Final Exam Study Guide.pdf

Study Guide Final Marketing Strategy Chapter 6 1. What is a product? A product is any good, service, or idea that can be offered to a market to satisfy a want or need. Products can be tangible (physical items) or intangible (services or experiences). 2. What is a consumer product and what is a bus...

Study Guide Final Marketing Strategy Chapter 6 1. What is a product? A product is any good, service, or idea that can be offered to a market to satisfy a want or need. Products can be tangible (physical items) or intangible (services or experiences). 2. What is a consumer product and what is a business product?  Consumer Product: These are products intended for personal use by consumers. They are classified into four categories: convenience products, shopping products, specialty products, and unsought products.  Business Product: Also known as industrial products, these are goods or services used by businesses in the production of other products or for resale. They include raw materials, component parts, and capital equipment. 3. What do we mean by convenience product, shopping product, unsought, and specialty product?  Convenience Product: Items that are purchased frequently and with minimal effort, like snacks and toiletries.  Shopping Product: Products that consumers compare based on price, quality, and style before purchasing, such as electronics and clothing.  Unsought Product: Products that consumers do not actively seek out, often due to lack of awareness or need, like life insurance.  Specialty Product: Unique items that have strong brand loyalty, with consumers willing to make a special effort to purchase them, such as luxury cars or designer handbags. 4. What do we mean by raw materials, component parts, process materials, accessory equipment, and installations?  Raw Materials: Basic materials that are processed or manufactured into products (e.g., timber, steel).  Component Parts: Finished products that become part of another product, such as engines or tires.  Process Materials: Materials used in the production process that are not easily identifiable in the finished product, like lubricants or chemicals.  Accessory Equipment: Tools and equipment that assist in the production process but do not become part of the final product (e.g., computers, tools).  Installations: Major capital items such as buildings and machinery that are used in the production of goods. 5. What do we mean by product mix, product line, product line extension, product width, and product depth?  Product Mix: The total range of products offered by a company.  Product Line: A group of related products within a product mix.  Product Line Extension: Introducing additional items in the same product line (e.g., new flavors of a snack).   Product Width: The number of different product lines a company offers.  Product Depth: The number of variations or options available within a product line (e.g., sizes, colors). 6. What is a service and what are some of the unique characteristics of services and some of the resulting marketing challenges? A service is an intangible offering that cannot be owned or touched, such as healthcare or education. Characteristics include:  Intangibility: Services cannot be seen or touched, making it hard for consumers to evaluate before purchase.  Inseparability: Services are produced and consumed simultaneously (e.g., haircuts).  Variability: The quality of services can vary depending on who provides them (e.g., different barbers).  Perishability: Services cannot be stored for later use (e.g., a missed flight). Marketing challenges include creating trust, managing quality consistency, and effectively communicating benefits. 7. What do we mean by new-to-the-world products (discontinuous innovations), new product lines, product line extensions, improvements or revisions of existing products, repositioning, and cost reductions?  New-to-the-world products (discontinuous innovations): Completely new products that create a new market (e.g., smartphones).  New product lines: Introduction of products that a company has not previously offered.  Product line extensions: Adding new variations to existing product lines.  Improvements or revisions of existing products: Enhancements made to current products (e.g., upgraded software).  Repositioning: Changing the market's perception of a product.  Cost reductions: Strategies to lower production costs, maintaining product quality. 8. What do we mean by idea generation, screening and evaluation, development, test marketing, and commercialization?  Idea Generation: The process of brainstorming new product ideas.  Screening and Evaluation: Assessing ideas to determine their potential success.  Development: Creating a prototype and developing the product.  Test Marketing: Launching the product in a limited market to gauge response.  Commercialization: Full-scale launch of the product into the market. 9. Why is pricing so important to companies? Pricing affects a company's profitability, market positioning, and competitiveness. It can influence consumer behavior and is a crucial element of the marketing mix. 10. In which situations do buyers have more power than sellers? In which situations do sellers have more power?  Buyers have more power when there are many options available, low switching costs, and high competition among sellers (e.g., in a saturated market).   Sellers have more power when they offer unique products, when demand exceeds supply, or when there are few suppliers for a given product (e.g., in monopolistic or oligopolistic markets). 11. What is the relationship between price and revenue? Revenue is calculated as price multiplied by quantity sold. Generally, if the price increases, revenue may also increase unless the decrease in quantity sold offsets it. Conversely, lowering prices may increase sales volume, potentially increasing revenue. 12. What do we mean by price elasticity? What do we mean by inelastic demand?  Price Elasticity: A measure of how much the quantity demanded of a good responds to a change in price. o Elastic Demand: A change in price leads to a proportionately larger change in quantity demanded. o Inelastic Demand: A change in price leads to a proportionately smaller change in quantity demanded (e.g., essential goods). 13. What are some situations that decrease price sensitivity?  Strong brand loyalty.  Unique product features.  Lack of substitutes.  Perceived quality and value.  Necessity of the product. 14. What do we mean by price skimming, odd pricing, and penetration pricing?  Price Skimming: Setting a high price initially and gradually lowering it over time (often used for new, innovative products).  Odd Pricing: Pricing a product just below a whole number (e.g., $9.99 instead of $10) to make it seem cheaper.  Penetration Pricing: Setting a low price to enter a competitive market and attract customers quickly. 15. What is a marketing channel? What are some of the marketing functions performed by distributors (sorting, breaking bulk, maintaining inventories, maintaining convenient locations, provide services)? A marketing channel is a set of interdependent organizations that help in the process of making a product or service available for use or consumption. Functions performed by distributors include:  Sorting: Arranging products into categories based on similar characteristics.  Breaking Bulk: Dividing large quantities of products into smaller, more manageable amounts for consumers.  Maintaining Inventories: Keeping stocks of products to ensure availability.  Maintaining Convenient Locations: Providing accessible points for customers to purchase products.  Providing Services: Offering additional support, like delivery or installation. 16. What are slotting allowances? Slotting allowances are fees paid by manufacturers to retailers for shelf space in stores, ensuring their products are prominently displayed and accessible to customers. 17. What are some of the reasons that outsourcing has increased in recent years? What are the driving forces that lead companies to outsource certain functions? Reasons for increased outsourcing include:   Cost savings.  Access to specialized expertise.  Focus on core competencies.  Increased efficiency.  Globalization. Driving forces include technological advancements, competitive pressures, and the need for flexibility. 18. What do we mean by dual distribution? Dual distribution refers to a strategy where a company sells its products through multiple channels simultaneously (e.g., direct sales and through retailers). 19. What do we mean by exclusive, selective, and intensive distribution?  Exclusive Distribution: Limited distribution to a few select retailers, often to maintain a luxury or premium image.  Selective Distribution: Products are available through a moderate number of retailers, allowing for more control over brand image.  Intensive Distribution: Products are sold through as many outlets as possible to maximize market coverage. 20. What do we mean by publicity and public relations? What is a company news release?  Publicity: The dissemination of information to the public to promote a product, brand, or company.  Public Relations (PR): The strategic communication process that builds mutually beneficial relationships between organizations and their publics.  Company News Release: An official statement issued to media outlets to announce something noteworthy about the company (e.g., new products, changes in leadership). 21. What is personal selling and sales promotion?  Personal Selling: A direct interaction between a salesperson and a customer to facilitate a sale.  Sales Promotion: Short-term incentives to encourage the purchase of a product, such as discounts, contests, or special offers. 22. What are the different types of publicity that a company may use? Types of publicity include press releases, media events, sponsorships, community engagement, and social media campaigns. 23. What do we mean by personal selling and sales management?  Personal Selling: The process of engaging with potential customers to persuade them to buy a product or service.  Sales Management: The process of planning, implementing, and controlling the sales strategy, including managing the sales force. 24. What do we mean by developing sales force objectives, determining sales force size, and recruiting and training salespeople?  Developing Sales Force Objectives: Setting clear goals and targets for the sales team.  Determining Sales Force Size: Deciding how many salespeople are needed to meet objectives effectively.   Recruiting and Training Salespeople: Attracting suitable candidates and providing them with the necessary skills and knowledge to perform their roles successfully. 25. What are some of the advantages and disadvantages of coupons, rebates, samples, and loyalty programs?  Coupons: o Advantages: Attract new customers, encourage repeat purchases. o Disadvantages: Can erode profit margins, may attract price-sensitive customers.  Rebates: o Advantages: Incentivize larger purchases, promote brand loyalty. o Disadvantages: Complex redemption process can deter customers.  Samples: o Advantages: Allow customers to try before they buy, can create buzz around a product. o Disadvantages: High cost of distribution, potential waste if samples are not used.  Loyalty Programs: o Advantages: Encourage repeat business, build customer relationships. o Disadvantages: Can be expensive to maintain, may not attract new customers. Chapter 7 1. What is branding strategy? A branding strategy is a long-term plan for the development and management of a brand to achieve specific goals. It defines how a brand will be perceived in the marketplace, including its identity, value proposition, and how it differentiates itself from competitors. A strong branding strategy helps build customer loyalty, enhances recognition, and increases market share. 2. What do we mean by brand recognition, brand loyalty, brand preference, brand equity, and brand insistence?  Brand Recognition: The extent to which consumers can identify a brand by its attributes, such as logo, packaging, or advertising. It signifies awareness but does not necessarily mean a consumer will choose that brand over others.  Brand Loyalty: A consumer's commitment to repurchase or continue using a brand despite competitors. It reflects a deeper emotional connection and trust in the brand.  Brand Preference: The tendency of consumers to favor one brand over others when making a purchase decision, often based on positive past experiences or perceived quality.   Brand Equity: The value a brand adds to a product or service based on consumer perceptions, recognition, loyalty, and associations. Strong brand equity can lead to premium pricing and greater market share.  Brand Insistence: The highest level of brand loyalty, where consumers will not accept substitutes and will go out of their way to purchase a particular brand. 3. What do we mean by differentiation and positioning? What are some differentiation strategies that firms can use?  Differentiation: The process of distinguishing a product or brand from others in the market to make it more attractive to a specific target audience. Differentiation can be achieved through various factors, including product features, quality, and customer service.  Positioning: The strategic process of creating a unique image and identity for a brand or product in the minds of consumers relative to competitors. Positioning aims to highlight the distinct benefits and attributes of the brand. Differentiation Strategies:  Product Descriptors: Using unique labels or descriptions that highlight key features (e.g., organic, gluten-free).  Product Features: Incorporating innovative features that provide added value (e.g., advanced technology, superior materials).  Customer Support Services: Offering exceptional customer service, warranties, or support that enhances the overall customer experience.  Brand Storytelling: Sharing the brand's history, values, or mission to create emotional connections with consumers.  Quality and Performance: Ensuring that the product or service consistently meets or exceeds customer expectations. 4. What do we mean by co-branding? Co-branding is a marketing strategy where two or more brands collaborate to create a combined product or service that leverages the strengths and reputations of each brand. This can enhance brand equity, expand market reach, and attract new customers. Examples include partnerships between a fast-food chain and a beverage company or luxury collaborations between fashion brands and high-end car manufacturers. 5. What do we mean by brand recognition, brand preference, and brand insistence? (These terms have already been defined in point 2.) 6. What do we mean by market positioning and repositioning?  Market Positioning: The strategy of defining how a brand or product fits into the marketplace, including its target audience, competitors, and unique selling propositions. It shapes consumer perceptions and influences marketing efforts.  Repositioning: The process of changing the market's perception of a brand or product. This can involve altering marketing strategies, targeting new customer segments, or modifying product attributes to refresh or improve the brand's image. 7. What is the product life cycle and what are some strategies that a firm can follow during the different stages of the product life cycle? What happens to competition and profits during the different stages of the product life cycle? The product life cycle (PLC) is a model that outlines the stages a product goes through from its introduction to its decline. The stages include: 1. Introduction: o Strategies: Focus on building awareness, educating consumers, and investing in marketing. Pricing strategies may include penetration pricing or skimming. o Competition: Limited as the product is new; firms may have little competition initially. o Profits: Typically low or negative due to high development and marketing costs. 2. Growth: o Strategies: Enhance distribution, optimize marketing efforts, and consider product improvements or line extensions. o Competition: Begins to increase as more competitors enter the market. o Profits: Start to rise as sales increase and costs stabilize. 3. Maturity: o Strategies: Focus on differentiation, new features, promotional strategies, and possibly lowering prices to maintain market share. o Competition: Intense, leading to price wars and increased marketing efforts. o Profits: Typically peak but may begin to decline as competition increases and market saturation occurs. 4. Decline: o Strategies: Decide whether to discontinue the product, reduce marketing costs, or seek niche markets. o Competition: Decreases as competitors exit the market or focus on more profitable products. o Profits: Decline sharply, leading to potential losses. Chapter 8 1. What do we mean by ethics and social responsibility in marketing strategy?  Ethics in Marketing: Refers to the moral principles and standards that guide behavior in the marketing process. It encompasses fairness, honesty, transparency, and respect for stakeholders.  Social Responsibility in Marketing: Refers to the obligation of companies to act in ways that benefit society, which may include environmental sustainability, community engagement, and ethical treatment of consumers and employees. Social responsibility extends beyond profit-making to consider the broader impact of business decisions. 2. What do we mean by economic and legal responsibilities; philanthropic responsibilities and sustainability?  Economic Responsibilities: The obligation of businesses to be profitable and financially viable, which supports economic growth and provides jobs.   Legal Responsibilities: The requirement for businesses to comply with laws and regulations governing their operations, ensuring fair practices and accountability.  Philanthropic Responsibilities: Voluntary actions taken by companies to contribute to societal goals, such as charitable donations, community service, and support for education and health initiatives.  Sustainability: Refers to practices that meet present needs without compromising the ability of future generations to meet their own needs, encompassing environmental stewardship and social equity. 3. What is the relationship of marketing ethics and strategy? Marketing ethics informs marketing strategy by establishing guidelines for how companies should conduct their marketing activities in a socially responsible manner. Ethical considerations shape strategic decisions, such as targeting audiences, product messaging, pricing strategies, and promotional tactics. A strong ethical foundation can enhance brand reputation, build customer loyalty, and contribute to long-term success. 4. What are some product, pricing, promotion, and supply chain ethical issues?  Product Ethical Issues: o Misleading labeling or false claims about product benefits. o Unsafe or harmful products being marketed to consumers.  Pricing Ethical Issues: o Price gouging during emergencies. o Discriminatory pricing practices that unfairly target certain groups.  Promotion Ethical Issues: o Deceptive advertising that misrepresents products. o Exploiting vulnerable populations in advertising (e.g., targeting children with unhealthy foods).  Supply Chain Ethical Issues: o Poor labor practices or unsafe working conditions in suppliers. o Environmental harm caused by sourcing practices. 5. What do we mean by “enlightened self-interest”? Enlightened self-interest is the concept that businesses can achieve long-term success by considering the well-being of their stakeholders (customers, employees, communities) alongside their own interests. It suggests that by acting ethically and responsibly, companies can build trust and loyalty, ultimately benefiting themselves in the process. 6. What is the role of top management in creating an ethical environment in a company? Top management plays a crucial role in establishing and promoting an ethical culture within an organization. They set the tone at the top by:  Modeling Ethical Behavior: Leading by example and demonstrating commitment to ethical practices.  Establishing Policies: Creating clear ethical guidelines and codes of conduct for employees.  Providing Training: Offering training programs on ethical decision-making and corporate social responsibility.   Encouraging Open Communication: Fostering an environment where employees feel comfortable reporting unethical behavior without fear of retaliation. 7. What are some of the deceptive practices in marketing, and how do firms try to regulate them? Deceptive Practices in Marketing:  False advertising claims.  Bait-and-switch tactics.  Misleading pricing strategies (e.g., hidden fees).  Concealing negative information about a product. Regulation of Deceptive Practices:  Government Agencies: Organizations like the Federal Trade Commission (FTC) in the U.S. regulate advertising practices and enforce laws against deceptive marketing.  Industry Self-Regulation: Many industries have associations that establish ethical standards and guidelines for members.  Consumer Advocacy Groups: These organizations monitor marketing practices and advocate for consumer rights. 8. What is the role of a code of conduct for a company? What are some key considerations in developing a code of conduct? Role of a Code of Conduct: A code of conduct serves as a formal document outlining the ethical principles and standards of behavior expected from employees. It provides guidance on decision-making and promotes a culture of integrity within the organization. Key Considerations in Developing a Code of Conduct:  Clarity: Ensure the code is clear and easily understood by all employees.  Relevance: Tailor the code to the specific needs and values of the organization.  Inclusiveness: Involve stakeholders in the development process to address diverse perspectives.  Enforcement: Establish procedures for reporting violations and consequences for unethical behavior.  Training: Provide ongoing training to ensure employees understand and adhere to the code. 9. Why is the connection of marketing ethics and leadership so important? The connection between marketing ethics and leadership is crucial because ethical leadership sets the standard for acceptable behavior within an organization. Leaders who prioritize ethics create a culture of trust, accountability, and transparency, which can positively influence employee morale and customer relationships. Ethical leadership fosters a positive reputation, enhances brand loyalty, and can lead to sustainable business success. 10. What is the connection between social responsibility and marketing performance? There is a growing recognition that social responsibility can enhance marketing performance. Companies that engage in socially responsible practices often enjoy:  Increased Brand Loyalty: Consumers are more likely to support brands that align with their values.  Positive Brand Reputation: Ethical practices can lead to favorable perceptions and word-of-mouth recommendations.  Competitive Advantage: Socially responsible companies can differentiate themselves in the marketplace, attracting conscious consumers.  Long-term Profitability: Investing in social responsibility can lead to cost savings (e.g., through sustainability efforts) and better risk management.