MKT 301 Test #2

Created by markod18 

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Chapters 6-10

Product

can be either a good or service; central offering in the marketing exchange

Intangibility

determines whether a product is a pure good, pure service or hybrid of both

Experience Marketing

the experience is the primary purchase, rather than a good/service

Search Qualities

attributes that may be evaluated prior to a purchase as the customer learns about competitive offerings

Experience Attributes

need some trial or consumption before evaluation

Credence Qualities

difficult to judge even after consumption; professional service providers are dominated by this

Exchange

company offers something, customer offers something in return; goal is to create mutual benefit to establish long-term customer relationships

Perishability

Services are simultaneously produced and consumed; services cannot be stored while goods can; services cannot be separated from provider while goods can

Variability

Services change across customers and across time

Relating to Variability, Marketers need to

Try to reduce bad variability
Try to improve good variability

Core Elements

essential to the product and expected; defines the business

Value-Added Elements

supplemental and marketers can compete/differentiate on them; satisfies customers

Firm's Marketing Offering is comprised of...

core and value-addeds

Competition

defined broadly

Product Mix

comprised of several product lines which can vary in breadth and depth

Alpha Company

produces two key product lines: health care personal goods and beauty personal goods

Beta Company

offers a slightly broader product line but less depth

Gamma Company

may appear to produce three product lines, but they may all be characterized as organic

Brand

starts with a name; marketers should chose brand names that convey brand information; brand name meaning built over time; invoke a certain image

Customer Benefits of Branding

brands identify company ownership, make customer decision making easier, serve as status symbol

How to Pick a good Brand Name

suggest product benefits, be memorable and positive, fit company brand/logo, simple and emotional

Company Benefits of Branding

induce loyalty, allow for premium pricing, allow single firm to pursue multiple targets

Brand Personalities

capture specific info about the brand and holistic perceptions of the brand

Packaging

combine brand image and brand personality

Consumers experience brands...

affectively, intellectually and behaviorally

Brand Communities

Customers who connect with like-minded customers

6 Principles to make ideas stick

simple, unexpected, concrete, credible, emotional and stories

Umbrella Approach

attach same brand name to products (Nike, Adidas)

House of Brands Approach

introduce a new brand for every product line (P&G)

Brand Extensions

leverages the brand's good name to get customers to buy something new (Apple)

Co-Branding

two companies collaborating in a joint venture to create a good or service for the customer

Global Brand

30% of revenue from other countries

Private Label Brands

retailer can offer decent quality for lower prices

Brand Equity/Valuation

worth of a brand

Why improve products?

better corporate pride, be consistent w/ image, attract customers, beat competition

Top Down Approach

idea generation, design and development, commercialization

Bottom Up Approach

customer and company co-create products

Newness

term that can be applied to a new product for up to six months following release

New Product Development Process

idea generation, refinement, obtain feedback, use results to develop prototype, test market on small scale, launch

Forecast Sales (need to know)

market potential, purchase intention, price

Forecasting

goal is to estimate sales potential

Forecasting Equation

$SP = MP x PI x Pr

Product Life Cycle Stages

Introduction, Growth, Maturity, Decline

Skimming Strategy

implement a high initial price and eventually lessen it

Penetration Pricing

implement low initial price and gradually increase as product grows/becomes known

Market Penetration

sell same products to current markets

Market Development - Innovation

sell existing products to new markets

Product Development

sell new product to current markets

Diversification

pursue new markets with new products; toughest

Big Five

new products crucial to growth; new product development process; products evolve through a life cycle; models can be used to forecast sales; marketers should study important trends

Price

that which is given up in an exchange to acquire a good or service

Supply and Demand

Demand tends to decrease as price increases

Demand Curve

graph relating the quantity sold and price, which shows the maximum number of units that will be sold at a given price

3 Factors to Estimating Demand

Consumer tastes
Price and availability of similar products
Consumer income

Inelastic Demand

An increase or a decrease in price will not significantly affect demand

Price Sensitivity

greater when item is a luxury, customers don;t care about price, there are substitutes

Elastic Demand

customers buy more of a product when the price changes

Unitary Elasticity

increase in sales exactly offsets a decrease in prices, so total revenue remains the same

Profit

increases as price increases; demand increased when price increases
(price x demand) - (fixed costs) - (variable costs x demand)

Price Strategy

establishes the initial price for a product and the intended direction for price movements over the product life cycle

Four General Pricing Approaches

Demand (McDonalds), Cost (retail), Profit (Kroger), Competition (Rolex, Walmart)

Yield Management Pricing

changing of the price based on the day, time, week, and even season (airlines)

Revenue

price charged to customers multiplied by the number of units sold

Profit

revenue minus expenses

Break Even Pt Qty

fixed cost / (unit selling price - unit variable cost)

Variable Cost

Varies with changes in level of output

Fixed Cost

Does not change as level of output changes

Setting the Right Price

Establish pricing goals
Estimate demand, costs, and profits
Choose a price strategy to help determine a base price
Fine-tune the base price with pricing tactics

Price Fluctuations

temporary cuts may be negative; coupons only relevant to clippers

Distribution Channel

network of firms which are interconnected, provides sellers access to goods/services and buyers a means of purchasing those goods

Distribution Network

consumers, manufacturers, distributors, wholesalers, retailers

Supply Chain Logistics

logistics is the process of coordinating the flow of all those goods/services and information throughout the channel, movement and ownership of goods

Marketing Channel

individuals/firms involved in the process of making a product/service "available" for use or consumption

Customer Oriented Activities

order, handle, ship

Product Oriented Activities

storage, display

Supply Chain Management

when a company is dealing with partners that are upstream

Channel Members

partners that are downstream

Distribution Intensity

how many intermediaries will a manufacturer go through to distribute its goods to consumers?

How to solve problems in channels

enhance communication

Channel Tension

What is the most effective and efficient way to distribute the product? conflict may arise

Strategic Alliance

one firms marketing channel is used to sell another firms products

Highest Profit Items

impulse buys, generally just below eye level height; kids cereal kept within reach of kids

Pull Strategy

incentives are offered to consumers to pull products through the channel

Push Strategy

incentives are offered to distribution partners to push products through the channel; targets suppliers

Double Marginalization

when the manufacturer wants a markup and the retailer wants a second markup

Vertical Integration

When manufactures competes with its partners

Horizontal Integration

Different types of retailers are competing

Franchising

Company can retain some control without complete ownership or capital expenditure

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