MAR 2023 - Exam 3

Basic Marketing Concepts

Types of consumer products

Convenience, shopping, speciality, unsought

Business products

Most products on the market in the US. Purchased to use for operations, to resell, or manufacture other products (IT, consulting, installations, repair, legal services)

Product hierarchy

1. Core (physical or intangible product)

2. Branded (brand name, packaging, styling, features, quality)

3. Augmented (terms, credit, repair, warranty, delivery, return)

Product Mix

All products that a company sells

Product line depth

Number of items in a product line

Product line width/breadth

Number of lines a company markets in a particular category

Product Life Cycle

1. Introductory stage

2. Growth stage

3. Maturity stage

4. Decline stage

Introductory stage

High failure rates, high advertising and production costs, negative profits, little competition

Growth stage

Increasing rate of sales, entrance of competitors, wider distribution

Maturity stage

Sales increase at decreasing rate, saturated market, prices and profits fall

Decline stage

Long-run drop in sales, elimination of all non-essential marketing expenses

Different kinds of life cycles

• High technology (stair-effect, increasing gradually with small decreases in between)

• Fads (very popular at first, then drop off completely)

• Styles of fashions (very popular when first introduced, then come in and out of fashion)

How to extend life cycle

Sell to new segments, promote more varied use, stimulate more frequent use, encourage more use per occasion

Repositioning

Changing the perspective of how consumers view the use of a product

Improvement

Modifications to a product formula or service process

Line extensions

Developing a product that is closely related to an existing successful product, but designed to meet a different need

Product modification

Changing one or more of the product’s characteristics

Brand extensions

Product developed is not closely (but still somewhat) related to product(s) in existing product line

7 Steps of developing new products

1. Idea generation

2. Idea screening

3. Concept testing

4. Business analysis

5. Development of product

6. Test markets

7. Product launch

Product Adoption Process (consumer)

1. Awareness

2. Interest

3. Evaluation

4. Trial

5. Adoption

Types of adopters

1. Innovators

2. Early adopters

3. Early majority

4. Late majority

5. Laggards

Factors contributing to growth in services

Aging population, increased leisure time, high per capital income, changing social and cultural values

“The Big 4” Characteristics of services

1. Intangibility

2. Perishability

3. Inseparability

4. Heterogenity (variability)

The 7 P’s (Service marketing mix)

1. Product

2. Price

3. Place

4. Promotion

5. People

6. Process

7. Physical evidence

Strategies for failure recovery

Zero defects, act quickly, encourage complaints, contingency planning, empowerment, learn from lost customers

Levels of brand loyalty

• Recognition

• Preference

• Insistence

Brand equity

Price of branded product - price of unbranded product

Types of branding policies

• Family: same brand for different products

• Individual: one brand for one product

• Private label: Trader Joe’s brand, Publix brand

Branding strategies

1. Brand extension

2. Brand stretching

3. Co-branding

4. Genericized brands

Shrinkflation

Retailers reduce size of package rather than raise price

Upstream firm

Close to raw materials

Downstream firm

Close to customers

Importance of supply chain

Time utility, place utility, form utility

Vertical Marketing System

Marketing channel that a single member coordinates

Horizontal Integration

When channel members at the same level acquire other channel members

Types of retailers

1. Big box - wide variety of items at discount prices (Target, Walmart)

2. Category killers - Big box retailer that focuses on one or a few product categories

3. Extreme value retailers - small, full-line discount stores with a limited assortment at discount prices (Dollar Tree, Dollar General)