Learn: Marketing 3305 Pagel Exam 3

What are the attributes of a product?

features, functions, benefits, and uses as well as brand and packaging

tangible vs. intangible products

something we can see, touch ,smell, hear or taste vs. services, ideas, people, and places

Layers of the Product Concept

core, actual augmented

core product

all the benefits the product will provide for consumers or business customers. (ex. benefit of car is transportation)

actual product

the physical good or the delivered service that supplies the desired benefit.

augmented product

the actual product plus other supporting features such as a warranty, credit, delivery., installation, and repair service after the sale.

classification of consumer products

convenience, shopping, specialty, and unsought products;

durable vs. non-durable

consumer products, that provide benefits, over a long period of time, such as cars, furniture, and appliances vs. consumer products that provide benefits for a short time because they are consumed (such as food) or are no longer useful (such as newspapers).

under what conditions are customers more likely to purchase durable goods?

high- involvement (need warranties, more customer support)

under what conditions are customers more likely to purchase non-durable goods?

low-involvement "don't sweat the details"

convenience products

a consumer good or service that is usually low priced, widely available, and purchased frequently with a minimum of comparison and effort (includes staple, impulse, and emergency products) ex. grocery store items

staple products

basic or necessary items that are available almost everywhere; a low-cost good that is consumed quickly and replaced frequently

impulse products

a product people often buy on the spur of the moment

emergency products

products we purchase when we're in dire need

shopping products

goods or services for which consumers spend considerable time and effort gathering information and comparing alternatives before making a purchase ex. buying a laptop

specialty products

goods or services that has unique characteristics and is important to the buyer and for which he or she will devote significant effort to acquire ex. hybrid vehicles, rolex watch

unsought products

goods or services for which a consumer has little awareness or interest until the product or a need for the product is brought to his or her attention ex. retirement plans, coffin

classification of B2B products

equipment, maintenance, repair, and operating, raw materials, processed materials, and special services, component parts.

equipment

expensive goods that an organization uses in its daily operations that last for a long time ex. heavy equipment/machinery or light or accessory equipment like computers or photocopy machine

maintenance, repair, and operating (MRO) products

goods that a business customer consumes in a relatively short time ex. maintenance-light bulbs, mops; operating supplies-computer paper, oil for machinery

raw materials

products of the fishing, lumber, agricultural, and mining industries that organizational customers purchase to use in their finished products

processed materials

products created when firms transform raw materials from their original state

specialized services

services that are essential to the operation of an organization but are not part of the production of a product ex. fixing machinery that make products

component parts

manufactured goods or subassemblies of finished items that organizations need to complete their own products ex. car needs a battery

Types of product innovations and the degree to which consumers must adapt to these innovations

Innovations differ in their degree of newness, and this helps determine how quickly the target market will adopt them.- (high to low: continuous, dynamically continuous, discontinuous.

continuous innovation

a modification of an existing product that sets one brand apart from its competitors ex. knockoff (slight modification)

dynamically continuous innovation

a change in an existing product that requires a moderate amount of learning or behavior change (ex. records to CD's to MP3 player)

discontinued innovation

a totally new product that creates major changes in the way we live. (ex. invention of airplane)

new product development (NPD)

the phases by which firms develop new products, including idea generation, product concept development and screening, marketing strategy development, business analysis, technical development, test marketing, and commercialization

Phases of New Product Development

Phase 1: idea generation

Phase 2: product concept development and screening

Phase 3: Marketing Strategy Development

Phase 4: Business Analysis

Phase 5: Technical Development

Phase 6: Test Marketing

Phase 7: Commercialization

idea creation

a phase of product development in which marketers use a variety of sources to come up with great new product ideas that provide customer benefits and that are compatible with the company mission.

product concept development and screening

the second step of product development in which marketers test product ideas for technical(does it work) and commercial success(is it marketable)

marketing strategy development

Marketers must identify a target market, estimate its size, and determine how they can effectively position the product to address the target market's needs.

technical development

the step in the product development process in which company engineers refine and perfect a new product

prototypes

test versions of a proposed product

market test

testing the complete marketing plan in a small geographic area that is similar to the larger market the firm hopes to enter

commercialization

the final step in the product development process in which a new product is launched into the market; requires full scale production, distribution, advertising, and sales promotion- the works.

product adoption

the process by which a consumer or business customer begins to buy and use a new good, service, or idea

diffusion

the process by which the use of a product spreads throughout a population

tipping point

in the context of product diffusion, the point when a product's sales spike from a slow climb to an unprecedented new level

Stages of product adoption

1. Awareness

2. Interest

3. Evaluation

4. Trial

5. Adoption

6. Confirmation

Awareness of the product

massive advertising

initial interest in the product

prospective adopter begins to see how a new product might satisfy an existing or newly realized need

evaluation of the product

weight the costs and benefits of the new product; how product can benefit customers

trial

first use of product; sampling can be used

adoption of product

prospective customer buys the product

confirmation

reinforce the customer's choice through advertising, sales promotion, and other communications

Adopter Categories

innovators, early adopters, early majority, late majority, laggards

innovators

The first segment (roughly 2.5 percent) of a population to adopt a new product.

early adopters

those who adopt an innovation early in the diffusion process but after the innovators

early majority

those whose adoption of a new product signals a general acceptance of the innovation

late majority

the adopters who are willing to try new products when there is little or no risk associated with the purchase, when the purchase becomes an economic necessity, or when there is social pressure to purchase

laggards

the last consumers to adopt an innovation

characteristics of products that influence the rate of adoption

relative advantage, compatibility, complexity, trialability, observbility

relative advantage

the degree to which a consumer perceives that a new product provides superior benefits

compatibility

the extent to which a new product is consistent with existing cultural values, customs, and practices

complexity

the degree to which consumers find a new product or its use difficult to understand

trialability

the ease of sampling a new product and its benefits

observability

how visible a new product and its benefits are to others who might adopt it

What is the process of product management?

1) Develop product objectives

2) Design Product Strategies

3) Make tactical Product Decisions

4) Organize for product management

Objectives and strategies for individual products

1) Introduce new products (ex. : leverage brand name)

2) Regional product: introduce nationally

3) Mature product: Build enthusiasm for product

Product line vs. product mix

a firm's total product offering designed to satisfy a single need or desire of target customers (number of separate items within the same category) vs. the total set of all products a firm offers for sale (number of different product lines)

product line length

determined by the number of separate items within the same category

Objectives and Strategies for multiple products

product planning means developing the product line and product mix strategies to encompass multiple offerings.

product line extensions

adding more brands/models

stretching strategy

add new items to line

Types:

1) upward- adds new items (higher priced entrants that claim better quality or offer more bells and whistles.

2) Downward line stretch- augments a line when it adds items at lower end. (careful not to blur lines between lower and higher priced items)

3) two-way stretch- adds products at both the upper and lower ends.

filling-out strategy

adding sizes or styles that were not previously available in a product category

Contracting strategy

reduce the size of product line or drop items if not profitable to company

Risk of cannibalization

the loss of sales of an existing brand when a new item is introduced in a product line or product family. (customers switch to new product, leaving older product in dust)

product mix width

the number of different product lines the firm produces (don;t put eggs all in one basket)

total quality management (TQM)

a management philosophy that focuses on satisfying customers through empowering employees to be an active part of continuous quality improvement

product life cycle (PLC)

a concept that explains how products go through four distinct stages from birth to death: introduction, growth, maturity, and decline

introduction stage

no profits because the company is recovering R&D costs and heavy spending for advertising and promotional efforts (to get first time buyers to try product)

growth stage

profits rapidly increase; marketing goal is to encourage brand loyalty by convincing the market that this brand is superior to others

maturity stage

sales peak and profit margins narrow; firms may resort to price reductions and reminder advertising to maintain market share

decline stage

market shrinks and sales fall; decrease advertising and other marketing communication to cut costs and reduce prices if if product can still remain profitable

Branding

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

brand equity

the value of a brand to an organization

trademark

the legal term for a brand name, brand mark, or trade character; trademarks legally registered by a government obtain protection for exclusive use in that country

sub-branding

creating a secondary brand within a main brand that can help differentiate a product line to a desired target group

brand dilution

a reduction in the value of a brand typically driven by the introduction of a brand extension that possesses attributes that adversely contrast with the current attributes consumers associate with the brand

brand extension

a new product sold with the same brand name as a strong existing brand

Branding strategies

Cobranding, licensing, generic brands, national and store brands, individual brands vs family brands

family brand

a brand that a group of individual products or individual brands share (umbrella brand strategy)

national or manufacturer brands vs. private-label brands

brands that the product manufacturer owns vs. brands that a certain retailer or distributor owns and sells

Generic Branding

a strategy in which products are not branded and are sold at the lowest price possible

licensing

an agreement in which one firm sells another firm the right to use a brand name for a specific purpose and for a specific period of time

cobranding

an agreement between two brands to work together to market a new product

ingredient branding

a type of branding in which branded materials become "component parts" of other branded products (ex. butterfinger's in DQ's blizzards)

universal product code (UPC)

a set of black bars or lines printed on the side or bottom of most items sold in grocery stores and other mass-merchandising outlets that correspond to a unique 10-digit number (national system of product identification)

brand manager

an individual who is responsible for developing and implementing the marketing plan for a single brand

product category managers

individuals who are responsible for developing and implementing the marketing plan for all the brands and products within a product category

market manager

an individual who is responsible for developing and implementing the marketing plans for products sold to a particular customer group

price

the assignment of value, or the amount the consumer must exchange to receive the offering

Process of establishing price levels

Step 1: Set Price objectives

Step 2: Estimate Demand

Step 3: Determine costs

Step 4: Examine Pricing Environment

Step 5: Choose a Pricing Strategy

Step 6: Develop Pricing Tactics

Setting the Price Objectives

-profit

-sales

-market share

-competitive effect

-customer satisfaction

-image enhancement

profit based pricing objective

the focus is on a target level of profit growth or a desired net profit margin; marketers develop pricing strategies that maximize the profits of the entire portfolio rather than focusing on the costs or profitability of each individual product.

Desired market share

pricing strategy to maximize sales or to increase market share (don't want "price wars" as sometimes competitors can beat you and take more of your market share)

competitive effect

pricing levels set to dilute marketing efforts of competition.

customer satisfaction

quality-focused firms; believe that profits result from making customer satisfaction the primary objective and want to retain customers in long term (brand loyalty)