Untitled Flashcards Set

A product should meet customer needs and wants, be a solution to a problem and provide value.

Definition: a product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a need or a want.

Good: tangible offering

Service: intangible offering that does not involve ownership

3 levels of a product,

-              Core product: the key benefit consumers want from a product.

-              Actual product: brand name, packaging, features, design, and quality level.

-              Augmented product: product support, after-sale service, warranty, delivery, and credit.

Product line: a set of closely related product items

-              The depth of the product line is the number of alternatives within product lines.

-              Expansion of the product line can be done by product line filling and stretching.

Product mix: all product line and items that a company offers for sale.

-              Width refers to the number of products lines.

-              Consistency refers to how closely related the product lines are.

-              Companies can extend the mix by adding a new line.

Consumer Product Classifications

-              Convenience

-              Shopping

-              Specialty

-              Unsought

Business to business products are classified according to how organisational customers use them.

Branding

A brand is a collection of symbols intended to create an image in the customers.

A brand image is the set of benefits that a consumer has regarding a particular brand or the customers perception of the brand.

A brand name is the part of a brand that can be spoken.

A brand mark is the park of the brand that is not made up of words often symbols and designs.

A trademark is the brand name or mark that has been legally registered.

Benefits of having a brand:

-              Company value.

-              Consumer preference and loyalty.

-              Barrier to competition.

-              High profits.

-              Base for brand extensions.

-              Coordinate channel behaviour.

Benefits to consumers

-              Can communicate features.

-              Reduce risk in purchasing.

-              Simplifies the purchase decision.

-              Symbolic value.

-              Assure quality and reliability.

Brand equity: the value of the brand

Types of branding

-              Individual branding: each product is branded separately.

-              Family branding: the same brand for several products.

-              Manufacturer brands: brands owned by producers and identified with the product at the point of sale.

-              Private label brands: brands owned by resellers.

-              Co-brand: where two established brands are used on the same product.

-              Licensed brand: where a company licenses names or symbols previously created by other manufacturers.

Packaging

-              Designed to attract the consumers attention.

-              Provides easy brand recognition.

-              Communicates the product benefits quickly.

-              “Protect what it sells and sell what it protects”.

Developing new products: continuous process of looking for ways to make the existing product range better.

PLC = Product life cycle

5 stages:

-              Product development

-              Introduction

-              Growth

-              Maturity

-              Decline  

Services are important in times of growth and development

A service is the result of some application of human or mechanical efforts to people or objects.

Four characteristics of a service

-              Intangible, cannot be seen, heard, felt, or smelt before purchase.

-              Inseparability, services cannot be separated from their provider.

-              Variability, quality depends on when, how, where and who provides them.

-              Perishability, service cannot be stored for later use.

Tangibility is the major characteristic the distinguishes a service from a good. 

Tangibility is a spectrum, one end being good dominant and the other being service dominant.

Inseparability meaning that the consumption of the service by customers cannot be separated from the production of the service.

Variability in the quality of service is common due to the nature of human behaviour.

Employee training and standard procedures are established to help increase consistency and reliability.

Creating Marketing mix for services

Product = development of services, bundle consisting of core service and supplementary service

Price = based on different variables, time, performance, level of demand

Place = distribution of services, using short and direct marketing channels

Promotion = typically includes tangible cues that symbolise the service

People = the human aspect of services

Physical Evidence = the tangible and intangible cues the customer may observe

Price = a measure of value to both buyers and sellers or the amount of money charger for a product or service

Seller’s value doesn’t always equal the buyers.

The key when setting prices is what consumers are willing to pay for the benefit or value provided.

Product, promotion and place all create marketplace value.

Price captures value back via profit.

Ineffective pricing is when the perceived value or the customers’ ability and/or willingness to pay is under or overshot.

5 c’s of pricing

-              Company objectives

-              Competition

-              Costs

-              Customers

-              Channel members.

Price competition = emphasising price and matching or beating competitors’ prices.

Non-Price competition = emphasising factors other than price to distinguish a product from competing brands

Factors that affect pricing decisions

-              Marketing and company objectives

-              Costs

-              Marketing mix variables

-              Demand

-              Customer interpretations of price

-              Consumer perceptions of the product

6 steps in establishing pricing.

1.        Developing pricing objectives

2.        Assessment of the target markets evaluation of price

3.        Evaluation of competitors prices

4.        Selection of a basis for pricing

5.        Selection of a pricing strategy

6.        Determination of a specific price

Cost based pricing = adding a dollar amount or percentage to the cost of the product.

Consumer value-based pricing = based on the level of benefits offered by the products and often demand.

Competition based pricing = influenced primarily by competitors’ prices

Differential pricing strategy = charging different prices to different buyers for the same product

New-product pricing strategies = price skimming and penetration pricing

Product-Mix pricing strategies = establishing and adjusting prices of multiple products with the product mix

Price skimming = charging the highest possible price so the buyer who wants it most

Penetration pricing = setting prices low to penetrate a market

Price lining = setting prices across an entire product line

Optional product pricing = pricing optional or accessory products sold with the main product

Captive pricing = pricing products that must be sold with the main product

Bundle pricing = packaging together two or more complementary products and selling them for a single price

Price adjustments

-              Discount and allowance pricing = reducing prices to reward customer responses

-              Segmented pricing = adjusting prices to allow for differences in customers, products or locations

-              Psychological pricing = adjustment for psychological effect

-              Promotional pricing = temporarily reducing prices to increase short term sales

-              Geographical pricing = adjustment for geographical location of customers

-              Dynamic pricing = adjusting prices continually to meet individual customer needs and situations

-              International pricing = adjusting prices for international markets

Supply Chain = all activities associated with the transformation/flow of products from raw materials through to delivery.

Marketing intermediaries = individuals or organisations that act in the distribution channel between the producer and the end users.

 Using intermediaries allows manufacturers to focus on their core business, carry out direct distribution even if they lack financial resources, match supply and demand and make distribution more efficient. However, they do give up some control over the distribution.  

Two critical roles for intermediaries:

-              Sales specialist for suppliers

-              Purchasing agent for customers

Marketing logistics = tasks involved in the physical flow of materials from point of origin to points of consumption to meet customer requirements.

Marketing Channel = the interrelated organisation and individuals involved in the process of making a product or service available to end users.

Channel management = managerial activities used to distribute products in the right quantities to the right locations at the right time.

Marketing Channel management effects the fulfillment of delivery and customer expectations.

Effective marketing channels achieve time utility, Place utility, possession utility, form utility, exchange efficiencies.

Functions of a marketing channel:

-              Information

-              Promotion

-              Facilitate exchange.

-              Physical distribution

-              Financing

-              Risk taking.

Channel strategy involves three key decisions, 1) select the most effective distribution channel, 2) the level of distribution intensity and 3) the degree of channel integration.

Channel level = a layer of intermediaries who perform some work in bringing the product and its ownership closer to the final buyer, the number of intermediaries indicates the length of a channel.

A direct channel has no intermediaries.

Distribution intensities = number of intermediaries at each level

Exclusive = one intermediaries

Selective = selling through only those intermediaries who give the product special attention

Intensive = selling through all responsible sellers who will stock or sell the product

Channel integration = combining separate businesses seeking to maximise their profits.

Vertical integration = combining two or more stages of the marketing channel under one management

Horizontal integration = combining organisations at the same level of operation under one management

Channel captain = dominant leader of a marketing channel

Channel power = the ability of one channel member to influence another member

Channel conflict = occurs when self-interest creates misunderstanding about roles expectations and objectives

Retailing = all activities involved in selling goods or services directly to the final customer

Retailers = businesses whose sales come primarily

Promotion = communication used to build and maintain relationships by informing and persuading target audiences

Communication = a sharing of meaning between sender and receiver

5 key functions of promotion are to persuade, remind, inform, build, and assist.

The communication process elements are source, receiver, encoding process, message, communications channel, decoding process, noise, and feedback.

IMC = integrated marketing communications, the management of promotion

There are two types of integration in IMC, message/tactial and strategic.

Promotion objectives = awareness, demand stimulation, encourage product trial and identify prospects

Promotional strategies = Push or Pull

Push strategy = trying to push products into the market

Pull strategy = trying to create demand for products

Advertising = paid non-personal communications about an organisation or product to the target audience

Advertising is self-regulated which benefits all parties including the government, industry and consumer.

PR (Public Relations) = activities to build good relations

PR objectives = introduction of new products to channel and consumers and bringing attention to their involvement in the community

Personal selling = paid personal communication to inform customer and persuade them to purchase products.  

Sale promotion = short term incentives to build interest or encourage purchases of a product during a specified time frame.

Advantages of sale promotions include short term consumer sales, financial incentives for trade and creation of excitement.

Disadvantages of sale promotions shifts rather than increases sales, can lead to trade wars, be overused, and easily copied.

A salesperson is an individual representing a company to customers.

Digital marketing = the company’s efforts to market products and services and build customer relationships over the internet and cellular networks

Main forms of digital marketing are websites, online ads, email, and social media.

Digital marketing is moving away from static ads to interactive ads.

Direct marketing = tailoring offers and content to the needs and interests of narrowly defined segments or individuals

Main forms of direct marketing are direct print, response, telemarking and kiosks.

Direct marketing is the process of interacting directly with targeted individuals for an immediate response.

Buyer benefits of direct marketing are convivence easy to use, private, interactive, and immediate.

Seller benefits of direct marketing are low-cost, efficient, targeted, flexible, and real time marketing.

A good customer database is an organised collection of comprehensive data about individual customers or prospects.