Intro to Marketing final

chapters 7-14

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 sale; it is intangible and does not result in ownership of anything

Three levels of product

core customer value, actual, augmented

consumer products

bought by final consumers for personal production

Industrial products

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

product line length

number of items in a product line

product mix

all of the product lines that a company has for sale 

product mix width

number of product lines the company carries (oral care, home care, personal care)

product mix length

total number of items a company carries within its product lines

product mix depth

number of versions offered for each product in the line

product mix consistency

relativity of the various product lines in end use, production requirements, distribution channels, or some other aspect

product attributes

quality, performance conformance, features style/design

product quality

characteristics of a product that bear on its ability to satisfy stated or implied customer needs 

branding

a brand name, term, sign, symbol, design, or combination that identifies the maker or seller of a product or service

packaging

involves designing the container or wrapper for a product, helps identify from competitive clutter, real estate on the shelf 

labeling and logos

labels and logos help identify and describe the product or brand, promote the brand, support its positioning, engage customers

product support services

survey customer periodically, keeping them happy after the sale

four service characteristics

intangibility, inseparability, variability, perishability 

intangibility

services can’t be seen, tasted, felt, heard, or smelled before purchase

inseparability

services can’t be separated from their providers

variability

quality or services depends on who provides them and when, where, and how

perishability

services can’t be stored for later sale or use

brand equity

differential effect that knowing the brand name has on customer response to the product or its marketing

consumer perception dimensions

differentiation, relevance, knowledge, esteem

Major brand strategy decisions

brand positioning, brand name selection, brand sponsorship, brand development

line extension

existing product category and existing brand name

brand extension

new product category and existing brand name

multibrands

existing product category and new brand name

new brands

new product category and new brand name

Major stages of new product development

idea generation, idea screening, concepts development and testing, marketing strategy development, business analysis, product development, test marketing, commercialization 

idea generation

systematic research for new product ideas from internal idea sources (development teams, social networks), external idea sources (distributors, competitors), and crowdsourcing

idea screening

picking which product ideas are good and dropping the poor ones (Real, win, worth doing framework)

concept development 

testing new product concepts with groups of target customers

product idea

idea for a possible product that the company can see itself offering to the market

product concept

detailed version of the new product idea stated in meeting consumer terms

product image

the way consumer perceive an actual or potential product 

Three parts of the marketing strategy statement

describe target market, value proposition, sales, market share, profit

determine products planned price, distribution and marketing budget

develop long-run sales, profit goals, and marketing mix strategy

Business analysis

review of sales, costs, and profit projections for a new product

product development

developing the product concept into a physical product, prototype, product testing and safety

test marketing

introduces the product and its proposed marketing program into realistic marketing settings, can be controlled or stimulated

commercialzation

introducing a new product into the market

3 pricing strategies

customer-value based, cost-based, and competition based

customer value based pricing

based on buyers perception of value rather than on the seller’s cost (good value or value-added)

cost based pricing

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

cost plus pricing

adding a standard markup to the cost of the product

break even pricing

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

Competition based pricing

setting prices based on competitors’ strategies, costs, prices, and market offerings

Internal factors affecting price decisions

overall marketing strategy, objectives, and mix, or organizational considerations

external factors affecting price decisions

market and demand, economy, impact on other parties in its environment 

target costing

starts with an ideal selling price, then targets costs that ensure the price is met

pure competition

many buyers and sellers trading in uniform commodity (no set market price, lots of product differentiation, little advertising)

monopolistic competition

many buyers and sellers trading over a range of prices rather than a single market price (differentiate products from competitors, lots of advertising)

oligopolistic competition

only a few large sellers (price leader, product differentiation depends on the industry, some advertising)

pure monopoly

market is dominated by one seller (sole seller sets the price, no other products, little advertising)

elastic demand

demand changes greatly with a small change in price 

inelastic demand

demand hardly changes with a small change in price (when the price goes up, consumer will not change their buying habits)

external factors impacting pricing

boom or recession, inflation, interest rates, resellers, government, social concerns

market skimming

setting a high price to skim maximum revenues from the segment willing to pay the price 

market penetration pricing

setting a low price to attract a large number of buyers and a larger market share

product line pricing

setting prices across an entire product line

optional product pricing

pricing optional or accessory products sold with the main product

captive product pricing

pricing products that must be used with the main product

by product pricing

pricing low-value by products to get rid of or make money on them

product bundle pricing

pricing bundles of products sold together

Price adjustment strategies

discount and allowance, segmented, psychological, promotional, geographical, dynamic, and international

discount pricing

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

allowance pricing

promotional money paid to retailers for an agreement to feature the manufacturer’s products in some way (trade-in promotion)

segmented pricing

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

psychological pricing

considers the psychology of prices and not simply the economics (the price says something about the quality of the product)

promotional pricing

temporarily pricing products below the list price to increase short-run sales (discount, limited time offers, low-interest financing, free maintenance)

geographical pricing 

free-on-board pricing (buyer pays all shipping costs), uniform-delivered pricing, cone pricing

Dynamic pricing

adjusting prices continually to meet the characteristics and needs of individual customers and situations

international pricing

International companies set a uniform worldwide price, adjust prices to reflect the local market conditions, and cost considerations

reasons for price cuts

excess capacity, falling demand due to strong comp or weak economy, attempt to dominate the market (gain market share through volume)

reasons for price increas

cost inflation, overdemand

upstream partners

supply the raw materials, components, parts info, finances, and expertise needed to create a product or service

downstream partners 

serve as distribution channels that link the firm and its customers

marketing channel

interdependent organizations that help make a product or service available for use or consumption

conventional distribution channels

consist of one or more independent producers, wholesalers, and retailers, each separate business seeking to maximize its own profits

Channel decisions can

affect other marketing decisions, lead to competitive advantage, involve long-term commitments

Channel members help complete transactions with

information, promotion, contact, matching, and negotiation

channel members help fulfill completed transaction with

physical distribution, financing, risk taking

channel level

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

direct marketing channel

no intermediary levels

indirect marketing channel

one or more intermediary levels

channel conflict

disagreements among marketing channel members on goals, roles, and rewards 

horizontal channel conflict

occurs among firms at the same level of the channel

vertical channel conflict

occurs between different levels of the same channel

vertical marketing system

consists of producers, wholesalers, and retailers acting as a unified system

administered vertical marketing system

coordinates successive stages of production and distribution through size and power of one of the parties

contractual vertical marketing system

independent firms at different levels of production and distribution joinde together through contracts

Three types of vertical marketing systems

corporate, contractual, and administered 

horizontal marketing system

two or more companies at one level join together to follow a new marketing company

multichannel distribution system

a single firm sets up two or more marketing channels to reach one or more customer segments

advantages of a multichannel distribution system

expansion of sales and marketing coverage, tailor-made products and services for the specific needs of customer segments 

disadvantages of a multichannel distribution system

harder to control, generate conflict

disintermediation

occurs when product or service producers cut out marketing channels, intermediaries, or when radically new types of channel intermediaries displace traditional one

channel design decisions

analyzing customer needs, setting channel objectives, identifying major channel alternatives, and evaluating the alternatives 

intensive distribution

stocking the product in as many outlets as possible

exclusive distribution

giving a limited number of dealers the exclusive right to distribute the company’s products in their territories