Marketing Exam 2

convenience

Bottled water, gum, toothpaste.

shopping

Dishwashers, furniture, laptops.

specialty

Luxury watches, exclusive designer products.

unsought

Funeral services, certain insurance products.

product mix

The complete collection of products and services offered by a company.

product line

A group of related products that consumers associate with one another.

Breadth

Number of different product lines a company offers.

depth

Number of products or variations within a product line.

Product Cannibalization

When a new product takes sales away from another product offered by the same company.

Four Components of Brand Equity:

• Brand Awareness: Do customers recognize or remember the brand?

• Perceived Value: Do customers believe the benefits justify the price?

• Brand Associations: What thoughts, emotions, and characteristics do customers connect with the brand?

• Brand Loyalty: Do customers repeatedly purchase and resist switching?

Manufacturer/National Brand:

A brand owned and marketed by the manufacturer.

• Nike

Private Label/Store Brand:

A brand owned by a retailer and sold through its stores

• great value at walmart

Family of Brands (Corporate Branding):

A company uses a shared corporate name across multiple products or product lines.

Brand Extension:

Using an existing brand name to enter a new product category.

Line extension

Introducing additional versions or variations within an existing product category.

Diffusion of Innovation Theory

The process through which consumers adopt a new product over time.

The adoption pattern generally follows a bell-shaped curve: few people adopt initially, adoption increases rapidly, then slows.

innovators

accept uncertainty and imperfections.

early adopters

influence others

early majority

wants proof that the product works.

late majority

often responds to social pressure or necessity.

Laggards

adopt only when necessary or traditional alternatives disappear.

Price skimming

Set a high initial price to recover costs.

Penetration pricing

Set a low initial price to encourage adoption.

harvesting

Reduce investment and expenses while continuing to generate revenue.

Deletion

Remove the product from the company's portfolio.

Skimming

Starts expensive, gradually becomes cheaper

penetration

Introduces a product at a low price to attract buyers

Value based

sets price based on what customers believe it's worth

prestige

Maintains high prices to communicate luxury

yield management

Prices fluctuate based on time or demand

standard markup

Adds a percentage to product cost

loss leader

Sells an item at little or no markup to attract shoppers

cost-plus

Adds an amount to costs, especially when costs fluctuate

Customary

follows established competitor price levels

EDLP

maintains consistently low prices

high-low

frequently offers promotional discounts