Midterm 3 Flashcards
What are the different stages in the product life cycle?
introduction
growth
maturity
decline
What is diffusion of innovation?
innovators
early adopters
early majority
late majority
laggards
What are the ways to manage the product life cycle?
(modifying product vs. modifying
market)
Product modification:
altering one or more of a product’s characteristics to increase
the product’s value to customers and increase sales.
1. Adding vitamins to Pantene shampoo to create a “new, improved shampoo”
2. product bundling —the sale of two or more separate products in one package.
market modification: f
find new customers, increase a product’s use among existing
customers, or create new use situations.
Finding New Customers
a) LEGO Group has introduced a product line for young girls called LEGO Friends.
Harley-Davidson encourages women to take up biking, thus doubling the
number of potential customers for its motorcycles.
Increasing a Product’s Use
a) Because soup consumption rises in the winter and declines during the summer,
Cambell advertises more heavily in warm months to encourage consumers to think of soup as more than a cold-weather food.
b) Florida Orange Growers Association advocates drinking orange juice throughout
the day rather than for breakfast only.
Creating a New Use Situation
a) Gillette markets its Gillette Body line of razors, blades, and shaving gels for
“manscaping”—the art of shaving body hair in areas below the neckline.
Reposition the product:
changes the place a product occupies in a consumer’s mind
relative to competitive products.
Ways to reposition product
-Change value offered
-react to competitor position
-reach a new market
-catch a rising trend
Changing the Value Offered
Trading Up
Trading Down
Reacting to a Competitor’s Position
New Balance repositioned its athletic shoes to focus on fit, durability, and
comfort rather than competing head-on against Nike on performance and
Adidas on fashion. The company offers an expansive range of shoes and networks with podiatrists, not sports celebrities.
Reaching a New Market
When Unilever introduced iced tea in Britain, sales were disappointing. The
company made its tea carbonated and repositioned it as a cold soft drink.
Johnson & Johnson effectively repositioned its St. Joseph aspirin from a product for infants to an adult low-strength aspirin to reduce the risk of heart problems
or strokes.
Catching a Rising Trend
Growing consumer interest in foods that offer health and dietary benefits is an example.
Quaker Oats makes the FDA-approved claim that oatmeal, as part of a low-saturated-fat, low-cholesterol diet, may reduce the risk of heart disease.
Calcium-enriched products, such as Kraft American cheese and Ben’s Original Calcium Plus rice, emphasize healthy bone structure for children
brand personality
A set of human characteristics associated with a brand name.
a) consumers assign personality traits to products—traditional,
brand name
Any word, device (design, sound, shape, or color), or combination of these used to
distinguish a seller’s products or services.
brand equity
The added value a brand name gives to a product beyond the functional benefits
provided.
Identify the four alternative branding strategies
- multiproduct branding
- multibranding
- private branding
- mixed branding
profit equation
Total Revenue - Total Cost
(PriceXQ sold) - (fixed costs+variable cost)
final price equation
List price - allowances + extra fees
break-even
point
break even quantity
fixed cost/ (unit price-unit variable costs)
What is a demand curve?
a graph that relates the quantity sold and price, showing the maximum number of units that will be sold at a given price
What are the factors affecting demand?
-consumer tastes
-price and availability of similar products
-consumer income
What are the three different types of vertical marketing systems?
corporate vertical marketing system
contractual vertical marketing system
administered vertical marketing systems
corporate vertical marketing system
combination of successive stages of production and distribution under a single ownership
corporate vertical marketing system
Forward integration
A producer is unhappy with the distributor and distributes their product. The producer is taking on the role of distribution.
corporatevertical marketing system
Backward integration:
The distributor needs more control over the quality of products, so they become the producer.
contractual vertical marketing system
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.
3 types of contractual vertical marketing system
Wholesaler-sponsored voluntary chain
Retailer-sponsored cooperatives
Manufacturer-sponsored retail franchise systems
Wholesaler-sponsored voluntary chain
involve a wholesaler that develops a contractual relationship with small, independent retailers to standardize and coordinate buying practices, merchandising programs, and inventory management efforts.
Retailer-sponsored cooperatives
exist when small, independent retailers form an organization that operates a wholesale facility cooperatively. Member retailers then concentrate their buying power through the wholesaler and plan collaborative promotional and pricing activities. Examples of retailer-sponsored cooperatives include Associated Grocers and Ace Hardware.
Manufacturer-sponsored retail franchise systems
is a contractual arrangement between a parent company (a franchisor) and an individual or firm (a franchisee) that allows the franchisee to operate a certain type of business under an established name and according to specific rules
administered vertical marketing systems
achieve coordination at successive stages of production and distribution by the size and influence of one channel member rather than through ownership. Procter & Gamble, given its broad product assortment ranging from disposable diapers to detergents, is able to obtain cooperation from supermarkets in displaying, promoting, and pricing its products
What are the factors affecting choice of channels in a distribution system?
- target market?
- buying requirements of the target market?
3.Which channel and intermediaries will be the most profitable?
What is a supply chain management system?
is the integration and organization of information and logistics activities across firms in a supply chain for the purpose of creating and delivering products and services that provide value to consumers.
How is a supply chain management system different from a marketing
channel?
supply chain differs from a marketing channel in terms of the firms involved. A supply chain includes suppliers that provide raw material inputs to a manufacturer as well as the wholesalers and retailers that deliver finished products to consumers. The management process is also different.
What are the different components of a supply chain management system?
-Suppliers
-producers
-consumers
-logistics management
-supply chain management (suppliers network and marketing channel)
What is Integrated Marketing Communications?
Designing marketing communications programs that coordinate all promotional activities—advertising, personal selling, sales promotion, public relations, and direct marketing—to provide a consistent message across all audiences.
What are the key elements in a communication process?
- Source
- Message
- Channel of communication
- Receiver
- Encoding
- Decoding
What are the five elements of the promotional mix?
Advertising
Personal Selling
Public Relations
Sales promotion
direct marketing
Pull strategy
by directing its promotional mix at ultimate consumers to encourage them to ask the retailer for a product. Seeing demand from ultimate consumers, retailers order the product from wholesalers and thus the item is pulled through the intermediaries. Pharmaceutical companies, for example, now spend more than
$9.6 billion annually on direct-to-consumer prescription drug advertising to complement traditional personal selling and free samples directed only at
doctors.
Push strategy
directing the promotional mix to channel members to gain their cooperation in ordering and stocking the product. In this approach, personal selling and sales
promotions play major roles. Salespeople call on wholesalers to encourage orders and provide sales assistance.
Understand the different types of appeals that can be created in an advertisement.
fear
sex
humor
What are customer-oriented sales promotions?
- Coupons
- Deals (2 for 1)
- Premiums- free toys w/ happy meals to promote movies
- Contests- guess the flavor of this chip
- Sweepstakes
- Samples
- Loyalty programs
- Point of purchase displays - Red Bull display in a store
- Rebate
- Product placement- Reeses pieces in ET
What are and trade-oriented Sales promotions?
- Allowances and discounts
- Corporate advertising
- Training of distributor salesforce
