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88 terms

MKT 301 Test #2

Chapters 6-10
STUDY
PLAY
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