Chapter Twelve Key Terms Business 101

Product

Anything that an organization offers to satisfy consumer needs and wants

Services

A Product by Any Other Name

Qualities of services

• Intangibility

• Inseparability

• Variability

• Perishability

Pure good example

• Bottle of ketchup

• Pack of socks

Pure services example

• Piano lesson

• Financial consulting 

Core benefit

Consumers buy a core benefit that satisfies their needs

Actual product

Physical goods or the delivered services that provides the core benefit

Augmented product

Additional goods and services provided with the actual product that sharpen the product’s competitive edge

Consumer products

Products purchased for personal use or consumption

Convenience products

Inexpensive goods and services that consumers buy frequently

Shopping products

More expensive products that consumers buy less frequently

Specialty products

Much more expensive products that consumers seldom purchase

Unsought products

Goods and services that hold little interest or even negative interest for consumers

Business products

Products purchased to use either directly or indirectly in the production of other products

Business products examples

• Installations

• Accessory equipment

• Maintenance, repair, and operating products

• Raw materials

• Component parts and processed materials

• Business services

Product differentiation

The attributes that make a good or service different from other products that compete to meet the same or similar customer needs

Quality level

How well a product performs its core functions

Product consistency

How reliably a product delivers its promised level of quality

Product features

The specific characteristics of a product

Customer benefit

The advantage that a customer gains from specific product features

Product line

A group of products that are closely related to each other, either in terms of how they work or the customers they serve

Product mix

The total number of product lines and individual items sold by a single firm

Firms can add new product lines in order to?

Reach new customers

Cannibalization

When a producer offers a new product that takes sales away from its existing products

Brand

A product’s identity—including product name, symbol, design, reputation, and image—that sets it apart from other players in the same category

Brand equity

The overall value of a brand to an organization

Brand name properties

• Catchy, memorable name

• Unique in the industry

Line extensions

Similar products offered under the same brand name

Brand extension

A new product, in a new category, introduced under an existing brand name

Licensing

Purchasing the right to use another company’s brand name or symbol

Cobranding

When established brands from different companies join forces to market the same product

National brands

Brands that the producer owns and markets

Store brands

Brands that the retailer both produces and distributes (also called private-label brands)

Packaging features

• Protects the product

• Provides information

• Facilitates storage

• Suggests product uses

• Promotes the product brand

• Attracts buyer attention

Discontinuous Innovation

Brand-new ideas that radically change how people live

Dynamically Continuous Innovation

Characterized by marked changes to existing products

Continuous Innovation

Features a slight modification of an existing product

The New Product Development Process

1. Idea generation

2. Idea screening

3. Analysis

4. Development

5. Testing

6. Commercialization 

New Product Adoption and Diffusion

The rate of new product spread depends on both individual consumers and the product itself

Product Adoption Categories

• First adopters are risk takers

• Laggards are late to adopt products

• Most adopters fall somewhere between the two

Product Diffusion Rates

• Observability

• Trialability

• Complexity

• Compatibility

• Relative advantage

Observability

Visibility of a product to other potential consumers

Trialability

Ease in which potential consumers sample a new product

Complexity

Ease with which potential consumers easily understand a product

Compatibility

Consistency of a product

Relative advantage

Benefits of the new product in comparison with an existing product

Promotion

Marketing communication is designed to influence consumer purchase decisions through information, persuasion, and reminders

Technology has empowered consumers to choose?

How and when they interact with media

Integrated Marketing Communication

The coordination of marketing messages through every promotional vehicle to communicate a unified impression about a product

Coordinating the Communication

• Coordinating the message starts at the top of the organization

• Information needs to flow top-down, bottom up, and laterally to keep everyone on the same page

Positioning statement

A brief statement that articulates how the marketer would like the target market to envision a product relative to the competition

The creative development ideally leads to?

The big idea

An International Perspective

• Some ideas translate well across cultures; others do not

• Requires careful research

Promotional channels

Specific marketing communication vehicles, including traditional tools, such as advertising, sales promotion, direct marketing, and personal selling, and newer tools such as product placement, advergaming, and internet mini movies

Emerging Promotional Tools: The Leading Edge

• Businesses face greater consumer expectations and empowerment

• Consumers show less tolerance for impersonal corporate communication

• Digital technology continues to change the promotional landscape

The Promotional Mix

• Internet advertising

• Social media

• Native advertising

• Product placement

• Advergaming

• Buzz marketing

• Sponsorships

Advertising

Paid, non-personal communication, designed to influence a target audience with regard to a product, service, organization, or idea

Major media categories

• Broadcast TV

• Cable TV

• Newspapers

• Direct Mail

• Radio

• Magazines

• Outdoor

• Internet

Sales promotion

Marketing activities designed to stimulate immediate sales activity through specific short-term programs aimed at either consumers or distributors

Consumer promotion

Marketing activities designed to generate immediate consumer sales, using tools such as premiums, promotional products, samples, coupons, rebates, and displays

Trade promotion

Marketing activities designed to stimulate wholesalers and retailers to push specific products more aggressively over the short term

Public relations (or PR)

Ongoing effort to create positive relationships with all of a firm’s different publics

Publicity

Unpaid stories in the media that influence perceptions about a company or its product

Personal selling

Person-to-person presentation of products to potential buyers

Sales Process

• Prospect and Qualify

• Prepare

• Present

• Handle Objections

• Close Sales

• Follow-Up

Choosing the Right Promotional Mix: Not Just a Science

• Product Characteristics

• Product Life Cycle

• Target Audience

• Push versus Pull

• Competitive Environment

• Budget