Marketing Concepts & Strategies PDF

SBU-strategic business unit is a businesses product or product line that has its own mission, objectives, resources, managers and competitors(example: gaming, home entertainment, professional equipment)/ Strategic planning is the managerial process that matches a firm's resources and capabilities t...

SBU-strategic business unit is a businesses product or product line that has its own mission, objectives, resources, managers and competitors(example: gaming, home entertainment, professional equipment)/ Strategic planning is the managerial process that matches a firm's resources and capabilities to market opportunities for long-term growth.It includes defining the firm's purpose and specifies what the firm hopes to achieve. Each USB need its own strategic plan Strategic planning steps: Step 1: Define the Mission, Vision, and Values Step 2: Evaluate the Internal and External Environment Step 3: Set Organizational or SBU Objectives Step 4: Establish Business Portfolio Step 5: Develop Growth Strategies Functional Planning Functional Planning is done by top functional level management. It involves developing detailed plans for strategies and tactics for the short term, supporting an organization’s long-term strategic plan. Market planning includes: –Situation analysis –Broad three-to-five-year plan to support the strategic plan –Detailed annual plan for the coming year Operational Planning is done by people such as sales managers, marketing communication managers, brand managers, market research managers. It is focusing on day-to-day execution of a functional plan.  Ansoff matrix Ansoff matrix includes four classifications to plan and evaluate growth initiatives. First is Market penetration strategy- Increase sales of existing products in the existing market. Second is Market development strategy-introducing existing products to the new markets. Third is Product development strategy- creating growth by selling new products in existing markets. Diversification strategy- new product in new market. Return on Marketing Investment (ROM) –Revenue (or profit) generated by investment in a given marketing program divided by the cost of the program at a given level of risk –For instance, if: ▪Revenue from Marketing Investment = $150,000 ▪Cost of Marketing Program = $30,000 ▪ROMI= 5.0 marketing mix The combination of factors(price, place, product, promotion) that a company uses to influence customers purchasing decision marketing concept A business philosophy that focuses on satisfying customers wants and needs while achieving company's goal utility the usefulness or benefit customers receive through the product, its price, its distribution, and the marketing communications about it. The business cycle describes the overall pattern of changes or fluctuations in an economy. –Prosperity –Recession –Recovery –Depression: a serious recession Competitive Intelligence The process of gathering and analyzing publicly available information about rivals. Export merchants are intermediaries a firm uses to represent it in other countries. In a licensing agreement, one firm (the licensor) gives another (the licensee) the right to produce and market its product in a specific country Strategic alliances allow companies to pool resources for common goals. Direct investment is when a firm expands internationally through ownership.(usually buys business in the new country) Product decisions –Straight extension –Product adaptation –Product invention –Backward invention Ethical relativism What is ethical in one culture is not necessarily the same in another culture Bribery occurs when someone voluntarily offers payment to get an illegal advantage. Extortion occurs when someone in authority extracts payment under pressure/using force. PESTLE is a framework for exploring and listing the external factors that may impact your business and planning. PESTLE stands for Political, Economic, Social, Technological, Legal and Environmental. countertrade A type of trade in which goods are paid for with other items instead of with cash. World Bank An international lending institution that seeks to reduce poverty and better people’s lives by improving economies and promoting sustainable development. balance of payments A statement of how much trade a country has going out compared to how much it has coming in. If a country is buying more than it is selling, it will have a negative balance of payments. protectionism A policy adopted by a government to give domestic companies an advantage. import quotas Limitations set by a government on the amount of a product allowed to enter a country. embargo A quota completely prohibiting specified goods from entering or leaving a country. tariffs Taxes on imported goods. monopoly A market situation in which one firm, the only supplier of a particular product, is able to control the price, quality, and supply of that product. oligopoly A market structure in which a relatively small number of sellers, each holding a substantial share of the market, compete in a market with many buyers. monopolistic competition A market structure in which many firms, each having slightly different products, offer unique consumer benefits. perfect competition A market structure in which many small sellers, all of whom offer similar products, are unable to have an impact on the quality, price, or supply of a product. demographics Statistics that measure observable aspects of a population, including size, age, gender, ethnic group, income, education, occupation, and family structure. collectivist cultures Cultures in which people subordinate their personal goals to those of a stable community. individualist cultures Cultures in which people tend to attach more importance to personal goals than to those of the larger community. consumer xenocentrism Consumer belief that products produced in other countries are superior to those produced at home. consumer ethnocentrism Consumers’ feeling that products from their own country are superior or that it is wrong to buy products produced in another country. straight extension strategy Product strategy in which a firm offers the same product in both domestic and foreign markets. product adaptation strategy Product strategy in which a firm offers a similar but modified product in foreign markets. product invention strategy Product strategy in which a firm develops a new product for foreign markets. backward invention Product strategy in which a firm develops a less advanced product to serve the needs of people living in countries without electricity or other elements of a developed infrastructure. ethnocentric pricing A pricing strategy where the firm sets a single price for a product around the globe. polycentric pricing A pricing strategy where the local partners set the prices for the product in each global market. geocentric pricing A pricing strategy that establishes a global price floor for a product but recognizes local conditions in setting the price in each market. free trade zones Designated areas where foreign companies can warehouse goods without paying taxes or customs duties until they move the goods into the marketplace. gray market goods Items manufactured outside a country and then imported without the consent of the trademark holder. gender-bending products Traditionally sex-typed items adapted to the opposite gender. 80/20 rule A marketing rule of thumb that 20 percent of purchasers account for 80 percent of a product’s sales. differentiated targeting strategy Developing one or more products for each of several distinct customer groups and making sure these offerings are kept separate in the marketplace. concentrated targeting strategy Focusing a firm’s efforts on offering one or more products to a single segment. customized marketing strategy An approach that tailors specific products and the messages about them to individual customers. adoption pyramid Reflects how a person goes from being unaware of an innovation through stages from the bottom up of awareness, interest, evaluation, trial, adoption, and confirmation. Product quality is measured through : Precision(accuracy), reliability, versatility(fucsioning), Durability, degree of pleasure, product safety, ease of use, and whether it satisfies needs. product life cycle (PLC) A concept that explains how products go through four distinct stages from birth to death: introduction, growth, maturity, and decline. introduction stage The first stage of the product life cycle, in which slow growth follows the introduction of a new product in the marketplace. product relaunch Using principles of segmentation, target marketing, and positioning to reposition an existing product for reintroduction into the product life cycle. growth stage The second stage in the product life cycle, during which consumers accept the product and sales rapidly increase. maturity stage The third and longest stage in the product life cycle, during which sales peak and profit margins narrow. decline stage The final stage in the product life cycle, during which sales decrease as customer needs change. augmented product The actual product plus other supporting features, such as a warranty, credit, delivery, installation, and repair service after the sale. innovators The first segment (roughly 2.5 percent) of a population to adopt a new product. –Extremely adventurous –Risk takers –Well-educated early adopters Those who adopt an innovation early in the diffusion process but after the innovators. 13.5% –Concerned about social acceptance –Heavy media users –Others ask their opinions early majority Those whose adoption of a new product signals a general acceptance of the innovation.34% –Avoid being first or last –Middle class –Deliberate and conscious late majority The adopters who are willing to try new products when there is little or no risk associated with the purchase, when the purchase becomes an economic necessity, or when there is social pressure to purchase. 34% -Older –Conservative –Lower than average education and income laggards The last consumers to adopt an innovation. 16% –Lower education and income –Bound by tradition The degree to which a new product has each of these characteristics affects the speed of diffusion. –Relative advantage –Compatibility –Complexity –Trialability –Observability Compatibility The extent to which a new product is consistent with existing cultural values, customs, and practices. observability How visible a new product and its benefits are to others who might adopt it. cannibalization The loss of sales of an existing brand when a new item in a product line or product family is introduced. outbound marketing Messages that come from the organization and are intended for those who have agreed to receive them. inbound marketing Messages that come to the organization from others outside. top-down budgeting techniques Allocation of the promotion budget based on management’s determination of the total amount to be devoted to marketing communication. percentage-of-sales method A method for promotion budgeting that is based on a certain percentage of either last year’s sales or estimates of the present year’s sales. competitive-parity method A promotion budgeting method in which an organization matches whatever competitors are spending. bottom-up budgeting techniques Allocation of the promotion budget based on identifying promotion goals and allocating enough money to accomplish them. objective-task method A promotion budgeting method in which an organization first defines the specific communication goals it hopes to achieve and then tries to calculate what kind of promotion efforts it will take to meet these goals. push strategy The company tries to move its products through the channel by convincing channel members to offer them. pull strategy The company tries to move its products through the channel by building desire for the products among consumers, thus convincing retailers to respond to this demand by stocking these items. drip pricing The illegal practice of advertising one price and then, by the time the sale is completed, presenting a total on which additional hidden fees have “dripped.” unique selling proposition (USP) An advertising appeal that focuses on one clear reason why a particular product is superior. competitive-effect pricing, or market-based pricing Pricing a product based on (above, below, or the same as) the competition’s pricing. target costing A process in which firms identify the quality and functionality needed to satisfy customers and what price they are willing to pay before the product is designed; the product is manufactured only if the firm can control costs to meet the required price. yield management pricing A practice of charging different prices to different customers to manage capacity while maximizing revenues price leadership A pricing strategy in which one firm first sets its price and other firms in the industry follow with the same or similar prices. skimming price A very high, premium price that a firm charges for its new, highly desirable product. penetration pricing A pricing strategy in which a firm introduces a new product at a very low price to encourage more customers to purchase it. trial pricing Pricing a new product low for a limited period of time to lower the risk for a customer. price segmentation The practice of charging different prices to different market segments for the same product. Generic branding is a strategy that is really no branding Generic branded products are typically packaged in very plain packaging with only the name of the product, for example, Green Beans are sold at lowest price possible and are very popular in pharmaceuticals because of pricing. peak load pricing A pricing plan that sets prices higher during periods with higher demand. Elements of price planning: 1. Set pricing objectives 2. Estimate Demand 3. Determine Costs 4. Examine the pricing environment 5. Choose the pricing strategy 6. Develop pricing tactics Pricing objectives: -Sales or market share -Image Enhancement -Customer satisfaction -Profit -Competitive effect surge pricing A pricing plan that raises prices of a product as demand goes up and lowers it as demand slides. bottom-of-the-pyramid pricing Innovative pricing strategy in which brands that wish to get a foothold in bottom- of-the pyramid countries appeal to consumers with the lowest incomes. two-part pricing Pricing that requires two separate types of payments to purchase the product. payment pricing A pricing tactic that breaks up the total price into smaller amounts payable over time. subscription pricing Pricing tactic where customers pay on a periodic basis, normally monthly or yearly, for access to a product. decoy pricing A pricing strategy where a seller offers at least three similar products; two have comparable but more expensive prices and one of these two is less attractive to buyers, thus causing more buyers to buy the higher-priced, more attractive item. price bundling Selling two or more goods or services as a single package for one price. captive pricing A pricing tactic for two items that must be used together; one item is priced very low, and the firm makes its profit on another, high-margin item essential to the operation of the first item. F.O.B. factory pricing, or F.O.B.origin pricing A pricing tactic in which the cost of transporting the product from the factory to the customer’s location is the responsibility of the customer. F.O.B. delivered pricing A pricing tactic in which the cost of loading and transporting the product to the customer is included in the selling price and is paid by the manufacturer. uniform delivered pricing A pricing tactic in which a firm adds a standard shipping charge to the price for all customers regardless of location. freight absorption pricing A pricing tactic in which the seller absorbs the total cost of transportation. Consumers in the sharing economy increasingly would rather rent than purchase the products they use. Disruptive marketing is the only way to stay in business for the long term.Marketers seek to understand the consumer and identify what is missing in the marketplace to satisfy the consumer,turning existing marketing rules upside down. customer journey mapping The process of identifying customer touchpoints and tracking the experiences customers have when they interact with a brand or a store as they become aware of, consider and evaluate, and decide to purchase a product in order to improve the customer experience. combination stores Retailers that offer consumers food and general merchandise in the same store. supercenters Large combination stores that combine economy supermarkets with other lower priced merchandise. merchandise breadth The number of different product lines available. merchandise depth The variety of choices available for each specific product line. convenience stores Neighborhood retailers that carry a limited number of frequently purchased items and cater to consumers willing to pay a premium for the ease of buying close to home. supermarkets Food stores that carry a wide selection of edibles and related products. specialty stores Retailers that carry only a few product lines but offer good selection within the lines that they sell. concept stores New, inspirational approaches to retailing that seek to sell a lifestyle to a particular target audience through the use of customer interaction, discovery, and experience rather than selling products. flash retailing, or pop-up stores and pop-up retailing A trend of opening short-term sales stores that close down after only days or weeks. Retail stores, such as Halloween costume stores, that “pop up” one day and then disappear after a period of one day to a few months. recommerce The process of selling used products or excess inventory to companies or consumer resale stores. resale stores Retail stores that accept and sell used merchandise, including clothing, furniture, household items, and musical instruments. thrift stores Resale stores that give their profits to charities. consignment stores Resale stores that take used merchandise, resell it, and return a portion of the proceeds to the original owner. general merchandise discount stores Retailers that offer a broad assortment of items at low prices with minimal service. factory outlets Manufacturer-owned brick-and-mortar or online retail stores that sell only a single brand and are almost always located in an outlet mall with other similar stores. outlet stores Retailer-owned brick-and-mortar or online stores where excess merchandise or special buys from vendors, not offered in the regular retail stores are available at lower prices. category killers, or category specialists Very large specialty stores that carry a vast selection of products in their category. hypermarkets Retailers with the characteristics of both warehouse stores and supermarkets; hypermarkets are several times larger than other stores and offer virtually everything from grocery items to electronics. involvement The relative importance of perceived consequences of the purchase to a consumer. perceived risk The belief that choice of a product has potentially negative consequences, whether financial, physical, or social. Customer decision making process : problem recognition, Information search, evaluating the alternatives,product choice, post purchase evaluation. evoked set All of the alternative brands a consumer is aware of when making a decision. consideration set The alternative brands a consumer seriously considers when making a decision. buyer’s remorse The anxiety or regret a consumer may feel after choosing from among several similar attractive choices. subliminal advertising Supposedly hidden messages in marketers’ communications. behavioral learning theories Theories of learning that focus on how consumer behavior is changed by external events or stimuli. classical conditioning The learning that occurs when a stimulus eliciting a response is paired with another stimulus that initially does not elicit a response on its own but will cause a similar response over time because of its association with the first stimulus. operant conditioning Learning that occurs as the result of rewards or punishments. cognitive learning theory Theory of learning that stresses the importance of internal mental processes and that views people as problem solvers who actively use information from the world around them to master their environment. observational learning Learning that occurs when people watch the actions of others and note what happens to them as a result. sadvertising Advertising designed to arouse negative emotions in order to get our attention and create a bond with the brand’s products. cognition The knowing component of attitudes; refers to the beliefs or knowledge a person has about a product and its important characteristics. consumerism A social movement that attempts to protect consumers from harmful business practices. Elements of the external environment: technological environment, political/legal environment, socio cultural environment, economic environment, competitive environment Competition in the Microenvironment involves consumer decision making at three levels. –Discretionary income – Product competition – Brand competition Marketers also need to understand the big picture —the overall structure of their industry. –Monopoly –Oligopoly –Monopolistic competition –Perfect competition Consumer markets can be segmented by demographic, geographic, psychographic, and behavioral criteria. Firms can be categorized based on: –Organizational demographics –Production technologies used –User/non-user Positioning steps: 1. Analyze Competitors’ positioning 2. Define your competitive advantage 3. Finalize the marketing mix  4. Evaluate responses and modify as needed Unsought products are goods and services for which a consumer has little awareness or interest until a need arises Marketing systems: conventional, vertical, horizontal Conventional marketing system Multilevel distribution channel in which members work independently, buying and selling from each other. Members of a conventional system recognize that self- interest is best served by fair dealing. Vertical marketing system Cooperation among members at the manufacturing, wholesaling, and/or retailing levels. VMSs are a way to meet customer needs better while keeping costs low. Include administered, corporate, contractual VMSs. Horizontal marketing system Two or more firms at the same level agree to work together to get their product to the customer. Most airlines are members of a horizontal alliance. Price elasticity/Elastic demand/markup/margin price elasticity of demand The percentage change in unit sales that results from a percentage change in price. elastic demand Demand in which changes in price have large effects on the amount demanded. inelastic demand Demand in which changes in price have little or no effect on the amount demanded. cross-elasticity of demand When changes in the price of one product affect the demand for another item. break-even point The point at which the total revenue and total costs are equal and above which the company makes a profit; below that point, the firm will suffer a loss. markup An amount added to the cost of a product to create the price at which a channel member will sell the product. gross margin The markup amount added to the cost of a product to cover the fixed costs of the retailer or wholesaler and leave an amount for a profit. SBU-strategic business unit is a businesses product or product line that has its own mission, objectives, resources, managers and competitors(example: gaming, home entertainment, professional equipment)/ SBU-strategic business unit is a businesses product or product line that has its own mission, objectives, resources, managers and competitors(example: gaming, home entertainment, professional equipment)/ Strategic planning is the managerial process that matches a firm's resources and capabilities to market opportunities for long-term growth.It includes defining the firm's purpose and specifies what the firm hopes to achieve. Each USB need its own strategic plan Strategic planning steps: Step 1: Define the Mission, Vision, and Values Step 2: Evaluate the Internal and External Environment Step 3: Set Organizational or SBU Objectives Step 4: Establish Business Portfolio Step 5: Develop Growth Strategies Functional Planning Functional Planning is done by top functional level management. It involves developing detailed plans for strategies and tactics for the short term, supporting an organization’s long-term strategic plan. Market planning includes: –Situation analysis –Broad three-to-five-year plan to support the strategic plan –Detailed annual plan for the coming year Operational Planning is done by people such as sales managers, marketing communication managers, brand managers, market research managers. It is focusing on day-to-day execution of a functional plan. Ansoff matrix Ansoff matrix includes four classifications to plan and evaluate growth initiatives. First is Market penetration strategy- Increase sales of existing products in the existing market. Second is Market development strategy-introducing existing products to the new markets. Third is Product development strategy- creating growth by selling new products in existing markets. Diversification strategy- new product in new market. Return on Marketing Investment (ROM) –Revenue (or profit) generated by investment in a given marketing program divided by the cost of the program at a given level of risk –For instance, if: ▪Revenue from Marketing Investment = $150,000 ▪Cost of Marketing Program = $30,000 ▪ROMI= 5.0 marketing mix The combination of factors(price, place, product, promotion) that a company uses to influence customers purchasing decision marketing concept A business philosophy that focuses on satisfying customers wants and needs while achieving company's goal utility the usefulness or benefit customers receive through the product, its price, its distribution, and the marketing communications about it. The business cycle describes the overall pattern of changes or fluctuations in an economy. –Prosperity –Recession –Recovery –Depression: a serious recession Competitive Intelligence The process of gathering and analyzing publicly available information about rivals. Export merchants are intermediaries a firm uses to represent it in other countries. In a licensing agreement, one firm (the licensor) gives another (the licensee) the right to produce and market its product in a specific country Strategic alliances allow companies to pool resources for common goals. Direct investment is when a firm expands internationally through ownership.(usually buys business in the new country) Product decisions –Straight extension –Product adaptation –Product invention –Backward invention Ethical relativism What is ethical in one culture is not necessarily the same in another culture Bribery occurs when someone voluntarily offers payment to get an illegal advantage. Extortion occurs when someone in authority extracts payment under pressure/using force. PESTLE is a framework for exploring and listing the external factors that may impact your business and planning. PESTLE stands for Political, Economic, Social, Technological, Legal and Environmental. countertrade A type of trade in which goods are paid for with other items instead of with cash. World Bank An international lending institution that seeks to reduce poverty and better people’s lives by improving economies and promoting sustainable development. balance of payments A statement of how much trade a country has going out compared to how much it has coming in. If a country is buying more than it is selling, it will have a negative balance of payments. protectionism A policy adopted by a government to give domestic companies an advantage. import quotas Limitations set by a government on the amount of a product allowed to enter a country. embargo A quota completely prohibiting specified goods from entering or leaving a country. tariffs Taxes on imported goods. monopoly A market situation in which one firm, the only supplier of a particular product, is able to control the price, quality, and supply of that product. oligopoly A market structure in which a relatively small number of sellers, each holding a substantial share of the market, compete in a market with many buyers. monopolistic competition A market structure in which many firms, each having slightly different products, offer unique consumer benefits. perfect competition A market structure in which many small sellers, all of whom offer similar products, are unable to have an impact on the quality, price, or supply of a product. demographics Statistics that measure observable aspects of a population, including size, age, gender, ethnic group, income, education, occupation, and family structure. collectivist cultures Cultures in which people subordinate their personal goals to those of a stable community. individualist cultures Cultures in which people tend to attach more importance to personal goals than to those of the larger community. consumer xenocentrism Consumer belief that products produced in other countries are superior to those produced at home. consumer ethnocentrism Consumers’ feeling that products from their own country are superior or that it is wrong to buy products produced in another country. straight extension strategy Product strategy in which a firm offers the same product in both domestic and foreign markets. product adaptation strategy Product strategy in which a firm offers a similar but modified product in foreign markets. product invention strategy Product strategy in which a firm develops a new product for foreign markets. backward invention Product strategy in which a firm develops a less advanced product to serve the needs of people living in countries without electricity or other elements of a developed infrastructure. ethnocentric pricing A pricing strategy where the firm sets a single price for a product around the globe. polycentric pricing A pricing strategy where the local partners set the prices for the product in each global market. geocentric pricing A pricing strategy that establishes a global price floor for a product but recognizes local conditions in setting the price in each market. free trade zones Designated areas where foreign companies can warehouse goods without paying taxes or customs duties until they move the goods into the marketplace. gray market goods Items manufactured outside a country and then imported without the consent of the trademark holder. gender-bending products Traditionally sex-typed items adapted to the opposite gender. 80/20 rule A marketing rule of thumb that 20 percent of purchasers account for 80 percent of a product’s sales. differentiated targeting strategy Developing one or more products for each of several distinct customer groups and making sure these offerings are kept separate in the marketplace. concentrated targeting strategy Focusing a firm’s efforts on offering one or more products to a single segment. customized marketing strategy An approach that tailors specific products and the messages about them to individual customers. adoption pyramid Reflects how a person goes from being unaware of an innovation through stages from the bottom up of awareness, interest, evaluation, trial, adoption, and confirmation. Product quality is measured through : Precision(accuracy), reliability, versatility(fucsioning), Durability, degree of pleasure, product safety, ease of use, and whether it satisfies needs. product life cycle (PLC) A concept that explains how products go through four distinct stages from birth to death: introduction, growth, maturity, and decline. introduction stage The first stage of the product life cycle, in which slow growth follows the introduction of a new product in the marketplace. product relaunch Using principles of segmentation, target marketing, and positioning to reposition an existing product for reintroduction into the product life cycle. growth stage The second stage in the product life cycle, during which consumers accept the product and sales rapidly increase. maturity stage The third and longest stage in the product life cycle, during which sales peak and profit margins narrow. decline stage The final stage in the product life cycle, during which sales decrease as customer needs change. augmented product The actual product plus other supporting features, such as a warranty, credit, delivery, installation, and repair service after the sale. innovators The first segment (roughly 2.5 percent) of a population to adopt a new product. –Extremely adventurous –Risk takers –Well-educated early adopters Those who adopt an innovation early in the diffusion process but after the innovators. 13.5% –Concerned about social acceptance –Heavy media users –Others ask their opinions early majority Those whose adoption of a new product signals a general acceptance of the innovation.34% –Avoid being first or last –Middle class –Deliberate and conscious late majority The adopters who are willing to try new products when there is little or no risk associated with the purchase, when the purchase becomes an economic necessity, or when there is social pressure to purchase. 34% -Older –Conservative –Lower than average education and income laggards The last consumers to adopt an innovation. 16% –Lower education and income –Bound by tradition The degree to which a new product has each of these characteristics affects the speed of diffusion. –Relative advantage –Compatibility –Complexity –Trialability –Observability Compatibility The extent to which a new product is consistent with existing cultural values, customs, and practices. observability How visible a new product and its benefits are to others who might adopt it. cannibalization The loss of sales of an existing brand when a new item in a product line or product family is introduced. outbound marketing Messages that come from the organization and are intended for those who have agreed to receive them. inbound marketing Messages that come to the organization from others outside. top-down budgeting techniques Allocation of the promotion budget based on management’s determination of the total amount to be devoted to marketing communication. percentage-of-sales method A method for promotion budgeting that is based on a certain percentage of either last year’s sales or estimates of the present year’s sales. competitive-parity method A promotion budgeting method in which an organization matches whatever competitors are spending. bottom-up budgeting techniques Allocation of the promotion budget based on identifying promotion goals and allocating enough money to accomplish them. objective-task method A promotion budgeting method in which an organization first defines the specific communication goals it hopes to achieve and then tries to calculate what kind of promotion efforts it will take to meet these goals. push strategy The company tries to move its products through the channel by convincing channel members to offer them. pull strategy The company tries to move its products through the channel by building desire for the products among consumers, thus convincing retailers to respond to this demand by stocking these items. drip pricing The illegal practice of advertising one price and then, by the time the sale is completed, presenting a total on which additional hidden fees have “dripped.” unique selling proposition (USP) An advertising appeal that focuses on one clear reason why a particular product is superior. competitive-effect pricing, or market-based pricing Pricing a product based on (above, below, or the same as) the competition’s pricing. target costing A process in which firms identify the quality and functionality needed to satisfy customers and what price they are willing to pay before the product is designed; the product is manufactured only if the firm can control costs to meet the required price. yield management pricing A practice of charging different prices to different customers to manage capacity while maximizing revenues price leadership A pricing strategy in which one firm first sets its price and other firms in the industry follow with the same or similar prices. skimming price A very high, premium price that a firm charges for its new, highly desirable product. penetration pricing A pricing strategy in which a firm introduces a new product at a very low price to encourage more customers to purchase it. trial pricing Pricing a new product low for a limited period of time to lower the risk for a customer. price segmentation The practice of charging different prices to different market segments for the same product. Generic branding is a strategy that is really no branding Generic branded products are typically packaged in very plain packaging with only the name of the product, for example, Green Beans are sold at lowest price possible and are very popular in pharmaceuticals because of pricing. peak load pricing A pricing plan that sets prices higher during periods with higher demand. Elements of price planning: 7. Set pricing objectives 8. Estimate Demand 9. Determine Costs 10. Examine the pricing environment 11. Choose the pricing strategy 12. Develop pricing tactics Pricing objectives: -Sales or market share -Image Enhancement -Customer satisfaction -Profit -Competitive effect surge pricing A pricing plan that raises prices of a product as demand goes up and lowers it as demand slides. bottom-of-the-pyramid pricing Innovative pricing strategy in which brands that wish to get a foothold in bottom- of-the pyramid countries appeal to consumers with the lowest incomes. two-part pricing Pricing that requires two separate types of payments to purchase the product. payment pricing A pricing tactic that breaks up the total price into smaller amounts payable over time. subscription pricing Pricing tactic where customers pay on a periodic basis, normally monthly or yearly, for access to a product. decoy pricing A pricing strategy where a seller offers at least three similar products; two have comparable but more expensive prices and one of these two is less attractive to buyers, thus causing more buyers to buy the higher-priced, more attractive item. price bundling Selling two or more goods or services as a single package for one price. captive pricing A pricing tactic for two items that must be used together; one item is priced very low, and the firm makes its profit on another, high-margin item essential to the operation of the first item. F.O.B. factory pricing, or F.O.B.origin pricing A pricing tactic in which the cost of transporting the product from the factory to the customer’s location is the responsibility of the customer. F.O.B. delivered pricing A pricing tactic in which the cost of loading and transporting the product to the customer is included in the selling price and is paid by the manufacturer. uniform delivered pricing A pricing tactic in which a firm adds a standard shipping charge to the price for all customers regardless of location. freight absorption pricing A pricing tactic in which the seller absorbs the total cost of transportation. Consumers in the sharing economy increasingly would rather rent than purchase the products they use. Disruptive marketing is the only way to stay in business for the long term.Marketers seek to understand the consumer and identify what is missing in the marketplace to satisfy the consumer,turning existing marketing rules upside down. customer journey mapping The process of identifying customer touchpoints and tracking the experiences customers have when they interact with a brand or a store as they become aware of, consider and evaluate, and decide to purchase a product in order to improve the customer experience. combination stores Retailers that offer consumers food and general merchandise in the same store. supercenters Large combination stores that combine economy supermarkets with other lower priced merchandise. merchandise breadth The number of different product lines available. merchandise depth The variety of choices available for each specific product line. convenience stores Neighborhood retailers that carry a limited number of frequently purchased items and cater to consumers willing to pay a premium for the ease of buying close to home. supermarkets Food stores that carry a wide selection of edibles and related products. specialty stores Retailers that carry only a few product lines but offer good selection within the lines that they sell. concept stores New, inspirational approaches to retailing that seek to sell a lifestyle to a particular target audience through the use of customer interaction, discovery, and experience rather than selling products. flash retailing, or pop-up stores and pop-up retailing A trend of opening short-term sales stores that close down after only days or weeks. Retail stores, such as Halloween costume stores, that “pop up” one day and then disappear after a period of one day to a few months. recommerce The process of selling used products or excess inventory to companies or consumer resale stores. resale stores Retail stores that accept and sell used merchandise, including clothing, furniture, household items, and musical instruments. thrift stores Resale stores that give their profits to charities. consignment stores Resale stores that take used merchandise, resell it, and return a portion of the proceeds to the original owner. general merchandise discount stores Retailers that offer a broad assortment of items at low prices with minimal service. factory outlets Manufacturer-owned brick-and-mortar or online retail stores that sell only a single brand and are almost always located in an outlet mall with other similar stores. outlet stores Retailer-owned brick-and-mortar or online stores where excess merchandise or special buys from vendors, not offered in the regular retail stores are available at lower prices. category killers, or category specialists Very large specialty stores that carry a vast selection of products in their category. hypermarkets Retailers with the characteristics of both warehouse stores and supermarkets; hypermarkets are several times larger than other stores and offer virtually everything from grocery items to electronics. involvement The relative importance of perceived consequences of the purchase to a consumer. perceived risk The belief that choice of a product has potentially negative consequences, whether financial, physical, or social. Customer decision making process : problem recognition, Information search, evaluating the alternatives,product choice, post purchase evaluation. evoked set All of the alternative brands a consumer is aware of when making a decision. consideration set The alternative brands a consumer seriously considers when making a decision. buyer’s remorse The anxiety or regret a consumer may feel after choosing from among several similar attractive choices. subliminal advertising Supposedly hidden messages in marketers’ communications. behavioral learning theories Theories of learning that focus on how consumer behavior is changed by external events or stimuli. classical conditioning The learning that occurs when a stimulus eliciting a response is paired with another stimulus that initially does not elicit a response on its own but will cause a similar response over time because of its association with the first stimulus. operant conditioning Learning that occurs as the result of rewards or punishments. cognitive learning theory Theory of learning that stresses the importance of internal mental processes and that views people as problem solvers who actively use information from the world around them to master their environment. observational learning Learning that occurs when people watch the actions of others and note what happens to them as a result. sadvertising Advertising designed to arouse negative emotions in order to get our attention and create a bond with the brand’s products. cognition The knowing component of attitudes; refers to the beliefs or knowledge a person has about a product and its important characteristics. consumerism A social movement that attempts to protect consumers from harmful business practices. Elements of the external environment: technological environment, political/legal environment, socio cultural environment, economic environment, competitive environment Competition in the Microenvironment involves consumer decision making at three levels. –Discretionary income – Product competition – Brand competition Marketers also need to understand the big picture —the overall structure of their industry. –Monopoly –Oligopoly –Monopolistic competition –Perfect competition Consumer markets can be segmented by demographic, geographic, psychographic, and behavioral criteria. Firms can be categorized based on: –Organizational demographics –Production technologies used –User/non-user Positioning steps: 5. Analyze Competitors’ positioning 6. Define your competitive advantage 7. Finalize the marketing mix 8. Evaluate responses and modify as needed Unsought products are goods and services for which a consumer has little awareness or interest until a need arises Marketing systems: conventional, vertical, horizontal Conventional marketing system Multilevel distribution channel in which members work independently, buying and selling from each other. Members of a conventional system recognize that self- interest is best served by fair dealing. Vertical marketing system Cooperation among members at the manufacturing, wholesaling, and/or retailing levels. VMSs are a way to meet customer needs better while keeping costs low. Include administered, corporate, contractual VMSs. Horizontal marketing system Two or more firms at the same level agree to work together to get their product to the customer. Most airlines are members of a horizontal alliance. Price elasticity/Elastic demand/markup/margin price elasticity of demand The percentage change in unit sales that results from a percentage change in price. elastic demand Demand in which changes in price have large effects on the amount demanded. inelastic demand Demand in which changes in price have little or no effect on the amount demanded. cross-elasticity of demand When changes in the price of one product affect the demand for another item. break-even point The point at which the total revenue and total costs are equal and above which the company makes a profit; below that point, the firm will suffer a loss. markup An amount added to the cost of a product to create the price at which a channel member will sell the product. gross margin The markup amount added to the cost of a product to cover the fixed costs of the retailer or wholesaler and leave an amount for a profit.