Ch2 Flashcards
why do organizations create new products?
New products pump life into a company’s sales, enabling the firm not only to survive but also to grow.
Companies that lead their
industries in profitability and sales growth get a large percentage of their revenues from products
developed within the last five years.
How is a new product classified?
When a firm introduces a product that has a brand new name and is in a product category new to the organization.
Line extension
A new flavour, size, or model using an existing brand name in an existing category.
Why do customers expect immediate improvement to services?
Services companies can often introduce and adapt their products faster than companies that
manufacture goods because service delivery can be more flexible and changes can often be made
immediately.
How new products are developed
Set new product goals: establish success parameters
Develop new ideas: brainstorm internally or externally, use focus groups to gain feedback and interest.
Screen ideas and concepts: accept or reject ideas by comparing to organizational goals, strategies and feasibility. Most ideas will be rejected.
Develop the concept: prototype, test and build marketing strategies
Test market: enter select markets to gauge customer acceptance.
Introduce the product: launch product
Role of the product manager
- when a new product enters the market the product manager controls it
- develops and implements complete strategy and marketing program for a specific product or brand of product
Product lifestyle and stages
Pattern of sales and profits over time for a product.
Introduction, growth, maturity, decline
Introduction
Product will face many obstacles. Competition is light. Unusually operating at break even or loss.
Growth
Sales begin to grow, profits are healthy, many competitors enter the market.
Maturity
Sales continue at a decreasing rate. Sales growth slowing, profits have peaked or show signs of decline
Decline
Rate of change in consumer taste and the rate at which new products enter the market. Sales and profit declining
Marketing
Process of getting the right goods or services or ideas to the right people at the right place, time, and price, using the right promotion techniques and utilizing the appropriate people to provide the customer service with those goods, services or ideas
Marketing concept
- focusing on the needs and wants of the customer so the organization can distinguish its products from competitors offerings. Products can be goods, services, or ideas.
- integrating all of the organizations activities, including production and promotion, to satisfy these wants and needs.
- achieving long term goals for the organization by satisfying customer wants and needs legally and responsibility.
Difference between marketing and sales
Marketing is the process of communicating the value of a product while sales is selling the company’s product.
Customer value
The ratio of benefits for the customer to the sacrifice necessary to obtain those benefits. Core business strategy. Price is not the only thing that matters
Customer satisfaction
Customer satisfaction is the customer’s
feeling that a product has met or exceeded expectations. Expectations are often the result of
communication, especially promotion.
Building relationships
Companies build relationships with customers by offering value and providing customer satisfaction and quality products which makes them willing to purchase again (loyal customers).
What is the nature and function of distribution?
Distribution is efficiently managing the acquisition of raw materials by the factory and the movement of
products from the producer or manufacturer to business-to-business (B2B) users and consumers.
Marketing intermediaries
Marketing intermediaries are in the
middle of the distribution process, between the producer and the end user. Agents and brokers, industrial distributors, wholesalers, retailers
Agents and brokers
Bring buyers and sellers together
• Usually hired on commission by buyer or seller
• Go-between to make deals
• Does not take possession of product
Industrial distributors
Independent wholesalers that sell to industrial users
• Usually have a sales force
• Will make delivers, extend credit and provide
information to user
Wholesalers
Buys from manufacturer or other wholesaler, for resale
• Resells finished goods to retailers, manufacturers and
institutions (schools, hospitals)
• Takes possession of product
Retailers
Buys from manufacturer or wholesaler, for resale
• Sells goods to end consumers and industrial users
• Takes possession of product
How do channels ease the flow of goods
- Packs products into more manageable order sizes for customers.
- Allows customers to purchase products in one place.
- Removes need for the producer to source individual customers.
- Provides a storage location for goods until customers are ready to purchase.
Distribution channels
Multiple intermediaries: producers -> wholesalers/distributors -> retailer -> end consumer
Wholesaler+retailer: producer -> wholesalers/distributors -> retailer -> end consumer
Retailer only: producer -> retailer -> end consumer
Direct to consumer: producers -> end consumer.