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MKT 300 > Theory > Flashcards

Theory Flashcards

1
Q

What’s a margin?

A

is always a % based on the cost of a product or service
It is the dollar ($) amount you want to add to the cost to determine the selling price
more representative of cost structures, strategy and business operation

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2
Q

What’s a mark-up?

A

is always a % based on the price of a product or service
It is the dollar ($) amount of the selling price that is available to cover fixed costs (remember contribution margin)
typically used in pricing

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3
Q

What’s segmentation?

A

dividing market into distinct groups with distinct needs, characteristics, or behaviours, who might require seperate products or marketing mixes
segmentation allows a marketer to target consumers that behave similarly
marketers can then position their products to fit their target market segment

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4
Q

What’s targeting?

A

choosing which groups to appeal to

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5
Q

Whats Positioning?

A

creating a clear, distinctive, ad desirable position in the target consumer’s mind, relative to competition

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6
Q

What’s a market strategy or objective?

A

consistent with mission statement

derives from mission and current state

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7
Q

What’s a segmentation basis?

A

geographic, demographic, psychographic, behavioural

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8
Q

how do you evaluate segment attractiveness?

A

identifiable, reachable, responsive, substantial and profitable
segment profitability = segment size x segment adoption % x purchase behaviour x profit margin % - fixed costs

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9
Q

How do you select the target market?

A

4 targeting strategies to choose from based on attractiveness of the opportunity and firm’s core competencies:
undifferentiated, differentiated, concentrates, micro marketing

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10
Q

How do you identify develop positioning strategy?

A

positioning strategy

product attributes, benefits and symbolism, market leadership, competition, value

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11
Q

What is the STP process? (5 steps)

A
  1. Strategy or objective
  2. segmentation bases
  3. evaluate segment attractiveness
  4. select target market
  5. identify develop positioning strategy
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12
Q

What’s repositioning?

A

coming up with a new look or message to try and sell more products

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13
Q

What’s variable costs?

A

Vary with production volume

e.g. labour, materials, packaging, shipping

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14
Q

What’s Fixed costs?

A

Unaffected by production volume

e.g. rent, utilities, insurance, property tax

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15
Q

What’s the total cost?

A

Sum of variable and fixed costs

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16
Q

What’s the break even point?

A

the point at which we sell enough products/services to cover total costs (including fixed costs) and we start making a profit

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17
Q

What’s a return on investment?

A

tells us how much value the company creates - how efficiently it allocates its available capital.

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18
Q

What’s a return on market investment?

A

a metric used to measure the overall effectiveness of a marketing campaign by considering the incremental contribution over the cost of the campaign

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19
Q

What makes a brand?

A
  • way to differentiate products
  • can represent firm or entire product assortment, product line or single product
  • brand elements include names, logos, symbols, characters, slogans
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20
Q

what’s the value of branding?

A 
brands facilitate purchasing
brands establish loyalty
protect competition
reduce marketing costs
are assets
impact market value
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21
Q

Why do we want to know the market share? What are the 3 types?

A

Market share gives an overall idea about the composition of an industry
1- unit market share
2- revenue market share
3- relative market share

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22
Q

What’s market penetration (%)?

A

gives an idea regarding how many people have purchased the product relative to the maximum size of the market

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23
Q

What’s brand penetration (%)?

A

gives an idea regarding how many people have purchased the brand relative to the maximum size of the market

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24
Q

Why do we use a brand development index?

A

Index used to show how well a category performs in a given market segment relative to its performance in the market as a whole

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25
Q

Whats a share of requirement or share wallet?

A

for people purchasing a particular brand, what is the ratio between brand purchases and other category purchases

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26
Q

What’s the usage index?

A

Relative to other consumers, do the people buying our brand buy more or less often?

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27
Q

What’s penetration share (%)?

A

gives the ratio of people who buy a brand relative to people who buy from the category. There are multiple ways of calculating, depending on information available. It is similar to market share

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28
Q

What’s the Brand Value: Brand Z Report? (3 steps)

A
  1. The calculate the financial value of the brand
    attribute rate x corporate earnings
    brand multiple
  2. they calculate the brand contribution
  3. multiply the financial value by the brand contribution
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29
Q

Two different types of new producs

A 
Radically new (first telephone)
Incremental (update)
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30
Q

Why create new products?

A

Market saturation - new products add value to the firm
fashion cycle - satisfy the needs of consumers
diversify firm’s risk

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31
Q

What’s the consumer lifecycle?

A

innovators
early adopters
early majority
leggards

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32
Q

What’s the product lifecycle?

A 
introduction
early growth
late growth
maturity
decline
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33
Q

What are the for extending the product lifecycle?

A 
develop new uses
modify product
increase frequency use
increase # of users
find new users
reposition product
tweak marketing strategy
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34
Q

What’s a brand extension?

A

taking brand into previously unrelates territory or market

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35
Q

What’s a line extension?

A

adding variation to an existing product

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36
Q

What are the pros of managing brand as a portfolio?

A

ability to adjust marketing mix to reflect the consumer’s perspective
can be used to defend against competitive pressure

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37
Q

What are the cons of managing a brand as a portfolio?

A

potential confusion of brand meanings
brand proliferation - increased costs with inventory logistics, etc.
potential to dilute marketing efforts, limiting the growth of the key brand

38
Q

What’s cannibalization?

A

a reduction of sales from one product due to the introduction of another
can be a new product, or a new channel outlet
ex. Starbucks opens another location across the street from another one of its locations.

39
Q

What’s breakeven cannibalization rate?

A

BECR tells us the maximum sustainable cannibalization rate

40
Q

What’s relationship marketing?

A

refers to “all marketing activities directed toward establishing, developing, and maintaining successful relational exchanges”
is a philosophy of doing business, a strategic orientation, that focuses on keeping current customers and improving relationships with them
the focus is less on attraction, and more on retention and enhancement of customer relationships

41
Q

What’s the leaky bucket theory?

A

many businesses focus on acquisition while ignoring or not understanding retention and defection
more focus should be on attracting and retaining the best customers
this is especially important to service providers

42
Q

What’s the customer life cycle?

A

customer hunting - market research, data collection, lead generation, traffic generation, appointment making
customer caring - customer service desk, data collection, satisfaction surveys
customer farming - activation, stimulation, retention, loyalty programs

43
Q

What are the 6 customer benefits of loyalty?

A
  1. confidence benefits
    -less risk of something going wrong, less anxiety
    -ability to trust provider
    -know what to expect
    -get firm’s best service level
  2. social benefits
    -mutual recognition, known by name
    friendship, enjoyment of social aspects
    -special treatment benefits
    -better prices, discounts, special deal unavailable to others
  3. extra services
    -higher priority with waits, faster service
  4. economic benefits
    -higher returns
    -lower costs to serve and acquire
    -trust leads to willingness to pat regular prices vs. shopping for discounts
    -tend to spend more as relationship develops
    -business customers may grow larger may consolidate purchases form one supplier
    -cost less to serve
    -less need for information and assistance
    -increased lifetime value of customers
  5. customer behaviour benefits
    -recommendations with new customers for firm (act as unpaid sales people)
    -word of mouth
  6. human resource management benefits
    co-production
44
Q

What are customer counts?

A

these are the number of customers of a firm for a specified time period

45
Q

What’s recency?

A

his refers to the length of time since a customer’s last purchase. A six-month customer is someone who purchased from the firm at least once within the last six months

46
Q

What’s a retention rate?

A

his is the ratio of the number of retained customers to the number of risk
the complement of retention is attrition or churn

47
Q

What’s customer profitability?

A

is the profit the firm makes from serving a customer or customer group over a specified period of time
overall profit vs. individual profit per customer
can be difficult to isolate PPC
the overall profitability of the company can be improved by treating dissimilar customers differently
top tier customers - reward
second tier customers - grow
third tier customers - fire
happy customers vs. profitable customers

48
Q

What’s the customer lifetime value?

A

the present value of the future cash flows attributed to the customer relationship
the dollar value of the customer relationship to the firm

49
Q

What’s a retention rate (%)?

A

the firm’s overall retention rate of customers

50
Q

What’s a discount rate (%)?

A

typically between 5%-15%

51
Q

What factors influence profitability?

A

software customization requirements
add-ons purchased
support requirements

52
Q

What factors impact value?

A

operation cost vs. purchase price
maintenance requirements
additional products required
convenience

53
Q

how do you select an approximate price level?

A

demand-oriented approaches
skimming, penetration, price lining, target
cost- oriented approaches
standard markup, cost-plus, experience curve
profit-oriented approaches
target profit, target return on sales/ on investment
competition-oriented approaches
above, at, or below market

54
Q

What are some options for demand based pricing?

A

Price Skimming - high initial price that falls over time
Price Penetration- setting a price for a new product lower than existing competitors price
Prestige Pricing - intentional setting of high prices to encourage exclusivity
Price lining - grouping products/ services at certain price points
Odd-Even Pricing - psych model of pricing (3.99)
Bundle Pricing - selling a group of products at a lower price than if each product was purchased separately
Yield Management Pricing - a variable pricing strategy to maximize revenue/ profit from a perishable good
Loss Leader Pricing - selling one product at a low price to stimulate profitable sales of other products

55
Q

What are elements that can affect the price?

A 
price/ quality relationship
a heuristic (mental shortcut) often used when consumers lack product knowledge or experience
56
Q

What factors affects the product lifecycle?

A 
competition
distribution
internet and extranets
promotion strategy
demands of large customers
57
Q

What’s a demand?

A

how many people want to buy a product, and how much they want to buy

58
Q

What’s a demand curve?

A

the number of products that will sell at a given price

59
Q

What’s price elasticity?

A

how sensitive a consumer (or group) is to a change of price

Small $ = Big demand

60
Q

What’s price inelasticity?

A

Big $ = Small Demand

61
Q

What factors influence price elasticity of demand?

A

income effect
as income increases, demand increases for high-priced products
price elasticity for these products drops
Substitution effect
greater availability of substitutes, higher price elasticity of a product
unique, strong brands are less affected
Necessity - more necessity, the lower the elasticity
Duration - the longer a price change holds. the higher the elasticity
Who pays - corporate expenses, there is likely to be more inelastic demand

62
Q

What are loyalty programs?

A

discount programs, where participants receive instant discounts/ benefits at the point of sale
rebate programs/ cash back, where customers accrue financial benefits from purchases tracked by the program sponsor and receive their benefit after a set time period
points programs, where members accrue points (or credits or some other unit: the “currency”) by buying goods and services from an issuing program sponsor, then exchange the points for free or discounted goods or services

63
Q

Advantages and disadvantages for coalation

A 
adv.
easier to redeem
receive offers from other sponsors
disadv. 
more unsolicited communications
loss of privacy
points may expire
64
Q

Advantages and disadvantages for Stand alone

A 
adv.
more personal and customized
disadv.
difficult to earn rewards at one sponsor
need to manage many cards and programs
points may expire
65
Q

What are the goals of loyalty programs?

A 
lower costs
increase revenue
improve performance
understand and exploit patterns
lift - help lift or elevate spending
shift - shift buying programs
retain - increase retention and reduce defection
66
Q

What’s a participation rate?

A

the number of customers registered for the loyalty program as compared to those who do not participate

67
Q

What’s a tenure?

A

length of time the customer has been a member of the program

68
Q

what’s an activity rate?

A

an evaluation of the number of registered customers who are collecting and/ or redeeming points (usually define ‘activity’ for a specified period)

69
Q

What’s a Churn/ attrition rate?

A

the rate, over a specified period, at which people drop out of the program (opposite of retention rate)

70
Q

What’s a Redemption (breakage) rate?

A

the percentage of issued points customers are expected to redeem before lost due to expiration or forfeiture
not every point issued will actually be redeemed in the future

71
Q

What’s the down side to loyalty programs?

A

the downside to loyalty programs is that the outstanding points represent a liability to the company

72
Q

What goes into a CRM database?

A 
customer data
sales data
marketing communications
inbound contact data
research data
inventory
73
Q

what if you had a list of sales transactions for a travel agency, with associated vendors and products, and wanted to see how the different products were performing on a month to month basis?

A 
pivot tables (similar to cross tabs) allow you to summarize one variable across two dimensions
one dimension gets listed vertically (the columns) while the second dimension is listed horizontally (the rows)
the intersection (column and row) provides you with he summarized value you are looking for (ex. the sales for a particular mont, for a particular product)
74
Q

ROMI revisted (promotion metrics)

A

return on market investment continues to be an optimal method for evoluting the cost/ benefits either os an anticipated campaign, or a completed campaign
focus on quantitative goals
may also want to look at less tangible outcomes
ex. each year charitable organizations run fundraising campaigns, but they also want to promote awareness

75
Q

Business Perspective, how does it work?

A

company agrees to sell their product at a discount of 50-90%
campaign runs for 24 hours, and must meet a minimum quota of buyers
groupon keeps 50% of the discounted revenue!
is it worth it for a business to use these “daily deal sites”?
Consider the following:
a store buys a shirt for $10, marks up the shirt by 70%; what is the selling price?
$10x (1+ markup) = $10 x (1 +0.7) = $17
The shirt doesn’t sell at that price, and they want to mark it down by 70% to get rid of it, what is the new selling price?
$17 - ($17 x markdown) = $17 - ($17 x 0.7) = $17 - $11.90= $5.10
Mark down is not the opposite of mark up

76
Q

What are the three parts of advertising metrics?

A

Impressions
Reach
Frequency

77
Q

What is an impression?

A

the number of times your ad is available too be seen or otherwise exposed to media audiences

78
Q

What is a reach?

A

the number of unique individuals exposed to your ad

if it you got 100 impressions, there might only be 40 people who the ad reached to

79
Q

What is a frequency?

A

average number of times your ad will be shown to/seen by an audience

80
Q

What is a rating point?

A

each of a media vehicle as a percentage of a defined population
rating point is the number of time it has been seen divided by the total number of possibilities
ex. a tv show with a rating of 2, reaches 2% of the population

81
Q

What’s a gross rating point? (GRPs)

A

total ratings achieved by multiple media vehicles expressed in rating points
ex. advertisements on five tv shows with an average rating of 30% would achieve 150 GRPs)

82
Q

What’s a cost per thousand of impression (CPM) useful for?

A

is useful in comparing the relative efficiency of different advertising opportunities or media and in evaluating the costs of overall campaigns

83
Q

What’s a clickthrough rate?

A

the number of impressions that lead a user to click on an ad

clickthrough rate = number of clicks

84
Q

What’s a cost per click?

A

gives the average amount to get an advertisement clicked
it tells us about the effectiveness or our ad
clicks are a way to measure attention and interest

85
Q

Why do marketers use rich media display time?

A

to monitor how long their advertisements are holding the attention of potential customers
rich media time represents an important way of tracking the success of internet advertising
ex. youtube can track how long you watch the ad and measure how affective the ad is

86
Q

What’s a rich media rate?

A

represents an important way of tracking the success of internet advertising in that in monitors the fraction of impressions that generate interaction on the part of the viewer

87
Q

What are the pros and cons of email promotions?

A

pros
inexpensive to implement
dynamic/ customizable content
relatively easy to track responses to promotional materials
unsubscribe option can indicate churn rate
cons
subject to wear-out and can easily ignored
difficult to measure opening vs non response
difficult to interpret
easy to “fake” email adresses

88
Q

What’s the email open rate?

A

the percentage of email delivered that gets opened

89
Q

What’s the email clicking rate?

A

the percentage of email delivered that gets clicked on

90
Q

What are the benefits of online reviews?

A

quantitative analysis
star rating (avg) and distribution of responses
helpfulness (helps identify opinion leaders)
qualitative analysis ( that can be qualified)
linguistic analysis ex. positive/negative emotions
easily accessible
gives real feedback
helpful for monitoring less tangible elements
useful for tracking opinion leaders, key websites
can help determine trend, tie back key dates
interactive

91
Q

What makes a web metric good?

A

can be linked to some downstream behaviour
can reflect the valence of perspective towards the brand/ ad
reminder, people can have specific attitudes towards a brand and attitudes towards an ad
can be linked to some form of interaction, or represents some positive action on behalf of the consumer
actionable (vs. vanity)

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