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Core customer value
The basic problem-solving benefits that consumers are seeking.
SKU
Stock-keeping unit; allows vendors to track inventory.
Product line
A group of associated items that consumers use together or think of as part of a group of similar products.
Product mix
The complete set of all products offered by a firm.
Breadth
The number of product lines offered by a firm; also known as variety.
Depth
The number of categories within a product line.
Convenience products/services
Products or services for which the consumer is not willing to spend effort to evaluate prior to purchase.
Shopping products/services
Products or services for which consumers will spend time comparing alternatives.
Specialty products/services
Products or services toward which the customer shows a strong preference and for which he or she will expend considerable effort to search for the best suppliers.
Unsought products/services
Products or services consumers do not normally think of buying or do not know about.
Brand elements
Components that make a brand including brand name, URLs, logos, symbols, characters, slogans, and jingles/sounds.
Manufacturers/national brands ownership
Brands owned and managed by the manufacturer.
Private labels/store brands ownership
Brand developed and marketed by a retailer, available only from that retailer.
Brand's value to customers and firms
Facilitates purchases, establishes loyalty, protects from competition, affects market value, and can be legally protected.
Brand equity
Assets and liabilities linked to a brand that add to or subtract from the value provided by the product or service.
Brand awareness
Measures how many consumers in a market are familiar with the brand and what it stands for.
Perceived value
The relationship between a product's or service's benefits and its cost.
Brand associations
Mental links that consumers make between a brand and its key product attributes.
Brand loyalty
Occurs when a consumer repeatedly buys the same brand's product or service over time.
Family brand naming strategy
A firm's own corporate name used to brand its product lines and products.
Individual brand naming strategy
The use of individual brand names for each of a firm's products.
Brand extensions
The use of the same brand name for new products being introduced to the same or new markets.
Line extensions
The use of the same brand name within the same product line, increasing product line depth.
Brand dilution
Occurs when a brand extension adversely affects consumer perceptions about the core brand.
Brand licensing
A contractual arrangement allowing one firm to use another's brand name or logo for a fee.
Co-branding
Marketing two or more brands together on the same package or promotion.
Repositioning
A strategy to change a brand's focus to target new markets or realign with changing preferences.
Primary packaging
The packaging the consumer uses, such as a toothpaste tube.
Secondary packaging
The wrapper or carton that contains the primary package.
Labeling
Provides information the consumer needs for purchase and consumption decisions.
Innovation
The process of transforming ideas into new products and services.
Pioneers
New product introductions that establish a completely new market or radically change competition.
Diffusion of innovation
The process of how the use of an innovation spreads in a market group over time.
Innovators
Buyers who want to be the first to have a new product or service, representing about 2.5% of the population.
Early adopters
The second group to use a product or service innovation, comprising about 13.5% of the population.
Early majority
About 34% of the population; they wait until bugs are worked out before purchasing.
Late majority
The last group of buyers to enter a new product market, also about 34% of the population.
Laggards
Consumers who avoid change and rely on traditional products, comprising about 16% of the population.
The Product Development Process
Includes idea generation, concept testing, product development, market testing, product launch, and evaluation of results.
Sources of new product ideas
Can include internal R&D, R&D consortia, licensing, brainstorming, outsourcing, competitors' products, or customer input.
R&D consortia
Groups of firms and institutions exploring new ideas or obtaining solutions for new products.
Concept testing
Presenting a concept statement to potential buyers to obtain their reactions.
Product development
The process of balancing engineering, manufacturing, marketing, and economic factors to develop a product.
Prototype
The first physical form of a new product, which may differ from the final version.
Alpha testing
Determining whether a product meets design specifications, usually done in R&D.
Beta testing
Having potential consumers examine a product prototype in a real use setting.
Premarket testing
Evaluating potential customer interest before a product is launched.
Test marketing
Introducing a new product to a limited area to gauge success before a full launch.
Product Life Cycle
Stages products go through as they enter, establish, and exit the marketplace.
Introduction stage
The stage when innovators start buying the product.
Growth stage
Stage when acceptance grows, demand increases, and competitors emerge.
Maturity stage
Stage when industry sales peak and firms rejuvenate products.
Decline stage
Stage when sales decline and the product exits the market.
Shape of PLC
Theoretical bell curve shape of the product life cycle.
Service-product continuum
Range from a pure service to a pure good, most examples lie in the middle.
Differences between services and goods
Services are inseparable, intangible, perishable, and heterogeneous.
Price
The overall sacrifice a consumer makes to acquire a product or service.
Price & value
Price decisions create strategic opportunities to create value.
5 C’s of pricing
Company objectives, customers, costs, competition, channel members.
Profit orientation
Objective focusing on target profit pricing, maximizing profits, or target return pricing.
Sales orientation
Objective based on increasing sales to benefit the firm more than increasing profits.
Competitor orientation
Objective measuring the firm against its competition.
Competitive parity
Setting prices similar to major competitors.
Customer orientation
Objective measuring the firm according to whether customer needs are met.
Demand curve
Shows how many units will be demanded at specific prices.
Elastic demand
Refers to price-sensitive markets; large changes in quantity demanded with small price changes.
Inelastic demand
Refers to price-insensitive markets; small changes in price do not significantly affect demand.
Income effect
Change in quantity demanded due to changes in consumer income.
Substitute products
Products with negatively related demand changes.
Complementary products
Products whose demand rises or falls together; positively related demand curves.
Dynamic pricing
Charging different prices based on customer type, time, and demand.
Fixed costs
Costs remaining at the same level regardless of production volume.
Variable costs
Costs that vary with production volume, primarily labor and materials.
Break-even point
Point where units sold generate enough revenue to equal total costs.
Reference price
Price against which buyers compare the actual selling price to facilitate evaluation.
Everyday low pricing (EDLP)
A strategy emphasizing the continuity of retail prices between regular and discount prices.
High-low pricing strategy
Pricing strategy that often features sales during which prices are temporarily reduced.
Price skimming
Selling a new product at a high price, then lowering it after market saturation.
Penetration pricing
Setting an initial low price to build sales rapidly and deter competition.
Leader pricing
Pricing tactic to build store traffic by aggressively pricing a regularly purchased item.
Loss leader pricing
Lowering the price below store cost to drive traffic.
Bait and switch
Deceptive practice of luring customers with low prices, then pressuring them to buy higher-priced items.
Predatory pricing
Setting very low prices to drive competitors out of business; illegal.
Price discrimination
Selling the same product at different prices to different resellers or consumers; some forms are illegal.
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