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Marketing Exam 2: Unit 6

Terms in this set (109)

What is product mix breadth?
The number of the product or service lines (categories) that a company offers to its customers.
What is product line depth?
the number of items in a given product line
What is product item design?
-manufacturing of product parts
-understanding how item will perform its function in a safe/efficient manner
-product must be made economically and be attractive to target customers
What does SKU stand for?
stock-keeping units
What are the three things that companies need to make key decisions about?
1. product mix breadth
2. product line depth
3. product item design
Why would a company decide to expand the number of product lines offered?
due to a favorable economic opportunity
What are three ways that a new product can connect to a companies existing product?
1. undertaking a business whose profit stream will probably correlate negatively with the profit stream of existing businesses, thus reducing the overall risk of the enterprise

2. leveraging a key asset of the company that underlies the current product offerings

3. tapping into complementary-in-use products and thus enabling the firm to be a "total solution supplier"
What are the nine product line depth considerations?
1. customer heterogeneity and requirements specification
2. ability to configure the offering to the segment
3. competitive impact
4. legitimization
5. category size impact
6. net impact on own margins
7. brand equity
8. cost of variety vs. scale opportunity
9. collaborator reaction
What does customer heterogeneity and requirements specification refer to?
essentially if consumer requirements are relatively homogenous across the market and those requirements can be met by products of varied specifications, the line can be shorter
What does ability to configure the offering to the segment refer to?
refers to a company being able to make a product that is intended for the customers to see the product as being made for them
What does competitive impact refer to?
a company may try to achieve competitive advantage with its product line through two ways:
1. prevent a competitor
2. achieve a point of sustainable differentiation with a product line expansion
What is one way a company can preempt a competitor in competitive impact?
the company can expand its product line and serve a greater range of customer segments
What does legitimization refer to?
extension of a product line by a leading firm into a product type or niche at a particular price point can legitimize that spot in the market, possibly to the benefit of a competitor or potential entrant
What does category size impact refer to?
understanding whether a new item will increase the demand for the product category overall
What does net impact on the company/s own margins refer to?
this refers to how net impact can occur in three places:
1. an expansion of the category
2. taking away a sale that would otherwise have been made by a competitor
3. taking away a sale that otherwise would have gone to an existing item in a company's line
What is product line extension?
A new product marketed by an organization that already has at least one other product being sold in that product or market area. Line extensions are usually new flavors, sizes, models, applications, strengths, and the like. Sometimes the distinction is made between near line extensions (very little difference) and distant line extensions (almost completely new entries).
What does brand equity refer to?
The set of assets linked to a brand's name that adds to or subtracts from the value of that product or service
What does cost of variety versus scale opportunity refer to?
assessing the overall effect of line extension on costs
What does collaborator reaction refer to?
how companies assess how partners and collaborators such as distributors and retailers will react to how new items are marketed
List the marketing strategy formation process.
1. analysis (the five Cs)
2. Decisions (1. aspirations, 2. action plan)
3. outcomes
What are the five C's of the analysis of the marketing strategy formation process?
1. company
2. collaborators
3. customers
4. competitors
5. context
What does the aspirations portion of the decisions in the marketing strategy formation process consist of?
STP
segmenting
targeting
positioning
What does the action plan of the decisions portion of the marketing strategy formation process consist of?
the marketing mix (4Ps)
1. price
2. product
3. place
4. promotion
What are the four different levels of products that theodore levitt described? (product structures)
1. generic
2. expected
3. augmented
4. potential
What are generic products?
a combination of elements required to participate in the market, or the "table stakes" of the game
-features needed to deliver the core benefit of the product
What are expected products?
includes the generic product plus the minimum that the customer normally expects from a product in the category
What are augmented products?
goes beyond the expected product to include unexpected value-enhancing elements
What are potential products?
an extension to the augmented product that includes "everything that might be done to attract and hold customers"
What is the number one driver of new product profitability according to Cooper?
a unique superior product-a differentiated product that delivers unique benefits and a compelling value proposition to the customer or user
What do unique and superior products have in common according to Cooper?
1. are superior to competitors' products in terms of meeting users' needs
2. solve a problem the customer has with a competitive product
3. feature good value for the money and excellent price and performance characteristics
4. provide excellent product quality, according to customer's way of defining quality
5. offer features easily perceived as useful by the customer
6. offer benefits that are highly visible to the customer
What are Roger's Five Key Innovation Attributes?
1. relative advantage
2. compatibility
3. complexity
4. trialability
5. observability
What is relative advantage?
Degree of improvement relative to existing products.
What is compatibility?
how easy it is to integrate with current investments and ways of doing things
What is complexity?
how easy is the innovation to understand and how easy is it to use properly
What is trialability?
how easy is it to try the product on a limited basis to assess its relative performance
What is observability?
to what extent would use by an adopter be visible to others and hence create awareness of and knowledge about the innovation
What are "stony buyers" coined by John Gourville?
consumers that are reluctant to move from their current product choices
What are two things that Gourvile suggests to minimize adoption resistance?
1. make behaviorally compatible products
2. target customers not currently wedded to an incumbent product
What are the types of improvements in the new product spectrum?
1. incremental improvements of existing product
2. expansion of existing product line
3. new product to firm, but not to world
4. new-to-world product/radical innovation
What is an example of an incremental improvement of existing products?
a new flavor/new package size
What are two commonalities when it comes to developing any new product?
1. the voice of the customer is heard through the process
2. there is a process of "spiral development" in which versions of a product are built and tested in the lab and with customers. Feedback is then recorded and used to revise the product, the specifications of the target market, and the go-to market plan
What are some research techniques that can be used for products towards the top of the spectrum?
1. focus groups
2. surveys
3. concept tests
4. product-use tests
What is the hierarchy-of-effects model?
-Concept relating to the manner in which advertising works. Awareness, interest, desire conviction, and action.
-Early model that depicted consumer purchasing behavior as a linear path: Awareness → knowledge → liking → preference → conviction → purchase.
List the components of the Hierarchy-of-Effects Model.
1. stage 0: unaware
2. advertising sample
3. stage 1: aware
4. product concept, advertising weight/persuasion, level of distribution, price
5. stage 2: trial
6. product quality
7. stage 3: repeat
List the steps of the Stage-Gate model.
1. idea generation
2. scoping
3. building business case
4. development
5. test
6. launch
What is the purpose of the Stage-Gate model?
to provide a conceptual and operational road map that moves a new product project from idea to launch
What critique did Cooper say about the Stage-Gate process?
it could be too rigid and linear
What are the guidelines that Cooper suggested to the spiral approach?
1. build something (even if its only a model)
2. get it in front of customers and get their reactions
3. get feedback on what needs to be changed
4. revise- update and set up the next iteration of "build-test-feedback-and-revise
List the steps of the feedback loop.
1. building an experimental version of the product
2. testing it
3. gathering feedback from users on how to improve it
What is the typical sales and profit path?
1. introduction
2. growth
3. maturity
4. decline
What is the introduction stage of the typical sales and profit path?
awareness and knowledge of product features need to be established
What is the growth stage of the typical sales and profit path?
competitors may arise so promotional spending must be carried out, pricing of product may need to be changed
What is the maturity stage of the typical sales and profit path?
all market segments have been reached at this point
What is the decline stage of the typical sales and profit path?
focus on loyal customers who are willing to pay higher prices
What is the ASSESSOR model?
The ASSESSOR model is a pre-test market model that forecasts sales or market share (or both) for a new brand
What is the BASES test?
A concept test that assesses a sample of consumers' reactions to a concept; a key measure is their expressed purchase intention. With this measure and others, such as perceived uniqueness of the product, BASES makes a market share forecast.
What is brand equity?
The value premium that a company realizes from a product with a recognizable name when compared to its generic equivalent.
What is brand extension?
Use of an existing brand name to promote a new product in a related/different category.
What is cannibalization?
A reduction in sales volume, sales revenue, or market share of one product as a result of the introduction of a new product by the same producer.
What is a product line?
A group of products or services marketed and positioned by an organization to one general market. The products have some characteristics, customers, or uses in common, and they may also share technologies, distribution channels, prices, services, and so on.
What is a stock-keeping unit (SKU)?
A specific unit of inventory that is carried as a separate, identifiable unit. In retailing it is the lowest level of identification of merchandise.
What is willingness to pay?
The maximum amount a consumer thinks a product or service is worth. This amount is considered when developing an asking price for products and services.
What is the organization of the products and services within the portfolio called?
the hierarchy
What is the lowest level of the hierarchy?
the product item
What is a product mix?
all products that an organization sells (many product lines)
What would be an example of an SKU (stocking keeping unit)?
the individual flavor or color of the product item
Give an example of how depth of product line can be used using Cambell's soup.
Within a product line (soups for example) we can say Cambell sells cream of chicken, cream of mushroom, vegetable beef, chicken noodle, tomato soups. collectively these showcase the depth of the product line
Given an example of the width of the product mix using Cambell's soup.
different product lines within a company showcase the width of the product mix. For example, Cambell sells soups, sauces, frozen entrees, beverages, and biscuits
There are a number of versions of liquid detergents marketed under the Tide brand, including detergents with and without fabric softener, with and without bleach, with various pleasing smells, and fragrance-free formulations. These detergents are an example of Tide's:
a. product mix
b. product equity
c. product line
d. marketing mix
e. mix consistency
c. product line
Saucony is considering adding a new item to its Hurricane line of running shoes to increase its product line depth. All options would be acceptable EXCEPT:
a. adding a lower-priced item that is capable of satisfying the needs of some customers
b. adding a new private-label product
c. adding a higher-priced shoe with a higher performance level
d. inserting an item of a price and performance level that fills a gap between two existing items
b. adding a new private-label product
What type of marketing strategy best exemplifies a straightforward mapping of a product to a customer's willingness to pay?
a. good-better-best vertical differentiation
b. perceived value
c. segmentation by income
d. sustainable differentiation
a. good-better-best vertical differentiation
Which of the following choices is NOT a consideration for the depth of a product line?
a. Customer heterogeneity and requirements specification
b. Potential for cannibalization
c. The trialability of the product line.
d. The effect on overall brand equity
c. The trialability of the product line.
What is the positioning statement?
a statement that informs how the product/service is created, priced, distributed, and communicated to customers
List the steps of the new product development process.
1. new product strategy
2. idea generation
3. idea screening
4. business analysis
5. development
6. test marketing
7. commercialization
What is the new-product strategy?
links the new-product development process with the objectives of the marketing department, business unit, and corporation
What is idea generation?
new product ideas come from many sources including customers, employees, distributors, competitors, research and development, consultants, and other experts
What is idea screening/scoping?
eliminates ideas that are inconsistent with the organization's new product strategy or are inappropriate for some other reason
What is business analysis (building the business case)?
preliminary figures for demand, cost, sales, and profitability are calculated for the new product ideas that survive the initial screening
What is development?
R&D (research and development) or engineering department may develop a prototype of the product (3D printing is becoming a more common tool in prototyping) and the firm starts sketching out a marketing strategy
What is test marketing?
limited introduction of a product and a marketing program to determine reactions of potential customers in the market
What is commercialization (launch)?
decision to market a product during the final stage of the new product development process
What is the % of new product failures?
80-90%
The first stage of the new-product development process is:
a. the building of a prototype
b. exploring opportunities
c. establishing the new-product strategy
d. screening and concept testing
e. developing a business analysis
c. establishing the new-product strategy
During which stage of the process does the marketer lead the preliminary analysis and calculations for demand, cost, sales, and profitability?
a. Developing a business analysis
b. Establishing the new-product strategy
c. The building of a prototype
d. Exploring opportunities
e. Screening and concept testing
a. Developing a business analysis
_______ product goes beyond the expected product to include unexpected value-enhancing elements.
a. Augmented
b. Generic
c. Potential
d. Expected
a. Augmented
Adopter categories refer to all of those who will eventually adopt a 1.______ not the entire 2._____.
1. product
2. population
What are the five categories of potential customers based on their willingness to adopt products and services from the business analysis stage?
1. innovators
2. early adopters
3. early majority
4. late majority
5. laggards
What are innovators?
those who are quick to try anything new and are willing to put up with the pain that sometimes goes with it
What are early adopters?
those who are also fairly quick to try something new. They adopt new ideas early but carefully
What are the early majority?
These people tend to be more deliberate. They will adopt a new idea before the average person but are rarely the leaders. They tend to be very practical. If the technology will solve a problem for them, and it has been tested out and has well-established references, they will adopt.
What is the late majority?
These people tend to be skeptics. They will adopt an innovation only after a majority of people have tried it.
What are the laggards?
These people tend to be tradition-bound and suspicious of any change. They have no desire to have anything to do with any new technology.
During the introductory stage, the profit curve is generally _______ because the firm is typically trying to cover fixed costs associated with the development and marketing of the product or service.
zero (negative)
The steepest part of the product life cycle curve occurs during the _______ phase which is when most of the market begins buying the product or service.
growth
While not always true, is it common for the ______ curve to decline during the maturity stage as increased competition puts downward pressure on prices that companies can charge in the marketplace.
profit
In the adopter categories, the final 16 percent to adopt are similar to innovators in that they do not rely on the norms of the group but are independent because they are bound to tradition. They tend to have the lowest socioeconomic status, are suspicious of new products, and are alienated from a rapidly advancing society. They are called:
a. decliners.
b. late majority.
c. luddites.
d. laggards.
e. generics.
d. laggards.
All of the following are product characteristics influencing the rate of adoption EXCEPT:
a. observability.
b. relative advantage.
c. complexity.
d. compatibility.
e. distribution
e. distribution
Which of the following is not one of the stages of the product lifecycle?
a. Growth stage
b. Maturity stage
c. New product strategy stage
d. Decline stage
e. Introductory stage
c. New product strategy stage
The "chasm" identified in the Technology Adoption Life Cycle concept exists between which two of the categories of product adopters?
a. Early Adopters and Early Majority
b. Laggards and Innovators
c. Innovators and Early Adopters
d. Early Majority and Late Majority
e. Late Majority and Laggards
a. Early Adopters and Early Majority
While products are, by nature, tangible goods that can be touched and physically examined, ______ are not tangible.
services
What does it mean for something to be high in search quality?
if the product can be easily assessed before purchase
(ex: picking up a mobile phone and play with the operating system to see if they like it)
What does it mean if something is considered high in experience quality?
if a consumer is only able to evaluate services after experiencing them
(ex: a haircut)
What does it mean if something is considered high in credence quality?
if consumers are not able to evaluate the service effectively even through experience
(ex: car repair)
Services delivered by humans tend to be more _____ or inconsistent with each service execution.
heterogeneous
How do services differ from products?
1. intangibility (services are intangible, products are tangible)
2. inseparability (customer and service provider have to be there for the service)
3. inconsistency (services can be different each time)
4. perishability (services cannot be stored like products)
Services tend to exhibit more search qualities than do tangible goods.
a. True
b. False
b. False
What is a search quality?
a characteristic that can be easily assessed before purchase
Which of the following is NOT one of the four unique elements to services?
Perishability
a. Heterogeneity
b. Intangibility
c. Inseparability
d. Incoherency
d. Incoherency
Which of the following services would be most likely to exhibit strong credence qualities?
a. The repair of a leaky drain
b. Tax return preparation
c. A math tutorial service
d. Consulting services for insurance coverage
b. Tax return preparation
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