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Midterm

AFM131 Study Guide - Midterm Guide: Statistical Process Control, Sales Promotion, Profit Margin


Department
Accounting & Financial Management
Course Code
AFM131
Professor
Robert Sproule
Study Guide
Midterm

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Marketing 1
Marketing = process of determining customer needs and wants and then developing GS that
meet these expectations
- Tailored to market, which changes continually
Green marketing: market efforts to produce environmentally sensitive products
FOURS ERAS OF MARKETING
- Production
- Sales
- Marketing concept
Customer orientation
Service orientation
Profit orientation
- Customer relationship (1990s)
FOUR P’S OF MARKETING
- Product
- Price
- Place
- Promotion
Secondary data = info that has already been compiled by others
Primary data = info gathered by yourself (eg. Via focus group)
Environmental scanning: process of identifying the factors that can affect marketing
success
TWO DIFFERENT MARKETS
A) CONSUMER MARKET: all individuals or households that want GS for personal use
B) BUSINESS-TO-BUSINESS: all individuals and organizations that want GS to use in
producing other GS

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CONSUMER MARKET
Market segmentation: process of dividing the total market into groups whose members
have similar characteristics
Target marketing: marketing directed toward those groups
- Geographic
- Demographic religion, education level, age
- Psychographic personality, social class
- Behavioural behaviour towards certain product
Mass vs. Relationship marketing
Mass marketing = developing products and promotions to please large groups of people
Relationship marketing = goal of keeping individual customers over time
Cognitive dissonance: psychological conflict that can occur after a purchase
- Learning
- Reference group
- Culture
- Subculture
BUSINESS TO BUSINESS MARKET
- Number of customers relatively few
- Size of business is relatively large
- Geographically concentrated
- Business buyers thought to be more rational
- Sales are direct
- More emphasis on personal selling

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MARKETING 2
Total product offer (“value package”) = everything that consumers evaluate when deciding
whether to buy something
Product line = group of products that are similar or intended for a similar market
Product mix = the combination of product lines offered by a manufacturer
Product differentiation = creation of real or perceived product differences
PRICING OBJECTIVES
- Achieve target return on investment/profit
- Building traffic advertising loss leaders
- Achieving greater market share
- Creating an image
- Furthering social objectives
THREE APPROACHES TO PRICING
1) Cost-based pricing: measure production costs + margin of profit = price
2) Demand-based pricing
Bundling: grouping 2 or more product together and price them as a unit
Psychological pricing: make product seem less expensive eg. 199
Target costing: design product that satisfy customers and meets profit margin
desired by firm
3) Competition-based pricing
Price leadership = procedure by which 1 or more dominant firms set the pricing
practices that all competitors in an industry should follow
Break-even analysis: process used to determine profitability at various levels of sales
Break even point = total fixed cost/ (price of one unit variable cost of one unit)
Total fixed costs: all expenses that remain the same no matter how many products are made
or sold
Variable costs: costs that change according to the level of production
PRICING STRATEGIES FOR NEW PRODUCTS
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