Marketing Exam 3

Chapter 11

Marketer involved in the development of multiple products or services think of them in an ________ _________

Interrelated fashion

When marketing multiple products, what should always be at the core focus?

Customer value

After customer value, what must marketing think of next (2 things)

Actual products and associated sevices

What are associated services and name some examples

Non-physical aspects of the product, such as product warranties, financing, product support, and after-sales service

Markets convert core customer value into an actual product through ______

Brand name, packaging, features/design, and quality level

What is another name for associated services

Augmented product

Define consumer products

Products and services used by people for their personal use

What are the types of consumer products

Specialty, shopping, convenience, unsought

Define specialty product/services

Products for which customers express such a strong preference that they will expend considerable effort to search for the best suppliers

What are some characteristics of specialty products

• Typically high-priced

  • Buyers do not take much time to compare other products, but do still spend more effort than the other options

• Purchased less frequently

e.g., sports cars, designer clothes, luxury products

Define shopping products/services

Products or services that consumers will spend a fair amount of time comparing alternatives

What are the characteristics of shopping products

• Require personal selling advertising and are in fewer outlets

• Consumers usually compare attributes of shopping products,, such as quality, price, and style, between other products

e.g., furniture, apparel, fragrances, appliances, cell phones, and travel

Define convenience products

Products for which the consumer is not willing to expend any effort to evaluate prior to purchase

What are the characteristics of convenience products?

• Bought frequently

• Bought quickly without much comparison

• Typically low-priced and not differentiated

e.g., Sugar, laundry detergent, pencils, pens, and paper

Define unsought products

Products that consumers either do not normally think of buying, do not know about, or would not buy under normal circumstances

What are the characterisitics of unsought products

• You don’t buy it until you absolutely need it

• The product/company is not top of mind for the customer

e.g., diamond rings, funeral services, life insurance, and fire extinguishers

Define product mix

The complete set of all products and services offered by a firm

Define product line

Groups of associated items that consumers tend to use together or think of as part of a group of products

• Product mix is made up of product lines

What is the breadth of a product mix?

A count of product lines offered by the firm

What is the depth of a product mix?

The number of products within a product line

Why would a company increase the breadth of a product mix

Firms often add new product lines to capture new or evolving markets.

• e.g., a firm adds a whole new line of yogurt

Why would a company decrease the breadth of a product mix

A firm drops its line of protein bars and focuses on energy drinks and vitamin water

What is the primary disadvantage to increasing the product line depth

If the new product competes with an existing product, it can cannibalize the other product by stealing some of its sales

What is the difference between a product and a brand

The product is the good or service being sold, whereas the brand is the symbolism and name that makes the product identifiable among other products in the marketplace

Define branding

The process of creating a strong, positive perception of your company, and the products you deliver, in your customer’s mind

What makes up a brand

Brand name, URLs, logos & symbols, characters, slogans, and jingles or sounds

How can branding offer value for a firm

Facilitate purchases, establish loyalty, protect from price competition, assets, and affect market value

Define brand equity

the consumer perception of the brand name of a product or service, and not a direct reflection on the product itself

What do marketers want to turn brand equity into?

Brand love

When is brand familiarity most important

Products that are bought frequently without much thought

Define perceived value in terms of brand equity

The relationship between a products benefits and its costs

How is perceived value measured?

the price the public is willing to pay

Define brand association in the context of brand equity

The mental and emotional links that consumers make between a brand and its key attributes, such as logo and its color, slogan, or famous personality

• Brand associations are often the result of a firm’s advertising and promotional efforts.

Define brand loyalty

Occurs when a customer buys the same brand’s products or services repeatedly over time rather than buying from multiple suppliers within the same category

What are the decisions surrounding brands or retailer/store brands

• Whether to use manufacturer brands or retailer/store brands.

• How to name brands and product lines.

• Whether or not to extend the brand name to other products and markets.

• Should the brand name be used with another firm or licensed to another firm?

• Whether or not the brand should be repositioned

What are the types of brand ownership, and name some examples?

Manufacturer → Kraft, Nike, Coca-Cola

Retailers/Store Brands → Kroger, Costco, Trader Joes

• Generally, the retailer brands are considered to be lower quality for the most part except Kirkland

Define family brands

Corporate name used accross brands and product lines

E.g., Kraft or Apple

Define individual brands

Products with individual identities

E.g. Kraft owns Velveeta, Classico, and Jell-O but doesn’t market them as “Kraft Products." Detergents are also good examples: Tide

Define brand extensions.

Same brand name in a different product line.

e.g., Coca-Cola branded chapstick

Define line extension

Same brand name within the same product line

E.g., Coke, Diet Coke, Coke Zero

What are the advantages of a brand extension?

• The company can spend less on brand awareness.

• The positive consumer acceptance will spread to the new product and a synergy exists between the two products

Define brand dilution

The weakening of a brand's reputation, value, or distinctiveness caused by overexpansion, inconsistent messaging, or launching unrelated products

Define co-branding.

Marketing two or more brands together

Define brand licensing

When one brand licenses the branding of another company.

e.g., Weight Watcher licenses their brand name to an ice cream company to make Weight Watchers Ice Cream

e.g., UGA licenses the power G from the Green Bay Packers

Define repositioning

Brand repositioning, or rebranding, refers to a strategy in which marketers change a brand’s focus to target new markets or realign the brand’s core emphasis with changing market preferences

Define a primary package

The packaging the consumer uses, such as a toothpaste tube.

Define secondary packaging

The packaging holding the primary packaging.

e.g., Box holding the tube of toothpaste.

e.g., Amazon box

Chapter 12—New Product Development

Define innovation

The process by which ideas are transformed into new offerings

Without innovation, firms have what options?

(1) Continue to market current products to current consumers or (2) take the same product to a new market

Why do firms need to innovate?

1. Changing customer needs—healthier and greener consumers

2. Market saturation—Everyone who wanted the product got it already, so no more growth

3. Managing risk through diversity—Multiple products can better withstand shocks like changes in consumer preferences

4. Fashion cycles—Products that rely on fashion trends (apparel, arts, books, video games)

5. Improving business relationships—Walmart asks suppliers for info about all their products

What is co-branding inovation?

When two firms come together to create a new product (not just a new campaign)

What is the following process called? Coca-Cola created diet coke to appeal to a more health-conscious market → Men rarely purchased diet coke, so Coke Zero was developed → Artifical sweeteners fell out of favor in the public eye so Coke Life (stevia) was developed

Product development → Similar products to new markets

How should firms respond to market saturation?

• Expand distribution

• Differentiate heavily

• Find new customer touchpoints

Define a pioneer in marketing

Producers who radically change competition and consumer preference by introducing new-to-the-world product/s

What is the largest advantage of innovational pioneers?

They have an easier time holding onto a large market share for longer because they did it first

Define diffusion of innovation

The process by which the use of an innovation—whether a product, service, or a process—spreads throughout a market group, over time and across various categories of adopters, is referred to as diffusion of innovation

Name the groups of adopters within the diffusion of innovation curve/theory in order. Include their size (%)

Innovators (2.5%) → early adopters (13.5) → early majority (34%) → Late majority (34%) → Laggards (16%)

What is the difference between an innovator and an early adopter?

Innovators want to be the very first person to adopt a new technology, but early adopters want to read a few reviews first

What is the difference between the early adopters and the early majority?

Early adopters are willing to pay more to adopt, and they are more willing to take a risk than the early majority. The early majority will wait for a good price or for the product to become more established

In what stage has a market product reached its full potential?

When the late majority jumps on the bandwagon

Example test question: The first year they were offered, John wanted a tablet computer, but he did not know which one to choose. He waited until there were more choices, lower prices, and improved quality. John is part of the ___________ diffusion of innovation group.

Early majority

Example test question: Tiffany always asks Samantha about beauty supply products. She considers her a well-informed friend who always knows the latest trends. For Tiffany, Samantha is a(n) ___________ in the diffusion of innovation curve.

Innovator

What does the diffusion of innovation theory teach?

1. Firms can predict which types of customers will buy their new product immediately after its introduction, as well as later, as the product gets more and more accepted by the market

2. A firm can develop effective promotion, pricing, and other marketing strategies to push acceptance among each customer group

What factors increase the rate of diffusion of a new product?

• Relative advantage

  • If a product is perceived to be better than substitutes, then the diffusion will be relatively quick

• Compatibility

  • The higher the level of compatibility, the quicker the diffusion, and the lower the compatibility, the slower the diffusion. A product will diffuse more quickly if it does not require consumers to change their values, norms, lifestyle, culture, and day-to-day life

• Observability

  • When products are easily observed, their benefits or uses are easily communicated to others, which enhances the diffusion process.

• Complexity and trialability

  • Products that are relatively less complex are also relatively easy to try. These products will generally diffuse more quickly than those that are not so easy to try

What is the product development process?

Idea generation → Concept testing → Product development → Market testing → Product launch → Evaluation of results

Define R&D consortia

Groups of other firms and institutions, possibly including the government or academic institutions, to explore new ideas or obtain solutions for developing new products

• Lower cost than internal R&D

• Every participating firm benefits

What is the difference between brainstorming and R&D consortia

Brainstorming is within one firm

For products with patents, what is the standard to reverse engineer the product without infringing on the patent?

Substantially different

What is concept testing?

A concept is a brief, written description of the product.

Concept testing is showing those concepts to potential buyers or users to gauge their reactions

What is product development?

Development of prototypes and/or the product

What is market testing?

Testing the actual products in a few test markets

Define prototype

A prototype allows customers to interact physically with the product. Some prototypes, such as concept cars revealed at auto shows, never actually go into production

What is alpha testing

In alpha testing, the firm attempts to determine whether the product will perform according to its design and whether it satisfies the need for which it was intended

Define beta testing

Beta testing uses potential consumers who examine the product prototype in a real-use setting to determine its functionality, performance, potential problems, and other issues specific to its use

Chapter 12.2

What is the difference between premarket product testing and market testing

Premarket product tests entail:

• Customers exposed

• Customers surveyed

• Sales are estimated

• Firms make a decision

Market testing:

• Mini product launch

• More expensive than the premarket test

• Market demand is estimated

What are the five types of market testing?

Beta Testing (for digital products), Test markets (for physical products), A/B Testing, Focus Groups, and Pilot programs

When are test markets used and what are they?

For physical products, businesses often use a test market strategy. This involves launching the product in a limited geographic area or market segment to assess consumer reactions

What is A/B testing, and when is it common?

It involves testing two different versions of a product or ad campaign (version A and version B) to see which one performs better

What is a focus group?

A small, diverse group of consumers is brought together to discuss their impressions of the product. This qualitative approach provides insights into customer perceptions, preferences, and potential barriers to purchase.

What is a pilot programs?

A pilot program is a small-scale trial run of the product in a real-world environment. For example, a company launching a new line of smart home devices might offer the product to a small group of tech-savvy users

When evaluating the test results of market testing, what questions should be asked?

• Does the product meet customer expectations?

• Are there any technical or usability issues that need to be addressed?

• How does the product compare to competitors?

• Is the pricing model resonating with customers?

• What marketing channels are driving the most interest and sales?

What are the key components of a product launch?

• Launch strategy

  • Key message

  • Target Audience

• Market selection

  • Digital or Traditional—TV, Radio, Search, Newspaper, Social, Blogs, etc.

• Sales Channel Selection

  • E-com vs retail partnerships

• Supply chain and distribution

  • Inventory, supplier relationships, etc.

• Customer Support and After-Sales Service

Define the product lifecycle?

The stages that products move through as they enter, get established in, and ultimately leave the marketplace

Do all products follow the same life cycle curve?

Not every product follows the same cycle curve. Many products, such as home appliances, stay in the maturity stage for a very long time

What are the stages of the product life cycle

Introduction → Growth → Maturity → Decline

What is the diffusion of innovation curve?

The curve that represents the types of consumers (and quantity) within the product life cycle

Which characterizes the introduction phase of the product life cycle?

Initial losses to the firm due to its high start-up costs and low levels of sales revenue as the product begins to take off. Innovators are the ones to try the new product

Which characterizes the growth phase of the product life cycle?

A growing number of product adopters (early adopters), rapid growth in industry sales, and an increased number of competitors and the number of available product versions.

What is the tipping point in the product lifecycle?

The point that transitions between the introduction phase and the growth phase, where the product either gains market acceptance or must exit the market. Most new products fail at this point.

Which characterizes the maturity phase of the product life cycle?

The adoption of the product by the late majority and intense competition for market share among firms. In this stage, firms compete over price as the average price of the product falls substantially compared to shifts during the previous two stages. Lower prices and increased marketing costs erode the profitability of the product. The market becomes very saturated

Which characterizes the decline phase of the product life cycle?

Firms will either position themselves for a niche segment of the diehard consumers or those with special needs, or firms will completely exit the market for lack of profitability. The few laggards (16%) who have not tried the product yet will enter the market at this stage

Describe the following for the introduction stage of product development: sales, profits, typical consumers, and competition

• Sales—low

• Profits—negative/low

• Typical consumers—Innovators

• Competition—little

Describe the following for the growth stage of product development: sales, profits, typical consumers, and competition

• Sales—rising

• Profits—rapidly rising

• Typical consumers—early adopters and early majority

• Competition—few, but increasing

Describe the following for the maturity stage of product development: sales, profits, typical consumers, and competition

• Sales—peak

• Profits—peak to declining

• Typical consumers—late majority

• Competition—lots of competition

Describe the following for the declining stage of product development: sales, profits, typical consumers, and competition

• Sales—declining

• Profits—declining

• Typical consumers—laggards

• Competition—little (most competition is gone)

What are the major limitations of the product lifecycle?

• Each product or service has its owns shape (the cycle will look very differently between products)

• It is challenging to know precisely where you are in the cycle

What is an instance where not knowing which stage the product is in could hurt a marketing strategy?

If a product experiences several season of declining sales, but is not in the declining stage yet, cutting the marketing budget would further hurt profits