Chapters 13, 14, 15, 16 Assessment Questions

Name: Steven P Sanderson II Date: 7/5/06 Class: Intro to Business BA11 5040 Professor: McNamara Chapter 13 Questions from page 405 What are the three parts of the marketing concept? The three parts to the marketing concept are customer orientation, service orientation and profit orientation. A customer orientation is to find out what consumers want and provide it for them. A service orientation is when an organization makes sure everyone has the same objective – customer satisfaction. This should be a total and integrated organizational effort. A profit orientation is the focus on those goods and services that will earn the most profit and enable the organization to survive and expand to serve more consumer wants and needs. What are the four Ps of the marketing mix? The four Ps of the marketing mix are as follows: Product, Place, Price and Promotion. A product is any physical good, service or idea that satisfies a want or need plus anything that would enhance the product in the eye of consumers, such as the brand. After you have developed the product or designed the service you want to offer consumers, you have to set an appropriate price. That price depends on a number of factors. For example, in the cereal business, the price should probably be close to what other cereal makers charge since most cereals are priced competitively. You also have to consider the costs involved in producing, distributing and promoting the product. You might price the product higher than other cereals to create an image of quality. Once the product is manufactured, you have to choose how to get it to the consumer. Remember place is the thirds P in the marketing mix. You may want to sell the cereal directly to supermarkets or health-food stores, or you may want to sell it through organizations that specialize in distributing food products. The last of the four Ps of marketing is promotion. Promotion consists of all the techniques sellers use to inform people and motivate them to buy their products or services. The include advertising’ personal selling’ public relations’ publicity’ word of mouth’ and various sales promotion efforts, such as coupons and rebates. Questions from page 411 What are the four steps in the marketing research process? The four steps in the marketing research process are: Defining the question (problem or opportunity) and determining the present situation, collecting data, analyzing the research data and choosing the best solution and implementing it. Marketing researchers should be given the necessary amount of time and freedom to be able to accurately discover what the present situation is and what the problems and opportunities are. Obtaining usable information is vital to the marketing research process. Research can become quite expensive, so some trade-off must often be made between the need for information and

the cost of obtaining that information. Normally the least expensive method is to gather information that has already been compiled by others and published in journals and books or made available online. Such existing data is referred to as secondary data since you aren’t the first one to gather them. Sometimes a focus group will be used. A focus group is usually about 8 to 14 people and meets under the direction of a discussion leader. Analyzing the research data is the next step in the process. The data collected in the research process must be turned into useful information. Careful, honest interpretation of the data collected can help a company find useful alternatives to specific marketing challenges. For example by doing primary research Fresh Italy, a small Italian Pizzeria found that even though they had superior taste the customers preferred free delivery. Next you need to find the best solution and implement it. After collecting and analyzing data, Market researchers determine alternative strategies and make recommendations as to which strategy may be best and why. This final step in a research effort involves following up on the actions taken to see if the results were as expected. What is environmental scanning? Environmental scanning is the process of identifying the factors that can affect marketing success. These factors include global, technological, sociocultural, competitive and economic influences. 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. Questions from page 422 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-toone 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. What is stakeholder marketing? Well remember stakeholders are all the people who stand to gain or lose by the policies and activities of a business. Stakeholder marketing, then is establishing and maintaining mutually beneficial exchange relationships over time withal the stakeholders of the organization. Organizatios that adopt stakeholder amerketing take the community’s needs into mind when designing and marketing products. For example many companies have responded to the market and now make what are called green products which have no or very little impact on the environment. Chapter 14 Questions from page 436 What value enhancers may be included in a total product offer? A total product offer is defined as everything that consumers evaluate when deciding whether to buy something; also called a value package. Some value enhancers that my be included in a total product offer would be; service, access via internet, delivery, guarantee and a variety of other things that could entice a consumer to want to buy one brand over another. For example some auto companies are offering zero percent financing in addition to a host of other things. What’s the difference between a product line and a product mix? A product line is a group of products that are physically similar or are intended for a similar market. They usually face similar competition. For example P&G sell Cascade, Dawn, Joy and Ivory for dish soaps. A product mix is the combination of all product lines offered by a manufacturer. For example P&G sells not only dish soaps, but antiperspirants, hair care, personal cleansing and many other types of product lines. 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. Describe three different types of industrial goods. One industrial good would be computers they are also consumer goods. Some other examples would be production goods such as raw materials, component parts like engines and production materials such as nuts and bolts. Some support goods that would be used as industrial goods would be things like installations which would include buildings and equipment, accessory equipment like tools and office equipment. Questions from page 440 What six functions does packaging now perform? The six functions that packaging now performs would be protect the goods inside, stand up under handling and storage, must be tamperproof, deter theft and yet be easy to open and use. Packaging also needs to attract the consumer’s attention, describe the contents and give information about the contents, explain the benefits of the good inside, provide information on warranties, warnings, and other consumer matters. Finally packaging needs to give some indication of price, value and uses. What’s the difference between brand name and trademark? A brand name is that part of the brand consisting of a word, letter, or group of words or letters comprising a name that differentiates a seller’s goods or services fro those of competitors. A trademark is a brand that has been given exclusive legal protection for both the brand name and the pictorial design they use. 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. What are the key components of brand equity?

First of all brand equity is defined by the combination of factors – such as awareness, loyalty, perceived quality, images, and emotions, that people associate with a given brand name. Questions from page 446 What are the five steps in the new-product development process? Generating new product ideas would be the first step in the process. A strong point can be made for listening to employee suggestions for new products. The number one source of ideas for new industrial products has been company sources such as employees. The next step in the process would be product screening. Product screening is designed to reduce the number of new product ideas being worked on at any one time. Criteria needed for screening include whether the product fits in well with present products, profit potential, marketability and personnel requirements. Product analysis is the next step in the process. It’s largely a matter of making cost estimates and sales forecasts to get a feeling for profitability off new product ideas. Products that don’t meet the established criteria are withdrawn from consideration. Now comes product development and testing. Concept testing involves taking a product idea to consumers to test their reactions. Do they see the benefits of this new product? How frequently would they buy it? At what price? What features do they like and dislike? These are all things that need to be taken into consideration. Commercialization which is the next step involves promoting a product to distributors and retailers to get wide distribution and developing strong advertising and sales campaigns to generate and maintain interest in the product among distributors and consumers. Finally we have the international challenge. U.S. marketers have learned through experience that the secret to success in today’s rapidly changing environment is to bring out high-quality new products and to bring them out quickly. This is especially true in light of the rapid development process occurring in other countries. Can you draw a product life cycle and its parts? A product lifecycle has four phases. They are as follows, introduction, growth, maturity, and decline. In the introduction stage sales and profits move up slow and sometimes can take years before they go anywhere. In the Growth stage sales and profits soar. With the next stage sales start to level off and go flat. One example of sales going flat would be with cellular phones. Finally comes the decline stage of a product like videocassettes, they pretty much have gone the way of the eight track sales and profits are declining due to new products like DVD’s. Questions from page 452 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. What’s wrong with using a cost based strategy? Using a cost based strategy is ok to find out what you need to sell you product at to make a profit but it does not take any market conditions or human nature into consideration, thus one will really never know if the product will be able to sell to make the anticipated profit. What’s the purpose of a break even analysis? The purpose of a break even analysis is to show you when or what it will take to finally turn a profit. To figure out what your BEP is a relatively simple formula can be used. It is as follows BEP = Total fixed cost (FC) / Price of one unit (P) – Variable Cost (VC) of one unit. Total fixed costs are the costs that don’t change such as rent and business insurance. Variable costs change according to the level of production such as labor and raw materials. For an example say there are $200,000 in fixed costs of a business you wish to run. You want to sell you product for $4 and it costs you $2, the BEP formula would be as follows: BEP = FC / P – VC = $200,000 / $4 - $2 = $200,000 / $2 = 100,000 units of product. 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 What is a channel of distribution, and what intermediaries are involved? A channel of distribution is a whole set of marketing intermediaries, such as wholesalers and retailers, that join together to transport and store goods in their path (or channel) from producers to consumers. Some of the intermediaries would include agents/brokers which are marketing intermediaries who bring buyers and sellers together and assist in negotiation an exchange but don’t take title to the goods. The use of a wholesaler is usually involved and they are a marketing intermediary that sells to other organizations. 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. Questions from page 472 Describe the activities of rack jobbers and drop shippers. A rack jobber will furnish a rack or shelves full of merchandise to retailers, display products, and sell on consignment. This means that they keep title to the goods until they’re sold, and then they share the profits with the retailer. A drop shipper will solicit orders from retailer and other wholesalers and have the merchandise shipped directly form a producer to a buyer. The own the merchandise but don’t handle, stock, or deliver it. That’s done by the producer. Drop shippers tend to handle bulky products such as coal. What are some ways in which retailers compete? Give examples. Retailers compete through a variety of methods one of the most notable ones being through price. Discount stores such as Wal-Mart, Target, Kmart, and T.J. Maxx/Marshalls – not to mention internet discount stores compete by price. The most notable of the bunch is Wal-Mart. Wal-Mart has become such a large retailer that they are even able to dictate what prices are going to be to the producers, that want to fight over shelf space just to get their product known. Another form of competition between retailers would be service competition. This involves follow ups to sales, guarantees, fast installation, and good service. Location competition is another form retailer’s use. As many banks put ATMs everywhere they become more accessible to their clients or

potential clients when they can do many things at kiosks or ATMs they then have more value added services which in turn usually leads to more customers. Selection competition is offering a wide selection of items in the same product category. Category killer stores offer wide selection at competitive prices. They are called category killers because they are so competitive that they usually sink the small guys. 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. Questions from page 479 What are the four systems that have evolved to tie together members of the channels of distribution? Corporate distribution systems is one in which all of the organizations in the channel of distribution are owned by one firm. If the manufacturer owns the retail firm, clearly it can maintain a great deal of control over its operations. Sherwin-Williams for example owns its own retail stores and thus coordinates everything. Contractual distribution systems try to get retailers to sign a contract to cooperate. A contractual distribution system is one in which members are bound to cooperate through contractual agreements, there are three forms of contractual systems: franchise, wholesaler-sponsored chains and retail cooperatives. Next we have administered distribution systems. If you were a producer, what would you do if you couldn’t get retailers to sign an agreement to cooperate? One thing you could do is to manage all the marketing functions yourself, including display, inventory control, pricing and promotion. Supply chains are the latest in systems coordination. Supply chain sometimes called value chain consists of the sequence of linked activities that must be performed by various organizations to move goods and service from the source of raw materials to ultimate consumers. The supply chain is longer than a channel of distribution because it includes links from suppliers to manufacturers, whereas the channel of distribution begins with manufacturers. How does logistics differ from distribution? Logistics is the marketing activity that involves planning implementing and controlling the physical flow of materials, final gods, and related information from points of origin to pints of consumption to meet customer requirements at a profit. One firm that does this is UPS Supply Chain Services. I used to work together with them at Michigan Truck Plant, which is where all of the Ford Expeditions and Lincoln Navigators are made, and they handles so much of the work is was amazing, they planned everything and did it efficiently, whereas distribution really deals with getting the product form A to B.

What are inbound logistics, outbound logistics and reverse logistics? Inbound logistics involves bringing raw materials, packaging and other goods and services form suppliers to producers. Outbound logistics is the area that involves managing the flow of finished products and information to business buyers and ultimate consumers people like you and me. Reverse logistics is the area that involves bringing goods back because of defects or recycling materials. Chapter 16 Questions from page 502 What are the four traditional elements of promotional mix? Advertising is paid, nonpersonal communication through various media by organizations and individuals who are in some way identified in the advertising message. The importance of advertising in the U.S. is easy to document. The total ad volume exceeds $231 billion yearly. Television in all its forms is the number one medium with direct mail coming in at number two. Advertising also comes in other forms such as retail advertising – which is advertising to consumers by various retail stores and supermarkets. Trade advertising is advertising to wholesalers and retailers by manufacturers to encourage them to carry their products. There are many other forms of advertising. Next comes personal selling which is face-to-face presentation and promotion of goods and services. It also involves the search for new prospects and follow-up service after the sale. Effective selling isn’t simply a matter of persuading others to buy. In fact, it’s more accurately described today as helping others satisfy their wants and needs. Given that perspective, you can see why salespeople are starting to use the internet, portable computers, paging devices, fax machines and a host of other devices. Personal selling also involves prospecting which involves researching potential buyers, qualifying which makes sure these people have a need for your product; these are only some of the steps in the process. Next, sales and promotion, which can be done in a variety of ways. When a business has a sales promotion they usually price products cheaper then normal or at a loss to get awareness of the product out. Finally comes Public Relations. Public Relations are the management function that evaluates public attitudes, changes policies and procedures in response to the public’s requests, and executes a program of action and information to earn public understanding and acceptance. 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 seven steps to the B2B selling process? The seven steps are Prospect and Qualify which is the first step in selling. Prospecting involves researching potential buyers and choosing those most likely to buy. That selection process is called qualifying. The qualify people means to make sure that they have a need for the product, the authority to buy, and the willingness to listen to a sales message. A person who meets these criteria is called a prospect. The second step is

called the preapproach. Before making a sales call, you must do further research. In the preapproach phase, you must learn as much as possible about customers and their wants and needs. Before you try to sell anything, you would want to find out which people in the firm are most likely to use and be able to buy the product. Now comes the approach stage. The old saying “You don’t have a second chance to make a good first impression.” That’s why the approach is so important. When you call on a customer your opening statements are very important. The idea is to give an impression of friendliness and professionalism, to create rapport, to build credibility and to start the relationship. Now that you have met them you need to make a presentation. IN the actual presentation of what it is you are selling the idea is to match the benefits package to the needs of the clients. After the presentation you will need to overcome and objective questions. You should be able to anticipate any objective since there will always be some. Think of questions as opportunities for creating better relationships, not as challenges to what you’re saying. Now that you have overcome any objectives you need to close the sale, start asking closing questions such as would you like that in blue or red?, would you like to pay cash or use you credit card? Finally the last step comes, this is where you must follow up with the new client, make sure the order. For some products the follow up could last for years especially if you are selling software of heavy equipment. What is a consultative salesperson? A consultative salesperson is a salesperson that begins by analyzing customer needs and then comes up with solutions to those needs. At Dell computer for example, it’s the sales team, not tech support, which builds and manages customer’s extranet sites. Questions from page 504 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 disadvantages and advantages of publicity versus advertising? Publicity is any information about an individual, product, or organizations that’s distributed to the public through the media and that’s not paid for, or controlled by, the seller. Publicity works only if the media find the material interesting or newsworthy. The idea, then, is to write publicity that meets those criteria. Gillette, for example used publicity to launch its Sensor and Mach III razors. Dean Kamen got huge publicity for his Segway scooter. Publicity may also be bad in the event that marketers have no control over what is said or shown, the media are not obliged to use the publicity and furthermore may alter it for ratings and you may get negative publicity. Questions from page 510

What are the sales promotion techniques used to reach consumers? What promotion techniques are used to reach businesses? Some techniques used to reach consumers would be something like sampling which is done a lot in places like super markets. Sampling is where a company will give consumers a small sample of product so they can experience it before they buy it. Word of mouth promotion is where people tell other people about your product or service they have purchased, this can be good and this can be bad. If the word of mouth is good it can prove positive for you and if it is bad it can be detrimental. Viral marketing is the term now used to describe everything from paying people to say positive things on the internet to setting up MLM selling schemes. For the B2B market trade shows are very important and ways or businesses to get word out about their product and services. What is viral marketing? Viral marketing is the term now used to describe everything from paying people to say good things about a product or service; this is done a lot in the investing penny markets quite often. Another thing done usually is setting up MLM schemes to get the word out, which allows customers to get commissions for directing traffic to them. Often companies will tell their customers that they can earn unlimited income from an opportunity they have for them and they take it. Describe how to implement a push and a pull strategy. A push strategy is a promotional strategy in which the producer uses advertising, personal selling, sales promotion and al other promotional tools to convince wholesalers and retailers to stock and sell merchandise. A pull strategy is a promotion strategy in which heavy advertising and sales promotion efforts are directed toward consumers so that they’ll request the products form retailers. 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.