Quiz 2 Flashcards
product item
is a specific product that has a unique brand, size or price.
product line
is a group of individual products that are closely related because they satisfy similar needs, may be used together or are sold to the same customer group.
product assortment
(or product mix) consists of all the individual and product lines offered by an organization.
The four types of consumer products
Convenience product
Shopping products
Specialty products
Unsought products
Convenience product
can be a staple like toothpaste, soap or butter or
an impulse product like candy, gum, magazine or
an emergency product like an ATM cash machine, batteries, flashlight
Convenience products tend to be relatively inexpensive, widely available, and brand loyalty is usually not a big factor.
Shopping products
are items like TVs. Cameras, cosmetics, briefcases, airline tickets.
These can be fairly expensive, are available through many selective outlets, are infrequently purchased and usually take some comparison shopping and extra shopping time. Brand preference may or may not be important in the final decision. Homogeneous products are seen as the same and therefore price may be the deciding factor. Heterogeneous products are seen as different in from each other, making price less of an issue.
Specialty products
are those unique and expensive items (Rolex watch, Porsche Carrera, exotic adventure vacation) bought infrequently after much thought and effort. Brand name is everything here.
Unsought products
are those that the customer doesn’t yet know about or if knowledgeable about, doesn’t initially want—how do you feel about long-term health insurance, funeral services?
The many benefits of packaging include:
- Protection of the product
- Communication of product benefits, conveys a brand’s positioning
- May enhance the product, such as allowing for more efficient storage
- Increase ease of use of product (re-sealable bags, squeeze bottles for mayonnaise, jam, tuna packed for single-serving, etc.)
- Reduce costs of transport through shape and weight of packaging
- Universal Product Codes (UPC) barcodes on packaging allow better inventory tracking and speeds checkout times for customers.
- Packaging can deter theft! This can greatly reduce “shrinkage” (stolen or disappearing stock) and allow for much greater profit for a company.
The Pure-Service industry is growing faster than the physical products industries true or false
true
How can businesses improve their service?
Through the Training and Empowerment of their employees!
Today, services account for almost what percent of the U.S. gross domestic product (GDP).
80%
Four Service Characteristics
Service Intangibility—services cannot be seen, tasted, felt, heard, or smelled before they are bought. (In contrast to physical products which are produced, stored, then later sold,
services are first sold, and then produced & consumed.
Service Inseparability—services cannot be separated from their providers, whether people or machines.
Service Variability—the quality of services depends on who, when, where, and how they are provided.
Service Perishability—services cannot be stored for later sale or use.
Why do companies “ Brand “ themselves?
- To cultivate authenticity, differentiation, and consistency in their products in the eyes of the consumer/market.
- To elevate their meaning and relevance with their customers.
- To command a premium price for their offerings, therefore ensuring the highest level of profitability for their business.
- Many customers base buying decisions on brands/brand names.
- The power of a brand name paves the way for a company to develop “brand extensions” or new products. These brand extensions are more easily and quickly adopted by consumers than unrecognized brands that offer new products.
- Good brand management insulates a brand from factors such as Price and
Competitive Pressure.
Elements of Successful Branding
- The Brand Platform: the foundation for all communications (brand theme, attributes, values)
- Visuals: name, logo, packaging, website, advertising, promotions
- Employees as Ambassadors
- The Brand Blog or Social Media Presence: referred to as the “Brand Autopsy”
Different types of brands
Family Brand—A company uses the same brand name for a variety of products (Sunkist, Sears Kenmore)
Licensed Brand—”licensing” (renting or leasing) is the process of creating a contract between the owner of a brand and a company who wants to use the brand name in association with its product. Examples: NASCAR, Harley Davidson, Coca Cola (clothing, household items such as drinkware, ice buckets, plates, etc.), Disney (children’s toys, clothing, plates, cups, etc.)
Individual Brand—marketing each product made by a company, under a different brand name. For example, Proctor & Gamble offers many laundry detergents, each with its own brand name and brand managers.
Generic Brand—a product that doesn’t have a widely recognized name or logo because it is not advertised and it typically does not have expensive packaging. The lack of promotion and fancy packaging can significantly reduce the cost of the product. Examples: prescription drugs, personal care items, cleaning products, paper products, etc.
Franchise Operations— Once a business is successful, with a proven business plan/strategy, it may opt to scale its business and allow investors to buy their own business unit. Under a franchise, the owner—or franchisor—retains control of the brand, and licenses the franchisee to use its business model and brand. (McDonalds, 7-Eleven, UPS Stores, Great Clips, Anytime Fitness, Merry Maids, Hampton by Hilton, RE/MAX realtors).
“manufacturer” or “national” brands.
Created/owned by producers
Develop demand across many markets
Dealer brands or private brands
Created/owned by intermediaries
Create higher margins for dealers
The biggest reasons that retailers create their own brands include:
- It is much more profitable for the store since it is eliminating the cost of a middleman.
- Private label merchandise allows the retailer to control quality, delivery times, PRICE, and promotion.
- Since the product is cheaper to the retailer, the savings can be passed along to the customers, resulting in lower retail prices—a nice way to create goodwill.
- Private label offers the retailer a chance to showcase product that is not available elsewhere, thus providing uniqueness of assortment.
Types of Branding
Licensing—an agreement between a manufacturer and another company, through which the other company pays the manufacturer a fee in order to use the former’s brand name.
I.e. Nike licensing its name to a sunglass manufacturer, who develops a line of Nike sunglasses.
Co-branding—the practice of using the established brand names of two different companies on the same product.
I.e. Alaska Airlines Visa card
Brand Extensions—extending an existing brand name to new product categories.
I.e. Harley Davidson riding apparel, Quaker Oatmeal energy bars
Brand Equity vs. Brand Value
Brand Equity—the differential effect that knowing the brand name has on customer response to the product and its marketing: a measure of the ability of the brand to capture consumer preference and loyalty.
Brand Value—the total financial value of the brand,I.e. Apple: $246 billion
Google $174 billion
Microsoft: $115 billion
The four stages of the lifecycle are
Market introduction
Market growth
Market maturity
Market decline
A company may look at two options in handling a declining product:
- Deletion: dropping the product from the company’s assortment is the most severe strategy. This decision requires serious thought on the part of the firm, due to the fact that there may be a residual core of customers still using the product who don’t want their ongoing supply taken away.
- Harvesting: retaining the product to a small degree and eliminating much if not all of the marketing efforts. e.g. Coca-Cola still sells Tab, it’s very first diet soda, to a small group of “die-hard” fans. Coke’s CEO explains that “It shows you care’”
Extending the Product Lifecycle methods
Increasing A product’s Use
Finding New Uses
Changing Package Size, Labels, or Product Quality
product lifecycles are generally getting
shorter
What constitutes a “new” product?
Newness Compared with Existing Products:
Newness in Legal Terms:
Newness from a Consumer Perspective:
failure rate of new products is
80%
New product development process
- Idea Generation
- screening
- Idea evaluation
- Development
- Commercialization
Service quality is determined by five variables:
- Tangibles—any physical evidence such as clean restrooms, crisp uniforms
- Reliability—consistency of performance; dependability
- Responsiveness—the readiness to serve (“We’re here 24/7”)
- Assurances—the confidence conveyed by the service provider
(“You’re in good hands with Allstate”) - Empathy—a show of personal understanding of the customer
