Final Exam (8-18, 6) Flashcards
6 reasons why firms create new products
- changing customer needs
- market saturation
- managing risk through diversity
- fashion cycles
- improving business relationships
- innovation and value
5 stages of the adoption cycle + their characteristics
- innovators - enjoy taking risks, highly knowledgable, not price sensitive
- early adopters - generally dont like to take as much risk as innovators
- early majority - prefer to “wait until the bugs work out”
- late majority - product has achieved its full market potential
- laggards - avoid change and rely on traditional products
4 factors affecting product diffusion (adoption rate)
- relative advantage - if a product is perceived to be better than substitutes, then diffusion will be quick
- compatibility - whether the product is compatible with the culture
- observability - easily observed, benefits are communicated to others
- complexity and trialability - less complex products and easy to try will diffuse quicker
premarket testing
conducted before introducing product to the market to determine how many consumers will try and continue to use the product
test marketing
introduces product to a small geographic are prior to a national launch
4 stages in the product life cycle + their characteristics
- introduction - initial losses due to high startup costs and low levels of sales
- growth - market becomes more segmented, increasing potential and achieving economies of scale
- maturity - adoption by late majority and intense competition, develop strategies to keep profit growth
- decline - either position for a niche segment for diehard consumers or exit the market
associated services
nonphysical aspects of the product such as product warranties, financing, product support, after-sale service
4 types of consumer products
- specialty - customers will expend considerable efforts to search for best suppliers (road bikes)
- shopping - customers will spend a fair amount of time comparing alternatives (furniture)
- convenience products - customer is unwilling to spend any effort (bread)
- unsought - products consumers either do not normally think of buying or do not know about (funeral services)
product mix
complete set of all products offered by firm; consists of various product lines (breadth) and depth within these lines
6 values of branding
- facilitate purchases - help consumers make quick decisions
- establish loyalty - consumers learn to trust certain brands
- protect from competition - strong brands are more established in amrket
- reduce marketing costs - brand sells itself
- brands are assets - legally protected through trademarks and copyrights
- impact market value - direct impact on bottom line
brand equity
set of assets and liabilities linked to a brand that add/subtract from the value provided by the product (e.g. recall of lululemon pants hurts brand equity)
brand awareness
how many consumers in a market are familiar with the brand, what it stands for, and have an opinion about it
brand association
mental links that consumers make between a brand and its key product attributes
3 types of brand ownership
- manufacturer’s brands
- private label brands
- generic
3 types of brand names
- corporate brand - firm uses own name to brand all its product lines
- family brand - combination of name to brand similar product lines
- individual brand - no connection between brands
4 criteria for choosing a brand name
- descriptive and suggestive of benefits
- easy to pronounce, remember, and recognize
- be able to register and protect name
- easy to translate into other languages
brand extension
the use of same brand name for new products being introduced to the same or new markets (nike, starbucks, coke)
brand dilution
brand extension adversely affects consumer perceptions about the attributes the core brand is believed to hold
how to prevent brand dilution
carefully evaluate fit between core and extension
- evaluate consumer perceptions of the attributes of the core
- refrain from extending name to too many products
co-branding
practice of marketing two or more brands together
- enhances consumers’ perceptions of product quality by signalling otherwise unobservable product quality through links
- risky when customers for each brand are vastly different
brand licensing
contractual arrangement between firms, allowing one firm to use another’s brand name, logo, symbols in exchange for a fee
- attracts visibility for brand and builds brand equity while generating additional revenue
- risk: dilution
5 aspects of packaging
- attracts attention
- promotional tool
- allows same product to appeal to different markets with different sizes
- protects from damage
- convey brand positioning
4 unique characteristics affecting services
- intangible - must employ symbols and images to convey benefits of services
- inseparable - produced and consumed at the same time
- inconsistent - fix through training
- inventory - perishable
gaps model and 4 aspects of it
designed to encourage the systematic examination of all aspects of the service delivery process and prescribe the steps needed to develop an optimal service strategy
- knowledge gap
- standards gap
- delivery gap
- communication gap
knowledge gap + fix
difference between customer’s expectations and the firm’s perceptions of those customer expectations
- voice of customer program
- zone of tolerance
FIX: use of research to match
5 dimensions to determine service quality
- reliability
- responsiveness
- assurance
- empathy
- tangibles
standards gap + fix
difference between the firm’s perceptions of customers’ expectations and the service standards it sets
FIX: setting appropriate service standards and measuring service performance
delivery gap + fix
difference between the firm’s service standards and the actual service it provides to its customers
FIX - getting employees to meet or exceed standards by empowering employees and providing incentives
communication gap + fix
difference between the actual service provided and the service that the firm’s promotion promises
FIX - be more realistic about the service and manage customer expectations effectively
3 parts to service recovery
- listening to the customer
- providing a fair solution
- resolving problem quickly
distributive vs procedural fairness
distributive: customers’ perception of the benefits they received compared to the inconvenience cost
procedural: perceived fairness of the process used to resolve complaints
5 c’s of pricing
- company objectives
- customers
- costs
- competition
- channel members
5 c’s of pricing: company objectives
4 orientations
profit orientation
sales orientation
competitor orientation
customer orientation
5 c’s of pricing: customers
2 aspects
demand curve
price elasticity of demand
- income effect
-substitution effect
5 c’s of pricing: competition
4 types of competitive environments
- monopoly - one firm controls the market
- monopolistic competition - many firms selling differentiated products at different prices
- oliogopoly - handful of firms control the market
- pure competition - many firms selling commodities for the same prices
the influence of the internet on pricing
more price sensitive and new categories of products that were difficult to obtain before
- showrooming
the influence of economic factors on pricing
increase in consumers disposable income but they are still attempting to shop cheap
- cross-shopping
3 pricing methods
- cost-based
- competitor based
- value based
cost of ownership method
customers may be willing to pay more for a product because over its lifetime, it will eventually cost less than a cheaper alternative
2 new product pricing strategies
- price skimming - initial price high to profit from innovative idea
- market penetration - set initial price low to build sales/market share
4 psychological factors affecting value-based pricing
- consumers’ use of reference prices
- odd prices
- everyday low pricing
- high/low pricing
3 pricing tactics aimed at consumers
- price lining - establish price floor/ceiling to represent distinct differences in quality
- price bundling - selling more than one product for a single, lower price
- leader pricing - build store traffic by aggressively pricing a regularly purchased item
3 types of consumer price reductions
- markdowns
- quantity discounts
- coupons/rebates
4 b2b pricing tactics and discounts
- seasonal discounts
- cash discounts
- allowances - advertising + listing
- quantity discounts
uniform delivery vs. geographic pricing
uniform - one shipping rate for any location
geographic - different rates depending on delivery area
4 types of illegal or unethical pricing
- deceptive or illegal price advertising (deceptive reference price, loss leader pricing, bait and switch)
- predatory pricing - low price for one or more products with intention of driving competitor out of business
- price discrimination - suppliers sell same product to different resellers at different prices
- price fixing (horizontal and vertical)
3 types of distribution channels
- direct
- indirect
- multi-channel
push marketing strategy
manufacturer focuses on promotional efforts to convince supplier to carry its products (personal selling or sales promotion)
pull marketing strategy
promotional efforts are focused on consumers to build demand that will convince retailers to carry them (tv commercials or print ads)
3 types of distribution intensity
- intensive distribution - designed to get products into as many outlets as possible
- exclusive distribution - granting exclusive geographic territories to one or very few retailers
- selective distribution - few selected customers in a territory
vertical marketing system
members act as a unified system because they realize that each part can maximize its individual benefits by working together
3 types of vertical marketing systems
- administered - no common ownership, but dominant member controls the relationship - if either party doesn’t like the relationship it can walk away
- contractual - firms join together through contracts to obtain economies of scale - franchising
- corporate - parent company has complete control of supply chain
data warehouse
stores consumer’s purchase data collected at the POS
electronic data interchange
computer-to-computer exchange of business documents from retailer to vendor and back
4 aspects of strategic relationships
- mutual trust - share relevant ideas, communicate efficiently
- open communication - share info, develop sales forecasts
- common goals - incentive to pool their strengths and abilities
- credible commitments - both sides make tangible commitments
just-in-time (JIT) inventory system AKA quick response (QR)
deliver less merchandise more frequently
storing and cross docking
storing - merch is unloaded onto storage shelves
cross docking - merch goes straight to staging area as it is prepackaged
3 factors in choosing retail partners
- channel structure
- customer expectations
- channel member characteristics
7 types of general merchandise retailers
- discount stores (walmart)
- specialty stores (sephora)
- category specialists (chapters)
- department stores (sears)
- drugstores
- off-price retailers (winners)
- extreme value retailers (dollarama)
6 p’s of developing a retail strategy
- product - right mix of products
- price - general price range of a store
- promotion - coordinated effort between manufacturer and retailer
- presentation - improving shopability by providing more convenient store layouts
- personnel - personal selling, csrs
- place - convenience of location of the stores
benefits of stores for consumers
- browsing
- touching/feeling products
- personal service
- cash and credit payments
- entertainment and social interaction
- instant gratification
- risk reduction
benefits of internet retailing
- deeper and broader selection
- more info to evaluate product
- personalization
- expanded market presence
integrated marketing communications
a variety of communication disciplines in combination to provide clarity, consistency, and maximum communicative impact
4 methods of determining a budget in an IMC
- objective and task - budget based on what is required to undertake specific tasks and accomplishments
- competitive parity - budget in line with its market share
- percentage of sales - fixed percentage of forecasted sales
- affordable budgeting - based on whats left over after other operating expenses
2 types of appeals in conveying a message
- rational appeal - factual info and strong arguments
2. emotional appeals - satisfy consumer’s emotional desires rather than utilitarian needs
media planning
process of evaluating and selecting the media mix that will deliver the message to the intended audience
3 types of advertising schedules
- continuous - runs steady throughout the year
- flighting - implemented in spurts
- pulsing - maintains base level but increasing intensity at some points
6 types of IMC tools
- advertising
- personal selling
- sales promotion
- direct marketing
- public relations
- digital media
AIDA model in advertising
attention, interest, desire, action
aided recall vs top of mind awareness
aided recall - consumers recognize brand when its name is presented to them
top of mind - brand has prominent place in people’s memories
lagged effect
delayed response to a marketing campaign - may take several exposures before viewer processes its message
3 types of advertising objectives
- informative advertising - create brand awareness
- persuasive advertising - motivate consumers to take action
- reminder advertising - prompt repurchase
3 values of personal selling
- build relationships
- educate and provide advice
- save time and simplify buying
5 steps of personal selling
- generate and qualify leads
- preapproach
- sales presentations and overcoming objections
- closing the sale
- follow up
4E framework for social media
Excite the customer - social network sites
Educate the customer - thought sharing sites
Experience the product - media sharing sites
Engage the customer - thought sharing and media sharing
4 types of social media users
- creators - use social media as a new way to share their ideas
- bonders - use social media to enhance relationships
- professionals - use social media to demonstrate how smart they are
- sharers - want to help others
sentiment analysis
analyze data from sources to collect consumer comments about companies and their products
exporting
producing goods in one country and selling them in another
indirect and direct
franchising
contractual agreement between a firm, the franchisor, and another firm or individual, the franchisee
strategic alliance
collaborative relationships between independent firms, though the partnering firms do not invest in one antoehr
joint venture
firm entering new market pools its resources with those of a local form to form a new company in which ownership, profits, and control are shared
- contract manufacturing
- management contracting
direct investment
firm maintains 100% ownership of its plants, operation facilities, and offices in a foreign country, often through the formation fo wholly owned subsidaries
3 ethical issues in global marketing
- environmental concerns
- global labour issues
- impact on host country culture
culture imperialism
belief that ones own culture is superior to that of other nations
corporate social responsibility
the voluntary actions taken by a company to address the ethical, social and environmental impacts of its business operations and the concerns of its stakeholders
consumerism
social movement aimed at protecting consumers from business practices that infringe upon their rights
4 segmentation bases
- geographic
- demographic
- psychographic - how do they live, what is their lifestyle
- behavioural - why they buy, how often
5 positioning methods
- value
- product attributes
- benefits and symbolism
- competition
- market leadership
4 targeting strategies
- undifferentiated targeting strategy - mass marketing
- differentiated targeting strategy
- concentrated (niche targeting strategy)
- micromarketing - custom
3 segmentation methods of behavioural segmentation
- occasion segmentation - when a product is purchased/consumed
- benefit segmentation - based on benefits customers derive from the product
- loyalty segmentation - strategy to retain their most profitable customers
