Marketing Final

Core customer value: The basic problem-solving benefits that consumers are seeking.

SKU: Stock-keeping unit. Allows vendors to track inventory

Product line: Group of associated items, such as those that consumers use together or think of as part of a group of similar products. 

Product mix: The complete set of all products offered by a firm.

Breadth: Number of product lines offered by a firm; also known as variety.

Depth: The number of categories within a product line.

Convenience products/services: Products or services for which the consumer is not willing to spend any effort to evaluate prior to purchase.

Shopping products/services: Products or services for which consumers will spend time comparing alternatives, such as apparel, fragrances, and appliances.

Specialty products/services: Products or services for which the consumer is not willing to spend any effort to evaluate prior to purchase.

Unsought products/services: Products or services consumers either do not normally think of buying or do not know about.

6 things that make a brand: Brand name, URLs, Logos and symbols, Characters, Slogans, Jingles/Sounds.

Manufacturers/national brands ownership: Brands owned and managed by the manufacturer. 

Private labels/store brands 0wnership: Brand developed and marketed by a retailer and available only from the retailer.

Brands add value for customer and the firm: facilitate purchases, establish loyalty, protect from competition and price competition, affects market value, and assets that are legally protected and cannot be used by others. 

Brand equity: The set of assets and liabilities linked to a brand that add to or subtract from the value provided by the product or service.

brand awareness (4 aspects of brand equity): Measures how many consumers in a market are familiar with the brand and what it stands for; created through repeated exposures of the various brand elements (brand name, logo, symbol, character, packaging, or slogan) in the firm’s communications to consumers.

perceived value (4 aspects of brand equity): The relationship between a product’s or service’s benefits and its cost.

brand associations (4 aspects of brand equity): The mental links that consumers make between a brand and its key product attributes; can involve a logo, slogan, or famous personality.

brand loyalty (4 aspects of brand equity): 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.

Family brand naming strategy: A firm’s own corporate name used to brand its product lines and products. 

Individual brand naming strategy: The use of individual brand names for each of a firm’s products.

Brand extensions: The use of the same brand name for new products being introduced to the same or new markets.

line extensions: The use of the same brand name within the same product line; represents an increase in a product line’s depth.

Brand dilution: Occurs when a brand extension adversely affects consumer perceptions about the attributes the core brand is believed to hold.

Brand Licensing: A contractual arrangement between firms, whereby one firm allows another to use its brand name, logo, symbols, or characters in exchange for a negotiated fee.

Co-branding: The practice of marketing two or more brands together, on the same package or promotion.

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.

Primary packaging: The packaging the consumer uses, such as the toothpaste tube, from which he or she typically seeks convenience in terms of storage, use, and consumption.

Secondary packaging: The wrapper or exterior carton that contains the primary package and provides the UPC label used by retail scanners; can contain additional product information that may not be available on the primary package

Labeling: provide information the consumer needs for a purchase decision and consumption of the product. 

Innovation: The process by which ideas are transformed into new products and services that will help firms grow.

Pioneers: New product introductions that establish a completely new market or radically change both the rules of competition and consumer preferences in a market.

Diffusion of innovation: The process by which the use of an innovation, whether a product or a service, spreads throughout a market group over time and over various categories of adopters.

Innovators (diffusion of innovation): Those buyers, representing approximately 2.5 percent of the population, who want to be the first to have the new product or service.

Early adopters (diffusion of innovation): The second group of consumers in the diffusion of innovation model, after innovators, to use a product or service innovation represent about 13.5 percent of the population. They generally don’t like to take as much risk as innovators but instead wait and purchase the product after careful review.

Early majority (diffusion of innovation): A group of consumers in the diffusion of innovation model that represents approximately 34 percent of the population; members don’t like to take much risk and therefore tend to wait until bugs are worked out of a particular product or service; few new products and services can be profitable until this large group buys them.

Late Majority (diffusion of innovation): The last group of buyers to enter a new product market, representing approximately 34 percent of the population; when they do, the product has achieved its full market potential.

Laggards (diffusion of innovation): Consumers, representing approximately 16 percent of the population, who like to avoid change and rely on traditional products until they are no longer available. Sometimes laggards never adopt a product or service.

The Product Development Process: Idea generation, concept testing, product development, market testing, product launch, evaluation of results.

Sources of new product ideas: Internal R&D, R&D consortia, licensing, brainstorming, outsourcing, competitors products, customer input.

R&D consortia: A group of firms and institutions, possibly including government and educational institutions, that explore new ideas or obtain solutions for developing new products.

Concept testing: The process in which a concept statement that describes a product or a service is presented to potential buyers or users to obtain their reactions.

Product development: Entails a process of balancing various engineering, manufacturing, marketing, and economic considerations to develop a product’s form and features or a service’s features. 

Prototype: The first physical form or service description of a new product, still in rough or tentative form, that has the same properties as a new product but is produced through different manufacturing processes, sometimes even the crafted individually

Alpha testing: An attempt by the firm to determine whether a product will perform according to its design and whether it satisfies the need for which it was intended; occurs in the firm’s research and development (R&D) department.

Beta testing: Having potential consumers examine a product prototype in a real-use setting to determine its functionality, performance, potential problems, and other issues specific to its use.

Premarket testing: Conducted before a product or service is brought to market to determine how many customers will try and then continue to use it. 

test marketing: A method of determining the success potential of a new product; it introduces the offering to a limited geographical area prior to a national launch.

Product Life Cycle: Defines the stages that new products move through as they enter, get established in, and ultimately leave the marketplace and thereby offers marketers a starting point for their strategy planning. 

Introduction stage (product life cycle): Stage of the product life cycle when innovators start buying the product.

Growth stage (product life cycle): Stage of the product life cycle when the product gains acceptance, demand and sales increase, and competitors emerge in the product category.

Maturity stage (product life cycle): Stage of the product life cycle when industry sales reach their peak, so firms try to rejuvenate their products by adding new features or repositioning them.

Decline stage (product life cycle): Stage of the product life cycle when sales decline and the product eventually exits the market.

Shape of PLC: Bell curved in theory. 

Service-product continuum: from a pure service to a pure good, with most examples lying in the middle with some services and some goods. A doctor is a pure service and a grocery store is a pure good. 

Differences between services and goods: inseparable, intangible, perishable, heterogeneous.

Price: The overall sacrifice a consumer is willing to make—money, time, energy—to acquire a specific product or service.

Price & value: Price decisions are a strategic opportunity to create value. 

5 C’s of pricing: Company objectives, customers, costs, competition, channel members

Profit orientation: A company objective that can be implemented by focusing on target profit pricing, maximizing profits, or target return pricing.

Sales orientation: A company objective based on the belief that increasing sales will help the firm more than will increasing profits.

Competitor orientation: A company objective based on the premise that the firm should measure itself primarily against its competition.

 competitive parity: A firm’s strategy of setting prices that are similar to those of major competitors.

Customer orientation: A company objective based on the premise that the firm should measure itself primarily according to whether it meets its customers’ needs.

Demand curve: Shows how many units of a product or service consumers will demand during a specific period at different prices.

Elastic demand: Refers to a market for a product or service that is price sensitive; that is, relatively small changes in price will generate fairly large changes in the quantity demanded.

Inelastic demand: Refers to a market for a product or service that is price insensitive; that is, relatively small changes in price will not generate large changes in the quantity demanded.

Income effect: The change in the quantity of a product demanded by consumers due to a change in their income.

Substitute products: Products for which changes in demand are negatively related; that is, a percentage increase in the quantity demanded for product A results in a percentage decrease in the quantity demanded for product B.

Complemntary products: Products whose demand curves are positively related, such that they rise or fall together; a percentage increase in demand for one results in a percentage increase in demand for the other.

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

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

Variable costs: Those costs, primarily labor and materials, that vary with production volume.

Break-even point: The point at which the number of units sold generates just enough revenue to equal the total costs; at this point, profits are zero.

Reference price: The price against which buyers compare the actual selling price of the product and that facilitates their evaluation process. 

Everyday low pricing (EDLP): A strategy companies use to emphasize the continuity of their retail prices at a level somewhere between the regular, non-sale price and the deep-discount sale prices their competitors may offer.

high-low pricing strategy: An alternative to EDLP. A pricing strategy that relies on the promotion of sales, during which prices are temporarily reduced to encourage purchases.

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; after the high-price market segment becomes saturated and sales begin to slow down, the firm generally lowers the price to capture (or skim) the next most price-sensitive segment.

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

Leader pricing: Consumer pricing tactic that attempts to build store traffic by aggressively pricing and advertising a regularly purchased item, often priced at or just above the store’s cost. 

Loss leader pricing: Loss-leader pricing takes the tactic of leader pricing one step further by lowering the price below the store’s cost.

Bait and switch: A deceptive practice of luring customers into the store with a very low advertised price on an item (the bait), only to aggressively pressure them into purchasing a higher-priced model (the switch) by disparaging the lower-priced item, comparing it unfavorably with the higher-priced model, or professing an inadequate supply of the lower-priced item.

Predatory pricing: A firm’s practice of setting a very low price for one or more of its products with the intent to drive its competition out of business; illegal under both the Sherman Antitrust Act and the Federal Trade Commission Act.

Price discrimination: The practice of selling the same product to different resellers (wholesalers, distributors, or retailers) or to the ultimate consumer at different prices; some, but not all, forms of price discrimination are illegal.