* Describe the three strategies that are necessary for a market leader to accomplish to stay on top.

Expanding the total market, when the total market expands, the dominant firm usually gains the
most.
Protecting market share, while trying to expand total market size, the dominant firm must actively
defend its current business.
Increasing market share, no wonder competition has turned fierce in so many markets: one share
point can be worth tens of millions of dollars.

* Characterize the four broad strategies often employed by market followers to meet their
competitors.
Counterfeiter - the counterfeiter duplicates the leader's product and package and sells it on the
black market or through disreputable dealers.
Cloner - the cloner emulates the leader's products, name, and packaging, with slight variations.
Imitator - the imitator copies some things from the leader but maintains differentiation in terms of
packaging, advertising, pricing, or location.

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Adapter - the adapter takes the leader's products and adapts or improves them.

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*Describe the four stages for Product Life Cycle.

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1. Introduction, a period of slow sales growth as the product is introduced in the market. Profits are
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nonexistent because of the heavy expenses of product introduction.
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2. Growth, a period of rapid market acceptance and substantial profit improvement.
3. Maturity, a slowdown in sales growth because the product has achieved acceptance by most
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potential buyers. Profits stabilize or decline because of increased competition.

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4. Decline, sales show a downward drift and profits erode.

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*Describe the "customer-value hierarchy" and identify the five levels of product contained within.
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1. The core benefit, the service or benefit the customer is really buying.
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2. The basic product, the actual product that provides the core benefits.
3. Expected product, a set of attributes and conditions buyers normally expect when they purchase the
product.
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4. The augmented product, the marketer exceeds customer expectations.

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5. The potential product, which encompasses all the possible augmentations and transformations the
product or offering might undergo in the future.
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* What the firms do to sustain rapid market share growth?
4. Improve product quality; add new features.
5. Add new models and flanker products (Diff. sizes, flavors) to protect the main product
6. Enter new market segments
7. Focus advertising on preferences & loyalty (not awareness and trial)
8. Increase distribution coverage
9. Lower price; Attract price-sensitive buyers

* Describe the PLC Objective & Strategies

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* Classification of product

1. Nondurable goods—the appropriate strategy is to make them available in many locations, charge
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only a small markup, and advertise heavily to induce trial and build preference.
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2. Durable goods—tangible goods that normally survive many uses . Durable products normally require
more personal selling and service, command a higher margin, and require more seller guarantees.
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3. Services—intangible, inseparable, variable, and perishable products. They require more quality
control, supplier credibility, and adaptability.

*Consumer Goods Classification

1. Convenience goods are bought frequently, immediately, and with a minimum of effort.

2. Shopping goods are goods that the consumer characteristically compares on such bases as suitability,
quality, price, and style.
3. Specialty goods have unique characteristics or brand identification for which a sufficient number of
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buyers are willing to make a special purchasing effort.
4. Unsought goods are those goods that the consumer does not know about or does not normally think
of buying.

*Explain the concepts of product-mix width, length, depth, and consistency.

- The width of a product mix refers to how many different product lines the company carries.
- The length of a product mix refers to the total number of items in the mix.
- The depth of a product mix refers to how many variants are offered of each product in the line
and is determined by dividing the total number of items by the number of lines.
- The consistency of the product mix refers to how closely related the various product lines are in
end use, production requirements, distribution channels, or some other way.

*Explain the concept of line stretching and the three uses for it.
Line stretching occurs when a company lengthens its product line beyond its current range. It includes:
- Down-market stretch (introduce a lower-priced line).
- Up-market stretch (introduce an upscale line).

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- Two-way stretch (introduce both an upscale line and a down-scale line).

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*Product-mix pricing can involve a number of pricing strategies for the brand manager. List each of

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these strategies and briefly define each.
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- Product-line pricing—low-, medium-, and high-priced products within the same line, such as
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different priced ties.
- Optional-feature pricing—charging for "extra" features, such as leather seats in a car.
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- Captive-product pricing—when the "user" has no choice but to use the high-priced "disposable"
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products that make the entire product work (for example, ink cartridges for printers).
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- Two-part pricing—consisting of a fixed fee and a variable usage fee (cell phone usage).
- By-product pricing—the price of the by-products of goods is being used for other purposes (oil
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refining for example).

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- Product-bundling pricing—pure bundling when the firm offers its products only as a bundle, or
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mixed bundling when the firm offers its products as a "bundle" and/or individually.

* List the Steps in Setting Price.

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1. Select the price objective

2. Determine demand
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3. Estimate costs
4. Analyze competitor price mix
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5. Select pricing method

6. Select final price

*Briefly describe the different types of pricing objectives.

Survival - Companies pursue survival as their major objective if they are plagued with overcapacity,
intense competition, or changing consumer wants. As long as prices cover variable costs and some fixed
costs, the company stays in business.
Maximum current profit - Companies who try to maximize their current profit, estimate the
demand and costs associated with alternative prices and choose the price that produces maximum
current profit, cash flow, or rate of return on investment. This strategy assumes the firm knows its
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demand and cost functions, but in reality, these are difficult to estimate.
Maximum market share - Companies that want to maximize their market share believe that a
higher sales volume will lead to lower unit costs and higher long-run profit. They set the lowest price,
assuming the market is price sensitive. This is a market-penetration pricing strategy.
Maximum market skimming - Companies unveiling a new technology favor setting high prices to
maximize market skimming. Companies that use this introduce their products at a high price and slowly
drop the price over time.
Product-quality leadership - Companies that aim to be product quality leaders strive to be
affordable luxuries, i.e., they want their products and services to be characterized by high levels of
perceived quality, taste, and status with a price just high enough not to be out of the consumer's reach.
* What are the different price-setting methods? Briefly describe each of them.
Markup pricing - This is the most elementary pricing method wherein a standard markup is added to the
product's cost.
Target-return pricing - Here, the firm determines the price that yields its target rate of return on
investment.
Perceived-value pricing - Perceived value is made up of a host of inputs, such as the buyer's image

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of the product performance, the channel deliverables, etc... And companies must deliver the value

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promised by their value proposition, and the customer must perceive this value.

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Value pricing - Companies win loyal customers by charging a fairly low price for a highly-quality

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offering.
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Going-rate pricing - Here, the firm bases its price largely on competitors' prices.
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Auction-type pricing - There are three major types of auctions and their separate pricing procedures:
o English auctions - These have one seller and many buyers. The highest bidder gets the item.
o Dutch auctions - This features one seller and many buyers, or one buyer and many sellers.
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o Sealed-bid auction - This lets would-be suppliers submit only one bid. The suppliers have no
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knowledge about the other bids.

*What are the different forms of countertrade?
Barter - The buyer and seller directly exchange goods, with no money and no third party involved.
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Compensation deal - The seller receives some percentage of the payment in cash and the rest in
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products.
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Buyback arrangement - The seller sells a plant, equipment, or technology to another country and
agrees to accept as partial payment products manufactured with the supplied equipment.
Offset - The seller receives full payment in cash but agrees to spend a substantial amount of the
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money in that country within a stated time period.

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*What are the different types of price discounts and allowances?

Discount - This is a price reduction given to buyers who pay their bills promptly.
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Quantity discount - This is a price reduction offered to those who buy in large volumes.
Functional discount - This is offered by a manufacturer to trade-channel members if they perform
certain functions like selling, storing, and record keeping.
Seasonal discount - This is a price reduction given to those who buy merchandise or services out of
season.
Allowance - This is an extra payment designed to gain reseller participation in special programs.
These are of two types:
- Trade-in allowances - These are granted for turning in an old item when buying a new one.
- Promotional allowances - These reward dealers for participating in advertising and sales support
programs.
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*Briefly explain some of the different types of intermediaries.
Wholesalers and retailers—buy, take title to, and resell the merchandise; they are called
merchants.
Others—brokers, manufacturers' representatives, sales agents—search for customers and may
negotiate on the producer's behalf but do not take title to the goods; they are called agents.
Others—transportation companies, independent warehouses, banks, advertising agencies—assist
in the distribution process but neither takes title to goods nor negotiates purchases or sales; they are
called facilitators.

Explain the three distribution strategies based on the number of intermediaries.

Exclusive distribution: This strategy focuses on severely limiting the number of intermediaries. It's
appropriate when the producer wants to maintain control over the service level and outputs offered by
the resellers, and it often includes exclusive dealing arrangements.
Selective distribution: This distribution strategy relies on only some of the intermediaries willing to
carry a particular product.

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Intensive distribution: This strategy places the goods or services in as many outlets as possible.

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*Briefly explain the various levels of marketing channels.

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A zero-level channel, also called a direct marketing channel, consists of a manufacturer selling
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directly to the final customer. The major examples are door-to-door sales, home parties, mail order,
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telemarketing and TV.
A one-level channel contains one selling intermediary, such as a retailer.
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A two-level channel contains two intermediaries. In consumer markets, these are typically a
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wholesaler and a retailer.

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A three-level channel contains three intermediaries. In the meatpacking industry, wholesalers sell
to jobbers, essentially small-scale wholesalers, who sell to small retailers.
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*What are the steps of designing a Marketing Channel System?
1. Analyze customer needs
2. Establish channel objectives
3. Identify major channel alternatives
4. Evaluate major channel alternatives

*Briefly explain the various service outputs that marketing channels produce.
Lot size: The number of units the channel permits a typical customer to purchase on one occasion.
Waiting and delivery time: The average time customers wait for receipt of goods. Customers
increasingly prefer faster delivery channels.
Spatial convenience: The degree to which the marketing channel makes it easy for customers to
purchase the product.
Product variety: The assortment provided by the marketing channel. Normally, customers prefer a
greater assortment because more choices increase the chance of finding what they need, although too

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Service backup: Add-on services (credit, delivery, installation, repairs) provided by the channel. The

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greater the service backup, the greater the work provided by the channel.

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*description of a value network rs e
A system of partnerships and alliances that a firm creates to source, augment, and deliver its offerings.
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*What are the elements of the marketing communications mix?
Advertising — any paid form of nonpersonal presentation and promotion of ideas, goods, or
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services by an identified sponsor via print, broadcast, network, electronic, and display media.
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Sales promotion — A variety of short-term incentives to encourage trial or purchase of a product or

service including consumer promotions, trade promotions, and business and sales force promotions.
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Events and experiences — Company-sponsored activities and programs designed to create daily or
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special brand-related interactions with consumers, including sports, arts, entertainment, and cause
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events as well as less formal activities.

Public relations and publicity — a variety of programs directed internally to employees of the
company or externally to consumers, other firms, the government, and media to promote or protect a
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company's image or its individual product communications.

Direct marketing — Use of mail, telephone, fax, e-mail, or Internet to communicate directly with or
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solicit response or dialogue from specific customers and prospects.

Interactive marketing — online activities and programs designed to engage customers or prospects
and directly or indirectly raise awareness, improve image, or elicit sales of products and services.
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Word-of-mouth marketing — People-to-people oral, written, or electronic communications that

relate to the merits or experiences of purchasing or using products or services.
Personal selling — Face-to-face interaction with one or more prospective purchasers for the
purpose of making presentations, answering questions, and procuring orders.

* List the Factors of Setting Communications Mix.

Type of product market

o Consumer markets Advertising & Sales promotion
o Business markets P.S. & Advertising
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 Product life cycle stage
o Introduction: Advertising, P.S. & Sales promotion
o Growth: Word-of-mouth
o Maturity: Sales promotion, Advertising, & P.S.
o Decline: Sales promotion, Advertising & publicity

* Briefly describe the macromodel of the marketing communications process.

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The macromodel of the communications process has nine key factors in effective communication.
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Two represent the major parties — sender and receiver.

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Two represent the major tools — message and media.

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Four represent major communication functions — encoding, decoding, response, and feedback.
The last element in the system is noise, random and competing messages that may interfere with
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the intended communication.

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Senders must know what audiences they want to reach and what responses they want to get. They must
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encode their messages so the target audience can decode them. They must transmit the message
through media that reach the target audience and develop feedback channels to monitor the responses.
The more the sender's field of experience overlaps that of the receiver, the more effective the message
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is likely to be.
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