MKT100 - Final exam

What is a product

a product is anything that can be offered to a market for attention, acquisition use or consumption that might satisfy a need or a want

A good

a physical or tangible offering

A service

intangible offering that doesn’t involve ownership

Convenience good 

A convenience good is inexpensive, highly available and required minimal effort to acquire

A shopping product

a shopping product is something that is purchased infrequently. buyer will want to compare alternatives before purchase

Specialty good

unique and requires special attention to obtain

Unsought good

a product that the consumer is unaware of needing until there is a sudden problem

5 product decisions

product attributes, branding, labelling and logos, product support services

Core product

the key benefit the consumer is wanting from a product

Actual product

the brand name, quality, design features, packaging and a blend of the form and function

Augmented product

the prosuct support after sale services and warranties that are offered with a product

Examples of business to business trading

equipment, maintenance, specialised services, raw materials

product line

a set of closely related product items

Product mix

all product lines and items a company offers 

Stretch down

new product is lower quality and price

Stretch high

new product is higher quality and more expensive

stretch both

new products are both high price high quality and low price and low quality

Stages of the product life cycle

development, intro, growth, maturity and decline

The introduction phase of the product lifecycle

the goal is to get first time customers to try the product

The growth stage of the product lifecycle

aim is to encourage repeat purchases

The maturity stage of the product life cycle

companies will try and sell at many outlets or on discount to reinforce brand loyalty

The decline stage of the product lifecycle

competitors tend to withdraw and there is less product variation released. Companies will try sell all remaining stock

Individual branding decision

each product in the product line is branded differently

Family branding decision

the same branding for multiple products

Manufacturing branding decision

owned by producers and identified with the product at the point of sale

Co-branding decision

two established named brands used together on a product

Licensed branding decision

names or symbols previously created by another company or manufacturer used on the branding of a product

brand value and equity

strong brands build an emotional connection with the customer

Why is new product development important

increases competition, due to the changes in technology and changing consumer lifestyles

What is a service

a result of the application of human efforts to people or objects that is intangible and doesn’t result in ownership of anything

The 4 service characteristics

intangibility, inseparability, perishability, variability

Intangibility

services cannot be seen, tasted, felt, heard or smelt before purchase

The challenge of intangibility

its harder to communicate the value of a service

Inseparability

Services cannot be separated from their providers

Challenges for inseparability

customers must be present at the time of consumption of the service and can’t take it home and services can’t be mass produced

Perishability

Services can’t be stored for later use

Challenges of perishability

hard to balance supply and demand so its difficult to maximise time as unused capicity is lost forever 

Variability

the quality of services depends on who provides them when, where and how

Challenges of variability

picking the right people with the right skills and the quality if difficult to control

the 7 P’s - extended marketing mix

product, price, place, promotion, people, physical evidence, processes

Produce - in services

core and supplementary services

Price - for services

variable to tasks, expertise and resources

Place - for services

direct channel where there is high contact

Promotion - for services

tangible cues that symbolise what service is offered

People - for services 

the service and the provider and co-dependant 

Processes - for services

how the customer is taken through the experience to ensure functional expectations and performance expectations are met

Physical evidence - for services

clues a customer may observe to validate the quality of services and positioning

Mapping the customer experience

checking where expectations aren’t met, unnecessary touch points, points of friction and moments of truth

What is price

the amount of money charged for a product/service that consumers exchange for the benefits of using a product or service 

three main pricing strategies

(1) customer value-based pricing, (2) cost-based pricing and (3) competition-based pricing.

Customer value based pricing

uses buyers’ perceptions of value, not the seller’s cost, as the key to pricing.

Cost based pricing

often product-driven. The company designs what it considers to be a good product, adds up the costs of making the product and sets a price that covers costs plus a target profit. Marketing must then convince buyers that the product’s value at that price justifies its purchase.

Competition based pricing

Setting prices based on competitors’ strategies, costs, prices and market offerings

Pure price competition marketing

marketing research, product development, pricing, advertising and sales promotion play little or no role. Thus, sellers in these markets do not spend much time on marketing strategy.

Monopolistic competition - marketing

many buyers and sellers who trade over a range of prices rather than a single market price. Sellers try to develop differentiated offers for different customer segments and, in addition to price, freely use branding, advertising and personal selling to set their offers apart

monopoly

In a regulated monopoly, the government permits the company to set rates that will yield a ‘fair return’. Non-regulated monopolies are free to price at what the market will bear

Price elasticity of demand

a measure of the sensitivity of the customer to the price of the products offered

New product pricing strategies

the price set for a new product depending on the market the product is trying to reach

Price skimming

Setting a high price for a new product to skim maximum revenue from the segments willing to pay the high price; the company makes fewer but more profitable sales.

Penetration pricing

Setting a low price for a new product in order to attract a large number of buyers and a large market share

Differential pricing strategy

different prices to different buyers for the same quality and quantity of product included negotiated and secondary pricing

Psychological pricing

an attempt to influence a customers perception of price to make a products price more attractive

examples of psychological pricing

reference, bundle, odd-even, prestige

6 steps for establishing prices

develop price objective, assess target market evaluation of price, evaluation of competitors prices, selection of basis for pricing, choose pricing strategy then determine on a price

What are the 5 C’s of pricing

company objectives, competition, costs, customers, channel members

Supply chain

A system of efficiently and effectively producing, making and getting products to end-users

Supply chain management

Managing upstream and downstream value-added flows of materials, final goods and related information among suppliers, the marketing organisation, resellers and final consumers

Marketing logistics

The tasks involved in planning, implementing and controlling the physical flow of materials, final goods and related information from points of origin to points of consumption in order to meet customer requirements at a profit

Value delivery network

The network made up of the marketing organisation, suppliers, distributors and, ultimately, customers who partner with each other to improve the performance of the entire system.

Marketing channel

A set of interdependent organisations involved in the process of making a product or service available to users

Why use a intermediary 

their contacts, experience, specialisation and scale of operation, intermediaries usually offer the firm more than it can achieve on its own

the role of a marketing intermediary

to transform the assortment of products made by producers into the assortments wanted by consumers

time utility

making products available at the time consumers want to purchase them

Place utility

making products available at the locations the consumers want them

Possession utility

making it easier for the consumers to acquire the product

Form utility

customising products to fit consumers needs

Exchanging efficancies

making transactions as cheap as possible by establishing and managing the exchange process

Channel levels

A layer of intermediaries who perform some work in bringing the product and its ownership closer to the final buyer.

Crucial functions marketing channel members perform 

information, promotion, facilitating exchange, financing and risk taking

Channel conflict

Disagreements among marketing channel members on goals, roles and rewards – that is, on who should do what and for what rewards

Vertical marketing system

A distribution channel structure in which producers, wholesalers and retailers act as a unified network; one channel member owns the others, has contracts with them or wields so much power that all channel members cooperate.

Horizontal marketing system

A channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity.

Conventional marketing system

A channel consisting of one or more independent producers, wholesalers and retailers, each a separate business seeking to maximise its own profits, perhaps even at the expense of profits for the system as a whole

Administered vertical marketing system

A vertical marketing system that coordinates successive stages of production and distribution, not through common ownership or contractual ties but through the size and power of one of the partie

Contractual vertical marketing system

A vertical marketing system in which independent firms at different levels of production and distribution join together through contracts

Multichannel distribution system

a single firm sets up two or more marketing channels to reach one or more marketing segments.

Disintermediation 

The removal of marketing channel intermediaries by goods or service producers, or the displacement of traditional resellers by new and different types of intermediaries

Intensive distribution

A distribution strategy in which companies stock the product in as many outlets as possible

selective distribution

A distribution strategy in which a company uses more than one but fewer than all of the intermediaries that are willing to carry the company’s products.

Exclusive distribution

A distribution strategy in which a company gives only a limited number of dealers the exclusive right to distribute the company’s products in the dealers’ territories.

Retailing

All activities involved in selling goods or services directly to final consumers for their personal, non-business use

Shopper market

Using the entire marketing process, from product to logistics and promotion, to extend brand equity to ‘the last mile’ and encourage favourable point-of-purchase decisions.

Omni-channel buying

little distinction between in-store and online shopping and for whom the path to a retail purchase runs across multiple channels]

A retailer

A business whose sales come primarily from retailing

Category killer

A giant specialty store that carries a very deep assortment of a particular line.

Classifications of retail stores

amount of service offered, product line sold, relative prices charged and how they are organised

Specialty stores

carry a narrow product line with deep assortment

Department stores

carry several product lines each with a different department

Supermarkets

A relatively large low cost low volume high volume and self service operation designed to serve the consumers needs for grocery and household products

Convenience stores

small shops in residential areas open long hours that have a high prices for what they sell