MKT 230 Exam 3 Rick Wills

Line Extensions

the development of a product that is closely related to existing products in the line, but is designed specifically to meet different customer needs

Reason for Line Extensions

- Focus on a different segment
- More precisely satisfy needs of current segments
- Capture market share competitors

Product Modifications

Changes in one or more characteristics of a product

Requirements for Product Modification

- Products must be modified
- Customers must be able to perceive a difference
- Modifications should produce greater customer satisfaction

3 Types of Product Modifications

Quality: dependability and durability
Functional: effectiveness or safety
Aesthetic: changing sensory appeal

Modification Drawbacks

try to increase cuts while cutting costs, sometimes made because of causes, and looks vary between people

"New Product"

Products that enhance a firms product mix and add depth to a product line

Roll-Out

Introducing a product in a stages across geographic areas

7 Phases of New Product Development

1. Idea Generation
2. Screening
3. Concept Testing
4. Business Analysis
5. Product Development
6. Test Marketing
7. Commercialization

Product Differentiation

Creating and designing products so customers perceive them as different

Product Quality

Making it perform as expected in satisfying customer needs

Product Design and Features

How it is conceived, planned, and produced

Product Support Service

Human and mechanical efforts or activities that add value to a product

Product Deletion

Phase Out: no change
Run Out: shows strength
Immediate Drop

Organizing Positions

Product Manager: Products
Brand Manager: 1 Brand
Market Manager: Customers
Venture Teams: Group

Product

A good, service, idea, or experience received in an exchange

Goods

tangible, physical entity

Service

Intangible, result of the application of human or mechanical efforts to people or objects

Idea

Concept, philosophy, image, or issue

3 Factors that make up Total Product

- Core Product
- Supplement Features
- Symbolic and Experimental Benefits

Core Product

The products fundamental utility or main benefit; addresses the basic needs of the consumer

Supplement Features

Provide the added value or attributes in addition to a product's core utility

Symbolic and Experimental Benefits

Buyers purchase the benefits and satisfaction they think the product will provide

Consumer Products

Products purchased to satisfy personal or family wants and needs

Business Products

Products bought to use in a firm's operations to resell or to make other products; purchased to satisfy the goals of the organization

Specialty Product

Items with unique characteristics that buyers are willing to expand considerable effort to obtain

Convenience Products

Inexpensive, frequently purchased products

Shopping Products

Items for which buyers are willing to expend considerable effort in planning and making purchases

Unsought Products

Products purchased to solve a problem

Product Line

a group of closely related product item view as units because of marketing, technical, or end-use considerations

Product Mix

the total group of products that an organization makes available to customers

Width of a Product Mix

number of product lines a company offers

Depth of Product Mix

The average number of different products in each product line

Product Item

Specific version of a product that is a distant offering among an organizations line of products

Stages of Product Life Cycle

Introduction
Growth
Maturity
Decline

Introduction Stage

Profits are negative
High risk failure

Growth Stage

Sales rise rapidly, profits reach a peak, and then they start to decline

Maturity Stage

Sales curve and start to decline; profits continue to fall

Decline Stage

Sales fall rapidly, usually repositioned or eliminated

Product Adoption Proccess

1. Awareness
2. Interest
3. Evaluation
4. Trail
5. Adoption

Adopter Categories

Innovators
Early Adopters
Early Majority
Late Majority
Laggards

5 Reasons Products Fail

Poor Timing
Bad Distribution
Bad Promotion
Wrong Message
Design Problems

What percent of GDP is in service sector?

represents almost 80% of US GDP

6 characteristics of a service

Intangibility
Inseparability
Perishability
Heterogeneity
Client-base Relationship
Customer Contact

Intangibility

not physical, cannot be perceived by the senses

Inseparability

production of a service cannot be separated from its consumption by customers

Perishability

cannot be stored for the future

Heterogeneity

service has variations in quality

Client-base Relationship

interactions resulting in satisfied customers who use a service repeatedly

Customer Contact

level of interaction between provider and customer needed to deliver the service

What is the typical bundle of services?

Core Service
Supplement Service

Distribution of Services

Customers go to the service providers place, or vice versa

Markerting Channels

Usually short and direct, some use intermediaries

Service Promotion

marketed with price, guarantees, performance documentation, and availability; word of mouth is the most important

Service Pricing

Consumer price sensitivity, nature of transactions, costs

Customers Evaluation of Service Quality

Service Quality: tangible
Experience Quality: pleasure
Credence Quality: unable to evaluate something

4 factors that affect service quality

analysis of customer expectations
service quality
employee performance
management of service expectations

Goals of Non-Profit Organizations

something other than profits, market share, or return an investment

Objectives of a Non-Profit Organization

obtain a desired response from a target market

Opportunity Cost

value of the benefit given up by selecting an alternative over another

Brand

a name, term, design, symbol, or feature that identifies the marketers product as distinct from those other marketers

Brand Name

Part of the brand that can be spoken
Including letters, words, and numbers

Brand Mark

the part of a brand that is not made up of words such as a symbol or design

Trademark

a legal designation of exclusive use of brand

Trade Name

the full legal name of an organization

Values of Branding to Buyers

- Identifies specific products
- Reduces purchase time
- Provides a form of self-expression
- Helps evaluate quality
- Reduces perceived risk in purchase
- Offers potential psychological reward

Values of Branding to Sellers

- Identifies the firm's product
- Makes repeat purchasing easier
- Assists in new product introduction
- Assists in promotional efforts
- Fosters brand loyalty
- Increase Profitability

Cultural Branding

term that has been used to explain how a brand conveys a powerful myth that consumers find useful in cementing their identities

Brand Loyalty

a customer's favorable attitude toward a specific brand

Degrees of Brand Loyalty

Brand Recognition
Brand Performance
Brand Insistence

Brand Equity

the marketing and financial value associated with a brand's strength in the market

4 Elements of Brand Equity

1. Brand - Name awareness
2. Brand Loyalty
3. Perceived Brand Quality
4. Brand Associated

3 Types of Brands

Manufacturers Brand
Private Distribution Brands
Generics

Brand Name for Product

- Be easy for customers to say, spell, and recall
- Be distinctive
- Indicate the product's major benefits and suggest the products uses
- Be designed so that it can be used and recognized in all types of media

Brand Names for Services

- Usually the same as the company name
- Must be flexible enough to encompass a variety of services (provided today and in the future)
- Symbols are often used with a brand name to make the brand distinctive

Why must brands be protected?

- Brands should be designed to be protected through registration
- A company must make sure that its brand doesn't infringe on any existing brands
- Generic names are not protected, so companies should take steps to ensure its brands do not become generic brands

Products most commonly counterfeited

most target are mass market products or products of high profitability

3 Branding Strategies

Individual Branding
Family Branding
Brand Extensions

Individual Branding

each product is given a different name

Family Branding

all of the firm's products are branded with the same name or part of the name

Brand Extension

an organization uses one of its existing brands to a new product in a different product category

Co-Branding

uses two or more brands on one product, the brands can be owned by the same or different companies

Brand Licensing

an agreement in which a company permits another organization to use its brand on other products for a licensing fee

Packaging

the development of a container and a graphic design of a product

4 Functions of Packaging

- Protect the product and maintain its functional form
- Provide customer convenience
- Promote the products features and uses
- Communicate quality through symbols

Major Packaging Consideration

- cost
- temperature
- food and drug administration packaging regulations
- consistency with other package designs
- Promotion rule
- Meet resell needs
- Environmentally responsible

6 ways to use packaging strategies

- Altering the package
- Secondary-use packaging
- Category-consisten packaging
- Innovative packaging
- Multiple Packaging
- Handling Improved Packaging

Altering the Package

to update the style and highlight new product features

Secondary-use packaging

rested for purposes other than its initial function, can add to the perception of value

Category-Consistent Packaging

the product is packages in line with a particular category, traditional designs or colors are used

Innovative Packaging

Unique features are used to make the product distinctive, usually shaped packages can attract attention

Multiple Packaging

May increase demand because it increases amount of product available at point of consumption
May make products easier to handle and store

Handling Improved Packaging

-Changing the outer carton, special bundling, shrink wrap, etc.
- Easier to distribute channel
- May help the product to proceed more easily through automated warehousing systems

Major Criticism of Packaging

Functional Issues
Packaging Costs
Safety Issues
Deceptive Packaging

What is labeling used for?

Identification, Promotional, Informational and Legal Purposes

Retailing

all transactions in which the buyer intends to consume the product through personal, family, or household use

Retailer

An organization that purchases the products for the purpose of reselling them to ultimate consumers

Importance of Retailing in the US

- Over 1 million in the US
- 20% of all employees in the US work retail
- Majority of personal income is spent in retail establishments
- retailers are the critical link between producers and ultimate consumer

Department Stores

large retail organizations with wide product mixes; employs at least 25 people

Discount Stores

self-service, general merchandise outlets that regularly offer brand names and private brand products at low prices