Shared Flashcard Set

Details

BusM&L 650
Ch. 1, 4, 5, 6, 8, 10, 11, 12, 15, 16, 14, 18, 19
638
Marketing
04/19/2010

Additional Marketing Flashcards

 


 

Cards

Term
3 Postpurchase Outcomes
Definition
Customer satisfaction, postpurchase dissonance, and customer loyalty (or disloyalty)
Term
3 Types of Customers
Definition
The ones that make you money (the most important), the ones that could make you money, and the ones that cost you money
Term
4 Orientations
Definition
Product Orientation, Production Orientation, Selling Orientation, Marketing Orientation; relate to the role and importance of marketing in organizations
Term
4 P's
Definition
The Marketing Mix): Product (creating), Place (delivering), Promotion (communicating), Price (capturing); the controllables
Term
4 P's Differences in B2B Markets
Definition
Product- purchase of inputs rather than outputs; Place- fewer middlemen, sellers go to buyers; Promotion- selling is critical, advertising generally much less important; Price- less price sensitivity overall, but price is more subject to negotiation (price is often more important to govt. in general)
Term
5 Forces of Competition Model
Definition
Current competitors, potential entrants, substitutes, suppliers, buyers; hyper competition
Term
80-20 Principle
Definition
Where the money is; targeting your best customers: most recent purchasers, most frequent purchasers, largest purchasers
Term
Advertising and Selling
Definition
Very visual and dramatic; the tip of the marketing iceburg
Term
Affective Attitude Component
Definition
Involves what we feel about the issue at hand; our like or dislike of something
Term
African Americans
Definition
Spend more money on products they feel equate them with quality
Term
Alpha Mom's
Definition
Tech-savvy, family-centric, working mothers who make most purchasing decisions in their households
Term
American Demographics
Definition
Constantly changing and uncontrollable; the information is often more available and predictable
Term
American Economy Since 1990
Definition
Slow economic growth and low rates of inflation (steady), longest period of prosperity in U.S. history
Term
Asians
Definition
Tend to earn more, have more schooling, and be more likely to be professionally employed or own a business than whites
Term
Attitude
Definition
A persons enduring evaluation of his/her feelings about and behavioral tendencies toward an object or idea; cognitive, affective, and behavioral
Term
Autocratic Buying Center
Definition
Though there may be multiple participants, one person makes the decision alone
Term
B2B Buying Process
Definition
Need Recognition, Product Specification, Request for Proposals (RFP) Process, Proposal analysis, vendor negotiation, and selection, Order specification, Vendor performance assessment using metrics
Term
B2B Marketing
Definition
Business-to-business marketing, the process of selling merchandise or service from one business to another
Term
B2C Marketing
Definition
Business-to-consumer marketing, the process by which businesses sell to consumers
Term
Baby Boomers
Definition
1946-1964; biggest generation in US history, experiencing "empty nest"; individualistic, leisure time represents a high priority, they believe they will always be able to take care of themselves, obsessed with maintaining youth, always love rock n' roll
Term
Baby Boomlet ("Baby Boom Echo")
Definition
1976-1993; lots of purchasing power, family purchases, brand building, own stuff
Term
Baby Bust (Generation X)
Definition
1965-1975; cynical disdainers, traditional materialists, hippies revisited; 50% have divorced parents, first generation of latchkey children (those who grew up in homes where both parents worked), posess considerable spending power since they tend to get married and buy houses later in life, much less interested in shopping than their parents, less interested in status prodcuts
Term
Bases for Segmentation
Definition
Demographic, geographic (first two usually widely available, general), psychographic (lifestyle), behavioristic (richest, most-challenging to use); to build "profile" of who their customers are, the "big picture"
Term
Behavioral Attitude Component
Definition
The actions we undertake with regard to that issue
Term
Benefit Segmentation
Definition
Groups consumers on the basis of the benefits they derive from products or services
Term
Buyer Differences in B2B Markets
Definition
Tend to be fewer in number, larger in size, and geographically concentrated
Term
Buyer Types
Definition
People purchasing in and for various kinds of organizations: producers, intermediaries, governments, institutions
Term
Buyers
Definition
Complete the exchange by giving money and information to the seller
Term
Buying Center
Definition
The group of people responsible for the buying decisions in large organizations; initiator, influencer, decider, buyer, user, gatekeeper
Term
Buying Process Differences in B2B Markets
Definition
Takes longer, lasts longer; involves more people; often more formal (the bigger the company, the more formal)
Term
Buying Situations
Definition
3 types: new buy situation, modified rebuy situation, and straight rebuy situation
Term
C2C Marketing
Definition
Consumer-to-consumer marketing, is the process by which consumers market their products and services to other consumers; internet auction sites
Term
Cause/Issue
Definition
Each organization tackles a specific issue or cause, which enables the firm to align their image with that of the cause; appropriate linkages between firms and their causes/issues benefit the cause and create better awareness of its objectives in the short run and more resources in the long run that it can devote toward its mission
Term
Clarity of Offer
Definition
knowledge of who you are and who you are not
Term
Classic Consumer Buying Model
Definition
5 Distinct stages: need recognition, information search, consideration of options, purchase decision, post-purchase evaluation
Term
Cognitive Attitude Component
Definition
Reflects what we believe to be true
Term
Company
Definition
Programs and causes that fit well with their strategy and industry; embrace social responsibility and it pays off in those terms and also in terms of cost savings; CSR activities can also enhance the morale of employees
Term
Compensatory Decision Rule
Definition
Assumes that the consumer, when evaluating alternatives, trades off one characteristic against another, such that good characteristics compensate for bad
Term
Competitive Intelligence (CI)
Definition
Used by firms to collect and synthesize information about their position with respect to their rivals; enables companies to anticipate market developments rather than merely react to them
Term
Concensus Buying Center
Definition
All members of the team must reach a collective agreement that they can support a particular purchase
Term
Concentrated Segmentation Strategy
Definition
An organization selects a single, primary target market and focuses all its energies on providing a product to fit that markets needs
Term
Concentration Strategy
Definition
"Niche" strategy, "focus" strategy, "specialist" strategy; particularly apt for small/new organizations
Term
Consultative Buying Center
Definition
Uses one person to make a decision but solicit input from others before doing so
Term
Consumer
Definition
Take shifts and trends into account and react to them quickly; CSR increases awareness of firm in the short run, which leads to better brand equity and sales in the long run
Term
Consumer Decision Rules
Definition
Set of criteria that consumers use consciously or subconsciously to quickly and efficiently select from among several alternatives; compensatory, noncompensatory, or decision heuristics
Term
Consumer Influences
Definition
Immediate actions of the focal company, the company's competitors, and the corporate partners that work with the firm to make and supply products and services to customers directly influence consumers
Term
Core Aspects of Marketing
Definition
Satisfying customer needs and wants, entails an exchange, requires product, price, place, and promotion decisions, and can be performed by both individuals and organizations; occurs in many settings; helps create value
Term
Corporate Social Responsibility (CSR)
Definition
The voluntary actions taken by a company to address the ethical, social, and environmental impacts of its business operations and the concerns of its stakeholders
Term
Cost Effect
Definition
Reduction in the final cost as brought about by productivity improvement, quality control, product reengineering, and other such efforts.
Term
Country Culture
Definition
Visible aspects - artifacts, behavior, dress, symbols, physical settings, ceremonies, language differences, colors and taste, and food preferences - are easy to spot; subtle aspects are trickier to identify and navigate
Term
Culture
Definition
All beliefs, objects, ect. that are shared with a society and are passed on to the next generation; the broadest influence on consumer behavior; transmitted by words, literature, and institutions; influence what, why, how, where, and when we buy
Term
Current Competitors
Definition
Most visible form of competition
Term
Customer Relationship Management (CRM)
Definition
Business philosophy and set of strategies, programs, and systems that focus on idenifying and building loyalty among the firms most valued customers; firms that practice value-based marketing use this process
Term
DINK
Definition
Duel income, no kids
Term
Data Mining
Definition
Discovering hidden predictive information
Term
Decision Heuristics
Definition
Mental shortcuts that help a consumer narrow down choices
Term
Demand Differences in B2B Markets
Definition
Demand is dependent, derived, fluctuates more (more volitile), and is somewhat more rational
Term
Democratic Buying Center
Definition
Majority rules
Term
Demographic Trends
Definition
More eduction, slow overall population growth, splitting of middle class
Term
Demographics
Definition
population characteristics such as age, sex, education, income, marital status, ect.; indicate the characteristics of human populations and segments, esp. those used to identify consumer markets; married women are the most important demographic group; provide easily understoof "snapshot" of typical consumer in specific target market; poor indicator of the users active wear; most common means to define segments because they are easy to identify and demographically segmented markets are easy to reach
Term
Derived Demand
Definition
The linkage between consumers demand for a companys output and its purchase of necessary inputs to manufacture or assemble that particular output
Term
Determinant Attributes
Definition
Product or service features that are important to the buyer and on which competing brands or stores are percieved to differ
Term
Differences in Everyday Behaviors
Definition
Physical distances, importance of time (Americans are particularly time concious), "friendliness"
Term
Differentiated Segmentation Strategy
Definition
Targets several market segments with a different offering for each
Term
Discover Marketing
Definition
When organizations find customers harder to find/reach when supply grows faster than demand
Term
Echo-Boomers
Definition
Those in their teens and early 20s who are avid shoppers for products that make them feel cool
Term
Economic Situations
Definition
Macroeconomic factor that affects the way consumers buy merchandise and spend money, both in a marketer’s home country and abroad; the rate of inflation, foreign currency exchange rates, and interest rates
Term
Employment Marketing
Definition
Programs that involve undertaking marketing research to understand what potential employees are seeking, as well as what they think about the firm; developing a value proposition and an employment brand image; communicating that brand image to potential employees; then fulfillinf the brand promise
Term
Evaluative Criteria
Definition
A set of salient, or important, attributes about a particular product which consumers base their evaluations on
Term
Evoked Set
Definition
Comprises the alternative brands or stores that the consumer states he/she would consider when making a purchase decision
Term
Exchange
Definition
The trade of things of value between the buyer and the seller so that each is better off as a result
Term
Extended Problem Solving
Definition
Common when the consumer perceives that the purchase decision entails a lot of risk
Term
External Search for Information
Definition
Buyer seeks information outside his/her own personal knowledge base to help make the buyer decision
Term
Financial Risk
Definition
Risk associated with a monetary outlay and includes the initial cost of purchase as well as costs of using the item or service
Term
Foreign Currency Fluctuations
Definition
Can influence customer spending by changing the purchasing power of the dollar
Term
Form Utility
Definition
Created when manufacturers make things; affected only indirectly by marketing activities
Term
Functional Needs
Definition
Pertain to the performance of a product or service
Term
Generation Y
Definition
3x the size of generation x and the biggest cohort since original post war baby boom; teens to young adults with their own families, puts strong emphasis on balancing work and life, no shame in moving back in with parents after college
Term
Generational Cohert
Definition
Group of people of the same generation - have similar purchase behaviors because they have shared experiences and are in the same stage in life
Term
Geodemographical Segmentation
Definition
Uses a combination of geographic, demographic, and lifestyle characteristics to classify consumers
Term
Goods
Definition
Items that you can physically touch
Term
Green Marketing
Definition
Involves a strategy effort to supply customers with environmentally friendly merchandise
Term
Habitual Decision Making
Definition
A purchase decision process in which consumers engage in little conscious effort; strong brand and store loyalty since alternatives are not even considered
Term
Household Composition
Definition
50-50 ratio married and not married
Term
Hypercompetition
Definition
The ways in which competition is stronger than it use to be - globalization, de-regulation
Term
Ideal Points
Definition
The positiion at which a particular market segments ideal product would lie on a perceptual map
Term
Ideas
Definition
Include thoughts, opinions, and philosophies; intellectual concepts such as these also can be marketed
Term
Immediate Marketing Environment
Definition
The company's capabilities, competitors, and competitive intelligence, and the conpany's corporate partners
Term
Importance of Marketing
Definition
Expands firms global presence, is pervasive acress the organization, is pervasive across the supply chain, makes life easier and provides employment opportunities, enriches society, and can be entrepreneurial
Term
Importance of Marketing
Definition
Depends on the amount of competition
Term
Impulse Buying
Definition
A buying decision made by customers on the spot when they see the merchandise
Term
Increasing Importance of Marketing Since 1980s
Definition
1. More fragmented markets 2. Slow economic growth 3. Already high level off affluence 4. De-regulation (transportation, communication, health care, financial services) 5. Entry of strong new competitors 6. More experience, training in the practice of marketing 7. Customers who are generall more knowledgeable, demanding, and skeptical
Term
Inflation
Definition
The persistent increase in the prices of goods and services; causes the purchasing power of the dollar to decline
Term
Inputs
Definition
Needed to understand and appreciate: consumer, company, and cause
Term
Interest Rates
Definition
The cost of borrowing money
Term
Internal Locus of Control
Definition
People with this believe they have some control over the outcomes of their actions, in which case they generally engage in more search activities
Term
Internal Search for Information
Definition
Buyer examines his/her own memory and knowledge about the product or service, gathereed through experiences
Term
Interpersonal Influences on Consumer Behaviors
Definition
Social influences; "the ways in which individual consumers' behavior is affected by other people"
Term
Intrinsic Enjoyment
Definition
Sensory pleasure, asthetic pleasure, emotional experience, fun and play; Freud says there are hidden motives
Term
Involvement
Definition
The consumer's degree of interest in the product or service
Term
Key Influences for Generation Y
Definition
Born since 1980; electronic media, computers, diversity, end of cold war, materialism
Term
Key Influences on Consumer Behavior
Definition
life experiences; grandparents greatly influenced by growing up in Great Depression; 180 degree change each generation
Term
Latino Subculture
Definition
More acculturation than assimilation, reasons for retention, challenges
Term
Laws Protecting
Definition
Competition (the anti-trust laws promote and protect competition), competitors (laws protecting small businesses), consumers
Term
Laws during 1890-1960
Definition
relatively few passed, general applkication laws passed to protect any business, the "basic framework"
Term
Laws during 1960
Definition
more frequent, more specific/detailed
Term
Laws during 1975-2008
Definition
De-regulation, same political philosophy
Term
Learning
Definition
Refers to a change in a persons thought process of behavior that arises from experience and takes place throughout the consumer decision process
Term
Lifestyle Changes Reflecting Increasing Labor Force Participation Rate of Married Women
Definition
Time poverty, instant gratification, life simplification, changing gender roles
Term
Lifestyles
Definition
The patterns in which people spend their time and money along with basic orientations; (AIO) activities, interests, and opinions; general, product specific
Term
Limited Problem Solving
Definition
Occurs during a purchase decision that calls for, at most, a moderate amount of effort and time
Term
Long-Held Traditional Values of American Culture
Definition
Individualism, material comfort, youthfulness, pragmatism, skeptical re government, optimism, bias toward action
Term
Lower-Level Management (& their staff)
Definition
Delivers daily customer satisfaction
Term
Loyalty Segmentation
Definition
A strategy of investing in loyalty initiatives to retain the firms most profitable customers
Term
M-W-R-C
Definition
The most common channel of distribution for consumer goods (manufacturer, warehouse, retailer, consumer)
Term
Macroenvironmental Factors
Definition
Operate in the external environment: the Culture, Demographics, Social issues, Technological advances, Economic situation, and Political/regulatory environment (CDSTEP)
Term
Market forces (customers, producers) determine...
Definition
What is acceptable and profitable
Term
Market-Oriented Era
Definition
Focusing on what consumers wanted and needed before designing, making, or attempting to sell products and services; after WWII
Term
Marketing
Definition
"We must make what we can sell"; helps create value; often designed to benefit an entire industry or society at large
Term
Marketing (AMA)
Definition
An organizational funcation and a set of processes for creating, communicating, capturing, and delivering value to customers and managing customer relationships in ways that benefit the organization and its stakeholders
Term
Marketing (Lecture)
Definition
Identifying, understanding, and satisfying buyer demands through exchanges
Term
Marketing (other)
Definition
Attempts to anticipate, sometimes to change, but always to satisfy buyer demands through exchanges, to achieve our own objectives
Term
Marketing Environments
Definition
In general, the environmental forces are uncontrollable; organizations try to anticipate and adapt to environmental forces
Term
Marketing Management
Definition
Decide on... 1. 4 P's 2. tarket markets 3. own goals 4. own structure... within top management framework
Term
Marketing Myopia
Definition
Mistake of focusing on prodcuts form instead of benefits buyers seek and thinking there will always be a demand for your product
Term
Marketing Orientation
Definition
Focused on customer satisfaction; the opposit of selling orientation
Term
Marketing Plan
Definition
specifies the marketing activities for a specific period of time; broken down into components such as how the product/service will be designed, how much it should cost, where and how it will be promoted, and how it will get to the customer
Term
Marketing Segmentation
Definition
The process of dividing the market into groups of customers with different needs, wants, or characteristics - who therefore might appreciate products or services geared towards them
Term
Maslow's Hierarchy of Needs
Definition
Theoreitcal progression of needs: physiological, safety, social (love, esteem), personal (self-actualization)
Term
Mass Customization
Definition
Providing one-to-one marketing to a large group of people; more expensive
Term
Metrosexuals
Definition
Those having female habits but are men
Term
Micromarketing
Definition
One-to-one marketing; generally more expensive; technology makes it easier to serve smaller markets
Term
Middlemen
Definition
The people who do much of the marketing\
Term
Monopolistic Competition
Definition
The most realistic and relevant of 4 traditional models for American marketing; multiple competitors makes it easier to enter into markets
Term
Motivation
Definition
What moves you to action; Maslow's Hierarchy
Term
Motive
Definition
A need or want that is strong enough to cause the person to seek satisfaction
Term
Need Recognition
Definition
consumers realize they have an unsatisfied need and want to go from their actual, needy state to a different, desired state
Term
Noncompensatory
Definition
When buyers choose a product or service on the basis of one characteristic or one subset of a characteristic, regardless of the values of its other attributes
Term
North American Industry Classification System (NAICS)
Definition
A hierarchial set of 6-digit codes the U.S. Bureau of the Census uses to categorize all firms based on data collected about business activity in the U.S.
Term
Opinion Leaders
Definition
For specific product categories: heavy users but not brand loyal, attentive to specialized media, same social class as the followers they influence, early adopters to use new products
Term
Organizational Culture
Definition
Reflects the set of values, tradtitions, and customs that guide a firms employee behavior
Term
Organizational Marketing
Definition
Business-to-business marketing, differs in buyers, 4 P's, demand, and purchasing process
Term
Outputs
Definition
3 main categories: consumer, company, and cause
Term
PRIZM (Potential Rating Index by Zip Marketing)
Definition
uses detailed demographic data and information about the consumption and media habits of peopel who live in each U.S. black tract (zip code + 4); can identify more than 60 characteristics including household type, age, and several key lifestlye variables
Term
PRIZM System
Definition
(Potential Rating Index by Zip Market); "geodemographics", 66 kinds of American neighborhoods
Term
Perception
Definition
Process of exposure, attention, reception, and interpretation of sensory stimuli; nose has best sensory memory; highly selective - what is perceived and that is remembered are strongly affected by what we expect to see, hear, ect.; the process by which we select, organize, and interpret information to form a meaningful picture of the world
Term
Perceptual Map
Definition
Displays, in two or more dimensions, the position of products or brands in the consumers mind
Term
Performance Risk
Definition
Involves the perceived danger inherent in a poorly performing product or service
Term
Place
Definition
All the activities (supply chain management) necessary to get the prodcut to the right customer when the customer wants it
Term
Place Utility
Definition
Affected directly by marketing activities
Term
Political/Regulatory Environment
Definition
Comprises political parties, government organizations, and legislation and law
Term
Positioning Strategy Steps (5)
Definition
1. Determine consumers perceptions and evaluations of the product/service in relation to competitors, 2. Identify competitors positions, 3. Determine consumer preferences, 4. Select the position, 5. Monitor the positioning strategy
Term
Possession Utility
Definition
Affected directly by marketing activities
Term
Postpurchase Dissonance
Definition
Buyers remorse, is the psychologically uncomfortable state produced by an inconsistency between prior beliefs and actual behavior that evokes a motivation to reduce the dissonance
Term
Price
Definition
Everything the buyer gives up - money, time, energy - in exchange for the product; key to determining price, figuring out how much customers are willing to pay so that they are satisfied and the seller acheives a profit
Term
Primary Motivations
Definition
The reasons consumers buy products and services - how they see themselves in the world and how that self-image governs their activities; 3 primary motivations of U.S. consumers - ideals (guided by knowledge and principles), acheivement (look for products and services that demonstrate sucess to peers), self-expression (desire social or physical activity, variety, and risk
Term
Private Exchange
Definition
Occurs when a specific firm (either buyer or seller) invites others to participate in online information exchanges and transactions
Term
Product Orientation
Definition
Offer highest quality; associated with excess demand; inward-looking, focused on what's imporatant to producers
Term
Production Orientation
Definition
Stress on making products; producer priorities; associated with excess demand; inward-looking, focused on what's imporatant to producers
Term
Production-Oriented Era
Definition
Firms were production-oriented and believed a good product would sell itself; around the turn of the 20th century; manufacturers concerned with product innovation, retail stores thought of as places to hold merchandise until a consumer wanted it
Term
Promotion
Definition
Communication by a marketer that informs, persuades, and reminds potential buyers about a product or service to influence their opinions and elicit a response; generally can enhance a prodcut/services value
Term
Psychographic Segmenting
Definition
The one that delves into how consumers actually describe themselves; determining psychographics involves knowing and understanding 3 components: self-values, self-concept, and lifestlyes
Term
Psychological Needs
Definition
Pertain to the personal gratification consumers associate with a product and/or service
Term
Psychological Risks
Definition
Those associated with the way people will feel if the product or service does not convey the right image
Term
Recession
Definition
General slowdown in economic activity over a long period of time, or a business cycle contraction; the growth rate is zero
Term
Reference Group
Definition
One or more persons whom an individual uses as a basis for comparison regarding beliefs, feelings, and behaviors; the most important single social influence on consumer behavior
Term
Regional Culture
Definition
"Soda", "pop", or "coke"
Term
Relational Orientation
Definition
Based on the philosophy that buyers and sellers should develop a long-term relationship; the life-time profitability of the relationship is what matters, not how much money is made during each transaction
Term
Request for Proposals (RFP)
Definition
A process through which buying organizations invite alternative suppliers to big on supplying their required components
Term
Requirements for Segmentation
Definition
(MARS) 1. Measurable (measure potential segments), 2. Accessible (reach customers), 3. Responsive (what will get customers to respond to your marketing offer and not to competitors), 4. sufficiently large (enough people, competition, change over time)
Term
Resellers
Definition
Marketing intermediaries that resell manufactured products without significantly altering their form
Term
Retailing Since 1990
Definition
many major store chains have gone out of business (increasing retailing concentration, more intense competition), relative decline of malls, less interest in shopping (except for young adults), shift from national brands to store brands
Term
Retrieval Sets
Definition
Those brands or stores that can be readily brought forth from memory
Term
Ritual Consumption
Definition
A special type of consumption which refers to life events that affect what and how we consume; tend to have symbolic meanings and vary by importance and culture
Term
Sales-Oriented Era
Definition
Depended on lots of personal selling and advertising as the answer to overproduction; between 1920 and 1950
Term
Scanner Data (Data Base Marketing)
Definition
Who, what, where, information
Term
Segmentation
Definition
The process of identifying smaller, more homogeneous segments within the larger, more heterogeneous market as a while; smaller, but more similar; particular customers; per unit costs generall increase as segmentation increases; segmentation/specialization is limited by the size of the market
Term
Segmentation Strategy Alternatives
Definition
3 Fundamental ways we segment markets: 1. concentration (very effective), 2. Mass Marketing, "undifferentiated" (old marketing), 3. multiple segments, differentiated (usually used by large organizations)
Term
Self-Concept
Definition
The image people ideally have of themselves
Term
Self-Monitoring
Definition
The ability to see yourself as others see you
Term
Self-Values
Definition
Goals for life, not just ones we want to accomplish in a day; overriding desires that drive how a person lives his/her life; this motivation causes people to develop self-images of how they want to be and then images of a way of life that will help them arrive at these ultimate goals
Term
Sellers
Definition
Provide products or services, communicate and facilitate the delivery of their offering to customers
Term
Selling
Definition
"We must sell what we make"
Term
Selling Orientation
Definition
Promoting the product is crutial - push prospects to buy with strong ads and selling
Term
Senior Boom
Definition
"Seniors"; now healthier and wealthier than ever; this market is bigger and more attractive than ever, Americas fastest growing group; generally have time to shop and spend money and fastest growing segment of internet users; typically loyal and willing to spend money, but are equally conscious and demand hassle-free shopping and convenient locations
Term
Services
Definition
Intangible customer benefits that are produced by people or machines and cannot be separated from the producer
Term
Shift From "Either-Or" Society to "Multiple Choice" Society
Definition
Greater diversity, fragmented markets
Term
Shopping Comparisons: Ethnic Differences (Asian-Americans)
Definition
Most frequent shoppers, most brand conscious, least brand loyal, most concerned re appearances, most likely to use internet to plan a shopping trip
Term
Shopping Comparisons: Ethnic Differences (Black Americans)
Definition
"Fashion leader"; most fashion conscious, most willing to travel to favorite store, most willing to travel to new stores, greatest preferences for shopping alone, most enjoyment in shopping
Term
Shopping Comparisons: Ethnic Differences (Latino Americans)
Definition
Most likely to shop as a family, most brand loyal, influence of children on purchases is the greatest (esp. male children), greatest preference for national chain stores
Term
Shopping Comparisons: Ethnic Differences (White Americans)
Definition
Least likely to enjoy shopping, least likely to "just browse", most likely to admit impulse purchasing, most likely to plan ahead for major purchases; account for ~80% of total purchasing power in U.S. and this will continue to decline
Term
Signals
Definition
Learning "cues"; only a small piece of the learning process; B. Wansink - "rules of thumb" of our day-to-day lives
Term
Situational Factors
Definition
Physical surroundings (atmosphere, the only one companies actually have control over), social surroundings, temporal perspective (time), task definition (purpose, reason), antecedent state (mood)
Term
Social Classes
Definition
Ranks or layers in which a society is arranged; share things that relate to some kinds of consumer behavior - language, values, lifestyles (badges of social class); U.S. - occupation, education, income, residence, ect.
Term
Social Trends
Definition
Shape consumer values
Term
Status
Definition
Depends on health, education, income - not just age
Term
Sub-cultures
Definition
Make different kinds of consumers; beses include race, religion, national origin, geography
Term
Subliminal Perception
Definition
The way in which there can be "hidden" messages, in the media, and other things we can't be consciously aware of
Term
Substitution Effect
Definition
Consumer buys more lower-priced items; always negative: consumers always switch from spending on higher-priced goods to lower-priced ones
Term
Supply Chain
Definition
The group of firms that make and deliver a given set of goods and services
Term
Supply Chain Management
Definition
The set of approaches and techniques that firms employ to efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores, and transportation companies, into a seamless value chain in which merchandise is produced and distributed in the right quantities, to the right locations, and at the right time, while minimizing system wide costs and satisfying service levels required by the customers
Term
Target Marketing
Definition
The process of evaluating the attractiveness of various segments and then deciding which to pursue as a market
Term
Targeting Specific Ethnic Groups
Definition
To do this effectively, you must show real respect, deep understanding, and demonstrate relevance
Term
Technological Advances
Definition
Improve the value of both products and services
Term
Technological improvement tends to...
Definition
Reduce prices; cost effect, substitution effect, on-line effect
Term
Technology determines...
Definition
What is possible; technology can be a turn-off that requires careful marketing
Term
The Anti-Trust Laws
Definition
Promote and protect competition
Term
The Economic Environment
Definition
The overall climate for marketing; the demand varied along with the economy, or "counter cyclical"
Term
The Segmentation, Targeting, Positioning Process
Definition
Step 1: establish overall strategy or objectives, Step 2: describe segments, Step 3: evaluate segment attractiveness, Step 4: select the target market, Step 5: identify and develop positioning strategy
Term
Time Utility
Definition
Affected directly by marketing activities
Term
Tools for Geoodemographic Segmentation
Definition
PRIZM, Tapestry
Term
Top Management
Definition
Sets direction and tone - "corporate culture"; 1. Determines overall goals 2. Determines line(s) of business 3. Determines role and importance of marketing
Term
Total rewards
Definition
Basis for freebies
Term
Transactional Orientation
Definition
Regards the buyer-seller relationship as merely a series of individual transactions
Term
Transfusive Triad
Definition
Family, religion, and eduction; carry culture from younger generations to older generations
Term
Tweens
Definition
Immense buying power, do not want to be looked at as babies, first generation born after emergence of the internet
Term
Undifferentiated Segmentation Strategy
Definition
Everyone might be considered a potential user of a firms product
Term
Universal Sets
Definition
Include all possible choices for a product category, but marketers tend to focus on only a subset of choices
Term
Utility
Definition
Satisfaction, value, benefits, from the buyers point of view; value adding activities
Term
VALS (Value and Lifestyle Survey)
Definition
Most widely used psychographical tool, classifies customers into 8 segments; enables firms to identify target segments and their underlying motivations, prioritize most promising applications to develop
Term
VALS Framework
Definition
Vertical dimension indicates level of resources (income, education, health, energy level, and degree of innovativeness); the horizontal dimension shows the segments primary psychological motivation for buying
Term
Value
Definition
The relationship of benefits to costs, or what you get for what you give
Term
Value Co-Creation
Definition
A method of providing additional value to customers; allow them the opportunity to act as collaborators in creating the product or service
Term
Value Driven
Definition
Focus on 3 activities: sharing information about customers/competitors across own organization and with other firms in chain, strive to balance customers benefits and costs, and concentrate on building relationships with customers
Term
Value-Based Marketing
Definition
Consumers make explicit and/or implicit trade-offs between the perceived benefits of a product/service and its cost; must understand what customers view as the key benefits of a given product or service and how to improve on them
Term
Value-Based Marketing Era
Definition
Attempt to discover and saitisfy customers needs and wants, while giving them greater value than their competitors
Term
Voluntary Exchange
Definition
when this happens, marketing is taking place; whether or not marketing is understood, approved of, or formally recognized
Term
Women are...
Definition
52% of total population, heads of many high net worth households, motivated by knowledge, relationships, trust
Term
Zip "Clusters"
Definition
Names for different lifestyles
Term
Advantages of Brand Extension
Definition
1. The brand name is already well established, the firm can spend less in developing consumer brand awareness and brand associations for the new product.
2. If either the original brand or the brand extension has strong consumer acceptance, that perception will carry over to the other product.
3. When brand extensions are used for complementary prodcuts, a synergy exists between the two products that can increase overall sales.
Term
Advantages of the Secondary Package
Definition
1. Add consumer value by facilitating the convenience of carrying, using, and storing the product.
2. Can be an important marketing tool for the manufacturer if used to convey the brand's positioning.
3. Benefit the manufacturer and the retailer in that they protect the shipment during transit; aid in loading, unloading, and storage; and allow cost efficiencies due to the larger order and shipment sizes.
Term
Alpha Testing
Definition

The firm attempts to determine whether the product will perform according to its design and whether it satisfies the need for which is was intended.

Occur in the firm's R&D department.

Term
Augmented Product Level
Definition
Service, Credit, Delivery, Reputation, Etc.
Term
B2B Products
Definition
Materials, parts, supplies
Accessory equipment
Installations
Term
Beta Testing
Definition
Uses potential consumers, who examine the product prototype in a "real use" setting to determine its functionality, performance, potential problems, and other issues specific to its use.
Term
Brainstorming
Definition

A group works together to generate ideas, where no idea can be immediately accepted or rejected.

Members vote on the best ideas or combinations of ideas at the end of the session.

Term
Brand Association
Definition
Reflect the mental links that consumers make between a brand and its key prodcut attributes, such as logo, slogan, or famous personality.
Result from a firm's advertising and promotional efforts.
Create specific associations for their brands with positive consumer emotions, such as fun, friendship, good feelings, family gatherings, and parties.
Term
Brand Awareness
Definition
Measures how many consumers in a market are familiar with the brand and what it stands for and have an opinion about that brand.
Familiarity matters most for products that are bought without much thought, and is important for infrequent purchased items or items the consumer has never purchased before.
One of the most important steps in creating a strong brand.
Term
Brand Dilution
Definition
Occurs when the brand extension edversely affects consumer perceptions about the attributes the core brand is believed to hold.
If the brand extension is very similar to the core brand, it even could cause cannibalization of sales from the core brand.
Term
Brand Equity
Definition
The set of assets and liabilities linked to a brand that add or subtract from the value provided by the product or service.
4 aspects of a brand determine its equity: brand awareness, perceived value, brand associations, and brand loyalty.
Term
Brand Extension
Definition
Refers to the use of the same brand name for new products being introduced to the same or new markets.
Term
Brand Licensing
Definition
A contractual arrangement between firms, whereby one firm allows another to use its brand name, logo, symbols, and/or characters in exchange for a negotiated fee.
An effective form of attracting visibility for the brand and thereby building brand equity while also generating additional revenue.
Popular form of licensing is the use of characters created in books and other media.
Term
Brand Loyalty
Definition
Occurs when a consumer buys the same brand's product or service repeatedly over time rather than buy from multiple suppliers within the same category.
Term
Brand Name
Definition

The spoken component of branding, it can describe the product or service/product characteristics and/or be composed of words invented or derived from colloquial or contemorary language.

Can be an exercise in creativity and can indicate a strong brand image.

1. National- Manufacturers brands

2. Resellers- Private label brands

3. Generic brands

4. Licensed brands

Term
Brand Personality
Definition
Refers to such a set of human characteristics associated with a brand, which has symbolic or self-expressive meanings for consumers.
Include personal issues such as gender, age, or personality, and/or physical traits such as fresh, smooth, round, clean, or floral.
Term
Brand Repositioning (Rebranding)
Definition
Refers to a strategy in which marketers change a brand's focus to target new markets or realign the brand's core emphasis with changing market preferences.
Can improve the brand's fit with its target segment or boost the vitality of old brands.
Term
Brand-Loyal Consumers
Definition
Often less sensitive to price.
Term
Brands
Definition
The names, terms, designs, symbols, or any other features that identify one seller's good or service as distinct from those of other sellers.
Assets the firms can build, manage, and harness over time to increase its revenue, profitability, and overall value.
Corporate or family brands, corporate and product line brands, and individual brands.
Term
Breadth (Variety)
Definition
The number of product lines offered by the firm.
Firms often add new product categories to capture new or evolving markets, increase sales, and compete in new venues.
Firms delete entire product lines to address changing market conditions or meet internal strategic priorities.
Term
Bundle of Benefits
Definition
Bundle of physical, service, and symbolic attributes designed to provide buyers want-satisfaction.
Term
Category Depth
Definition
The number of SKUs within a category.
Term
Causes of Intensified Competition
Definition

1. De-regulation

2. Franchising

3. Budget crunchies

4. Technology

5. New supply/demand conditions

6. Changing standards

Term
Characters
Definition
Brand symbols that could be human, animal, or animated
Term
Clinical Trial
Definition
Medical study that tests the safety and effectiveness of a drug or treatment in people.
Term
Cobranding
Definition
The practice of marketing two or more brands together, on the same package or promotion.
Greatly increased in the past decade.
Airlines were among the first to cobrand with credit card companies.
Starbucks was the first in the quick-service restaurant industry to offer its own credit card in alliance with Visa.
Term
Concept Testing
Definition

The process in which a concept statement is presented to potential buyers or users to obtain their reactions.

The reactions enable the developer to estimate the sales value of the product or service concept, possibly make changes to enhance its sales value, and determine whether the idea is worth further development.

Occurs very early in the new product introduction process, even before a real product is made, which helps the firm avoid the costs of unnecessary product development.

Term
Concepts
Definition

Brief written descriptions of the product; its technology, working principles, and forms; and what customer needs it would satisfy.

May also include visual images of what the product would look like.

Ideas with potential are developed further into concepts.

Term
Convenience Products
Definition
Staples, "impluse", emergency
Term
Copycat Brands
Definition
Imitate the manufacturer's brand in appearance and packaging, generally are perceived as lower quality, and are offered at lower prices.
Abound in drugstores.
Term
Corporate Brand (Family Brand)
Definition
When all products are sold under one brand. The individual brands benefit from the overall brand awareness associated with the family name. A firm can use its own corporate name to brand all its product lines and products.
Term
Corporate and Product Line Brand
Definition
A firm uses a combination of brands to distinguish its products.
The individual brand's name is more prominently displayed on the package.
Term
Customer Input
Definition

Listening to the customer is essential for successful idea generation, especially the lead users.

As many as 85% of all new B2B product ideas come from customers.

Joint effort between the selling firm and the customer that significantly increases the probability that the customer eventually will buy the new product.

Can also help a company innovate in different areas.

Term
Customer Service
Definition
Human or mechanical activities firms undertake to help satisfy their customers' needs and wants.
Term
Decline
Definition

"Old Age" Characteristics

Profit/Sales- Further decline

Ripe old age

Cut backs

Bite the bullet

Term
Decline Stage
Definition

Firms in this stage either have a niche segment of loyal consumers or those with special needs, or they exit the market.

Laggards who have yet to try the product enter the market at this stage.

Term
Depth
Definition
The number of categories within a product line.
Term
Differences Between Services and Goods
Definition

Services are...

1. Intangible

2. Inseparable

3. Variable

4. Perishable

Term
Diffusion of Innovation
Definition

The process by which the use of an innovation, whether a product or a service, spreads throughout a market group, over time and over various categories of adopters.

Helps marketers understand the rate at which consumers are likely to adopt a new product or service, identify potential markets for their new products or services, and predict their potential sales before they introduce the innovations.

Knowing this, the firm can develop effective promotion, pricing, and other marketing strategies to  push acceptance among each customer group.

Generally follows a bell-shaped curve.

Comes into play in the immediate and long-term aftermath of a new product or service introduction.

The purchasers can be divided into 5 groups according to how soon they buy the product after its introduction:

1. Innovators

2. Early adopters

3. Early majority

4. Late majority

5. Laggards

Marketers must understand what the diffusion curve for the new product looks like, and the characteristics of the target customers in each stage of the diffusion since different products diffuse at different rates.

The speed a product diffuses depends on several product characteristics:

-Relative advantage- diffusion will be relatively quick if a product is perceived to be better than substitutes.

-Compatibility, consistent with people's past behavior, needs, and values.

-Observability, the products benefits or uses are easily communicated to others, thus enhancing the diffusion process.

-Complexity and Trialability, products that are less complex and easier to try generally diffuse more quickly.

Term
Distributive Fairness
Definition

A customer's perception of the benefits he/she received compared with the costs (inconvenience or loss).

The key is listening carefully to the customer.

Term
Early Adopters
Definition

Second subgroup that begins to use a product or service innovation.

Generally don't like to take as much risk as innovators, instead wait and purchase the product after careful review.

Tend to enjoy novelty and often are regarded as the opinion leaders in product categories who spread the word.

Represents about 13.5% of all buyers in market, and crucial for bringing the other 3 buyer categories to the market.

-If this group is small, the number of people who ultimately adopt the innovation likely will also be small.

Term
Early Majority
Definition

When entering the market, the number of competitors in the marketplace usually also has reached its peak, giving them many price and quality choices.

Represents about 34% of the population.

Few new products and services can be profitable until this large group buys them.

Don't like to take as much risk as innovators or the early adopters, instead, wait until "the bugs" are worked out.

Term
Emotional Support
Definition
Demonstrating a concern for co-workers well-being by managers and standing behind their decisions.
Term
Empowerment
Definition

Allowing employees to make decisions about how service gets provided to customers.

When frontline employees are authorized to make decisions to help their customers, service quality generally improves.

Becomes more important when the service is more individualized.

Managers need to support the service provider in several ways:

1. Emotional support

2. Instrumental support

3. Consistent and coherent support throughout the organization

4. Provide rewards to employees for excellent service

Term
Evaluation of Results
Definition

Postlaunch review to determine if the product and its launch were a success or not and what additional resources or changes to the marketing mix are needed, if any.

Firms measure success of a new product by 3 interrelated factors:

1. Its satisfaction of technical requirements, such as performance

2. Customer acceptance

3. Its satisfaction of the firm's financial requirements, such as sales and profits.

Term
Exclusive Cobrand
Definition
A brand that is developed by a national brand vendor, often in conjunction with a retailer, and is sold exclusively by the retailer.
Simplest form is when a national brand manufacturer assigns different model numbers and has different exterior features for the same basic product sold by different retailers.
Makes it difficult for consumers to compare prices for virtually the same products sold by different retailers.
A more sophisticated form is when a manufacturer develops an exclusive product or group of related products for a retailer.
Term
First Movers
Definition

-The first to create the market or product category

-Become readily recognizable to consumers and thus establish a commanding and early market share lead

-Can command a greater market share over a longer time period than later entrants can.

-The advantage of Pioneers

-Imitators capitalize on the weaknesses of pioneers and subsequently gain advantage in the market. Spend less marketing effort creating demand for the product category and focus directly on creating demand for their specific brand

-Majority of new products fail: 95% of all new consumer goods fail, and products across all markets and industries suffer failure rates of 50-80%

Term
Generic Brands
Definition
Target a price-sensitive segment by offering a no-frills product at a discount price.
popularity and acceptance has declined.
Term
Growth
Definition

Youth and Young Adulthood Characteristics

Profit- Way up

Sales- Way up

Build loyalty

Retain, expand

Promotion- Persuade

Lines, competition increasing

Term
Growth Stage
Definition

Marked by a growing number of product adopters, rapid growth in industry sales, and increases in both the number of competitors and the number of available prodcut versions.

Market becomes more segmented and consumer preferences more varied, which increases potential for new markets or new uses of the product or service.

Innovators start rebuying the product, and early majority consumers enter.

Firms attempt to reach new consumers by studying their preferences and producing different product variations enabling them to segment the market more precisely.

The goal this segmenting is riding the rising sales trend and firmly establishing the firm's brand, where profits rise because of the economies of scale associated with manufacturing and marketing costs, esp. promotion and advertising.

Term
Idea Generation
Definition

A firm can use:

-its own internal research and development (R&D) efforts

-collaborate with other firms and institutions

-license technology from research-intensive firms

-brainstorm

-research competitors' products and services

-and/or conduct consumer research

Term
Increasing Importance
Definition
Self-service, Rise of national manufacturers, Technology, Affluence, Planning
Term
Individual Brand
Definition
A firm uses individual brand names for each of its products.
The more the products vary in their usage or performance, the more likely it is that the firm should use individual brands.
Term
Innovation
Definition

The process by which ideas are transformed into new products and services that will help firms grow.

Firms sustain growth by getting customers excited by the new looks and features before a products functional life is over.

1. Adds new products to firms' offerings, so they can create and deliver value more effectively by satisfying the changing needs of their current and new customers or simply by keeping customers from getting bored with current product or service offerings.

2. The longer a product exists in the marketplace, the more likely it is that the market will become saturated.

3. The portfolio of prodcuts that innovation can create helps the firm diversify its risk and therefore enhances firm value better than a single product can.

4. In some industries (arts, books, software) most of the sales come from new products.

Without innovation, firms would only have two choices:

1. Continue to market current products to current customers,

2. Take the same product to another marker with similar customers, making the value of the firm decline.

Term
Innovators
Definition

Buyers who want to be the first to have the new product or service, and keep themselves well informed about the product category.

Firms that invest in the latest technology, either to use in their new products or services or to make the firm more efficient.

Enjoy taking risks and are regarded as highly knowledgeable.

Help the product gain market acceptance and in bringing in the next adopter category, the early adopters.

Represent only about 2.5% of total market for any new product or service.

Term
Inseparable
Definition

Services are produced and consumed at the same time.

Purchase risk of services are relatively high.

A difference between services and products.

Term
Instrumental Support
Definition

The systems and equipment to deliver the service properly

Required by service providers.

Term
Intangible
Definition

The most fundamental difference between and product and a service.

Services that cannott be touched, tasted, or seen like a pure product can, which makes it difficult to convey the benefits of services.

Cannot be shown directly to potential customers making it difficult to promote.

Term
Internal Research and Development (R&D)
Definition

Product development costs are quite high for these firms, and the resulting new product or service has a good chance of being a technological or market breakthrough.

R&D investments are considered continuous investments, since in the long run the few extremely successful new products, or blockbusters, generate enough revenues and profits to cover the losses from the less successful introductions

Term
Introduction
Definition

Childhood Characteristics

Profit- Negative

Sales- Low

"Get it off ground"

Secure trial

Promotion- Inform

Limited lines, competition

Term
Introduction Stage
Definition

Usually starts with a single firm, and innovators are the ones to try the new offering.

Characterized by initial losses to the firm due to its high start up costs and low levels of sales revenue as the product begins to take off.

If the product is successful, the firm may start seeing profits towards the end of this stage.

Term
Introductory Price Promotions
Definition
Limited-duration lower-than-normal prices designed to provide retailers with an incentive to try the products.
Term
Jingles
Definition
Audio messages about the brand that are composed of words or distinctive music.
Term
Labels
Definition
Provide information the consumer needs for his/her purchase decision and consumption of the product.
Identify the product and brand.
Can be used for promotion.
Information required on them must comply with general and industry-specific laws and regulations, inlcuding the constituents or ingredients contained in the product, where the product was made, directions for use, and/or safety precautions.
Term
Laggards
Definition

Like to avoid change and rely on traditional products until they are no longer available.

May never even adopt a certain product or service.

Roughly 16% of the market.

Term
Late Majority
Definition

Last group to enter a new product market, and usually do when the product has achieved its full market potential.

By the time they enter the market, sales tend to level off or may be in decline.

Represents about 34% of the market.

Term
Laws for Labeling Requirements
Definition
1. The Federal Trade Commission Act of 1914
2. The Fair Packaging and Labeling Act of 1967
3. The Nutrition Labeling Act of 1990
Term
Lead Users
Definition

Innovative product users who modify existing products according to their own ideas to suit their specific needs.

Helps firms understand general market trends that might just be on the horizon.

Analysis of this group is a successful customer input approach.

Term
Licensed Brand
Definition
One in which there is a contractual arrangement between firms, whereby one firm allows another to use its brand name, logo, symbols, and/or characters in exchange for a negotiated fee.
Term
Licensing
Definition

Firms buy the rights to use the technology or ideas from other research-intensive firms through a licensing agreement in many new scientific and technological products.

Saves the high costs of in-house R&D, but means the firm is relying on a solution that already exists but has not been marketed.

Term
Logos and Symbols
Definition
Logos are visual branding elements that stand for corporate names and trademarks.
Symbols are logos without words.
Term
Manufacturer Brands (National Brands)
Definition
Owned and managed by the manufacturer.
The manufacturer develops the merchandise, produces it to ensure consistent quality, and invests in a marketing program to establish an appealing brand image.
Majority of the brands marketed in the U.S.
Manufacturers retain more control over their marketing strategy, are able to choose the appropriate market segments and positioning for the brand, and cran build and thereby create their own brand equity.
Term
Market Testing
Definition

Testing the market for the new product with a trial batch of products, after testing the prototypes.

Can take two forms: Premarket testing, Test marketing

Term
Maturity
Definition

"Adulthood" Characteristics

Profit/Sales- Both beginning to decline

Combat competition

Forms

Promotion- Market share

Maximum levels

Term
Maturity Stage
Definition

Characterized by the adoption of the product by the late majority and intense competition for market share among firms, and so marketing costs increase.

Average price of the product falls substantially compared with the shifts during the previous 2 stages of the life cycle.

In the US, most consumer packaged goods found in grocery and discount stores are already in the maturity stage.

Firms may pursue strategies such as entry into new markets and market segments and developing new products, to increase their customer base and/or defend their market share.

In the later stages, the market is quite saturated.

Term
Newness Benchmark Study
Definition
New to the world- 10%
Improvements/Revisions- 26%
Additions to existing lines- 26%
New to company- 20%
Cost reductions- 11%
Repositionings- 7%
Term
Packaging
Definition
More tangible or physical benefits than the other brand elements.
Come in different types and offer a variety of benefits to consumers, manufacturers, and retailers.
Term
Perceived Value
Definition
The relationship between a product or service's benefits and its cost.
Determine the offering's value in relationship to that of its close competitors.
Term
Perishable
Definition

Services cannot be stored for use in the future.

Provides both challenges and opportunities to marketers in terms of the critical task of matching demand and supply; but their perfect match rarely occurs.

Term
Pioneers (Breakthroughs)
Definition

Truely new product introductions, truely new-to-the-world products that create new markets that add tremendous value to firms.

Establish a completely new market or radically change both the rules of competition and consumer preferences in a market.

Have the advantage of being first movers.

The degree to which a new product or service adds value to the firm and for customers depends on how new it really is.

Completely new-to-the-market products represent <10% of all new product introductions each year.

The degree of newness of a product ranges from truely "new-to-the-world" to "slightly repositioned".

New-to-the-world products diffuse or spread through a population by diffusion of innovation.

Term
Place
Definition
Manufacturer coordinates delivery and storage with its retailers to assure its available when the customer wants it, at the stores they are expecting to find it, and in sufficient quantities to meet demand.
Term
Premarket Tests
Definition

Conducted by firms before they bring a product or service to market to determine how many customers will try and then continue to use the product or service according to a small group of potential consumers.

1. BASES II, exposes potential customers to the marketing mix variables, surveys them and gives them a sample to try. A second survery is given after a period of time, which indicates an estimate of repeat purchases. This data helps the firm generate a sales estimate and enables them to decide whether to introduce the product, abandon it, redesign it, or revise the marketing plan saving marketers money.

2. Firms simulate a product or service introduction where potential customers view the ads of various currently available products along with ads for the new product. They are given money to purchase the product and then respond to a survey. This helps determine the effectiveness of a firm's ads as well as the expected trial rates for the new product.

Term
Premium Brands
Definition
Offer the consumer a private label that is comparable to, or even superior to, a manufacturer's brand quality, sometimes with modest price savings.
Term
Pressures for New Products
Definition
1. Market saturation
2. New substitutes
3. Changes in tastes, incomes
4. Intensifies competition
Term
Price
Definition

Setting prices is a supply chain-wide decision.

Manufacturers often encourage retailers to sell at a specified price know as the manufacturer's suggested retail price (MSRP).

Term
Primary Package
Definition
The one consumers use.
Consumers typically seek convenience in terms of storage, use, and consumption.
Term
Private-Label Brands (Store Brands, House Brands, Own Brands)
Definition
Products developed by retailers.
4 categories: premium, generic, copycat, and exclusive cobrands.
Retailers develop the design and specifications for their private-label products and then contract with manufacturers to produce those products.
National brand vendors work with a retailer to develop a special verson of its standard merchandise offering to be sold exclusively by the retailer; the national brand manufacturer is responsible for the design and specifications as well as the production of the merchandise.
~16% of purchases in North America and ~22% in Europe.
Term
Procedural Fairness
Definition

The perceived fairness of the process used to resolve complaints.

Customers want come influence on the outcomes of complaints.

Term
Product
Definition

Anything that is of value to a consumer and can be offered through a voluntary marketing exchange.

Benefits are in the eyes of the beholder.

Create value for consumers in their respective competitive marketing arenas.

Add value to firms' product and service offerings through innovation.

Term
Product Assortment (Product Mix)
Definition

The complete set of all products offered by a firm.

Consists of various product lines.

Can be described in terms of their breadth and depth, or variety.

Term
Product Category
Definition

An assortment of items that the customer sees as reasonable substitutes for one another or are used under similar circumstances.

Consists of similar or different brands, and a number of individual SKUs.

Term
Product Development (Product Design)
Definition

Optimizing the combination of function, value, and aestetics.

Process of balancing various engineering, manufacturing, marketing, and economic considerations to develop a product's form and features or a service's features.

Engineering team develops a prototype based on research findings from the concept testing.

The prototypes are usually tested through alpha and beta testing

Companies can demonstrate the likely success or failure of a product without actually having to produce it for a market and, possibly expose any secrets to competitors.

Term
Product Development Process
Definition

(lecture)

1. Generate ideas

2. Evaluate ideas

3. Conduct business analysis

4. Develop product and marketing mix

5. Test marketing

6. Commercialization

(book)

1. Idea generation

2. Concept testing

3. Product development

4. Market testing

5. Product launch

6. Evaluation of results

Term
Product Forms
Definition
Goods, Services, Ideas, Places, Personalities
Term
Product Label
Definition

Provide information the consumer needs for his/her purchase decision and consumption of the product.

Identify the product or brand, and can be used for promotion.

Information required on them must comply with general and industry-specific laws and regulations, inclusing the ingredients in the product, where the product was made, directions for use, and/or safety precautions.

A product label is a communication tool.

Help sell the product and facilitate its use.

Term
Product Launch
Definition

Most critial step in the new product introduction.

Requires a lot of financial resources and extensive coordination of all aspects of the marketing mix.

1. On the basis of the research on consumer perceptions, conducted tests, and competitive considerations, the firm confirms its target market(s) and decides how the product will be positioned.

2. Then the firm finalizes the first year marketing budget and remaining marketing mix variables: Promotion, Place, Price, Timing.

Term
Product Life Cycle
Definition

The stage that new products move through as they etner, get established in, and ultimately leave the marketplace.

In their life cycle, products pass through 4 stages:

1. Introduction

2. Growth

3. Maturity

4. Decline

Offers marketers a starting point for their strategy plan.

Growth slows, and customers become more knowledgeable.

Helps marketers manage their products' marketing mix during and after its introduction.

Useful tool for managers to analyze the types of strategies that may be required over the life of their products.

The strategic emphasis of a firm and its marketing mix (4 P's) strategies can be adapted from insights about the characteristics of each stage of the cycle.

Term
Product Life Cycle Curve
Definition

Assumed to be bell shaped, but in reality, each product or service has its own shape, but managers don't know exactly what shape each will take.

Some move more rapidly through their product life cycles than others, depending on how different the product is from current products and how valuable it is to the consumer.

New products and services that consumers accept very quickly have higher consumer adoption rates very early in their product life cycles and move faster across the various stages.

Term
Product Lines
Definition
Groups of associated items, such as items that consumers use together or think of as part of a group of similar products.
Consists of multiple product categories.
Term
Promotion
Definition

Required at each link in the supply chain for new products.

Test results help determine an appropriate integrated marketing communications strategy.

Promotions to retailers to get them to purchase the new products are often a combination of introductory price promotions, special events, and personal selling.

Used by manufacturers to generate demand for new products with consumers, which are often coupled with short-term price reductions, coupons, or rebates.

Manufactures sometimes promote new products in advance of the product launch to create excitement.

May just be an effort to add value to a relatively well-known product.

Term
Prototype
Definition

The first physical form or service description of a new product, still in rough or tenative form, that has the same properties as a new product but is produced through different manufacturing processes, or even crafted individually.

Usually tested through alpha and beta testing.

Developed by an engineering team.

Term
R&D Consortia
Definition

In recent years, more and more firms have been joining consortia, or groups of other firms and institutions, possibly including govt. and educational institutions, to explore new ideas or obtain solutions for developing new products.

Example: A clinical trial

The R&D investments come from the group as a whole, and they share the results.

Term
RFIDs (Radio Frequency Identification Devices)
Definition

Tiny computer chips that automatically transmit to a special scanner all the info about a container's contents or products.

Personalize and enhance the customer experience.

Term
Reverse Engineering
Definition

Used to understand the competitor's product and then bring an improved version to market, creating a market opportunity for the firm.

Involves taking apart a product, analyzing it, and creating an improved product that does not infringe on any competitor patents.

Widespread "copycat" approach practiced by even the most research-intensive firms.

Term
Risks of Brand Licensing
Definition
For the licensor:
1. The dilution of its brand equity through overexposure of the brand, especially if the brand name and characters are used inappropriately.
2. Improperly valuing their brand for licensing purposes or entering into the wrong type of licensing arrangement.
Term
Risks of Cobranding
Definition
1. When the customers of each of the brands turn out to be vastly different.
2. May fail if the brands' owners cannot resolve financial disputes about revenue or royalty sharing.
3. The firms that own the brands may change their priorities, as a result of which the cobranded product may no longer be available.
4. Can be a prelude to an acquisition strategy.
Term
Secondary Package
Definition

The wrapper or exterior carton that contains the primary package information and provides the UPC label used by retail scanners.

Location of additional product information that may not be available on the primary package.

May be packed into larger cartons, pallets, or containers to facilitate shipment and storage from the manufacturer to the retailer.

Since packages are critical to the firm's brand positioning and shelf appeal, many innovations in design and materials have occured in the past few decades.

Term
Service
Definition

Any intangible offering that involves a deed, performance, or effort that cannot be physically possessed.

A method to maintain a sustainable competitive advantage.

Service industries account for 42% of the US GDP and almost 100% of US job growth.

Proportion of service production to goods production in the US has steadily increased over time.

Because of their intangibility, the images marketers use reinforce the benefit or value that a service provides; Professional providers, such as doctors lawyers, accountants, and consultants, depend heavily on consumers' perceptions of their integrity and trustworthiness.

Term
Service Gap
Definition

When the delivery of a service fails to meet a customers certain expectations.

There are 4 service gaps:

1. The knowledge gap

2. The standards gap

3. The delivery gap

4. The communication gap

Term
Service Marketing Conditions and Problems
Definition

1. Intangibility- Communication

2. Variability- Quality control

3. Perishability- Scheduling

4. Inseparability- Delivery

5. Low productivity- Cost

Term
Service Quality
Definition

Customers' perceptions of how well a service meets or exceeds their expectations.

Often difficult to evalutate because of its intangibility.

Customers generally have 5 distinct service dimensions to determine overall service quality:

1. Reliability

2. Responsiveness

3. Assurance

4. Empathy

5. Tangibles

Term
Service Recovery
Definition

1. Listening to the customer

2. Providing a fair solution

3. Resolving the problem quickly

Effective service recovery efforts can significantly increase customer satisfaction, purchase intentions, and positive word of mouth, though customers' postrecovery satisfaction levels usually fall lower than their satisfaction level prior to the service failure.

Term
Slogans
Definition
Short phrases used to describe the brand or persuade consumers about some characteristics of the brand.
Term
Slotting Allowance
Definition
Fee paid by the manufacturer, simply to get the new products into stores or to gain more or better shelf space for their products.
Term
Stock Keeping Units (SKUs)
Definition
The smallest unit available for inventory control.
Firms may add or delete SKUs to address changing consumer preferences or preempt competitors while boosting sales.
Firms sometimes delete SKUs to realign resources.
Term
Tangible Product Level
Definition

Size, Color, Package, Physical Characteristics, Features, "Quality", Absence of Defects, Capabilities, Performance Level.

From the customer's point of view.

Term
Test Marketing
Definition

A method of determining the success potential of a new product.

Introduces the offering to a limited geographical area prior to a national launch and uses all the elements of the marketing mix.

The results can help the firm estimate demand for the entire market, and then can determine how aggressively the product should be introduced nationally.

Costs more and takes longer than premarket tests

Strong predictor of product success because the firm can study actual purchase behavior.

Term
The 4 C's
Definition

1. Customer

2. Convenience

3. Communication

4. Costs

From the customers' point of view

Term
The CREST Method
Definition

Can help resolve many service failures when carefully and sincerely implemented.

-C: "Calm the customer"

-R: "Repeat the problem"

-E: Use "empathy statements"

-S: "Solve the problem"

-T: Make a "timely response"

Term
The Communication Gap
Definition

The difference between the actual service provided to customers and the service that the firm's promotion program promises.

Firms can generally close this gap by being more realistic about the services they can provide and at the same time manage customer expectations created through promotions, ads, or personal selling.

Customer expectations can be managed when the service is delivered.

Term
The Delivery Gap
Definition

Always results in a service failure.

The difference between the firm's service standards and the actual service it provides to customers.

Where "the rubber meets the road", or where the customer directly interacts with the service provider.

This gap can be closed by getting employees to meet or exceed service standards, and with the use of technology.

Term
The Food and Drug Administration (FDA)
Definition
The primary federal agency that reviews food and packaging labels and ensures that the claims made by the manufacturer are true.
Term
The Knowledge Gap
Definition

Reflects the difference between customers' expectations and the firm's perception of those expectations.

Firms can close this gap by matching customer expectations with actual service through research and increased interaction and communication between managers and employees.

Customers' expectations are based on their knowledge and experiences, and vary according to the type of service and the situtation.

Term
The Standards Gap
Definition

The difference between the firm's perceptions of customers' expectations and the service standards its set.

By setting appropriate standards and measuring service performance, firms and attempt to close this gap.

Term
Total Product Concept
Definition

3 levels:

1. Core (Benefits)

2. Tangible

3. Augmented

Term
Types of Consumer Products
Definition

1. Convenience Products

2. Shopping Products

  a. Homogeneous- Price based

  b. Heterogeneous- Attribute based

3. Speciality Products

4. Unsought Products

Term
URLs (Uniform Resource Locators) or Domain Names
Definition
The location of pages on the Internet, which often substitutes for the firm's name.
Term
Variable
Definition

The quality of a service may vary because it is provided by humans.

Marketers can use the variable nature of services to their advantage in the way of a micromarketing segmentation strategy to customize a service to meet customers' needs exactly.

Some service providers are replacing people with machines to reduce variablity.

The internet has reduced in-store service variability and has many online benefits.

Term
Voice-Of-Customer (VOC) Program
Definition
Collects customer inputs and integrates them into managerial decisions.
Term
Zone of Tolerance
Definition

The area between customers' expectations regarding their desired service and the minimum level of acceptable service.

An important marketing metric to evaluate how well firms perform on the 5 service quality dimensions.

Term
4 Retailing Institutions
Definition

1. Traditional department stores

2. Chain store organizations

3. Food supermarkets

4. Planned shopping centers

Term
Administered Vertical Marketing System
Definition
No common ownership and no contractual relationships, but the dominant channel member controls the channel relationship.
Term
Advanced Shipping Notice (ASN)
Definition
Electronic document the supplier send the retailer in advance of a shipment to tell the retailer exactly what to expect in the shipment.
Term
Agents-Brokers
Definition

Specialize in buying, selling contracts.

Do NOT take title.

Term
Benefits of EDI
Definition

1. Reduces the cycle time, information flows quicker, so inventory turnover is higher.

2. Improves overall quality of communications through better recordkeeping; Fewer errors in inputting and receiving an order; less human error in the interpretation of data.

3. Data transmitting by EDI are in a computer-readable format that can be easily analyzed and used for a variety of tasks ranging from evaluating vendor delivery performance to automating reorder processes.

Term
Catalog Channel Benefits
Definition
Convenience, Information, Safety
Term
Category Specialists (Big Box Retailers or Category Killers)
Definition

Discount Stores that offer a narrow but deep assortment of merchandise.

Most use a self-service approach, but do offer assistance.

-Staples

Term
Chain Store Organizations
Definition

2 or more stores with the same owner, format.

Completely dominate most retail categories.

Steady growth in market share.

Cookie cutter approach.

Tend to have higher turnover and lower mark-ups.

Term
Channel Conflict (Supply Chain)
Definition
When supply chain members are not in agreement about their goals, roles, or rewards.
Term
Channels
Definition

8 differnt channels.

M-W-R-C is the most common for consumer goods.

Tend to be shorter for organizational (B2B) markets.

Term
Checking
Definition
Process of going through the goods upon receipt to make sure they arrived undamaged and that the merchandise ordered was what was received.
Term
Choosing Retail Partners
Definition
Manufacturers must look at the basic channel structure, where their target customers expect to find the products, channel member characteristics, and distribution intensity.
Term
Collaborative Planning, Forecasting, and Replenishment (CPFR)
Definition
Sharing of forecast and related business info and collaborative planning  between retailers and vendors to improve supply chain efficiency and product replenishment.
Term
Consignment
Definition

The manufacturer owns the merchandise until it is sold by the retailer, at which time the retailer pays for the merchandise.

By sharing POS transaction data, allows manufacturers to sell merchandise on consignment.

Provides an incentive for manufacturer to pick SKUs and inventory levels that will minimize inventory and generate sales.

Term
Contractual Vertical Marketing System
Definition

Independent firms at different levels of the supply chain join together through contracts to obtain economies of scale and coordination and to reduce conflict.

Franchising is the most common type of Contractual Vertical Marketing System.

Term
Convenience Stores
Definition

Provide a limited variety and assortment of merchandise at a convenient locationwith speedy checkout.

Customers make quick purchases.

Term
Conventional Supermarket
Definition

Self-service food store offering groceries, meat, and produce with limited sales of nonfood items, such as health and beauty aids and general merchandise.

Perishables account for 50% of supermarket sales and typically have higher margins than packaged goods.

Carry about 30,000 SKU's.

Term
Conversion Rates
Definition
The percentage of consumers who buy the product after viewing it.
Term
Cooperative (Co-Op) Advertising
Definition
Agreement between a manufacturer and retailer in which the manufacturer agrees to defray some advertising costs.
Term
Corporate Vertical Marketing System
Definition
Parent company has complete control and can dictate the priorities and objectives of the supply chain.
Term
Cross-Docked
Definition
Merchandise containers that are prepackaged by vendor for a specific store.
Term
Cycle Time
Definition

Time between the decision to place an order and the receipt of merchandise.

Reduced by EDI use.

Term
Department Stores
Definition

Retailers that carry a broad variety and deep assortment, offer customer services, and organize their stores into distinct departments for displaying merchandise.

Categorized into 3 tiers:

1. Upscale, high-fashion chains

2. Upscale traditional department stores

3. Value-oriented, price-conscious

To better compete, department stores are:

1. Attempting to increase the amount of exclusive and private-label merchandise they sell

2. Strengthening their customer loyalty programs

3. Expanding their online presence

-JCPenny

Term
Determinants of Channel Length
Definition

Products are costly, bulky, complex, perishable.

Buyers are few in number, large, geographically concentrated.

Suppliers are large, offer full lines, want control.

Term
Disintermediation
Definition
Occurs when a manufacturer sells directly to consumers, bypassing retailers.
Term
Dispatcher
Definition
Person who coordinates the deliveries to the distribution centers.
Term
Distribution Center
Definition

Coordinates inbound transportation; receiving, checking, storing, and cross-docking; getting merchandise "floor ready"; coordinating outbound transportation.

Facility for the receipt, storage, and redistribution of goods to company stores or customers, may be operated by retailers, manufacturers, or distribution specialists.

Term
Distribution Intensity
Definition

Number of channel members to use at each level of the marketing channel.

Commonly divided into 3 levels: Intensive, Exclusive, Selective.

Term
Drugstores
Definition

Specialty Stores that concentrate on pharmaceuticals and health and personal grooming merchandise.

Sustained sales growth because of the aging population.

-CVS

Term
Electronic Data Interchange (EDI)
Definition

Computer-to-computer exchange of business documents from a retailer to a vendor and back.

Transmits sales data, purchase orders, invoices, and data about returned merchandise.

Enables vendors to transmit information about on-hand inventory status, vendor promotions, and cost changes to the retailer, as well as info about purchase orders, order status, retail prices, and transportation routings.

Transmitted over the internet through either intranets or entranets.

Term

Exclusive Distribution

Definition

Policy by granting exclusive geographic territories to one or very few retail customers so no other customers in the territory can sell a particular brand.

Can benefit manufacturers by assuring them that the most appropriate retailers represent their products.

Term
Extranets
Definition

Collaborative network that uses internet technology to link businesses with their suppliers, customers, or other businesses.

Transmit EDI.

Typically private and secure.

Suppliers can describe and show pictures of their products, and buyers can issue requests for proposals.

Term
Extreme Value Retailers
Definition

Small, full-line discount stores that offer a limited merchandise assortment at very low prices.

Reduce costs and maintain low prices by buying opportunistically from manufacuturers that have excess merchandise, offering a limited assortment, and operating in low-rent locations.

Offer a broad but shallow assortment.

-Dollar General

Term
Floor Ready Merchandise
Definition

Merchandise that is ready to be placed on the selling floor.

Ticketing, marking, and possibly putting garments on hangers.

Term
Food Retailers
Definition
Supermarket, Supercenter, Convenience, Warehouse club.
Term
Franchising
Definition
Contractual agreement between a franchisor and a franchisee that allows the franchisee to operate a retail outlet using a name and format developed and supported by the franchisor.
Term
Full-Line Discount Stores
Definition

Retailers that offer a broad variety of merchandise, limited service, and low prices.

Offer both private-label and manufacturer brands.

-Wal-Mart

Term
General Merchandise Retailers
Definition
Department stores, Full-line discount stores, Specialty stores, Drugstores, Category specialists, Extreme value retailers, Off-price retailers
Term
Home Improvement Center
Definition

Offering equipment and material used by do-it-yourselfers and contractors to make home improvements.

One of the largest and most successful types of Category Specialists.

-Home Depot

Term
Independent (Conventional) Supply Chain
Definition

Several independent members- manufacturer, wholesaler, and retailer -each attemp to satisfy their own objectives and maximize their own profits, often at the expense of the other members.

None of the participants has any control over the other.

Term
Independent Retailers
Definition
Potentially unique identity, Personal services, Flexibility, Tough Business
Term
Intensive Distribution
Definition

Designed to get products into as many outlets as possible.

The more exposure it gets, the more it sells.

Term
Internet Channel Benefits
Definition
Broader selection, More information, Personalization, Touch and feel attributes
Term
Intranets
Definition

Secure communicationg systems contained within one company, such as between buyers and distribution centers.

Transmits EDI.

Term
Irregulars
Definition

Merchandise that has minor mistakes in construction.

Puchased by Off-Price Retailers.

Term
Just-in-Time Inventory Systems (JIT)
Definition

Also known as Quick Response (QR) Systems in retailing.

Inventory management systems designed to deliver less merchandise on a more frequent basis than traditional inventory systems.

Lowers inventory investments, and product availablity increases.

Term
Lead Time
Definition

Amount of time between the recognition that an order needs to be placed and the arrival of the needed merchandise at the seller's store, ready for sale.

Reduced by the EDI in the JIT system.

Term
Limited Supermarkets (Extreme Value Food Retailers)
Definition

Stock only 2,000 SKU's.

Offer one or two brands and sizes, one of which is a store brand.

Stores are designed to maximize efficiency and reduce costs.

40-60% lower prices than conventional supermarkets.

-ALDI

Term
Logistics Management
Definition

The integration of two or more activities for the purpose of planning, implementing, and controlling the efficient flow of raw materials, in-process inventory, and finished goods from the point of origin to the point of consumption.

That element of the supply chain management that concentrates on the movement and control of physical products.

As a whole, also includes an awareness of the relationships among members of the supply chain or channel and the need to coordinate efforts to provide customers with the best value.

 

Term
Making Information Flow
Definition

Flow 1: Customer to Store

Flow 2: Store to Buyer

Flow 3: Buyer to Manufacturer

Flow 4: Store to Manufacturer

Flow 5: Store to Distribution Center

Flow 6: Manufacturer to Distribution Center and Buyer

Term
Manufacturers'
Definition

Own sales branches - offices.

"Inside wholesaling"

Highest sales per establishment.

Term
Marketing Channel
Definition

The set of institutions that transfer the ownership of and move goods from the point of production to the point of consumption.

Consists of all the institutions and marketing activities in the marketing process.

virtually the same as a supply chain.

Term
Merchant Wholesalers
Definition
Own merchandise, buy it from others.
Term
Multichannel Retailers
Definition
Retailers that use some combination of stores, catalogs, and the internet to sell merchandise.
Term
Multichannel Strategy
Definition
Retailers and some manufactures sell in more than one channel (store, catalog, and internet).
Term
Off-Price Retailers (Close-Out Retailers)
Definition

Offer an inconsistent assortment of brand name merchandise at low prices.

20-60% lower prices through their unique buying and merchandising practices.

Most merchandise is bought opportunistically from manufacturers or other retailers with excessive inventory at the end of the season.

Merchandise might be in odd sizes or unpopular colors and styles, or it may be irregulars.

They can buy at low prices because they do not ask suppliers for advertising allowances, return privileges, markdown adjustments, or delayed payments.

-TJMaxx

Term
Outlet Stores (Factory Outlets)
Definition

Off-Price Retailers owned by manufacturers or department or specialty store chains.

Manufacturers view outlet stores as an opportunity to improve their revenues from irregulars, production overruns, and merchandise returned by retailers.

Term
Overall Revenue
Definition

Industrial, Govt, Commercial- 41%

Retailers- 37%

Wholesalers- 15%

Foreign- 6%

Term
Pick Ticket
Definition
Document or display on a screen in a forklift truck indicating how much of each item to get from each storage area, it finds that item, labels it and puts it on the conveyor.
Term
Place
Definition

Includes all activities required to get the right product to the right customer when that customer wants it.

Happens behind the scenes.

About half of marketing costs.

Least flexibly of the 4 P's.

Often misunderstood, taken for granted.

Commonly called supply chain management adds value for customers because it gets products to customers efficiently, quickly and at low cost.

Term
Planned Shopping Centers
Definition
Strip centers, regional malls, others.
Term
Pull Supply Chain
Definition

Orders for merchandise are generated at the store level on the basis of sales data captured by POS terminals.

Demand for an item pulls it through the supply chain.

Term
Push Supply Chain
Definition

Merchandise if allocated to stores on the basis of forcasted demand.

Once a forecast is developed, specified quanities of merchandise are shipped (pushed) to distribution centers and stores at predetermined time intervals.

Term
Reorder Point
Definition

Level of inventory at which more merchandise is required.

Determined by sharing the data in the retailer's data warehouse and communicating that info by EDI.

Term
Retailing
Definition
Set of business activities that add value to products and services sold to consumers for their personal or family use.
Term

Selective Distribution

Definition

Helps the seller maintain a particular image and control the flow of merchandise into an area, and uses a few selected customers in a territory.

Term
Share of Wallet
Definition
The percentage of the customers purchases made from a particular retailer.
Term
Social Shoppers
Definition

People who participate in virtual communities and seek not just info for future use but also an enhanced emotional connection with other participants during the shopping experience.

Enjoy the experience of shopping more than the product or service.

Term
Specialty Stores
Definition

Concentrate on a limited number of complementary merchandise categories and provide a high level of service in relatively small stores.

Tailor their retail strategy toward specific market segments by offering deep but narrow assortments and sales associate expertise.

-Sephora

Term
Store Channel Benefits
Definition
Browsing, Touching and feeling merchandise, Personal service, Cash and credit payment, Entertainment and social interaction, Instant gratification, Risk reduction.
Term
Strategic (Partnering) Relationship
Definition
Supply chain members are committed to maintaining the relationship over the long term and investing in opportunities that are mutually beneficial.
Term
Supercenters
Definition

Fastest growing retail category.

Large stores that combine a supermarket with a full-line discount store.

One stop shopping experience.

-Target

Term
Supply Chain
Definition

As transactions are eliminated, the supply chain becomes more efficient, adding value for customers by making it more convenient and less expensive to purchase merchandise.

Affects and is affected by every marketing decision.

Term
Supply Chain Management
Definition

A set of approaches and techniques firms employ to efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores, and transportation intermediaries into a seamless operation in which merchandise is produced and distributed in the right quantities, to the right locations, and at the right time, as well as to minimize systemwide costs while satisfying the service levels their customers require.

Includes both channel and logistics management.

5 interrelated activities emerge in supply chain management:

1. Making information flow

2. Making merchandise flow

3. Managing inventory

4. Designing the suppy chain

5. Managing the relationships among supply chain partners

Term
Universal Product Code (UPC)
Definition

Contains a 13-digit code that indicates the manufacturer of the item, a description of the item, information about special packaging, and special promotions.

The black-and-white bar code found on most merchandise.

RFID tags may replace UPC tags in the future.

Term
Vendor-Managed Inventory (VMI)
Definition

Approach for improving supply chain efficiency where the manufacturer is responsible for maintaining the retailer's inventory levels in each of its stores.

Usually applied to replenish inventories at distribution centers.

Term
Vertical Marketing System
Definition

Improve channel performance by increasing co-operation, coordination and by reducing costs, conflicts.

Supply chain in which the members act a as a unified system.

3 types, or phases, each with increasing levels of formalization and control: Contractual, Corporate, Administered

The more formal the vertical system, the less likely there will be conflict.

Term
Virtual Communities
Definition

Networks of people who seek information, products, and services and communicate with one another about specific issures, also help customers solve problems by providing information not readily available through other channels.

Participants are known as social shoppers.

Term
Warehouse Clubs
Definition

Large retailers that offer a limited and irregular assortment of food and general merchandise with little service at low prices for ultimate consumers and small businesses.

-Costco

Term
Wholesalers
Definition

Firms that buy products from manufacturers and resell them to retailers, and retailers sell products directly to consumers.

Like retailers, decide levels of service, selection

Differences: Market, Mark-up, Ownership

3 Basic Types: Merchant Wholesalers, Agents-Brokers, Manufacturer-Operated

Term
Advertising
Definition

-Paid form of communication, delivered through media from an identifiable source, about an organization, product, service, or idea, designed to persuade the receiver to take some action, now or in the future.

-Most visible form of marketing communications--it is everywhere.

 

-Differences from other forms of promotion:

1. not free; someone has paid, with money, trade or other means, to get the message shown.

2. Must be carried by some medium; television, radio, print, the Web, t-shirts, sidewalks, ect.

3. Legally, the source of the message must be known or knowable.

4. Represents a persuasive form of communication, designed to get the consumer to take some action.

Term
Ad Campaign
Definition

-Aim to acheive certain objectives: to inform, persuade, and remind customers.

-Objectives determine the specific ad's focus.

 

-Steps in planning and executing an ad campaign:

1. Identify target audience

2. Set advertising objectives

3. Determine the advertising budget

4. Convey the message

5. Evaluate and select media

6. Create advertisements

7. Assess impact

Term
Advertising Plan
Definition

-Subsection of the firm's overall marketing plan that explicitly analyzes the marketing and advertising situation, identifies the objectives of the ad campaign, clarifies a specific strategy for accomplishing those objectives, and indicates howt he firm can determine whether the campaign was successful.

-Later, will serve as the yardstick against which advertising success or failure is measured.

Term
Pull Strategy
Definition
-Objective when advertising to consumers is to get consumers to pull the profuct into the supply chain by demanding it.
Term
Push Strategy
Definition

-Designed to increase demand by focusing on wholesalers, distributors, or sales people.

-Attempt to motivate the seller to highlight the product, rather than the products of competitors, and thereby push the product to consumers.

Term
Informative Advertising
Definition

-Communicates to create and build brand awareness, with the ultimate goal of moving the consumer through the buying cycle to a purchse.

-Helps determine some important early stages of a product's life cycle.

Term
Persuasive Advertising
Definition

-Used to motivate consumers to take action.

-Used when a product has gained a certain level of brand awareness.

-Generally occurs in the growth early maturity stages, when competition is most intense, and attempted to accelerate the market's acceptance of the product.

-In later stages, used to repostition an established brand by perduading consumers to change their existing perceptions of the advertised product.

Term
Reminder Advertising
Definition
-Communication used to remind or promt repurchases, especially for products that have gained market acceptance and are in the maturity stage.
Term
Product-Focused Advertisements
Definition
-Focus on informing, persuading, or reminding consumers about a specific product or service.
Term
Institutional Advertisements
Definition
-Inform, persuade, and remind consumers about issues related to places, politics, an industry, or a particular corporation.
Term
Primary Demand
Definition

-Ads designed to generate demand for the product category or an entire industry.

Term
Selective Demand
Definition

-Ads designed to generate demand for a specific brand, firm, or item.

Term

Public Service Advertising (PSA)

Definition

-Class of primary demand advertising which focuses on public welfare and is generally sponsored by nonprofit institutions, civic groups, religious organizations, trade associations, or political groups.

-Represent a form of social marketing.

-Creative and appealing.

 

Term
Social Marketing
Definition

-The application of marketing principles to a social issue to bring about attitudinal and behavioral change among the general public or a specific population segment.

Term
Determine the Advertising Budget
Definition

1. Firms must consider the role that advertising plays in their attempt to meet their overall promotional objectives.

2. Advertising expenditures vary over the course of the product life cycle.

3. The nature of the market and the product influence the size of advertising budgets.

Term
Convey the Message
Definition

1. The firm determines the key message it wants to communicate to the target audience.

2. The firm decides what appeal would most effectively convey the message.

Term
Unique Selling Proposition (USP)
Definition

-Often the common theme or slogan in the ad campaign.

-Must be unique to the brand, meaningful to the consumer, and be sustainable over time, even with repetition.

Term
Informational Appeals
Definition

-Help consumers make purchase decisions by offering factual information and strong arguments built around relevant issues that encourage consumers to evaluate the brand favorably on the basis of the key benefits it provides.

Term
The Appeal
Definition

-3 main types of appeals an argument may use:

1. Logos (Logical)

2. Ethos (Ethical)

3. Pathos (Emotional)

-2 categories that combine the types of appeals:

1. Informational

2. Emotional

Term
Emotional Appeal
Definition

-Aims to satisfy consumers’ emotional desires rather than their utilitarian needs.

-Focus on feelings about the self.

-Use the emotion to create a bond between the consumer and the brand.

Term
Media Planning
Definition

-The process of evaluating and selective the media mix that will deliver a clear, consistent, compelling message to the intended audience.

Term
Media Mix
Definition

-The combination of the media used and the frequency of advertising in each medium.

Term
Media Buy
Definition

-The actual purchase of airtime or print pages.

-Generally the largest expense.

-TV: most expensive

Term
Mass Media
Definition

-Newspapers, magazines, radio, and TV.

-Are ideal for reaching large numbers of anonymous audience members.

Term
Niche Media
Definition

-More focused and generally used to reach narrower segments, often with unique demographic characteristics or interests.

-Examples: Cable TV, specialty magazines

-Allows advertisers to change and even personalize their messages.

Term
Viral Marketing Campaign
Definition

-Campaign that facilitates and encourages people to pass along a marketing message.

Term
Types of Media
Definition

TV:

-Advantages: Wide reach, incorporates sound and video.

-Disadvantages: High cost, cluttered airways, more potential spillover..

 

Radio:

-Advantages: Relatively inexpensive, can be selectively targeted, wide reach.

-Disadvantages: No video, less focused attention of consumers, short exposure periods.

 

Magazines:

-Advantages: Very targeted, subscribers pass along to others.

-Disadvantages: Relatively inflexible, long lead times.

 

Newspapers:

-Advantages: Flexible, timely, can localize.

-Disadvantages: Can be expensive, potential loss of control over placement, short life span.

 

Internet:

-Advantages: Can be linked to detailed content, high flexibility and interactive, allows for specific targeting.

-Disadvantages: Costs not easily comparable to other media, becoming cluttered, blocking software prohibits delivery.

 

Outdoors:

-Advantages: Relatively inexpensive, offers opportunities for repeat exposure, flexible.

-Disadvantages: Not easily targetedd, placement problems in some markets, short exposure time.

 

Direct Mail:

-Advantages: Highly targeted, flexible, allows for personalization.

-Disadvantages: Relatively expensive, cluttered environment, often considered "junk mail."

Term
Advertising Schedule
Definition

-Decision for the media planner which specifies the timing and duration of advertising

-3 types:

1. Continuous

2. Flighting

3. Puling

Term
Continuous Schedule
Definition

-Runs steadily throughout the year and therefore is suited to products and services that are consumed continually at relatively steady rates and that require a steady level of persuasive and/or reminder advertising.

Term
Flighting Schedule
Definition

-Implemented in spurts, with periods of heavy advertising followed by periods of no advertising.

-Generally functions for products who demand fluctuates.

Term
Pulsing Schedule
Definition

-Combines the continuous and flighting schedules by maintaining a base level of advertising but increasing advertising intensity during certain periods.

Term

Components of Print Advertising

Definition
-Headline, Body Copy, Background, Foreground, Branding.
Term
Headline
Definition

-Large type designed to draw attention and be read first.

Term
Body Copy
Definition

-The main text portion of the ad

Term
Background
Definition

-Backdrop for the ad.

-Usually a single color.

Term
Foreground
Definition

-Everything that appears on top of the background.

Term
Branding
Definition

-Identifies the sponsor of the ad.

Term
Pretesting
Definition

-Assessments performed before an ad campaign is implemented to ensure that the various elements are working in an integrated fashion and doing what they are intended to do.

Term
Tracking
Definition

-Includes monitoring key indicators, such a daily or weekly sales volume, while the ad is running to shed light on any problems with the message or the medium.

Term
Posttesting
Definition

-Evaluation of the campaign’s impact after it has been implemented.

-Advertisers assess the sales and/or communication impact of the advertisement or campaign.

Term
Lift
Definition

-Additional sales caused by the advertising.

Term
Federal Trade Commission (FTC)
Definition

-Enforces federal consumer protection laws.

-Enforces truth in advertising laws

-Defines deceptive and unfair advertising practices.

 

Term
Federal Communications Commission (FCC)
Definition

-Regulates interstate and international communications by radio, tv, wire, satellite, and cable.

-Enforces restrictions on broadcasting material that promotes lotteries, cigarettes, little cigars, or smokeless tobacco products, or that perpetuates a fraud.

-Enforces laws that prohibit or limit obscene, indecent, or profane language.

Term
Food and Drug Administration (FDA)
Definition

-Regulates food, dietary supplements, drugs, cosmetics, medical devices, biologics, and blood products.

-Regulates package labeling and inserts, definition of terms such as “light” and “organic,” and required disclosure statements such as warning labels and dosage requirements.

Term
Puffery
Definition

-Legal exaggeration of praise, stopping just short of deception, lavished on a product.

Term
Public Relations (PR)
Definition

-Involves managing communications and relationships to achieve various objectives, such as building and maintaining a positive image of the firm, handling or heading off unfavorable stories or events, and maintaining positive relationships with the media.

Term
Cause-Related Marketing
Definition

-Commercial activity in which businesses and charities form a partnership to market an image, product, or service for their mutual benefit.

Term
Event Sponsorship
Definition

-Occurs when corporations support various activities (financially or otherwise), usually in the cultural or sports and entertainment sectors.

Term
Elements of Public Relations Toolkit
Definition

Publications:

-Brochures, special-purpose single-issue publications such as books.

-Inform various constituents about activities of the organization and highlight specific areas of expertise.

 

Video and Audio:

-Programs, public service announcements.

-Highlight the organization or support cause-related marketing efforts.

 

Annual Reports:

-Give required financial performance data and inform investors and others about the unique activities of the organization.

 

Media Relations:

-Press kits, news releases, speeches, event sponsorships.

-Generate news coverage of the organization’s activities or products/services.

 

Electronic Media:

-Web sites, e-mail campaigns.

-Web sites can contain all the previously mentioned toolbox elements, while e-mail directs PR efforts to specific target groups.

Term
Sales Promotions
Definition

-Special incentives or excitement-building programs that encourage consumers to purchase a particular product or service.

-Typically used in conjunction with other advertising or personal selling programs.

-Goal is to create value for both the consumers and the firm.

Term
Coupons
Definition

-Certificate with a stated price reduction for a specific item or percentage of purchase.

Term

Kinds of Sales Promotion

Definition

Coupons:

Advantages:

-Stimulates demand, allows for direct tracing of sales.

Disadvantages:

-Low redemption rates, high cost.

 

Deals:

Advantages:

-Encourages trial, reduces consumer risk.

Disadvantages:

-May reduce perception of value.

 

Premiums:

Advantages:

-Builds goodwill, increases perception of value.

Disadvantages:

-Consumers buy for premium not product, has to be carefully managed.

 

Contests:

Advantages:

-Increases consumer involvement, generates excitement.

Disadvantages:

-Requires creativity, must be monitored.

 

Sweepstakes:

Advantages:

-Encourages present consumers to consume more.

Disadvantages:

-Sales often decline after.

 

Samples:

Advantages:

-Encourages trial, offers direct involvement.

Disadvantages:

-High cost to firm.

 

Loyalty Programs:

Advantages:

-Creates loyalty, encourages purchase.

Disadvantages:

-High cost to firm.

 

POP Displays:

Advantages:

-Provides high visibility, encourages brand trial.

Disadvantages:

-Good location in store in difficult, can be costly to firm.

 

Rebates:

Advantages:

-Stimulates demand, increases value perception.

Disadvantages:

-Easily copied by competitors, may just advance future sales.

 

Product Placement:

Advantages:

-Displays products nontraditionally, demonstrates product uses.

Disadvantages:

-Firm often has little control over display, product can be overshadowed.

Term
Deal
Definition

-Type of short-term price reduction that can take several forms, such as a “featured price,” a price lower than the regular price, “buy one, get one free” offer, or a certain percentage “more free” offer contained in larger packaging.

-Special financing arrangement, such as reduced percentage interest rates or extended repayment terms.

-Encourage customers to try a product because they lower the risk for consumers by reducing the cost of the good.

-Can also alter perceptions of value—a short-term price reduction may signal a different price/quality relationship than would be ideal from manufacturer’s perspective.

Term
Premium
Definition

-Offers an item for free or at a bargain price to reward some type of behavior, such as buying, sampling, or testing.

-Build goodwill among consumers, who often perceive high value in them.

-Can be very effective if consistent with brand’s message and image and highly desirable to the target market.

Term
Contest
Definition

-Brand-sponsored competition that requires some form of skill or effort.

Term
Sweepstakes
Definition

Sweepstakes

-Form of sales promotion that offers prizes based on a chance drawing of entrant’s names.

-Do no require entrant to complete a task other than buying a ticket or filling out a form.

-Key benefit is they encourage current consumers to consume more if sweepstakes form appears inside packaging or with product.

Term
Sampling
Definition

-Offers potential customers the opportunity to try a product or service before they make a buying decision.

-Distributing samples is one of the most costly sales promotion tools, but is also one of the most effective.

Term
Loyalty Programs
Definition

-Specifically designed to retain customers by offering premiums or other incentives to customers who make multiple purchases over time.

-Growing increasingly popular and are often tied to long-term CRM systems.

Term
Point-of-Purchase (POP) Displays
Definition

-Merchandise displays located at the point of purchase, such as at the checkout counter in a supermarket.

Term
Rebates
Definition

-Particular type of price reduction in which a portion of the purchase price is returned by the seller to the buyer in the form of cash.

Term
Product Placement
Definition

-Inclusion of a product in nontraditional situations, such as in a scene in a movie or tv program.

Term
Cross-Promoting
Definition

-When two or more firms join together to reach a specific target market.

-Two products must appeal to the same target market and together create value for consumers.

Term
Evaluating a Trade Promotion
Definition

-Retailer must consider:

1. Realized margin from the promotion.

2. Cost of additional inventory carried due to buying more than normal amount.

3. Potential increase in sales from the promoted merchandise.

4. Long-term impact on sales of the promotion.

5. Potential loss suffered when customers switch to the promoted merchandise from the more profitable.

6. Additional sales made to customers attracted to the store by the promotion.

Term
Personal Selling
Definition

-The two-way flow of communication between a buyer or buyers and a seller that is designed to influence the buyer’s purchase decision.

-Can take place in various situations: face-to-face, via video teleconferencing, on the phone, or over the Internet.

-Sales representatives or reps, account executives, agents.

-In a unique position to customize a message for a specific buyer.

-Sales presentation can be directed toward those customers with the highest potential.

-Work with customers to find mutually beneficial solutions to their wants and needs.

-As part of integrated marketing communications program, personal selling adds value to their product or service mix.

-Worth more than it costs.

-Adds value by educating and providing advice, saving the customer time, and making things easier for the customer.

 -Salesperson can be held accountable for illegal actions sanctioned by the employer.

-Sales people are company employees so the manufacturer has more control over what they do compared to manufacturer's representatives.

 

-Professional selling can be a satisfying career:

1. Many people love the lifestyle.

-Typically out on their own, usually responsible for planning their own day.

-Easier balance between work and family.

2. The variety of the job often attracts people.

-Every day is different, bringing different clients and customers, often in a variety of places, with different problems and the solutions all differ and require creativity.

3. Sales is among the highest-paying careers for college graduates.

-Satisfaction of being involved in interesting, challenging, and creative work is rewarding in and of itself.

4. Sales people are the frontline emissaries for their firm.

-They are visible to management making it easier to identify top performers.

 

Sales people generally play 3 important roles:

1. Order getting

2. Order taking

3. Sales support

Term
Positive Customer-Salesperson Relationship
Definition

-Contributes trust, increased customer loyalty, and the intent to continue the relationship with the salesperson.

Term
Customer Relationship Management (CRM) Programs
Definition

-Identify and focus on building loyalty with the firm’s most valued customers.

-Specifically designed to keep track of what customers have purchased in the past.

Term
Selling Process Steps
Definition

1. Generate and qualify leads

2. Preapproach

3. Sales presentation and overcoming reservations

4. Closing the sale

5. Follow-up

Term
Leads
Definition

-List of potential customers.

Term
Qualify
Definition

-Process of assessing the potential of sales leads.

Term
Generate and Qualify Leads (Step 1)
Definition

-Talking to current customers and networking at events, the Internet, trade shows, cold calls, telemarketing.

-Qualify leads by determining whether it is worthwhile to pursue them and attempt to turn them into customers.

Term
Trade Shows
Definition

-Major events attended by buyers who choose to be exposed to products and services offered by potential suppliers in an industry.

Term
Cold Calls
Definition

-Method of prospecting in which sales people telephone or go to see potential customers without appointments.

Term
Telemarketing
Definition

-Similar to a cold call, but always occurs on the telephone.

Term
Preapproach (Step 2)
Definition

-Occurs prior to meeting the customer for the first time and extends the qualification of leads procedure.

-Conduct additional research and develop plans for meeting with customer.

-Establish goals for meeting with customer.

-Role play to practice sales presentation.

Term
Role Playing
Definition

-Salesperson acts out a simulated buying situation while a colleague or manager acts as the buyers.

-Presentation can be critiqued and adjustments can be made.

Term
Sales Presentation and Overcoming Reservations (Step 3)
Definition

-Get to know customer, get his/her attention, and create interest in the presentation to follow.

-Beginning of the presentation may be most important part of the entire selling process because this is where the salesperson establishes exactly where the customer is in his/her buying process.

-Assess need for product or service and adapt or customize the presentation to match customer’s need and stage in decision process.

-Apply that knowledge to help customer solve its problem or satisfy its need.

Term
Closing the Sale (Step 4)
Definition

-Means obtaining a commitment from the customer to make a purchase.

Term
Follow-Up (Step 5)
Definition

-With relationship selling, it is never really over, even after the sale has been made.

-Offers prime opportunity for a salesperson to solidify customer relationship through great service quality.

-Takes salesperson back to first step in sales process for initiating a new order and sustaining the relationship.

Term
5 Service Quality Dimensions
Definition

1. Reliability

2. Responsiveness

3. Assurance

4. Empathy

5. Tangibles

Term
Ethical and Legal Issues
Definition

-Permeate all aspects of marketing

-Arise in 3 areas in personal selling:

1. The relationship between sales manager and sales force.

2. In some situations, an inconsistency might exist between corporate policy and the salesperson’s ethical comfort zone.

3. When sales person interacts with customer, especially if that salesperson or the selling firm collects significant info about the customer.

Term
Commission
Definition

-Percentage of the agent’s sales.

Term
Sales Management
Definition

-Involves the planning, direction, and control of personal selling activities, including recruiting, selecting, training, motivating, compensating, and evaluating, as they apply to the sales force.

Term
Company Sales Force
Definition

-Comprises people who are employees of the selling company.

Term
Independent Agents (Manufacturer’s Representatives, “Reps”)
Definition

-Sales people who sell a manufacturer’s products on an extended contract basis but are not employees of the manufacturer.

-Compensated by commissions and do not take ownership or physical possession of the merchandise.

-Useful for smaller firms or firms expanding into new markets because such companies can achieve instant and extensive sales coverage without having to pay full-time personnel.

-Facilitates flexibility.

Term
Order Getter
Definition

-Salesperson whose primary responsibilities are identifying potential customers and engaging those customers in discussions to attempt to make a sale.

-Responsible for following up with customer to ensure they are satisfied and to build the relationship.

-In B2B settings—primarily involved in new guy and modified new buy situations.

-Require extensive sales and product knowledge training.

Term
Order Taker
Definition

-Salesperson whose primary responsibility is to process routine orders or reorders or rebuys for products.

Term
Sales Support Personnel
Definition

-Enhance and help with the overall selling effort.

Term
Selling Teams
Definition

-Combine sales specialists whose primary duties are order getting, order taking, or sales support but who work together to service important accounts.

Term
Recruiting and Selecting Sales People
Definition

-Most important activity is to determine exactly what the salesperson will be doing and what personal traits and abilities a person should have to do the job well.

-Training and supervision are more critical determinants of selling success than the salesperson’s inherent personal characteristics.

 

-Personal traits are important for successful sales careers:

1. Personality

2. Optimism

3. Resilience

4. Self-Motivation

5. Empathy

 

Term
Sales Training
Definition

-All sales people benefit from training about selling and negotiation techniques, product and service knowledge, technologies used in the selling process, time and territory management, and company policies and procedures.

-Varied methods of training depending on the topic of the training, what type of salesperson is being trained, and the cost versus the value of the training.

-On-the-job training programs are good for communicating selling and negotiating skills because managers can observe the sales trainees in real selling situations and provide instant feedback.

-The Internet is a less expensive but for some purposes equally valuable training method.

-Online training—Firms can provide new product and service knowledge, spread the word about changes in company policies and procedures, and share selling tips in a user-friendly environment that sales people can access anytime and anywhere.

-Distance learning sales training programs through teleconferencing enable a group of sales people to participate with their instructor or manager in a virtual classroom.

Term
Motivating and Compensating Sales People
Definition

-Sales managers determine how best to motivate each sales person according to what is most important to each individual.

-Methods used to compensate sales people must be fairly standardized and can be divided into 2 categories: Financial and nonfinancial.

-Advantage of a salary plan is that sales people know exactly what they will be paid, and sales managers therefore have more control over their sales people.

-Commission system provides the most incentive for sales force to sell.

-Nonfinancial rewards should have high symbolic value—The way the reward is operationalized is more important than what the reward is.

-Sales people’s evaluation process must be tied to their reward structure and measures must be tied to performance.

-Evaluation measures are either objective or subjective.

Term
Objective Evaluation Measures
Definition

-Objective: quantitative—sales, profits, and number of orders

-Subjective: seek to assess sales people’s behavior—what they do and how well they do it—and reflect one person’s opinion about another’s performance so can be biased and should be used cautiously and only in conjunction with multiple objective measures.

Term
Salary
Definition

-Fixed sum of money paid at regular intervals.

Term
Bonus
Definition

-Payment made at management’s discretion when the salesperson attains certain goals.

-Usually given only periodically.

Term
Sales Contest
Definition

-Short-term incentive designed to elicit a specific response from the sales force.

Term
Pricing Strategy
Definition

-Firms employ unique pricing strategies that seem best for the particular set of circumstances in which they find themselves.

-Specific to the product/service and target market.

-Cost-based, competitor-based, value-based.

-Long-term approach to setting prices broadly in an integrated effort (across all the firm’s products) based on the 5 C’s (company objectives, costs, customers, competition, and channel members) of pricing.

Term
Cost-Based Pricing Method
Definition

-Determine the final price to charge by starting with the cost.

-Do not recognize the role that consumers or competitors’ prices play in the marketplace.

-Requires calculation and identification of all costs on a per-unit basis.

-Prices are usually set on the basis of estimates of average costs.

Term
Competitor-Based Pricing Method
Definition

-Set prices to reflect the way they want consumers to interpret their own prices relative to the competitors’ offerings.

-Gain market share or exploit an achieved cost advantage.

-Premium pricing means the firm deliberately prices a product above the prices set for competing products to capture consumers who shop for the best or for whom price does not matter.

Term
Value-Based Pricing Method
Definition

-Include approaches to setting prices that focus on the overall value of the product offering as perceived by the consumer.

Term
Improvement Value
Definition

-Estimate of how much more/less consumers are willing to pay for a product relative to other comparable products.

Term
Cost of Ownership Method
Definition

-Determines total cost of owning the product over its useful life.

Term
Reference Price
Definition

-Price against which buyers compare the actual selling price of the product and that facilitates their evaluation process.

-“Regular price” or “original price.”

Term
External Reference Price
Definition

-Higher price to which the consumer can compare the selling price to evaluate the purchase.

-Influence internal reference prices.

Term
Internal Reference Price
Definition

-Price information stored in the consumer’s memory that the person uses to assess a current price offering.

-Are influenced by external reference prices.

Term
Everyday Low Pricing (EDLP)
Definition

-Strategy companies use to emphasize the continuity of their retail prices at a level somewhere between the regular, non-sale price and the deep-discount sale prices their competitors may offer.

-Adds value by reducing consumers’ search cost.

Term
High/Low Pricing
Definition

Pricing strategy that relies on the promotion of sales, during which prices are temporarily reduced to encourage sales.

Term
Odd Prices
Definition

-Prices that end in odd numbers, usually 9.

-Believed to get its start as a way to prevent sales clerks from just pocketing money.

-Signal to consumers that the price is low.

-Can also suggest low quality.

Term
Price Skimming
Definition

-Strategy of selling a new product/service at a high price that innovators and early adaptors are willing to pay.

-After saturation of high-price market segment and sales begin to slow down, firm generally lowers the price to capture (or skim) the next most price sensitive segment.

-Price dropping process can continue until demand for the product has been satisfied, even at the lowest price points.

-Signal high quality to the market.

-Limit demand to build their production capacities.

-Try to quickly earn back some of the high research and development investments of new product.

-Test consumers’ price sensitivity.

Term
Market Penetration Strategy
Definition

-Growth strategy that employs the existing marketing mix and focuses the firm’s efforts on existing customers.

-Set initial price low for introduction of new product or service.

-Objective is to build sales, market share, and profits quickly.

-Discourages competitors from entering the market because of profit margin is relatively low.

Term

Experience Curve Effect

Definition

-Drop in unit cost as the accumulated volume sold increases.

Term
Pricing Tactics
Definition

-Offer short term methods to focus on select components of the five C’s.

-Represents either a short-term response to a competitive threat or a broadly accepted method of calculating a final price for the customer that is short term in nature.

Term
Seasonal Discounts
Definition

-Additional reduction offered as an incentive to retailers to order merchandise in advance of the normal buying season.

Term
Cash Discounts
Definition

-Additional reduction that reduces the invoice cost if the buy pays the invoice prior to the end of the discount period.

-Expressed in the form of a percentage.

-B2B sellers benefit from the time value of money by encouraging early payment.

Term
Advertising Allowances
Definition

-Offered to retailers if they agree to feature the manufacturer’s product in their advertising and promotional efforts.

-Lowers final cost to channel members.

-Prohibited by the Robinson-Patman Act.

Term
Slotting Allowances
Definition

-Offered to get new products into stores or to gain more or better shelf space.

-Lowers final cost to channel members.

Term
Quantity Discount
Definition

-Providing a reduced price according to the amount purchased.

-Must be available to all customers and not be constructed in such a way that they consistently and obviously favor one or a few buyers over others.

Term
Cumulative Quantity Discount
Definition

-Uses the amount purchased over a specified time period and usually involves several transactions.

-Encourages resellers to maintain their current supplier because the cost to switch must include the loss of the discount.

Term
Noncumulative Quantity Discount
Definition

-Based only on the amount purchased in a single order.

-Provides buyer with an incentive to purchase more merchandise immediately.

-Larger, less frequent orders can save manufacturers order processing, sales, and transportation expenses.

Term

Uniform Delivered Price

Definition

-Shipper charges one rate, no matter where the buyer is located.

-Simpler for buyer and seller.

Term
Zone Price
Definition

-Different prices depending on the geographical delivery area.

-Reflects the actual shipping charges more closely.

Term
Pricing Lining
Definition

-Pricing tactic aimed at consumers, establishing a price floor and a price ceiling for an entire line of similar products and then setting price points in between to represent distinct differences in quality.

- Pricing tactic aimed at consumers.

Term
Price Bundling
Definition

-Pricing tactic aimed at consumers pricing of more than one product for a single, lower price.

Term
Leader Pricing
Definition

-Pricing tactic aimed at consumers building store traffic by aggressively pricing and advertising a regularly purchased item, often priced at or just above the store’s cost.

Term
Markdowns
Definition

-Reductions retailers take on the initial selling price of the product/service designed to enhance value.

-Component of the high/low pricing strategy by enabling retailers to get rid of slow-moving or obsolete merchandise, sell seasonal items after the appropriate season, and match competitors’ prices on specific merchandise.

-Used to promote merchandise and increase sales, and can increase traffic into the store.

Term
Size Discount
Definition

-The most common implementation of a quantity discount at the consumer level designed to enhance value.

-The larger the quantity bought, the less the cost per unit.

Term
Seasonal Discount
Definition

-Pricing tactic of offering an additional reduction as an incentive to retailers to order merchandise in advance to normal buying season designed to enhance value.

-Price reductions offered on products /services to stimulate demand during off-peak seasons.

Term
Coupon
Definition

-Provides a stated discount to consumers on the final selling prices of a specific item designed to enhance value.

-Retailer handles the discount.

-Used to introduce consumers to try products for the first time, convert those first-time users to regular users, encourage large purchases, increase usage, and protect market share against competition.

Term
Rebate
Definition

-Consumer discount in which a portion of the purchase price is returned to the buyer in cash designed to enhance value.

-Lets manufacturers offer price cuts to consumers directly, and fine-tune inventories or respond quickly to competitors without actually cutting prices.

-Great way for vendors to build a customer data warehouse from required information on forms.

-Can be rolled out and shut off quickly.

-Manufacturer issues the refund.

-Prohibited by the Robinson-Patman Act.

Term
Lease
Definition

-Written agreement under which the owner of an item or property allows its use for a specified period of time in exchange for a fee designed to enhance value.

-Never own product, only renting it.

-Opens up new, less price sensitive, target markets.

Term
“Regular Price”
Definition

-Better Business Bureau suggests that at least 50% of the sales have occurred at that price when using this label.

Term
Loss Leader Pricing
Definition

-Takes the tactic off leader pricing one step further by lowering the price below the store’s cost

-Prohibited in some states.

Term
Bait-and Switch
Definition

-Deceptive practice of luring customers into the store with a very low advertised price on an item (the bait), only to aggressively pressure them into purchasing a higher-priced model (the switch) by disparaging the low-priced item, comparing it unfavorable with the higher-model, or professing an inadequate supply of the lower-priced item.

-Sellers advertise items for a very low price without the intent the really sell any.

-Laws against this practice and difficult to enforce

-Key to proving deception centers on the intent of the seller.

Term
Predatory Pricing
Definition

-Firm’s practice of setting a very low price for one or more of its products with the intent to drive its competition out of business.

-Constrains free trade and represents a form of unfair competition making it illegal under both the Sherman Act and the Federal Trade Commission Act.

-Tends to promote a concentrated market with a few dominant firms (an oligopoly).

 

-Proving predation:

1. One must demonstrate intent, that is, that the firm intended to drive out its competition or prevent competitors from entering the market.

2. Complainant must prove that the firm charged prices lower than its average cost.

 

Term
Price Discrimination
Definition

-Practice of selling the same product to different resellers (wholesalers, distributors, or retailers) or to the ultimate consumer at different prices.

-Usually, larger firms receive lower prices.

-Some, but not all, forms of price discrimination are illegal under the Clayton Act and the Robinson-Patman Act.

-Perfectly legitimate to charge a different price to a reseller if the firm is attempting to meet a specific competitor’s price.

-Barter agreement, in which the buyers and sellers negotiate a mutually agreed upon price, is common and absolutely legal in retail settings.

-Robinson-Patman Act does not apply to sales to end consumers, at which point many forms of price discrimination occur.

Term
Price Fixing
Definition

-Practice of working with other firms to control prices.

Term
Horizontal Price Fixing
Definition

-Occurs when competitors that produce and sell competing products work together to control prices, effectively taking price out of the decision process for consumers.

-Clearly illegal under the Sherman Antitrust Act.

Term
Vertical Price Fixing
Definition

-Occurs when parties at different levels of the same marketing channel work together to control the prices passed on to consumers.

-In 1997, Supreme Court Justice Sandra Day O’Connor rendered the decision that it does not always violate antitrust laws.

-Not always illegal but must be reviewed on a case-by-case basis to determine its legality.

Term
Globalization
Definition

-Processes by which goods, services, capital, people, information, and ideas flow across national borders.

-Global markets are the result of several fundamental changes, such as reductions or eliminations of trade barriers by country governments, the decreasing concerns of distance and time with regard to moving products and ideas across countries, the standardization of laws across borders, and globally integrated production processes.

-In the US, the market has evolved from a system of regional marketplaces to national markets to geographically regional markets to international markets and finally to global markets.

-Has been progressing at a steady and increasing pace.

Term
World Bank Group
Definition

-Rank countries according to their degrees of globalization on the basis of a composite metric that examines whether the factors necessary to participate in the global marketplace are present.

-Dedicated to fighting poverty and improving the living standards of people in the developing world.

-Development bank that provides loans, policy advice, technical assistance, and knowledge-sharing services to low- and middle-income countries in an attempt to reduce poverty.

-Largest external funding source of education and HIV/AIDS programs.

-With the IMF, enables marketers to participate in the global marketplace by making it easier to buy and sell, financing deserving firms, opening markets to trade, and raising the global standard of living, which allows more people to buy goods and services.

Term
Globalization of Production (Offshoring)
Definition

-Manufacturers’ procurement of goods and services from around the globe to take advantage of national differences in the cost and quality of various factors of production.

-Originally focused on relocating manufacturing to lower cost production countries, now grown to include products associated with a knowledge economy: medical services, financial advice, technological support, and consulting.

-Financial services ~35% of all offshoring, largest private-sector market.

-India ~11.5% of offshoring market, European countries ~ 54% of offshoring contracts, Canada ~ 20% lower labor costs and advantageous exchange rate.

Term
General Agreement on Tariffs and Trade (GATT)
Definition

-Organization established to lower trade barriers, such as high tariffs on imported goods and restrictions on the number and types of imported products that inhibited the free flow of goods across borders.

-Founded the IMF and was replaced by the WTO in 1994.

Term
International Monetary Fund (IMF)
Definition

-Established with the original GATT.

-Primary purpose is to promote international monetary cooperation and facilitate the expansion and growth of international trade.

-With the World Bank, enables marketers to participate in the global marketplace by making it easier to buy and sell, financing deserving firms, opening markets to trade, and raising the global standard of living, which allows more people to buy goods and services.

Term
World Trade Organization (WTO)
Definition

-Replaced the GATT in 1994.

-Differs from the GATT in that it is an established institution based in Geneva, Switzerland, instead of simply an agreement.

-Represents the only international organization that deals with the global rules of trade among nations.

-Main function is to ensure that trade flows as smoothly, predictable, and freely as possible.

-Administers trade agreements, acts as a forum for trade negotiations, settles trade disputes, reviews national trade policies, and assists developing countries in their trade policy issues through technical assistance and training.

-Currently 148 members account for 97% of global trade.

Term
Country Market Assessment
Definition

1. Economic analysis using metrics

2. Infrastructure and technology analysis

3. Government actions or inactions

4 Sociocultural analysis

Term
Economic Analysis Using Metrics
Definition

1. General economic environment

-Relative level of imports and exports

-GDP and GNP

-PPP: The Economist’s Big Mac Index

-HDI

2. Market size and population growth rate

3. Real income

Term
Trade Deficit
Definition

-When a country imports more goods than it exports.

-Can signal the potential for greater competition at home from foreign producers.

Term
Trade Surplus
Definition

Trade Surplus

-Higher level of exports than imports.

-Signals greater opportunity to export products to more markets.

Term
Gross Domestic Product (GDP)
Definition

-The market value of the goods and services produced by a country in a year.

-Most widely used standardized measure of output, used to gauge the size and market potential of an economy, and therefore the potential the country has for global marketing.

Term
Gross National Income (GNI)
Definition

-GDP + net income earned from investments abroad (minus any payments made to nonresidents who contribute to the domestic economy.)

-Standardized measure of output, used to gauge the size and market potential of an economy, and therefore the potential the country has for global marketing.

Term
Purchasing Power Parity (PPP)
Definition

-Theory that states that if the exchange rates of two countries are in equilibrium, a product purchased is one will cost the same in the other, expressed in the same currency.

-The Economist’s Big Mac Index employs this theory and suggests that exchange rates should adjust to equalize the cost of a basket of goods and services, wherever it is bought around the world.

Term
Human Development Index (HDI)
Definition

-Composite measure of 3 indicators of the quality of life in different countries:

1. Life expectancy at birth

2. Educational attainment

3. Whether the average incomes are sufficient to meet the basic needs of life in that country.

-Determine the lifestyle elements that ultimately drive consumption

-Scaled from 0 to 1, nations that score <.5 are classified as nations with low human development, those that score .5-.8 have medium development, and those >.8 are classifies as having high human development.

Term
Market Size and Population Growth
Definition

-Less-developed nations are experiencing rapid population growth while many developed nations are experiencing either 0 or negative population growth.

-Stagnated growth may make the countries with the highest purchasing power today less attractive in the future for many products and services.

-Distribution of the population within a particular region determines where and how products and services can be delivered.

-Long supply chains are necessary to reach rural populations and add costs to products.

-Trends of increasing urbanization, a growing middle class, and a youthful populace make India an absolutely enormous market for consumer goods.

-The rapid growth rates of industries create significant opportunities for global companies to sell products.

-A firm can make adjustments to an existing product to meet the unique needs of a particular country market.

-As the US dollar has fallen, the relative purchasing power of other regions has increased.

-Global trade creates opportunities for those who make expensive luxury goods as well as those companies that can find a way to produce low-cost, yet still profitable, products.

Term
Infrastructure
Definition

-The basic facilities, services, and installations needed for a community pr society to function.

-Marketers are especially concerned with 4 key elements:

1. Transportation

-There must be a system to transport goods throughout the various markets and to consumers in geographically dispersed marketplaces.

2. Distribution channels

-Must exist to deliver products in a timely manner and at a reasonable cost.

3. Communications

-The communications system, particularly media access, must be sufficiently developed to allow consumers to find information about the products and services available in the marketplace.

4. Commerce

-The commercial infrastructure, which consists of the legal, banking, and regulatory systems, allows markets to function.

Term

Governmental Actions

Definition

-As well as the actions of nongovernmental political groups, can significantly influence firms’ ability to sell goods and services, because they often result in laws or other regulations that either promote the growth of the global market or close off the country and inhibit growth.

-Tariffs, quotas, boycotts, exchange controls, and trade agreements.

Term

Tariff (Duty)

Definition

-Tax levied on a good imported into a country.

-Intended to make imported goods more expensive and less competitive with domestic products which protect domestic industries from foreign competition.

-Penalize another country for trade practices that the home country views as unfair.

-Artificially raise prices and therefore lower demand.

Term
Dumping
Definition

-Practice of selling a good in a foreign market at a price that is lower than its domestic price or below its cost.

-Protect domestic companies against foreign competition.

-US law allows for fines which are distributed to US companies affected by the dumping practices.

Term
Quota
Definition

-Designates the maximum quantity of a product that may be brought into a country during a specified time period.

-Many US quotas on foreign-made textiles were eliminated in 2005, which increased the amount of imported apparel products sold in the US.

-Reduce the availability of imported merchandise, and reduce foreign competition.

Term
Boycott
Definition

-Group’s refusal to deal commercially with some organization to protest against its policies.

-Governments or nongovernmental organizations, such as trade unions or environmental groups.

Term
Exchange Control
Definition

-Regulation of a country’s currency exchange rate.

Term
Exchange Rate
Definition

-Measure of how much one currency is worth in relation to another.

-Designated agency in each country sets the rules for currency exchange, often the Central Bank. (US—Federal Reserve)

Term
Countertrade
Definition

-Trade between two countries where goods are traded for other goods not for hard currency.

-Method of avoiding an unfavorable exchange rate.

Term
Trade Agreement
Definition

-Intergovernmental agreements designed to manage and promote trade activities for specific regions.

-Cover ⅔ of the world’s international trade: EU, NAFTA, CAFTA, ASEAN, and Mercosur.

Term
Trading Bloc
Definition

-Consists of those countries that have signed a particular trade agreement.

-Trading blocs (EU, NAFTA, CAFTA, ASEAN, and Mercosur) affect how US firms can conduct business in member countries.

-Believed to confer an unfair advantage on their member nations because they offer unfavorable terms for trade by some, and stimulate economies by lowering trade barriers and allowing higher levels of foreign investment by others.

Term
European Union (EU)
Definition

-Represents the highest level of integration across individual nations.

-Economic and monetary union that currently contains 27 countries.

-Represents a significant restructuring of the global marketplace by dramatically, changing the complexion, by lowering trade barriers between member nations.

-The conversion to the euro across Europe (Jan. 1, 1999) simplified the way many multinational companies market their products; Prior to this, firms were unable to predict exchange rates and made it difficult to set consistent prices across countries.

-Patent requirements were simplified, and rules governing data privacy and transmission, advertising, direct selling, and other marketing issues have been streamlined and simplified, allowing more seamless trade.

-Recently recommended common guidelines for member countries regarding advertising to children and is currently reviewing a possible ban on “junk food” advertising.

Term

North American Free Trade Agreement (NAFTA)

Definition

-Limited to trade-related issues, such as tariffs and quotas, among the US, Canada, and Mexico.

Term

Central America Free Trade Agreement (CAFTA)

Definition

-Trade agreement among US, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua.

Term
Mercosur
Definition

-Means Southern Common Market in Spanish and covers most of South America.

-Member nations created the Free Trade Area of the Americas (FTAA), primarily in response to NAFTA.

Term

Association of Southeast Asian Nations (ASEAN)

Definition

-Originally formed to promote security in Southeast Asia during the Vietnam War and changed its mission to building economic stability and lowering trade restrictions among the 6 member nations in the 80s.

Term

Sociocultural Factors

Definition

-Culture, or the shared meanings, beliefs, morals, values, and customs of a group of people, exists on 2 levels:

1. Visible artifacts—Behavior, dress, symbols, physical settings, ceremonies.

2. Underlying Values—Thought processes, beliefs, and assumptions.

-Importance of verbal communication can classify cultures

-Geert Hofstede’s cultural dimensions concept is a cultural classification scheme that believes cultures differ on 5 dimensions:

1. Power distance—Willingness to accept social inequality as natural.

2. Uncertainty avoidance—Extent to which the society relies on orderliness, consistency, structure, and formalized procedures to address situations that arise in daily life.

3. Individualism—Perceived obligation to and dependence on groups.

4. Masculinity—Extent to which dominant values are male oriented.

5. Time orientation—Short- versus long-term orientation.

Term
Global Entry Strategy
Definition

-Conduct an internal assessment of a firm’s capabilities—an assessment of the firm’s access to capital, the current markets it serves, its manufacturing capacity, its proprietary assets, and the commitment of its management to the proposed strategy.

-Approaches to entering a new market vary according to the level of risk the firm is willing to take.

-Progression of increasing risk strategies:

exportfranchisingstrategic alliancejoint venturedirect investment

Term
Exporting
Definition

-Producing goods in one country and selling them in another.

-Requires the least financial risk but also allows for only a limited return to the exporting firm.

-Difficult to achieve economies of scale when everything has to be shipped internationally.

Term
Franchising
Definition

-Contractual agreement between a franchisor, and another firm or individual, the franchisee

-Allows the franchisee to operate a business—Retail product or service firm or a B2B provider—Using a name and format developed and supported by the franchisor.

-Global franchising entails lower risks and requires less investment than does opening units owned wholly by the firm.

-Firm has limited control over the market operations in the foreign country and its potential profit is reduced.

Term
Strategic Alliances
Definition

-Collaborative relationship between independent firms, though the partnering firms do not create an equity partnership—meaning they do not invest in one another.

Term
Joint Venture
Definition

-Formed when a firm entering a new market pools its resources with those of a local firm to form a new company in which ownership, control, and profits are shared.

-Local partner offers foreign entrant greater understanding of the market and access to resources such as vendors and real estate.

-China, like many other countries, usually requires joint ownership of firms entering its domestic markets, though these restrictions are loosening as a result of WTO negotiations.

Term

Direct Investment

Definition

-When a firm maintains 100% ownership of its plants, operation facilities, and offices in a foreign country, often through the formation of wholly owned subsidiaries.

-Requires the highest level of investment and exposes the firm to significant risks, including the loss of its operating and/or initial investments.

-Many believe the potential risks are outweighed by the high potential returns, since none of the potential profits must be shared with other firms.

-Offers the firm complete control over its operations in the foreign country.

Term
Global Marketing Strategy
Definition

-Includes 2 components:

1. Determine the target markets to pursue.

2. Develop a marketing mix that will sustain a competitive advantage over time.

Term

Global Segmentation, Targeting, and Positioning (STP)

Definition

-More complicated than domestic STP because:

1. More difficult to understand the cultural nuances of other countries.

2. Consideration of subcultures within each country.

3. Differing consumers views on products and their role as consumers in different countries.

Term

Global Marketing Mix

Definition

-During the early stages of globalization, in the 50s and 60s, large US firms were uniquely positioned in the global marketplace because they had the unique skills necessary to develop, promote, and market brand name consumer products.

-In the 70s and 80s, Japanese firms dominated the global marketplace because they could exploit their skills in production, materials management, and new product development.

-Today, retailers such as Wal-Mart, financial services firms such as Citicorp, and software firms such as Microsoft are dominating the newest stage of globalization by exploiting their technological skills.

Term

Global Product/Service Strategies

Definition

-3 potential global product strategies:

1. Sell the same product/service in both the home country market and the host country.

2. Sell a product/service similar to that sold in home country but include minor adaptations.

3. Sell totally new products/services.

-Chosen depending on the needs of the target market, the level of economic development, differences in product and technical standards, cultural differences.

-Consumers in developed countries demand more attributes in their products than those in less developed countries.

-Firms may also standardize their products globally but use different promotional campaigns to sell them.

-Growing convergence in good consumption in many product categories.

Term

Global Pricing Strategies

Definition

-Tariffs, quotas, antidumping laws, and currency exchange policies along with rules governing the competitive marketplace in many countries and currency fluctuations impact global pricing strategies.

Term

Global Distribution Strategies

Definition

-Global distribution networks form complex value chains that involve middlemen, exporters, importers, and different transportation systems.

-Complexity of a channel is determined by the number of firms with which the seller needs to deal to get its merchandise to the consumer.

Term

Global Communication Strategies

Definition

-Major challenge is identifying the elements that need to be adapted to be effective in the global marketplace.

-Varying literacy levels, media availability, advertising regulations, differences in language, customs, and culture, and regulatory actions in the host country complicate marketers’ ability to communicate with customers in various countries.

-Having more than one name for a product/service likely will become increasingly inefficient.

-Firms with global appeal can run global advertising campaigns and simply translate the wording in the ads and product labeling.

Term

Environmental Concerns

Definition

-Include, but are not limited to, the excessive use of natural resources and energy, refuse from manufacturing processes, excess trash created by consumer goods packages, and hard-to-dispose-of products like tires, cell phones, and computer monitors, especially in developed countries.

-Many developed countries product ~2 tons of household and industrial waste per person per year, while much of the waste in developing countries is not properly disposed of.

Term

Global Labor Issues

Definition

-Includes concerns about working conditions and wages paid to factory workers in developing countries.

-Electronic Industry Code of Conduct (EICC) exacts a promise to ensure safe labor conditions, workers’ rights, and environmental responsibility in the global electronics supply chain.

-Signed by a group of companies, including: Hewlett-Packard, Dell, and IBM, and is supported by Apple.

Term

Cultural Imperialism

Definition

-Belief that one’s own culture is superior to that of other nations.

-Can take the form of an active, formal policy or a more subtle general attitude.

Term

Logistics Management

Definition

-“That part of supply chain management that plans, implements, and controls the efficient, effective forwards and reverse flow and storage or goods, services and related information between the point or origin and the point of consumption in order to meet customers’ requirements.” –Council of Supply Chain Management Professionals

Term
Logistics
Definition

-Is about getting the right items, to the right place, at the right item, in the right condition and at the right cost.

-Key part of supply chain management, but is not supply chain management.

-Successful logistics is a key for economic development and corporate profit performance.

-Can be used to provide value to customers which offsets a premium price.

-For most firms logistics represents the best opportunity for building a sustainable competitive advantage.

-Offers outstanding career opportunities.

-Operations managers and logistics managers need to work closely together to assure the smooth flow of materials and finished goods.

-Accountants need to capture logistics costs to understand the total cost to serve the customer.

-R&D managers should consider logistics costs when designing the product and the packaging.

-Logistics activities affect one another, helping to determine both cost and service levels and affect product design and development decisions.

-Logistics performance affects how consumers react to a retailer.

Term

Logistics Role in Marketing Strategy

Definition

-Can play a key role and be the centerpiece of a marketing strategy.

-Supports marketing strategies based on other aspects of marketing.

-Difficult-to-duplicate competitive advantage.

Term

Logistics Expenditures

Definition

-Expenditures on logistics in 2008 were $1,344 billion or 9.4% of GDP.

-Components of logistics costs:

1. Logistics administration—3.9%

2. Warehousing—9.1%

3. Inventory carrying costs—22.2%
4. Freight forwarders—2.4%

5. Oil pipelines—0.7%

6. Shipper related costs—0.6%

7. Motor carriers—50.6%

8. Railroads freight—4.7%

9. Water freight—2.9%

10. Air freight—3.0%

-Advertising expenditures in 2007 were $279.6 billion or 2% of GDP.

-Budget for the Department of Defense in 2008 was $481.4 billion or 3.4% of GDP.

-Total spending on healthcare in 2008 reached $2.4 trillion or 17% of GDP.

Term

Cost Tradeoffs Required in Marketing and Logistics

Definition

-Marketing Objective—Allocate resources to the marketing mix in such a manner as to maximize the long-term profitability of the firm.

-Logistics Objective—Minimize Total Costs given the customer service objective where total costs = Transportation Costs + Warehousing Costs + Order Processing and Information Costs + Lot Quantity Costs + Inventory Carrying Costs.

Term

Total Cost Concept

Definition

-View the sum of logistics operations as a system and seek to minimize the total cost of the system rather than the individual functions.

-It’s like a stereo system.

Term

Logistics Interfaces with Marketing and Production

Definition

-Production Activities—Quality control, detailed production scheduling, equipment maintenance, capacity planning.

-Logistics Activities—Transportation, inventory, order processing, materials handling.

-Marketing Activities—Promotion, market research, product mix, sales force management.

-LG/PD Interface Activities—Product scheduling, plant location, purchasing.

-LG/MK Interface Activities—Customer service, pricing, packaging, retail location.

Term

Marketing/Logistics Relationship

Definition

-Demand realization and/ creation ↔ Demand satisfaction

Term

Logistics Advantages

Definition

Value Advantage—Leverage opportunities:

-Tailored service, reliability, responsiveness, ect.

Cost Advantage—Leverage opportunities:

-Capacity utilization, asset turn, and schedule integration.

Term

Supply Chain Management

Definition

-“… is the integration of key business processes from end user through original suppliers, that provides products, services, and information that add value for customers and other stakeholders.” –The Global Supply Chain Forum, 1998

Term

Supply Chain Network Structure

Definition

-Focal Company

-Tier 1—Suppliers (Left), Customers (Right)

-Tier 2—Suppliers (Left), Customers (Right)

-Tier 3—Initial Suppliers (Left), Customers/End-Users (Right)

Term

Supply Chain Management Processes

Definition

-Customer relationship management

-Customer service management

-Demand management

-Order fulfillment

-Manufacturing flow management

-Supplier relationship management

-Product development and commercialization

-Returns management

Term

Why Study Logistics at OSU?

Definition

-US News & World Report consistently ranks undergraduate program as one of the best in the nation—current 4th.

-Required course structure makes it easy to double major.

-Top companies from all over the nation come to OSU to recruit logistics majors.

-You’ll love the faculty.

Term

Careers in Logistics

Definition

-Manufacturers—General Mills, Owens-Corning, Energizer, Unilever, Rolls-Royce, Shell, Dow.

-Retailers—Target, The Gap, Limited, Staples, Walgreen’s, Save-a-Lot, Wendy’s, Starbucks.

-Transportation—Schneider, JB Hunt, CSX.

-3rd Party Logistics—Exel, FedEx Logistics, CH Robinson, Caterpillar Logistics, Penske.

-Consulting—Accenture, Ernst & Young, IBM.

-Software—i2, Manugistics, CAPS.