FINAL EXAM REVIEW

MARKETING 5125

WINTER 1, 2016

CHAPTERS 10-18 (13 and 17 omitted)

Chapter 10 – SERVICES

 CHARACTERISTICS OF SERVICES (160-162)

o Intangibility – Products or services that cannot be seen, tasted, felt heard or smelled
(for example, cosmetic surgery, as results are not there until completed)
o Inseparability – Provider-client interaction – generally service oriented (not product)
o Variability – Quality of services vary based on who provides them. This can cause
companies to create service guarantees
o Perishability – Matching supply and demand. For example, rush hour created more
demand for peak hours for train service). You can create schedules to manage
demand side and add part-time employees to manage supply side.
 INTERNAL MARKETING (164)
o Training and motivating employees to serve customers well. Get everyone else in
the organization to practice marketing
 SERVICE QUALITY MODEL (167-168, Figure 10.3)
o 5 Determinants of service quality
 In order of importance
 Reliability
 Responsiveness
 Assurance
 Empathy
 Tangibles
 SERVICE RISKS ?
 CATEGORIES OF SERVICE MIX (160)
o 1. Pure tangible good
 Product with no accompanying service (toothpaste purchased at market)
2. Tangible good with accompanying services
- Car as it comes with a warranty or contract
3. Hybrid
Restaurant meal – you are buying service and product
4. Major Service with accompanying minor goods and services
Air travel and you get a snack on the plane
5. Pure Service
Babysitting or massage
 EVALUATION OF DIFFERENT TYPES OF PRODUCTS (161)
 o Most goods are easy to evaluate and services are hard to evaluate. Must see Figure
10.1 in book.
 POST SALE STRATEGY (169-170)
o Company starts out by offering service for their products after sale, then after
growing, have authorized dealers or repair centers. After that, independent firms
provide the service and original company must find ways to make money on parts
and equipment rather than on service.

Chapter 11 – PRICING

 Reference pricing (175)

o Most consumers cannot recall exact prices. Consumers will compare an observed
price to an internal reference price they remember or an external frame of
reference such as a posted “regular retail price”. This also includes when a retailer
states monthly price of under $50/mo instead of $500/yr.
 Steps in the process (176-183)
o 1. Selecting the pricing objective
 Survival, maximum current profit, maximum market share, maximum
market skimming, and product-quality leadership.
o 2. Determining demand
 Price sensitivity, estimating demand curves, and price elasticity of demand
o 3. Estimating costs
 Fixed costs, variable costs, or total costs (sum of fixed and variable)
o 4. Analyzing competitors’ costs prices and offers
o 5. Selecting a pricing method
 Markup pricing, target return pricing, perceived value pricing, value pricing,
EDLP (everyday low pricing), going-rate pricing, and auction type pricing
o 6. Selecting the final price
 Includes impact of other marketing activities, company pricing policies, gain-
and-risk sharing pricing, and impact of price on other parties
 Types of pricing methods (180-183)
o 1. Markup pricing – standard markup to the product’s cost
o 2. Target-return pricing – Determining a price based on the firm’s required or fair
return on investment
o 3. Perceived-value pricing – Pricing based on consumer’s perceived value. May
increase perceived value with marketing methods
o 4. Value pricing – Charge a fairly low price for a high quality offering. Requires re-
engineering of company to lower costs without sacrificing quality
o 5. EDLP – Everyday low pricing – firm charges a constant low price. In high-low
pricing, a firm charges higher prices but frequently runs promotions temporarily
lower than the EDLP level.
o 6. Going-rate pricing – Firm bases prices mostly on competition
 o 7. Auction-type pricing – different auction techniques (English and dutch, and sealed
bid)
 Price discrimination (186)
o When a company sells a product or service at 2 different prices that do not reflect a
proportional difference in costs
 Types of discounts (185) Table 11.2
o Discount – Price reduction for paying bill promptly
o Quantity Discount – Buying in volume
o Functional Discount – Discount for performing certain functions such as storing,
selling, or record keeping.
o Seasonal Discount – Purchasing product or service out of season
o Allowance – Extra payment for re-seller participation, for example a trade-in of a car
 Elasticity (178)
o How much will demand change with a change in price

Chapter 12 – Channels

 Types of intermediaries (198)

o Merchants – wholesalers and retailers which buy and sell
o Agents – May negotiate for but never take possession of the goods
o Facilitators – assist in the distribution process but never take possession. For
example a transportation company or advertising agency
 Push and pull strategies (192)
o Push Strategy – Uses the manufacturer’s sales force and promotion money to
encourage intermediaries to carry, promote, and sell the product. This is used when
there is low brand loyalty and purchase is an impulse buy.
o Pull Strategy – Uses the manufacturer’s sales force and promotion money to
encourage consumers to demand product form an intermediary. This is used when
there is high brand loyalty.
 Number of intermediaries (198)
o 3 strategies based on the number of intermediaries
 Exclusive distribution limits the number of intermediaries and often in
markets which are driven by price
 Selective distribution relies on only some of the intermediaries willing to
carry a particular product
 Intensive distribution – Places good or service in as many outlets as possible
and is good for frequent purchases in a variety of locations (candy)
 Channel levels (195)
o Channel levels is the number of channels between the manufacturer and the final
consumer. A zero-level channel means that the manufacturer is selling directly to
the final consumer
 o Reverse-flow channels includes the re-use of products or containers, such as
recycling an can redemption centers

Chapter 14 – IMC

 What is IMC? (222)

o Integrated Marketing Communications – The means which a firm attempts to
inform, persuade, and represent the voice of the company and its brands; a means
by which the firm can establish a dialogue and build relationships with customers.
 Marketing mix elements (222-223)
o 1. Advertising – Paid presentation via media
o 2. Sales promotion – Short-term incentives to encourage trial or purchase such as
coupons or samples.
o 3. Events and experiences – Company sponsored activities and programs to create
brand related interactions
o 4. Public Relations and publicity – Programs directed to internal employees or
externally to customers, other firms or government and media to promote or
protect the company image
o 5. Online and social media marketing – Online activities or promotions to engage
customers
o 6. Mobile marketing – Online marketing specifically geared for cell phones
o 7. Direct and database marketing – Use of mail, phone, fax, email or Internet to
directly communicate from specific customers or prospects
o 8. Personal selling – Face-to-face interaction with prospective customers
 Response Hierarchy Models (224-225) Figure 14.2
o 1. AIDA Model
o 2. Hierarchy-of-Effects Model
o 3. Innovative-Adoption Model
o 4. Communications Model
 Message Source (227)
o The source’s credibility is crucial to the message’s acceptance Credibility is
comprised of expertise, trustworthiness and likability. In a state of congruity, where
a person likes the celebrity but dislikes the product, either the person will like the
celebrity less or will like the brand more. This is the Principle of Congruity.
 Budget methods (229-230) Table 14.2
o 1. Affordable Method – Setting the communications budget at what managers think
they can afford
o 2. Percentage-of-sales Method – Setting expenditures as a specified percentage of
current or anticipated sales or of the sales price
o 3. Competitive-party Method – Setting communications budgets to achieve share-
of-voice party with competitors
 o 4. Objective-and-task Method – Setting the budget by defining specific objectives,
identifying the tasks that must be performed to achieve the objectives, and
estimating the costs to achieve them
 Setting the IMC mix (231-232)
o Must consider several factors – type of product market, consumer or buyer
readiness to make a purchase, and stage of the product life cycle
o Consumer marketers spend more on sales promotions and advertising
o Business marketers spend more on personal selling
 Advantages and Disadvantages of Advertising
o Advantages (230)
 Reaches geographically dispersed buyers
 Build up a long term image of a product
 Trigger quick sales
 Can be persuasive
 Offers opportunities to dramatize brands and products
 Enables advertiser to focus on specific aspects of the brand or product
o Disadvantages (240?)
 Short life
 High cost
 Limited attention
 Limited audience
 Undermines social value
 Confuses buyers From other source
 Encourages sale of inferior products
 Some advertisement is in bad taste

Chapter 15 – Mass Communications

 Setting objectives (236-237)

o A specific communications task and achievement level to be accomplished with a
specific audience in a specific period of time. Were the advertising objectives meant
to inform, persuade, remind, or reinforce?
 Reach, frequency and impact (239)
o Reach – The number of different persons or households exposed to a particular
media schedule at least once during a specified period of time. This is most
important when launching new product or with an undefined target market
o Frequency – The number of times within the specified time period that an average
person or household is exposed to the message. This is most important when there
are strong competitors or a frequent purchase cycle.
o Impact – The qualitative value of an exposure through a given medium (for example,
a food ad will have higher value in Bon Appetit than in Fortune Magazine.
 Advantages and disadvantages of TV (240)
 o Advantages – Combines sight, sound, and motion. Appealing to the senses, high
attention and high reach
o Disadvantages – High absolute cost, high clutter, fleeting exposure, less audience
selectivity.
 Share of voice (241)
o Proportion of company advertising of that product to all advertising of that product
 Events and experiences (244-245)
o Events Objectives
 Identify with a particular target market or lifestyle
 Increase salience of company or product name
 Create or reinforce perceptions of key brand image associations
 Enhance corporate image
 Create experiences and evoke feelings
 Express commitment to the community on social issues
 Entertain key clients or reward key employees
 Permit merchandising or promotional opportunities
o Experiential Marketing
 Communicates features and benefits and also connects a product or service
with a unique and interesting experiences

Chapter 16 – Digital Communications

 Types of Online Communications (251-253)

o Web sites, search ads, display ads, and email
 Microsites (251)
o Individual web pages or clusters of pages which function as supplements to a
primary site, usually used with low-interest product. For example, an insurance
company creates a site which shows on a used car site and offers advice to car
buyers and offers a good insurance deal at the same time the person buys the car
 Social Media (253-254)
o A place where consumers can share text, images, audio, and video with each other
and with companies.
o 3 main platforms – Online communities and forums, blogs, and social networks
(Facebook & Twitter)
 Word of mouth (254-256)
o Social media is an online form of word of mouth, however 90% is not conducted
online (75% face-to-face and 15% over phone)
o Advertising can spark word of mouth
 Buzz and viral (254-255)
 o Viral marketing is a form of word of mouth that encourages consumers to pass
along company developed products and services to audio, video, or written
information to other users online.
o Buzz campaigns are based on the willingness of consumers to talk with other
consumers.
 You must identify influential individuals and companies and devote extra
effort to them
 Supply key people with product samples
 Work through community influential
 Develop word of mouth referral channels to build business
 Provide compelling information that customers want to pass along
 Mobile Devices (256-257)
o Mobile apps
 Add convenience, social value, incentives, and entertainment
 Conducive for boosting loyalty programs with tracking
o Effective mobile marketing should be clear and concise w/ simple sites

Chapter 18 – Global

 Sprinkler and waterfall strategies (277)

o Sprinkler – Entering many countries simultaneously
o Waterfall – Gradually entering countries in sequence
 Entry Modes (277-278) Figure 18.2
o Indirect and direct export – Companies typically start with indirect export, working
through independent intermediaries and may move into direct export because
indirect requires less investment and less risk. This mode is used to test the waters
prior to building a plant overseas.
o Licensing – Company issues a license to a foreign company to use a manufacturing
process, trademark, patent, trade secret, or other item of value for a fee. This
provides less control to the licensor and if the product is successful, the licensor may
have given up profits (and create a competitor once the contract ends)
o Joint ventures – Shared ownership and control, sometimes desirable for political or
economic reasons
o Direct investment – Purchase partial or full interest in a foreign company or build its
own manufacturing or service facilities. An advantage is the firm builds cost
economies but also poses a great investment risk. Most companies choose to
acquire local brands for their portfolio.
 Product and Communication Strategies (279-280) Figure 18.3
o Product Strategies
 Straight extension – Introduce product in the foreign market without any
change (popular with consumer electronics)
  Product adaptation – Alters the product to meet local conditions or
preferences (regional version)
 Product invention – Creates something new
 Backward invention – reintroduce an earlier product form
 Forward invention – create a new product to meet a need in
another country
o Communication Strategies (280) Figure 18.3
 Communication adaptation – changing marketing communications for each
market
 Dual adaptation – If a local market adapts both the product and the
communications
 Sustainability (285)
o Sustainability is the ability to meet humanity’s needs without harming future
generations
 Greenwashing – The appearance of a product being environmentally
friendly without actually being so.