week 6 -12 Flashcards
1
Q
A product is …
A
anything that is of value for the consumer and can be offered through a voluntary marketing exchange.
2
Q
Consumer Products are
A
goods and services used by people for their personal use.
3
Q
Product mix
A
The complete set of all goods and services offered by a firm. All the product lines offered.
4
Q
3 components of a product
A
Core product: the needs it satisfies.
Actual product: the physical attributes / design features of the product (e.g., brand name, packaging).
Augmented Product: services or non-physical aspects of the product (e.g., warranty).
5
Q
4 types of consumer products
A
Specialty product.
Shopping product.
Convenience product.
Unsought product.
6
Q
Specialty product
A
Special purchase efforts. Brand identification. Has unique characteristics. Only few purchase locations. e.g., laptop, car.
7
Q
Shopping product
A
Buy less frequently.
Fewer purchase locations.
Gather product information.
e.g., clothing.
8
Q
Convenience product
A
Buy frequently and immediately. Low priced. Many purchase locations. Includes Staple, Impulse, and Emergency goods. e.g., deodorant, food.
9
Q
Unsought product
A
New innovations.
Products consumers don’t want to think about.
Require much advertising and personal selling.
e.g., insurance, dentist appointments.
10
Q
Product mix breadth
A
Number of different product lines. (side).
11
Q
Product line depth
A
Total number of items within the line. (down).
12
Q
Advantages brands provide
A
Facilitates purchasing Establishes loyalty. Protects from competition. Is an asset. Affect market value.
13
Q
Brand licensing
A
Contractual agreement between firms, whereby one firm allows another to use its brand name, logo, symbol, and/or characters in exchange for a negotiated fee
14
Q
Co-branding
A
Practice of marketing two or more brands together on the same package or promotion.
It attracts the consumers of one brand to the other.
It can also enhance perceptions of quality through links between brands.
15
Q
Brand extension
A
Existing brand names extended to a new product category.
16
Q
Line extension
A
Existing brand names extended to new firms, sizes and flavours of an existing product company.
e.g., coke and diet coke.
17
Q
Rebranding
A
Improves the brand’s fit with its target segment, and boosts the vitality of old firms.
Also called bran repositioning.
18
Q
Advantages of changing packaging.
A
Catch customers’ attention.
To allow for the same product to appeal to different markets with a different sizes and graphs.
Increase exclusivity and hence price.
Smaller packages size may be a hidden price increase.
19
Q
Objectives of product labels
A
Labels provide information needed for the purchase and consumption of the product.
e.g., instructions for use, nutritional information, legal warnings, etc.).
20
Q
Health insurance can be considered to be an …
A
Unsought product / service.
21
Q
The complete set of all goods and services offered by Driscoll’s Surf Shop is called …
A
Product mix.
22
Q
The term “…” refers to the number of product lines offered by a firm.
A
Breadth.
23
Q
If many consumer are aware of the brand, you could say that “…” is high.
A
Brand awareness.
24
Q
If Apple decides to sell electric cars under the ‘Apple’ brand name, it is engaging in …
A
Brand extension.
25
Toothpaste tubes are an example of a
Primary package.
26
Why do firms innovate and create new products?
Because consumers needs are always changing.
There is no lock of competing products - prevent decline in sales.
To manage risk through diversity.
To respond to shorter life cycles.
To improve business relationships.
27
5 groups on the diffusion of innovation curve.
```
Innovators (2.5%).
Early adopters (13.5%).
Early majority (34%).
Late majority (34%).
Laggards (16%).
```
28
Function of the diffusion of innovation curve.
The diffusion of innovation curve shows how the number of users of an innovative product or service spreads through the population over a period of time.
29
What is the shape of the diffusion of innovation curve.
It generally follows a bell-shaped curve.
30
Factors that enhance the diffusion rate of a good or service.
Compatibility: degree to which the innovation matches the values and experiences of the individual.
Observability: degree to which the benefits of use are observable or describable to others.
Complexity and trialability: degree to which the innovation is easy to use and can be tried on a limited basis.
Relative advantage: degree to which the innovations appears superior to existing products.
31
Sources of new product ideas.
Internal R&D (research and development): often the source of technological products.
R&D consortia: firms/governments may join forces with educational institutions.
Licensing: small biotech firms frequently license their inventions to larger pharmaceutical firms.
Brainstorming: groups work together to generate ideas.
Outsourcing.
Competitors' products: reverse engineering, trade shows.
Customer input.
32
Stages in the Product Life Cycle (PLC).
Introduction.
Growth.
Maturity.
Decline.
33
Introduction (PLC)
Sales are low, profits are negative or low, typical consumers are innovators, and has one or few competitors.
34
Growth (PLC)
Sales are rising, profits are rapidly rising, typical consumers are early adopters and early majority, and has few (but increasing) competitors.
35
Maturity (PLC)
Sales are at its peak to declining typical consumers are late majority, and has a high number of competitors and competitive products.
36
Decline (PLC)
Sales are declining, profits are declining, typical consumers are laggard, and has low number of competitors and products.
37
Reasons for decline stage (PLC)
Technological advances, shifts in consumer tastes.
| Also increased competition.
38
During decline stage.
Stop manufacturing the product, reduce the price significantly, stop re-stocking, and stop stocking product on "top-shelf".
Start promoting it more to get rid of it faster.
39
To create successful new products, the company must:
Understand its consumers, marketers and competitors.
| Develop products that deliver superior value to customers.
40
The Ansoff Matrix
Tool to analyse and plan strategies for growth.
41
The Ansoff Matrix strategies
Market Penetration: existing product, existing market.
Product development: new product, existing market.
Market development: existing product, new market.
Diversification: new product, new market.
42
Steps to develop new products.
Idea generation: development of viable new product ideas.
Concept development: potential ideas are fully describes and connected to customer needs.
Product development: development of prototypes and/or the product.
Market testing: testing the actual products in a few market tests.
Product launch: full-scale commercialisation of the product (promotion, place, price, timing).
Evaluation of results: analysis of the performance of the new product and making appropriate modifications.
43
Simulated Test Market
Test in simulated shopping environment to a panel of consumers.
(Premarket test).
44
Controlled Test Market
Full marketing campaign in a small number of representative stores or cities.
(Test marketing).
45
Prototype
A first or preliminary version of a product. It allows consumer to interact physically with the product.
46
Alpha testing
The firm attempts to determine whether the product will perform according to its design whether it satisfies the need for which it was intended.
*it makes sure it satisfies the intended needs*
47
Beta testing
Uses potential consumers, who examine the product prototype in a 'real use' setting to determine its functionality, performance, potential problems, and potential.
48
Price penetration strategy
Place price 2%-5% cheaper than competition so customers give the product a go.
49
The first stage of the new product development process is ...
Idea generation.
50
A "..." is the first physical form of a service description of a new product, still in rough or tentative form, that has the same properties but is produced through different manufacturing processes.
Prototype.
51
The owner of Mary's Cupcake Shop is attempted to determine if a new cupcake recipe will perform according to its design and whether it will satisfy the need for which it was intended. She is engaging in ...
Alpha testing.
52
In contrast to alpha testing, "..." used potential consumers who examine the product prototype in 'real use' settings.
Beta testing.
53
Introduction, growth, maturity, and decline are part of ...
Product Life Cycle (PLC)
54
The "..." of the product life cycle is the stage where industry sales each their peak.
Maturity stage.
55
A Service
Any intangible offering that involves a deed, performance or effort that cannot be physically possessed.
56
Customer service
Specifically refers to human or mechanical activities that firms undertake to help satisfy their customers' needs and wants.
By providing good customer service, firms add value to their products.
57
4 marketing elements that distinguish services from products.
Services are intangible, perishable, inseparable, and heterogeneous/variability.
58
Intangible
Cannot be touched, tasted, or seen (as a product can be).
59
Perishable
Services cannot be stored for use in the future.
| Its is critical that marketers can tackle the task of matching demand and supply.
60
Inseparable
Production and consumption are simultaneous.
Little opportunity to test service before use.
lower risk offering guarantees or warranties.
61
Heterogeneous / Variability
The more we depend on humans to provide a service, the more likely there is to be variability in the service's quality.
62
Gaps model
The Service Gaps Model enables the systematic examination of all aspects of the service delivery process.
63
4 service gaps identified by the Gaps Model.
Knowledge gap.
Standards gap.
Delivery gap.
Communication gap.
64
The Knowledge Gap
customer's expectations vs firm's perception of those customer expectations.
Firms need to understand consumer expectations and evaluate service quality.
65
The Standard Gap
Firm's perception of customers' expectations vs the service standards it sets.
Firms must set appropriate service standards, training and monitoring to achieve the standards.
66
The Delivery Gap
Firm's service standards vs actual service it provides to customers.
Firms must have employees meet or exceed service standards by providing incentives and support, and by empowering employees.
67
The Communication Gap
Actual service provided vs level of service that the firm's promotion program promises.
If firms are more realistic about the services they can provide and manage customer expectations effectively, they can close this gap.
68
Ways to overcome the 4 service gaps.
Reliability: the ability to perform the service dependably and accurately.
Responsiveness: the willingness to help customers and provide prompt service.
Assurance: the knowledge and courtesy displayed by employees and their ability to inspire trust and confidence.
Empathy: the caring, individualised attention provided to customers.
Tangibles: the appearance of physical facilities, equipments, personnel and communication material.
69
Why is service recovery so important to companies?
Because it proves a firm's commitment to customers.
70
What can companies do to recover from a service failure?
Listen to the customer: this also means involving them in the service recovery.
Resolve problems quickly.
Find a fair solution: the longer it takes to resolve a service failure, the most irritated the customer will become and the more people they are likely to tell.
71
Distributive fairness
Pertains to the customer's perception of benefits compared with the inconvenience, loss, costs resulting from a service failure.
72
Procedural fairness
Pertains to the customer's perception of the fairness of the process used to resolve complaints about service.
73
'Attributes that cannot be touched, tasted, or seen' is a description of the "..." nature of service.
Intangible.
74
A service gap that refers to the difference between a firm's perceptions of customer expectations and the service standards it sets is specifically called the ...
Standards gap.
75
"..." means allowing employees to make decisions about how service is provided to customers.
Empowerment.
76
When it comes to services, customers often have a minimum and an acceptable standard. The difference between the two is referred to as the ...
Zone of tolerance.
77
"..." refers to a customer's perception of the benefits they receive compared with the costs.
About the compensation, not the procedure.
Distributive fairness.
78
IMC represents the P that stands for ...
Promotion, encompassing a variety of communication disciplines.
79
6 Steps in the communication process.
The sender develops an idea to be sent.
The sender encodes the message.
The sender selects the channel of communication that will be used.
The message travels over the channel of communication,
The message is received by the receiver.
The receiver decodes the message.
80
What is the AIDA model?
The most common and simple model that marketers use to create effective IMC programs.
It suggests that awareness leads to interest, which leads to desire, which leads to action.
81
Awareness
Gets the receiver's attention.
| think
82
Interest
So that the value can be communicated.
83
Desire
(feel).
84
Action
(do).
85
Elements of an IMC mix
```
Advertising.
Personal selling.
Sales promotion.
Public relations.
Direct / online marketing.
```
86
Advertising
Any paid form of non-personal presentation by an identified sponsor.
87
Personal selling
Personal presentations by a firm's sales force.
Effective because salespeople can:
-adjust the marketing offer to fit the special needs of each customer.
-negotiate terms of sale.
-build long-term personal relationships with key decision makers.
88
Sales promotion
Mass communication technique that offers short-term incentives to encourage purchase or sales of a product or service.
89
Public relations
Building good relations with various stakeholder by obtaining favourable unpaid publicity.
Build and maintain a positive image of the firm.
Work with charities or sponsor events.
Maintain relationships with the media.
90
Direct / online marketing
```
Direct communications with individuals to obtain an immediate response.
Determine the advertising budget.
Convey the message.
Evaluate and select media.
Create advertisements.
Assess impact using marketing metrics.
```
91
Steps in planning and executing an ad campaign
Identify target audience.
| Advertising objectives.
92
3 objectives of advertising.
Inform: informative advertising build primary demand.
Persuade: persuasive advertising build selective demand.
Remind: reminder advertising keeps consumers thinking about a product.
93
Push strategy
designed to increase demand by focusing on wholesales, distributors or sales people.
(to intermediates).
94
Pull strategy
Strategy in which the goal is to get consumers to pull the product into the supply chain by demanding it.
95
Elements of a PR toolkit?
```
Website.
Newspapers.
Speeches.
Special events.
Written materials.
Audio-visual materials.
Corporate identity materials.
Public service activities.
```
96
Methods for setting an IMC budget.
Objective-and-task method.
| Rule-of-thumb method.
97
Objective-and-task method
Determines the budget required to undertake specific tasks to achieve the communication objective.
98
Rule-of-thumb method
Use previous sales and communication activities from other products.
99
"..." is a paid form of communication from an identifiable source delivered through a communication channel and designed to persuade the receiver to take some action.
Advertising.
100
The process of evaluating and selecting the media mix is called ...
Media planning.
101
Jane's Stationery Shop uses advertising that reminds or prompts consumers to repeat purchases at its stores. Jane is engaging in ...
Reminder advertising.
102
"..." are special incentives or excitement-building programs that encourage the purchase of a product.
Sales promotions.
103
A "..." increases demand by motivating sellers to highlight the product.
Push strategy.
104
Price
The overall sacrifice consumer is willing to make to acquire a specific product.
Includes money that must be paid to the seller, time, travel costs, taxes and shipping costs.
105
5 C's of pricing
```
Competition.
Costs.
Company objectives.
Customers.
Channel members.
```
106
Competition
While costs set a lower limit, the level of competition set an upper limit to price.
107
Types of competition.
Pure Competition: going rate price.
Monopolistic Competition: differentiated products and prices.
Oligopoly: usually follow prices.
Pure Monopoly: charge any price.
108
Costs
Costs set the floor price. If your costs are higher than competitors, you will have to charge a higher price or accept lower profits.
109
Types of Costs.
Fixed Costs: costs that don't vary with sales or production levels.
Variable Costs: costs that do vary directly with the level of production.
Total costs: sum of the Fixed and Variable costs for a Given Level of Production.
110
Company objectives
Specific orientation in the marketplace that dominates its pricing strategy.
- profit oriented.
- sales oriented.
- competitor oriented.
- customer oriented.
111
Customers
how customer react to different prices and changes in prices will impact on your pricing approach. Knowing a demand curve enables one to see the relationship between price and demand.
112
Channel members
Firm must consider reseller profit margins. A more intensive distribution strategy results in greater convenience and hence command higher prices.
Each channel member should earn a reasonable profit.
113
4 types of company objectives in relation to pricing strategy.
Profit oriented.
Sales oriented.
Competitor oriented.
Customer oriented.
114
Profit oriented
Focus is on determining a price that produces the Maximum Profit, a Target Level of Profit or ROI.
115
Sales oriented
Focus is on increasing sales.
| Sacrifice short-term profits for long-term market share and future profits.
116
Competitor oriented
Focus is on the use of price as a competitive tool. The simplest to use.
117
Customer oriented
Focus is on the customer expectations and matching prices to them.
118
Inelastic demand
Demand hardly changes with a small change in price.
- small proportion of income.
- exclusive products.
- up price -> up revenue.
119
Elastic demand
Demand changes greatly with a small change in price.
- durables (e.g., furniture).
- down price -> up revenue.
120
Break-even point
Point in which the number of units sold generates just enough revenue to equal the total costs.
It enables managers to examine the relationship between cost, price, revenue and profit over different levels of production and sales.
121
Formula to find Break-even points in units.
Fixed Cost / Contributions per units
122
Formula to find Contribution per units (CPU)
Price - Variable cost per unit.
123
How have the Internet and Economic factors affected the way people react to prices.
The internet allows consumers to easily research prices. This has made customer more price sensitive and has broadened the scope of competition for many firms.
Economic factors affect pricing of household durables, high tickets products like cars. Inflation and interest rates impact on purchasing power.
124
Methods firms used to set their prices.
Cost-based pricing.
Competitor-based pricing.
Value-based pricing.
125
Cost-based pricing
Set prices by starting with the costs and adding a profit (cost+pricing). Ignores demand and competition.
126
Competitor-based pricing
When firms set their prices according to their competitors' and also reflect the way they want consumers to interpret their prices relative to competitors' offering.
Price may signal quality.
The simplest to use.
127
Value-based pricing.
Base price on product's perceived value rather than costs.
The most effective one.
- Improvement Value Method: where the manager estimates the improvement value of the product relative to other comparable products.
- Cost of Ownership Method: where consumers may be willing to pay more for a particular product because over time it will cost less to own than a cheaper alternative.
128
Pricing strategies that should be considered when introducing a new product.
Market Skimming and Market Penetration.
129
Market Skimming
Setting a high price for a new product to maximise revenues from the target market.
Results in fewer, but more profitable sales.
Product's quality and image must support higher price.
130
Market Penetration
Setting a low price for a new product in order to attract a large number of buyers. (preferably 2-5% lower than competitors).
Results in a larger market share.
Demand should be elastic.
Benefit from economies of scale.
131
What are some consumer and B2B-oriented pricing tactics?
Markdowns: to get rid of slow-moving products.
Quantity discounts: the more you buy, the cheaper the unit price.
Seasonal discounts: encourage consumers to buy after the season or demand is low.
Coupons and Rebates: coupons offered at the retail level, rebates from the manufacturer.
Leasing: increasing affordability by spreading out payments.
Price Bundling: encourage sales of slow-moving items or trials of new products.
Leader Pricing: enticing consumers into the store with "loss leaders".
Price Lining: setting price steps between product lines for ease of comparison.
132
Firms that use a "..." set a high price that innovators and price adopters are willing to pay in order to obtain something before others do.
Price skimming strategy.
133
The "..." measures how changes in a price affect the quantity of the product demanded.
Price elasticity of demand.
134
"..." is a company objective that can be implemented by focusing on target profit pricing, maximising profits or target return pricing.
Profit orientation.
135
"..." is a pricing strategy that uses price to stimulate a certain level of sales at a certain profit per unit.
Target profit pricing.
136
"..." are reductions retailers take off the initial selling price of a product.
Markdowns.
137
Supply Chain Management
When a firm's suppliers, manufacturers, warehouses, stores and transportation work in a seamless operation in which merchandise is produced and distributed in the right quantities, to the right locations, at the right time.
138
Distribution centre
A place to accumulate merchandise from many vendors and then allocate it to stores in the quantities they need.
139
What is place
Getting the right product, at the right time, to the right consumer.
140
Channel level
Layer on intermediaries that perform some work in bringing the product and its ownership close to the buyer.
141
In Direct channel, the product goes from ...
Manufacturers directly to customer.
142
In Indirect channel, the product ...
Can go through 1 or 2 intermediaries.
1 intermediary: manufactures to retailer to customer.
2 intermediaries: manufacturer, wholesaler, retailer, customer.
143
How can a channel be most effective?
When each member is assigned tasks it can do best.
| When all member cooperate to attain overall channel goals and satisfy the target market.
144
Types of conflicts.
Horizontal Conflict.
| Vertical Conflict.
145
Horizontal conflict
Occurs among firms at the same level of the channel.
| e.g., among retailers.
146
Vertical conflict
Occurs between different levels of the same channel.
| e.g., between manufacturer and wholesaler.
147
How can conflicts be resolved?
There must be leadership to assign roles and resolve conflicts.
148
Vertical marketing system
Where all channel partners act as a united system with a common goal and reduced conflict.
149
3 types of vertical marketing system.
Corporate: common ownership at different levels of the channel (greater degree of direct control).
Contractual: contractual agreement among channel members.
Administered: leadership is assumed by one or a few dominant members (lesser degree of direct control).
150
How do firms develop strong strategic partnership with their marketing channel partners?
Supply chain relationships are stronger when there is mutual trust, open communication, common goals, credible commitment, and interdependence.
151
How does technology facilitate distribution and logistics?
Technology facilitates shipment to stores by tracking item sale and thus triggering replacement orders.
152
What technologies facilitate distribution and logistics?
Electronic data interchange (EDI): computer-to-computer exchange of business documents from a retailer to a vendor.
Radio frequency identification (RFID): tags that automatically track package contents and location.
153
Aim of a JIT inventory system,?
Just-in-time inventory system delivers products just in time to meet consumer demand.
154
Levels of distribution density.
Intensive distribution.
Selective distribution.
Exclusive distribution.
155
Intensive distribution.
Designed to get products into as many outlets as possible.
156
Selective distribution.
Uses a few selected outlets in a territory.
157
Exclusive distribution.
Grants exclusive geographic territories to one or very few elect retailers in each region.
158
What are retailers?
Retailers are businesses whose sale come primarily from retailing.
159
Different classifications of retailers?
```
Food retailers (supermarkets, convenience stores).
General merchandise (specialty shops, department stores).
Service retailers (banks, car rentals, cinemas).
```
160
What are store atmospherics?
Controllable characteristics of a retail space that encourages a customer to enter the store.
They are designed to influence a customer's mood so as to increase the odd of a purchase being made
161
Examples of store atmospherics.
```
Design and layout.
Music.
Lighting.
Smell.
Crowding.
```
162
Advantages of traditional stores vs online stores?
Traditional stores benefit their customers by providing browsing, touching and feeling the product, personal service, cash and credit payment, entertainment and social interaction, etc.
163
A "..." arises when members at different levels of marketing channels are in disagreement with one another.
Vertical channel conflict.
164
An "..." is where independent channel members follow the direction of one or few dominant channel members.
Administered vertical marketing system.
165
Supply chain relationships are stronger where there are all of the following except ...
Legal contracts.
166
The number of retail outlets to use in the marketing channel refers to its ...
Supply chain intensity.
167
An "..." refers to the computer-to-computer exchange of business documents from a retailer to a vendor.
Electronic data interchange.
168
... refers to the strategy of delivering products at the right time to meet consumer demand.
Just-in-time (JIT) inventory system.
169
Examples of ethical issues in marketing.
Creating false wants and too much materialism.
Deceptive practices.
Shoddy or unsafe products.
High pressure selling.
170
How can ethic be integrated into a firm's marketing strategy?
During the Planning Phase, the firm can set ethical standards for the firm.
During the Implementation Phase, ethical standards are incorporated in marketing strategy.
During the Control Phase, ethical issue raised are successfully addressed.
171
Difference between ethics and social responsibility.
Being socially responsible generally means going above and beyond the norms of corporate ethical behaviour.
Whilst ethics are the moral principles that someone governs.
172
Way in which Corporate Social Responsibility (CSR) help various stakeholders.
Establishing charitable foundations.
Supporting non-profit groups.
Supporting the rights of minority groups.
Adopting responsible marketing, sales, and production practices.
173
CSR involves
Considering the impact go the firm's actions on society.
Operating in a way that balances short term profit needs with society's long term needs.
Ensure the firm's survival in a healthy environment.
The employees of a company have to first maintain high ethical standards.
174
Firm goals
Profit is important to the success of the firm.
- greed and short term profit seeking -> serious long-term consequences.
- creating value over the long run -> long term success.
175
Ethical climate
The set of values within a marketing firm, or in the marketing division of any firm, that guide decision-making and behaviour.
176
Who presents a code of ethics and provides advice on fair promotions, fair pricing, marketing, research practices and other critical areas of the marketing profession.
MAANZ (Marketing Association of Australia and New Zealand).
177
Most basic responsibility of a firm is to employees to ...
Ensure a sage working environment free of threats to their physical safety, health, or well-being.
178
CSR is distinct from ethical business practices in that it
Acknowledges that there is responsibility towards the community beyond the individual.
179
Mark's Surf Shop recycles as much material as it can. It follows ...
Marketing ethics.
180
Product line decisions
Stretching and filling.
181
Stretching
Lengthen beyond current range (upwards and downwards).
182
Filling
Lengthen within current range.
| fill the gaps to keep out competitors or match them more closely
183
Multibrands
New brand names introduced in the same category.
| Capture variety seekers or other segments.
184
New brands
New brand names in new product category.
