EXAM 2 Flashcards
what are services
an activity, benefit, or satisfaction that is offered for sale and is essentially intangible and does not result in ownership of anything
levels of product (3)
core customer value, actual product, augmented product
product classifications
consumer products (convenience, shopping, specialty, unsought), vs. industrial products (materials and parts, capital items, supplies and services)
product attributes
quality, features, style and design
dimensions of product quality
level ( performance quality or ability to perform functions) vs. consistency (quality conformance-free from defects and consistency in delivering a targeted level of performance
product design
contributes to usefulness as well as looks
what is a brand
a name, term, sign, symbol or design, or a combination of these, that identifies the maker or seller of a product or service
product line
a group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges
characteristics of a service
intangibility, inseparability (from providers), variability (quality depends of who, when, where, how), and perishability
customer equity
the value of the customer relationships that the brand creates
brand equity vs valuation
differential effect that knowing the brand name has upon customer response vs. the process of estimating the total financial value of the brand
4 consumer perception dimensions to measure brand strength
differentiation, relevance, knowledge, esteem
4 choices to develop a brand
line extensions, brand extensions, multibranding, new brands
brand extension
extending a current brand name to new or modified products in a category
causes of failure for new products
innovation is expensive and risky, market size can be overestimated, it can be poorly designed, launched at the wrong time, poorly positioned, priced incorrectly, or poorly advertised
new product development process (8 steps)
idea generation, idea screening, concept development and testing, market strategy development, business analysis, product development, test marketing, commercialization
alpha vs beta testing
alpha- in lab
beta- in real world by customers
Crowdsourcing
inviting broad communities of people (customers, employees, independent scientists and researchers, the public at large) into the new product innovation process
types of test marketing
controlled test markets-new products and tactics tested among controlled groups of customers and stores vs
simulated test markets- researchers measuring consumer responses to new products and marketing tactics in lab stores or simulated shopping environments
customer centered product development
finding new ways to solve customer problems and create more customer satisfying experiences
team-based product development
various company departments work closely together in cross-functional teams, overlapping the steps in the product development process to save time and increase effectiveness
innovation management system
used to collect, review, evaluate, and manage new product ideas to yield 2 outcomes: creating an innovation oriented company culture and yielding a larger number of new product ideas, among which will be found some especially good ones
what causes changes in the product life cycle
changing competitive attacks and responses
5 product life cycle stages
development, introduction, growth, maturity, and decline
product life cycle strategies
introduction: promo spending & basic product versions
growth: increase in competitors & distribution outlets
maturity: marking down prices, increased promo and product development, modifying the market, modifying the product, and modifying the marketing mix
decline: maintain the brand, harvest the product, or drop the product
what is price
sum of all the values that customers give up in order to gain the benefits of having or using a product or service
customer value-based pricing
using buyers’ perception of value instead of the sellers cost as the key to pricing
good value pricing
offering just the right combination of quality and good service at a fair price
EDLP- everyday low pricing
charging a constant, everyday low price with few or no temporary price discounts
high-low pricing
charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily based on selected items
value-added pricing
attaching value-added features and services to differentiate a company’s offers and support higher prices
learning curve
drop in average cost with accumulated production experience
impact of lower costs on pricing
lower prices with lower margins but higher sales and profits
different types of costs (3)
fixed: overhead, costs that do not vary with production or sales level
variable: vary directly with level of production
total: sum of fixed and variable costs for any given level of production
break-even pricing
setting a price to break even own the costs of making and marketing a product or setting price to make a target return, using a break even chart.
how to calculate break even price
fixed cost/contribution (contribution is price-variable cost)
target costing
pricing that starts with an ideal selling price based on customer value considerations, and then targeting costs that will ensure that price is met
demand curve
a curve that shows the number of units a market will buy in a given time period at different potential prices
price elasticity
sensitivity of demand to change in price (small change is inelastic, big change is elastic)
pricing in different types of markets (4)
pure competition (many buyers and sellers with little effect on market price), monopolistic competition (many buyers and sellers who trade over a range of prices because sellers differentiate their offers), oligopolistic competition (few sellers highly sensitive to each other’s pricing), and pure monopoly (one seller)
new product pricing strategies (2)
market skimming (set high price for new products to skim maximum revenues layer by layer, company will make fewer but more profitable sales) vs. market penetration (setting a low price to attract a large number of buyers quickly and win a large market share)
product line pricing
setting price steps between various products in a line based on cost differences, customer evaluations of different features, and competitors’ prices
captive product pricing
setting a price for products that must be used along with a main product, often a low price for the main product with high markups on the supplies
reference prices
prices that buyers carry in their minds and refer to the they look at a given product
price adjustment strategies (7)
discount and allowance pricing, segmented pricing, psychological pricing, promotional pricing, geographical pricing, dynamic/online pricing, and international pricing
FOB-origin pricing
goods are placed free on board a carrier, the customer pays the freight from factory to destination
5 geographical pricing strategies
FOB-origin, uniform-delivered, zone, basing-point, freight-absorption
dynamic pricing
adjusting prices continually to meet the characteristics and needs of individual customers and situations
international pricing
typically differences in international pricing are the result of higher costs of selling in another country: additional costs of product modifications, shipping and insurance, import tariffs and taxes, exchange rate fluctuations, and physical distribution
causes for price cuts
excess capacity, falling demand in the face of strong price competition or a weakened economy, or a drive to dominate the market through lower costs
factors for price increases
cost inflation, over-demand
must avoid price-gouging
price-fixing
sellers must set prices without talking to competitors- no price collusion permitted
predatory pricing
selling below cost with the intention of punishing a competitor or gaining higher long-run profits by putting competitors out of business
deceptive pricing
stating prices or price savings that mislead consumers or are not actually available to consumers
sense and respond market view
a demand chain suggest this, planning starts with the needs of the target customer, as opposed to the make and sell view of a supply chain
value delivery network
the company, suppliers, distributors, and ultimately customers who partner with each other to improve the performance of the entire system in delivering customer value
marketing channel
(distribution channel), a set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user
role of marketing intermediaries
to transform the assortments of products made by producers into the assortments wanted by consumers
channel levels
layers of intermediaries that perform some work in bringing the product and its ownership closer to the final buyer: indirect (one or more intermediaries) vs. direct (no intermediary levels, direct company to consumer)
channel conflict types
horizontal: amongst firms at the same level of the channel
vertical: occurs between different levels of the same channel
conventional distribution channel
one or more independent producers, wholesalers, and retailers; each is a separate business seeking to maximize its own profits, perhaps at the expense of the system as a whole
types of VMS-vertical marketing systems (3)
corporate vms: integrates successive stages of production an distribution under single ownership
contractual vms: independent firms at different levels of production and distribution joined to obtain more economies or sales impact
franchise organization: most common, non contractual, franchisors link several stages in the production-distribution process
multi channel distribution systems
a single firm sets up two or more marketing channels to reach one or more customer segments
disintermediation
when product or service producers cut out intermediaries and go directly to final buyers, or when radically new types of channel intermediaries displace traditional ones
different distribution intensity strategies (3)
intensive distribution (convenience products and common raw materials, stocking products in as many outlets as possible) exclusive distribution (limited number of intermediaries, gives dealers exclusive rights) selective distribution (use of more than one but not all intermediaries)
marketing logistics
physical distribution, involves planning, implementing, and controlling the physical flow of materials, final goods, and related information from points of origin to points of consumption to meet customer requirements at a profit
supply chain management
managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers
shopper marketing
focusing the entire marketing process on turning shoppers into buyers as they approach the point of sale, whether during in-person, online or mobile shopping
classifications of types of retailers
amount of service (self, limited, full), product lines (specialty, department, supermarket, convenience, superstores, category killers, service retailers), relative prices (discount, off-price), organization (corporate chains, franchises)
franchise
a contractual association between a manufacturer, wholesaler, or service organization (a franchisor) and independent business people (franchisees) who buy the right to own and operate one or more units in the franchise system
STP decisions
segmentation, targeting, positioning; a retailer must first segment and define their target markets and then decide how they will differentiate and position themselves in these markets
types of shopping centers (3)
regional (largest, 50-100 stores), community (15-50 stores), neighborhood (strip malls, 5-15 stores, close and convenient)
pop-up stores
limited-time stores that allow a company to promote their brands to seasonal shoppers and create buzz in busy, high-rent areas
retail convergence
different types of retailers now sell the same products at the same prices to the same consumers, in part due to the price transparency of the internet; means greater competition and difficulty in differentiating
impact of mega retailers
shift in the balance of power between retailers and producers; small handful of retailers now control access to enormous amounts of customers and have the upper hand with manufacturers
showrooming
the shopping practice of coming into retail showrooms to check out merchandise and prices but instead buying from an online-only rival, sometimes while in the store
wholesaling
all activities involved in selling goods and services to those buying for resale or business use (mostly buying from producers and selling to retailers)
types of wholesalers (3)
merchant wholesalers, brokers and agents, and manufacturers’ and retailers’ branches and offices
how brokers and agents differ from merchant wholesalers
they do not take title to goods and perform only a few functions
