Marketing - Exam 3 review

How are services different from products?

4 WAYS: intangibility, inseparability, variability, perishability

Intangibility

Services cannot be touched or physically possessed

EX: haircut, place flight, copyright

Variability

service quality can vary depending on who provides it and when its provided

EX: fruit size, weather patterns

Inseparability

Services are produced and consumed at the same time

EX: hospital and food, school and sport, haircut and makeup

Perishability

Services cannot be stores or later use

EX: stuff that expires, an empty airplane seat cannot be saved

What is a product?

Anything that can be offered in a market for attention, use, or consumption that satisfies a need or want

Consumer products

Products purchased by individual consumers

EX: car from dealership

durable

long last stuff (ac unit)

nondurable

stuff not lasting for a while (local newspaper)

Convenience products

Items bought frequently, low price, minimal effort to purchase

examples: toothpaste, snacks

Shopping products

consumers compare price, quality and style

example: different kinds of JBL speakers

Speciality products

unique characteristics or strong brand loyalty

example: luxury cars, designer brands

unsought products

Products consumers don't normally think about buying

Example: life insurance, funeral services

Industrial products

products purchased for business use/production rather than personal consumption

example: car builders buying car parts

(MANUFACTURING PRODUCT)

What is a Brand?

things that identifies one seller's good or service unique from those of other sellers.

Examples: name, logo, packaging, design (barbie, adidas)

Why is branding important

it provides info to customers, creates reliability and trust, act as status symbols, encourage customer loyalty, allow companies to charge premium prices, help differenciate products from competitors

Individual Branding

Each product has its own brand name.

EX: P&G owns different brands, but they have their own packaging LIKE……Tide Detergent, Pampers Diapers, Pantene Shampoo

Family Brand

multiple products share the same brand name

example: Apple products

National Brand

Manufacturer's brand thats sold nationwide

example: Tylenol

Private brand

brand owned by retailers (store brands)

example: Kirkland (costco only) or walgreens

Brand Licensing

Allowing another company to use a brand name for a fee.

Example: MCD and Kpop demon hunters with kids meals

Co-Branding

Two brands used together on one product

example: DORITOS LOS TACOSSS

Ingredient Branding

Highlighting a branded component inside a product

example: case for a laptop is the ingredient

Brand Line extension

new variations within the same product category

Example: new flavors of a RedBull energy drink (RedBull category)

Brand Category extension

using an existing brand to enter a new product category

example: Crest toothpaste, floss, white strips (teeth category)

What is Innovation?

something new or different that is initially purchased by a small group and then spreads throughout populations

EX: Starbucks reusable cups, needohs

The Product Life Cycle (PLC)

Introduction, Growth, Maturity, Decline

Introduction PLC

product launched

low sales

high promotion costs

Growth PLC

Sales increase quickly

profits grow

competitors enter

Maturity PLC

sales stablize

competition increases

marketing focuses on differentiation

Decline PLC

Sales decrease

product may be discontinued

What is Price?

the amount consumers must exchange to receive a product/service

its the only element of marketing mix that produces revenue, other elements create cost

EASIEST P TO ATTRACT ATTENTION!!!

Pricing Objectives

Sales objective (increase market share)

Profit objective (maximize profit)

Competition objectives (match/beat competitors)

Cost based pricing

Price is determined based on production costs plus a markup price

Value based pricing

price is based on customer perceived worth rather than just cost

Profit Formula

(Price × Demand) – (Fixed costs) – (Variable costs × Demand)

Break-even analysis

Determines when revenue equals total costs

Formula: fixed costs / (Price - variable cost)

BEP (units)

total fixed costs / contribution per unit to fixed costs

contribution per unit to fixed costs

selling price per unit - variable cost per unit

BEP (in $)

total fixed costs / (variable cost per unit / price per unit)

Demand curve

Shows relationship between price and quantity demanded.

higher price = lower demand

lower price = higher demand

Price Elasticity

measures how much demand changes when price changes

formula: % change in demand / % change in price

large changes in price will cause small changes in demand

% change

old price - new price / new price

Marketing skimming pricing

high intial price

target customers willing to pay more

often used with new techology products

market-penetration pricing

low inital price

designed to quickly gain market share

Product line pricing

setting prices for an entire product line rather than a single product

(line of a product in different versions (REDBULL EXAMPLE)

optional-product pricing

pricing optional add ons for the main product

EX: screen protector for iphone

captive product pricing

product that must be used with another product

Example: printers and ink cartridges

Product bundle pricing

selling multiple products together for a lower combined price

Example: sephora perfume bundles, MCD $6 meal deal

Segmented pricing

selling the same product at different prices to different customers

EX: Depop (making offers)

Dynamic pricing

prices change continously based on customer demand or situation

EX: ticketmaster resalers, needoh resellers, uber

What is promotion?

coordination of marketing communication efforts to influence attitudes or behavior 

EX: BOGO, free samples, loyalty rewards

Promotion mix elements

1. advertising

2. content creation

3. direct marketing

4. public relations

5. sale promotion

Advertisment

any paid form of nonpersonal communication, presentation and promotion of ideas, goods, services by identified sponsor

must EDUCATE, EMPHASIZE and ENSURE target audience

key tool of promotion

Content creation

UGC and social media marketing

direct marketing

Direct communications with carefully targeted individual consumers
Narrow ads to a specific audience/person

EX: period products for women

Public Relations (PR)

building good relations with the company's publics through favorable publicity, a good corporate image and effective handling of unfavorable news

EX: press release, sponsorship marketing, PR packages

Sales promotion

short-term incentives to encourage purchase or sales of a product or service

EX: bonus packs, samples, cashbacks, dicounts, free trails, coupons

Marketing Channel

set of organizations involved in making a product or service available for use or consumption

Include: manufacturer, wholesaler, distributor, retailer, customer

Direct distribution channel

producer —> consumer

EX: farmers market: from seller to customer

LULULEMON: sells products from its stores

indirect distribution channel

producer —> intermediaries → customer

• it directs you to a seller/store/market 

EX: The 3M website 

Hybrid distribution channel

Combines direct and indirect selling methods.

EX: Nike

4 types of intermediaries

wholesalers, distributors, agents/brokers, retailers

Intensive distribution

product is available in as many outlets as possible

example: ramen packets

Selective distribution

product sold in a limited number or stores

example: FORD car dealership/ CarMax

exclusive distribution

Product only sold through only one or a few retailers

Example: Kirkland (costco products) or Tiffany and co. Jewelry