Unit 3 Test

Question 1

Why is Product the primary P?

Answer 1

because the other marketing decisions (place, price, promotion) are based on the product decision

Question 2

Types of Products

Answer 2

• A product can be anything that can be bought or sold (good, service, idea) or a product is whatever the business sells to satisfy customer needs
• Products can be for the consumer (consumer products) or sold to businesses (business product)

Question 3

Product benefit

Answer 3

The need satisfying quality of a product

Question 4

Tangible

Answer 4

Something that exists physically and can be touched (goods are tangible)

Question 5

Intangible

Answer 5

Something that exists, but is not physical and cannot be touched (services and ideas are in tangible)

Question 6

What are the characteristics of service?

Answer 6

• Intangible

Inseparable:
- production of the service cannot be separated from
• The use of the service
• The producer of the service
Example: the haircut does not exist until the hairdresser cuts your hair and the haircut does not exist without the hairdresser

Variable:
- A service only exists once and is never exactly repeated in the same way
Example: different hairdressers may give different quality haircuts

Perishable:
- Services cannot be stored for later use
- some goods are perishable, but most can be stored until needed
Example: unsold concert tickets cannot be stored and sold at a later time, once the concert is over, the tickets are worthless

Question 7

What is the goods and service Continuum?

Answer 7

Many products are combinations of goods and services

• Example: a restaurant meal is a combination of a good and a service. (the food is the good and the preparation and serving is the service)

Question 8

What is product life cycle?

Answer 8

The stages that a product or a product category goes through from beginning to end.

The four stages are:
1. Introduction.
2. Growth.
3. Maturity.
4. Decline.

Question 9

Explain the purpose of a brand

Answer 9

• A brand helps communicate with the product is about
• Encompasses all aspects of the product
• A way to distinguish the product from competitors

Question 10

Distinguish between a brand-name, slogan and a logo

Answer 10

Brand:
- Consists of words, numbers, or letters that can be spoken
- Example: Nike - brand-name for athletic shoes

Logo:
- Picture, design, or graphic image associated with the brand, sometimes called a brandmark
- Can include the brand-name
- Trade Character

Slogan:
- Phrase or sentence that summarizes some essential aspect of the product
- Also called a tagline
- Example: Nike’s “just do it”

Question 11

Explain the concept of price

Answer 11

• often consider the dollar amount on a price tag
• also called admission, donation, dues, fare (as in bus fare), fee, interest, rate, rent, tip, toll and tuition
• Marketers use price to communicate the value of products

Question 12

State and describe the nine factors that affect pricing

Answer 12

1. Company goals.
2. Expenses.
3. Other marketing mix variables.
4. Customer response.
5. Competition.
6. Economic conditions.
7. Government regulations.
8. Product lifecycle.
9. Supply and demand.

Question 13

Explain how expenses can affect profits

Answer 13

• Price of product must at least cover the cost of goods and operating expenses
• If expenses and costs can be reduced, profit will increase

Example: income - expenses = profit

Question 14

Distinguish between price and non-price competition and give an example of each

Answer 14

Price competition:
- Low prices are used to attract customers
- Example: coca-Cola and Pepsi

Nonprice competition:
- Features other than price are used to attract customers, such as quality, service, and uniqueness
- Example: Advertising

Question 15

Explain the two main purposes of government regulations

Answer 15

1. Prevent monopolies.
2. Promote fair competition.

Question 16

What are government regulations?

Answer 16

Price Fixing:
- competitors meet and agree to sell a specific product for the same price
- Can a occur between retailers and customers between members of the supply chain

Price discrimination:
- Company charges lower prices to some companies for the same products

Question 17

Explain how supply and demand effect price

Answer 17

Law of demand:
- when prices fall, demand will rise
- when prices rise, demand will fall

Law of supply:
- when prices are high, supply will rise
- when prices fall, supply will fall

Marketers keep these laws in mind when setting prices :
- If a product is not selling, they lower prices
- If a product is selling well and supply is falling, they raise prices

Question 18

Explain five common objectives of pricing

Answer 18

1. Maximize profit.
2. Maximize sales.
3. Increase market share.
4. Meet competition.
5. Return on investment.

Question 19

Describe the impact of price on revenue

Answer 19

Lowering the price raises the revenue

Question 20

Determine the break even point for a product with a given cost and selling price

Answer 20

• point at which the revenue from sales equals costs
• once you reach the break even point, any additional revenue is profit

Question 21

List and explain five psychological pricing techniques

Answer 21

1. Odd pricing: prices in an odd number and convey a bargain
2. Even pricing: prices end in zero or an even number and convey an image of quality.
3. Promotional pricing: prices are lowered for sales.
4. Prestige pricing: prices are high and convey an image of status and high-quality.
5. Price Lining: prices are set at different levels to indicate different quality levels or number of options for the same type of product.

Question 22

List and explain five discount pricing techniques

Answer 22

1. Cash discount: offered to retailers who pay their bills promptly.
2. Promotional discount: offered to retailers and wholesalers in exchange for promotions to customers.
3. Quantity discount: offered for purchasing large quantities of a product.
4. Seasonal discount: taylor if they buy goods in advance of the season
5. Trade discount: manufacturer offers the wholesaler or retailer percentage of the list price

Question 23

Explain the purpose of channel distribution

Answer 23

Channel distribution is the route a good takes from its original source to its final customer

The most common of distribution for consumer goods includes:
- A producer
- A wholesaler
- A retailer

Question 24

Explain the difference between a wholesaler and a retailer and why a business would use each

Answer 24

Wholesaler:
- B2B business
- Buys from producers
- Sells to another business
- Also called distributor

Retailer:
- B2C business
- Buys from producers or wholesalers
- sells to consumers
- includes stores, restaurants, theaters, etc.
- includes nonstore retailers
- Examples: e-tailers, TV shopping channels, mail order catalogues

Question 25

Explain why a company would choose an agent or broker

Answer 25

- Another type of intermediary - Connect buyers and sellers - Never own or physically handle the product - may be hired by the seller or buyer - Know the market extremely well - Often used in situations where it is hard for buyers and sellers to find each other

Question 26

Distinguish between direct distribution and indirect distribution

Answer 26

Direct distribution: - channel of distribution with no intermediaries - many services have direct distribution - The service producer “distributes” the service directly to the service user Indirect distribution: - channel of distribution with more than one intermediary

Question 27

Describe the four components of physical distribution

Answer 27

Products Products to be shipped include: - Raw materials - Manufactured goods - Finish consumer goods Products that are shipped are known as: - freight - cargo - merchandise - shipment Channel members - Businesses that need to distribute their products - Usually own the products to be shipped - May transport their own goods - May hire transportation companies to move their goods for them Transportation companies - physically moving goods from buyer to seller - Also called shipping carrier - Company that provides the service of transportation for channel members - Is not part of the distribution channel - Does not own the goods shipped - Example: Purolator Warehouses - products must be stored at various points along the channel of distribution - building large quantities of products until needed for shipping - products are often called inventory

Question 28

Summarize the advantages and disadvantages of each of the five modes of transportation

Answer 28

1. TRUCK Advantages - can deliver door-to-door - flexibility in delivery times - can be modified to carry specific cargo Disadvantages - delays due to traffic, weather, or maintenance 2. SHIP Advantages - can move large quantities farther at a lower cost per item - can be modified to carry specific cargo Disadvantages - slow speed - requires another mode of transportation to get goods from the port to the delivery address 3. TRAIN Advantages - can move large quantities a long distance at low cost - good for heavy and bulky goods - can be modified for specific cargo Disadvantages - no destination flexibility, can only go where there are tracks 4. PLANE Advantages - speed Disadvantages - expensive - delays due to weather - requires another mode of transportation to get goods from airport to final destination 5. PIPELINE Advantages - limited types of products can be transported this way - products safe from damage and theft - low operation costs - not subject to delivery delays Disadvantages - expensive to build - potential for environmental damage

Question 29

Explain how businesses process orders

Answer 29

1. Purchase order (PO): - a sales contract between the buyer and seller - authorizes the purchase and delivery of goods at specific prices and times - starts the transfer of goods from supplier to buyer - buyer sends signed PO to the supplier - supplier receives and signs the PO - supplier sends confirmation to buyer 2. Order Processing: - the receiving and filling of orders - pick ticket created after PO received - pick ticket lists the items in one order - picked items collected in warehouse - items are packaged, labelled, and shipped - bar-code scanning helps keep track of orders and inventory 3. Computerized Order Processing: (Order processing can be automated through computer linkages) - buyer sets up computer linkage with the supplier - buyer’s computer sends message to supplier’s computer when inventory is low - supplier’s computer orders enough goods to resupply the buyer - supplier sends goods to buyer 4. Channel Management and Physical Distribution: - The role of channel management is to oversee physical distribution related to factors such as: • shipping mode • warehouse storage • inventory control • risk 5. Inventory Control (Just-in-time (JIT)): - distribution strategy - allows for materials to be delivered the moment they are needed Electronic data interchange (EDI) - business-to-business exchange of data through computers - examples: shipping notices, invoices 6. Review: - List four place decisions. - What is a channel of distribution? - List the four elements of physical distribution. - List the five modes of transportation. - What is the difference between distribution of goods and the distribution of services and ideas?

Question 30

State and explain the role of promotion and three goals of promotion

Answer 30

- Promotion is one of the Four Ps of the marketing mix. - Promotion is the process of telling people about a product or the company that offers it. - The goal of promotion is to help a business achieve its goals by communicating with customers and the public. - Promotion: informs, expresses, persuades

Question 31

Describe how the communication process works in promotion

Answer 31

- Promotion is communication from an organization to its customers, potential customers, and the public. - Marketing communication is another term for promotion.

Question 32

Distinguish between B2C and B2B Sales promotion

Answer 32

B2C strategy that focuses advertising on customers to create demand. - E.x. Customers got retail stores and demand products then customer demand pulls the product through the supply chain. B2B strategy focuses on wholesalers, distrubutors, and retailers. - These intermediaries buy the product, then promote it to the next link in the supply chain. - The last link, the retailer, promotes it to the customer. - Intermediaries push the product through the supply chain.

Question 33

Explain the AIDA promotional strategy

Answer 33

Four steps of the AIDA strategy consist of: - Attention - Interest - Desire - Action. The steps provide information or motivation for customers at each stage of the decision process.

Question 34

Explain the “Push” and “Pull” promotional strategy

Answer 34

Pull strategy: Helps a company increase its sales by focusing its attention on consumers Push strategy: Helps a company increase its sales by focusing its attention on intermediaries.

Question 35

Summarize the role of integrated marketing communications (IMC) in promotional activities.

Answer 35

The marketing mix is like a puzzle - all the pieces have to fit together Integrated marketing communications (IMC) is the process designed to convey a single, unified message through all promotional activities and includes online and off-line marketing activities

Question 36

What are product elements? Why are they important?

Answer 36

Products have many elements that can be changed to meet customers needs 1. Basic product: When you decide which product to sell, you need to make basic product decisions about • quality - level of excellence (3 types) • features - for a good it’s physical - for a service it’s a task • options - customer request (car) 2. Usage: - Many products are designed to be assembled, installed, or used in some way. - Part of the product decision is how to help the customer make the best use of the product. - Product elements that help the customer with product usage • Instructions •Installation •technical support 3. Protection: - Protection consists of product elements that protect the product from harm, both before and after purchase - Protection includes • grades and standards • packaging • warranties • maintenance and repair services 4. Name: - Name is a critical part of a product and includes: • product name • brand name • product “personality”

Question 37

Identify three ways branding helps the customer

Answer 37

- building trust - credibility - creating emotional connections

Question 38

Describe and give an example of each of the four elements of promotion

Answer 38

1. Sales promotion. 2. public relations. 3. Personal selling. 4. Advertising.

Question 39

Why is the marketing concept important in promotion

Answer 39

- the marketer is the sender - the target market is the reciever

Question 40

What are the three goals of branding for the marketer?

Answer 40

1. Inform 2. Express 3. Persuade