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Marketing 330
Chapter 13 and 14
127
Marketing
Undergraduate 3
03/30/2014

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Cards

Term
Term: Overall sacrifice a consumer is willing to make to acquire a specific product/service
Definition
Price
Term
What are the five Cs of pricing?
Definition
-Company orientation
-Customers
-Costs
-Competition
-Channel members
Term
What are the different company objectives?
Definition
-Profit orientation
-Sales orientation
-Competitor orientation
-Customer orientation
Term
Term: Focusing on target profit pricing, maximizing profits, or target return pricing
Definition
Profit orientation
Term
Term: Using price to stimulate a certain # of sales at a certain profit per unit
Definition
Target profit pricing
Term
Term: Strategy relying primarily on economic theory that identifies a price at which profits are maximized
Definition
Maximizing profits
Term
Term: Pricing strategies designed to produce a specific return on their investment
Definition
Target return pricing
Term
Term: Belief that increasing sales helps the firm more than increasing profits
Definition
Sales orientation
Term
Term: Firm deliberately sets prices above the prices set for competing
Definition
Premium pricing
Term
Term: Strategy according to the premise that they should measure themselves primarily against competition
Definition
Competitor orientation
Term
Term: Set prices to those similar to major competitors
Definition
Competitive parity
Term
Term: Strategy where price is changed only to meet those of the competition
Definition
Status quo pricing
Term
Term: Invokes the concept of value by focusing on customer satisfaction and selling prices to match consumer expectations
Definition
Customer orientation
Term
Term: Shows how many units of a product/service consumers will demand during a specific period of time at different prices
Definition
Demand curve
Term
Term: Products purchased for their status rather than functionality
Definition
Prestige products
Term
Term: Measures how changes in a price affect the quantity of the product demanded
Definition
Price elasticity of demand

% change in quantity demanded
-----------------------------
% change in price
Term
Term: Price-sensitive
Definition
Elastic
Term
What number would be representative of elasticity?
Definition
Less than -1
Term
What are the influencing factors of price elasticity?
Definition
-Income effect
-Substitution effect
-Cross-price elasticity
Term
Term: Change in quantity of a product demand due to a change in income
Definition
Income effect
Term
Term: Consumers' ability to substitute products for the focal brand
Definition
Substitution effect
Term
Term: % change in quantity of product A compared to % change in quantity of product B
Definition
Cross-price elasticity
Term
Term: Products whose demands are positively related (DVD and DVD player)
Definition
Complementary products
Term
Term: Products whose demands are negatively related
Definition
Substitute products
Term
Term: Costs that vary with production volume
Definition
Variable costs
Term
Term: Costs that remain essentially at the same level regardless of production
Definition
Fixed costs
Term
Term: Sum of variable and fixed costs
Definition
Total cost
Term
Term: Technique allowing managers to examine the relationships among cost, price, revenue, and profit over different levels of production and sales
Definition
Break even analysis
Term
Term: Point at which the number of units sold generates just enough revenue to equal the sales
Definition
Break even point
Term
Term: Price less variable cost per unit
Definition
Contibution per unit
Term
What are the different types of competition?
Definition
-Monopoly
-Monopolistic
-Oligopoly
-Pure
Term
Term: One firm provides the product/service in a particular industry and results in less price competition
Definition
Monopoly
Term
Term: A few firms dominate an industry
Definition
Oligopoly
Term
Term: 2+ firms compete primarily by lowering their prices
Definition
Price war
Term
Term: Firm sets a very low price to drive out competition
Definition
Predatory pricing
Term
Term: Many firms competing for customers in a given market with differentiated products
Definition
Monopolistic competition
Term
Term: Large number of sellers of standardized products that customers perceive as substitutable
Definition
Pure competition
Term
Term: Employs irregular but not necessarily illegal methods
Definition
Gray market
Term
What are some macro influences on pricing?
Definition
-Internet
-Economic factors
-Reserve price
Term
Term: Minimum amount a seller will sell an item at
Definition
Reserve price
Term
What are the different methods for setting prices?
Definition
-Cost-based method
-Competitor-based method
-Value-based method
-Improvement Value method
-Cost-of-ownership method
Term
Term: Determine final price to charge starting with costs
Definition
Cost-based method
Term
Term: Prices set to reflect the way they want consumers to compare them to competitors
Definition
Competitor-based method
Term
Term: Setting prices that focus on the overall value of the product as perceived by the customer
Definition
Value-based method
Term
Term: Estimate of how much more/less consumers are willing to pay for a product compared to others
Definition
Improvement value method
Term
Term: Consumers may be willing to pay more for a product because over its lifetime it will eventually cost less to own than alternatives
Definition
Cost-of-ownership method
Term
What are the pricing strategies?
Definition
-EDLP (Everyday low prices)
-High-low pricing
Term
Term: Companies stress the continuity of their retail prices somewhere between regular price and deep-discount prices competitors may offer
Definition
EDLP
Term
Term: Prices that end in odd numbers, usually a 9
Definition
Odd prices
Term
Term: Pricing strategy that relies on sales
Definition
High-low pricing
Term
Why is high-low pricing chosen?
Definition
It attracts two kinds of customers: those not afraid to pay the high price, and price-sensitive customers looking for sales
Term
Term: Price against which customers compare selling price
Definition
Reference price
Term
Term: When marketers establish a price floor and ceiling and a few other points in between for an entire line of products
Definition
Price lining
Term
What are the new pricing strategies?
Definition
-Market penetration strategy
-Price skimming
Term
Term: Set initial price low for the introduction of product to build market share and profits
Definition
Market penetration strategy
Term
Term: Prices are lowered after each group of customers purchase so they can skim the next market segment
Definition
Price skimming
Term
Term: Short-term methods to focus on select components of the five Cs
Definition
Pricing tactics
Term
What are some pricing tactics aimed at consumers?
Definition
-Markdowns
-Size discounts
-Seasonal discounts
-Coupons
-Rebates
-Lease
-Price bundling
-Leader pricing
Term
Term: Reductions retailers take on the initial selling price
Definition
Markdowns
Term
Term: Larger quantities offer better sales
Definition
Size discount
Term
Term: Price reductions offered to stimulate demand during off-peak seasons
Definition
Seasonal discount
Term
Term: Offer a discount on the price of specific items when they're purchased
Definition
Coupons
Term
Term: Manufacturer issues refund as a portion of purchase price returned to buyer as cash
Definition
Rebate
Term
Term: Consumers pay a fee to purchase the right to use a product for a specific amount of time
Definition
Lease
Term
Term: Selling more than one product for a single, lower price
Definition
Price bundling
Term
Term: Tactic that attempts to build store traffic by aggressively pricing and advertising a regularly purchased item, usually just above store cost
Definition
Leader pricing
Term
What are some pricing tactics aimed at B2B?
Definition
-Seasonal discounts
-Cash discounts
-Vendor allowances
-Quantity discounts
-Uniform-delivered pricing
-Zone pricing
Term
Term: Reduced invoice cost if buyer pays invoice prior to end of a discount period (3/10, n/30)
Definition
Cash discount
Term
Term: Offers a price reduction if they agree to feature the products in their advertising/promotional efforts
Definition
Advertising allowance
Term
Term: Fees paid to retailers simply to get new products into stores or better shelf space
Definition
Slotting allowance
Term
Term: Provides a reduced price according to the amount purchased
Definition
Quantity discount
Term
Term: Shipper charges at one rate, no matter to where
Definition
Uniform delivered pricing
Term
Term: Shipper sets different prices depending on geographical division of delivery areas
Definition
Zone pricing
Term
What are some deceptive/illegal price advertising schemes?
Definition
-Deceptive reference prices
-Loss leader pricing
-Bait-and-switch
-Predatory pricing
-Price discrimination
-Price fixing
Term
Term: Lower reference price used to make sale look more attractive
Definition
Deceptive reference prices
Term
Term: Lowering price below store cost
Definition
Loss leader pricing
Term
Term: Luring customers in with a very low price only to aggressively pressure them into purchasing a higher-priced model
Definition
Bait-and-switch
Term
Term: When a firm sets a very low price for its product in order to drive out competition
Definition
Predatory pricing
Term
Term: When firms sell the same product to different resellers at the same price
Definition
Price discrimination
Term
Term: Practice of colluding with other firms to control prices
Definition
Price fixing
Term
Term: Process by which ideas get transformed into new offers
Definition
Innovation
Term
Why do firms create new products?
Definition
-Fashion cycles
-Market saturation
-Changing customer needs
-Managing risk through diversity
-Improving business relationships
Term
Term: Process in which innovation spreads throughout a market over time
Definition
Diffusion of innovation
Term
Term: New products that create new markets
Definition
Pioneer/breakthrough
Term
Term: First to create a new market/product category
Definition
First movers
Term
What are the different groups to purchase a new product?
Definition
1. Innovators (2.5%)
2. Early adopter (13.5%)
3. Early majority (34%)
4. Late majority (34%)
5. Laggards (16%)
Term
Term: Buyers who want to be the first on the block to have the new service/product
Definition
Innovator
Term
Term: Customers who don't take as much risk and wait for careful review
Definition
Early adopters
Term
Term: New products do not become popular until this group purchases
Definition
Early majority
Term
Term: Market has reached full potential once this group buys; sales tend to decrease/level off after this
Definition
Late majority
Term
Term: Consumers that avoid change and rely on traditional products until they are no longer available
Definition
Laggards
Term
What four factors affect the diffusion process?
Definition
-Relative advantage
-Compatibility
-Observability
-Complexity and trialability
Term
How do firms develop new products?
Definition
1. Idea generation
2. Concept testing
3. Product development
4. Market testing
5. Product launch
6. Evaluation of results
Term
How can new ideas be generated?
Definition
-Internal R&D
-R&D consortia
-Outsourcing
-Licensing
-Brainstorming
-Competitor's products
-Customer input
Term
Term: Medical study that tests the safety and effectiveness of a drug/treatment
Definition
Clinical trial
Term
Term: Taking apart a product, analyzing it, and creating a new product
Definition
Reverse engineering
Term
Term: Brief written descriptions of a product
Definition
Concepts
Term
Term: Process in which a concept statement is presented to potential buyers to obtain their reactions
Definition
Concept testing
Term
Term: Product design; Developing a products' form and features
Definition
Product development
Term
Term: First physical form of a product
Definition
Prototype
Term
Term: Firm attempts to determine whether the product will perform according to its design and whether it satisfies the need for which it was intended
Definition
Alpha testing
Term
Term: Uses potential customers to examine prototype in a real use setting
Definition
Beta testing
Term
Term: Manufacturer's Suggested Retail Price
Definition
MSRP
Term
What are the stages in the product life cycle?
Definition
1. Introduction stage
2. Growth stage
3. Maturity stage
4. Decline stage
Term
Term: Defines stages that products move through during life in the marketplace
Definition
Product life cycle
Term
Term: Life cycle stage of a freshly launched product
Definition
Introduction stage
Term
Term: Life cycle stage in which product gains acceptance, demand, and sales; more competitors emerge
Definition
Growth stage
Term
Term: Life cycle stage in which industry sales reach their peak and firms try to enhance products
Definition
Maturity stage
Term
Term: Life cycle stage that occurs if sales are not enhanced, and so the product share declines and it eventually exits the market
Definition
Decline stage
Term
True/False: Laggards may never adopt a new product
Definition
True
Term
Term: Any intangible offering that involves a deed, performance, or effort that cannot be physically touched
Definition
Service
Term
Term: Human/mechanical activities firms undertake to help satisfy their customers needs and wants
Definition
Customer service
Term
How are services different from products?
Definition
-Intangible
-Inseperable
-Variable
-Perishable
Term
Term: The delivery of a service fails to meet expectations
Definition
Service gap
Term
Term: What are the different types of service gaps?
Definition
-Knowledge gap
-Standards gap
-Delivery gap
-Communication gap
Term
Term: Difference between customer's expectations and the firm's perception of these expectations
Definition
Knowledge gap
Term
Term: Difference between firm's perception of customers' expectations and the standards it sets
Definition
Standards gap
Term
Term: Difference between the firms' standards and the actual service
Definition
Delivery gap
Term
Term: Difference between actual service provided and the promised service
Definition
Communication gap
Term
Term: Customers' perceptions on how well a service meets/exceeds their expectations
Definition
Service quality
Term
Term: Program that collects customers' inputs and integrates them into managerial decisions
Definition
VOC program
Term
Term: Difference between customers' desired service and the minimum level of acceptable service
Definition
Zone of tolerance
Term
Term: Allowing employees to make decisions about how service gets provided to customers
Definition
Empowerment
Term
What are the three steps to service recovery?
Definition
1. Listen to the customer
2. Find a fair solution
3. Resolve problem quickly
Term
Term: Customer's perception of the benefits received compared with the costs
Definition
Distributive fairness
Term
Term: Perceived fairness of the process used to resolve complaints
Definition
Procedural fairness
Term
What are the five service quality dimensions?
Definition
-Reliability
-Responsiveness
-Empathy
-Assurance
-Tangibles
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