MGMT 2430 Exam 2

The three ways a product can satisfy a need

use, consumption, or acquisition

What do customers care more about: features or benefits?

Benefits

the “augmented product”

Core benefit + features + packaging + services + warranty

two quality dimensions for goods

performance, durability

two quality dimensions for services

empathy, responsiveness

feature fatigue

Consumer confusion when too many features are added.

the five stages of the product life cycle

Development, Introduction, Growth, Maturity, Decline/Extension

Why branding is important

Differentiation, simplified decisions, lower risk, possible status

the difference between individual and family branding

Individual = separate brand names per product; Family = shared name across multiple products.

brand extension

Using an existing brand name to enter a new product category.

co-branding

Combining multiple brand names into one offering.

three functions of packaging

Protection, promotion, information

How packaging can apply to services

design, presentation, or service environment

Why warranties are important

Reduces risk, enhances quality perceptions, assures reliability

The marketing mix element that generates revenue

Price

Why pricing is hard for managers to decide

Price is influenced by both costs and market conditions.

The 7 steps in the price-setting decision process

Objectives 1st. Demand/Elasticity 2nd. Costs 3rd. Competitors 4th. Method 5th. Price level 6th. Adaptation 7th

The difference between fixed and variable costs

Fixed = do not change with production; Variable = change per unit produced

penetration pricing

Setting a low price to quickly gain market share

When skimming is effective

For new products with proprietary tech and limited competition

profit harvesting

Raising prices and reducing costs in a declining market

What a price elasticity greater than 1 means

Demand is elastic; % change in demand > % change in price

two factors that make demand more elastic

Availability of substitutes, ability to compare alternatives

cost-plus pricing

Marking up unit cost by a percentage to set price

value-in-use pricing

Setting price based on the economic value provided vs. alternatives

competitive parity pricing

Setting prices equal to or near major competitors

An example of time-based differential pricing

Movie tickets priced higher at night than matinees

customer-segment pricing

Different groups (e.g., students, seniors) pay different prices for the same product

marketing channel

A set of interdependent organizations that make products/services available to consumers

The three main types of channel intermediaries

Retailers, wholesalers, agents

Why firms use intermediaries

For functional, scale, and transactional efficiency

transactional efficiency

Making it possible for customers to get many products from one source in one purchase

the five main objectives of channel design

Availability, customer service, promotional effort, market info, cost-effectiveness

the difference between intensive and exclusive distribution

Intensive = many outlets, mass coverage; Exclusive = few outlets, selective prestige

the difference between a merchant wholesaler and an agent middleman

Wholesaler owns goods; agents do not

an example of a direct channel

Dell selling computers online

multichannel distribution

Using more than one channel to serve different customer segments

push strategy

Motivating intermediaries with incentives to promote/sell your product

pull strategy

Creating consumer demand so customers request your product from intermediaries

The main goals of promotion?

To create awareness, influence attitudes, and drive sales or usage.

the five elements of the promotion mix

Advertising, personal selling, sales promotion, public relations, social media

the five steps in the IMC plan

Define audience 1st, Set objectives 2nd, Set budget 3rd, Design mix 4th, Evaluate results last

What makes a good promotional objective

Specifies target audience, desired change, time frame, and measurable degree of change

one advantage and one disadvantage of using online promotions

Advantage: Easy to measure. Disadvantage: Can lead to short-term focus or clutter

the objective-and-task method

Define objectives → identify tasks → estimate costs → set budget accordingly

Why the percentage-of-sales method is sometimes criticized

Because it ties promotion spending to past performance rather than future potential

The promotion mix element that has the highest credibility but the highest cost

Personal selling

the difference between push and pull strategies

Push = incentivize intermediaries; Pull = build consumer demand directly

one pro and one con of event marketing

Pro: High visibility; Con: Expensive and short-term

some risks of celebrity endorsements

Scandals, overexposure, poor fit with product

What AIDA stands for

Awareness, Interest, Desire, Action

The stage in AIDA that creates emotional appeal

Desire

The stage in AIDA that encourages the final purchase

Action

Why marketing research is critical for product success

It helps understand markets, needs, and competition, reducing launch failure rates

the four steps of marketing research

Data 1st, Analysis 2nd, Information 3rd, Interpretation 4th

a limitation of surveys and focus groups

People may not act as they say or know what they truly want

the main advantage of experiments

Quick and low-cost insights before full product launch

Why market tests are useful

They reveal actual purchase behavior and validate earlier research

What’s the danger of relying too much on historical data

It assumes the future mirrors the past, ignoring market changes

The difference between correlation and causation

Correlation = relationship; causation = one directly causes another

an example of observational research

Watching how consumers use products in their homes or stores

an example of an ethical issue in product marketing

Misleading “healthy” claims on sugary foods

The type of products that are highly regulated due to ethics

Addictive or harmful substances like alcohol and tobacco

an example of deceptive promotion

Ads showing unrealistic food quality (“fast food vs. reality”)

an ethical risk of competitor-focused ads

They may mislead or unfairly damage reputations

price gouging

Raising prices unethically during emergencies or shortages

Define deceptive reference pricing

Inflating original prices to make discounts look bigger

shrinkflation

Reducing product size while keeping price the same

an example of consumer lock-in

Printers with cheap hardware but expensive ink refills

Why selling cigarettes near schools is unethical

It targets underage consumers and encourages harmful habits

an ethical concern with product placement in stores

Placing sugary products at kids’ eye level manipulates vulnerable buyers