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intangible product involving a deed, performance or effect, can't be physically produced. |
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Production and consumption are simultaneous, they are the same thing |
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Who was the first service economy? |
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United states (represent half of the GDP) |
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Isn't physical and can't be perceived by the senses, rely on price to determine quality |
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can't be stored for future use |
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Variation in quality, increases as degree of labor intensiveness increases, makes difficult to standardize industry |
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Client Based relationships |
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interactions result in satisfied customers who use a service repeatedly over time (Long time, loyal, unlikely to switch) |
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level of interaction between provider and customer needed to deliver service, train good employees for good customers |
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Offered by an organization and consists of a core service and supplementary service |
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basic service expected/experienced by customer |
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6 Service characteristics: |
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Intangible product/consumption at same time perishable heterogeneity (varies in quality) client based relationship Customer contact |
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a supportive service, used to differentiate service from competitors |
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key element in competitive advantage for service providers, provide acceptable level of service and economically efficient |
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customers believe company with perform service in a way that meets/exceeds promise |
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5 ways to deliver services |
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1. customers go to facility 2. server to customers home 3. "arms length" no personal contact 4. Short and direct marketing channels 5. warehousing |
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Inventory management (warehousing and transportation) |
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balancing supply/demand, increase supply of services, appointments and reservations |
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Negatives of equipment replacement |
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lack of personalization but increases serive supply and reduces labor costs |
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symbolize service, have nothing to do with actual product but help customers understand, specific language, IE show pictures of facilities and equipment |
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Service providers promote what? |
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price, guarantees, performance documentation and training certificates |
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Word of mouth communication |
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VERY important because of intangibility and heterogeneity |
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Ways price is established: |
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the specific task, amount of time, demand based pricing (esp with time-sensitive services like tanning) |
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customer's perception of how well a service meets/exceeds their expectations, marketers must look at from customers POV |
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Judged only during purchase or consumption of service |
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attributes that customers cant evaluate even after buying/using because of lack of knowledge/skill |
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Four factors that affect service quality |
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1. Customer expectation analysis 2. service quality specifications 3. employee performance 4. management of service expectations |
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difference between desired level of service and acceptable level of service |
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Customer-contact employees |
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least trained/lowest paid members of company |
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Management of service expectations |
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1. set realistic goals for services provided. 2. don't promise more than they deliver 3. customers tell 4X more people about bad service than good service |
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achieve other goal than profit; social marketing (social cause like AIDS) nonprofit- goal is not to make $$ |
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make VALUE judgments, the marketing provides ONLY knowledge to further organizations goals |
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people with interest in social cause, product or organizations |
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direct consumer of product, most marketing attention to these people |
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Indirect consumer of prodcut |
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1. focus on ideas/services 2. distribution focuses on how ideas made available to clients 3. Promotional decisions 4. Pricing |
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primary means of fundraising for social services |
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Fixed Variable-based on users ability to pay **place clients welfare above revenue |
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value of the benefit given up by selecting alternative over another product |
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Name, term, symbol or design that identifies one sellers good/service as distinct from those of other sellers |
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Can be spoken, letters, words, numbers |
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can't be spoken (symbol) nike swoosh |
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Legal designation, exclusive use -full legal name of an organization |
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Value of branding to buyers: |
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helps identify specific products, evaluates quality, reduces perceived risk, gives psychological reward, status |
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Value of branding to sellers: |
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make repeat buying easier for consumers, helps facilitating promotional efforts, level of stability, |
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brand conveys a powerful myth that consumers find useful in cementing their identities |
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Customer's favorable attitude towards a specific brand |
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3 degrees of brand loyalty |
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Brand recognition: aware of brand but views it as an alternative purchase Brand Preference: Prefers brand over another, but will accept substitute Brand insistence: strongest(declining) brand loyalty, NO SUBSTITUTE |
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marketing and financial value associated with brand's market strength; includes patents, trademarks, name, loyalty, quality and brand association |
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initiated by producers and ensure they are identified with their products at point of purchase. |
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Private distributor brands |
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store or dealer brands, initiated and owned by RESELLERS. manufactorers not identified. Cheaper and larger margin of profit |
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ongoing competition between manufacturer and private brands |
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indicates only a product category, NOT a company name, account for less than half a percent of retail grocery sale |
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-easy for customers to say, spell, recall -distinctive -compatible with all products in the line -no negative connotations -brand/service name the same -symbol with brand name |
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-registration!! -generic brands aren't protectable -Not like any other brand -Advil is not the only name for medicine -Trademark with symbol goes with brand |
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Trademark Law Revision Act |
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Increases value of the federal registration system relative to foreign competitors to protect consumers from counterfeiting |
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should they brand all products? Hard to brand raw materials |
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each product given a different name, use market segmentation |
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Products branded with same name (promotes all products) |
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firm uses one of its existing brands to brand a new product in different category |
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use of two or more brands on one prodcut, capitalizes brand equity of multiple brands |
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agreement in which a company permits another organization to use its brand on products for a licensing FEE |
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Protects and maintains products functional form by reducing damage that affects usefulness |
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similar packaging for all products |
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cost, tamper resistance, promotional role, shape, color, texture, meet needs of resellers, transportation, handling, environment |
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reused for purposes other than initial use, adds value to product |
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Category consistent packaging |
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package things consistently with associated products and categories |
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use extra items to make product completely distinctive |
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products come in twin packs or more, |
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Handling improved packaging |
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make it easier to handle in distribution channel, ie shrink wrapping |
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functional problems, safety problems, deceptive |
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promotional and legal purposes, brand name/mark, symbols and information |
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Universal Product Code (UPC) |
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electronically readable lines identifying a product and providing inventory/information |
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1966 Fair Packaging and labeling Act |
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mandatory labeling requirements and regulations |
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Nutrition Labeling Act of 1990 |
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FDA required to review food labeling and packaging. Nutrition and ingredients |
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decisions and actions involved in making products available to customers when/where they want to purchase them |
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activities associated with the flow/transformation of products from raw materials to purchase |
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managerial activities used to transform resource inputs into products |
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involves planning, implementing, and controlling the flow/storage of products and information from beginning to end for customers |
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set of approaches used to integrate operations, logistics, supply and marketing channel management so products are produced and distributed, in the right quantities to the right locations and at the right time. |
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Technology and supply chain management |
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seemless distribution, match inventory, reduces cost, integrates information |
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"channel of distribution" group of individuals that direct the flow of products from producer to consumer |
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link producers to other intermediaries and have consumers purchase goods and resale products, PRODUCTS AVAILABLE AT RIGHT TIME/RIGHT PLACE |
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requires all channel members to satisfy customers and reduce the cost of all channel members to improve profits |
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Significance in marketing channel decisions |
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determine a products market presence and accessibility, decisions on price/promotions easier to change than marketing channel |
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4 types of utility in marketing channels |
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1. time: available when customers want 2. Place: Available in locations 3. Possession: access to use/store product 4. Form: able to assemble, prepare, refine for individual needs |
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Criticism of intermediaries |
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inefficient/parasitic but won't remove the need for that, other people would perform the function |
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Channels for consumer products |
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A. directly form producer to consumer B. producer-retailer-consumer (large retailers) C. producer-wholesale-retail-consumer (mainly consumer products) D. producer-agent-wholesale-retail-consumer (processed food, mass distribution) |
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Channels for business products |
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Business Customers (E): direct communication with producers/customers when goods are expensive Industrial distributor (F): Facilitates exchanges between producer/consumer |
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Industrial distributor (business) |
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independent business that takes title to products/carries inventory, used when products have broad market appeal, easily stocked, sold in small quantities |
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Manufacturer's agent (business) |
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independent business person sells complimentary products of producer's in assigned areas and paid on commission |
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includes both manufacturer's agent and industrial distributor's; cover large area with sales force |
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use two or more market channel's to distribute same product to same market |
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strategic channel alliance |
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agreement that the products of one organization are distributed through the marketing channels of another (pancakes and syrup?) |
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Factors of selections market channel |
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customer characteristics, product attributes, type of organization, competition, marketing environment force, characteristics of intermediaries |
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Product attributes: Type of organization: Competition |
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-attributes have strong effect on channel -SIZE matters (large or small) -success/failure of others may consider similar approach |
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Environmental factors: Intermediary characteristics: |
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-regulations, technology,economy effect it -if company feels intermediary isn't promoting product effectively |
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all outlets for distributing a product are used (convenience products) |
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only some outlets in an area are chosen to distribute a product |
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only one outlet is used in a LARGE geographic area (infrequently purchased items) |
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organize/controls channel (producer, wholesaler, retailer) |
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ability o influence another channel member's goal achievement |
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Conditions needed to resolve conflict |
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-role of each channel member specified -use channel coordination (leadership,ect) |
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Vertical channel integration |
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combines two or more stages of the channel under one management (eliminates intermediary by purchasing another company) |
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Vertical marketing systems (VMS) |
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single channel member coordinates channel activities to reach low cost, effective distribution (Corporate, administered, contractual) |
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all stages from producer to consumer under ONE owner |
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independent channel members but high level of inter-organizational management with INFORMATION COORINATION |
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Most popular, linked by legal agreement spells out rights/obligations |
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Horizontal channel integration |
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combine organizations at same level of operation under one management (merge) |
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"logistics" activities used to move products from producer to consumer |
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contract physical distribution tasks to third party to decrease cost |
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managers view physical distribution as a systme |
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time needed to complete a process |
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order processing (and three tasks) |
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receipt/transmission of sales order information. Order entry, order handling, order delivering |
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electronic data interchange |
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computer order processing with production, inventory, accounting and transportation, LINKS marketing channel member and outsourcing firm |
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develop/maintain adequate assortment of products to meet customer's needs |
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product shortage, loss of customers, low sales, switch brands |
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order lead time X usage rate + safety stock |
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two methods of material handling |
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1. unit loading: boxes placed on pallet and loaded with machine 2. containerization: consolidate many items into large container and ship |
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design/operation of facilities for storing/moving goods Private: Company owned Public: leased storage space Distribution center: rapid flow of goods in large facility NO STORAGE |
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Five transportation modes |
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RR: carry heavy/bulky over land Truck: Most flexible route/schedule Water: cheapest heavy/low value,coal Air: fast/$$, high value perishable Pipeline: most automated, chemicals/oil |
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Five factors of transportation modes |
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cost, speed, dependability, load flexibility, accessibility |
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Intermodal transportation |
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two/more transportation modes used |
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consolidate shipments from several firms for low cost |
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Freight transportation, offer many modes of shipment |
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use two market channels to distribute same product to same market (threat to competition) |
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supplier furnishes product to channel member with stipulation that the channel member must purchase other products too |
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manufacturer forbids intermediary to carry product of competing manufacturer;s |
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includes all transactions where buyer intends to consume products through personal, family, house use. Resell products to "ultimate customer" |
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Add value/assist in product selection and are CRITICAL link between producer and ultimate consumer |
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General merchandise retailer (8) |
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variety of product lines. 1. department store (employs at least 25) 2. discount store(self-service, less $) 3. Convenience (convenience item,24/7) 4. supermarket (large, buy 3/4 of items 5. superstore-food and nonfood items 6. hypermarket-supermarket+discount 7. Warehouse club-member only, large 8. Warehouse showroom |
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traditional specialty retailer |
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carry small product mix w/deep product lines (cheese store) limited line retailer |
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very large specialty store, compete on basis of low price/product availability |
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buy seconds, overrun, returns, off-season goods at huge discount (20-50 less%) |
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strategy factors of retail stores |
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location, retail positioning, store image, category management |
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least flexible/most important issue, dictates customer people |
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Neighborhood: small convience/specialty Community: department/convience/special REGIONAL: Many department, large product mix product line (150,000) Lifestyle: open-air shopping center Power: combine off-price/small store with category killers |
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identify under-served market segment and re-distinguish in minds of consumers |
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atmosphere, attracts customers, appearance, displays |
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retail strategy that manages group of similar goods (substitute) produced by different manufacturers, NEED cooperative interaction |
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use of television/non-personal media to communicate product/organizational info. to customers |
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catalog to make selection and place order via mail, phone, internet |
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Direct-response marketing |
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retailer advertises a product and make it available through mail/phone. IE telemarketing, TV home shopping, Online retail |
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"door-to-door" face-to-face sales presentation EXPENSIVE |
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machines dispense products selected by customers, impersonal, needs service/repair |
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supplier grants dealer right to sell product for money, franchise supply labor/capital |
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advantages/disadvantages of franchising |
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*start business with limited capital, successful, gain fast distribution -dictate aspects of business, pay to use name |
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independent business take title to goods, assume risks associate with ownership and generally buy/resell products to wholesalers, retailers, |
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