Exam 3 Marketing

Actual product

brand name

quality level

packaging

features/design

Associated services

financing

product warranty

product support

What is a product?

anything a business offers to satisfy a customer’s want or need

Specialty products

are those for which customers express such a strong preference that they will expend considerable effort to search for the best suppliers

Shopping products

products or services for which customers will spend a fair amount of time comparing alternatives, such as furniture, appliances, apparel, fragrances, and travel

Convenience products

products or services for which the consumer is not willing to expend any effort to evaluate prior to purchase

Unsought products

products or services that consumers either do not normally think of buying or do not know about

Product mix

the complete set of all products and services offered by a firmPr

Product line

groups of associated items that consumers tend to use together or think of as part of a group of similar products or services

Product mix breadth

represents a count of the number of product lines offered by the firm

Product line depth

equals the number of products within a product line

Cannibalize in marketing

when a company’s new product takes sales away from one of its existing products instead of bringing in new customers

Branding

Increases awareness and provides a way to differentiate from competitors

What makes a brand?

brand name

URL’s

logos and symbols

characters

slogans

jingles/sounds

What is brand equity?

the value a brand adds to a product because of the brand’s name, reputation, and customer perception

Brand awareness

The more aware of or familiar consumers are with a brand, the easier the decision-making process is for consumers, which improves the chances of purchase

Perceived value in branding

the relationship between a product’s or service’s benefits and its costs

What is brand association?

reflect the mental and emotional links that consumers make between a brand and its key product attributes, such as a logo and its color, a slogan, or a famous personality

What is brand loyalty?

occurs when a consumer buys the same brand’s product or service repeatedly over time rather than buying from multiple suppliers within the same category

Branding strategies

• Whether to use manufacturer brands or retailer/store brands.

• How to name brands and product lines.

• Whether or not to extend the brand name to other products and markets.

• Should the brand name be used with another firm or licensed to another firm?

• Whether or not the brand should be repositioned

Manufacturer/national brands

are owned and managed by the manufacturer

Retailer/store brands

are products that are developed by retailers

Family brand

a firm can use its own corporate name to brand all its product lines and products

Individual brands

the use of individual brand names for each of a firm’s products

Brnad extension

Same brand name in different product line

Line extension

Same brand name within the same product line

Brand dilution

occurs when a brand extension adversely affects consumer perceptions about the attributes the core brand is believed to hold

Brand repositioning

a strategy in which marketers change a brand’s focus to target new markets or realign the brand’s core emphasis with changing market preferences

Co-branding

the practice of marketing two or more brands together, on the same package or promotion

Brand licensing

a contractual agreement between firms, whereby one firm allows another to use its brand name, logo, symbols, or characters inn exchange for a negotiated fee

Primary package

the package the consumer uses, such as a tube of toothpaste, from which he or she typically seeks convenience in terms of storage, use, and consumption

Secondary package

the wrapper or exterior carton that contains the primary package and provides the UPC label used by retail scanners

Sustainable packaging

product packaging that has less of a negative impact on the environment

What are the 5 C’s of pricing?

1. company objectives

2. customers

3. costs

4. competition

5. channel members

What is pricing?

The overall sacrifice a consumer is willing to make to acquire a specific product or service

Profit orientation

a company objective that can be implemented by focusing on target profit pricing, maximizing profit, or target return pricing

Profit-oriented company objective

Institute a companywide policy that all products must provide for at least an 18 percent profit margin to reach a particular profit goal for the firm

Sales-oriented company objective

Set prices very low to generate new sales and take sales away from competitors, even if profits suffer

Competitor-oriented company objective

To discourage more competitors from entering the market, set prices very low.

Customer-oriented company objective

Target a market segment of consumers who highly value a particular product benefit and set prices relatively high (referred to as premium pricing)

Target profit pricing

a pricing strategy implemented by firms when they have a particular profit goal as their overriding concern

Maximizing profits

a profit strategy that relies primarily on economic theory

Sales orientation

a company objective based on the belief that increasing sales will help the firm more than will increasing profits

Premium pricing

a competitor-based pricing method by which the firm deliberately prices a product above the prices set for competing products to capture those consumers who always shop for the best or for whom price does not matter

Competitor orientation

a company objective based on the premise that the firm should measure itself primarily against its competition

Status quo pricing

only change prices to meet competitors’ prices

Customer orientation

a company objective based on the premise that the firm should measure itself primarily according to whether it meets its customer’s needs

Prestige products or services

products and services that consumers purchase for status rather than functionality

Price elasticity of demand

measures how changes in a price affect the quantity of the product demanded

Elastic market

refers to a market for a product or service that is price sensitive

Inelastic market

refers to a market for a product or service that is price insensitive

Demand curve

shows how many units of a product or service consumers will demand during a specific period at different prices

Individualized pricing

refers to the process of charging different prices for goods or services based on the type of customer; time of day, week, or even season; and level of demand

Income effect

the change in the quantity of a product demanded by consumers due to a change in their income

Substitution effect

consumer’s ability to substitute other products for the focal brand, thus increasing the price elasticity of demand for the focal brand

Cross-price elasticity

the percent change in demand for product A that occurs on response to a percentage change on price of product B

Complementary products

products who’s demand curves are positively related, such that they rise or fall together

Substitute products

products for which changes in demand are negatively related

Total costs

the sum of the variable and fixed costs

Variable costs

those costs, primarily labor and materials, that vary with production volume

Fixed costs

those costs that remain essentially at the same level, regardless of any changes in the volume of production

Break-even analysis

technique used to examine the relationships among cost, price, revenue, and profit over different levels of production and sales to determine the break-even point

Break-even point

the point at which the number of units sold generates just enough revenue to equal the total costs

Monopoly

one firm provides the product or service in a particular industry

Oligopolistic competition

competition that occurs when only a few firms dominate a market

Monopolistic competiton

many firms sell differentiated products at different prices

Pure competition

many firms sell commodities for the same prices

Pricing strategy

a long-term approach to setting prices for the firm’s products

Penetration pricing

a new product or service pricing strategy in which the initial price is set low with the objective of building sales, market share, and profits quickly and to deter competition from entering the market

Price skimming

a strategy of selling a new product or service at a high price that innovators and early adopters are willing to pay in order to obtain it

Price discrimination

the practice of selling the same product to different resellers or to the ultimate consumer at different prices

Price fixing

the practice of colluding with other firms to control prices

What is MSRP?

the price that manufacturers suggest retailers use to sell their merchandise

Wholesalers

firm engaged in buying, taking title to, often storing, and physically handling goods in large quantities, then reselling the goods to retailers or industrial or business users

Supply chain management

a set of approaches and techniques firms employ to efficiently and effectively integrate their suppliers, manufactures, warehouses, stores and transportation channel members into a seamless operation in which

Distribution center

a facility for the receipt, storage, and redistribution of goods to company stores or customers

Direct supply chain

manufacturer to customer

Indirect supply chain (one intermediary)

manufacturer to retailer to customer

Indirect supply chain (two intermediaries)

manufacturer to wholesaler to retailer to customer

Franchising

a contractual agreement between a franchisor and a franchisee that allows the franchisee to operate a business using a name and format developed and supported by the franchisor

Reward power

a type of marketing channel power that occurs when the channel member exerting the power offers rewards to gain power, often a monetary incentive, for getting another channel member to do what it wants to do

Coercive power

a type of marketing channel power that occurs when a member uses threats or punishment of the other channel member for not undertaking certain tasks

Referent power

a type of marketing channel power that occurs if one channel member wants to be associated with another channel member

Expertise power

a type of marketing channel power that occurs when a channel member uses its expertise as leverage to influence the actions of another channel member

Information power

a type of marketing channel power within an administrated vertical marketing system in which one party provides or withholds important information to influence the actions of another party

Legitimate power

a type of marketing channel power that occurs if the channel member exerting the power has a contractual agreement with the other channel member that requires the other channel member to behave in a certain way

Strategic relationship

a supply chain relationship that the members are committed to maintaining long term, investing in opportunities that are mutually beneficial

What is a UPC?

the black and white bar code found on most merchandise