MKTG 3310 EXAM 3 Wolter

"A great product isn't just a collection of features. It's how it all works together."

-Tim Cook, Apple CEO and Auburn graduate

What is a product?

Anything that can be offered to a market for attention, acquisition, use, or consumption.

What are the products that fit under the broadened definition of product?

Convenience products

Shopping Products

Ideas

Places

People/persons

Organizations

Goods, services

What are the product levels?

Augmented product, Actual Product, and core customer vale. They must then design the actual product and find ways to augment it to create customer value and a full and satisfying brand experience.

How do consumers see products?

Consumers see products as complex bundles of benefits that satisfy their needs and desires. They don’t just focus on the physical item itself

In essence, consumers see products as more than just objects, they see them as complete experiences that fulfill both functional and emotional needs.

Where does someone start when designing a product?

When developing products, marketers must first identify the core customer value that consumers seek from the product. Then they must design the actual product and find ways to augment it to create customer value and a full and satisfying brand experience

Which level does product differentiation occur?

Over time, you tend to build from the inside out. Other companies may copy the core, but then must differentiate in the outer rings

Differentiation happens at all levels

What is product quality?

The characteristics of a product or service that bear on its ability to consistently and reliably satisfy stated or implied customer needs

Why are performance and conformance quality?

Product quality is a strong potential point of differentiation both in terms of performance (i.e., level) and conformance (i.e., stability). Conformance is the determinant of satisfaction.

Why may performance be mid but conformance be high?

Performance may be mediocre, but your conformance may be higher because you are always meeting that mediocre or "mid" level of performance and meeting the customer's expectations

Which type of quality is a determinant of satisfaction (though disconfirmation)?

Conformance is the determinant of satisfaction

What are services

"Product that consists of activities, benefits, or satisfactions offered for sale that are essentially intangible and do not result in a customer's ownership of anything."

What kind of products are most prevalent in the US economy?

We are a Service Based economy

2 multiple choice options

Why is this product the most prevalent in the US economy?

Manufacturing occurs in other countries

Automation of production of goods

Innovations

How did we determine what kind of products are most prevalent in the US economy?

We look at the percent and quantities of workers in the manufacturing industry, and notice it is low, but also declining.

We can also look at the percent of value added industries to out GDP, and that is also trending downwards

How are services different from goods?

Intangibility, Variability, Inseparability, Perishability

How do the service characteristics affect marketing?

Intangible products are harder to assess. A heterogenous product has greater employee and customer input, therefore quality becomes harder to control. An inseparable product must be produced in front of and along with customers. A perishable product cannot be produced ahead of time, so demand must be forecasted.

Does employee satisfaction relate to customer satisfaction for all products? Why or why not?

- Happy employees work better and make customers happier

- However, this only happens when products are highly separable and variable

- Does not work when you have high quality

Which customers perceive changes in employee satisfaction?

Highly inseparable or Repeat customers

What is the services marketing triangle?

Figure 8.4: At the top is the company, bottom right customers and then employees in bottom left. Intended to show how each interacts

What are the concepts captured by each side of the triangle?

Making the promise (external marketing), enabling the promise (internal marketing), fulfilling the promise (interactive marketing)

What are the four categories of benefits? (lecture and article titled "Elements of Value" on Canvas)

Social Impact, Life Changing, Emotional, and functional (from top to bottom) "...the more elements provided, the greater customers' loyalty and the higher the company's sustained revenue growth."

How does the pyramid relate to Maslow's hierarchy?

1. Fulfill lower order ideas to have the higher order ideas to have the higher order needs

2. People will willingly give up the lower order needs to maintain the higher order needs

In general, which category must be fulfilled first?

The bottom must be fulfilled first, if you don't have any of the other categories. Once you get to the higher categories, then you become more willing to give up the bottom level categories

In general, which category is most easily copied?

functional

What is the range of provided benefits for companies with highly loyal customers?

4-11 benefits

Greater customer loyalty and satisfaction

Research suggests that just providing four benefits well can create loyal customers, and the most provided by top brands is 11 out of the 30 in the Value Pyramid

What does bad customer service (over phones) do to the benefits?

Good service can create an edge

Bad service, however, can hamper the benefits

What is feature fatigue?

"A persistent challenge with asking customers what attributes they want is that customers typically want a lot of everything, all at a low price."

- Features of a product are easily copied. When you have more features, satisfaction rates can decrease because customers don't use all the features and they feel they didn't get all of the value out of it and decreases their satisfaction

.- Need to find a balance between having enough features to be attractive, but not too much that drives satisfaction down.

"Branding demands commitment; commitment to continual re-invention; striking chords with people to stir their emotions; and commitment to imagination."

- Sir Richard Branson, CEO Virgin

"Mass advertising can help build brands, but authenticity is what makes them last. If people believe they share values with a company, they will stay loyal to the brand."

- Howard Schultz, previous CEO of Starbucks

What is a brand?

A name, term, sign, symbol, or design or combination of these that identifies the products or services of one seller or group of sellers and differentiates them from competitors.

What is branding?

is the process of endowing products with the power of a brand

Where does the idea of branding stem from and what is the point of branding (i.e., what does it do for a company)?

- Tells people that it is their brand

- Who the company is

- Create connotations of quality/benefits of the product

- Get a customer to think of certain things when they see the brand

- Don't have to repeat what the company is about because consumers know based on the brand. Simplifies communication

What is brand value?

The total financial value of a brand (Apple is #1)

What is brand equity?

The differential effect of a brand on consumer responses to marketing

- "If I put my brand on something, people react differently as compared to something else"

What are the four outcomes of brand equity?

Increases willingness to pay

Attracts new customers

Increases customer loyalty

Stabilizes cash flows

What is a private brand?

Typically a retailer's own brand that they do on own products. Usually a cheaper knockoff. (ex. Target branded bleach vs. clorox)

What does the Pepsi Taste Challenge tell us about the positive effects of the power of branding?

- Pepsi taste challenge: blind tasting scenario between drinks. When people did not know whether they were drinking Pepsi or Coke, they would often say Pepsi is better. But when they knew which drink was Pepsi and which was Coke, they would more commonly say Coke.

- Branding can rewire how people respond, showing how difficult it can be to fight against high brand equity

How do we create a powerful brand?

1. awareness

2. brand image

NEED BOTH

What is brand awareness? Why does it matter?

The extent a market knows or recognizes a brand.

- Can create brand equity. If we recognize a thing, we are more likely to buy something. "Familiarity breeds liking"

Why did downloads of Twitter drop 30% once it rebranded to X?

- Had no brand awareness upon the change. People did not know of "X" when it was created initially

- People also began to search for Twitter, and people did not see Twitter show up and they would not download X

What is brand image? How does it work?

The collection of associations, thoughts, and feelings that are evoked when exposed to a brand. Can be both positive and negative connotations

- Can be anything you want it to be, but you have to have a common and consistent theme

- Also is not always controlled by you (Ex. Corona beer took a bad hit when coronavirus came along)

What can brand image focus on?

Can be whatever you want it to be.

"Can be your product, McDonald's fries, feelings, things you do". THERE JUST HAS TO BE CONSISTENCY, just has to come back to one larger idea

Does brand image have to only focus on the brand?

No, it just has to come back to one common theme. Find different ways to get your message across

Crossfit brand equity increased when they fought with soda companies, conveying it in a consistent manner

What is a doppelganger brand image?

"a family of disparaging images and stories about a brand that are circulated in popular culture by a loosely organized network of consumers, anti brand activists, bloggers, and opinion leaders in the news and entertainment media"

What does Barnes & Noble tell us about branding?

Sometimes good branding breaks the rules

(they experimented and allowed a Barnes and Noble to change its name and it worked)

- Not using overall corporate branding, each store can do it's own branding so that they can have a small time bookstore feel.

What are brand extensions and co-branding?

Brand extensions: Extending an existing brand name to new product categories (Ex. Reese's selling peanut butter "from their candies)

Co-branding:

The practice of using the established brand names... on the same product (Ex. Reese's logo and flavor on Breyer's ice cream)

What are the different types of extensions (e.g., in-category vs out-category)?

- In-category: High similarities/connections between the original product and the extension (Reese's Puffs Cereal)

- Out-category: Low similarities/connections between the original product and the extension (Reese's scented markers)

What determines if a brand extension works?

The brand equity of the original brand

The connection (or fit) between the brand and the product category being extended to (ex. Reese's scented markers is dumb vs. Reese's Puffs)

What are the positive outcomes of brand extensions?

- Improves odds of new product success when things go well (Ex. Amsterdam food truck)

- Positive feedback effects when things go well(increase brand equity of original brand)

What are the potential negative outcomes of brand extensions?

- Negative feedback effects when things go poorly

- Ongoing link to the extended brand if something goes poorly

What do companies do to avoid these negative outcomes?

They brand things separately (Proctor and Gamble have Crest, Scope, Oral-B) so that the individual brands are isolated when something goes poorly.

What happened to Donald Trump's brand and brand extensions after he was president? Why?

- They had varied success, likely due to his presidency

- When he became more controversial, the brand extensions began to fail

- At first, some brands were spared, then a negative feedback started and all of them suffered

- When his fortunes rose and fell(assassination attempt, felony charges), his brand extensions fluctuated wildly

Why?

He began to change some of the brand extensions (i.e. their names) because he saw his value going down, and wanted to create a disconnect between himself as president and his brands

"If things are not failing, you are not innovating enough."

- Elon Musk, CEO Tesla & SpaceX

What are the five stages of the Product Life Cycle?

- Product Development

- Product Introduction

- Product Growth

- Product Maturity

- Product Decline

What are the characteristics of each stage in terms of sales, profits, competitors, and marketing?

Development: none, negative, none, none

Introduction: low, negative, few, Create product engagement and trial

Growth: Rapidly rising sales, rising profits, growing numbers, maximize market share

Maturity: peak sales, high profits, Stable number beginning to decline, Maximize profit while defending market share

Decline: Declining, declining, declining, Reduce expenditure and milk the brand

What are the typical PLCs for styles, fashions, and fads?

What are the diffusion of innovation adopter categories?

What are the percentages given?

What are the values of each category?

Why do early adopters adopt early?

What happens to the diffusion of innovation if early adopters cannot adopt early?

What is the NPD process?

How important is idea generation?

What are the sources for ideas?

What is an innovation?

What is an alpha change and gamma change?

How do these relate to radically new products?

What kind of innovation is a consumer likely to come up with?

Who makes the innovations that lead to radically new products?

Are consumers good at idea screening?

How does the NPD process play into the role of luck in life?

"If you've got the power to raise prices without losing business to a competitor, you've got a very good business. And if you have to have a prayer session before raising the price by 10 percent, then you've got a terrible business."

- Warren Buffett, CEO Berkshire Hathaway, Inc

Why is pricing so important?

Pricing is a reflection of what?

What are the influences on pricing?

What is the price floor and ceiling?

Know the terms fixed costs and variable costs.

What is competition-based pricing?

What is a demand curve?

What is price elasticity?

How is price elasticity calculated?

What are the factors that affect price elasticity?

What does marketing do to a product's price elasticity?

What is value-based pricing?

Who are superconsumers?

Are they price sensitive or insensitive?

Are there superconsumers for any product?

How do superconsumers relate to the demand curve?

What is good-value pricing?

What is EDLP?

What is value-added pricing?

How do the two pricing strategies above relate to the demand curve?

What is dynamic pricing?

What are the three classic industries that used dynamic pricing?

Who is using dynamic pricing today and changing prices dozens of times a day?

Is price discrimination legal?

Why is Target's pricing in-store different than on the app in the parking lot?

Why must firms be careful when using dynamic pricing?

What are the four determinants of unfairness perceptions?