PRINCIPLES OF MARKETING NOTES Chapters 10-12

BUS 270 Principles of Marketing, Chapters 10-12 through Cengage

Good

A tangible physical entity

Service

An intangible result of the application of human and mechanical efforts to people or objects

Idea

 A concept, a philosophy, an image, or an issue

Consumer Products

Products purchased to satisfy personal and family needs

Business Products

Products bought to use in an organization’s operations, to resell, or to make other products

Convenience Products

Relatively inexpensive, frequently purchased items for which buyers exert minimal purchasing effort

Shopping Products

Items for which buyers are willing to expend considerable effort in planning and making purchases

Specialty Products

Items with unique characteristics that buyers are willing to expend considerable effort to obtain

Unsought Products

Products purchased to solve a sudden problem, products of which customers are unaware, and products that people do not necessarily think about buying

Product Item

A specific version of a product that can be designated as a distinct offering among a firm’s products

Product Line

A group of closely related product items viewed as a unit because of marketing, technical, or end-use considerations

Product Mix

The total group of products that an organization makes available to customers

Width of Product Mix

The number of product lines a company offers

Depth of Product Mix

The average number of different product items offered in each product line

Product Life Style

The progression of a product through four stages: introduction, growth, maturity, and decline

Introduction Stage

The initial stage of a product’s life cycle—its first appearance in the marketplace—when sales start at zero and profits are negative

Growth Stage

 The stage of a product’s life cycle when sales rise rapidly and profits reach a peak and then start to decline

Maturity Stage

The stage of a product’s life cycle during when the sales curve peaks and starts to decline as profits continue to fall

Decline Stage

The stage of a product’s life cycle during when sales fall rapidly

Product Adoption Process

The stages buyers go through in accepting a product: Awareness, Interest, Evaluation, Trial, and Adoption

Innovators

First adopters of new products

Early Adopters

Careful choosers of new products

Early Majority

Those adopting new products just before the average person

Late Majority

Skeptics who adopt new products when they feel it is necessary

Laggards

The last adopters, who distrust new products

Brand

A name, term, design, symbol, or any other feature that identifies one marketer’s product as distinct from those of other marketers

Brand Name

The part of a brand that can be spoken

Brand Mark

The part of a brand not made up of words

Trademark

A legal designation of exclusive use of a brand

Trade Name

 The full legal name of an organization

Brand Equity

The marketing and financial value associated with a brand’s strength in a market, includes: Brand Name Awareness, Brand Loyalty, Perceived Brand Quality, and Brand Associations

Co-Branding

Using two or more brands on one product

Labeling

Providing identifying, promotional, or other information on package labels

Product Manager

The person within an organization responsible for a product, a product line, or several distinct products that make up a group

Brand Manager

the person responsible for a single brand

Venture Team

A cross-functional group that creates entirely new products that may be aimed at new markets

Line Extension

Development of a product closely related to one or more products in the existing product line but designed specifically to meet somewhat different customer needs

Product Modification

Change in one or more characteristics of a product

Quality Modifications

Changes relating to a product’s dependability and durability

Functional Modifications

Changes affecting a product’s versatility, effectiveness, convenience, or safety

Aesthetic Modifications

Changes to the sensory appeal of a product

New-Product Development Process

A seven-phase process for introducing products, includes: Idea Generation, Screening, Concept Testing, Business Analysis, Product Development, Test Marketing, and Commercialization

Idea Generation

Seeking product ideas that will help organizations to achieve objectives

Business Analysis

Evaluating the potential contribution of a product idea to the firm’s sales, costs, and profits (use a professional (outside) opinion!)

Product Development

Determining if producing a product is technically feasible and cost effective

Test Marketing

Introducing a product on a limited basis to measure the extent to which potential customers will actually buy it

Commercialization

Deciding on full-scale manufacturing and marketing plans and preparing budgets

Product Differentiation

Creating and designing products so customers perceive them as different from competing products

Quality

Characteristics of a product that allow it to perform as expected in satisfying customer needs

Level of Quality

The amount of quality a product processes

Consistency of Quality

The degree to which a product has the same level of quality over time

Product Design

How a product is conceived, planned, and produced, includes: Styling, Functionality, and Usefulness

Styling

The physical appearance of a product

Product Features

Specific design characteristics that allow a product to perform certain tasks

Customer Services

Human or mechanical efforts or activities that add value to a product

Product Positioning

Creating and maintaining a certain concept of a product in customers’ minds

Client-Based Relationships

Interactions that result in satisfied customers who use a service repeatedly over time

Customer Contact

 The level of interaction between provider and customer needed to deliver the service

Price Competition

Emphasizing price as an issue and matching or beating competitors’ price

Non-Price Competition

Emphasizing factors other than price to distinguish a product from competing brands

Pricing Objectives

Goals that describe what a firm wants to achieve through pricing

Profit

May be stated in terms of either actual dollar amounts or a percentage of sales revenues

Return on Investment

Pricing to attain a specified rate of return on the company’s investment is a profit-related pricing objective

Market Share

A product’s sales in relation to total industry sales

Cash Flow

Some companies set prices so they can recover cash as quickly as possible

Status Quo

such as maintaining a certain market share, meeting competitors’ prices, achieving price stability, or maintaining a favorable public image

Product Quality

customers perceived to be of high quality are more likely to survive in a competitive marketplace

Cost-Based Pricing

Adding a dollar amount or percentage to the cost of the product

Cost-Plus Pricing

Adding a specified dollar amount or percentage to the seller’s cost

Markup Pricing

Adding to the cost of the product a predetermined percentage of that cost

Demand-Based Pricing

Pricing based on the level of demand for the product

Competition-Based Pricing

Pricing influenced primarily by competitors’ prices

Price Skimming

Charging the highest possible price that buyers who most desire the product will pay

Penetration Pricing

Setting prices below those of competing brands to penetrate a market and gain a significant market share quickly

Differential Pricing

Charging different prices to different buyers for the same quality and quantity of product

Psychological Pricing

Strategies that encourage purchases based on consumers’ emotional responses, rather than on economically rational ones

Odd-Number Pricing

 The strategy of setting prices using odd numbers that are slightly below whole-dollar amounts

Reference Pricing

Pricing a product at a moderate level and positioning it next to a more expensive model or brand

Bundle Pricing

Packaging together two or more complementary products and selling them for a single price

Everyday Low Prices (EDLPs)

Setting a low price for products on a consistent basis

Customary Pricing

Pricing on the basis of tradition

Product-Line Pricing

Establishing and adjusting prices of multiple products within a product line

Captive Pricing

Pricing the basic product in a product line low, but pricing related items at a higher level

Premium Pricing

Pricing the highest-quality or most versatile products higher than other models in the product line

Price Lining

The strategy of selling goods only at certain predetermined prices that reflect definite price breaks

Price Leaders

Products priced below the usual markup, near cost, or below cost

Special-Event Pricing

Advertised sales or price cutting linked to a holiday, season, or event

Geographic Pricing

Reductions for transportation and other costs related to the physical distance between buyer and seller

F.O.B. Origin

The product price does not include freight charges

F.O.B. Destination

The product price includes freight charges

Discount

A deduction from the price of an item