Marketing Exam #3

Product

Everything, both favorable and unfavorable, that a person receives in an exchange.

Good

A tangible, physical entity

Service

The intangible result of the application of human and mechanical efforts to people or objects.

Idea

A concept, philosophy, image, or issue

The Core Product

The product's fundamental utility or main benefit.
- Addresses the basic need of the consumer.
- Ex. Sports drink -- hydrates

Supplemental Features

Provide the added value or attributes in addition to a product's core utility or benefit
- Installation
- Delivery
- Training
- Financing
Helps differentiate one product brand from another

What are Convenience Products?

These are consumer products and services that the customer usually buys frequently, immediately, and with a minimum comparison and buying effort.

Convenience Product Advantages

Relatively inexpensive, frequently purchased items for which buyers exert minimal purchasing effort
- Requires little to no search
- Many retail outlets
- Low per-unit gross margins/price points
- Heavy brand promotion
- Packaging important
- Reliance on self-service
- Usually low price points

What are Shopping Products?

These are consumer products and services that the customer compares carefully on suitability, quality, price, and style.

Shopping Products Advantages

Items for which buyers are willing to expend considerable effort in planning and making purchases.
- More extensive search
- Available substitutes
- Less frequent purchase

Shopping Product Strategic Considerations

- No/little brand loyalty
- Fewer retail outlets than convenience
- Lower inventory turnover
- Channel members demand higher gross margins
- Personal Selling

What are Speciality Products?

These are consumer products and services with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort.

Speciality Product Advantages

Items with unique characteristics that buyers are willing to expand considerable effort to obtain.
- Require extensive search
- Are generally higher price points
- Have no ready substitutes

Speciality Products Strategic Considerations

- Limited retail outlets
- Lower inventory turnover
- High gross margins

What are Unsought Products?

These are consumer products that the consumer does not know about or knows about but does not normally think of buying.
- Bought a product that you didn't plan on buying

Unsought Products

Products purchased to solve a sudden problem, products of which customers are unaware, and products that people do no necessarily think of buying.
- No search
- Price not important
- Purchase compelled

What is an Industrial Product?

These are products purchased for further processing or for use in conducting a business.

Product Item

A specific version of a product that can be designated as a distinct offering among an organization's products.

Product Line

A group of closely-related product items.
- The number of product items in a product line.
- Shallow or deep
ex. Doritos

Product Line Extension

Adding additional products to an existing product line in order to compete more broadly in the industry.

Product Mix

All products that an organization sells.

Product Mix Width

The number of product lines an organization offers.
- Diversifies risk
- Capitalizes on established reputations

The progression of a product through four stages:

1. Introduction
2. Growth
3. Maturity
4. Decline
As a product moves through its life cycle, strategies must be periodically evaluated and possibly changed.

Product Life Cycle

A concept that provides a way to trace the stages of a product's acceptance, from its introduction (birth) to its decline (death).

Introductory Stage

- High failure rates
- Little competition
- Frequent product modification
- Limited distribution
- High marketing and production costs
- Negative profits
- Promotion focuses on awareness and information
- Intensive personal selling to channels (usually to trade)

Growth Stage

- Increasing rate of sales
- Entrance of competitors
- Market consolidation
- Initial healthy profits
- Promotion emphasizes brand ads
- Goal is wider distribution
- Prices normally fall
- Development costs are recovered

Maturity Stage

- Declining sales growth
- Saturated markets
- Extended product line
- Stylistic product changes
- Heavy promotions to dealers and consumers
- Marginal competitors drop out
- Prices and profits fall
- Niche marketers emerge

Decline Stage

- Long-run drop in sales
- Large inventories of unsold items
- Elimination of all nonessential marketing expenses

What is a Brand?

A name, term, symbol, design, or combination thereof that identifies a seller's products and differentiates them from competitors' products.

Benefits of Branding

Sellers:
- Exclusive rights
- Premium prices
- Facilitates new introductions
- More trade leverage
- Encourages repeat purchases

Consumers:
- Helps identify products
- Facilitates evaluation
- Psychological rewards

Manufacturer's Brand

The brand name of a manufacturer.

Private Brand

A brand name owned by a wholesaler or a retailer.

Individual Brand

Using different brand names for different products.

Family Brand

Marketing several different products under the same brand name.

What is a Brand Extension?

When an organization used on of its existing brands to brand new product in a different product category.
ex. Harley Davidson - fragrance

Co-Branding

Two or more well-known brands are combined with each other expecting the other brand name will strengthen purchase intentions.
- Both will profit somehow
ex. KFC and TacoBell in Antigo

Branding

A brand is a set of associations that are linked to a person, product, a division, or company.
These associations help customers understand:
- what the brand is
- why it is potentially relevant to them
- how it is different or similar to other options

Integrity of a Brand

A brand is a promise. A promise to achieve certain results, deliver a certain experience, or act in a certain way. A promise that is conveyed by everything people see, hear, touch, taste or smell about your business.

What is a Personal Brand?

"Your personal brand is the powerful, clear, positive idea that comes to mind whenever other people think of you. It's a professional alter ego designed for the purpose of influencing how others perceive you, and turning that perception into opportunity."

Positioning Statement

A corporate statement that defines the benefit of your product / service to your target customer, and states how you're different from your competitors.
- Capture what you are and who you are.
ex. "For (target market and need), the (product, service, brand name) is a (product/service class or category) that (statement of unique attributes or benefits provided)."

Slogan

A tagline or slogan is a catchy advertising message about how you want to be perceived by your target customer.
- It succinctly delivers your core message.
- Should be a couple words.

Logo

A graphic mark or symbol commonly used by commercial enterprises, organizations and even individuals to aid and promote instant public recongnition.

Packaging

Is a component of a product that refers to any container in which it is offered for sale and on which label information is conveyed.

Brand Equity

Is the added value a given brand name gives to a product beyond the functional benefits provided.

An Effective Brand Name

- easy to pronounce, recognize and remember
- describes the product qualities, and benefits
- Is legally protectable

Naming Strategies

- Corporate or family brand
- all have same brand
- Product line brands
- Individual brands
- all have different brands

Label

Identifies the product or brand, who made it, where and when it was made, how it is to be used, and package contents and ingredients.

Service

An intangible product that often involves human or mechanical effort.
- account for more than 60% of GDP worldwide

Service Characteristics

- Intangibility
- incapable of assessment by customers' sense of taste, touch, sight, smell, or hearing
- Inseparability
- production and consumption occur simultaneously
- Perishability
- services are created as needed and cannot be stored for use in
the future
- ex. flights and hotels
- Heterogeneity
- each service is unique making the creation of consistency a
problem

Search Qualities

Tangible attributes (of a product) such as color, style, size, feel, or fit that can be judged before the purchase of a product.

Experience Qualities

Attributes, such as taste, satisfaction, or pleasure, that can be assessed only during purchased and consumption of a service.

Credence Qualities

Attributes that customers may be unable to evaluate even after purchasing and consuming a service.

What is Service Quality?
The Customer Gap

Service quality is the customer's judgement of overall excellence of the service provided in relation to the quality that was expected.

Reliability

- Perform dependability and accurately

Responsiveness

- Willingness to help customers and provide prompt service

Assurance

- Ability to inspire trust and confidence

Empathy

- Caring, individualized attention

Tangibles

- Appearance of physical facilities, equipment, personnel, and communications material

Service quality assessments are formed on judgments of:

- process quality

Service Quality

Service quality assessments are formed on judgments of process and outcome quality.
- you want both process and outcome quality.

Service Recovery

1. Listen to the customer
2. Provide a fair solution
- Distributive fairness
- Procedural Fairness
3. Resolve problems quickly
- the longer it takes to resolve service failure the more irritated the
customers are
- It is in the firms best interest to solve problems quickly
4. Increase Service Recovery

New Products

80% of new products fail
- risks if you introduce new product vs if you don't

Acquisition

Refers to the buying of a whole company, a patent, or a license to produce someone else's product.

New Product Development

Refers to original products, product improvements, product modifications, and new brands developed from the firm's own research and development.

New Product Development Process

1. Idea Generation
2. Idea Screening
3. Concept Test
4. Business Analysis
5. Prototyping
6. Test Marketing
7. Commercialization
8. New Product

Idea Generation

Is the systematic search for new-product ideas
- involves developing a pool of concepts as candidates for new products

Brainstorming

Groups work together to generate ideas
- No idea can be immediately dismissed

Competitors Product

"Me too" or copycat products

Customer Input

- As much as 85% of new business to business products come from customers
- Lead users modify existing products according to their own specific needs

Idea Screening

The first filter in the product development process, which eliminates ideas that are inconsistent with the organization's mission, objectives, competitive advantage, and image OR are inappropriate for some other reason.

Concept Test

Refers to testing new product concepts with groups of target consumers
- only have idea/concept, not the actual product

Concept

- a brief written description of the product
- customers reactions determine whether or not it goes forward
- triggers the marketing research process

Business Analysis

Involves specifying the product features and marketing strategy and making necessary financial projections needed to commercialize a product.

Product Development

Involves turning the idea on paper into a prototype

Test Marketing

Involves exposing actual products to prospective consumers under realistic purchase conditions to see if they will buy.

Standard Test Market

Controlled Test Market

Closed, nobody knows

Stimulated Test Markets

Advantages:
- less expensive than other test methods
- faster
- restricts access by competitors
Disadvantages:
- not considered as reliable and accurate due to the controlled setting
ex. Shopping in virtual environment

Commericalization

Process that involves positioning and launching a new product in full-scale production and sales.
- When to launch
- Where to launch
- Planned market rollout

Improving New-Product Success

New product success depends on having a :
- Unique superior product (one with higher quality, features, and value in use)
- Well-defined product concept (a defined target market, product requirements, and benefits)

Getting Smart about New Products

- Ask your customers
- Set realistic goals
- Break down walls
- Create gateways
- Do you post-mortems
- figure out what happened, what went wrong

Supply Chain

Consists of a sequence of firms that perform activities required to create and deliver a good or service to customers or industrial users.

Supply Chain Management

Is the integration and organization of information and logistic activities across firms in a supply chain for the purpose of creating and delivering goods and services that provide value to customers.

Types of Intermediaries

- Wholesalers
- Retailers
- Agents
- Brokers

Wholesalers

sell goods/services to those who buy for resale or business use

Retailers

sell goods/services directly to final consumers for their personal, non-business use

Agents

Represent either buyer or seller usually on a permanent basis

Brokers

Bring buyers and sellers together on a temporary basis

How channel members add value

From an economic view, intermediaries transform the assortment of products into assortments wanted by consumers
- Reduce number of transactions
- Overcome discrepancies

Overcoming Discrepancies

- Discrepancy of Quantity
- Discrepancy of Assortment
- Temporal Discrepancy
- Spatial Discrepancy

Discrepancy of Quantity

The difference between the amount of product produced and the amount an end user wants to buy
- Ex. shampoo

Discrepancy of Assortment

The lack of all the items a customer needs to receive full satisfaction from a product or products

Temporal Discrepancy

A situation that occurs when a product is produced but a customer is not ready to buy it

Spatial Discrepancy

The difference between the location of a producer and the location of widely scattered markets

Conventional Distribution Systems

Consists of one or more independent producers, wholesalers, and retailers. Each seeks to maximize its own profits, and there is little control over the other members and no formal means for assigning roles and revolving conflict.

Vertical Marketing Systems (VMSs)

Provide channel leadership and consist of producers, wholesalers, and retailers acting as a unified system.

Corporate Vertical Marketing System

Integrates successive stages of production and distribution under single ownership
- Ex. Zara

Contractual Vertical Marketing System

Consists of independent firms at different levels of production and distribution who join together through contracts to obtain more economies or sales impact than each could achieve alone. - Most common form is the franchise organization

Franchise

Is a business whereby the owner licenses its operations--along with its products, branding, and knowledge--in exchange for a franchise fee.

Administered vertical marketing system

Has a few dominant channel members without common ownership. Leadership comes from size and power.