Professional Documents
Culture Documents
Date: 7/5/06
Class: Intro to Business BA11 5040
Professor: McNamara
Chapter 13
Questions from page 405
Can you define the terms consumer market and B2B markets?
A consumer market includes all the individuals or households that want goods and
services for personal consumption or use. A B2B market are all the individuals and
organizations that want goods an services to use in producing other goods an services or
to sell, rent or supply goods to others.
Can you name and describe five ways to segment the consumer market?
Five ways to segment the consumer market are Geographic segmentation which is
dividing a market by geographic region, demographic segmentation which is done by
dividing the market by age, income and education level. Psychographic segmentation is
dividing the market using the group’s values attitudes and interests. Benefit segmentation
which is done by dividing the market by determining which benefits of the product to talk
about. Finally there is Volume or Usage segmentation which simply put is dividing the
market by usage.
What are four key factors tat make industrial markets different form consumer markets?
Compared to the consumer market the amount of potential customers in the B2B market
are relatively low that is there are just a few construction firms, accounting firms, mining
firms and so on compared to the 70 million households or more that are in America. The
size of business customers if relatively large; that is, a few large organizations account for
most of the employment and production of various goods and services. Nonetheless, there
are many small to medium-sized firms in the United States that together make an
attractive market. B2B markets tend to be geographically concentrated. For example,
oilfields tend to be concentrated in the Southwest and in Alaska. Consequently,
marketing efforts may be concentrated on a particular geographic area and distribution
problems can be minimized by locating warehouses near industrial center. Business
buyers are generally thought to be more rational as opposed to emotional then ultimate
consumers in their selection of goods and services.
What is niche marketing, and how does it differ from one-to-one marketing?
Niche marketing is the process of finding small by profitable market segments and
designing or finding products for them. Just how small such a segment can be is
illustrated by fridgedoor.com; this company sells refrigerator magnets on the internet. It
keeps some 1,500 different magnets in stock and sells as many as 400 per week. One-to-
one marketing means developing a unique mix of goods and services for each individual
customer. Travel agencies often develop such packages, including airline reservations,
hotel reservations, rental cars, restaurants and admission to museums and other
attractions for individual customers.
Chapter 14
Questions from page 436
Name the four classes of consumer goods and service, and give examples of each.
First we have convenience goods which are products that the consumer wants to purchase
frequently and with a minimum of effort. One convenience store that comes to
everyone’s mind is 7-Eleven Next we have shopping goods an services which are
products that the consumer buys only after comparing value, quality, price and style from
a variety of sellers. Shipping goods and services are sold largely through shopping
centers where consumers can make comparisons. Sears is one store that sells mostly
shopping goods. Because many consumers carefully compare such products, marketers
can emphasize price differences, quality differences, or some combination of the two.
Next are specialty goods and services which are consumer products with unique
characteristics and brand identity. Because these products are perceived as having no
reasonable substitute, the consumer puts fort a special effort to purchase them. Examples
include fine watches and wines along with fur coats and autos like Jaguar. Next and
finally are unsought goods and services which are products that consumers are unaware
of, haven’t necessarily thought of buying, or find that they need to solve an unexpected
problem. Some examples would be emergency towing, funeral services and insurance.
Can you explain the difference between a manufacturer’s brand, a dealer brand, and a
generic brand?
A manufacturer brand would be something like Xerox, Kodak, Sony and Chevy. A dealer
brand would be something like Kenmore and Diehard. They don’t carry the
manufacturers name but the dealers name instead. A generic brand are no branded
products that usually sell at a sizable discount compared to national or private=label
brands. They feature basic packaging and are backed with little or no advertising.
Can you list two short term and two long term pricing objectives? Can the two be
compatible?
Two short term pricing objectives would to be to price the product high so as to recoup
the cost and to start making a profit, where a long term objective is to optimize profits.
Another short term pricing objective would be to achieve greater market share, and this
was done by U.S. automakers when they offered zero percent financing and employee
pricing. Another long term objective would be to eventually be able to sell your product
at a high premium by creating an image so you can sell at a high price.
Can you calculate a product’s BEP if producing it costs $10,000 and revenue from the
sale of one unit is $20?
With this bit of information you are missing the VC part of the equation. For this
example we will assume that VC equals $5, if this is what it equaled the formula would
look like this; BEP = FC / P – VC = $10,000/ $20 - $5 = $10,000 / $15 = 667 units of
product.
Chapter 15
Questions from page 465
Why do we need intermediaries? Can you illustrate how intermediaries create exchange
efficiency? How would you defend intermediaries to someone who said that getting rid
of them would save millions of dollars?
Intermediaries are necessary to business; if we did not have them then business as we
know would not exist today. Say if you are going to buy a car I don’t really think that
you would want to go to the manufacturer to get it you want to go to the dealer and place
your order. The dealer is one form of intermediary. You may place you order with them
but how is the product going to get made? The process of building the vehicle is quite
large and takes many intermediaries, I suppose you could get all of the parts yourself and
make the thing but that is impractical. So you order the vehicle let the plant build it, but
then it needs to get to you. I suppose you could pick it up, but here in NY you would
have to travel far to get it so it is easier to let the railroad ship it from the plant to the
dealer. The railroad would be another form of intermediary. Another intermediary
involved would be the banks that give you the loan for the car if you cannot pay cash for
it, and most people cannot or don’t so they are another intermediary. You could save
money by getting rid of all these people but how much would you really be saving in
time and gas money, by the time it is all done you should have just went to the dealer to
get it and let them handle everything from there.
Can you give examples of utilities created by intermediaries and how intermediaries
perform them?
In economics, the want-satisfying ability, or value that organization add to goods or
services when the products are mad more useful or accessible to consumers than they
were before is called a utility. Here are an example of some utilities and how they work.
A time utility would be adding value to products by making them readily available when
they are needed. A place utility adds value to products by having them where people
want them; some examples would be stores like 7-Eleven and Wal-Mart. Possession
utility is doing whatever is necessary to transfer ownership from one party to another,
including providing credit, delivery, installation, guarantees, and follow-up service.
Information utility adds value to products by opening two-way flows of information
between marketing participants, for example if you want to buy a car you can get
information from the library, internet, dealers and the government.
What kinds of products would call for each of the different distribution strategies:
intensive, selective, exclusive?
Intensive distribution puts products into as many retail outlets as possible, including
vending machines. Products that need intensive distribution include convenience goods
such as candy, cigarettes, gum and popular magazines. Selective distribution is the use of
only a preferred group of the available retailers in an area. Such selection helps to assure
producers of quality sales and service. Manufacturers of appliances, furniture, and
clothing (shopping goods) usually use selective distribution. Exclusive distribution is the
use of only one retail outlet in a given geographic area. The retailer has exclusive rights
to sell the product and is therefore likely to carry a large inventory, give exceptional
service, and pay more attention the brand than others.
Chapter 16
Questions from page 502
What are the three most important advertising media in order of dollars spent?
Advertising expenditure by media in terms of billions of dollars is as follows: Direct Mail
with U.S. volume of $44.7 billion or 19.3 percent; Newspapers with $44.3 billion or 19.2
percent; and finally Broadcast TV with $38.9 billion or 16.8 percent.
What are the three steps involved in setting up a public relations program?
The three steps in setting up a public relations program are as follows: listen to the
public, change policies and procedures. Businesses don’t earn understanding by
bombarding the public with propaganda they need to earn it. Finally you need to inform
people that you’re being responsive to their needs. It’s not enough to simply have
programs in the public interest. You have to tell the public about those programs so that
they know you’re being responsive.
What are the three steps used in setting up an interactive marketing communication
system?
An integrated marketing communication system is a formal mechanism for uniting all the
promotional efforts in an organization to make them more consistent with each other and
more responsive to that organization’s customers and other stakeholders. That includes
the latest in internet communications and interactive tools. The result is a unified image
of the company in the public’s mind. In the past, advertising was created by ad agencies,
public relations were created by PR firms, and selling was done in house. There was
little coordination across promotion efforts. As a result, consumers often received
conflicting messages about a company and its products. This is where a good network
comes into play so all the necessary parties can have access to vital information.