Block 2.2 Flashcards
What is a product?
‘A combination of tangible and intangible characteristics that enable an object or a service to satisfy a customer need.’
What is the “bundle of benefits”?
Buying a product really exists out of the actual product and the way it is bought. When you buy an i-phone at mediamarkt, you probably get less service than when you buy it at an Apple store.
In a marketing perspective, someone who buys a phone at an Apple store gets a different product then someone who buys it at Mediamarkt.
What are the three different product levels?
- The core product
- The actual product
- The augmented product
What is a core product?
What it is meant for/ how it fulfils the needs of the customer. For a car, it is transportation.
What is the “actual product”?
Everything that is physically attached to it. You can’t separate it.
What is an augmented product?
Everything you get when buying a product that can be separated: service, installation.
What are the two types of consumer products?
- Consumer goods
- Business products
What are consumer goods?
They are sold to individuals and families for their personal use or consumption.
What are business products?
Products, services or industrial goods that are sold to organisations that either resell them or use them to make products or to provide a service.
What are 4 categories of consumer goods?
- Convenience products
- Shopping products
- Speciality products
- Unsought products
What are convenience products?
Things that we buy without thinking, with minimum effort. Preferred brand, but accepts substitutes.
What are shopping products?
Items for which the consumer normally comperes quality, price and style of a few alternatives.
Shopping products can be homogeneous or heterogeneous.
What is a homogeneous shopping product?
When someone thinks all televisions are the same. All the same. Consumer looks for cheapest.
What is a heterogeneous shopping product?
Difference between products, at least in the eyes of the consumer. Consumer has a favourite brand.
What are speciality products?
Things we really care about. Consumers are willing to make a special effort to buy this product. High involvement with purchasing. (Like special beer, you have to go to a special store)
What are unsought products?
Products and services of which consumers are unaware, haven’t necessarily thought of buying or discover they need it on order to solve an unexpected problem.
You can also classify products in durable and non-durable. What is the difference?
Durable products are, for example, cars, E-readers and dishwashers. These products are used repeatedly over an extended period.
Non-durable products have a relatively short life cycle, like clothing and footwear.
What is the product mix?
The total assortment of products and services that the company sells, including the various product lines, products, product types and brands.
What is the product mix width?
The number of product lines the company sells.
What is the product mix length?
The total number of articles a company offers within all of its product lines.
What is the product mix depth?
The number or product items (brands, types and sizes) in a product line.
What is the assortment height?
Products that fall within the same price range.
What are the 5 stages of the product life cycle?
- Introduction
- Rapid growth
- Turbulence
- Maturity
- Decline
In which stage are the sales the highest?
Maturity
In which stage are the profits the highest?
Rapid growth
How to stretch the maturity fase?
- Stimulate more frequent use
- Tap different markets
- Coca Cola –> Coca Cola light and zero - Suggest alternate use
- you can use KitKat as a morning snack as well, and in a cake!
What is the Introduction stage of the product life cycle?
Consumers are not even aware of the product and its potential uses.
Emphasise primary demand: convince target group that they should use the type of product. After that, the company can focus on selective demand: demand for the brand, and not the product.
What is the Rapid Growth stage of the product life cycle?
Sales grow at an increasing rates and faster than during any other part in the product life cycle.
Word-of-Mouth communication creates a snowball effect, which makes the market expand daily.
What is the Turbulence stage of the product life cycle?
Sales continue to increase. Virtually, all potential buyers are aware of the product and will have tried or purchased the product. New competitors enter the market and there is an intense fight for market share.
What is the Maturity stage of the product life cycle?
The curve peaks and starts to decline. The company has to start thinking about the future of its product. The primary goal is to defend the market share.
The company should have small, noticeable changes that will keep consumers away from competition.
What is the Decline stage of the product life cycle?
The sales start to decline rapidly. Usually, a product enters this stage because of changes in the environment.
What causes a product to become in the Decline stage?
- A saturated market (all households have a phone)
- Consumers’ changing tastes or social values. (women no longer want to wear fur)
- New technology
What are the three levels of product’s sales analysis?
- Product category or product class
- Product type or form
- Brand
What four elements does the product mix exist of?
- Product quality
- Product warranty
- Product guarantee
- Satisfiers and dissatisfiers
What is the definition of “Product Quality”?
The collection of attributes and features of a product or service that influence its ability to meet customers’ needs, wants and expectations.
What is the technical quality of a product?
It relates to a product’s dependability and durability. It reflects how well it performs its intended function.
What is the consumer quality of a product?
It relates to the overall characteristics of a product that are important to consumers and that allow it to perform as expected in satisfying customer needs.
Why is quality management necessary?
Because quality is subjective.
What is the price/quality ratio?
How higher the quality, how more money a company can ask for the product. But, not all customers are willing to pay a high price. There should be a balance.
What is a warranty?
A written statement of what a seller promises to do if a product turns out to be defective or fails to perform within a certain period after being purchased.
What is a guarantee?
Assurance that the product is as represented and that it will provide the expected performance.
What are satisfiers?
Things about a product that cause satisfaction. In a sense that there are elements of a product that, from a customer’s POV, improve its quality and are major reasons to buy the product.
What are dissatisfiers?
An absence from a product that will be the reason for a consumer not to buy a product.
What is the definition of “Brand”?
‘Name, term, symbol, design or any feature that a firm uses to identify its products/services and differentiate them from those of competitors.’
What is a brand name?
For example, HP, TomTom.
What is a brand mark?
The logo. It can not be vocalised.
What is a Trademark?
A brand, especially one that is officially registered and protected by law, which a company or individual uses as identification on goods made or sold by them. Trademarks must be registered legally.
What is a manufacturer brand?
It is owned by the product’s maker or manufacturer. There are two sorts.
What are the two types of manufacturer brands?
- Premium
2. Standard
What are distributor brands?
Owned and controlled by a retailer, wholesaler or other type of reseller.
What are 5 important things about packaging and design?
- Technical: protection
- Product information
- Symbolic image
- Product differentiation
- Stimulate consumption
What are the characteristics of services?
- Intangible
- Inseparability
- Perishability
- Heterogenity
What is perishability?
(Beperkt houdbaar)
It cannot be stored for future use.
What are the 5 types of new products?
- Product innovation
- Me-too product
- Product line addition
- Product modification
- Repositioned product
When talking about new products, what is product innovation?
A new to the world product that provides a new way of satisfying needs and wants and created a whole new product category.
What is a me-too product?
A new product type. It is new to the company but already sold by other firms. (Like navigation systems)
What is a product line addition?
A product is added to the company’s existing line of products. (Senseo, a new coffee flavour)
What is product modification?
An improved version of one of the firm’s current products that replaces the original one. (windows 8)
What is a repositioned product?
A product intentionally positioned or marketed in a different way to create a new image in the minds of the target audience.
What is a “Flanker Brand”?
A new item introduced under a new brand name into a product category in which the company already sells products.
What are the seven reasons why firms introduce new products?
- Sales growth objectives
- Excess capacity
- Completion of the product line
- Government regulations
- Competition
- Changing wants and needs
- New technology
Why is “Sales growth objectives” a reason to introduce a new product?
Business objectives are to establish sale growth of over 10% a year. The easiest way to achieve this is by introducing a new product.
Why is “Excess capacity” a reason to introduce a new product?
Excess capacity = bezettingsgraad. Percentage dat aangeeft hoeveel van de totale beschikbare capaciteit - van een productiemiddel - daadwerkelijk benut wordt.
There are still overhead costs (vaste kosten), when introducing a new product, the profit from that might fix overhead costs and the excess capacity will be higher.
What are substitute products?
Product that replaces another product.
What is the make-or-buy decision?
Once a company decides to introduce a new product or service, there are two strategic options.
- Develop the product internally
- Acquire a patent, license or established brand, or buy out a firm that already makes the product or delivers the service.
What is the new product strategy development process?
6 steps
- Idea generation
- Screening and evaluation
- Business analysis
- Prototype development
- Test marketing
- Commercialisation
There are two types of product development strategies, what are these?
- Proactive
2. Reactive
What is a proactive product development strategy?
It focusses on anticipating future events. The company is constantly searching for new marketing opportunities.
The objective is to stimulate and initiate changes.
What is a reactive product development strategy?
A company with a reactive strategy adopts a defensive approach. It implements reactive changes in response to events that have already taken place in the environment.
What happens during the screening fase?
80% of all new product ideas are eliminated.
What happens during test marketing?
Almost all the ideas are eliminated, the remaining ones are being test marketed. Here, the product gets tested on a small scale, supported by a complete marketing campaign. A population that is representative for the selected target market is used in order to assess the effectiveness of the marketing strategy.
Companies who are a well known brand or have already launched similar products will most likely skip this fase.
What is a roll-out strategy?
Some new products are initially introduced in only one area of the country or market and then, if successful, are sold in other submarkets.
What is a venture team?
A tightly structured, independent group of people from different departments or functional areas of the enterprise. The team member are usually relieved of their normal tasks and responsibilities for as long as they are associated with the project.
This group together will evaluate new product ideas.
What are the two alternatives of venture teames?
- New product managers
2. New product committees
What are the six ways to speed up the product development process?
- Start early: start before there is a consumer demand
- Outsource part of the process: focus on essential and strategic aspects of the new product and leave the rest to experts outside of the company
- Use internal competition: get two development teams (expensive though)
- Make stages overlap: start working on the next one already, but excellent internal communication is required
- Use other people’s ideas
- Assemble the right team
What are 5 factors that influence whether the product will be a succes?
- Customer orientation
- Core business activity
- Superior product
- Stimulating corporate culture
- Well-planned product development process
What is “Customer orientation”?
A new product has to satisfy customer’s needs and wants.
What is synergy?
The interaction or cooperation of two or more organizations, substances, or other agents to produce a combined effect greater than the sum of their separate effects.
What are the 5 reasons for failed introductions of a product?
- No clear product benefits
- Poor marketing strategy
- Quality problems
- Unanticipated competitive reactions
- Bad timing
What is the diffusion process?
The spread of new ideas and products through society and their acceptance by various groups in the target market