Chapter 4--Product and Promotion Strategy

Question 1

What is a product?

Answer 1

A good, service, or idea

Question 2

What are consumer products?

Answer 2

Products geared to meet consumer’s needs for their own, or their families’, personal use.

Question 3

What are the three categories of consumer products?

Answer 3

1) Convenience–relatively inexpensive, purchased on a regular routine basis without much thought. Readily available at multiple outlets
2) Shopping–more expensive than convenience, for which customers will expend some effort to determine which product to purchase. May have several outlets that supply it, but not all outlets carry the same brands
3) Specialty–most expensive, purchased based upon strong opinions, for which substitutes are not willingly accepted. Often, only one outlet in a market carries each brand.

Question 4

Why is understanding the type of product important for marketers?

Answer 4

The way the target market perceives the product helps determine the marketing strategy that will best work

Question 5

What are business products?

Answer 5

Products geared to help businesses produce other products, or resell.

Question 6

What are the seven categories of business products?

Answer 6

1) Installations–major equipment or processes
2) Accessory equipment–less expensive, less complex equipment than installations
3) Raw materials
4) Component parts–products purchased in finished form from other suppliers
5) Process materials–products that are used in production to become the finished product
6) MRO (maintenance, repair, and operating) products–products used in production that do not become part of the finished product
7) Business services–processes required to run the company–often outsourced to other businesses

Question 7

What is the product mix of a company? How can we classify product mix?

Answer 7

The overall group of products a firm offers.

Narrow versus broad, which is the number of product categories contained in the mix.

Question 8

What is a product class?

Answer 8

The highest-order designation of a firm’s products (e.g.: major home appliances)

Question 9

What is a product category?

Answer 9

The next step below product class (e.g.: kitchen products)

Question 10

What is a product line? How are they classified?

Answer 10

The next step below product category (i.e.: refrigerator).

We classify product lines by depth–how many closely-related product items are in each line.

Question 11

What is a product item? What characteristics define them?

Answer 11

The lowest-level of classification, under product category (i.e.: a particular model of refrigerator).

Defined by a combination of style, brand, and size.

Question 12

What is cannibalization in product mix?

Answer 12

The reduction of sales in one brand due to the introduction of a new brand. Can be planned or unintentional.

Question 13

Why do companies introduce new products?

Answer 13

1) Increase sales
2) Increase market share
3) Increase presence in the marketplace

Question 14

What is a continuous innovation product? What is a discontinuous innovation product? What marketing activity does a discontinuous innovate specially require?

Answer 14

Continuous innovation: a variation on an existing product
Discontinuous innovation: a completely new product, so there must be consumer education of how to use it, as part of the marketing strategy

Question 15

What are the steps of the New Product Development Process?

Answer 15

1) idea Generation
2) Screening
3) Concept testing
4) Business analysis
5) Product development
6) Test marketing
7) Commercialization

Question 16

What is branding of a product from a definition point of view?

Answer 16

A product’s multidimensional concept that is “a name, term, design, symbol, or any other feature that identifies one seller’s good or service as distinct from those of other sellers.

The legal term for a brand is a trademark.

A brand may identify one item, a family of items, or all items of that seller.

If used for the firm as a whole, the preferred term is trade name”

Question 17

What is branding of a product from a strategic point of view?

Answer 17

A promise to the target market–the brand represents to totality of that which an organization delivers to its customers.

Closely tied to positioning strategy and promotion.

Question 18

What are the brand elements?

Answer 18

Brand name (spoken part of the brand)
Brand mark (symbol or design associated with the brand)

Question 19

What are the available branding alternatives?

Answer 19

1) Manufacturer’s brand (national brand)
2) Private label brand (store brand)
3) Generic product (no brand name)–unusual to find today
4) Family brands (a brand for a family of related products)
5) Individual brands (multiple brands for similar products, each designed to appeal to on segment of the market)

Question 20

What is brand equity?

Answer 20

Consumer’s perspective: The value of a brand. It is based on the consumer attitudes about positive brand attributes and favorable consequences of brand use.

Firm’s perspective: The financial value of a brand.

Question 21

What determines brand equity?

Answer 21

1) Brand name awareness
2) Brand loyalty
3) Perceived quality
4) Brand associations

Question 22

How is packaging used in marketing? Why is it important?

Answer 22

The package is often the only part of the product visible to the customer at the time of purchase, so it most promote the product.

This includes label design, which describe the product and promote it.

Question 23

For service products, what four special product strategy considerations are there?

Answer 23

1) Intangibility–how does a marketer make the intangible service tangible to the customer’s perception?
2) Inseparability–the service provider is not separate from the service, so processes must be in place to assure that a service provider performs the service at the time and in the manner expected.
3) Perishability–an available period for supplying a service cannot return, whether the service is provided or not. Thus, marketers may reduce the price for non-busy times, to increase the chance those slots will be filled
4) Heterogeneity–services are difficulty to standardize between providers. Service marketers must standardize training, uniforms, and systems monitoring, so the service experience is as standard as possible.

Question 24

What are the stages of the product lifecycle (PLC)?

Answer 24

1) Introduction–often negative profit while the product development costs are being covered, and the product is being promoted and distributed
2) Growth–customer demand increases, competitors enter the market. Marketing expenses go up, but so do sales and profits
3) Early maturity: industry sales remain high, but the growth rate slows. Companies jockey for position by presenting adjustments to the marketing mix
4) Mid maturity: industry sales peak and begin to decline as competitors drop out of the market. Customer demand is fully saturated. This phase can go on for years, and strong companies can remain profitable.
5) Decline: industry sales fall to where even strong companies no longer support the product. Companies either make a planned exit or are forced out of the market.

Question 25

What is the goal of marketers within the product lifecycle?

Answer 25

Maintain sales and profitability for as long as possible given the market dynamics.

Question 26

In the PLC, what is product adoption? What factors make adoption more likely?

Answer 26

Product adoption is when consumers decide to adopt a new product. This is more likely when:

1) The product is not appear to be too complex
2) The product is compatible with current products or uses
3) The product’s relative advantage can be clearly understood
4) The product’s relative advantage is readily observable
5) The product’s risk can be reduced through trial

Question 27

In the PLC, what is diffusion of innovation? What are the categories of those who eventually adopt a new product?

Answer 27

Diffusion of innovation is the process by which the use of an innovation is spread within a market group, over time and over various categories of adopters.

These categories include:

1) Innovators (with 2.5% of adopters)
2) Early adopters (13.5% of adopters)–best group to target with marketing early in the PLC. They are opinion leaders.
3) Early majority and late majority (34% and 34% each)
4) Laggards (remaining 16% of adopters). Rarely targeted by marketers, since they are difficult to influence and do not adopt till the decline stage of the PLC.

Question 28

What is promotion in marketing?

Answer 28

Promotion is the communications arm or marketing. How the marketer informs, persuades, and reminds the target market about its products, brands, company, or people.

Question 29

What are the four main promotional tools?

Answer 29

Advertising, Personal Selling, Sales Promotion, and Public Relations, which together determine to Promotional Mix.

Question 30

What is the promotional mix?

Answer 30

The organization of promotional activities, designed to organize the impact of a limited promotional budget

Question 31

What is advertising?

Answer 31

The placement of announcements and persuasive messages in time or space purchased in any of the mass media by business firms, nonprofit organizations, government agencies, and individuals who seek to inform and/or persuade members of a particular target market or audience about their products, services, organizations, or ideas.

Question 32

What is personal selling?

Answer 32

Selling that involved a face-to-face interaction with the customer. Pays a larger role for high value products with limited numbers of customers, since sales calls are expensive.

Question 33

What is sales promotion?

Answer 33

The media and non-media marketing pressure applied for a predetermined, limited period of time at the level of consumer, retailer, or wholesalers in order to stimulate trial, increase consumer demand, or improve product availability (e.g.: rebates, coupons, contests, etc.).

It is a temporary incentive for the customer to buy now.

Question 34

What is public relations?

Answer 34

That form of communication management that seeks to make use of publicity and other non-paid forms of promotion and information to influence the feelings, opinions, or beliefs about the company, its products or services, or about the value of the product or service or the activities of the organization to buyers, prospects, or other stakeholders.

Question 35

What is the communication process?

Answer 35

Sender encodes a message (with some noise) through a given channel. The receiver decodes the message (with some noise) from the channel. The receiver gives feedback to the sender.

Question 36

What are integrated marketing communications?

Answer 36

A planning process designed to assure that all brand contacts received by a customer or prospect for a product, service, or organization are relevant to that person and consistent over time.