MKTG Exam 3 Wolter

Product

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

Actual Product

Brand name: features, design, packaging, and quality level

Augmented Product

After-sale service, warranty, support, and delivery/credit

Convenience product

Consumer products and services that customers usually buy frequently, immediately, and with minimal comparison and buying effort

Shopping Product

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

Consumers spend more time and effort in gathering info and marketing comparisons.

Brands matter

Specialty

A consumer product with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort.

High-end, luxury

Unsought Product

Consumer product that the customer either does not know about or knows about but does not normally consider buying

Ex: insurance, preplanned funeral, blood donations

Unbounded products

Persons- Tiger Woods

Organizations- Intuit

Ideas- Truth campaign to stop smoking

Places- Auburn, Loveliest village on plains

Product line

Group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges

Ex: Nike and Marriott

Marketing Strategy

Each product line has it's own what?

Product mix

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

Ex: Clorox

Surveying group of customers, grouping together to have a similar marketing strategy across the line, companies determine it

How are product lines determined

Length in relation to product mix

Total number of items a company carries within its product lines.

Clorox carries several brands within each line.

Width in relation to product mix

Number of different product lines the company carries.

GE manufactures as many as 250,000 items across a broad range of categories, from lightbulbs to medical equipment, jet engines, and diesel

Depth in relation to product mix

The number of versions offered for each product in the line.

Clorox brand contains a deep assortment of items and varieties including disinfecting wipes, floor cleaners, stain removers, and bleach. Each variety comes in a number of product forms, formulations scents, and sizes.

Product line length

The number of items in the product line.

The line is too short if the manager can increase profits by adding items; the line is too long is the manager can increase profits by dropping items

Product line stretching

Occurs when a company lengthens its product beyond its current range

Down-market stretch

Offer cheaper versions (tide--> gain)

A company may stretch downward to plug a market hole that otherwise would attract a new competitor or respond to a competitor's attack on the upper end. Or it may add low-end products because it finds faster growth taking place in the low-end segments

Up-Market stretch

Offer more luxuries versions (taco bell --> taco bell cantina)

Sometimes, companies stretch upward to add prestige to their current products. Or they may be attracted by a faster growth rate or higher margins at the higher end

Cannibalization

When new products steal customers and sales from existing ones

Can be planned or unplanned

Intangibility,

heterogeneity (quality of services depends on who provides),

inseparability (services can't be separated from providers),

perishability (services cannot be stored for later use),

services will offer proxies to their quality (ex: lawyers office have nice furniture)

How are services different from goods?

Brand

A name, term, symbol, design, or combination of these things that are intended to identify and differentiate a seller or seller's

Branding

The process of endowing products with the power of a brand

Ex: crossfit, cow branding

Power of a brand

The differential effect of brand knowledge on consumer responses to marketing.

Meaning of brand in your head

Ex: bleach vs bleach

apple shirt

Brand equity

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

Measure of the brand's ability to capture consumer preference and loyalty

Brand Value

Total financial value of brand

These brands win in the marketplace not simply because they deliver unique benefits or reliable service. Rather, they succeed bc they forge deep connections with customers

Have to change slightly and keep growing

Consistency

What does Chevrolet, Levis, and and Coca-Cola tell us about creating a powerful brand?

To build a brand, you have to create meaning

You have to stay consistent

What does the Pespi Taste Challenge tell us about the power of branding?

Brands have to change slightly and keep growing

What does Oldsmobile and Howard Johnsons tell us about the power of branding?

Brand extension

Extending an existing brand name to new product categories

Sun-maid raisins on english muffins

Improves odds of new products success

Positive feedback

ex: virgin

Positive outcomes of brand extensions

Brand dilution

Negative feedback

Negative outcomes of brand extensions

Fit

Strength of brand

Amount of successful extensions

What determines if a brand extension works

The greater the fit between the brand of product, then product will get negative feedback from brand and vice versa

If gets hit, then everything can potentially be negative

How can brand extensions backfire

Price

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

Pricing is the reflection of everything you do as a business

Why is pricing so important?

Pure competition

Selling typically commodities

Not much marketing

Market consists of many buyers and sellers trading in a uniform commodity, such as wheat, copper, or financial securities.

Sellers in these markets do not spend much time on marketing strategy

Monopolistic competition

Having differentiation

Most of what we see

Market consists of many buyers and sellers trading over a range of prices rather than a single market price. A range of prices occurs because sellers can differentiate their offers to buyers

Oligopolistic competition

Only a few providers in market

Still have more control

Airlines

They can see what competitors are doing with pricing

Pure monopoly

Market is dominated by one seller

Seller may be a government monopoly (postal services), a private regulated monopoly (power company), or a private unregulated monopoly (de beers and diamonds)

Pricing is handled differently in each case

Reference price

How do we know price is fair

Bench price

Set thing in mind based on norms and what we see happening on fair value of a product

We often set norms for what we feel like is a fair price

Actually can be influenced

Are reference prices stable? Can they be manipulated?

Cost based pricing

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

Value based pricing

Using buyer's perceptions of value as the key to pricing

Value based pricing

Which method is hardest- Value or cost based pricing?

Because it is harder

You have to do research

It is diff if you have a ton of products

Why do large retailers not engage in value-based pricing?

1. Design a good product

2. Determine product costs

3. Set price based on cost

4. Convince buyers of product's value

What are the steps for cost based pricing?

o Assess customer needs and value perceptions

o Set target price to match customer perceived value

o Determine costs that can be incurred

o Design product to deliver desired value at target price

What are the steps for value based pricing

Markup (cost plus)- adding a standard increase to the cost of a product

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

What are the types of cost-based pricing?

Good value pricing- offering just the right combination of quality and good service at a fair price

Value added- Attaching services and features to a product to support higher prices

What are the types of value-based pricing?

Price discrimination

Idea of changing your price to charge different prices to different people on demand curve

To take advantage of entire demand curve

• Allow customers at the bottom of the demand curve to pay less

• Ex: discounts (rebates, specials), contests

What is the 1st method of PD?

The value equation

o Benefits/costs

o Benefits/monetary costs + nonmonetary costs

o Providing avenues for people to buy cheaper, given that they jump through hoops

How does this method (PD 1) tie into the value equation? In other words, why are people inherently ok with this method?

• Charge customers at the top of the demand curve more

• Ex: value-added pricing; freemium

What is the second method? What are examples?

Superconsumers

Aren't particularly price sensitive

Dynamic pricing

Changing the price for different market segments or to take into account situational factors

Ex: rental cars, airlines, hotels

Online

Where is dynamic pricing especially prevalent

Dynamic pricing is legal as long as companies do not discriminate based on age, gender, location, or other similar characteristics

When is dynamic pricing illegal?

Perceptions of excessive profit

-in comparison to estimated costs or reference price

Perceived immorality

-deception

-take advantage of a situation

Inability to understand pricing strategy

-inability to understand price changes

-inability to estimate costs

-inability to assess real value

What are the three determinants of negative attributions?

o Attribution can be a function of reputation

o The better reputation, I'm more likely to perceive it as fair

What does reputation have to do with this?

Pay what you want pricing

Allow customers to pay exactly what they are willing

Coffee shops, restaurants, not movies

Where does PWYW pricing work?

• Smithsonian

• Sets a price in customer's head making them pay more than they would if no price was set

How does a reference price work with PWYW?

When add social responsibility and charity, you make a ton more money $$

What happens when you pair CSR with PWYW?

Introduction

Growth

Maturity

Decline

What are the stages of the Product Life Cycle?

Introduction

Period of slow sales growth as the product is introduced in the market

Profits are nonexistent in this stage because of the heavy expenses of product introduction

Growth

Rapid market acceptance and increasing profits

Competition sees and jumps in there too

Maturity

Period slow down in sales growth because the product has achieved acceptance b most potential buyers

Profits level off or decline bc of increased marketing outlays to defend the product against competition

Max level of sales

Decline

Everything goes down

Can compete to makey $

• If you're in a style based product, then sometimes you can revitalize

• A style cycle showing several periods of renewed interest

• Fashions tend to grow slowly, remain popular for a while, and then decline slowly

• A fad may be part of an otherwise normal cycle, as in the case of recent surges in the sales of poker chips and accessories

What are the typical PLCs for styles, fashions, and fads?

Introduction

o create product awareness and trial

Growth

o max market share

Maturity

o max profit while defending market share

Decline

o reduce expenditure and milk the brand

How do the marketing objectives change across the PLC?

Consumers are good for validating (ie testing) and evolving but not for creating radically new products

What kind of innovation is a consumer likely to come up with?

Innovative ideas with strong market potential tend to come from "experts" in the field who combine newly emerging existing technologies

Who makes the innovations that lead to radically new products?

He has limitation

In consideration of 5-hour energy, why is someone who developed a successful product unlikely to do it again?