Marketing Exam 2

good

tangible attributes that a consumer’s five senses can perceive

product

A good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers’ needs and is received in exchange for money or something else of value.

nondurable good

an item consumed in one or a few uses

durable good

one that usually lasts over many uses

services

Intangible activities or benefits that an organization provides to satisfy consumers’ needs in exchange for money or something else of value.

idea

a thought that leads to a product or action

consumer products

products purchased by the ultimate consumer

business products

Products organizations buy that assist in providing other products for resale. Also called B2B products or industrial products.

types of consumer products

1. convenience

2. shopping

3. specialty

4. unsought

convenience products

Items that the consumer purchases frequently, conveniently, and with a minimum of shopping effort.

shopping products

Items for which the consumer compares several alternatives on criteria such as price, quality, or style

specialty products

Items that the consumer makes a special effort to search out and buy.

unsought products

Items that the consumer does not know about or knows about but does not initially want.

derived demand

sales of business products frequently result from the sale of consumer products

a major characteristic of business products is that their sales are often the result of

derived demand

components

items that become part of the final product

support products

items used to assist in producing other products and services

installations

buildings and fixed equipment

accessory equipment

tools and office equipment

supplies

stationery, paper clips, and brooms

industrial services

maintenance, repair, and legal services

support products include

• installations

• accessory equipment

• supplies

• industrial services

services can be classified according to whether they are delivered by

1. people or equipment

2. business firms or nonprofit organizations

3. government agencies

services classifications

• equipment based

• people based

equipment based

• automated (self-service)

• operated by relatively unskilled operators

• operated by skilled operators

automated (self service)

• ATMs

• online brokerages

• automated car washes

operated by relatively unskilled operators

• motion picture theaters

• dry cleaners

• taxis

operated by skilled operators

• electric utilities

• airlines

• computer networks

people based

• unskilled labor

• skilled labor

• professionals

unskilled labor

• lawn care

• security guards

• janitorial services

skilled labor

• appliance repair

• plumbers

• caterers

professionals

• managements consultants

• accountants

• lawyers

delivery by privately owned companies

must make profits to survive

delivery by nonprofit organizations

seek to satisfy clients and be efficient

• marketing to improve their communications and better serve those in need

four I’s of services

The four unique elements that distinguish services from goods:

1. intangibility,

2. inconsistency,

3. inseparability, and

4. inventory.

intangibility

can’t be touched or seen before the purchase decision, instead services tend to be a performance rather than an object, which makes them much more difficult for consumers to evaluate

inconsistency

services often depend on the people who provide them, as a result their quality varies with each persons capabilities and day to day performance

inseparability

the consumer cannot distinguish the service provider from the service itself

inventory

handling costs that relate to their storage, perishability, and movement. with services, these costs are more subjective and are related to idel production capacity

idle production capacity

when the service provider is available but there is no demand for the service

three dimensions of service quality

• reliability

• tangibility

• responsiveness

product class

industry to which they belong

product forms

within a product class

product item

a specific product that has a unique brand, size, or price

product line

A group of product or service items that are closely related because they satisfy a class of needs, are used together, are sold to the same customer group, are distributed through the same outlets, or fall within a given price range.

product mix

consists of all product lines offered by an organization

feature bloat

the tendency for some product developers to add additional features or functionalities to a product that are not of any benefit to the customer and unnecessarily add to the cost of the product

feature fatigue

research shows that while feature bloat can increase the capability of a new product and encourage a purchase, the actual usage experience after purchase can result in consumer dissatisfaction

the degrees of “newness”

• continuous innovation

• dynamically continuous innovation

• discontinuous innovation

continuous innovation

requires no new learning by consumers

dynamically continuous innovation

disrupts consumers’ normal routine but does not require totally new learning

discontinuous innovation

requires new learning and consumption patterns by consumers

successful organizations view newness and innovation in their products at three levels

1. product line extension

2. brand extension

3. radical invention

product line extension

an incremental improvement of an existing product line the company already sells

brand extension

involving putting an established brand name on a new product in an unfamiliar market

radical invention

a truly revolutionary new product that creates value for the consumer

protocol

A statement that, before product development begins, identifies

1. a well-defined target market;

2. specific customers’ needs, wants, and preferences; and

3. what the product will be and do to satisfy consumers.

critical marketing factors that often separate new product winners and losers:

1. insignificant point of difference

2. incomplete market and product protocol before product development starts

3. Failure to satisfy customer needs on critical factors

4. bad timing

5. no economical access to buyers

6. poor execution of the marketing mix

7. too little market attractiveness

8. poor product quality

insignificant point of difference

distinctive point of difference is the single most important factor for a new product to defeat competing ones having superior characteristics that deliver unique benefits to the user

incomplete market and product protocol before product development starts

without this protocol firms try to design a vague product for a phantom market

failure to satisfy customer needs on critical factors

Overlapping somewhat with point 1, this factor stresses that problems with one or two critical factors can kill the product, even though the general quality is high

bad timing

This results when a product is introduced too soon, too late, or when consumer tastes and preferences are shifting dramatically

no economical access to buyers

failed to generate enough sales to meet these requirements

poor execution of the marketing mix

somewhere in the marketing mix there can be a showstopper that kills the product

too little market attractiveness

the ideal is a large target market with high growth and real buyer need but the target market is too small or competitive to warrant the high expenses necessary to reach it

poor product quality

this factor often results when a product is not thoroughly tested the costs to an organization for poor quality can be staggering and include the labor, materials, and other expenses to fix the problem

Organizational problems and attitudes can also cause new product disasters

1. encountering “groupthink” in task force and committee meetings

2. avoiding the “NIH problem”

encountering “groupthink” in task force and committee meetings

someone in the new product planning team meeting knows or suspects the product concept is a dumb idea, but they are afraid to speak up

avoiding the “NIH problem”

some large organizations, ideas, practices, and processes from outside often get rejected simply becuase they come from outside

not invented here syndrome (NIH)

closed innovation, based on the conviction that new products and consumer solutions can successfully emerge only from inside the organization

open innovation

Practices and processes that encourage the use of external as well as internal ideas and internal as well as external collaboration when conceiving, producing, and marketing new products and services.

new product development process

The seven stages an organization goes through to identify opportunities and convert them into salable products or services

Stage 1: new product strategy development

the stage of the new product development process that defines the role for a new product in terms of the firm’s overall objectives

• SWOT analysis

• environmental scanning

• defines the vital “protocol”

Stage 2: idea generation

The stage of the new-product development process that develops a pool of concepts to serve as candidates for new products, building upon the previous stage’s results.

• what if?

crowdsourcing

generating insights leading to actions based on ideas from massive numbers of people

smaller, nontraditional firms

adjacent industries provide creative advances

universities

have technology transfer centers that often partner with businesses to commercialize faculty inventions

inventors

develop new product ideas

Stage 3: screening and evaluation

The stage of the new-product development process that internally and externally evaluates new-product ideas to eliminate those that warrant no further effort.

internal approach

a firms employees evaluate the technical feasibility of a proposed new product idea to determine whether it meets the objectives defined in the new product strategy development stage

customer experience management (CEM)

the process of managing the entire customer experience within the company

external approach

screening anf evaluation use concept tests, external evaluations with consumers that consist of preliminary testing of a new product idea rather than an actual finished product

concept tests

rely on written descriptions of the product but may be augmented with sketches, mockups, or promotion literature

stage 4: business analysis

The stage of the new-product development process that specifies the features of the product or service and the marketing strategy needed to bring it to market and make financial projections

prototype

a full scale operating model of the product or service

stage 5: development

The stage of the new-product development process that turns the idea on paper into a prototype.

stage 6: market testing

The stage of the new-product development process that exposes actual products to prospective consumers under realistic purchase conditions to see if they will buy.

three main kinds of test markets are

1. standard

2. controlled

3. simulated

standard test markets

A company develops a product and then attempts to sell it through normal distribution channels in a number of test market cities

test market cities

must be demographically representative of markets targeted fro the new product

regional rollout

a product is introduced sequentially into geographic areas to allow production levels and marketing activities to build up gradually to support the product

controlled test markets

Involves contracting the entire test program to an outside service, the service pays retailers for shelf space and can therefore guarantee a specified percentage of the test product’s potential distribution volume

simulated test markets

a technique that somewhat replicated a full sclae test market

stage 7: commercialization

The stage of the new-product development process that positions and launches a new product in full-scale production and sales.

product life cycle

Describes the stages a new product goes through in the marketplace: introduction, growth, maturity, and decline.

stages of the product life cycle

1. intorduction

2. growth

3. mautrity

4. decline

introduction stage

occurs when a product is introduced to its intended target market, sales grow slowly, and profit is minimal

trial

the initial purchase of a product by a consumer

primary demand

the desire for the product class rather than for a specific brand, since there are few competitors with the same product

slective demand

as more competitors launch their own products and the product progresses along its life cycle, the preference for a specific brand