Principles of Marketing (Powell) - Test 2

Define “product”

Anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need

Define “services”

A form of product that consists of activities, benefits, or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything.

What is the difference between pure tangible goods and pure tangible services?

Pure tangible goods: no services accompany the product
Pure services: the market offer consists primarily of a service

What are the three levels of products or services?

Core customer value: core problem-solving benefits customers seek when they purchase a product
Actual product: the core product including features, quality, design, etc.
Augmented product: the actual product + the services and benefits offered with it

Define “consumer products“

Bought by final consumers classified according to consumer shopping habits

Define “convenience products”

Bought by customers frequently, immediately, and with minimal comparison and effort
Example: laundry detergent

Define a “shopping product” and list some examples

Less frequently purchased, customers compare carefully concerning suitability, quality, price, and style
Example: furniture, clothing

Define “specialty products” and what are some examples?

Having unique characteristics or brand identifications that lead target markets to make a purchase
Example: expensive cars

What are “unsought products“ and some examples?

A product customers either know nothing about or would not normally buy
Examples: life insurance, blood donations

What are industrial products?

Products purchased for further processing or for use in conducting business

Define “product quality”

Product or service characteristics that affect how it satisfies customer needs

What is total quality management (TQM)

All company employees are involved in constantly improving the quality of products, services, and processes

What is ‘return-on-quality”?

Viewing quality as an investment and holding quality efforts accountable for bottom-line results

What are the 2 dimensions of product quality?

Performance: match target market needs and exceed competition
Conformance: freedom from defects and being consistent in delivering target performance

What do product support services do?

Enhance customer service and satisfaction and protect against competition

What does the service profit chain do?

Links service firm profits with employee and customer satisfaction

What is brand equity?

The positive differential effect that knowing the brand name has on customer response to the product or service

What are the 4 brand sponsorship options?

Launch a national brand
Resell to a private brand
Market licensed brands
Co-brand a product with another company

What are the 4 options of brand development?

Line extension
Brand extension
Multibrand
New brand

What is social marketing?

Using traditional business marketing concepts and tools to encourage behaviors that will create individual and societal well-being

Define “brand“

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

Define “product mix/portfolio“

The set of all product lines and items that a particular seller offers for sale

Define “service intangibility“

Services cannot be seen, tasted, felt, heard, or smelled before they are bought

Define “service inseparability“

Services are produced and consumed at the same time and cannot be separated from their providers

Define “service variability“

The quality of services may vary greatly depending on who provides them and when, where, and how they are provided

Define “service perishability“

Services cannot be stored for later sale or use

Define “service profit chain“

The chain that links service firm profits with employee and customer satisfaction

Define "“internal marketing“

Orienting and motivating customer-contact employees and supporting service employees to work as a team to provide customer satisfaction

Define “interactive marketing“

Training service employees in the fine art of interacting with customers to satisfy their needs

Define “brand value“

The total financial value of a brand

Define “store/private brand“

A brand created and owned by a reseller of a product or service

Define “co-branding“

The practice of using the established brand names of two different companies on the same product

Define new product development and describe internal and external methods of developing new products

The development of original products, product improvements, product modifications, and new brands through the firm’s own product development efforts
Internal sources: R&D or brainstorming
External sources: track competitor’s offerings, ideas from distributors and suppliers, customers through crowdsourcing or open-innovation

What are the eight stages of new product development?

Idea generation, idea screening (eliminating ideas that don’t fit certain criteria), product concept development (detailed version of product idea is expressed in relation to consumers) and concept testing (representative sample of target customers test product), marketing strategy development (marketing strategy is developed based on concept), business-analysis (review of projected sales, costs, and profit to see if it is in the best interest of the company), product development, test marketing, commercialization

What are the two additional product issues the textbook talks about?

Social responsibility (public policy issues, regulations, etc.)
International marketing challenges

Define idea generation

The systematic search for new product ideas

Define crowdsourcing

Inviting broad communities of people—customers, employees, independent scientists and researchers, and even the public at large—into the new product innovation process.

Define idea screening

Screening new product ideas to spot good ones and drop poor ones as soon as possible.

Define product concept

A detailed version of the product idea stated in meaningful consumer terms

Define concept testing

Testing new product concepts with a group of target consumers to find out if the concepts have strong consumer appeal.

Define marketing strategy development

Designing an initial marketing strategy for a new product based on the product concept.

Define business analysis

A review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the company’s objectives.

Define product development

Company growth by offering modified or new products to current market segments.

Define test marketing

The stage of new product development in which the product and its proposed marketing program are tested in realistic market settings.

Define commercialization

Introducing a new product into the market.

Define customer-centered new product development

New product development that focuses on finding new ways to solve customer problems and create more customer-satisfying experiences.

Define team-based new product development

New product development in which various company departments work closely together, overlapping the steps in the product development process to save time and increase effectiveness.

Define style

A basic and distinctive mode of expression.

Define fasion

A currently accepted or popular style in a given field.

Define “fads“

A temporary period of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity.

What are the differences between product ideas, concepts, and images?

Product idea: an idea for a possible product that the company can see itself offering to the market
Product concept: a detailed version of the idea stated in meaningful consumer terms
Product image: the way consumers perceive an actual or potential product

What are the three parts of the marketing strategy statement?

Describes the target market, planned VP, and the projected sales, market-share, and profit
Outlines planned price, distribution, and marketing budget
Describes the planned Long-run sales, profit goals, and marketing mix strategy

What are controlled test markets?

When new products and tactics are tested among controlled panels of shoppers and stores

What are simulated test markets?

When researchers measure consumer responses to new products and marketing tactics in laboratory stores or simulated online shopping environments

What is sequential product development?

When one company department works individually to complete its stage of the process before passing the new product along to the next department and stage

What is the main takeaway from the PLC?

Companies must continually innovate, or they risk extinction

In the maturity phase of the PLC, what are some changes companies can make to attempt to extend this phase?

Modifying the market, product offering, or marketing mix

In the decline stage of the PLC, what are some actions a company can take?

Maintain the brand: repositioning or reinvigorating to move back into the growth stage
Harvest: reducing various costs in hopes that sales hold up to increase profits in the short run
Drop: selling the product to another firm or liquidating it

Define price

The amount of money charged for a product or service, or the sum of the values that customers exchange for the benefits of having or using the product or service.

Define customer value-based pricing

Setting price based on buyers’ perceptions of value rather than on the seller’s cost.

Define good-value pricing

Offering just the right combination of quality and good service at a fair price

Define Value-added pricing

Attaching value-added features and services to differentiate a company’s offers and charging higher prices.

Define Cost-based pricing

Setting prices based on the costs of producing, distributing, and selling the product plus a fair rate of return for effort and risk.

Define Fixed costs (overhead)

Costs that do not vary with production or sales level.

Define variable costs

Costs that vary directly with the level of production.

Define Total costs

The sum of the fixed and variable costs for any given level of production

Define Cost-plus pricing (markup pricing)

Adding a standard markup to the cost of the product

Define Break-even pricing (target return pricing)

Setting price to break even on the costs of making and marketing a product or setting price to make a target return.

Define Competition-based pricing

Setting prices based on competitors’ strategies, prices, costs, and market offerings.

Define Target costing

Pricing that starts with an ideal selling price and then targets costs that will ensure that the price is met.

Define Demand curve

A curve that shows the number of units the market will buy in a given time period, at different prices that might be charged

Define price elasticity

A measure of the sensitivity of demand to changes in price

Define Market-skimming pricing (price skimming)

Setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales.

Define Market-penetration pricing

Setting a low price for a new product in order to attract a large number of buyers and a large market share.

Define Product line pricing

Setting the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors’ prices.

Define Optional-product pricing

The pricing of optional or accessory products along with a main product.

Define Captive-product pricing

Setting a price for products that must be used along with a main product, such as blades for a razor and games for a video-game console.

Define By-product pricing

Setting a price for by-products to help offset the costs of disposing of them and help make the main product’s price more competitive.

Define Product bundle pricing

Combining several products and offering the bundle at a reduced price.

Define Discount

A straight reduction in price on purchases during a stated period of time or of larger quantities.

Define allowances

Promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer’s products in some way.

Define Segmented pricing

Selling a product or service at two or more prices, where the difference in prices is not based on differences in costs.

Define Psychological pricing

Pricing that considers the psychology of prices and not simply the economics; the price is used to say something about the product.

Define Reference prices

Prices that buyers carry in their minds and refer to when they look at a given product.

Define Promotional pricing

Temporarily pricing products below the list price, and sometimes even below cost, to increase short-run sales.

Define Geographical pricing

Setting prices for customers located in different parts of the country or world.

Define Dynamic pricing

Adjusting prices continually to meet changing conditions and situations in the marketplace.

Define Personalized pricing

Adjusting prices in real time to fit individual customer situations, locations, and buying behaviors.

Name some internal and external influences on pricing.

Internal: marketing strategy, objectives, marketing mix
External: nature of the market and demand, environmental factors like the economy, reseller needs, government actions

What are captive products?

Products required for use of the main product

What is everyday low pricing (EDLP)? What are some examples of companies that use this?

charging a constant, everyday low price with few or no temporary price discounts
Examples: Aldi, Walmart

What is high-low pricing? What are some examples?

charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items
Examples: Kohl’s, JCPenney

What are low-cost producers? What are some examples?

Companies with lower costs can set lower prices that result in smaller margins but greater sales and profits
Examples: Walmart, Aldi

What does a break-even chart do?

shows the total cost and total revenue expected at different sales volume levels

Is the goal of competitive pricing strategies to match or beat competitors’ prices? Why or why not?

No—the goal is to set prices according to the relative value of the product.

What is nonprice positioning?

not charging the lowest price, but rather differentiating the marketing offer to make it worth a higher price

What is pure competition? A purely competitive market?

The market consists of many buyers and sellers trading in a uniform commodity
Marketing research, product development, pricing, advertising, and sales promotion play little or no role

What is monopolistic competition? What does a marketing strategy in this look like?

The market consists of many buyers and sellers trading over a range of prices rather than a single market price
Sellers try to develop differentiated offers for different customer segments and try to set their products apart

What is oligopolistic competition? What does marketing in this look like?

The market consists of only a few large sellers
Each seller is alert and responsive to competitors’ pricing strategies and marketing moves; pricing becomes a major tool