Final Exam
Definition
Chapter 1
Term
Chapter 1
The activity, set of institutions, and processes for
creating, communicating, delivering, and exchanging
offerings that have value for customers, clients,
partners, and society at large
People with both the desire and the ability to buy a
specific product.
Marketing
Relatively homogeneous groups of prospective
buyers that
(1) have common needs and
(2) will respond similarly to a marketing action.
Market segments
One or more specific groups of potential customers
toward which an organization directs its marketing
program.
Target market
Market
Product: Good, service, or idea designed to satisfy
4P’s
customers' needs.
Price: What is exchanged for the product—usually
money.
Place: Distribution channel used to get the product to
the customer.
Promotion: Communication between the seller and
buyer—including advertising, public relations, sales
promotions, and personal selling.
a metric that represents the total net profit a
company can expect to generate from a customer
throughout their entire relationship.
Customer Lifetime Value
Bundle of tangible and intangible attributes that
satisfies consumers' needs and is received in
exchange for money or something else of value.
• Good: Physical or tangible object.
• Service: Intangible item.
• Idea: Concept or opinion
Feeling deprived of basic a necessity such as food,
clothing, or shelter.
Product:
Need that is shaped by a person’s knowledge,
culture, and personality.
Want:
Chapter 2
An organization's long-term course of action
designed to deliver a unique customer experience
while achieving its goals.
1) For-profit business firms
2) Nonprofit organizations
Need:
Chapter 2
Strategy:
Three types of organizations:
3) Government agencies
The fundamental, passionate, and enduring
principles of an organization that guide its conduct
over time.
Core values:
A statement of the organization's function in society
that often identifies its customers, markets, products,
and technologies. Often used interchangeably with
vision.
Mission:
The set of values, ideas, attitudes, and norms of
behavior that is learned and shared among the
members of an organization.
Current products in current markets:
• Promotional campaigns
• Price changes
Organizational culture:
New products:
• New versions of existing products
• New products in existing categories
• New products in new categories
Product development
New markets (place):
• New market segments
• New distribution channels
• New geographic areas
Market development
New products in new markets:
• Internal expansion
• Joint ventures
• Mergers/Acquisitions
Diversification
Strengths, Weaknesses, Opportunities, Threats
Chapter 3
the uncontrollable forces in a marketing decision
involving social, economic, technological,
competitive, and regulatory forces.
Describing a population on characteristics such as
age, gender, ethnicity, income, and occupation.
SWOT Analysis
The set of values, ideas, and attitudes that are
learned and shared among the members of a group.
Culture:
The total amount of money made in one year by a
person or household.
Gross income:
The money a consumer has left after paying taxes to
use for necessities such as food, housing, clothing,
and transportation.
Disposable income
Market penetration
Chapter 3
Environmental Forces:
Demographics:
The money a consumer has left after paying for taxes
and necessities to put towards savings and to
purchase luxuries.
Discretionary income:
Many sellers with similar products (e.g.
Commodities)
Pure competition:
Many sellers with substitutable products in a price
range
Monopolistic competition:
Few sellers control the majority of sales
Oligopoly:
Only one seller
Pure monopoly:
The recognition of the need for organizations to
improve the state of people, the planet, and profit
simultaneously if they are to achieve sustainable,
long-term growth.
Triple bottom line:
The view that holds an organization should satisfy the
needs of consumers in a way that also provides for
society’s well being
Societal Marketing Concept
Marketing efforts to produce, promote, and reclaim
environmentally sensitive products.
Green marketing:
Occurs when the charitable contributions of a firm
are tied directly to the customer revenues produced
through the promotion of one of its products.
Cause marketing:
Chapter 4
All of the touchpoints a consumer before during and
after a purchase
Chapter 4
Consumer Journey Maps
A favorable attitude toward and consistent purchase
of a single brand over time.
Brand loyalty:
Mode of living—how people spend their time and
resources, what they consider important in their
environments, and what they think of themselves
and the world around them.
Lifestyle
The analysis of consumer lifestyles.
• Provides insights into consumer needs and
wants.
• Useful in segmenting and targeting
consumers for new and existing products.
Psychographics:
Individuals who exert direct or indirect social
influence over others.
Opinion leaders:
Chapter 5
Chapter 5
The marketing of products to organizational buyers
that buy products for their own use or for resale.
Business-to-business marketing:
Chapter 7
The process of defining a marketing problem or
opportunity, systematically collecting and analyzing
information, and recommending actions.
Chapter 7
Marketing research:
Facts and figures related to the project
Data:
Facts and figures recorded prior to the project
Secondary data:
Facts and figures newly collected for the project
Primary data:
A qualitative research method that involves bringing
together a small group of individuals—typically 6 to
10 participants—for a structured discussion led by a
moderator.
Focus group:
Questions that allow respondents to express opinions
and ideas or describe behaviors in their own words.
Open-ended questions:
Questions that require respondents to select one or
more response options from a set of predetermined
choices.
• Dichotomous questions.
• Semantic differential questions.
• Likert scale questions.
Closed-end (or fixed alternative questions):
Type of forecast that involves estimating the value to
be forecast without intervening steps.
Direct forecast:
A forecast made by starting with the last known value
of the item, listing the factors that could cause
changes in that value, estimating the degree of
impact that each of those factors would have, and
adjusting the base level to arrive at the final amount.
Lost-horse forecast:
Forecasting sales by extending a pattern observed in
past data into the future.
• When the pattern is described with a straight
line, it is linear trend extrapolation.
Trend extrapolation:
Involves aggregating prospective buyers into groups,
or segments, that (1) have common needs and (2)
will respond similarly to a marketing action.
Market segmentation:
A marketing strategy that involves a firm using
different marketing mix actions to help consumers
perceive the product as being different and better
than competing products.
Product differentiation:
Geography—where prospective customers live or
work.
Demographics—physical characteristics, measurable
characteristics, and other classification attributes of
individuals and households.
Psychographics—subjective mental or emotional
attributes of prospective customers.
Behaviors—observable actions. ( Usage rates, 80/20
Rule)
Bases of Segmentation for Consumer Markets
The place a product occupies in consumers’ minds
based on important attributes relative to competitive
products.
Product positioning:
Changing the place an offering occupies in
consumers’ minds relative to competitive products
Product repositioning:
Those characteristics of a product that make it
superior to competitive substitutes.
Points of difference:
Competing directly with competitors on similar
product attributes in the same target market.
Head-to-head positioning:
Targeting a less competitive, smaller market niche
with unique product benefits.
Differentiation positioning:
Visual representation of the locations of products in
the minds of consumers relative to competing
products.
Perceptual map:
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Product
Price
Promotion
Place
People
Physical environment
process
Seven P’s of Services Marketing:
A specific product with a unique brand, size, or price.
(SKU or Stock Keeping Unit)
Product item:
A group of closely related products sold by one
company that share similar characteristics and serve
similar customer needs.
Product line:
All the product lines offered by an organization.
Intangibility: Services cannot be experienced before
purchase.
Inconsistency: The quality of services varies.
Inseparability: Consumers cannot distinguish the
service provider from the service itself.
Inventory ( perishability): Can not be stored
Four l's of Services
No new learning or behavior changes
Continuous Innovation
Some learning and disruptions to normal routine
Dynamically Continuous Innovation
Extensive learning and entirely new consumption
patterns
Discontinuous Innovation
1. Insignificant point of difference.
2. Incomplete market and product protocol.
3. Not satisfying customer needs on critical
factors.
4. Bad timing.
5. No economical access to buyers.
6. Poor execution of the marketing mix.
7. Too little market attractiveness.
8. Poor product quality.
Marketing Reasons for New-Product Failures
The seven stages an organization goes through to
identify opportunities and convert them into salable
products.
New-product development process:
Preliminary test of a new-product idea with
customers using written descriptions and sketches
rather than a prototype or actual finished product.
Concept test:
Full-scale operating model of the product.
Prototype:
Relying primarily on its internal resources, research,
and development teams to create new products and
technologies.
Closed innovation:
Collaborating with external stakeholders, including
customers, suppliers, research institutions, startups,
and even competitors, to access a broader pool of
ideas and resources.
Open innovation:
Process of obtaining ideas, content, or solutions by
soliciting contributions from a large group of people,
typically via the internet.
Crowdsourcing:
A good, service, or idea consisting of a bundle of
tangible and intangible attributes that satisfies
consumers’ needs and is received in exchange for
money or something else of value.
Product:
Tangible product or physical item.
• Durable good → emphasis on personal
selling.
• Nondurable good → emphasis on consumer
advertising.
Good:
Intangible activity or benefit that an organization
provides to satisfy consumers’ needs.
Chapter 10
Describes the stages a new product goes through in
the marketplace— introduction, growth, maturity,
and decline.
Service:
Chapter 10
Product life cycle:
Setting a high initial price to help the company
recover development costs and capitalize on the
price insensitivity of early buyers.
Skimming pricing:
Setting a low initial price to discourage competitive
entry and build unit volume.
Penetration pricing:
Using different marketing mix actions to help
consumers perceive the product as being different
and better than competing products.
Product differentiation:
A favorable attitude toward and consistent purchase
of a single brand over time.
Brand loyalty:
Altering one or more of a product’s characteristics to
increase the product's value to customers and
increase sales.
Product modification:
Strategies companies use to find new customers,
increase a product’s use among existing customers,
and create new use situations.
• Finding new customers
• Increasing product use
• Creating a new use situations
Market modification:
Using a name, phrase, design, symbol, or
combination of these to identify a company’s
products and distinguish them from those of
competitors.
Branding:
The added value a brand name gives to a product
beyond the functional benefits provided.
Brand equity:
An integral part of the package that typically
identifies the product or brand, who made it, where
and when it was made, how it is to be used, and
package contents and ingredients
Brand Label
Chapter 11
The practice of simultaneously increasing product
benefits while maintaining or decreasing price.
The practice of reducing product content while
maintaining price.
Chapter 11
Value pricing:
Downsizing:
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Demand Oriented
Cost Oriented
Profit Oriented
Competition Oriented
Pricing Approaches
Setting a low initial price on a new product to appeal
immediately to the mass market.
Penetration pricing:
Setting the highest initial price that customers who
really desire the product are willing to pay when
introducing a new or innovative product.
Skimming pricing:
Setting a high price so that quality- or statusconscious consumers will be attracted to the product
and buy it.
Prestige pricing:
Setting prices a few dollars or cents under an even
number.
Odd-even pricing:
Marketing two or more products for a single package
price.
Bundle pricing:
Setting a price that is dictated by tradition, a
standardized channel of distribution, or other
competitive factors.
Customary pricing
Setting a market price for a product or product class
using the average market price as the benchmark—
pricing above, at, or below market level.
Above-, at-, or below-market pricing:
Selling a product below its customary price, not to
increase sales, but to attract customers' attention to
it in hopes that they will buy other products with
large markups as well.
Loss-leader pricing:
A graph that relates the quantity sold and price,
showing the maximum number of units that will be
sold at a given price.
Demand curve:
The percentage change in quantity demanded
relative to a percentage change in price.
Price elasticity of demand:
The sum of the expenses that do not change with the
quantity sold.
• Examples: Rent, executive salaries, insurance.
Fixed cost (FC):
The sum of the expenses that vary directly with the
quantity of a product that is produced and sold.
• Examples: Direct labor and direct materials
used in production; sales commissions tied
directly to the quantity sold.
Variable cost (VC):
Variable cost expressed on a per unit basis
The total expense incurred to produce and market a
product,
Unit variable cost (UVC):
Total cost (TC):
A technique that analyzes the relationship between
total revenue and total cost to determine profitability
at various levels of output.
Break-even analysis:
The quantity at which total revenue equals total
cost—profit is zero.
Break-even point (BEP):
The ratio of the firms sales revenues or unit sales to
those of the industry (Competitors plus firm itself)
Market share
A conspiracy among firms to set prices for a product.
Price fixing:
The practice of charging different prices to different
buyers for goods of like grade and quality.
Price discrimination:
Price deals that mislead consumers.
• Bait and switch: When a firm offers a very
low price on a product (the bait) to attract
customers to a store and then tricks the
customer into purchasing a higher-priced
(the switch).
Deceptive pricing:
Charging a very low price for a product with the
intent of driving competitors out of business.
Predatory pricing:
An intermediary who sells to other intermediaries,
usually retailers.
Wholesaler
An intermediary who sells to consumers
Retailer
An intermediary with the legal authority to act on
behalf of the manufacturer—their role is to bring
buyers and sellers together.
Agent or broker
The activities required to move product inputs and
finished products through the supply chain.
Logistics:
Network of individuals and firms that create and
deliver a product to end users—includes the supplier
network and marketing channel.
Supply chain:
Chapter 15
The combination of communication tools to (1)
inform prospective buyers about the benefits of the
product, (2) persuade them to try it, and (3) remind
them later about the benefits they enjoyed by using
the product.
Chapter 15
Promotional mix:
(1) advertising, (2) personal selling, (3) sales
promotion, (4) public relations, and (5) direct
marketing.
Elements of the promotional mix include:
The concept of designing marketing communications
programs that coordinate all promotional activities to
provide a consistent message across all audiences.
Integrated marketing communications (IMC):
Any paid form of nonpersonal communication by an
identified sponsor about an organization or product.
Advertising:
The two-way flow of communication between a
buyer and seller, often in a face-to-face encounter,
designed to influence the purchase decision of a
person or group.
Personal selling:
A form of communication management that seeks to
influence the feelings, opinions, or beliefs held by
customers, prospective customers, stockholders,
suppliers, employees, and other publics about a
company and its products or services.
Public relations:
A nonpersonal, indirectly paid presentation of an
organization, product, or service that can take to
form of news release, news conference , or Public
Service Announcement (PSA)
Publicity:
A short-term inducement of value offered to arouse
interest in buying a product or service.
Sales promotion:
A promotional alternative that uses direct
communication with consumers to generate: traffic
generation, lead generation, direct order.
Flow of promotion, mainly advertising and consumer
promotions, directed to consumers
Direct marketing
Flow of promotion, mainly personal selling and trade
promotions, directed to intermediaries
Push Strategy
Spending is set as a percentage of past or anticipated
sales.
Percentage of sales budgeting:
Spending is set to match competitors absolute
spending or spending relative to market share.
Competitive parity budgeting:
Spending on promotion occurs only after all other
expenses are covered.
All-you-can-afford budgeting:
Budget is determined by setting promotion
objectives, outlining the tasks needed to accomplish
Objective and task budgeting:
Pull Strategy
those objectives, and then determining the cost of
performing those tasks.
Chapter 16
watching multiple episodes of a series in a short
period of time.
Any paid form of nonpersonal communication by an
identified sponsor about an organization or a
product.
Chapter 16
Binge watching
Advertising:
Advertisement used to launch a new product
Pioneering (or informational) advertisements:
category by informing people what a product is, what
it can do, and where it can be found.
Comparative advertisement: Form of a competitive
advertisement that shows a brand’s strengths relative
to those of competitors.
used to reinforce previous knowledge of a product.
Reminder advertisements
: Form of reminder advertisement used to assure
users of the product that they made the right choice
Promotion that offers a premium as a customer
accumulates purchases.
• Encourage repeat purchases and
develop brand loyalty.
Reinforcement advertisement
A nonpersonal, indirectly paid presentation of an
organization, product, or service that can take the
form of: News release, news conference or public
service announcement (PSA)
Publicity
An approach to communication that suggest
consumers can avoid some negative experience
through the purchase and use of a product, a change
in behavior, or a reduction in the use of a product.
Fear appeal:
An approach to communication that suggests a
product will increase the attractiveness of the user.
Sex appeal:
An approach to communication that implies the
product is more fun or exciting than competitors’
offerings.
Humorous appeal:
The number of different people or households
exposed to an advertisement.
Reach:
The average number of times a person in the target
audience is exposed to an advertisement.
Frequency:
Advertising is run on a steady schedule throughout
the year.
Continuous (or steady) schedule
Loyalty Program:
Periods of advertising are scheduled between periods Flighting (or intermittent) schedule
of no advertising to reflect seasonal demand.
A flighting schedule is combined with a continuous
schedule to reflect increases in demand, heavy
periods of promotion, or the introduction of a new
product.
Pulse (or burst) schedule
An agency that provides a complete range of
advertising services, including marketing research,
media selection, copy development, artwork, and
production.
Full-service agency:
An agency that specializes in one aspect of
advertising such as creative work, media, or digital
advertising.
Limited-service agency:
A company’s own staff providing a limited range or
full range of advertising services.
In-house agency:
Term Choices