Revision Flashcards
Describe a product and a service with examples (10 marks)
Product:
a product refers to anything that can be offered to a market for attention,
acquisition, use, or consumption that might satisfy a want or need. In
simpler terms, a product is a tangible item that customers can physically
interact with.
Example: A popular example of a product is a smartphone. Smartphones
are tangible devices that individuals can purchase to satisfy various needs
such as communication, entertainment, and productivity. Customers can
hold and use smartphones to make calls, send messages, access the
internet, and perform a wide range of tasks.
Service:
On the other hand, a service is defined as an activity, benefit, or satisfaction
offered for sale that is essentially intangible and does not result in the
ownership of anything. In simpler terms, services provide intangible benefits
or experiences to customers.
Example: An example of a service is ridesharing provided by companies like
Uber or Lyft. Ride-sharing services offer customers the benefit of convenient
transportation from one location to another.
Discuss product line and product mix with examples
Product line decision A group of products that are closely related
because they function in a similar manner, are sold to the same
customer groups, are marketed through the same type of outlets, or fall
within the price ranges.
Example: Apple’s iPhone Product Line
Product mix the set of all products lines and items that a particular
seller offers for sale.
(Product Portfolio)
Example: Coca-Cola’s Product Mix
Define omni channel marketing and discuss the key aspects for
building an Omni-Channel Marketing Campaign
Omni-channel marketing is a customer-centric approach that integrates all
channels a company uses to interact with consumers, aiming to create a
seamless and unified brand experience across both physical (stores) and
digital platforms (websites, apps).
Here are the key aspects for building a successful Omni-Channel Marketing
Campaign:
Customer Journey Mapping: This involves identifying all touchpoints a
customer interacts with during their purchase journey, from initial
awareness to post-purchase service. By understanding this journey,
marketers can tailor messaging and offers at each stage.
Channel Integration: Ensure all communication channels (website, social
media, email, SMS, physical stores) work together seamlessly. Data and
customer information should be readily shared across platforms, allowing
for a consistent experience regardless of the channel used.
Consistent Branding: Maintain a consistent brand voice, tone, message,
and visual identity across all channels. This reinforces brand recognition
and builds trust with consumers.
Benefits of a strong Omni-Channel Marketing Strategy:
Enhanced Customer Experience: Creates a smooth and personalized
journey for customers, fostering brand loyalty and advocacy.
Increased Engagement: Reaches customers on their preferred channels,
leading to higher engagement and conversion rates.
Examples:
Example - A customer sees a social media ad for a new product, visits the
brand website for more information, receives a personalized discount code
via email, and then makes the purchase at a physical store.
By implementing these key aspects and harnessing the power of omnichannel
marketing, companies can create a cohesive and personalized
customer experience, ultimately driving brand loyalty and business growth.
Discuss the classification of new products/ services in terms of
whether they are (new to the world, new to the firm, addition to the
existing product line etc.) (25 marks)
When companies introduce new things, it’s important to understand what
they are and how they fit into the market.
New to the world products (Innovative Products): These are big inventions
that create totally new markets. Like when personal computers first came
out, they changed how we use technology everywhere.
New to the firm (New stuff for the company): These are products that might
already exist in the market, but it’s the first time a company is selling them.
For example, when Microsoft started making Xbox, they were new to the
gaming market.
Additions to Existing Product Lines (Product Line Extensions): This is when
companies add more choices to products they already sell. Think of all the
different types of Tide detergent Procter and Gamble offers.
Product improvement (Making What’s Already Good Even Better): This
means upgrading existing products to make them nicer. Like when
toothpaste brands come out with versions that are supposed to be better at
keeping your teeth healthy.
Re-positioning (Showing Off in a New Way): Sometimes, companies take
products people already know and use them for different things or for
different groups of people. For example, aspirin used to just be for
headaches, but then they found out it could also help thin blood.
Cost reduction (Getting Cheaper): These are products that give the same
benefits but cost less because the company figured out how to make them
cheaper. Like when phone companies offer cheaper plans for the same
services.
Understanding these categories helps companies plan better. It helps them
know where their new ideas fit and how they can compete in the market. This
way, they can make sure they’re meeting what customers want and staying
ahead of the game.
Analyse the new product/ service development process in relation to
any contemporary product/ service of your choice
Let’s analyse the new product development process in relation to the
contemporary product of electric cars, specifically focusing on Tesla’s
Model 3:
Idea Generation: Tesla’s idea for the Model 3 stemmed from the vision of
making electric vehicles mainstream. The idea was worth considering due
to the growing concern for sustainability and the increasing demand for
electric vehicles.
Idea Evaluation: Tesla evaluated the idea of the Model 3 to ensure it aligned
with their objectives, strategies, and resources. They aimed to create an
affordable electric car that could reach a wider market, which was in line
with their mission to accelerate the world’s transition to sustainable energy.
Concept Development: Tesla developed a concept for the Model 3 that
appealed to consumers by offering an electric vehicle with a longer range
and a more affordable price compared to their previous models. This
concept resonated well with consumers, as evidenced by the high number
of pre-orders when it was announced.
Market Strategy: Tesla utilized a cost-effective marketing strategy for the
Model 3, relying heavily on word-of-mouth, social media, and online preorders
to generate buzz and interest. This strategy helped them reach a wide
audience without spending heavily on traditional advertising.
Business Analysis: Before launching the Model 3, Tesla conducted a
thorough business analysis to ensure that the product would meet their
profit goals. They analysed factors such as production costs, pricing
strategy, and projected demand to ensure profitability.
Product Development: Tesla invested in both technically and
commercially sound product development for the Model 3. They focused on
designing a car that not only met high technical standards but also appealed
to consumers in terms of design, performance, and features.
Test Marketing: Tesla conducted test marketing of the Model 3 by offering
test drives and allowing customers to place pre-orders before the official
launch. The overwhelming response from consumers exceeded
expectations, indicating strong demand for the product.
Commercialization: Following successful test marketing, Tesla proceeded
with the commercialization of the Model 3. The product sales quickly met
and even exceeded expectations, making it one of the best-selling electric
vehicles globally.
In conclusion, Tesla’s development process for the Model 3 demonstrates
the importance of thorough planning, evaluation, and execution at each
stage of new product development. By aligning their idea with market
demand, utilizing cost-effective marketing strategies, and ensuring both
technical and commercial viability, Tesla successfully brought the Model 3
to market and achieved significant sales success.
6.
Evaluate the risks to be considered while developing a new product
or service. How can the identified risks be minimized? (25 marks)
When developing a new product or service, several risks need to be carefully considered to ensure success. These risks include:
Customer Behaviour: Understanding how customers will respond to the new product or service is crucial. Predicting their preferences, needs, and
buying habits accurately can be challenging.
Macro Factors: External factors like economic conditions, regulatory changes, and cultural shifts can impact the success of a new product or
service.
Technological Changes: Rapid advancements in technology can make a product or service obsolete quickly if not adapted accordingly.
Level of Investment: Developing and launching a new product or service requires a significant investment of resources. There’s a risk of not recouping these investments if the product or service fails to gain traction
in the market.
Competitor Activity: Competitors may introduce similar products or services, leading to market saturation or intense competition.
To minimize these risks, certain strategies can be employed:
Market Research: Conduct thorough market research to understand
customer preferences, market trends, and potential challenges.
Pilot Testing: Trial the new product or service on a limited basis to gather feedback and identify areas for improvement before full-scale launch.
Adaptability: Stay abreast of technological advancements and market changes to ensure the product or service remains relevant.
Diversification: Spread investments across multiple products or services
to mitigate the impact of failure on any single offering.
Competitive Analysis: Monitor competitor activity closely and
differentiate the new product or service to stand out in the market.
In addition to these general strategies, specific characteristics pertaining
to products and services also present risks
For products:
Complexity: Ensure the new product is easy to understand and use to
increase adoption rates.
Trialability: Allow customers to trial the product before making a purchase
to reduce uncertainty and increase confidence.
Communicability: Enable customers to share their positive experiences
with others to drive word-of-mouth marketing.
For services:
Variability: Strive for consistency in service delivery to minimize
differences in customer experiences.
Intangibility: Enhance the tangibility of the service experience through
effective branding and communication.
Perishability: Optimize capacity utilization and pricing strategies to
mitigate revenue losses due to unused capacity.
By addressing these specific characteristics and implementing appropriate
risk-mitigation strategies, companies can increase the likelihood of success when developing new products or services.
Discuss Kotler’s product levels model with an example of a product/
service of your choice (15 marks)
Kotler’s product levels model provides a framework for understanding the
different layers of value that a product or service offers to customers.
Let’s apply this model to the hospitality industry, specifically a luxury hotel,
to illustrate each level:
Core Level: At the core level, customers are purchasing the fundamental benefit or service. In the case of a hotel, guests are primarily buying rest and sleep. They seek a comfortable environment where they can relax and rejuvenate after a long day of travel or work.
Basic Level: The basic product is the tangible manifestation of the core benefit. For a hotel, this includes the physical accommodations provided to
guests, such as a hotel room. The basic product typically includes essential amenities like a bed, bathroom with towels, desk, dresser, and closet. These
elements ensure that guests have a place to rest comfortably during their stay.
Expected Level: The expected level refers to the attributes and conditions that customers anticipate when they purchase a product or service. In the
context of a hotel, guests expect cleanliness, safety, and functionality. This means a clean bed with fresh linens, a tidy bathroom with working fixtures,
and well-maintained facilities. Meeting these expectations is crucial for customer satisfaction and retention.
Augmented Level: Going beyond customer expectations, the augmented level involves offering additional features or services that enhance the
customer experience. For a luxury hotel, this might include complimentary amenities such as a four-course meal at the hotel restaurant, personalized
concierge services, chauffeur-driven car services, guided city tours, spa treatments, or access to exclusive club lounges. These extras differentiate the hotel from competitors and create a memorable and indulgent
experience for guests.
Potential Level: The potential level encompasses future possibilities for product enhancements or innovations. In the hotel industry, this could
involve the integration of advanced technologies such as the use of robots for room service, automated check-in processes, virtual reality concierge services, or sustainable practices like renewable energy sources and ecofriendly initiatives. Embracing such advancements can drive innovation, improve efficiency, and further differentiate the hotel in a competitive market.
By understanding and strategically addressing each level of Kotler’s product hierarchy, hotels can effectively meet customer needs, exceed
expectations, and stay ahead of evolving trends in the hospitality industry.
Discuss the characteristics of services with examples appropriately
- Intangibility:
Services lack physical form and cannot be experienced through the senses before purchase. This characteristic poses a challenge for customers in evaluating services prior to consumption. For instance, in healthcare
services, patients cannot physically assess the treatment they will receive before visiting a doctor. - Inseparability:
Services are often produced and consumed simultaneously, and
customers are typically involved in the delivery process. For example, in restaurant dining, food preparation and consumption occur simultaneously, with customers actively participating in the experience. - Variability:
Due to human involvement and other factors, services exhibit variability in quality and delivery. This can lead to inconsistencies in customer experiences. For instance, customer service interactions can vary based on
the skills and attitudes of individual representatives. - Perishability:
Services are perishable and cannot be stored for future use. Once the opportunity to provide a service is missed, it cannot be reclaimed or resold.
For example, unsold airline seats or unoccupied hotel rooms cannot be stored or sold later, resulting in lost revenue.
Understanding these characteristics is crucial for service providers to manage service quality, meet customer expectations, and address
challenges inherent in the service industry.
Analyse the classification of products based on the types of
consumers who use them
Consumer Products:
Convenience Products: These are items that consumers purchase frequently with minimal effort. They require little comparison or shopping
effort. Examples include toothpaste, magazines, and detergent.
Shopping Products: These products are purchased less frequently and involve more planning and effort. Consumers compare brands based on
factors like price, quality, and style. Examples include major appliances, televisions, and furniture.
Specialty Products: These products exhibit strong brand preference and loyalty among consumers. They require special purchase effort, and there’s usually little comparison between brands. Price sensitivity is low. Luxury goods such as Rolex watches, Rolls Royce cars, and Louis Vuitton clothing
fall into this category.
Unsought Products: These are products for which consumers have little awareness or knowledge. They are not typically considered under normal circumstances but may be sought out under specific conditions such as fear or danger. Examples include funeral services, disability insurance, and fire extinguishers.
Industrial Products:
Materials and Parts: These are raw materials, manufactured materials, or parts used in the production process. Examples include farm products like
wheat, natural products like fish, and manufactured products like iron, wire, and cement.
Capital Items: Capital items are physical assets used in the production process to facilitate manufacturing and operations. Examples include buildings, factories, tools, generators, and computers.
Supplies and Services: This category includes operating supplies like lubricants, paper, and pencils, as well as repair and maintenance items such as paint and brooms.
Understanding the classification of products based on consumer types is essential for marketers to develop effective strategies for product development, positioning, and marketing efforts tailored to the specific
needs and behaviours of different consumer segments.
Analyse product life cycle concept in the context of any product/
service of your choice. Discuss the characteristics of the strategies
adopted at each stage of the cycle (25 marks)
The product life cycle is the process a product goes through from when it is first introduced into the market until it declines or is removed from the
market.
Product Life Cycle Analysis: Smartphones
- Introduction Stage:
During the introduction stage, a new smartphone model is launched into the market. The focus is on capturing the attention of early adopters who are willing to try new technology. Profits accrued during this stage are negligible as the goal is to recover initial costs and persuade potential customers to
try the product. Heavy investment is made to induce trial purchases through
marketing and promotional efforts. - Growth Stage:
In the growth stage, the sales of the smartphone experience rapid growth as
more consumers adopt the product. A market penetration strategy is suitable during this phase, aiming to capture a larger market share. Profits
accrued are very high, and the retail price of the smartphone tends to be high due to high demand. Advertising expenditure is moderate, focusing on building brand awareness, while sales and promotional efforts are aimed at
creating brand preference among consumers. - Maturity Stage:
The maturity stage is characterized by a slowdown in the growth rate of smartphone sales. Competition becomes intense, and companies focus on
maintaining market share. A defensive strategy is adopted to check the competition and retain market position. Profits accrued during this stage are
staggered, and price cuts may be implemented to remain competitive. Retail prices are adjusted to accommodate price-sensitive consumers.
Advertising expenditure remains moderate to high, with a focus on brand loyalty and attracting switchers from competitors. Sales and promotional efforts are heavy to encourage customer loyalty and repeat purchases. - Decline Stage:
In the decline stage, smartphone sales begin to decline as new technologies emerge or consumer preferences shift. Companies may opt for a harvesting or divesting strategy, where they either maximize profits from loyal customers or phase out the product from the market. Profits accrued are
minimal, and retail prices may be reduced to clear remaining inventory. Advertising and promotional expenditure are minimal, aimed at reducing
costs, while minimal efforts are made to sustain the product’s presence in the market.
Understanding the product life cycle stages and adopting appropriate
strategies at each stage is crucial for smartphone manufacturers to
effectively manage their products in a dynamic and competitive market.
Discuss product positioning & repositioning with organizational
examples (10 marks)
Product positioning
Positioning (or product positioning) is how the product is designed to be perceived in the marketplace by the target market against its main
competitors. In other words, it’s basically how consumers understand the product offering and how it differs from similar competitive offerings.
Example: Apple positions its products, such as the iPhone and MacBook, as premium, high-quality devices that offer superior performance, design,
and user experience compared to competitors like Samsung and Dell.
Through sleek marketing campaigns and minimalist product designs, Apple
establishes itself as a leader in innovation and technology.
A perceptual or positioning map helps companies see how customers view their brand in the market. It helps track how people’s opinions about the
brand change over time, understand where competitors stand, find places in the market where new products could fit, and figure out if they need to
change how they’re seen.
Market Gaps & Opportunities: Identify potential gaps in the market where new products could be introduced.
Brand Perception: Track how consumers perceive our brand over time, especially with new products and marketing initiatives.
Product repositioning
Repositioning is the task of implementing a major change to the target market’s perception of the product’s key benefits and features, relative to
the offerings of competitive products. This is often necessary when:
Product Life Cycle Decline:
Sales and profitability decline as the product reaches the later stages of its life cycle.
Competitive Squeeze: Sales suffer due to intense competition or close positioning to a dominant competitor.
New Market Entry: The product needs to be repositioned to appeal to a new market segment.
Example: In response to changing consumer preferences and increased
competition in the fast-food industry, McDonald’s has undertaken product
repositioning efforts. For example, introducing healthier menu options like
salads, wraps, and fruit smoothies to address concerns about nutrition and
cater to health-conscious consumers.
This repositioning strategy helps
McDonald’s maintain its market relevance and attract a broader customer base.
Define the term innovation and discuss four Ps of innovation in the context of contemporary products & services (15 marks)
Product/Service Innovation: This aspect of innovation involves changes in the actual offerings of an organization. It encompasses the development of new products or services or the enhancement of existing ones to meet evolving consumer demands or preferences. For instance, the introduction
of a new car design with advanced features or the launch of an innovative insurance package tailored to specific customer needs exemplifies
product/service innovation.
Process Innovation: Process innovation pertains to changes in the methods and procedures used to create and deliver products or services. It
focuses on improving efficiency, reducing costs, and enhancing overall effectiveness in production and delivery processes. For example, the
adoption of new manufacturing technologies or the implementation of streamlined office procedures in the insurance industry illustrates process innovation.
Position Innovation: Position innovation involves targeting a particular audience initially and then transitioning to another audience or expanding to
target a wider demographic. It revolves around strategic shifts in positioning to capitalize on emerging market opportunities or changing consumer
preferences. For instance, Taco Bell’s evolution from offering cheap Mexican food to repositioning itself as a lifestyle brand catering to youth
reflects position innovation.
Paradigm Innovation: Paradigm innovation encompasses changes in the underlying mental models or frameworks that shape an organization’s
activities and strategies. It involves challenging existing norms, beliefs, and
assumptions to foster breakthrough innovations and disrupt established industries or markets. Examples include the emergence of low-cost airlines
challenging traditional full-service carriers or the revolution brought about by smartphones, fundamentally altering communication and computing
paradigms.
Evaluate diffusion of innovation curve in relation to any product/service of your choice (25 marks)
The innovation diffusion curve, proposed by Everett Rogers in 1962, provides a framework for understanding how new ideas, products, or technologies
spread and are adopted by individuals or groups over time.
This curve consists of five main segments: innovators, early adopters, early majority, late majority, and laggards. Let’s evaluate the diffusion of
innovation curve in relation to the adoption of electric vehicles (EVs).
Innovators (2.5%)
Innovators are the very first people, just about 2.5% of them, who are super excited to try out new things like electric cars. They’re like the early fans who
don’t mind if there are some problems at first, if they get to be the first to try out the cool new tech. They’re usually big fans of the environment and love new gadgets, so they’re happy to overlook any early issues like not having many places to charge their car or it being a bit more expensive.
Early adopters (13.5)
Early adopter are the people who come right after the innovators, making up
about 13.5% of the group. When it comes to electric cars, these folks care a lot about the environment and are interested in trying out new things that
can help reduce pollution. They’re attracted to electric cars because they’re quiet, look cool, and could save them money on fuel and repairs in the long
run. They’re willing to spend money on new technology if it means helping the environment and having a stylish ride.
Early majority (34%)
Early majority making up about 34% of the group, are the practical folks who
come after the early adopters. For electric cars, they’re the regular consumers who wait a bit to see if these new cars are worth it. They’re convinced to give electric cars a try because they see others using them, and
they’re attracted by things like saving money on fuel, getting government perks, and seeing better battery technology. Plus, they’re happy to see more
places to charge their cars and more affordable options becoming available.
late majority (34%)
late majority making up about 34% of the group, are the cautious people
who come after most others have tried new things. For electric cars, they’re the ones who are a bit unsure about switching from their regular cars to electric ones. They worry about things like how far they can drive on one charge, where they can charge their cars, and whether they can sell the car
later. But as electric cars become more common and everyone else is using them, they might give them a try too.
Laggards (16%)
Laggards about 16% of the group, are the very last to try new stuff. For
electric cars, they’re the ones who really don’t want to switch from their old-fashioned cars. They like what they’re used to, and they might only change
to electric cars if they really must, like if the government says they can’t use regular cars anymore. So, electric cars follow a pattern where first, the adventurous and eco-conscious
folks try them out. Then, more regular people join in, followed by those who are a bit cautious, and finally, those who are slow to change. It’s important for car makers, government people, and others involved to
understand this process, so they can make electric cars more popular and help the environment.
Evaluate standardization & adaptation strategy in the context of any organization(s) of your choice
Standardization means selling the same things and using the same ways to promote them in different places.
Advantages
- Economies of Scale: Standardization allows companies to leverage mass production, leading to cost efficiencies.
- Better Quality: With uniform processes, maintaining consistent quality becomes feasible, enhancing customer satisfaction.
- Global Recognition: Standardized products foster brand recognition and customer loyalty across borders.
- Simplified Operations: Streamlined processes and reduced complexity benefit operational efficiency.
Disadvantages
- Loss of Uniqueness: Standardization may dilute a brand’s uniqueness, reducing its appeal in certain markets.
- Cultural Misalignment: Ignoring cultural nuances can alienate local consumers and hinder market penetration.
- Failure to innovate: Overemphasis on standardization may stifle
innovation, limiting adaptation to emerging market trends. - Loss of Customers: Standardizing products may lead to a loss of customers who prefer customized or localized offerings.
Adaptation means changing products and how they’re sold to match
what people like and the culture of a place. For example, fancy perfume brands like Chanel might change their scents to appeal to different cultural tastes.
Advantages:
* Cultural Relevance: Adapting products demonstrates sensitivity to
local customs, enhancing brand perception.
- Customer Engagement: Personalized offerings foster stronger customer relationships and loyalty.
- Market Responsiveness: Adapting to local tastes and preferences improves market penetration and competitiveness.
- Niche Satisfaction: Tailored products cater to niche needs, allowing organizations to tap into diverse market segments.
Disadvantages
- Increased Costs: Developing and implementing tailored products incur higher expenses, impacting profitability.
- Operational Challenges: Adapting products requires intricate coordination and may slow down the speed of execution.
- Consumer Understanding: Understanding diverse consumer expectations and preferences across markets can be challenging.
- Quality Maintenance: Ensuring consistent quality across adapted products poses logistical and operational challenges.
In conclusion, the choice between standardization and adaptation depends on various
factors such as market characteristics, organizational capabilities, and competitive
dynamics. While standardization offers economies of scale and operational efficiencies,
adaptation fosters cultural relevance and consumer engagement. Many successful
companies do a bit of both, keeping some things the same while making small changes
to fit different places, which helps them make the most of their chances while avoiding
big risks.
Define market testing. Analyse the stages of market testing in the context of a product/ service of your choice (15 marks)
One of the stages of new product development
Process used by businesses to assess the viability and acceptance of a product or service within a target market before fully launching it
Stages:
Testing/planning
Running tests
Analysis
Optimization
Advantages:
Validates demand
Facilitates testing of alternative marketing strategies
Ensures market is big enough
Gives insight into new segments
Points out source of sales
Unexpected problems and opportunities are brought forward
