Baylor University - MKT 3305 - Tom Pagel - Exam 3 Review

Goods

tangible products that we can see, touch, smell, hear, or taste

Services

Intangible products that are exchanged directly between the producer and the customer

Tangible products

something that we can see, touch, smell, hear, taste or possess

Intangible products

services, ideas, people, and places

Layers of the products concept

- Core

- Actual

- Augmented

Core

all the benefits the product will provide for consumers or business customers

Actual

the physical good or the delivered service that supplies the desired benefit

Augmented

the actual product plus other supporting features such as warranty, credit, delivery, installation, and repair service after the sale

Durable goods

consumer products that provide benefits over a long period of time, such as cars, furniture, and appliances

Non-durable goods

consumer products that provide benefits for a short time because they are consumed (such as food) or are no longer useful (such as newspapers)

Types of products consumers buy

- Convenience

- Shopping

- Specialty

- Unsought

Convenience

a consumer good or service that is usually low priced, widely available, and purchased frequently with a minimum of comparison and effort

Shopping

goods or services for which consumers spend considerable time and effort gathering information and comparing alternatives before making a purchase

Specialty

Goods or services that have unique characteristics and are important to the buyer and for which he or she will devote significant effort to acquire

Unsought

Goods or services for which a consumer has little awareness or interest until the product or a need for the product is brought to his or her attention

Types of products businesses purchase

- Equipment

- MRO

- Raw materials

- Processed materials

- Component parts

Equipment

Expensive goods that an organization uses in its daily operations that last for a long time

Maintenance, Repair, and Operating (MRO) products

Goods that a business customer consumes in a relatively short time

Raw Materials Inventory

Products of the fishing, lumber, agricultural, and mining industries that organizational customers purchase to use in their finished products

Processed materials

Products created when firms transform raw materials from their original state

Component parts

Manufactured goods or subassemblies of finished items that organizations need to complete their own products

How long may products be called "new"

six months

Types of product innovations and their characteristics

- Dynamically continuous

- Continuous

- Discontinuous

Dynamically continuous

a change in an existing product that requires a moderate amount of learning or behavior change

Continuous

a modification of an existing product that sets one brand apart from its competitors

Discontinuous

a totally new product that creates major changes in the way we live

Advantages of test marketing

- Marketers can evaluate and improve the marketing program

- Sometimes uncover a need to improve the product itself

- Indicate product failure

Disadvantages of test marketing

- Extremely expensive

- Gives the competition a free look at the new product, its introductory price, and the intended promotional strategy - and an opportunity to get to the market first with a competing product

Levels of the Product Adoption Pyramid

- Confirmation (Reinforce the customer's choice through advertising, sales promotion, and other communications)

- Adoption (Make the product available. Provide product use information)

- Trial (Demonstrations, samples, trial-size packages)

- Evaluation (Provide information to customers about how the product can benefit them)

- Interest (May use teaser advertising)

- Awareness (Massive advertising)

What is a product line?

a firm's total product offering designed to satisfy a single need or desire of target customers

What is meant by product line length?

determined by the number of separate items within the same category

Product line extensions

- Upward, downward, or two-way extensions

- Filling (full-line or limited-line)

- Contracting

Upward extensions

adds new items - higher-priced entrants that claim better quality or order more bells and whistles

Downward extensions

augments a line when it adds items at the lower end

Two-way extensions

adds products at both the upper and lower ends

Full-line filling

adds sizes or styles not previously available in a product category

Limited-line filling

can improve the firm's image if consumers perceive it as a specialist with a clear, specific position in the market

Contracting

reduce the size of a product line, particularly when some of the items are not profitable and the complexity of managing them becomes detrimental to the company

What is meant by a product mix?

the total set of all products a firm offers for sale

What is a product mix width?

the number of different product lines the firm produces

The Product Life Cycle Concept

- Introduction

- Growth

- Maturity

- Decline

Introduction

the first stage of the product life cycle, in which slow growth follows the introduction of a new product in the marketplace

Growth

the second stage in the product life cycle, during which consumers accept the product and sales rapidly increase

Maturity

The third and longest stage in the product life cycle, during which sales peak and profit margins narrow

Decline

the final stage in the product life cycle, during which sales decrease as customer needs change

Definition of brand

a name, a term, a symbol, or any other unique element of a product that identifies one firm's product(s) and sets it apart from the competition

Brand extension

a new product sold with the same brand name as a strong existing brand

Sub-branding

Creating a secondary brand within a main brand that can help differentiate a product line to a desired target group

Family brand

a brand that a group of individual products or individual brands share

Individual brand

A separate, unique brand for each product item

Reason(s) why stores choose to offer store/private label brands alongside national brands

Customers are satisfied with the private label brands after the Great Recession and many customers have not switched back

Co-branding

An agreement between two brands to work together to market a new product

Ingredient branding

A type of branding in which branded materials become "component parts" of other branded products

What packaging does for a product

The covering or container or a product that provides product protection, facilities product use and storage, and supplies important marketing communication

What is copycat packaging?

Packaging designed to mimic the look of a similar or functionally identical national branded product often meant to lead the consumer to perceive the two products as comparable

Definition of price

The assignment of value, or the amount the consumer must exchange to receive the offering

What is opportunity cost?

the value of something we give up to obtain something else

Pricing Objectives

- Sales or market share

- Image enhancement

- Customer satisfaction

- Competitive effect

- Profit

Sales or market share

to maximize sales (either in dollars or in units) or to increase market share

Image enhancement

Alter pricing policies to reflect the increased emphasis on the product’s quality image

Customer satisfaction

Profits result from making customer satisfaction the primary objective

Competitive effect

A firm may deliberately try to preempt or reduce the impact of a rival's pricing changes

Profit

Focus on pricing for the firm's entire portfolio of products

The Demand Curve

Illustrates the effect of price on the quantity demanded of a product. Can be curved or straight line, shows the quantity of a product that customers will buy in a market during a period of time at various prices if all other factors remain the same

Increase in demand = increase in price

How prestige products relate to the Demand Curve (how they react differently)

Demand will increase - to a point - as price increases or will decrease as price decreases

price elasticity of demand

the percentage change in unit sales that results from a percentage change in price

cross elasticity

when changes in the price of one product affect the demand for another item

variable costs

the costs of production (raw and processed materials, parts, and labor) that are tied to and vary, depending on the number of units produced

fixed costs

costs of production that do not change with the number of units produced

Characteristics of cost plus pricing

a method of setting prices in which the seller totals all the costs for the product and then adds an amount to arrive at the selling price

Characteristics of Value pricing or Everyday low pricing (EDLP)

A pricing strategy in which a firm sets prices that provide ultimate value to customers

Characteristics of Skimming pricing

a very high, premium price that firm charges for its new, highly desirable product

Characteristics of Price bundling

selling two or more goods or services as a single package for one price

Characteristics of Captive pricing

a pricing tactic for two items that must be used together; one item is priced very low, and the firm makes its profit on another, high-margin item essential to the operation of the first item

Characteristics of Dynamic pricing

a pricing strategy in which the price can easily be adjusted to meet changes in the marketplace

Characteristics of Surge pricing

a pricing plan that raises prices of a product as demand goes up and lowers it as demand slides

What is a freemium?

a business strategy in which a product in its most basic version is provided free of charge but the company charges money (the premium) for upgraded versions of the product with more features, greater functionality, or greater capacity