked with distinctive competencies of the company
27
What are four forms of international market development?
Exporting, Licensing, joint ventures, direct investment (building factories everywhere)
28
With the new offering development, what is the difference between offerings that are product augmentations and products that are product line extensions?
o Product Augmentation: enhancing the value to the customer of something we already offer o Product line extension: Offering something new or adding new product/updated product to an already existing segment of products
29
What does it mean that successful new offerings must have a significant point of difference?
- For the new offerings in a product line extension to be successful they must have a significant point of difference - They must be different than the offerings we already have and also different from our competitors
30
What is cannibalization?
-Cannibalization is competing with yourself - risk associated with product line extension o Cannibalization: reduction of sales, volume, or market share due to an introduction of a new product by the same company (in the same product segment)
31
Why Is diversification really risky?
- Diversification is contingent on market success requirements linked with the distinctive competencies of the company - There is no past data about product life in a certain market – do not know how the market will react to the product launched
32
• What is the probability of success for each of the product market strategies?
Diversification — 5% success or 1 in 20 Marketing Development – 25% success (1 in 4) Market Penetration – greater than 50% success product development 50%
33
• What are the 4 C’s?
Product --- consumer needs and wants Price----- cost to user Promotion----- Communication Place------- convenience to customer
34
• What is included in the services marketing mix?
People Process Physical attributes
35
• Who determines the “rightness” of marketing mix decisions?
Rightness always based on the customer (changing 4 P’s to 4 C’s and going to the services marketing that includes the customers rather than just the product)
36
What is a budget?
Budget - “How much is it going to cost me to do this stuff?”
37
What is the difference between an operating budget and a financial budget?
Operating Budget: Involves operations and focuses on the income statement Financial : Focuses on the effect that our Operating Budget has on our cash position
38
• What is a marketing audit? Why is it important?
Someone coming in and looking at your decisions and making sure its on the right path – external
39
What are the strategic and operational questions involved with an audit?
1. Strategic - Are we doing the right things? | 2. Operational - Are we doing things right?
40
• What does it mean that a marketing plan is the tangible result of an intellectual process?
Come up with answer (get your thoughts from plan and turn it into a business, etc, making it actually tangible)
41
What is the difference between variable and fixed costs?
Variable costs are PER UNIT of output, where total variable cost FLUCTUATE in direct proportion to output. Fixed costs vary PER UNIT of output, where they DO NOT fluctuate with output volume. Variable costs : COGS & expenses not directly tied to production. Fixed cost: Programmed & committed
42
• Are per unit variable costs uniform or do they vary?
Variable per unit costs stay the same (uniform)
43
• What are the 2 categories of variable costs?
o Costs of Goods Sold (facilities, labor, materials, etc.) | o Expenses not directly tied to production (sales commission, discounts, delivery expenses)
44
• Do per unit fixed costs vary?
o Fixed per unit costs vary
45
• What are the 2 types of fixed costs? Know the difference between the two.
o Programmed: results from attempts to generate sales volume (ex: advertising, sales promo, etc.) o Committed: required to maintain the organization (ex: salaries, rent, etc.)
46
• What are relevant costs?
o Costs expected to occur in the future (differ among marketing alternatives being considered)
47
• What are opportunity costs? (be sure you know how to figure out the opportunity cost of choosing one option)
o The next best option, what we are going to lose when we make a decision What you give up in return for choosing an alternative
48
• What are sunk costs?
o Past expenditures that are typically irrelevant to future decisions o Will neither reoccur nor influence future expenditures
49
• What are margins?
o Difference between selling price and the costs | o Can be $ or %
50
What is gross margin? Be sure you know how to calculate those.
net sales - cost of goods sold.
51
What is a trade margin? What two ways can they be calculated? Make sure you can calculate them both ways. Which base is the correct way to calculate trade margins? Explain.
Trade margin is the difference between selling costs and price. Unit selling price - unit sales sold = trade margin OR Price / % Margin . would they not both be correct?
52
What is a net profit margin?
Net sales - cogs - gross profit margin - selling expenses = Net profit margin
53
What’s a contribution?
(Contribution margin is unit selling price - unit variable cost) /unit sales price
54
Make sure you understand what break-even analysis is. Know what the results mean. Know how to calculate it. Also know how to calculate it given a targeted profit.
Break even is when your profit is equal to your loss and your revenue is equal to your total fixed costs. BE= total fixed costs / (unit selling price - unit variable price)
55
Know how to calculate break even in units AND dollars.
Unit BE Volume = Total $ Fixed Costs / (Unit Selling Price - Unit Variable Costs) (Unit Selling Price - Unit Variable Costs) = Contribution per Unit
56
What is operating leverage? What is the difference between a firm that has high operating leverage and one that has low operating leverage? How does that affect total profits?
High total relative costs relative to their variable cost have higher leverage . Low fixed costs equals low leverage . high fixed costs equals high leverage.
57
Be able to calculate the customer lifetime value.
CLV= cash- variable cost [ (1 / 1+i - r)] where i =interest rate and r = probability the customer will be retained
58
1. Why is a well-defined problem important?
Because “A problem well defined is a problem half solved” o You must define the problem so you know what and how to solve it – if you do not know the problem then the outcome will not fix that problem.
59
• What 3 things must be recognized when defining a problem?
o Objectives o Constraints o Success measures
60
• What does enumerate mean?
o To mention a number of things one by one
61
What two sets of decision factors must be enumerated in the decision making process? Which of those are controllable and which are not?
1. Alternative courses of action (things that are controllable, have complete command over these things) 2. Uncertainties (Uncontrollable, things like buyers responses.)
62
• What is relevant information? Why is it sometimes not easy to figure out what is relevant?
Relevant info: information that relates to the alternatives identified as being likely to affect future events
63
. What are two notes of caution in regard to finding relevant information?
1. Resist the temptation to consider everything as fact | 2. You may need to create information
64
What is the situation analysis? What question does that seek to answer?
Situation analysis is the first three steps: Define the problem, Enumerate the decision factors, Consider relevant information Seeks to answer the question: Asks where are we now?
65
Know how to use a decision tree and a payoff table to help in decision making. Know the calculations. Know three reasons why decision analysis is important.
Three reasons why decision analysis is important: 1. You get to the bottom of “what if” situations 2. It forces you to quantify stuff 3. You can use it in a variety of different situations

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