Transcript Marketing Concepts

Marketing Concepts
Joseph Lewis Aguirre
Non-Profit Organizations
Internet
Nonprofit
Center
About
Slide 12-19
Marketing
AMA Definition of Marketing
Marketing is an organizational function
and a set of processes for creating,
communicating, and delivering value to
customers and for managing customer
relationships in ways that benefit the
organization and its stakeholders.
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Exchange
Exchange is the trade of things of value
between buyer and seller so that each is
better off after the trade.
72
Market
A market consists of people with both the
desire and ability to buy a specific
product.
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Target Market
The target market consists of one or
more specific groups of potential
customers toward which an organization
directs its marketing program.
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Marketing Mix
The marketing mix consists of
the marketing manager’s controllable
factors—product, price, promotion, and
place (the 4Ps)—that can be used to solve
a marketing problem.
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Environmental Factors
Environmental factors are the
uncontrollable factors involving social,
economic, technological, competitive, and
regulatory forces.
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Customer Value
Customer value is the unique
combination of benefits received by
targeted buyers that includes quality,
price, convenience, on-time delivery, and
both before-sale and after-sale service.
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Relationship Marketing
Relationship marketing links the
organization to its individual customers,
employees, suppliers, and other partners
for their mutual long-term benefits.
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Marketing Program
A marketing program is a plan that
integrates the marketing mix to provide
a good, service, or idea to prospective
buyers.
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Marketing Concept
The marketing concept is the idea that
an organization should (1) strive to satisfy
the perceived needs of consumers (2)
while also trying to achieve the
organization’s goals.
NOTE: As perceived by the customer
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Market Orientation
An organization that has a market
orientation focuses its efforts on
(1) continuously collecting information
about customers’ needs, (2) sharing this
information across departments, and
(3) using it to create customer value.
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Customer Relationship
Management (CRM)
Customer relationship management
(CRM) is the process of identifying
prospective buyers, understanding them
intimately, and developing favorable
long-term perceptions of the organization
and its offerings so that buyers will
choose them in the marketplace.
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Societal Capital Marketing
The societal marketing concept is the
view that an organization should satisfy
the needs of consumers in a way that
provides for society’s well-being.
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Macromarketing
Macromarketing is the study of the
aggregate flow of a nation’s goods and
services to benefit society.
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Micromarketing
Micromarketing is how an individual
organization directs its marketing
activities and allocates its resources to
benefit its customers.
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Ultimate (End Users) Consumers
Ultimate consumers are the people who
use the goods and services purchased for
a household.
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Organizational Buyers
Organizational buyers are those
manufacturers, wholesalers, retailers,
and government agencies that buy goods
and services for their own use or for
resale.
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Utility
Utility is the benefits or customer value
received by users of the product.
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Profit
Profit is the reward to a business firm for
the risk it undertakes in offering a
product for sale. It is also the money left
over after a firm’s total expenses are
subtracted from its total revenues.
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Corporate Level
The corporate level is the level in an
organization where top management
directs overall strategy for the entire
organization.
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Business Unit
A business unit is an organization that
markets a set of related products to a
clearly defined group of customers.
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Business Unit Level
The business unit level is the level in an
organization where business unit
managers set the direction for their
products and markets to exploit valuecreating opportunities.
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Functional Level
The functional level is the level in an
organization where groups of specialists
actually create value for the organization.
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Cross-functional Teams
Cross-functional teams are a small
number of people from different
departments in an organization who are
mutually accountable to a common set of
performance goals.
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Mission
Mission is a statement of the
organization’s scope, often identifying its
customers, markets, products, technology,
and values.
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Stakeholders
Stakeholders are the people who are
affected by what the company does and
how well it performs.
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Organizational Culture
Organizational culture is a set of values,
ideas, and attitudes that is learned and
shared among the members of an
organization.
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Goals or Objectives
Goals or objectives convert the mission
into targeted levels of performance to be
achieved, often by a specific time.
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Market Share
Market share is the ratio of sales revenue
of the firm to the total sales revenue of all
firms in the industry, including the firm
itself.
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Competencies
Competencies are an organization’s
special capabilities, including skills,
technologies, and resources that
distinguish it from other organizations.
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Competitive Advantage
Competitive advantage is a unique
strength relative to competitors, often
based on quality, time, cost, or
innovation.
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Quality
Quality consists of those features and
characteristics of a product that influence
its ability to satisfy customer needs.
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Benchmarking
Benchmarking involves discovering how
others do something better than your own
firm so you can imitate or leapfrog
competition.
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Strategic Marketing Process
The strategic marketing process is the
approach whereby an organization
allocates its marketing mix resources to
reach its target markets.
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Marketing Plan
A marketing plan is a road map for the
marketing activities of an organization for
a specified future period of time, such as
one year or five years.
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Situation Analysis
Situation analysis involves taking stock
of where a firm or product has been
recently, where it is now, and where it is
headed in terms of the organization’s
plans and the external factors and trends
affecting it.
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SWOT Analysis
SWOT analysis is an acronym describing
an organization’s appraisal of its internal
Strengths and Weaknesses and its
external Opportunities and Threats.
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Market Segmentation
Market segmentation involves
aggregating prospective buyers into
groups, or segments, that (1) have
common needs and (2) will respond
similarly to a marketing action.
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Points of Difference
Points of difference are those
characteristics of a product that make it
superior to competitive substitutes.
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Marketing Strategy
A marketing strategy is the means by
which a marketing goal is to be achieved,
usually characterized by a specific target
market and a marketing program to reach
it.
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Marketing Tactics
Marketing tactics are detailed
day-to-day operational decisions essential
to the overall success of marketing
strategies.
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Environmental Scanning
Environmental scanning is the process
of continually acquiring information on
events occurring outside the organization
to identify and interpret potential trends.
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Social Forces
The social forces of the environment
include the demographic characteristics
of the population and its values.
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Demographics
Demographics describes a population
according to selected characteristics such
as age, gender, ethnicity, income, and
occupation.
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Baby Boomers
Baby boomers is the generation of
children born between 1946 and 1964.
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Generation X
Generation X includes the 15% of the
U.S. population born between 1965 and
1976.
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Generation Y
Generation Y includes the 72 million
Americans born between 1977 and 1994.
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Blended Family
A blended family is a family formed by
the merging into a single household of
two previously separated units.
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Multicultural Marketing
Multicultural marketing consists of
combinations of the marketing mix that
reflect the unique attitudes, ancestry,
communication preferences, and lifestyles
of different races.
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Culture
Culture incorporates the set of values,
ideas, and attitudes that are learned and
shared among the members of a group.
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Value Consciousness
Value consciousness is the concern for
obtaining the best quality, features, and
performance of a product or service for a
given price.
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Economy
The economy pertains to the income,
expenditures, and resources that affect the
cost of running a business and household.
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Gross Income
Gross income is the total amount of
money made in one year by a person,
household, or family unit.
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Disposable Income
Disposable income is the money a
consumer has left after paying taxes
to use for food, shelter, clothing, and
transportation.
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Discretionary Income
Discretionary income is the money
that remains after paying for taxes and
necessities.
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Technology
Technology refers to inventions or
innovations from applied science or
engineering research.
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Marketspace
Marketspace is an information- and
communication-based electronic
exchange environment mostly occupied
by sophisticated computer and
telecommunication technologies and
digitized offerings.
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Electronic Commerce
Electronic commerce is any activity
that uses some form of electronic
communication in the inventory,
exchange, advertisement, distribution,
and payment of goods and services.
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Intranet
An Intranet is an Internet-based
network used within the boundaries
of an organization.
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Extranets
Extranets use Internet-based
technologies to permit communication
between a company and its suppliers,
distributors, and other partners.
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Competition
Competition refers to the alternative
firms that could provide a product to
satisfy a specific market’s need.
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Barriers to Entry
Barriers to entry are business practices
or conditions that make it difficult for
new firms to enter the market.
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Regulation
Regulation consists of restrictions state
and federal laws place on business with
regard to the conduct of its activities.
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Consumerism
Consumerism is a grassroots movement
started in the 1960s to increase the
influence, power, and rights of consumers
in dealing with institutions.
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Self-Regulation
Self-regulation is an alternative to
government control where where an
industry attempts to police itself.
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Ethics
Ethics are the moral principles and values
that govern the actions and decisions of
an individual or group.
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Laws
Laws are society’s values and standards
that are enforceable in the courts.
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Caveat Emptor
Caveat emptor is the legal concept of
“let the buyer beware” that was pervasive
in American business culture prior to the
1960s.
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Consumer Bill of Rights (1962)
The Consumer Bill of Rights (1962)
is a law that codified the ethics of
exchange between buyers and sellers,
including the rights (1) to safety,
(2) to be informed, (3) to choose, and
(4) to be heard.
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Economic Espionage
Economic espionage is the clandestine
collection of trade secrets or proprietary
information about a company’s
competitors.
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Code of Ethics
A code of ethics is a formal statement of
ethical principles and rules of conduct.
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Whistle-blowers
Whistle-blowers are employees who
report unethical or illegal actions
of their employers.
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Moral Idealism
Moral idealism is a personal moral
philosophy that considers certain
individual rights or duties as universal,
regardless of the outcome.
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Utilitarianism
Utilitarianism is a personal moral
philosophy that focuses on “the greatest
good for the greatest number,” by
assessing the costs and benefits of the
consequences of ethical behavior.
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Social Responsibility
Social responsibility means that
organizations are a part of a larger society
and are accountable to that society for
their actions.
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Green Marketing
Green marketing consists of marketing
efforts to produce, promote, and reclaim
environmentally sensitive products.
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ISO 14000
ISO 14000 consists of worldwide
standards for environmental quality and
green marketing practices developed by
the International Standards Organization
(ISO).
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Cause Marketing
Cause 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.
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Social Audit
A social audit is a systematic assessment
of a firm’s objectives, strategies, and
performance in terms of social
responsibility.
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Sustainable Development
Sustainable development involves
conducting business in a way that protects
the natural environment while making
economic progress.
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Consumer Behavior
Consumer behavior consists of the
actions a person takes in purchasing and
using products and services, including the
mental and social processes that come
before and after these actions.
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Purchase Decision Process
The purchase decision process is the
stages a buyer passes through in making
choices about which products and
services to buy.
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Evaluative Criteria
Evaluative criteria are the factors which
represent both the objective attributes of
a brand and the subjective ones a
consumer uses to compare different
products and brands.
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Consideration Set
A consideration set is the group of
brands that a consumer would consider
acceptable from among all the brands in
the product class of which he or she is
aware.
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Cognitive Dissonance
Cognitive dissonance is the feeling of
postpurchase psychological tension or
anxiety consumers may experience when
faced with two or more highly attractive
alternatives.
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Involvement
Involvement consists of the personal,
social, and economic significance of the
purchase to the consumer.
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Situational Influences
Situational influences consist of the five
aspects of the purchase situation that
impacts the consumer’s purchase decision
process: (1) the purchase task, (2) social
surroundings, (3) physical surroundings,
(4) temporal effects, and (5) antecedent
states.
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Motivation
Motivation is the energizing force that
stimulates behavior to satisfy a need.
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Personality
Personality refers to a person’s consistent
behaviors or responses to recurring
situations.
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Self-Concept
Self-concept is the way people see
themselves and the way they believe others
see them.
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Perception
Perception is the process by which an
individual selects, organizes, and
interprets information to create a
meaningful picture of the world.
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Subliminal Perception
Subliminal perception is seeing or
hearing messages without being aware
of them.
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Perceived Risk
Perceived risk represents the anxieties
felt because the consumer cannot
anticipate the outcomes of a purchase
but believes that there may be negative
consequences.
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Learning
Learning refers to those behaviors that
result from (1) repeated experience and
(2) reasoning.
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Brand Loyalty
Brand loyalty is a favorable attitude
toward and consistent purchase of a
single brand over time.
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Attitude
An attitude is a “learned predisposition
to respond to an object or class of objects
in a consistently favorable or unfavorable
way.”
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Beliefs
Beliefs are a consumer’s subjective
perception of how a product or brand
performs on different attributes based on
personal experience, advertising, and
discussions with other people.
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Lifestyle
Lifestyle is a mode of living that is
identified by how people spend their time
and resources, what they consider
important in their environment, and what
they think of themselves and the world
around them.
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Opinion Leaders
Opinion leaders are individuals who
exert direct or indirect social influence
over others.
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Word of Mouth
Word of mouth is the influencing of
people during conversations.
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Reference Groups
Reference groups are people to whom
an individual looks as a basis for
self-appraisal or as a source of personal
standards.
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Consumer Socialization
Consumer socialization is the process
by which people acquire the skills,
knowledge, and attitudes necessary to
function as consumers.
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Family Life Cycle
The family life cycle describes the
distinct phases that a family progresses
through from formation to retirement,
each phase bringing with it identifiable
purchasing behaviors.
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Social Class
Social class is the relatively permanent,
homogeneous divisions in a society into
which people sharing similar values,
interests, and behavior can be grouped.
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Subcultures
Subcultures are subgroups within the
larger, or national, culture with unique
values, ideas, and attitudes.
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Business Marketing
Business marketing is the marketing
of goods and services to companies,
governments, or not-for-profit
organizations for use in the creation of
goods and services that they can produce
and market to others.
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Organizational Buyers
Organizational buyers are those
manufacturers, wholesalers, retailers, and
government agencies that buy goods and
services for their own use or for resale.
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Industrial Firms
Industrial firms are organizational
buyers that in some way reprocesses a
product or service they buy before selling
it again to the next buyer.
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Resellers
Resellers are wholesalers and retailers
that buy physical products and resell them
again without any processing.
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Government Units
Government units are the federal, state,
and local agencies that buy goods and
services for the constituents they serve.
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North American Industry
Classification System (NAICS)
The NAICS provides common industry
definitions for Canada, Mexico, and the
United States, which makes easier the
measurement of economic activity in the
three member countries of the North
American Free Trade Agreement
(NAFTA).
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Derived Demand
Derived demand means the demand
for industrial products and services is
driven by, or derived from, demand for
consumer products and services.
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Organizational Buying Criteria
Organizational buying criteria are
the objective attributes of the supplier’s
products and services and the capabilities
of the supplier itself.
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ISO 9000
ISO 9000 consists of standards for
registration and certification of a
manufacturer’s quality management
and assurance system based on an
on-site audit of practices and procedures
developed by the International Standards
Organization (ISO).
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Reverse Marketing
Reverse marketing involves the
deliberate effort by organizational buyers
to build relationships that shape suppliers’
products, services, and capabilities to fit a
buyer’s needs and those of its customers.
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Reciprocity
Reciprocity is an industrial buying
practice in which two organizations
agree to purchase each other’s products
and services.
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Supply Partnership
A supply partnership exists when a
buyer and its supplier adopt mutually
beneficial objectives, policies, and
procedures for the purpose of lowering
the cost or increasing the value of
products and services delivered to the
ultimate consumer.
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Buying Center
A buying center is the group of people
in an organization who participate in the
buying process and share common goals,
risks, and knowledge important to a
purchase decision.
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Buy Classes
Buy classes consist of three types
of buying situations: straight rebuy;
modified rebuy; and new buy.
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Organizational Buying Behavior
Organizational buying behavior is
the decision-making process that
organizations use to establish the need
for products and services and identify,
evaluate, and choose among alternative
brands and suppliers.
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Make-Buy Decision
A make-buy decision is an evaluation of
whether components and assemblies will
be purchased from outside suppliers or
built by the company itself.
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Value Analysis
Value analysis is a systematic appraisal
of the design, quality, and performance of
a product to reduce purchasing costs.
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Bidder’s List
A bidder’s list is a list of firms believed
to be qualified to supply a given item.
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E-Marketplaces
E-marketplaces are online trading
communities that bring together buyers
and supplier organizations to make
possible the real time exchange of
information, money, products, and
services.
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Traditional Auction
A traditional auction is an online auction
in which a seller puts an item up for sale
and would-be buyers are invited to bid in
competition with each other.
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Reverse Auction
A reverse auction is an online auction in
which a buyer communicates a need for a
product or service and would-be suppliers
are invited to bid in competition with each
other.
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Countertrade
Countertrade is the practice of using
barter rather than money for making
global sales.
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Gross Domestic Product
Gross domestic product is the monetary
value of all goods and services produced
in a country during one year.
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Balance of Trade
Balance of trade is the difference
between the monetary value of a nation’s
exports and imports.
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Economic Espionage Act (1996)
The Economic Espionage Act (1996) is
a law that makes the theft of trade secrets
by foreign entities a federal crime in the
United States.
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Protectionism
Protectionism is the practice of shielding
one or more industries within a country’s
economy from foreign competition
through the use of tariffs or quotas.
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Tariffs
Tariffs are a government tax on goods
or services entering a country, primarily
serving to raise prices on imports.
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Quota
A quota is a restriction placed on the
amount of of a product allowed to enter
or leave a country.
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World Trade Organization
The World Trade Organization (WTO)
is a permanent institution that sets rules
governing trade between its members
through panels of trade experts who
decide on trade disputes between
members and issue binding decisions.
82
Global Competition
Global competition exists when firms
originate, produce, and market their
products and services worldwide.
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Strategic Alliances
Strategic alliances are agreements
among two or more independent firms
to cooperate for the purpose of achieving
common goals.
84
Multidomestic Marketing
Strategy
A multidomestic marketing strategy is
used by multinational firms that have as
many different product variations, brand
names, and advertising programs as
countries in which they do business.
85
Global Marketing Strategy
A global marketing strategy is used
by transnational firms that employ the
practice of standardizing marketing
activities when there are cultural
similarities and adapting them when
cultures differ.
86
Global Brand
A global brand is a brand marketed
under the same name in multiple countries
with similar and centrally coordinated
marketing programs.
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Global Consumers
Global consumers consist of customer
groups living in many different countries
or regions of the world who have similar
needs or seek similar features and benefits
from products or services.
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Cross-Cultural Analysis
Cross-cultural analysis involves the
study of similarities and differences
among consumers in two or more nations
or societies.
89
Values
Values is a society’s personally or
socially preferable modes of conduct
or states of existence that tend to persist
over time.
90
Customs
Customs are what is considered normal
and expected about the way people do
things in a specific country.
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Foreign Corrupt Practices
Act (1977)
The Foreign Corrupt Practices Act
(1977) is a law, amended by the
International Anti-Dumping and Fair
Competition Act (1998), that makes it a
crime for U.S. corporations to bribe an
official of a foreign government or
political party to obtain or retain business
in a foreign country.
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Cultural Symbols
Cultural symbols are things that represent
ideas or concepts.
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Semiotics
Semiotics are a field of study that
examines the correspondence between
symbols and their role in the assignment
of meaning for people.
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Back Translation
Back translation is when a translated
word or phrase is retranslated into the
original language by a different
interpreter to catch errors.
95
Consumer Ethnocentrism
Consumer ethnocentrism is the tendency
to believe that it is inappropriate, indeed
immoral, to purchase foreign-made
products.
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Currency Exchange Rate
A currency exchange rate is the price of
one country’s currency expressed in terms
of another country’s currency.
97
Exporting
Exporting is producing goods in one
country and selling them in another
country.
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Joint Venture
A joint venture is when a foreign country
and a local firm invest together to create a
local business.
99
Direct Investment
Direct investment entails a domestic firm
actually investing in and owning a foreign
subsidiary or division.
100
Dumping
Dumping is when a firm sells a product
in a foreign country below its domestic
price or below its actual cost.
101
Gray Market
A gray market is a situation where
products are sold through unauthorized
channels of distribution. Also called
parallel importing.
102
Marketing Research
Marketing research is the process
of defining a marketing problem and
opportunity, systematically collecting
and analyzing information, and
recommending actions.
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Decision
A decision is a conscious choice from
among two or more alternatives.
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Measures of Success
Measures of success are criteria or
standards used in evaluating proposed
solutions to a problem.
83
Constraints
Constraints in a decision are the
restrictions placed on potential solutions
to a problem.
84
Sampling
Sampling involves selecting
representative elements from a
population.
85
Probability Sampling
Probability sampling involves using
precise rules to select the sample such
that each element of the population has a
specific known chance of being selected.
86
Nonprobability Sampling
Nonprobability sampling involves using
arbitrary judgments to select the sample
so that the chance of selecting a particular
element may be unknown or 0.
87
Statistical Inference
Statistical inference involves drawing
conclusions about a population from a
sample taken from that population.
88
Data
Data are the facts and figures related
to the problem, and are divided into two
main parts: secondary data and primary
data.
89
Secondary Data
Secondary data are facts and figures
that have already been recorded before
the project at hand.
90
Primary Data
Primary data are facts and figures
that are newly collected for the project.
91
Observational Data
Observational data are the facts and
figures obtained by watching, either
mechanically or in person, how people
actually behave.
92
Questionnaire Data
Questionnaire data are the facts and
figures obtained by asking people about
their attitudes, awareness, intentions, and
behaviors.
93
Information Technology
Information technology involves a
computer and communication system to
satisfy an organization’s needs for data
storage, processing, and access.
94
Data Mining
Data mining is the extraction of hidden
predictive information from large
databases.
95
Market Segments
Market segments are the relatively
homogeneous groups of prospective
buyers that result from the market
segmentation process.
90
Product Differentiation
Product differentiation is a strategy
that involves a firm’s using different
marketing mix activities to help
consumers perceive the product as
being different and better than
competing products.
91
Market-Product Grid
A market-product grid is a framework
to relate the market segments of potential
buyers to products offered or potential
marketing actions by the firm.
92
Synergy
Synergy is the increased customer value
achieved through performing
organizational functions more efficiently.
93
Usage Rate
Usage rate is the quantity consumed or
patronage (store visits) during a specific
period of time.
94
80/20 Rule
The 80/20 rule is a concept that suggests
80 percent of a firm’s sales are obtained
from 20 percent of its customers.
95
Product Positioning
Product positioning refers to the place
an offering occupies in consumers’ minds
on important attributes relative to
competitive products.
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Product Repositioning
Product repositioning involves
changing the place an offering
occupies in a consumer’s mind
relative to competitive products.
97
Perceptual Map
A perceptual map is a means of
displaying or graphing in two dimensions
the location of products or brands in the
minds of consumers to enable a manager
to see how consumers perceive competing
products or brands relative to its own and
then take marketing actions.
98
Market Potential
Market potential is the maximum total
sales of a product by all firms to a
segment during a specified time period
under specified environmental conditions
and marketing efforts of the firm. Also
called industry potential.
99
Industry Potential
Industry potential is the maximum total
sales of a product by all firms to a
segment during a specified time period
under specified environmental conditions
and marketing efforts of the firm. Also
called market potential.
100
Sales Forecast
A sales forecast refers to the total sales of
a product that a firm expects to sell during
a specified time period under specified
environmental conditions and its own
marketing efforts. Also called company
forecast.
101
Company Forecast
A company forecast refers to the total
sales of a product that a firm expects to
sell during a specified time period under
specified environmental conditions and its
own marketing efforts. Also called sales
forecast.
102
Direct Forecast
A direct forecast involves estimating the
value to be forecast without any
intervening steps.
103
Lost-Horse Forecast
A lost-horse forecast involves making a
forecast using the last known value and
modifying it according to positive or
negative factors expected in the future.
104
Survey of
Buyers’ Intentions Forecast
A survey of buyers’ intentions forecast
involves asking prospective customers if
they are likely to buy the product during
some future time period.
105
Salesforce Survey Forecast
A salesforce survey forecast involves
asking the firm’s salespeople to estimate
sales during a coming period.
106
Trend Extrapolation
Trend extrapolation involves extending
a pattern observed in past data into the
future.
107
Linear Trend Extrapolation
Linear trend extrapolation involves
using a straight line to extend a pattern
observed in past data into the future.
108
Product
A product is a good, service, or idea
consisting of a bundle of tangible and
intangible attributes that satisfies
consumers and is received in exchange
for money or some other unit of value.
82
Product Line
A product line is a group of products
that are closely related because they
satisfy a class of needs, are used together,
are sold to the same customer group, are
distributed through the same type of
outlets, or fall within a given price range.
83
Product Mix
The product mix is the number of
product lines offered by a company.
84
Consumer Goods
Consumer goods are products purchased
by the ultimate consumer.
85
Business Goods
Business goods are products that assist
directly or indirectly in providing
products for resale. Also called as B2B
goods, industrial goods, or organizational
goods.
86
Convenience Goods
Convenience goods are items that
the consumer purchases frequently,
conveniently, and with a minimum
of shopping effort.
87
Shopping Goods
Shopping goods are items for which the
consumer compares several alternatives
on criteria, such as price, quality, or style.
88
Specialty Goods
Specialty goods are items that a
consumer makes a special effort to
search out and buy.
89
Unsought Goods
Unsought goods are items that the
consumer either does not know about or
knows about but does not initially want.
90
Production Goods
Production goods are items used in the
manufacturing process that become part
of the final product.
91
Support Goods
Support goods are items used to assist in
producing other goods and services.
92
Protocol
A protocol is a statement that, before
product development begins, identifies:
(1) a well-defined target market;
(2) specific customers’ needs, wants,
and preferences; and (3) what the
product will be and do.
93
New-Product Process
The new-product process consists of
seven stages a firm goes through to
identify business opportunities and
convert them to a salable good or service.
94
New-Product Strategy
Development
New-product strategy development is
the stage of the new-product process that
defines the role for a new product in
terms of the firm’s overall corporate
objectives.
95
Six Sigma
Six Sigma is a means to “delight the
customer” by achieving quality through
a highly disciplined process to focus on
developing and delivering near-perfect
products and services.
96
Idea Generation
Idea generation is the stage of the newproduct process that involves developing
a pool of concepts as candidates for new
products.
97
Screening and Evaluation
Screening and evaluation is the stage
of the new-product process that involves
internal and external evaluations of the
new-product ideas to eliminate those
that warrant no further effort.
98
Business Analysis
Business analysis is the stage of the
new-product process that involves
specifying the product features and
marketing strategy and making
necessary financial projections needed
to commercialize a product.
99
Development
Development is the stage of the newproduct process that involves turning
the idea on paper into a prototype.
100
Market Testing
Market testing is the stage of the
new-product process that involves
exposing actual products to prospective
consumers under realistic purchase
conditions to see if they will buy.
101
Commercialization
Commercialization is the stage of the
new-product process that involves
positioning and launching a new product
in full-scale production and sales.
102
Slotting Fee
A slotting fee is a payment a
manufacturer makes to place a
new item on a retailer’s shelf.
103
Failure Fee
A failure fee is a penalty payment a
manufacturer makes to compensate a
retailer for sales its valuable shelf space
failed to make.
104
Product Life Cycle
The product life cycle describes the
stages a new product goes through in the
marketplace: introduction, growth,
maturity, and decline.
71
Product Class
A product class is the entire product
category or industry.
72
Product Form
The product form pertains to variations
of a product within the product class.
73
Product Modification
Product modification involves altering
a product’s characteristic, such as its
quality, performance, or appearance, to
try to increase the product’s sales.
74
Market Modification
Market modification is a strategy in
which a company tries to find new
customers, increase a product’s use
among existing customers, or create
new use situations.
75
Trading Up
Trading up involves adding value to
a product (or line) through additional
features or higher-quality materials.
76
Trading Down
Trading down involves reducing the
number of features, quality, or price.
77
Downsizing
Downsizing involves reducing the
content of packages without changing
package size and maintaining or
increasing the package price.
78
Branding
Branding is a basic decision in marketing
products in which an organization uses a
name, phrase, design, or symbols, or
combination of these to identify its
products and distinguish them from those
of competitors.
79
Brand Name
A brand name is any word, device
(design, shape, sound, or color), or
combination of these used to distinguish a
seller’s goods or services.
80
Trade Name
A trade name is a commercial, legal
name under which a company does
business.
81
Trademark
A trademark identifies that a firm has
legally registered its brand name or trade
name so the firm has its exclusive use,
thereby preventing others from using it.
82
Brand Personality
A brand personality is a set of human
characteristics associated with a brand
name.
83
Brand Equity
Brand equity is the added value a given
brand name gives to a product beyond the
functional benefits provided.
84
Brand Licensing
Brand licensing is a contractual
agreement whereby one company
(licensor) allows its brand name(s) or
trademark(s) to be used with products or
services offered by another company
(licensee) for a royalty or fee.
85
Multiproduct Branding
Multiproduct branding is a branding
strategy in which a company uses one
name for all its products in a product
class.
86
Co-Branding
Co-branding is a branding strategy that
involves the practice of the pairing of two
brand names of two manufacturers on a
single product.
87
Multibranding
Multibranding is a branding strategy that
involves giving each product a distinct
name when each brand is intended for a
different market segment.
88
Private Branding
Private branding is a branding strategy
used when a company manufactures
products but sells them under the brand
name of a wholesaler or retailer. Also
called private labeling or reseller
branding.
89
Mixed Branding
Mixed branding is a branding strategy
where a firm markets products under its
own name(s) and that of a reseller
because the segment attracted to the
reseller is different from its own market.
90
Packaging
Packaging is a component of a product
that refers to any container in which it is
offered for sale and on which label
information is conveyed.
91
Label
A label is 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.
92
Warranty
A warranty is a statement indicating the
liability of the manufacturer for product
deficiencies.
93
Services
Services are intangible activities or
benefits that an organization provides
to consumers in exchange money or
something else of value.
61
Four I’s of Service
The four I’s of service are the four
unique elements to services: intangibility,
inconsistency, inseparability, and
inventory.
62
Idle Production Capacity
Idle production capacity occurs when
the service provider is available but there
is no demand.
63
Service Continuum
The service continuum is a range from
the tangible to the intangible or gooddominant to service-dominant offerings
available in the marketplace.
64
Gap Analysis
Gap analysis is a type of analysis that
identifies the differences between a
consumer’s expectations about and
experiences with a service based on
dimensions of service quality.
65
Customer Contact Audit
A customer contact audit is a flowchart
of the points of interaction between a
consumer and a service provider.
66
Internal Marketing
Internal marketing is the notion that
a service organization must focus on its
employees, or internal market, before
successful programs can be directed at
customers.
67
Capacity Management
Capacity management involves
integrating the service component of the
marketing mix with efforts to influence
consumer demand.
68
Off-Peak Pricing
Off-peak pricing consists of charging
different prices during different times
of the day or days of the week to reflect
variations in demand for the service.
69
Price (P)
Price (P) is the money or other
considerations (including other goods and
services) exchanged for the ownership or
use of a good or service.
66
Barter
Barter is the practice of exchanging
goods and services for other goods and
services rather than for money.
67
Value
Value is the ratio of perceived benefits
to price; or Value = (Perceived benefits
divided by Price).
68
Value-Pricing
Value-pricing is the practice of
simultaneously increasing product and
service benefits while maintaining or
decreasing price.
69
Profit Equation
A firm’s profit equation is as follows:
Profit = Total revenue − Total cost; or
Profit = (Unit price × Quantity sold)
− Total cost.
70
Pricing Objectives
Pricing objectives involve specifying
the role of price in an organization’s
marketing and strategic plans.
71
Pricing Constraints
Pricing constraints involve factors that
limit the range of prices a firm may set.
72
Demand Curve
A demand curve is a graph relating the
quantity sold and price, which shows the
maximum number of units that will be
sold at a given price.
73
Demand Factors
Demand factors are factors that
determine consumers’ willingness and
ability to pay for goods and services.
74
Total Revenue (TR)
Total revenue (TR) is the total money
received from the sale of a product.
Total revenue (TR) = unit price (P)
× the quantity sold (Q) or TR = P × Q.
75
Average Revenue (AR)
Average revenue (AR) is the average
amount of money received for selling
one unit of a product, or simply the
price of that unit.
76
Marginal Revenue (MR)
Marginal revenue (MR) is the change in
total revenue that results from producing
and marketing one additional unit.
77
Price Elasticity of Demand
Price elasticity of demand is the
percentage change in quantity demanded
relative to a percentage change in price.
78
Total Cost (TC)
Total cost (TC) is the total expense
incurred by a firm in producing and
marketing a product. Total cost (TC)
equals the sum of fixed cost (FC) and
variable cost (VC) or TC = FC + VC.
79
Fixed Cost (FC)
Fixed cost (FC) is the sum of the
expenses of the firm that are stable
and do not change with the quantity
of a product that is produced and sold.
80
Variable Cost (VC)
Variable cost (VC) is the sum of the
expenses of the firm that vary directly
with the quantity of a product that is
produced and sold.
81
Unit Variable Cost (UVC)
Unit variable cost (UVC) is variable cost
expressed on a per unit basis.
82
Marginal Cost (MC)
Marginal cost (MC) is the change in
total cost that results from producing
and marketing one additional unit of a
product.
83
Marginal Analysis
Marginal analysis is a continuing,
concise trade-off of incremental costs
against incremental revenues.
84
Break-Even Analysis
Break-even analysis is a technique that
analyzes the relationship between total
revenue and total cost to determine
profitability at various levels of output.
85
Break-Even Point (BEP)
Break-even point (BEP) is the quantity
at which total revenue and total cost are
equal or BEP = (FC ÷ (P−UVC)).
86
Break-Even Chart
Break-even chart is a graphic
presentation of the break-even analysis
that shows when total revenue and total
cost intersect to identify profit or loss
for a given quantity sold.
87
Skimming Pricing
Skimming pricing involves setting the
highest initial price that customers really
desiring the product are willing to pay.
67
Penetration Pricing
Penetration pricing involves setting a
low initial price on a new product to
appeal immediately to the mass market.
68
Prestige Pricing
Prestige pricing involves setting a high
price so that quality- or status-conscious
consumers will be attracted to the product
and buy it.
69
Price Lining
Price lining involves setting a the price of
a line of products at a number of different
specific pricing points.
70
Odd-Even Pricing
Odd-even pricing involves setting prices a
few dollars or cents under an even number.
71
Target Pricing
Target pricing involves estimating the price
that the ultimate consumer would be willing to
pay for a product, working backward through
markups taken by retailers and wholesalers to
determine what price is charged to wholesalers,
and then deliberately adjusting the composition
and features of a product to achieve the target
price to consumers.
72
Bundle Pricing
Bundle pricing involves the marketing of
two or more products in a single package
price.
73
Yield Management Pricing
Yield management pricing involves the
charging of different prices to maximize
revenue for a set amount of capacity at
any given time.
74
Standard Markup Pricing
Standard markup pricing involves
adding a fixed percentage to the cost of
all items in a specific product class.
75
Cost-Plus Pricing
Cost-plus pricing involves summing the
total unit cost of providing a product or
service and adding a specific amount to
the cost to arrive at a price.
76
Experience Curve Pricing
Experience curve pricing is a method of
pricing based on the learning effect,
which holds that the unit cost of many
products and services declines by 10
percent to 30 percent each time a firm’s
experience at producing and selling them
doubles.
77
Target Profit Pricing
Target profit pricing involves setting an
annual target of a specific dollar volume
of profit.
78
Target Return-On-Sales Pricing
Target return-on-sales pricing involves
setting a price to achieve a profit that is a
specified percentage of the sales volume.
79
Target Return-On-Investment
Pricing
Target return-on-investment pricing
involves setting a price to achieve an
annual target return-on-investment (ROI).
80
Customary Pricing
Customary pricing involves setting a
price that is dictated by tradition, a
standardized channel of distribution,
or other competitive factors.
81
Above-, At-, or Below-Market
Pricing
Above-, at-, or below-market pricing
involves setting a market price for a product
or product class based on a subjective feel for
the competitors’ price or market price as the
benchmark.
82
Loss-Leader Pricing
Loss-leader pricing involves deliberately
selling a product below its customary
price, not to increase sales, but to attract
customers’ attention in hopes that they
will buy other products as well.
83
One-Price Policy
A one-price policy involves setting one
price for all buyers of a product or
service. Also called fixed pricing.
84
Flexible-Price Policy
A flexible-price policy involves setting
different prices for products and services
depending on individual buyers and
purchase situations. Also called dynamic
pricing.
85
Product Line Pricing
Product line pricing involves setting the
price of a line of products at a number of
different specific pricing points.
86
Price War
A price war involves successive price
cutting by competitors to increase or
maintain their unit sales or market share.
87
Quantity Discounts
Quantity discounts are reductions in unit
costs for a larger order.
88
Promotional Allowances
Promotional allowances are cash
payments or extra amount of “free goods”
awarded sellers in the channel of
distribution for undertaking certain
advertising or selling activities to promote
a product.
89
Everyday Low Pricing
Everyday low pricing is the practice of
replacing promotional allowances with
lower manufacturer list prices.
90
FOB Origin Pricing
FOB origin pricing is the price the seller
quotes that includes the cost of loading the
product onto the vehicle. The seller names the
location (factory or warehouse) where the
loading is to occur. The buyer becomes
responsible for picking the specific mode of
transportation and paying for all transportation
and handling costs.
91
Uniform Delivered Pricing
Uniform delivered pricing is the price
the seller quotes includes all
transportation costs.
92
Basing-Point Pricing
Basing-point pricing involves selecting
one or more geographical locations
(basing point) from which the list price
for products plus freight expenses are
charged to the buyer.
93
Price Fixing
Price fixing involves a conspiracy among
firms to set prices for a product.
94
Price Discrimination
Price discrimination is the practice of
charging different prices to different
buyers for goods of like grade and quality.
95
Predatory Pricing
Predatory pricing is the practice of
charging a very low price for a product
with the intent of driving competitors
out of business.
96
Marketing Channel
A marketing channel consists of
individuals and firms involved in the
process of making a product or service
available for use or consumption by
consumers or industrial users.
69
Direct Channel
A direct channel is a marketing channel
where a producer and ultimate consumers
deal directly with each other.
70
Indirect Channels
Indirect channels are marketing channels
where intermediaries are inserted between
the producer and consumers and perform
numerous channel functions.
71
Industrial Distributor
An industrial distributor is an
intermediary that performs a variety of
marketing channel functions, including
selling, stocking, delivering a full product
assortment, and financing.
72
Electronic Marketing Channels
Electronic marketing channels employ
the Internet to make goods and services
available for consumption or use by
consumers or business buyers.
73
Direct Marketing Channels
Direct marketing channels allow
consumers to buy products by interacting
with various advertising media without a
face-to-face meeting with a salesperson.
74
Dual Distribution
Dual distribution is an arrangement
whereby a firm reaches different buyers
by employing two or more different types
of channels for the same basic product.
75
Strategic Channel Alliances
Strategic channel alliances is a practice
whereby one firm’s marketing channel is
used to sell another firm’s products.
76
Merchant Wholesalers
Merchant wholesalers are independently
owned firms that take title to the
merchandise they handle.
77
Manufacturer’s Agents
Manufacturer’s agents are agents who
work for several producers and carry
noncompetitive, complementary
merchandise in an exclusive territory.
Also called manufacturer’s
representatives.
78
Selling Agents
Selling agents are agents who represent
a single producer and are responsible for
the entire marketing function of that
producer.
79
Brokers
Brokers are independent firms or
individuals whose principal function is
to bring buyers and sellers together to
make sales.
80
Vertical Marketing Systems
Vertical marketing systems are
professionally managed and centrally
coordinated marketing channels designed
to achieve channel economies and
maximum marketing impact.
81
Franchising
Franchising is a contractual arrangement
between a parent company (a franchisor)
and an individual or firm (a franchisee)
that allows the franchisee to operate a
certain type of business under an
established name and according to
specific rules.
82
Channel Partnership
A channel partnership consists of
agreements and procedures among
channel members for ordering and
physically distributing a producer’s
products through the channel to the
ultimate consumer.
83
Intensive Distribution
Intensive distribution is a level of
distribution density whereby a firm tries
to place its products and services in as
many outlets as possible.
84
Exclusive Distribution
Exclusive distribution is a level of
distribution density whereby only one
retail outlet in a specific geographical
area carries the firm’s products.
85
Selective Distribution
Selective distribution is a level of
distribution density whereby a firm
selects a few retail outlets in a specific
geographical area to carry its products.
86
Channel Conflict
Channel conflict arises when one
channel member believes another channel
member is engaged in behavior that
prevents it from achieving its goals.
87
Disintermediation
Disintermediation is channel conflict
that arises when a channel member
bypasses another member and sells or
buys products direct.
88
Channel Captain
A channel captain is a channel member
(producer, wholesaler, or retailer) that
coordinates, directs, and supports other
channel members.
89
Logistics
Logistics consists of those activities that
focus on getting the right amount of the
right products to the right place at the
right time at the lowest possible cost.
60
Logistics Management
Logistics management is the practice of
organizing the cost-effective flow of raw
materials, in-process inventory, finished
goods, and related information from point
of origin to point of consumption to
satisfy customer requirements.
61
Supply Chain
A supply chain is a sequence of firms
that perform activities required to create
and deliver a good or service to
consumers or industrial users.
62
Supply Chain Management
Supply chain management is the
integration and organization of
information and logistic activities across
firms in a supply chain for the purpose of
creating and delivering goods and
services that provide value to consumers.
63
Electronic Data Interchanges
Electronic data interchanges (EDIs)
combine proprietary computer and
telecommunication technologies to
exchange electronic invoices, payments,
and information among suppliers,
manufacturers, and retailers.
64
Total Logistics Cost
Total logistics cost consists of expenses
associated with transportation, materials
handling and warehousing, inventory,
stockouts (being out of inventory), order
processing, and return goods handling.
65
Customer Service
Customer service is the ability of
logistics management to satisfy users
in terms of time, dependability,
communication, and convenience.
66
Lead Time
Lead time is the lag from ordering an
item until it is received and ready for use
or sale. Also called order cycle time or
replenishment time.
67
Quick Response
Quick response consists of reducing the
retailer’s lead time so that inventory
levels of customers may be minimized
and to make the process of reordering and
receiving products as simple as possible.
Also called efficient consumer response.
68
Efficient Consumer Response
Efficient consumer response consists
of reducing the retailer’s lead time so
that inventory levels of customers may
be minimized and to make the process
of reordering and receiving products as
simple as possible. Also called quick
response.
69
Third-Party Logistics Providers
Third-party logistics providers are
firms that perform most or all of the
logistics functions that manufacturers,
suppliers, and distributors would normally
perform themselves.
70
Just-In-Time (JIT) Concept
The just-in-time (JIT) concept is an
inventory supply system that operates
with very low inventories and requires
fast, on-time delivery.
71
Vendor-Managed Inventory
Vendor-managed inventory (VMI)
is an inventory management system
whereby the supplier determines the
product amount and assortment a
customer (such as a retailer) needs and
automatically delivers the appropriate
items.
72
Reverse Logistics
Reverse logistics is a process of
reclaiming recyclable and reusable
materials, returns, and reworks from the
point of consumption or use for repair,
remanufacturing, redistribution, or
disposal.
73
Retailing
Retailing includes all activities involved
in selling, renting, and providing goods
and services to ultimate consumers for
personal, family, or household use.
75
Form of Ownership
Form of ownership distinguishes retail
outlets based on whether individuals,
corporate chains, or contractual systems
own the outlet.
76
Level of Service
Level of service is the degree of service
provided to the customer and include
self-, limited-, and full-service retailers.
77
Merchandise Line
A merchandise line describes how many
different types of products a store carries
and in what assortment.
78
Depth of Product Line
Depth of product line means that the
store carries a large assortment of each
item.
79
Breadth of Product Line
Breadth of product line refers to the
variety of different items a store carries.
80
Scrambled Merchandising
Scrambled merchandising involves
offering several unrelated product lines
in a single store.
81
Hypermarket
A hypermarket is a large store (more
than 200,000 square feet) that offers
consumers everything in a single outlet,
eliminating the need to shop at more
than one location.
82
Intertype Competition
Intertype competition means there is
competition between very dissimilar types
of retail outlets.
83
Telemarketing
Telemarketing involves using the
telephone to interact with and sell
directly to consumers.
84
Retail Positioning Matrix
The retail positioning matrix is a
matrix that positions retail outlets on
two dimensions: breadth of product line
and value added.
85
Retailing Mix
The retailing mix includes the activities
related to managing the store and the
merchandise in the store, which includes
retail pricing, store location, retail
communication, and merchandise.
86
Shrinkage
Shrinkage is the breakage and theft
of merchandise by customers and
employees.
87
Off-Price Retailing
Off-price retailing involves selling
brand-name merchandise at lower than
regular prices.
88
Central Business District
The central business district is the
oldest retail setting, usually located
in the community’s downtown area.
89
Regional Shopping Centers
Regional shopping centers consists
of 50 to 150 stores that typically attract
customers who live or work within a
5- to 10-mile range, often containing
two or three anchor stores.
90
Community Shopping Center
A community shopping center consists
of a retail location that typically has one
primary store (usually a department store
branch) and often 20 to 40 smaller outlets,
serving a population of consumers who
are within a 10- to 20-minute drive.
91
Strip Location
A strip location consists of a cluster of
stores to serve people who are within a
5- to 10-minute drive.
92
Power Center
A power center consists of a huge
shopping strip with multiple anchor
(or national) stores.
93
Category Management
Category management is an approach to
managing the assortment of merchandise in
which a manager is assigned the responsibility
for selecting all products that consumers in a
market segment might view as substitutes for
each other, with the objective of maximizing
sales and profits in the category.
94
Wheel of Retailing
The wheel of retailing is a concept that
describes how new forms of retail outlets
enter the market.
95
Retail Life Cycle
The retail life cycle is the process of
growth and decline that retail outlets,
like products, experience, which
consists of the early growth, accelerated
development, maturity, and decline
stages.
96
Multichannel Retailers
Multichannel retailers utilize and
integrate a combination of traditional
store formats and nonstore formats such
as catalogs, television, and online
retailing.
97
Promotional Mix
The promotional mix consists of the
combination of one or more of the
communication tools used 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.
79
Integrated Marketing
Communications (IMC)
Integrated marketing communications
(IMC) is the concept of designing
marketing communications programs that
coordinate all promotional activities—
advertising, personal selling, sales
promotion, public relations, and direct
marketing—to provide a consistent
message across all audiences.
80
Communication
Communication is the process of
conveying a message to others and
requires six elements: a source, a
message, a channel of communication, a
receiver, and the processes of encoding
and decoding.
81
Source
A source is a company or person who has
information to convey.
82
Message
A message is the information sent by a
source to a receiver in the communication
process.
83
Channel of Communication
A channel of communication is the means
(e.g., a salesperson, advertising media, or public
relations tools) of conveying a message to a
receiver.
84
Receivers
Receivers are consumers who read, hear,
or see the message sent by a source in the
communication process.
85
Encoding
Encoding is the process of having the
sender transform an idea into a set of
symbols.
86
Decoding
Decoding is the process of having the
receiver take a set of symbols, the
message, and transform them back to
an idea.
87
Field of Experience
A field of experience is a mutually shared
understanding and knowledge that the a
sender and receiver apply to a message so
that it can be communicated effectively.
88
Response
A response is the impact the message had
on the receiver’s knowledge, attitudes, or
behaviors in the feedback loop.
89
Feedback
Feedback is the sender’s interpretation
of the response and indicates whether a
message was decoded and understood
as intended.
90
Noise
Noise includes extraneous factors that can
work against effective communication by
distorting a message or the feedback
received.
91
Advertising
Advertising is any paid form of
nonpersonal communication about an
organization, good, service, or idea by
an identified sponsor.
92
Personal Selling
Personal selling is the two-way flow
of communication between a buyer and
seller, designed to influence a person’s
or group’s purchase decision, usually in
face-to-face communication between the
sender and receiver.
93
Public Relations
Public relations is 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.
94
Publicity
Publicity is a nonpersonal, indirectly paid
presentation of an organization, good, or
service.
95
Sales Promotion
Sales promotion is a short-term
inducement of value offered to arouse
interest in buying a good or service.
96
Direct Marketing
Direct marketing uses direct
communication with consumers to
generate a response in the form of an
order, a request for further information,
or a visit to a retail outlet.
97
Push Strategy
A push strategy consists of directing the
promotional mix to channel members to
gain their cooperation in ordering and
stocking the product.
98
Pull Strategy
A pull strategy consists of directing the
promotional mix at ultimate consumers to
encourage them to ask the retailer for a
product.
99
Hierarchy of Effects
The hierarchy of effects is the sequence
of stages a prospective buyer goes
through from initial awareness of a
product to eventual action (either trial
or adoption of the product). The stages
include awareness, interest, evaluation,
trial, and adoption.
100
Percentage of Sales Budgeting
Percentage of sales budgeting consists
of allocating funds to promotion as a
percentage of past or anticipated sales,
in terms of either dollars or units sold.
101
Competitive Parity Budgeting
Competitive parity budgeting consists
of allocating funds to promotion by
matching the competitor’s absolute level
of spending or the proportion per point of
market share. Also called matching
competitors or share of market.
102
All-You-Can-Afford Budgeting
All-you-can-afford budgeting consists
of allocating funds to promotion only
after all other budget items are covered.
103
Objective and Task Budgeting
Objective and task budgeting consists
of allocating Allocating funds to
promotion whereby the company
(1) determines its promotion objectives,
(2) outlines the tasks to accomplish these
objectives, and (3) determines the
promotion cost of performing these tasks.
104
Direct Orders
Direct orders are the result of direct
marketing offers that contain all the
information necessary for a prospective
buyer to make a decision to purchase and
complete the transaction.
105
Lead Generation
Lead generation is the result of a direct
marketing offer designed to generate
interest in a product or a service and a
request for additional information.
106
Traffic Generation
Traffic generation is the outcome of a
direct marketing offer designed to
motivate people to visit a business.
107
Advertising
Advertising is any paid form of
nonpersonal communication about an
organization, good, service, or idea by
an identified sponsor.
115
Product Advertisements
Product advertisements are
advertisements that focus on selling a
good or service and which take three
forms: (1) pioneering (or informational),
(2) competitive (or persuasive), and
(3) reminder.
116
Institutional Advertisements
Institutional advertisements are
advertisements designed to build goodwill
or an image for an organization rather
than promote a specific good or service.
117
Reach
Reach is the number of different people
or households exposed to an
advertisement.
118
Rating
A rating is the percentage of households
in a market that are tuned to a particular
TV show or radio station.
119
Frequency
Frequency is the average number of
times a person in the target audience is
exposed to a message or an
advertisement.
120
Gross Rating Points
Gross rating points (GRPs) is a
reference number used by advertisers
that is obtained by multiplying reach
(expressed as a percentage of the total
market) by frequency.
121
Cost per Thousand
Cost per thousand (CPM) is the cost of
reaching 1,000 individuals or households
with the advertising message in a given
medium (M is the Roman numeral for
1,000).
122
Infomercials
Infomercials are program-length
(30-minute) advertisements that take an
educational approach to communication
with potential customers.
123
Pretests
Pretests are tests conducted before the
advertisements are placed in any medium
to determine whether it communicates the
intended message or to select among
alternative versions of the advertisement.
124
Full-Service Agency
A full-service agency is an advertising
agency that provides the most complete
range of services, including market
research, media selection, copy
development, artwork, and production.
125
Limited-Service Agencies
Limited-service agencies are advertising
agencies that specialize in one aspect of
the advertising process such as providing
creative services to develop the
advertising copy or buying previously
unpurchased media space.
126
In-House Agencies
In-house agencies consists of the
company’s own advertising staff,
which may provide full services or a
limited range of services.
127
Posttests
Posttests are tests conducted after an
advertisement has been shown to the
target audience to determine whether it
accomplished its intended purpose.
128
Consumer-Oriented
Sales Promotions
Consumer-oriented sales promotions
are sales tools used to support a
company’s advertising and personal
selling directed to ultimate consumers.
129
Product Placement
Product placement is a sales promotion
tool that uses a brand-name product in a
movie, television show, video, or a
commercial for another product.
130
Trade-Oriented
Sales Promotions
Trade-oriented sales promotions are a
Sales tools used to support a company’s
advertising and personal selling directed
to wholesalers, distributors, or retailers.
Also called trade promotions.
131
Cooperative Advertising
Cooperative advertising consists of
advertising programs by which a
manufacturer pays a percentage of the
retailer’s local advertising expense for
advertising the manufacturer’s products.
132
Publicity Tools
Publicity tools consist of methods of
obtaining nonpersonal presentation of an
organization, good, or service without
direct cost. Examples include news
releases, news conferences, and public
service announcements.
133
Personal Selling
Personal selling involves the two-way
flow of communication between a buyer
and seller, designed to influence a
person’s or group’s purchase decision,
usually in face-to-face communication
between the sender and receiver.
82
Sales Management
Sales management involves planning
the selling program and implementing and
controlling the personal selling effort of
the firm.
83
Relationship Selling
Relationship selling is the practice of
building ties to customers based on a
salesperson’s attention and commitment
to customer needs over time.
84
Partnership Selling
Partnership selling is the practice
whereby buyers and sellers combine their
expertise and resources to create
customized solutions, commit to joint
planning, and share customer,
competitive, and company information for
their mutual benefit, and ultimately the
customer. Also called enterprise selling.
85
Order Taker
An order taker processes routine orders
or reorders for products that were already
sold by the company.
86
Order Getter
An order getter sells in a conventional
sense and identifies prospective
customers, provides customers with
information, persuades customers to buy,
closes sales, and follows up on customers’
use of a product or service.
87
Missionary Salespeople
Missionary salespeople are sales support
personnel who do not directly solicit
orders but rather concentrate on
performing promotional activities and
introducing new products.
88
Sales Engineer
A sales engineer is a salesperson who
specializes in identifying, analyzing, and
solving customer problems and brings
know-how and technical expertise to the
selling situation but often does not
actually sell products and services.
89
Team Selling
Team selling is the practice of using an
entire team of professionals in selling to
and servicing major customers.
90
Personal Selling Process
The personal selling process consists of
sales activities occurring before and after
the sale itself, consisting of six stages:
(1) prospecting, (2) preapproach,
(3) approach, (4) presentation, (5) close,
and (6) follow-up.
91
Stimulus-Response Presentation
Stimulus-response presentation is a
presentation format which assumes that
given the appropriate stimulus by a
salesperson, the prospect will buy.
92
Formula Selling Presentation
Formula selling presentation is a
presentation format that consists of
information that must be provided in
an accurate, thorough, and step-by-step
manner to inform the prospect.
93
Need-Satisfaction Presentation
Need-satisfaction presentation is a
presentation format that emphasizes
probing and listening by the salesperson
to identify needs and interests of
prospective buyers.
94
Adaptive Selling
Adaptive selling is a need-satisfaction
presentation format that involves
adjusting the presentation to fit the selling
situation, such as knowing when to offer
solutions and when to ask for more
information.
95
Consultative Selling
Consultative selling is a needsatisfaction presentation format that
focuses on problem identification, where
the salesperson serves as an expert on
problem recognition and resolution.
96
Sales Plan
A sales plan is a statement describing
what is to be achieved and where and
how the selling effort of salespeople is
to be deployed.
97
Major Account Management
Major account management is the
practice of using team selling to focus
on important customers so as to build
mutually beneficial, long-term,
cooperative relationships. Also called
key account management.
98
Workload Method
The workload method is a formula-based
method for determining the size of a
salesforce that integrates the number of
customers served, call frequency, call
length, and available selling time to arrive
at a figure for the salesforce size.
99
Account Management Polices
Account management policies specify
whom salespeople should contact, what
kinds of selling and customer service
activities should be engaged in, and how
these activities should be carried out.
100
Emotional Intelligence
Emotional intelligence is the ability to
understand one’s own emotions and the
emotions of people with whom one
interacts on a daily basis.
101
Sales Quota
A sales quota contains specific goals
assigned to a salesperson, sales team,
branch sales office, or sales district for
a stated time period.
102
Salesforce Automation
Salesforce automation (SFA) is the
use of computer, information,
communication, and Internet technologies
to make the sales function more effective
and efficient.
103
Interactive Marketing
Interactive marketing involves
two-way buyer-seller electronic
communication in a computer-mediated
environment in which the buyer controls
the kind and amount of information
received from the seller.
61
Choiceboard
A choiceboard is an interactive,
Internet-enabled system that allows
individual customers to design their
own products and services by answering
a few questions and choosing from a
menu of product or service attributes
(or components), prices, and delivery
options.
62
Collaborative Filtering
Collaborative filtering is a process that
automatically groups people with similar
buying intentions, preferences, and
behaviors and predicts future purchases.
63
Personalization
Personalization is the consumer-initiated
practice of generating content on a
marketer’s website that is custom tailored
to an individual’s specific needs and
preferences.
64
Permission Marketing
Permission marketing is the solicitation
of a consumer’s consent (called “opt-in”)
to receive e-mail and advertising based on
personal data supplied by the consumer.
65
Customer Experience
Customer experience is the sum total of
the interactions that a customer has with
a company’s website, from the initial look
at a home page through the entire
purchase decision process.
66
Online Consumers
Online consumers are the subsegment
of all Internet users who employ this
technology to research products and
services and make purchases.
67
Bots
Bots are electronic shopping agents or
robots that comb websites to compare
prices and product or service features.
68
Eight-Second Rule
The eight-second rule a view that
customers will abandon their efforts to
enter and navigate a website if download
time exceeds eight seconds.
69
Customerization
Customerization is the growing practice
of not only customizing a product or
service but also personalizing the
marketing and overall shopping and
buying interaction for each customer.
70
Web Communities
Web communities are websites that
allow people to congregate online and
exchange views on topics of common
interest.
71
Blog
A blog is a webpage that serves as a
publicly accessible personal journal for
an individual.
72
Spam
Spam is communications that take the
form of electronic junk mail or
unsolicited e-mail.
73
Viral Marketing
Viral marketing is an Internet-enabled
promotional strategy that encourages
individuals to forward marketer-initiated
messages to others via e-mail.
74
Dynamic Pricing
Dynamic pricing is the practice of
changing prices for products and services
in real time in response to supply and
demand conditions.
75
Portals
Portals are electronic gateways to the
Internet that supply a broad array of news
and entertainment, information resources,
and shopping services.
76
Cookies
Cookies are computer files that a
marketer can download onto the computer
of an online shopper who visits the
marketer’s website.
77
Multichannel Marketing
Multichannel marketing consists of
the blending of different communication
and delivery channels that are mutually
reinforcing in attracting, retaining, and
building relationships with consumers
who shop and buy in the traditional
marketplace and marketspace.
78
Sales Response Function
A sales response function relates
the expense of marketing effort to the
marketing results obtained.
93
Share Points
Share points is an analysis that uses
percentage points of market share as the
common basis of comparison to allocate
marketing resources effectively for
different product lines within the same
firm.
94
Generic Business Strategy
A generic business strategy is a
strategy that can be adopted by any
firm, regardless of the product or
industry involved, to achieve a
competitive advantage.
95
Cost Leadership Strategy
A cost leadership strategy is one of
Porter’s generic business strategies that
focuses on reducing expenses and, in turn,
lowers product prices while targeting a
broad array of market segments.
96
Differentiation Strategy
A differentiation strategy is one of
Porter’s generic business strategies that
requires products to have significant
points of difference in product offerings,
brand image, higher quality, advanced
technology, or superior service to charge a
higher price while targeting a broad array
of market segments.
97
Cost Focus Strategy
A cost focus strategy is one of Porter’s
generic business strategies that involves
controlling expenses and, in turn,
lowering product prices targeted at a
narrow range of market segments.
98
Differentiation Focus Strategy
A differentiation focus strategy is one of
Porter’s generic business strategies
that requires products to have significant
points of difference to target one or only
a few market segments.
99
Product or Program Champion
A product or program champion is a
person who is able and willing to cut red
tape and move the program forward.
100
Action Item List
An action item list is an aid to
implementing a marketing plan,
consisting of three columns: (1) the task,
(2) the person responsible for completing
that task, and (3) the date to finish the
task.
101
Line Positions
Line positions are managers who have
the authority and responsibility to issue
orders to the people who report to them.
102
Staff Positions
Staff positions are people who have the
authority and responsibility to advise
people in the line positions but cannot
issue direct orders to them.
103
Product Line Groupings
Product line groupings are
organizational groupings in which a
unit is responsible for specific product
offerings.
104
Functional Groupings
Functional groupings are organizational
groupings that represent the different
departments or business activities within a
firm.
105
Geographical Groupings
Geographical groupings are
organization groupings in which sales
territories are subdivided according to
geographical location.
106
Market-Based Groupings
Market-based groupings are
organizational groupings which utilize
specific customer segments.
107
Sales Analysis
Sales analysis is a tool for controlling
marketing programs using the firm’s sales
records to compare actual sales with sales
goals to identify areas of strength and
weakness.
108
Sales Component Analysis
Sales component analysis is a tool for
controlling marketing programs which
traces sales revenues to their sources,
such as specific products, sales territories,
or customers. Also called microsales
analysis.
109
Profitability Analysis
Profitability analysis is a tool for
controlling marketing programs using the
profit attributable to the firm’s products,
customer groups, sales territories,
channels of distribution, and promotions
to expand, maintain, or eliminate specific
products customer groups, channels, or
promotions.
110
ROI Marketing
ROI marketing is a tool for controlling
marketing programs using the application
of modern measurement technologies and
contemporary organizational design to
understand, quantify, and optimize
marketing spending.
111