Final Exam Flashcards
Augmented Product
The associated services of a product. They extend the value of a product with things like warranties financing and product support.
Consumer Products
Products and services used by people for their personal use
Specialty Products/Services
are those for which customers express such a strong preference that they will expend considerable effort to search for the best suppliers (designer apparel, luxuary cars etc)
Shopping Products/ Services
products or services for which consumers will spend a fair amount of time comparing alternatives such as furniture, aparel, fragrances, apliances, and travel alternatives
Conveinence Products/ Services
are those porducts or services for which the consumer is not willing to spend any effort to evaluate prior to purchase (commodity items)
Unsought Products
Products that you don’t think about or even know exists (new to the world products and things you wouldn’t even consider you needed
Product Mix
The complete set of all products and services offered by a firm
Product Lines
Groups of associated items that counumers tend to use together or think of as part of a group of similar products or services
Perceived Value (of a brand)
relationship between a product’s or service’s benefits and it’s costs. Customers usually make this comparison by looking at competitors. If a cheaper brand is viewed as having the same quality as a more expensive brand that product is considered to have high perceived value
Who can own a brand?
Both retailers and manufacturers can own a brand. Store brands are an example.
Brands can also be under an individual brand or under a family brand. Like special K having cereal and bars and other products under specail K
Manufacturer brands
aka national brands (ex Nike, coke, Kitchen Aid)
Retalier/ store brands
aka Private-label Brands
Products that are developed by the retailers.
Sometimes they manufacture them and sometimes the make specs and get someone else to produce them
in recent years, as the size of retail firms has increased through growth and consolidation, more retailers ave the scale economies to develop private-label merchandise and use this merchandise to establish a distinctive identity
Family brand Vs Indvidiual Brand
Family brand would brand a line of products where there is an overall brand, like when kellogs puts it’s name on fruitloops, special K and, rice crispies.
Kellogs also has individual brands that it does not put the family name on like Morning Star farms Keebler and Cheez-its
Brand Extention
When a brand puts it’s name on different product lines
Like Crest putting it’s name on toothpaste, floss, mouthwash etc
Advantages:
Brand awareness already exists so new products don’t need to develop it
Consumer Acceptance can carry over from one product to the other
if used for complementary products there is a synergy between the products (tostitos Chips and Tostitos Dip)
Brand Dilution
When the brand extension adversly affects the consumer perceptions about the core brand
Brand Repositioning
changing a brands focus to realign with changing market preferences
Very difficult to do and firms often need to spend tremendous amounts of money to make tangible changes to the brands image through various forms of promotion
Reasons Why firms create new products
Changing Customer needs (also to keep them from getting bored)
Market Saturation(Once everyone has one you will see declines in the sales of the product- so create new revamped models)
Managing risk through diversity
Fashion Cycles
Improving Business relationships
Difusion of innovation
how a new product spreads through various categories of adopters Innovators 2.5% of the market Early Adopters 13.5% early majority 34% late majority 34% laggards 16%
Innovators (diffusion of innovation theory)
keep themselves informed about the product category
they are crucial to a products success because they are the ones that get the market to gain acceptance through word of mouth
Relative advantage (and effect on diffusion of innovation)
When a product or service is perceived to be better than substitutes then the diffusion will be relatively quick
Idea Generation (sources)
internal R&D
R&D Consortia (R&D through groups of firms)
Licensing (buying other peoples ideas –scientific and technology products usually)
Brainstorming
Outsourcing (ideo)
Competitors Products (reverse engineering)
Customer Input
Lead Users
innovative product users that modify existing products according to their own ideas to suit their specific needs
Test Marketing
introducing the offering to a limited geographical area
can be a very strong predictor because you can actually observe purchase behavior which is more reliable than a simulated test
Product Life cycle
Introduction -
Growth- product gains acceptance and sales increase – more competitors emerge
Maturity -
Decline
Maturity Stage of the life cycle
industry sales reach the peak
firms try to rejuvenate by adding features or repositioning
Competition is at it’s peak
Factors Differentiating services from goods - Intangible
Services cannot be touched
This makes it difficult to market because it cannot be shone directly to the customer
You must reinforce benefit and value instead
Factors Differentiating services from goods - Inseparable
Services are produced and consumed at the same time
this means that customers rarely have the opportunity to try the service before they purchase it
Purchase risk is relativly high
Factors Differentiating services from goods - Heterogeneous
Variability in the service quality due to the fact that it takes humans to produce the service generally
Factors Differentiating services from goods - perishable
Services cannot be stored for the future
Gaps Model
Analyzes the gap in customer expectation and delivery
Knowledge gap- difference between customer expectations and the firms perceptions of those expectations
standards gap - service standards gap between customer expectations and firms service standards
delivery gap - difference between firms service standards and what it actually provides to the customers
Communication Gap- difference between the actual service and the promoted service
Building Blocks of Service Quality (5)
Reliability
Responsiveness- Willingness to help customers and provide prompt service
Assurance - the knowledge of and courtesy by employees and their ability to convey trust and confidence
Empathy - the caring individualized attention provided to customers
Tangibles- the appearance of physical facilities equip and personel
The 5 c’s of pricing
Competition Costs Company Objectives Customers Channel Members
Profit oriented Pricing Strategy
Associated with a particular profit goal as an overiding concern reaching a certain level of profit per unit
Sales oriented Pricing Strategy
setting prices with the idea that more sales will help the firm more than profits per unit
Firms might be concened with their overall market share
or to discourage new firms from entering the market
Competitor oriented Pricing Strategy
status quo pricing and staying competitive with others prices
Customer oriented Pricing Strategy
Setting prices based on how it can add value to it’s products
Ex Carmax no haggle pricing
or setting the price very high to make the statement of what the company is able to produce and increase the image of the firm even thought very few people will buy it
Price Elasticity of Demand
Measures how change in the price of an item affect the quantity of the product demanded
Necessities like milk and gasoline are less senssitive to changes in price because these item need to be bought regardless of if the price changes
Income Effect
Refers to the change in the quantity of a product demanded by customers due to a change in their income
Substitute effect
refers to the customers ability to substitute other products for the focal brand greater availability of substitute products means an increase in price elastictiy
Monopoly
One firm controls the market (less price competition)
Oligopoly
only a few firms dominate
firms tend to change their prices based on the competition to avoid disrupting and otherwise staple competitive environment
Examples soft drink market commercial airlines
Posibility of price war exist
Monopolistic
many firms competing for customers in a given market where their products are differentiated
Product differentiation over strict price competition
Examples wrist watch market
Pure Competition
large number of sellers with standardized products
price usually set by the laws of supply and demand
tyson tried to leave this kind of market by attempting to differentiate it’s chicken and enter a more monopolistic market
Cost Based Pricing Strategy
Start with a cost and base your price off of it
Cost of ownership pricing method
takes into account the cost to own a product over it’s life time consumers might be willing to pay more for a product if they know it will save them money over the life of the product
Every day Low Pricing
Focuses on constant low prices somewhere between regular prices and discount prices competitors offer during sales
this gains customer trust with the store because they know they do not have to shop around for prices and it saves them time
in addition odd prices may suggest that the quality is low and that is why the price appears low which is fine if price is more of an interest than quality
High Low Pricing
Temporarily reducing price on select items
This has the benefit of attracting both customers who are willing to pay the high price and customers that are willing to wait and pay the low price
Usually used in conjunction with a reference price so that customer know what they are saving
Market Penetration Pricing
Setting the initial price low in order to get the market penetration
firms also expect the cost per unit to decrease as the accumulated volume sold increases (experience curve effect)
Price Skimming
Initially pricing high because you know that the early adopters are willing to pay a higher price to get the product now
For this strategy to work the product must be considered breaking new ground in some way and offering consumers new benefits not currently available and competitors can not be able to enter the market easily
Coupons Downside
They do little to get customer loyalty
they are temporary and have no effect after the sale ends
Leader Pricing
is a tactic that attempts to build store traffic by aggressively pricing and advertising a regularly purchased item at or just above stores cost
if the customer comes to the store for the at cost item they are likely to make purchases on other things
Price Lining
setting a floor and ceiling priced item hoping that this will get the customer to purchase the items priced somewhere in the middle
Loss leader pricing and ethics
one step forward from leader pricing
The store sets the price of and item below cost to attract customers
In some places this is considered close to a bait and switch and is illegal
Vertical Price Fixing
Not illegal like horizontal price fixing but somewhere in the gray area
Example MSRP Manufacturer Suggested Retail Price
Direct marketing channel
typically manufacturer to buyer buy can be C2C in the case of craigslist or B2B like boeing selling planes to jetblue
No middle men
Channel Conflict
When there is a dissagreement among goals of people in the supply channel
Horizontal - Example a price war between lowes and home deopot affects both of them negatively and the supplier whom they share
Vertical - goals and rewards between supplier and retailer do not align
Push Marketing Channel
Merchandise is allocated to stores based on previous sales forecast and are shipped out at pre determined intervals
Pull Marketing Channel
Ammount of merchandise shipped to stores is determined at the POS terminal
requires a more costly and sophisticated information system to be effective
Advantages of a distribution center
Stores need to carry less merch
More accurate sales information for manufacturers because sales numbers are combined across many stores
retail space is generally more expensive than distribution center space
Multi Channel Strategy for retailing
Involves selling in more than one channel (ex catalogue or internet or instore)
intensive distribution
Place products in as many outlets as possible
good for products like pepsi
Exclusive Distribution
limiting to a select few retailers
good for luxury brands that could weaken their brands by selling at discount stores
Selective Distribution
in between exclusive and intensive
Good for shopping goods
Full Line Discount Stores
stores that offer a broad variet of merchandise limited service and low prices
walmart target and k mart
Category Specailists
Narrow but deep assortment of goods
a complete assortment in a category
Like Office Depot
Off Price Retailers
Inconsistant assortment of goods offered below MSRP
tjmaxx marshalls etc
Share of wallet
the percentage of a customers purchases that are made at a particular retailer (literally the share of their wallet that you get)
Integrated Market Communications IMC
represents the Promotion portion of the 4 p’s
Involves 3 elements the consumer the channel and the message communicated
The Sender
Where the message originates
The Transmitter
The marketing department or external agency receives the information from the sender and transforms it for use in its role as the transmitter
Encoding
Converting the senders idea into a message which could be verbal visual or both
Communication channel
is the medium that carries the message
The receiver
Person who reads hears or sees and processes the information contained in the message
Noise
Interference tha stems from competing messages a lack of clarity in the message or a flaw in the medium
AIDA
Awareness Interest Desire Action
Think Feel Do
Awareness leads to interest
inerest to desire and desire to action
Communications should be tailored to which part of the AIDA model the receiver is in
Laggard Effect
A delayed response to marketing communication campaign
Direct Marketing
carefully targeting customers so they will be more receptive to the message Catalogues email mobile marketing etc
Has seen the biggest increase in aggregate spending
the internet and customer databases have made this easier to do
Objective and task method to IMC budget
determines the budget required to undertake specific tasks to accomplish communication objectives
Rule of thumb method to IMC budgeting
uses prior sales and communications activities to determaina budget
Steps in Planning and executing ad AD campaign
Identify Target audience Set Advertising objectives Determine the budget convey the message evaluate and select the media create advertisements assess impact
Pull/ Push strategy
Getting the customers to pull the the product into the marketing channel by demanding or push by focusing on whole salers and retailers to sell the product
Reminder Advertising
Designed to prompt re purchases
Institutional advertisements
designed to persuade or remind people about issues related to places politics or and industry
Like the got milk campaign
Unique Selling Proposition USP
establishes the unique benefits which is often the slogan or theme for an advertising campaign
Built Ford Tough
Gives you wings
Informational Vs Emotional Appeals
Informational appeals help consumers make purchase decisions by offering factual information emotional appeals aim to satisfy consumers emotional desires rather than utilitarian needs
Premium (sales promotion)
offers an item for free or at a bargained price to reward some type of behavior such as buying sampling or testing
