Product

Question 1

Consumer Products

Answer 1

used by the ultimate customer

Question 2

Business Products

Answer 2

organisations purchase products that assist in providing other products for resale
(some are both consumer and business eg computers)

Question 3

Convenience Products

Answer 3

• Product: eg toothpaste, handsoap etc
• Price: Relatively inexpensive
• Distribution: Widespread (many outlets)
• Promotion: price awareness and availability stressed
• Brand Loyalty: Aware of brand but will accept substitutes
• Purchase Behaviour: Frequent purchases, little time and effort spent shopping

Question 4

Shopping Product

Answer 4

• Product: Cameras, TV,airline ticket etc
• Price: Fairly expensive
• Distribution: Large number of selective outlet
• Promotion: Differentiation from competitors stressed
• Brand Loyalty: prefer specific brands but will accept substitutes
  Purchase Behaviour: Infrequent purchases made; needs much comparison shopping time

Question 5

Specialty Product

Answer 5

• Product: Rolls Royce car, heart surgery etc
• Price: Usually very expensive
• Distribution: Very limited
• Promotion: Uniqueness, brand and status stressed
• Brand Loyalty: Very brand loyal, will not accept substitutes
• Purchase Behaviour: Infrequent purchases; needs much extensive search and decision time

Question 6

Product Life Cycle

Answer 6

Describes the stages a new product goes through in the market place:

• Introduction
• Growth
• Maturity
• Decline

Question 7

Introduction Stage

Answer 7

When the product is introduced to the intended target market

• Sales grow slowly
• Minimal profit ( often a result of large investment costs in product development)

Question 8

Introduction

objective and marketing mix actions

Answer 8

Objective: gain awareness
Competition: few
Product: one
Price: Skimming or Penetrating
Promotion: inform, educate, stimulate ‘primary demand’
Distribution: limited (can be challenging as channel intermediaries may be hesitant to carry a new product)

Question 9

Skimming Pricing

Answer 9

Set high initial price

• helps recover from development costs
• can capitalize on price insensitivity of early buyers
• however can attract competitors as they see opportunity for profit

Question 10

Penetration pricing

Answer 10

Low initial price

• discourage competitors entering market
• helps build volume in units
• however company must closely monitor costs

Question 11

Primary Demand

Answer 11

create a desire for the product class rather than specific brand as there are few competitors at this stage

Question 12

Growth Stage

Answer 12

Rapid increase in sales

• competitors appear
• profit usually peaks at this stage
• product sales grow at an increasing rate (new purchasers + repeat purchasers)

Question 13

Growth

objectives and marketing mix actions

Answer 13

Objective: stress differentiation
Competition: more
Product: more versions
Price: gain market share
Promotion: stress points of difference (new features, improvements)
Distribution: more outlets (fight for shelf space in retail outlets)

Question 14

Maturity Stage

Answer 14

Slowing of total industry sales or product class revenue

• sales increase at a decreasing rate
• marginal competitors begin to leave the market
• most consumers are either repeat purchasers or have trialed and abandoned the product
• profit declines due to fierce price comp btw competitors + cost of gaining new buyers

Question 15

Maturity stage

objectives and marketing mix actions

Answer 15

Objective: maintain brand loyalty
Competition: many
Product: full product line
Price: defend market share
Promotion: reminder orientated
Distribution: maximum outlets

Question 16

Decline Stage

Answer 16

When sales drop

- due to environmental changes (eg fax machines when email came in)

Question 17

Decline Stage

objective and marketing mix actions

Answer 17

Objective: harvesting or deletion
Competition: reduced
Product: best sellers
Price: stay profitable
Promotion: minimal promo
Distribution: fewer outlets

Question 18

Product Deletion

Answer 18

Dropping product from the line

- extreme move, not taken lightly as there will still be core customers using the product

Question 19

Product Harvesting

Answer 19

Retains product but reduces marketing costs

• product will still be offered but no advertising c]money spent
• maintains ability to meet customer requests

Question 20

Product adoption process

Answer 20

Awareness- consumer becomes aware of product through word of mouth, promotional activities or incidental exposure
Interest - consumer gains interest in product and seeks information
Evaluation - consumer evaluates information, decideds wheter to try product
Trial- consumer examines and tries out product
Adoption- consumer decides to purchase product, evaluates and determines if they will repurchase

Question 21

Diffusion of innovation

Answer 21

The theory that social groups influence the decisions made by individuals in such a way that innovations are adopted by the market in a predictable pattern over time

Question 22

Product Modification

Answer 22

altering one of more of a products characteristics, such as its quality, performance, or appearance, to increase the products value to customers and increase sales

Question 23

Market Modification

Answer 23

a company tries to find new customers, increase a products use among existing customers, or create new situations

Question 24

Re positioning the product

Answer 24

A company changes the place a product occupies in a consumers mind relative to competitive products.. by changing one or more of the four marketing mix elements

Question 25

Branding

Answer 25

companys' use of a name, phrase, design, symbols or combination of these to identify its products and distinguish them from those of competitors

Question 26

Multiproduct branding Strategy

Answer 26

``` A company uses one name for all its products in a product class eg: Samsung, Sony, Huggies, Honda ```

Question 27

Multiproduct branding: Capitalizing on brand equity

Answer 27

consumers with a good experience with product will transfer this favorable attitude to other items in the product class with the same name

Question 28

Multiproduct branding: | Product line extension

Answer 28

using current brand name to enter a new market segment in its product class pro: can result in lower advertising costs because the same name is used across all products thus raising the level of brand awareness con: product line extension may come at the expense of other items in the product line

Question 29

Multiproduct branding: | subbranding

Answer 29

combines a corporate or family brand with a new brand, to distinguish a part of its product line from others eg: Porsche Carrera (high end ) and Porsche Boxster (lower end)

Question 30

Multiproduct branding: | brand extention

Answer 30

using a current brand name to enter a different product class. eg: Honda extending into snowblowers, lawn mowers, marine engines etc -however, too many uses for one brand name can dilute the meaning of a brand for customers

Question 31

Multiproduct branding: | co-branding

Answer 31

the pairing of two brand names of two manufacturers on a single product - allows a firm to enter new product classes and capitalize on an already established brand name in that product class

Question 32

Multibranding Strategy

Answer 32

giving each product a distinct name useful when each brand is intended for a different market segment eg Disnet uses Miramax and Touchstone Pictures names for films directed at adults and uses itd Disney name for kids films

Question 33

Multibranding: | Fighting brands

Answer 33

some multibrand companies introduce new product brands as defensive moves to counteract competition. Their chief purpose is to confront competition.

Question 34

Multibranding disadvantages

Answer 34

compared with multiproduct strategy, advertising and promo costs tend to be higher company must generate awareness among customers and retailers for each new brand name without the benefit of previous impressions

Question 35

Multibranding advantages

Answer 35

each brand is unique to each market segment | there is no risk that a product failure will affect other products in the line

Question 36

Private Branding

Answer 36

company manufactures products but sells them under the brand name of a wholesaler or retailer. eg sears, Walmart, large retailers that have their own established brand name popular because it typically provides high profits for manufacturers and reseller

Question 37

Mixed Branding Strategy

Answer 37

firm markets products under its own name and that of the a reseller because the segment that is attracted to the reseller is different from its own market