Exam 2 Flashcards
Two methods of idea generation
brain draining
stimulus response
Stimulus feeds the brain
more stimulus = more ideas
life currencies
money, information, time, space, fun
gravitational marketing
the only way to disrupt marketplace equilibrium is to introduce new products and services that are significantly different than what already exists
improvements
most innovation is not totally new to the world ideas - they are improvements on things that already exist
Product life cycle
- momentum
- growth
- cost cutting
- decline
looks like a bell curve
failure rate
85%
high risk
Innovation process
- brainstorm ideas
- write a brand positioning statement
- turn the brand positioning into a written concept
- test the concept on real, live consumers
Developing your idea
- create a great product name aligned with benefit
- determine the target audience, benefit and reason why (brand positioning)
- write one paragraph ad for product (concept)
cycles of learning
plan
do
study
act
Failure rates
No test = 85% test 1 = 42.5% test 2 = 21.25% test 3 = 10.6% test 4 = 5.3%
Competitors pricing is irrelevant when determining how to price your own products / services. You should just do what’s best for your products / services to maximize your profitability.
False
skimming price strategy
sacrificing high sales to gain a high profit
value
increased competition force companies to provide value products and services to retain sales (value meals at mcdonalds)
captive
products have complementary products where one requires using the other
dynamic
flexible pricing mechanism made possible by advances in information technology
price discrimination
a different price for the same product in different segments to the market
freemium
offering a product or service free of charge while charging for advance features
cost-plus
calculates the cost of producing the product and adds a percentage
product bundle
combine several products in the same package rather than trying to sell all separately
penetration
price charged for products and services is set artificially low to gain market share
loss-leader
product sold at a low price - sometimes at cost or even below cost - to stimulate other profitable sales
predatory
intended to drive out competitors from a market
preimum
keeping the price of a product or service artificially high to encourage favorable perceptions based solely on price
psychological
selling a product at 3.99 rather than 4.00
market based
based upon analysis and research compiled from the competitive marketplace
high-low
this is the pricing strategy of most department stores
One page memo section headings
- Subject (introduce)
- Background
- How it works (Key Learning)
- Benefits
- Next steps
functional packaging benefits
store-ability
convenience
portability