Marketing Midterm 2

Product

Anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need

Service

An activity, benefit, or satisfaction offered for consumption or sale that is essentially intangible and does not result in customer’s ownership of anything

Customer solutions

Carefully though-out bundles of products and services that are designed to comprehensively solve customers’ problems

Customer experiences

Market offerings with a strong sensory or emotional component that play out for the customer over time

Consumer products

Products brought by final consumers for personal consumption

Convenience products

Consumer products that customers usually buy frequently, immediately, with low customer involvement, and with minimal comparison and buying effort

Shopping products

Consumer product that the customer, in the process of selecting and purchasing, usually compares on such attributes as suitability, quality, price, and style

Speciality products

Consumer products with unique characteristics or brand identifications for which buyers are willing to make a special purchase effort

Unsought products

Consumer products that the consumer either does not know about or knows about but does not normally consider buying

Industrial products

products bought by individuals and organizations for further processing, use in conducting a business, or resale

Social marketing

the use of traditional marketing concepts and tools to encourage behaviors that will create individual and societal well-being

Individual product decisions

Product quality

the characteristics of a product or service that bear on its ability to consistently and reliably satisfy stated or implied customer needs

Total quality management

All employees are involved in constantly improving the quality of products, services, and business processes

Customer-driven quality

Companies taking an approach to create quality that matters to the customer

Return-on-quality

Companies take an approach to hold quality-improvement investments accountable for bottom-line results

Brand

A name, term, sign, symbol, or design, or a combination of these that identifies the products or services of one seller or group of sellers and differentiates them from those of competitors

Packaging

Designing and producing the container or wrapper for a product

Product line

A group of products from a company that are closely related because they function in a similar manner, are sold to similar customer groups, serve similar customer needs, are marketing through the same types of outlets, or fall within given price range

Product line length

The number of items in the product line

Product line filling

adding items within the present range of the line. Can yielded extra profits, satisfy dealers, use excess capacity, help the company become a full line provider, and plug holes to keep out competitors

Product line stretching

A company lengthens its product line beyond its current range. The company can stretch line downward, upward, or both ways.

Product mix (product profolio)

The set of all product lines and items that a seller offers for sale

Four service characteristics

1. Intangibility

2. Inseparability

3. Variability

4. Perishability

Service intangibility

services cannot not be seen, tasted, felt, heard, or smelled before purchase

Service inseparability

services are produced and consumed at the same time and cannot be separated from their providers

Service variability

The quality of services may vary greatly depending on who provides them and when, where, and how they are provided

Service perishability

services cannot be stored for later sale or use

Service profit chain

the chain that links customer satisfaction and profits for service firms within employee satisfaction

• internal service quality

• Satisfied and product employees

• Greater service value

• Satisfied and loyal customers

• Healthy service profits and growths

Brand equity

the differential effect that knowing the brand name has on a customer’s emotions, attitudes, and behaviors related to the product or its marketing

Brand value

The total financial value of a brand

Customer equity

The sum of total value of customer relationships that the brand creates

Store brands (or private labels)

Brands created and owned by a reseller of a product or service

Licensing

Some companies have other companies pay a fee for the use of names, symbols, names of well-known celebrities, or characters from popular movies and books

Co-branding (or brand collaborations)

the practice of using the established brand names of two different companies on the same product

Brand development strategies

Line extensions

extending an existing brand name to new forms, colors, sizes, ingredients, or flavors of an existing product category

Brand extension

extending an existing brand name to new product categories

Major stages in new product development

Idea generation → idea screening → concept development and testing → marketing strategy development → business analysis → product development → test marketing → commercialization

Idea generation

the systematic search for new product ideas

Crowdsourcing

inviting broad communities of people — customers, employees, independent scientists and researchers, and even the public at large — into the new product innovation process

Idea screening

Evaluating new product ideas to spot good ones and drop poor ones

Product concept

a detailed version of the new product idea stated in terms that are meaningful to the consumer

Concept testing

testing new products concepts with a group of targeted consumers to find out if the concepts have strong consumer appeal

Marketing strategy development

Designing an initial marketing strategy for a new product based on the product concept

Business analysis

A review of the sales, costs, and profit projections for a new product to find on whether these factors satisfy the company’s objectives

Product development

developing the product concept into a physical product or a detailed service blueprint to ensure that the product idea can be tuned into a workable market offering

Testing marketing

the stage of new product development in which the product and its proposed marketing program are tested in realistic market settings

Commercialization

Introducing a new product into the market

Customer centered new product development

New product development that focuses on finding new ways to solve customer problems and create more customer-satisfying experiences

Team-based new product development

New product development in which various company departments work closely together, overlapping the steps in the product development process to save time and increase effectiveness

Product life cycle(PLC)

The course of a product’s sales and profits over its lifetime

1. Product development

2. Introduction

3. Growth

4. Maturity

5. Decline

Style

A basic and distinctive mode of expression

Fashion

A currently accepted or popular style in a given field

Fads

a temporary period of unusually high sales or interest driven by consumer enthusiasm immediate product or brand popularity

Introduction stage

The PLC stage in which a new product is first distributed and made available for purchase

Growth stage

The PLC stage in which a product’s sales start climbing quickly

Maturity stage

The PLC stage in which a product’s sale growth slows or levels off

Decline stage

The PLC stage in which a product’s sales fade away

Price

The amount of money charged for a product or service, or the sum of the values that customers exchange for the benefits of having or using the product or service

Customer-based value pricing

setting pricing based on buyers’ perceptions of value rather than on the seller’s cost

Good value pricing

offering an attractive combination of quality goods and service at a fair price

Value added pricing

attaching value added features and services to differentiate a company’s offers and charging higher prices

Cost based pricing

setting prices based on the costs of producing, distributing, and selling the product plus a fair rate of return for effort and risk

Fixed costs (overhead)

Costs that do not vary with production or sales level

Variable costs

costs that directly vary with the level of production

Total costs

the sum of the fixed and variable costs for any given level of production

Experience curve

the drop in the average per-unit production cost that comes with accumulated production experience

Cost-plus pricing (or markup pricing)

Adding a standard markup to the cost of the product

Break even pricing (target return pricing)

Setting price to break even on the costs of making and marketing a product or setting price to make a target return

Competition based pricing

Setting prices based on competitor’s strategies, prices, costs, and market offerings

Target costing

pricing that starts with an ideal selling price and then targets costs that will ensure that the price is profitably met

Demand curve

A curve that shows the number of units the market will buy in a given time period at different prices that may be charged

Price elasticity

A measure of the sensitivity of demand to changes in price

Market-skimming pricing (price skimming)

Setting a high price for a new product to skim maximum profits layer by layer from costumer segments in line with their willingness to pay

Product line pricing

Setting the priced across various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors’ prices

Optional-product pricing

The pricing of optional or accessory products along with a main product

Captive-product pricing

Setting a price for products that must be used along with a main product, such as toner cartridges for a printer and games for a video game console

By-product pricing

Setting a price for and selling by-products to improve profits and help offset the costs of disposing of them

Product bundle pricing

Combining several products and offering the bundle at a recused price

Discount

A straight reduction in price on purchases made during a stated period of time or in larger quantities

Allowance

Promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer’s products in some way

Segmented pricing

Selling a product or service at two or more prices, where the difference in prices is not based on differences in costs

Psychological pricing

Pricing that considers the psychology — and not just the economics — behind how consumer evaluate price and value

Reference prices

Prices that buyers carry in their minds and refer to when they look at a given product

Promotional pricing

Temporarily pricing products below the list price, and sometimes even below cost, to increase short-run sales

Geographical pricing

Setting prices for customers located in different parts of the country or world

FOB-origin pricing

Pricing in which goods are placed free on board a carrier; the customer pays the freight from the factory to the destination

Uniform-delivered pricing

Pricing in which the company charges the same delivered price, including freight, to all customers regardless of their location

Zone pricing

Pricing in which the company sets up two or more delivery zones. All customers within a zone pay the same total price; the more distant the zone, the higher the price

Basing-point pricing

Pricing in which the seller designates some city as a basing point and charges all customers the freight cost from that city to the customer

Freight-absorption pricing

Pricing is which the seller absorbs all or part of the freight charges in order to get or keep the desired business

Dynamic pricing

Adjusting prices continually in real time to meet changing conditions and situations in the marketplace

Personalized pricing

Adjusting prices in real time to fit individual customer needs, situations, locations, and buying behaviors

Value Delivery Network

A network composed of the company, suppliers, distributors, and, ultimately, even customers — all of whom partner together to improve the performance of the entire system in delivering customer value and driving profits

Marketing channel (distribution channel)

a set of interdependent intermediary organizations that help make a product or service available for use or consumption by the consumer or business user

Channel level

A layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer

Direct marketing channel

a marketing channel that has no intermediary levels, with the producer selling directly to the consumer

Indirect marketing channels

A marketing channel containing one or more intermediary levels between the producer and the consumer

Channel conflict

disagreements among marketing channel members on goals, roles, and rewards — who should do what and for what rewards