Marketing Chapter 11

Shape of the product life cycle

Not every product have the same shape to their curve. There are several life-cycle curves, each type suggesting different marketing strategies.

Private branding

Often called private labeling or reseller branding, a marketing strategy where a company manufactures products but sells them under the brand name of a wholesaler or retailer. Ex: Sears has Kenmore appliances, Craftsman tools and DieHard batteries.

Early majority

One profile of a consumer. Deliberate, many informal social contacts.

Laggards

One profile of a consumer. Fear of debt, neighbors and friends are information sources.

Innovators

One profile of a consumer. Innovators are venturesome, higher educated and use multiple information sources.

Early Adopters

One profile of a consumer. Leaders in social setting, slightly above average education.

Late majority

One profile of a consumer. Skeptical, below average social status.

Communication benefits

A benefit of packaging and labeling is communication through label information, directions on how, where, and when to use the product, and the source and composition of the product, which is needed to satisfy legal requirements of product disclosure.

Perceptual benefits

A benefit of packaging and labeling. Package and label shape, color, and graphics distinguish one brand from another, convey a brand's positioning, and build brand equity.

Functional benefits

A benefit of packaging and labeling. Packaging plays a functional role, such as storage, convenience, protection, or product quality. Storing food containers is one example, and beverage companies have developed lighter and easier ways to stack products on shelves and in refrigerators.

Multiproduct branding strategy

A branding strategy where a company uses one name for all its products in a product class. Sometimes called family branding or corporate branding. Advantage: consumers who have a good experience will transfer this favorable attitude to other items in the product class with the same name. Ex: Toro makes Toro snowblowers, Toro lawn mowers, Toro garden hoses, etc.

Mixed branding

A branding strategy where a firm markets products under its own names(s) and that of a reseller because the segment attracted to the reseller is different from its own market. Ex: Michelin makes Michelin tires and Sears tires.

Cost reduction

A challenge of packaging and labeling. As the cost of materials for packaging such as paper, plastics, and glass, rises, companies are constantly challenged to find innovative ways to cut packaging costs while delivering value to their customers.

Environmental concerns

A challenge of packaging and labeling. Because of widespread worldwide concern about the growth of solid waste and the shortage of viable landfill sites, the amount, composition and disposal of packaging material continue to receive much attention.

Connecting with customers

A challenge of packaging and labeling. The challenge lies in creating aesthetic and functional design features that attract customer attention and deliver customer value in their use.

Health, Safety, and Security issues

A challenge of packaging and labeling. Today, most consumers believe companies should make sure products and their packages are safe and secure, regardless of the cost, and companies are responding in numerous ways.

Trade name

A commercial, legal name under which a company does business.

Psychological barriers

A common reason for resisting a product in the introduction stage. Cultural differences or image.

Risk barriers

A common reason for resisting a product in the introduction stage. Physical, economic, or social.

Usage barriers

A common reason for resisting a product in the introduction stage. The product is not compatible with existing habits.

Value barriers

A common reason for resisting a product in the introduction stage. The product provides no incentive to change.

Market modification

A company tries to find new customers, increase a product's use among existing customers, or create new use situations.

Brand licensing

A contractual agreement whereby one company (licensor) allows its brand name(s) or trademark(s) to be used with products or services offered by another company (licensee) for a royalty or fee.

Multibranding strategy

A marketing strategy which involves giving each product a distinct name. Ex: Proctor & Gamble makes Tide, Cheer, Ivory Snow and Bold.

Diffusion of innovation

A product diffuses, or spreads, through the population.

Brand personality

A set of human characteristics associated with a brand name.

Fad

A shape of a life-cycle curve. A fad experiences rapid sales on introduction and then an equally rapid decline.

high-learning product

A shape of a life-cycle curve. A product for which significant customer education is required and there is an extended introductory period.

Fashion product

A shape of a life-cycle curve. A style of the times. Fashion products are introduced, decline, and then seem to return.

Low-learning product

A shape of a life-cycle curve. Sales begin immediately because little learning is required by the consumer, and the benefits of purchase are readily understood. This product often can be easily imitated by competitors so the marketing strategy is to broaden distribution quickly.

Warranty

A statement indicating the liability of the manufacturer for product deficiencies.

Label

An integral part of the package and typically identifies the product or brand, who made it, where and when it was made, how it is to be used, and package contents and ingredients.

Branding

An organization uses a name, phrase, design, symbols, or combination of these to identify its products and distinguish them from those of competitors.

Brand name

Any word, device (design, sound, shape, or color), or combination of these used to distinguish a seller's goods or services.

Implied warranties

Assign responsibility for product deficiencies to the manufacturer.

Product repositioning

Changes the place a product occupies in a consumer's mind relative to competitive products.

Introduction stage

First stage of the product life cycle. Occurs when a product is introduced to its intended target market.

Trademark

Identifies that a firm has legally registered its brand name or trade name so the firm has its exclusive use, thereby preventing others from using it.

Trading up

Involves adding value to the product (or line) through additional features or higher-quality materials.

Product modification

Involves altering one or more of a product's characteristics, such as its quality, performance, or appearance, to increase the product's value to customers and increase sales.

Product counterfeiting

Involves low-cost copies of popular brands not manufactured by the original producer. A serious problem.

Trading down

Involves reducing the number of features, quality, or price.

Product manager (brand manager)

Manages the marketing efforts for a close-knit family of products or brands.

Fighting brands

Part of multibranding strategy. When multibrand companies introduce new product brands as defensive moves to counteract competition. Their chief purpose is to confront competitor brands.

Subbranding

Part of multiproduct branding. Combines a corporate or family brand with a new brand, to distinguish a part of its product line from others.

Co-branding

Part of multiproduct branding. The pairing of two brand names of two manufacturers on a single product.

Brand extension

Part of multiproduct branding. The practice of using a current brand name to enter a different product class.

Product line extensions

Part of multiproduct branding. The practice of using a current brand name to enter a new market segment in its product class.

Deletion

Part of the decline stage. Dropping the product from the company's product line, the most drastic strategy.

Harvesting

Part of the decline stage. When a company retains the product but reducing the marketing costs. The product continues to be offered but salespeople do not allocate time in selling nor are advertising dollars spent.

Repeat purchasers

Part of the growth stage. People who tried the product, were satisfied, and bought again.

skimming

Part of the introduction stage. Introducing the product with a high price to help the company recover costs of development as well as capitalize on the price insensitivity of early buyers.

Penetration pricing

Part of the introduction stage. Pricing a product low to help build unit volume. Used to discourage competitive entry.

primary demand

Part of the introduction stage. The desire for the product class rather than for a specific brand, since there are few competitors with the same product.

trial

Part of the introduction stage. The initial purchase of a product by a consumer.

selective demand

Part of the introduction stage. The preference for a specific brand.

Product form

Pertains to variations within the product class. For prerecorded music, product form exists in the technology used to provide the music such as cassette tapes, compact discs, and digital music players.

Packaing

Refers to any container in which it is offered for sale and on which label information is conveyed.

Product class

Refers to the entire product category or industry, such as prerecorded music.

Magnuson-Moss Warranty/FTC Improvement Act (1975)

Regulates the content of consumer warranties and so has strengthened consumer rights with regard to warranties.

Growth stage

Second stage in the product life cycle. The growth stage is characterized by rapid increases in sales. It is the stage that competitors appear.

Limited-coverage warranty

Specifically states the bounds of coverage and, more important, areas of noncoverage.

Brand equity

The added value a brand name gives to a product beyond the functional benefits provided.

Decline stage

The fourth and final stage of the product life cycle. The decline stage occurs when sales drop. A company will follow one of the two strategies to handle a declining product: deletion or harvesting.

Product bundling

The sale of two or more separate products in one package.

Maturity stage

The third stage of the product life cycle. Characterized by a slowing of total industry sales or produce class revenue. Marginal competitors begin to leave the market. Most consumers are either repeat purchasers or have tried the product at least once.

Length of product life cycle

There is no set length of the product life cycle. As a rule, consumer products usually have a shorter life cycle than business products.

Express warranties

Written statements of liabilities.

product life cycle

describes the stages a new product goes through in the marketplace: introduction, growth, maturity, and decline.

Full warranty

has no limits of noncoverage.