Exam 2 Flashcards
- What is a product?
Everything, both favorable and unfavorable (i.e., value), that a person receives in an exchange.
- What is associated in product “P” decisions?
a. Core Customer Value
b. Actual Product
c. Associated Services
a. Core Customer Value
i. What are the basic problem solving benefits that you want your product to have
b. Actual Product
i. Brand name
ii. Packaging
iii. Quality level
iv. Features/design
c. Associated Services
i. Financing
ii. Product warranty
iii. Product support
- How does the product “p” relate to the other p’s?
a. It comes before all of the other p’s
- What is a brand?
Includes a name, term, symbol, design, or combination thereof that identifies a seller’s products and differentiates them from competitors’ products
Gives a personality to a non-living object
- What are some aspects of branding?
Brand name
Brand mark
Brand equity
d. Brand name
that part of a brand that can be spoken, including letters, words, and numbers.
i. Examples
1. Nike, 3m, Pepsi
e. Brand mark
the elements of a brand that cannot be spoken.
i. Examples
1. The golden arches, nike swoosh, mickey mouse ears
f. Brand equity
the value (assets and liabilities) of the brand name; ability to create demand and secure future earnings
- Brand awareness
measures how many consumers in a market are familiar with the brand and what it stands for and have an opinion about it.
g. Trademarks
the exclusive right to use a brand
h. What is a registered trademark?
i. A governmental office declares whether or not you are worthy of getting a registered trademark
ii. What parts of a brand can be registered for trademark protection?
- Name, sounds, products, etc.
iii. How do you continuously protect it?
- You must re-register for a registered tm every 10-12 years
- You must actively use the brand and actively fight if someone is using your tm
iv. What happens if you don’t continuously protect it?
- You run the risk of your brand becoming generic
- Examples
a. Aspirin, thermos, cola, zipper, trampoline
i. Licensee
the people who want to borrow the brand
j. Licensor
the people who own the brand
k. What are royalties?
i. When the licensee pays the licensor in order to use their brand
i. Infringement
l. What is it called when you use someone else’s brand without permission?
p. What is cobranding
The practice of marketing two or more brands together on the same package or promotion
o. Private brand
Brands developed and marketed by a retailer and available only from that retailer
Manufacturer brand
Brands owned and managed by the manufacturer
What is a market
A group of people with the same general need/want that also have the ability and willingness to buy
What is a segment
A smaller group of the market with a specific need/want
What is the step after segmentation
Pick a segment to target
What is the step after picking a segment to target
Develop your marketing mix for that segment
Why do companies bother with segmentation
To refine the needs/wants and develop the 4 p’s that connect better with the consumers needs/wants
What is a segmentation variable
Characteristics of individuals, groups, or organizations used to divide the total market into segments
We segment people, not products
Common segmentation variables
Geography, demographics, psychographics, usage rate, and occasion/situation of use
Geography segmentation
Where will the consumer use the product
Demographic segmentation
Age, gender, ethnicity, income, family size
Psychographic segmentation
Lifestyle, attitudes, interests, AIO (attitudes, interests, and opinions)
Usage rate segmentation
How often will the product be used
Occasion/situation of use segmentation
When will the product be used
Family life cycle
Combines 3 demographic variables:
Age, married (Y/N), and children (Y/N)
Young and single (Family life cycle)
You buy products that you specifically want
Young and married without kids (Family life cycle)
People come together with different brand preferences and they will eventually come to a common household brand
Young and married with kids (Family life cycle)
Now the parents kids will continue with their parents preferences
Middle aged married with kids (Family life cycle)
More focused on durable goods
Middle aged married without dependent kids (Family life cycle)
Focus on self improvement
Cooking classes, vacations, remodeling, more education
Older and married (Family life cycle)
More focused on healthcare
Older and unmarried (Family life cycle)
Focused on attention and affection from family members
Geodemographic segmentation
Segmenting potential customers into neighborhood lifestyle categories; combines geography, demographics, and psychographics
What are the different targeting strategies
Undifferentiated/mass marketing
Concentrated/niche
Differentiated/multi-segment
Micromarketing/1-1/mass customization
Undifferentiated/mass marketing
Marketing approach that views the market as one big market with no individual segments and thus requires a single marketing mix
Ex. commodities (sugar, salt, water)
Undifferentiated/mass marketing advantages/disadvantages
Potential savings on production and marketing costs
Unimaginative product offerings and more susceptible to competition
Concentrated/niche
A strategy used to select one segment of a market for target marketing efforts
Concentrated/niche advantages/disadvantages
Can charge higher prices
All eggs are in one basket, very small market
Differentiated/multi-segment
A strategy that chooses two or more well defined market segments and develops a distinct marketing mix for each
Differentiated/multi-segment advantages/disadvantages
Greater financial success (bigger market share), economies of scale (cost/unit decreases as you produce more), lower overall risk (all of your eggs are not in your basket)
Higher costs and cannibalization (when sales for one product eat into the sales of another product)
Micromarketing
When a firm tailors part of the marketing mix to suit an individual customers wants/needs
Theoretically meets the needs/wants the best
It is individualized, expensive, relies heavily on technology, and difficult to execute
Positioning
A process of defining the marketing mix variables so that target customers have a clear, distinctive, and desirable understanding of what the product does or what the company represents in comparison with the competition
Value proposition
Communicates the customer benefits to be received from a product or service and thereby provides reasons for wanting to purchase it
Includes the target market, brand name, product/service category, and unique benefits/differences from the competition
Product lines
A group of closely related products
Ex. SUV’s (Ford), trucks (Ford), or sedans (Ford)
Product item
A specific version of a product that can be designated as a distinct offering among an organization’s products
Ex. Ford Escape, Ford Taurus, Ford F-150
Product mix
All product that an organization sells
Ex. Ford –> SUV’s, Sedans, trucks
Product mix width/breadth
The number of product lines in a mix
Adding a line would be going after a new market
Increasing product mix width/breadth would…
Diversifies risk
Capitalizes on established reputations
Brand extension - Adding a new product line with the same brand name
Adding product mix width/breadth would be like…
Apple going from iPod –> iPhone –> iPad –> iMac
Product line depth
The number of product items in a line
Increasing product line item depth would…
Attract new buyers with different preferences
Increase sales by further market segmentation
Capitalize on economies of scale (as you produce more of a product, the cost/unit goes down)
Increasing product line item depth would be like…
Adding a product line item would add a segment
Product line extension would…
Increase depth
Product line contraction would…
Decrease depth
What is innovation
The process by which ideas are transformed into new offerings including products, services, processes, and branding concepts that will help firms grow
Why do firms innovate
If they don’t change, then the competitors will
Wants and needs are constantly changing
Things go out of style
What is the product life cycle
A concept that provides a way to trace the stages of a product’s acceptance from its introduction (birth) to its decline (death)
What is the point of the product life cycle
It is one of the most helpful tools for marketing managers becasue it tells them what the 4 p’s look like over the life of a product
What stage of the PLC has the highest sales
Maturity
What stage of the PLC are profits the highest
Growth
Introductory stage
Price is high, costs are high, sales are low, and usually have a negative profit
High failure rates. Only 3% of new products survive this stage
Little competition
Limited distribution
High ad and production costs
Promotion focuses on awareness and information of the product category benefits
Intensive personal selling to channels
Growth stage
Increasing rate of sales
Initial healthy profits
Entrance of competitors
Prices normally fall
Market becomes more segmented
Aggressive advertising of the difference between brands
Wider distribution
Maturity stage
Defined by sales increase at a decreasing rate
Saturated markets
Annual models appear
Lengthened product lines
Go after new geographic markets and segments
High promotion and distribution costs
Prices and profits fall
Decline stage
Defined by long run drop in sales
Elimination of all nonessential marketing expenses
Organized abandonment (Every 2-3 years, you should review all your product items and ask if we knew what we knew now, would we start making the product)
What is diffusion of innovation
The process by which adoption of an innovation spreads throughout a market, over time and a cross various categories of adopters
Tells us how consumers change
Pioneers/breakthrough products
New to the world products that create their own market/industry because they drastically change the way consumers do things and their preferences
What is an adopter
Someone who used the product
Someone who was satisfied by the product
Someone who intends to buy the product again/keep using the product
Categories of adopters
Innovators Early adopters Early majority Late majority Laggards
Innovators
High socioeconomic status
Has ties outside the community with manufacturers
Like to take risks
Obsessed with being first
Early adopters
Heavily involved in the community
Less risky but still somewhat risky
Opinion leaders (ones who influence others)
Early majority
Do a lot of research
Very deliberate
Don’t like risks
Late majority
Very skeptical
Little bit older
Only get the product if it is a gift or they are peer pressured into buying it
Laggards
Lower socioeconomic status Old Forced into buying the product Very suspicious of the new product Get ignored by marketers Still uses the old version of the product even with the new product available Typically one PLC behind
Product characteristics that affect the rate of adoption
Complexity Compatibility Relative advantage Observability Trialability
