CLEP Principles of Marketing Study Notes

Calculate the markup as a percentage of the cost when

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Calculate the markup as a percentage of the cost when the product cost is $40 and the selling price is $60. The markup would be 50 %. The answer is 50%. Take the markup (60 - 40 = 20) and divide it by the cost (20 / 40). You divide it by the cost because you are calculating markup as a percentage of the cost. If you divide it by the selling price (20 / 60) you get 33.3%, so when the markup based on cost is 50%, the markup based on price is 33.3%. Product Adoption Process - steps buyers go through in accepting a product. Consists of 5 steps: 1. Awareness 2. Interest 3. Evaluation 4. Trial 5. Adoption- When a buyer accepts a product and decides to continue using it regularly. Buyer buys a product and decides to continue buying it; however, they still require reassurance or confirmation on a regular basis to stick with that product. This process is often taken into account in the commercialization phase of new product development, where companies try to promote the product to make people aware of the product, and even offer samples or trials to help them decide to purchase the product for the first time. Diffusion Process - divides into 5 categories the people who decide to adopt a product based on how soon after its initial release they purchase it. Progression through which an innovation travels through the social system . 5 Groups of People: (in order) 1. Innovators - first to buy a new product. Customers who are at the forefront of trends , particularly when it comes to technical products are known as innovators. Likely to have a higher disposable income and are often willing to pay a higher price to be first into the market. They make up about 2.5 percent of the population. 2. Early Adopters - Young, have an above average education and comprise approximately 13.5 percent of the population. 3. Early Majority - speed of adoption increases significantly. Made up of middle class consumers. They are more cautious in making purchases than the early adopters and they make up approximately 34 percent of the population. 4. Late Majority - a group skeptical of new ideas. Tends to be older, more conservative and traditional than the early majority . They also tend to be less educated and more skeptical about new products and ideas. This group makes up about 34 percent of the population. 5. Laggards - price conscious, low-income consumers who are the last to buy a product/services. Make up about 16 percent of the market. They tend to be older and resist change. Often this group will only adopt a new clothing style when other groups have abandoned the style and moved on to something else. Whereas the diffusion process tracks an innovation as it spreads throughout a social system, the adoption process is concerned with the individual 's decision making process. Product Positioning - refers to the decisions and activities intended to create and maintain a certain concept of the firm's product relative to competitive brands in customers' minds. Trying to manipulate the product's position, or image , relative to competing brands and products. The customers' concept of a product's attributes
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