Marketing Final

Why is it so important for companies to develop new product?

To sustain growth, increase revenue, and replace obsolete items

What are the 7 steps in the new product development process?

New product strategy, Idea Generation, Idea Screening, Business Analysis, Development, Test Marketing, Commercialization

What does the New Product Strategy step mean?

Provides general guidelines for generation, screening, and evaluation of new products

What is Idea Generation?

Brainstorming

What is Idea Screening?

Filter through ideas and get rid of the ones that won’t work

What is Development?

Create a working prototype and make a marketing mix

What is Test Marketing?

Pick a geographic area and introduce the product there

What is Commercialization?

Sell in mass quantities, ship to distribution centers, announce

What is the most common reason some products succeed and some fail?

There is not a match between the Market needs and the product

What is diffusion?

How fast the final product moves through the market

What are the 5 stages in the product adoption process?

Awareness, Interest, Evaluation, Trial, Adoption

What are the categories of adopters?

Innovators, Early Adopters, Early Majority, Late Majority, Laggards

What 5 product characteristics affect the rate of product adoption?

Complexity, Compatibility, Relative Advantage, Observability, Trialability

How does Complexity affect the rate of product adoption?

The less complex the better

How does Compatibility affect the rate of product adoption?

The more compatible the better

How does Relative advantage affect the rate of product adoption?

The greater Relative advantage the better

How does Observability affect the rate of product adoption?

The more Observable the better

How does Trialability affect the rate of product adoption?

The greater Trialability, the better

What are the stages of the Product Life Cycle?

Introductory, Growth, Maturity, Decline

What is the Product Life Cycle?

A concept that tracks a product, from birth to death

What is the stage of the Product Life Cycle that if a product will fail, it’s going to fail here?

Introductory phase

What is the phase of the product life cycle where sales start to increase?

Growth Stage

What is the sweet spot of the Product life cycle?

Maturity Stage

What stage of the product life cycle is product death?

Decline Stage

What stage of the Product Life Cycle has the initial heavy profits, and competitors starting to come out?

Growth Stage

What stage of the Product Life Cycle has increasing sales, but at a decreasing rate?

Maturity Stage

What is a Marketing Channel?

A collection of businesses move the product from the producer into the hands of customers

What are the three functions of a marketing channel?

Specialization and Division of Labor, Overcoming Discrepancies, and Providing Contact Efficiency

What are the four types of Discrepancies?

Discrepancy of Quantity, Assortment, Spatial, and Temporal

What does Specialization and Division of Labor mean?

Breaking down labor into smaller pieces and allowing companies to specialize

What is Discrepancy of Quantity?

The number produced is not the number needed

What is Discrepancy of Assortment?

The lack of the items a customer wants

What is Spatial Discrepancy?

The distance between market and product

What is Temporal Discrepancy?

Where the product made is not one the customer is willing to buy

What is Contact Efficiency?

Number of Transactions

What are the different types of Channel Intermediaries?

Retailer, Wholesaler, Agents and Brokers

Which Channel Intermediaries take Title (Ownership) of the Goods?

Retailers and Wholesalers

What types of activities do channel intermediaries perform?

Transactional, Logistical, and Facilitating Functions

What are Transactional Functions?

Sales, buying, selling, negotiating, promotion, risk-taking

What are Logistical Functions?

Sorting, Storing, Assorting, Physically Transporting

What are Facilitation Functions?

Researching, Financing, Grading

What are the 4 most common channel structures for consumer products?

Direct, Retailer, Wholesaler, Agent/Broker

Which Factors influence channel Strategy?

Market Factors, Product Factors, and Producer Factors

What are Market Factors?

Customer Profiles, Consumer or Industrial Profiles, Size of Market, Geographical Location

What is a Customer Profile?

Who, What, Where, When, Why

What is the difference between a Consumer or Industrial channel?

Industrial means Shorter channel

How does size of market affect the channel?

Larger market means longer channel, and vice-versa

How does Geographic Location affect the channel?

The more spread out, the longer the channel

How does Product complexity affect the channel?

The more complex the product, the shorter the channel

How does Product Price affect the channel?

The more expensive the shorter the channel

How does Product Standardization affect the channel?

The more customized the shorter the channel

How does Product Life Cycle affect the channel?

The channel changes over the life cycle

How does Product Delicacy affect the channel?

The more delicate the shorter the channel

How do the Producer resources affect the channel?

The more resources the shorter the channel

How does the Size of the Producer affect the channel?

The larger the producer, the more freedom to choose shorter

How does the Desire for Channel Control affect the channel?

The more desire for control, the shorter the channel

What are the different levels for Distribution Intensity?

Intensive, Selective, and Exclusive

What is the Intensive level of Distribution Intensity?

Product offered everywhere, Convenience Goods

What is the Selective level of Distribution Intensity?

Having the product at some, but not all outlets, Shopping Goods

What is the Exclusive level of Distribution Intensity?

Having the product at one or a few established dealer, Specialty Goods

Why is price such an important element of the marketing mix?

It’s the most flexible element and how consumers percieve quality

How to find Revenue?

The Price X Number of Units Sold

How to find Profit?

The Revenue - Expenses

What is the procedure for setting the right price?

Establish pricing goals, estimate demand, cost, and profits, choose a strategy, and fine-tune with pricing tactics

What are the three categories of pricing objectives?

Profit Oriented, Sales Oriented, and Status Quo

What is the Profit Oriented strategy?

Getting as much profit as possible

What is the Sales Oriented strategy?

Getting as many sales as possible

How do you find Net Profit?

Target ROI - ROI

What is Market Share?

A companies product sales as a percentage of the total market

What is Status Quo Strategy?

Keeping things the same and equal with competition

What is demand?

How much of a good is sold at various prices

What is Elastic Demand?

Demand that will change with the price of the item

If the price decreases…

Total Revenue Increases

What is Ineslastic Demand?

Demand that will not change with the price of an item

What id dynamic pricing?

Price that changes over time to increase revenue

What is Markup pricing?

Marking up the price from the producer to make a profit

How to find Selling Price?

Cost of Item + Markup

How to find Markup?

Selling Price - Cost of the Item

What is Keystoning?

Multiplying the cost by two and using it as a price point

What is Break-Even Analysis?

Calculating the number of sales and profit it would take to break even

How to find Total Variable Cost?

Average Variable Cost per Unit X Units Sold

How to find Total Cost?

Fixed Cost + Total Variable Cost

What are the three Pricing Strategies?

Price Skimming, Penetration Pricing, Status Quo Pricing

What is Price Skimming?

Setting a high Introductory rate, with heavy promotion

What is Penetration Pricing?

Setting a low introductory rate to reach the mass market

What are the advantages for a Penetration Strategy?

Discourages competition, boosts sales, provides profit increase, can justify product expansion

What are the Disadvantages of a Penetration Strategy?

Requires gear for mass production, selling large amounts at low prices, and strategy can fail

What is Status Quo Pricing?

Charging the same price as competitors

What are the advantages of a Status-Quo strategy?

Simplicity and safest route to long-term survival

What are the disadvantages of Status-Quo strategy?

May ignore demand

What other factors affect price?

Stages of product life cycle, competition, distribution strategy, promotion strategy, perceived quality

What is the role of Promotion in the marketing mix?

Informing, Persuading, Reminding, Connecting

What are the elements of the promotional mix?

Advertising, Public Relations, Sales Promotion, Personal Selling, Social Media

What does Advertising do?

Reach the masses

Which element of the promotional mix is impersonal, one way, mass communication paid for by a marketer?

Advertising

What does Public Relations do?

Maintains Image and Educates Customers

Which element of the promotional mix elevates public attitudes, introduces new products, and maintains a positive image?

Public Relations

What does Sales Promotion do?

Stimulates a purchase

What element of the promotion mix is marketing activities meant to stimulate purchasing

Sales Promotion

What does Personal Selling do?

Builds relationships