Exam 3 Flashcards
describes the stage a new product goes through in the marketplace: introduction, growth, maturity, and decline
product life cycle
when a product is introduced to its intended market
introduction stage
the initial purchase of a product by a consumer
trial
the desire for the product class rather than for a specific brand, since there are few competitors with the same product
primary demand
the preference for a specific brand
selective demand
high initial price to help the company recover the costs of development as well as capitalize on the price insensitivity of early buyers
skimming
pricing low to discourage competitive entry
penetration pricing
characterized by rapid increases in sales, more competitors appear
growth stage
people who tried the product, were satisfied, and bought again
repeat purchasers
characterized by a showing of total industry sales or product class revenue, marginal competitors begin to leave the market
maturity stage
when sales drop
decline stage
dropping the product from a company’s product line, most drastic
deletion
when a company retains the product but reduces marketing costs
harvesting
important aspects of the product life cycle
length, shape of the sales curve, difference between product classes and forms
a product has no set time to go through its life cycle. However, consumer products tend to have shorter life cycles than business products
length
not all products have the same shape to their curve
shape of sales curve
one for which significant customer education is required and there is an extended introductory period
high learning product
little learning is required by the consumer and the benefits are readily understood
low learning product
style of the times; are introduced, decline, then seem to return
fashion product
rapid sales on introduction and then an equally rapid decline
fad product
refers to the entire product category or industry
product class
pertains to variations of a product within the product class
product form
common reasons for resisting new products
usage barriers, value barriers, risk barriers, psychological barriers
the product is not compatible with existing habits
usage barriers
the product provides no incentive to change
value barriers
physical, economic, or social
risk barriers
cultural differences or image
psychological barriers
manages the marketing efforts for a close-knit family of products or brands
brand manager
involves altering one or more of a products characteristics, such as its quality, performance, or appearance, to increase the product’s value to customers and increase sales
product modification
the sale of two or more separate products in one package
product bundling
strategies by which a company tries to find new customers, increase a product’s use among existing customers, or create new situations
market modification
changes the place a product occupies in a consumer’s mind relative to competitive products
product repositioning
four factors that trigger repositioning
changing the value offered, reacting to a competitor’s position, reaching a new market, catching a rising trend
adding value to the product (or line) through additional features or higher-quality materials
trading up
reducing a product’s number of features, quality, or price
trading down
reducing the package content without changing the package size and maintaining or increasing the package price
downsizing
price inflation in disguise
shrinkflation
a commercial, legal, name which a company does business
trade name
a marketing in which an organization uses a name, phrase, design, symbols, or combination of these to identify its products and distinguish them from those of competitors
branding
identifies that a firm has legally registered its brand name or trade name so the firm has exclusive use, thereby preventing others from using it
trademark
a set of human characteristics associated with a brand name
brand personality
the added value a brand name gives to a product beyond the functional benefits provided
brand equity
the reason why a brand exists, the place it has in consumers’ lives, the solution it provides to customers, and the brand’s role in making society better off
brand purpose
a contractual agreement whereby one (licensor) allows its brand name(s) or trademark(s) to be used with products or services offered by another company (licensee) for a royalty or fee
brand licensing
a component of a product that refers to any container in which it is offered for sale and on which label information is conveyed
packaging
an integral part of the package that typically identifies the product or brand, who made it and when it was made, how it is to be used, and package contents and ingredients
label
challenges of packaging and labeling
the continuing need to connect with customers, environmental concerns, health, safety, and security issues, and cost reduction
information for consumer
communication benefits
storage, convenience, or protection
functional benefits
distinguishes brand in consumer’s eyes
perceptual benefits
intangible activities or benefits that an organization provides to satisfy consumer’s needs in exchange for money or something else of value
services
intangibility, inconsistency, inseparability, inventory
four I’s of service
can’t be held, touched, or seen before the purchase decision
intangibility
services that depend on the people who provide them, the quality varies with each person’s capabilities and day-to-day job performance
inconsistency
the consumer can not and does not separate the deliverer of the service from the service itself
inseparability
problems exist because many items are perishable and because there are cost associated with handling inventory
inventory
occurs when the service provider is available but there is no demand for the service
idle production capacity
the range of offerings companies bring to the market, from the tangible to the intangible or the product-dominant or to the service-dominant
service continuum
whether they are delivered by people or equipment, whether they are for-profit or nonprofit, whether they are government sponsored
ways services can be classified
self-checkout, self check-in
self-service technologies
smartwatches, sport trackers, and smart home assistants
self-service devices
excesses in revenue over expenses are not taxed or distributed to shareholders
nonprofit organizations
what makes service organizations successful?
understanding of how the consumer makes a service purchase decision, understand how the consumer evaluates the quality, determine how to present a differential advantage relative to competing offerings
a type of analysis that compares the differences between the consumer’s expectations about and experiences with a service based on dimensions of service quality
gap analysis
a flowchart of the points of interaction or “service encounters” between consumers and a service provider
customer contact audit
the notion that a service organization must focus on its employees, or internal market, before successful programs can be directed at customers
internal marketing
customers will often judge the quality of the service experience based on the performance of the people providing the service
people
the appearance of the environment in which the service is delivered and where the firm and customer interact can influence the customer’s perception of the service
physical environment
the actual procedures, mechanisms, and flow of activities by which the service is created and delivered
process
technological development, improved understanding of service delivery and consumption, the social imperative for sustainability
will change services in the future
charging different prices during different times of the day or during different days of the week to reflect variations in demand for the service
off-peak pricing
the money or other considerations exchanged for the ownership or use of a product or service
price
the practice of exchanging products and services for other products and services rather than for money
barter
the ratio of perceived benefits to price
value
the practice of simultaneously increasing the product and service benefits while maintaining or decreasing price
value pricing
identify pricing objectives and constraints, estimate demand and revenue, determine cost, volume, and profit relationships, set an approximate price level, set list or quoted price, make special adjustments to list or quoted price
steps to pricing
specifying the role of price in an organization’s marketing and strategic plans
pricing objectives
factors that limit the range of prices a firm may set
pricing constraints
consumers compare prices on the Internet
consumer-driven pricing actions
aggressive price changes through the Internet
retailer-driven pricing actions
a graph that relates the quantity sold and price, showing the maximum number of units that will be sold at a given price
demand curve
consumer tastes, price and availability to similar products, consumer income
factors for demand
factors that determine consumers’ willingness and ability to pay for products and services
demand factors
the percentage change in quantity demanded relative to percentage changed in price
price elasticity of demand
when a 1 percent decrease in price produces more than a 1 percent increase in quantity demanded, increasing total revenue
elastic demand
when a 1 percent decrease in price produces less than a 1 percent increase in quantity demanded, decreasing total revenue
inelastic demand
the total expense incurred by a firm in producing and marketing a product
total cost
the sum of the expenses of the firm that are stable and do not change with the quantity of product that is produced and sold
fixed cost
a technique that analyzes the relationship between the total revenue and total cost to determine profitability at various levels of output
break-even analysis
the quantity at which total revenue and total costs are equal
break-even point
a graphic presentation of the break-even analysis that shows when total revenue and total costs intersect to identify profit or loss for a given quantity sold
break-even chart
demand-oriented, cost-oriented, profit-oriented, competition-oriented
approaches to find approximate price level
setting the highest initial price that consumers really desiring the product are willing to pay when introducing a new or innovating product
skimming pricing
setting a low initial price on a new product to appeal immediately to the mass market
penetratiton pricing
setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it
prestige pricing
setting the price of a line of products at a number of different specific pricing points
price lining
setting prices a few dollars or cents under an even number
odd-even pricing
consists of estimating the price that ultimate consumers would be willing to pay for a product, working backward through markups taken by retailers and wholesalers to determine what price to charge wholesalers, deliberately adjusting the composition and features of the product to achieve the target price to the consumer
target pricing
marketing two or more products in a single package price
bundle pricing
charging different prices to maximize revenue for a set amount of capacity at any given time
yield management pricing
adding a fixed percentage to the cost of all items in a specific product class
standard markup pricing
summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at a price
cost-plus pricing
setting an annual target of a specific dollar volume of profit
target-profit pricing
setting a price to achieve a profit that is a specified percentage of the sales profit volume
target return-on-sales pricing
setting a price to achieve and annual target return on investment (ROI)
target return-on-investment pricing
setting a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors
customary pricing
setting a market price for a product class based on a subjective feel for the competitors’ price or market price as the benchmark
above-, at-, or below-market pricing
deliberately selling a product below its customary price, but not to attract consumers’ attention to it in hopes that they will buy other products with large markups as well
loss-leader pricing
setting one price for all buyers of a product or service
fixed price policy
setting different prices for products and services in real time response to supply and demand conditions
dynamic pricing policy
setting prices for all items in a product line to cover the total cost and produce a profit for the complete line, not necessarily for each item
product line pricing
successive price cutting by competitors to increase or maintain their unit sales or market share
price war
reductions in unit costs for a larger order
quantity discount
cash payments or an extra amount of “free goods” awarded sellers in the marketing channel for undertaking certain advertising or selling activities to promote a product
promotional allowances
the practice of replacing promotional allowances with lower manufacturer list prices
everyday low pricing
a conspiracy among firms to set prices for a product
price fixing
charging different prices to different buyers for products of like grade and quality
price discrimination
charging a very low price for a product with the intent of driving competitors out of business
predatory pricing
consists of the individuals and firms involved in the process of making a product or service available for use or consumption by consumers or industrial users
marketing channel
when intermediaries buy and sell products or services
transactional function
buying, selling, risk taking
what happens during a transactional function
when products or services are grouped for convience
logistical function
assorting, storing, sorting, transporting
what happens during a logistical function
when intermediaries make a transaction easier for buyers
facilitating functions
financing, grading, marketing information and research
what happens during a facilitating function
the producer and the ultimate consumer deal directly with each other
direct channel
intermediaries are inserted between the producer and the consumers and perform numerous channel functions
indirect chanel
make products and services available for consumption or use by consumers or organizational buyers
digital marketing channel
allow consumers to buy products by interacting with various print or electronic media without a face-to-face meeting with a salesperson
direct to consumer marketing channel
the blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop and buy in traditional intermediaries and online
multichannel marketing
an arrangement whereby a firm reaches different buyers by employing two or more different types of channels for the same basic product
dual distribution
kitchen appliances
example of dual distribution
professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact
vertical marketing system
the combination of successive stages of production and distribution under a single ownership
corporate vertical marketing system
where a manufacturer owns a store to sell its products
forward integration
Apple, Ralph Lauren, Goodyear
examples of forward integration
retailer owns manufacturer
backward integration
Kroger/Dillon’s, generic brands
examples of backward integration
independent production and distribution firms integrate their efforts on a contractual basis to obtain greater functional economies and marketing impact than they could achieve alone
contractual vertical marketing system
the number of stores in a geographical area
target market coverage (density)
a level of distribution density whereby a firm tries to place its products and services in as many outlets as possible
intensive distribution
a level of distribution density whereby only one retailer in specific geographic area carries the firms products
exclusive distribution
a level of distribution density whereby a firm selects a few retailers in a specific area to carry its products
selective distribution
information, convenience, variety, pre- or post-sale purchase
channel requirements to satisfy buyer requirements
arises when one channel member believes another channel member is engaged in behavior that prevents it from achieving its goals
channel conflict
a source of channel conflict that occurs when a channel member bypasses another channel member and sells or buys products direct
disintermediation
those activities that focus on getting the right amount of the right products to the right place at the right time at the lowest possible cost
logistics
the various firms involved in performing the activities required to create and deliver a product or service to consumers or industrial users
supply chain
