BUSI 231 - test 3 Flashcards
what is a product?
anything in the marketplace that can satisfy a need or want
what are the 4 benefits that products deliver?
- sensory
- functional
- resource
- psychological
what is sensory benefits?
appeal to one or more of the five senses
what is functional benefits?
products that perform an intended task effectively and efficiently.
what is resource benefits?
provide or save customers things that they value, primarily time and money
what is psychological benefits?
affect how the customer responds emotionally to product purchases.
core product
It is the primary reason why a customer buys the product or service
actual product
An actual product is the tangible or intangible product that delivers the core benefit to the customer. It includes the physical attributes, design, brand, quality, and features that differentiate it from competitors.
augmented product
An augmented product includes all the additional services, benefits, and features that enhance the actual product and improve the customer experience.
what is innovation
an improvement in a products ability to deliver its primary benefit to its customer
discontinuous innovation
large jumps in products benefit- delivering abilities
continuous innovation
smaller incremental improvements to products benefit- delivering abilities.
new product development process (4)
- Conceptualization: process that pertain to generating and screening ideas
- Planning: where viable product concepts are considered through the lens of marketing strategy
- Commercialization: creating, producing, and selling the product are put into motion
- Prototypes: working models of the actual product
the diffusion of innovation
Diffusion of innovation is how new technology and products slowly become popular and used by more people over time.
groups as they adopt new products over time
- innovators
- early adopters
- early majority
- late majority
- laggards
what is the product life cycle and the stages?
The product life cycle is the pattern of growing and declining sales in a product category.
1. development
2. introduction
3. growth
4. maturity
5. decline
what affects the product life cycle? (1)
competition from multiple brands
variations in the product life cycle
- fads (really high increase and quick steep decrease)
- fashions (up, down, up, down)
Figure C (steady increase, levels out, steady decrease) shows a whole host of enduring products that remain largely unchanged for many years.
brand name
parts of brands that can be spoken
brand marks
include visual designs, logos, colors, typefaces, and other representations that cannot be spoken
branding
a process
brand equity
the financial value of a brand is captured in the concept
brand image
collection of images, thoughts, and feelings that are evoked when someone is exposed to a brand name.
influences on price setting
- customer perceptions or expectations
- internal costs
- market characteristics
- competition
reference price
an expectation about the price of a given product
internal costs
variable and fixed costs
what are the 2 market characteristics
- Price sensitivity (Price elasticity of demand) How do consumers respond to price increases or decreases?
Price elasticity of demand = % change in quantity demanded/% change in price - Product Life Cycle
How does the price change as the product moves through stages of its life cycle?
pricing strategy for new products?
- skimming: an initially high price and using gradual, timed price drops to make as much profit as possible over time by maximizing how much you make from each sale.
- penetration: introducing a new product at a relatively low price to establish a large market share before competitors can establish themselves.
pricing strategy for existing products?
- cost-based: Cost-Plus (Markup) Pricing. Set the floor for the price the company can charge. Product cost + markup = price
- value-based: Starts with the consumer, considers the competition, and then determines the price.
consumer + competition =value-based pricing
static pricing strategy?
Everyday Low Prices: When a store offers consistently stable prices tied to small markups on items throughout the store.
dynamic pricing strategies?
- High-Low: The store offers temporary low prices on items and then raises the prices significantly on these items when other items are offered on discount
- Loss-Leader:The retailer discounts certain items significantly to lure customers in to the store hoping those customers will buy other merchandise at higher margins
pricing strategies for services?
- hourly pricing
- flat-rate pricing
- retainer-based: A pricing model in which a business charges a fixed fee for a predetermined period of time in exchange for a set of services
- value-based
- tiered pricing:offers different pricing options for a product or service based on the usage, quantity, and/or volume purchased by the custom
- freemium pricing: offers a basic product or service for free, with the option for customers to upgrade to a premium version with additional features or benefits for a fee
- subscription pricing
- performance-based: charges a customer based on the results achieved or the outcomes produced by the product or service.
breakeven formula?
breakeven = FC/P-VC
predatory pricing?
Setting prices extremely low (the typical rule is below variable cost) for an item specifically to run competitors out of business.
bait and switch?
Occurs when a company offers customers an attractive low price on an item but then doesn’t have the item available when the customer tries to buy it, instead pushing a higher-priced item that typically has a higher margin.
price discrimination?
Charging different customers a different price for the same thing, is generally illegal unless certain conditions are met.
price fixing?
A form of collusion where companies agree either implicitly or explicitly to charge an artificially high price rather than set competitive market prices based on market conditions.
what are the two devisions of supply chains?
- industrial supply chain: raw materials -> component parts maker -> final producer or manufacturer
- retail supply chain: final producer or manufacturer -> wholesaler -> retailer -> consumer
supply chain & distribution channels
upstream partners: suppliers -> producers ->
downstream partners: wholesalers/retailers
structure of retail supply chains (3)
- traditional: producer -> wholesaler -> retailer -> consumer
- retailer: producer -> retailer -> consumer
- direct retail supply chain: producer -> consumer
what moves through supply chains?
- materials and merchandise
- money
- information
- promotional efforts and assistance
when to use direct supply chains?
- where pre-purchase inspection is not important.
- build and support online retail sales.
- consumers do not need the product immediately
when to use indirect supply chains?
- When wholesalers have better access to retailers than producers do.
- When producers sell to one wholesaler, who in turn sells to hundreds of retailers, producers can keep costs down and quantities up.
intensive distribution
When producers wish to make their products easily obtainable and increase convenience
selective distribution
When producers place their brands in many but not all possible outlets.
exclusive distribution
placing their product in few outlets. Most often used for luxury or specialty products, exclusive distribution contributes to brand exclusivity
3 retailer store types
- Mass merchandisers: Very large retail stores that specialize in selling large volumes of merchandise at low prices. exmaples such as Walmart, Costco, Safeway, Home Depot, and Best Buy are all mass merchandisers.
- Department stores: Large stores that feature apparel and home furnishings but are usually smaller than mass merchandisers. Examples of department stores include Hudson’s Bay, Nordstrom.
- Specialty stores: Physically much smaller in space than mass merchandisers and department stores. Examples include PetSmart, Marks.
push vs pull strategy
- A push strategy is where the producer uses its sales force and promotional incentives to convince wholesalers and retailers to carry the producer’s products.
- A pull strategy is where a producer goes directly to the consumer, usually by advertising, and attempts to build demand for its brands.
3 conflicts in supply chains
- Supply chain members have different goals, the most important of which is to make as much profit as
- Sometimes supply chain members
have differences about who should be responsible for what activities. - Supply chain members may see the target market differently.
relationship marketing
An orientation between seller and buyer that focuses on customer satisfaction, loyalty, and engagement built over the long term
discrete transactions
When two parties conduct business on a one-time basis with no set expectations of future business
relational exchange
A focus on lasting business relationships and the value they bring to the brand over time.
traditional supply chains vs vertical marketing systems
traditional: producer -> wholesaler -> retailer -> consumer
vertical: producer, wholesaler, retailer -> consumer
why do we need supply chains
Supply chains ensure efficient production and distribution by reducing costs, enabling specialization, supporting global trade, improving speed and reliability, managing risks, and keeping customers satisfied. They keep economies running smoothly and ensure products are available when needed.
promotional budget setting methods (4)
- intuition and instinct
- percentages of sales
- competitive response
- objective and task
advantages and disadvantages of group promotion
advantages
1. market coverage
2. speed
3. cost
disadvantages
1. noise
2. wasted money spent
3. difficult to track effectiveness
4 media strategies in advertising
- Basic media planning problem: how to maximize exposure of the advertising message to the target audience while minimizing waste coverage
- Waste coverage: occurs when people outside of the target audience are exposed to advertising messages not intended for them or when the target audience itself is overexposed or underexposed
- Reach: the percentage of a target audience that sees an advertisement at least once during a given period of time
- Frequency: is the average number of times members of the target audience see the advertisement
tools of consumer sales promotion (7)
- Coupons
- Premiums
- Bonus packs
- Samples
- Contests/ Sweepstakes (e.g., McDonald’s Monopoly)
- Price-off deals
- Sponsorships
trade promotion tools
- Trade allowances
a. Buying allowances
b. Off-invoice discounts
c. Merchandise allowances
d. Promotional allowances
e. Cooperative advertising - Training programs
- Sales contests and incentives
- Trade shows
public relations in marketing (6)
- Press releases
- Media kits
- Digital media content
- Press conference
- Institutional advertising
- Special events
christian perspective
honesty and truthfulness
Proverbs 11:1 states, “The Lord detests dishonest scales, but accurate weights find favor with him”
