Marketing Final

*Average Cost (Per Unit)*

-more interested in cost per unit than total cost bc prices are usually quoted per unit -obtained by divide total cost by related quantity, total quantity that causes the total cost

*Brand Preference*

-most branders would like to win this -target market usually choose the brand over other brands, perhaps bc of habit or favorable past experience

*Institutional Advertising*

-1 of 2 basic types of advertising -promotes an organization image, reputation, or ideas rather than a specific product -focuses on name and prestige of an organization or industry, basic objective is to develop goodwill or improve organization's relations with various groups (not only customers but channel members, supplies, shareholders, employees, and public) ex) British government runs ads promoting England as a place to do business -sometimes to overcome image problems and put them in a good light, or to advocate a specific cause or idea ex) Mothers Against Drunk Driving use ads to encourage people not to drink and drive

*Product Advertising*

-1 of 2 basic types of advertising -tries to sell a product -3 categories: 1) pioneering 2) competitive 3) reminder -categories get consumers to know, like, and remember something

*Market Introduction*

-1st stage of the product life cycle -slaes are low as a new idea is first introduced to a market, customers aren't looking for the product and even if it offers superior value the customers don't know about it -informative promotion is needed to tell potential customers about the advantages and uses of the new product, but still takes time for customers to learn that the product is available -most companies experience loses during this stage bc they spend so much on product, place and promotion development but they are investing money in the hope of future profits -Products: one or few, Place: build channels and maybe some selective distribution, Promotion: building primary demand and pioneering/informing, Price: skimming or penetration, Competitive Situation: monopoly or monopolistic competition

*Market Growth*

-2nd stage of the product life cycle -industry sales grow fast, but industry profits rise and then start to fall -innovators begin to make big profits as more customers buy, but competitors see the opportunity and enter the market ex) East African Breweries created sensation with non-alcoholi malt beverage, 8 months later Coca-Cola had its own malt drink -some just copy the most successful product or try to improve it to compete better, other try to refine their offerings to do a better job appealing to some target market -new entries result in much product variety, so monopolistic competition with a down sloping demand curve is typical of this stage -time of biggest profits for the industry, also time of rapid sales and earning for companies with effective strategies -towards the end of this stage industry profits begin to decline as competition and consumer price sensitivity increase -Product: variety, try to find the best product, build brand familiarity, Place: build channels and maybe selective distribution, Promotion: building selective demand and informing/persuading, Price: meet competin (especially if oligopoly) or price dealing and price cutting, Competitive Situation: monopolists competition or oligopoly

*Noncumulative Quantity Discounts*

-apply only to individual orders -encourage larger orders but don't tie a buyer to a seller after one purchase ex) Owens-Corning tries to encourage Lowe's to stock larger quantities of their brand of insulation by offering a discount

*Cumulative Quantity Discounts*

-apply to purchases over a give period, such as a year, and the science usually increase as the amount purchased increases -encourages repeat buying by reducing customers cost for additional purchases, develop loyalty and ongoing relationships -attractive to business customers who don't want to run up their inventory, rewarded for buying large quantities even thought individual order may be smaller ex) Lowes give discount to contractor who isn't able to buy all the needed materials at once, reward contracts patronage and discourages shopping around

*Unsought Products*

-class of consumer products -products that potential customers don't yet want or know they can buy, so they don't search for them unless promotion can show their value -2 types: 1) new unsought products and 2) regularly unsought products

*Market Maturity*

-3rd stage of the product life cycle -when industry sales level off and competition gets tougher -many aggressive competitors racing for profits, unless oligopoly -industry profits go down bc promotion costs rise and some competitors cut prices to attract business -less efficient firms can't compete with this pressure and drop out of the market, long-run downward pressure on prices -new firms still enter at this stage increasing competition even more, they skip the early life-cycle stages including the profitable market stage and must try to take a share of the saturated market from established firms which is difficult and expensive -market leaders have a lot at stake and must defend their share, customers who are happy with their current relationship won't switch to a new brand so late entrants have a tough battle -persuasive promotion very important, products may differ only slightly and most competitors have discovered effective appeals or have just copied leaders -as various products become almost the same in the minds of potential customers, price sensitivity is a real factor -this stage may continue for many years until a basically new product idea come along, even thought individual brands or models come and go ex) cars, household appliances, consumer packaged goods like cereal/carbonated soft drinks/laundry detergent -Product: all the same, battle of the brands, Place: continuation of other plus a move towards more intensive distribution, Promotion: building selective demand, informing/persuading, fanatically competitive, moving towards persuading/reminding, Price: meet competition (especially oligopoly) or price dealing and price cutting, Competitive Situation: monopolistic competition or oligopoly heading towards pure competition

*Sales Decline*

-4th and final stage of the product life cycle -new products replace the old -price competition from dying products becomes vigorous, but firms with strong brands may make profits until the end bc they have successfully differentiated their product -as the new products go through their intro stage, the old ones may keep some sales by appealing to their most loyal customers or those who are slow to new ideas, but these conservative buyers might switch later smoothing the sales decline -Product: some drop out, Place: move towards more intensive distribution, Promotion: building selective demand and persuading/reminding, Price: meet competition (especially oligopoly) or price dealing and price cutting, Competitive Situation: monopolistic competition or oligopoly headed towards pure competition

*Wheeler Lea Amendment*

-FTC tries to stop phony list pricing -bans unfair or deceptive acts in commerce ex) electronics retailers advertised $300 discount on computer when customer signed up fro an interned service provider, but wasn't clear that to consumers that a 3-year commitment costing over $700 was required

*Push Money (Prize Money) Allowances*

-PMs or Spiffs -given to retailers by manufactures or wholesalers to pass on the the retailers salesclerks for aggressively selling certain items -used for new items, slow moving items, or higher margin items ex) pushing furniture, clothing, consumer electronics, cosmetics ex) salesclerk earns additional $5 for each new model Panasonic DVD player sold

*Dumping*

-UW controls minimum price of imported products with antidumping laws -pricing a product sold in a foreign market below the cost of producing it or at a price lower than in its domestic market -designed to protect country domestic producers and jobs ex) US steelmakers accused China of dumping and encored US government to take action

Capital Item

-a long lasting product that can be used and depreciated for many years -often very expensive -customers pay for the item when they buy it, but for tax purposes the cost is spread over a number of years which may reduce the cash available for other purchases

Expense Item

-a product whose total cost is treated as a business expense in the years its purchased -how a firm's accountants treat a purchase is also important to business customer

*Communication Process*

-a source trying to reach a receiver with a message -source to encoding to message channel to decoding to receiver and then feedback to the source, noise at all levels -reflects an outbound model for promotion -try to reach customers when they are most interested in receiving the message

*Freight-Absorption Pricing*

-absorbing freight cost so that a firms delivered price meets that of the nearest competitor -cutting list price to apple to new market segments -international market looked at this way, figure profit from export sales is bonus -reduces problem of not being able to compete in places far from shipping point

*AIDA Model*

-action-oriented model that basic promotion objective and adoption process fits neatly within -4 promotion jobs: 1) get Attention 2) hold Interest 3) arouse Desire 4) obtain Action 1) getting attention necessary to make consumers aware of the company's offering, promotion objective to inform, awareness and interest in the adoption process 2) holding interest gives communication a chance to build the consumer's interest in the product, promotion still in informing, and adaption process still at awareness and interest 3) arousing desire affects the evaluation process and perhaps builds preference, promotion tries to persuade, evaluation and trial part of the adoption process 4) obtaining action includes gaining trial which may lead to purchase decision, reminding is goal of promotion, decision and confirmation part of the adoption process ex) Pampers generated attention and interest with TV ads showing the world from a baby's perspective, used creative in-store and point of purchase advertising to encourage desire and action

*Average-Cost Pricing*

-adding reasonable markup to the average cost of a product -finds average cost per unit by studying past records, dividing total cost for last year but units produced and sold in that periods

*Price*

-amount of money that is charged for something of value -may be called something different -almost every business transaction on our modern economy involves an exchange of money (price) for something -nature and extent of this something determines the amount of money exchanged

Fad

-an idea that is fashionable only to certain group who are enthusiastic about it -these groups are so fickle that a fad is even more short lived than a regular fashion ex) many toys, do well during short-lived cycle

*Noise*

-any distraction that reduces the effectiveness of the communication process ex) conversation and snack getting during TV ads, industrial buyer reading text during salesperson's presentation -advertisers who plan messages must recognize that many possible distractions can interfere with communications

Early Majority

-avoid risk and waits to consider a new idea after many early adopters have tried it and liked it -average-sized business firms that are less specialized often fit in this category, if successful companies in their industry adopt the new idea they will too -great deal of contact with mass media, sales people, and early adopter opinion leaders -not opinion leaders

*Manufacturer Brands*

-brands created by producers -sometimes called national brands bc they brand is promoted across the country or in large regions -many are now distributed globally ex) Nabisco, Colgate, Northwestern Mutual Life, Marriott, MasterCard, and McDonalds

*2/10, Net 30*

-buyer can take a 2% discount off the face value if the invoice is paid within 10 days, otherwise face value is due within 30 days -understood that an interest charge will be added after the 30 day free credit period

*Corrective Advertising*

-can be ordered by FTC if they decide particular practice is unfair or deceptive, power to require affirmative disclosure -ads to correct deceptive advertising ex) forced Bayer to run corrective ad after it made unproven claims about its drug Yaz's efficacy for treating acne acne and premenstrual syndrome -others learn from these cases, possibility of financial penalty or need to pay for corrective ads causes most to stay within the law -sometimes claims seem to get out of hand, lately cracking down on claims related to weight loss and health

Late Majority

-cautious about new ideas -often older and more set in their ways so they are less likely to follow early adopters -strong social pressure from own peer group usually needed before they adopt -business firms in this group tend to be conservative, smaller sized with little specialization -make little use of marketing sources of info like mass media and salespeople, oriented toward other late adopters rather than outside sources they don't trust

Professional Services

-class of business products -specialized services that support a firm's operations -expense items -managers compare the cost of buying professional service outside (outsourcing) to the cost of having company people do them, needs may be specialized -services customized to buyer's needs, personal selling important, inelastic demand often supports high prices -work that was once often done by an employee is now often purchased from an independent organization, number of service specialist are growing in our complex economy ex) mangement consulting services improves company's efficiency, information technology services maintain a company's network and websites, and advertising agencies help promote the firm's product

Installations

-class of business products -such as building, land rights, and major equipments are important capital items -multiple buying influence (top management) and new task buying are common, infrequent purchase, long decision period, boom and bust demand are typical -requires skillful personal selling by producer, leasing and specialized support services may be required -one of a kind installations, such as office buildings and custom made machines, generally require special negotiations for sale that usually involve top management and can stretch for months and years -standardized major equipment is treated more routinely -installations are boom or bust, during growth periods firms may buy installations to increase casting but during downswings sales fall off sharply -suppliers sometimes include special services with installations at no extra cost bc they are needed as part of the product ex) firm that sells or leases equipment to dentists may install it and help the dentist learn to use it

Raw Materials

-class of business products -unprocessed expense items that are moved to the next production process with little handling , use of online auctions -transportation and storing can be crucial bc of seasonal production and perishable products, markets tend to be competitive ex) longs, iron ore, and wheat -they become part of a physical good and are expense items -2 types: 1) farm products and 2) natural products -need for grading, nature produces what it will and someone must sort and grade it to satisfy various market segments -most buyers want ample supplies in the right grade for specific uses -to ensure steady quantities customers often sign long-term contracts, sometimes at guaranteed prices

Supplies

-class of business products -expense items that do not become part of a finished product -often handled as straight rebuys except important operating supplies may be treated more seriously and involve multiple buying influences -require widespread distribution or fast delivery (repair items), arrangements with appropriate intermediaries crucial -3 types: 1) maintenance 2) repair and 3) operating supplies (MRO supplies) -maintenance and small operating supplies like convenience products, ordered bc it is needed but won't spend much time on it. -branding is important and so are breadth of assortment and the seller's dependability -intermediaries usually hand the many supply items and they are often purchased via online catalog sites -important operating supplies (coal and fuel oil) receive special treatment, there are usually several sources for such commodity product and large volumes may be purchased at global exchanges on the internet

*Speciality Products*

-class of consumer products -consumer products that the customer really wants and makes a special effort to find, willing to expend effort to get a specific product even if it's not necessary, strong preference makes it an important purchase, internet becomes important information source *-price sensitivity is low, limited distribution acceptable but should be treated as connivence or shopping product to reach persons not yet sold on its specialty product status* -doesn't mean comparing, buyer wants that special product and it willing to search for it -any branded product consumers insist on by name is a specialty product -building this relationship isn't easy, it mean satisfying the customer every time, but its easy and less costly than trying to win back dissatisfied customers or attract new customer who are not seeking the product at all

*Convenience Products*

-class of consumer products -products a consumer needs but isn't willing to spend much time or effort shopping for -bought often, require little service or selling, don't cost much, and may even be bought in habit -can be a 1) staple, 2) impulse product, or 3) emergency product

*Shopping Products*

-class of consumer products -products that a customer feels are worth the time and effort to compare with competing products -divided into two groups, 1) Homogenous and 2) Heterogeneous, deepening on what the customers are comparing -products can be both homogenous and heterogenous, depends on how particular target market thinks about and shops for the product

*F.O.B.*

-commonly used transportation term -free on board some vehicle at some place -typically some location associated with it and often term FOB shipping point or FOB destination -place refers to point where title passes from seller to buyer, buyer has responsibility as soon as product loaded onto a vehicle at sellers point of shipment -buyer pays the coast of shipping, insurance, and other costs from point of shipping -title does not pass to buyer until product delivered, seller has responsibility for shopping cost and any damages that might occur in shipping -simplifies sellers pricing but may narrow the market, customer located farther from the seller must pay more and might buy from closer suppliers -firms competes well near its shipping point

*Promotion*

-communicating information between the seller and potential buyer or other in the channel to influence attitudes and behavior -telling target market customers that the right product is available at the right place at the right price -3 major methods: 1) personal selling, 2) mass selling, 3) sales promotion -typically use the time in combination

*Mass Selling*

-communicating with large numbers of potential customers at the same time -involves advertising and publicity -less flexible, but when the target market is large it can be less expensive

Feedback

-communication from the receiver back to the source -takes many forms: customer may have a different attitude, may seek more info, may visit another store, may purchase the product -objectives should state the desired feedback and managers should measure whether the communication is have the anticipated response -sometimes want immediate feedback from specific customers which requires direct marketing, direct communication between seller individual customer using promotion method other than face to face personal selling, called direct response promotion -direct mail and email tools commonly used for direct response promotion, targeted direct response promotion works best -can conduct marketing research or monitor the internets to gauge customer reactions

*Public Relations*

-communication with non customers: labor, public interest groups, stockholders, government -could be in-house advertising manager who handles this or contracted outside firm that specials in public relations

*Battle of the Brands*

-competition between dealer brands and manufacturer brands is just a question of which brands will be more popular and who will be in control -manufacturer brands used to be more popular than dealer brands, and still are in categories such as soft drinks, but now dealer brands are on the rise after the economic downturn and are more popular in categories such as milk and cheese -intermediaries usually earn a better margin on the sale of dealer brands, and having a strong dealer brand can help them in negotiations with the manufacturer brand -retailers are putting more attention behind new dealer brand products, and dealer brands are now making premium products vs. knockoffs of manufacturers -intermediaries can give dealer brands special shelf positions and promotions, and they generally have lower costs

New-product Development Process

-cost and risk are high -fail bc companies don't offer a unique benefit or underestimate the competition, sometimes idea is good but there are design flaw or it costs too much to produce, some rush to get the product on the market without a marketing plan -moving too slowly can also be a problem, with the fast pace of change speedy entry is key to a competitive advantage, longer a new-product takes to develop the more likely the customer needs will be different when the product is introduced -5 steps: 1) idea generation, 2) screening, 3) idea evaluation, 4) development of product and marketing mix, and 5) commercialization -hypothesis that new will not be profitable, which puts burden on new idea to prove itself or be rejected, before the company spends money to develop and market a product -steps should not be skipped -top level support is vital, need a culture that supports innovation, need to put somebody in charge and balance market needs and company resources

*Brand Insistence*

-customers insist on a firm's branded product and are willing to search for it

*Brand Recognition*

-customers remember the brand -big advantage if there are many "nothing" brands on the market -even if the consumers can't recall the brand without help, they may be reminded when they see it in a store among other less familiar brands -*aided awareness*: Have you heard of brand X? -*aided unawareness*: What brands of cola are you aware of?

Product Life Cycle Length

-cycles vary in length, hard to precisely know how long it will last, but important to expect and plan for the different stages than to know the precise length -the greater the comparative advantage of a new product over those already on the market, the more rapidly its sales will grow -sales growth is faster when the product is easy to use and if its advantages are easy to communicate, if the product can be tried on a limited basis it can be introduced more quickly -if the product is compatible with the values and experience of target customers, they are likely to buy it more quickly ex) fast adoption of DVD players bc idea of buying videos to watch at home was already compatible with consumer lifestyles, they saw DVD rental as compatible when they went to rent a VHS, demo of a DVD at at store or friends made for compelling communication of the comparative advantages of better picture and audio quality, advantages highlighted in ads showing DVDs with extras, when the price dropped customers quickly bought DVD players -in general, product life cycles are getting shorter due to rapidly changing technology, one new invention may make possible may new products that replace old ones ex) product-market for listening to music from AM/FM radio, to MP3s, to satellite radio, to Pandora is short time -pioneers tend to be less profitable over the long run, in part bc many do not survive -advantage to being the second-mover or the one who quickly follows the pioneer, have a strong customer focus and respond quickly with a superior marketing mix can build market share during the market growth stage, can learn from pioneer mistakes ex) Apple wasn't first of its kind, just responded quickly with a better marketing mix, Amazon wasn't first online bookstore, RC Cola had the first diet soda but Coke and Pepsi quickly followed

*Allowances*

-given to final consumers, business customers, or channel members for doing something or accepting less of something

*Nonprice Competition*

-status quo pricing can be part of an aggressive overall marketing strategy focusing on this -aggressive action on one ore more of the P's other than price ex) Zappos offers free shopping and guarantees to meet local shoes store prices, but wins customers with enormous selection and website that makes it easy to find what you want with excellent customer service before and after the sale

*Product Life Cycle*

-describes the stages a really new product ideas goes through from beginning to end -divided into 4 major stages: 1) market introduction 2) market growth 3) market maturity 4) sales decline -concerned with new types or categories of products in the market, not just what happens to an individual brand, describes industry sales and profits for a products ideas within a particular product market -sales and profits of an individual brand may not and usually don't follow this cycle, they may vary up and down and sometimes move in the opposite direction -a firm may introduce or drop a specific product during any stage, a "me-too" brand introduced during the market growth stage may never get sales and suffer a quick death ex) Walmart tired to rent DVDs by mail after Netflix was established as the market leader, but customers didn't see it as having a better marketing mix and it failed to attract enough customers and closed operations -firm's marketing mix usually must change during the product life cycle, may be aimed at totally different target markets at different stages and the competitions moves towards pure competition or oligopoly -total sales vary in each stage, they move from very low in the intro stage to hight at maturity and then back down low in the decline stage -sales and profit don't move together over time, industry profits decline while industry sales are still rising -product idea can be in a different stage in different markets, strategy planners who naively expect sales of an individual product to follow the general life-cylce pattern are likely to be surprised ex) milk in is maturity in the US, but in Asia it is in the introduction stage

*Seasonal Discounts*

-discounts offered to encourage buyers to buy earlier than present demand requires -shift the storying function further along the channel and tends to even out sales over the year ex) Kyota offers wholesalers lower price on garden tills if they buy in fall when sales are slow -often used by service firms that face irregular demand or excess capacity, such as ski resorts

*Quantity Discounts*

-discounts offered to encourage customers to buy in larger amounts -lets a seller get more of a buyer's business or shift some of the storing function to the buyer or reduces shipping and selling costs -2 types: 1) cumulative 2) noncumulative

*Fixed-Cost (FC) Contribution Per Unit*

-divide total fixed cost by the FC to find the BEP -assumed selling price per unit minus the variable cost per unit

*Markups*

-dollar amount added to the cost of products to get the selling price -stated as percentages rather than dollar amounts which is where confusion sometimes arises

Prototypes

-early sample of model built to test a concept -plastic, low cost replicas -co-creation process where customers react to prototypes and suggest improvements -rapid prototyping where customer input is received and quickly defined not a revision of the product, and then fed back to consumers for further input, encourages to fail early and fail often -can more realistically react to how well a product meets their needs, sometimes the reaction kills the idea

*Consumer Product Safety Act of 1972*

-encourages safety in product design and better quality control -sets safety standards for products and can order costly repairs or the return of unsafe products -can back up its orders with fines and jails sentences -not all are willing to pay more for safer products and some features cost a lot to add and increase price considerably

*Break-Even Analysis*

-evaluates whether the firm will be able to break even, voter all its costs, with a particular price -must cover all costs in the long run or there is no point in being in business

*Warranty*

-explains what the seller promises about its product -decided wether to offer a specific warranty, and if so what it will cover and how it will be communicated to the target market -area where the legal environment must be considered -US common law says producers must stand behind their products, even if they don't offer a specific warrant -written warrant may promise more than common law provides, or actually reduce the responsibility a producer would have under common law

*Federal Trade Commission (FTC)*

-federal government agency that policies antimonopoly laws -to be called new a product must be entirely new or changed in a functionally significant or substantial respect -firm can only call its product new for 6 months

*Brand Nonrecognition*

-financial consumers don't recognize a brand at all, even though intermediaries may use the brand name for indication and inventory control ex) *schools supplies, inexpensive dinnerware, many items from hardware stores such as nuts and bolts, and thousands of dot-coms on the internet*

Innovators

-first to adopt -eager to try a new idea and willing to take risks -young and well educated -mobile and have many contacts outside their social groups and community -firms in this groups are specialized and willing the take the risk of doing something new -rely on impersonal and scientific info sources or other innovators rather than salespeople -search for info on the web, technical publications, informative ads in special interest magazines

*Publicity*

-form of mass selling -any unpaid form of non personal presentation of ideas, goods, or services -publicity people are paid, but they try to attract attention without have to pay media costs ex) celebrities on talk shoes to talk about movie -creating and placing content on the web for customers to find or pass on ex) fb posts, videos on youtube, information page on website

*Concept Testing*

-formal method, getting reactions form customers about how well a new product idea fits their needs -uses market surveys: focus groups to surveys, can be online to lower cost and speed initial feedback

Idea Evaluation

-getting more reactions from customers even though an actual product has yet to be developed, makes getting customer input more difficult but firms need extensive feedback before adding the expense of producing the product -describe and relate the assumptions they are making about each new idea to see if they are true, may initially use informal focus groups -think about wholesalers and retailer customers as well as final consumers, intermediaries may have special concerns about handling a proposed product -marketing research can also help identify the size of potential markets which helps companies to estimate likely costs, revenues, and profitability -decide if there is an opportunity, if it fits with firm's resources, and if there is a basis for developing a competitive advantage, then develop an more reliable estimate of ROI

Goods vs. Services

-goods are tangible items, usually know exactly what you will get before you buy and once bought you own it ex) shoes, Starbucks, magazine -services are intangible, they can't keep it but can experience, use, or consume it. Reduce uncertainty by seeking referrals friends or advice from online reviews, or looking for cues suck as lawyers have diplomas on their walls and shelves loaded with books. Use message and images in promotions to make the benefits of the service more vivid. ex) accountant advice, Vail ski pass, going to a movie -goods are mass-produced in a factory away from a consumer -services are produced in person where the customer is located after the costumer has committed to buy, often difficult to achieve economies of scale with personal services because they need duplicate equipment and staff at places where the service is provided -goods have a consistent quality -services are as consistent because it's hard to separate the services experience from the person who provides it, they also vary in their ability and problems with the service they deliver are obvious, and when many people all have to work together it's a challenge to consistently deliver quality service -services can't be stored which makes it hard to balance supply and demand, especially if demand varies a lot. Charge a fee to clients who don't show up, shift customer demand to less busy times, and try to reduce dissatisfaction customers feel if they have to wait for service ex) Southwest has to turn away customers during the holidays because all their flights are full

*Brand Familiarity*

-how well customers recognize and accept a company's brand -degree of brand familiarity affects the planning for the rest of the marketing mix -five levels of brand familiarity: 1) Rejection 2) Nonrecognition 3) Recognition 4) Preference and 5) Insistence -brand likely to have target customers at each level and ideally customers move to higher levels over time, marketing strategies often aim to encourage this movement

Fashion

-influences sale of some products -currently accepted or popular style -fashion-related items have short life cycles, what is popular currently can shift rapidly ex) Zara takes only 2 weeks to go from a new fashion concept to having items on the racks, quickly produces just enough of a new design to test and waters and then send it or overnight delivery to some stores, at headquarters they monitor sales of new designs and when a garment is hot more is produced and shipped or its dropped, stores are stocked with new designs and orders twice a week, store managers use handheld computer that show how garments rank by sales so they can record best sellers in less than an hour and these orders drive in 2 days

Personal Selling

-involves direct spoken communication between sellers and potential customers -customer service is a form -strength in its flexibility -very expensive so desirable to combine it with mass selling and sales promotion

*Packaging*

-involves promoting, protecting, and enhancing the product -important to sellers and customers, can make the product more convenient to use or store and can prevent spoiling or damage -*good packaging makes products easier to identify and promotes the brand at the point of purchase and in use* -*new packaging can make the important difference in a new marketing strategy by meeting customers needs betters* ex) Aleve's new Soft Grip Cap makes it easier for aging customers with arthritis to open the bottle -*packaging sends a message and can tie the product to the rest of the marketing strategy, a good package sometimes gives a firm more promotional effect than it could with advertising bc customers see the package in store when they are shopping* -*helps when customer is comparing alternatives in the store, good packaging can make it easy for customer to see and evaluate the product and its design features* -opportunity to add value through promoting (product info), protecting (shipping and storing), and enhance the product (helping the environment) -*can call attention to knew products, showcase connivence, or show evidence of tampering* -can lower distribution costs, protect the product so don't have to pay the price of damaged goods, reduce storing costs by cutting breakage/spoiling/theft, and can save space and weight so easier to transport/display/handle -*making greener choices in packaging, publicizing that attracts like minded consumers and is also lower cost for producers too. Small changes can have a huge impact on the environment and bottom line* ex) Frito-Lay 100% compostable chip bag for Sun Chips, consumers found it too noisy -*Universal Product Code (UPC)*: speed handling

*Trademark*

-legal term -includes only those words, symbols, or marks that are legally registered for use by a single company ex) FedEx is branded under the brand name FedEx (spoken or printed), but once printed in a certain typeface is becomes a trademarks

*Surge Pricing*

-let supply and demand determine pricing

*Advertising*

-main form of mass selling -any paid form of non personal presentation of ideas, good, or services by an identified sponsor ex) magazines, newspaper, radio, tv, signs, direct mail, internet -pay for advertising to be placed on specific media -less is spent on advertising that personal selling or sales promotion

*Robinson-Patman Act of 1936*

-make illegal any price discrimination if it injures competition -permits some price differences, but they must be based on cost differences or the need to meet competing -both buyers and sellers considered guilty if they're entering into discriminatory agreements -charge different price if they are not like grade and quality, but if physical characteristics are are similar they are of the same grade and quality

*Status Quo Objectives*

-manager satisfied with their current market share and profits -dont rock the pricing boat objectives -stabilize prices or meet competition or avoid competition, when total market is not growing -make price changes very carefully, and only if other follow their lead which tend to prevent price wars which can drag down all firms profits ex) airline industry raises prices collectively, 1 may add a fuel surcharge but if others don't follow they back off the maintain the status quo

Advertising Managers

-mange their company's mass-selling efforts in tv, newspaper, magazines, and other media -job is to choose the right media and develop ads -can be handled in house or by contracted outside advertising agencies -also handle publicity, could be in house or outside PR firm

*Message Channel*

-message is coming from a source through some message channel -the carrier of the message -source can use many different message channels to deliver its message -advertising must do it with media such as magazines, tv, email, websites -particular message channels may enhance or detract from the message ex) tv ad can show Dawn takes away grease, not as effective as saying that in an email

*Task Method*

-most sensible approach to budgeting promotion expenditures -basing the budget on the job to be done -helps manager set priorities so that the money spent on promotion produces specific and desired results -determine which promotion methods are most economical and effective for the task that needs to be completed to achieve communication objectives, costs of these tasks totaled to determine how much should be budgeted for promotion -assemble total budget from detailed plans rather than relying on historical patterns or ratios -*sales method*: percentage of sales

*New Products*

-not an optional matter, has to be done to survive in today's dynamic markets -one that is new in any way for the company concerned, but customers don't see all new products in the same way -grouped into 3 categories based on the customer's point of view 1) Continuous innovations: don't require customers to learn new behaviors, minor variations on existing products, customers can easily understand and use these new products, promotion emphasizes awareness with new packaging or advertising that touts features. ex) new toothpaste flavor, low-cal iced tea, new style earring 2) Dynamically continuous innovations: require minor changes in customer behavior, promotion clearly communicates the benefits of the innovation. ex) bluetooth-enabled stethoscope 3) Discontinuous innovation: requires that customers adopting the innovation significantly change their behavior, results in new product-market and new product life cycle, promotion requires personal selling and product demonstrations to educate customers about new behaviors. ex) Godrej new refrigerator that runs on batteries to be used in rural India

*Stockturn Rate*

-number of times the average inventory is sold in a year -various methods to figure out this rate -low stockturn rate bad for profits, at least increases inventory carrying cost and ties up working capital

*Average Fixed Cost (Per Unit)*

-obtained by dividing total fixed cost by the related quantity

*Average Variable Cost (Per Unit)*

-obtained by diving total variable cost by the related quantity

*Individual Product*

-particular product within a product line -differentiated by brand, level of service offered, price, or some other characteristic ex) each size and scent of a band of soap is an individual product -intermediaries think of each sport product as a stock-keeping unit it and assign it a unique SKU number -each product and target market may require a separate strategy ex) Clorox's strategy for selling scented bleach different from regular bleach

*Receiver*

-potential customer -customers evaluate both the message and the source of the message in terms of trustworthiness and credibility ex) American Dental Association studies show Listerine helps reduce plaque, Listerine mentions this in ads to promote credibility

*Brand Rejection*

-potential customers won't buy a brand unless its image is changed, or if the customers have no other choice -*may suggest a change in the product, or only a shift to target customers who have a better image of the product* -overcoming a negative image is difficult and expensive -sometimes customers don't have a choice ex) many would like to reject Ticketmaster, but often have little choice when it comes to buying tickets -big concern for service oriented businesses bc its hard to control the quality of the service ex) *business traveler who get a dirty room at a Hilton in Venezuela may never return to another Hilton, even though its hard to ensure every maid does a good job every time*

Laggard or Nonadopters

-prefer to do thing the way they've been done in the past and are very suspicious of new ideas -older and less well educated -firms in this group are smallest businesses with the least specialization, cling to the status quo and think it's the safe way -main source of info is other laggards, bad new for marketers -marketers don't bother with this group

*Reference Price*

-price consumers expect to pay -different customers have different reference prices for the same basic type of purchase ex) those who really enjoy reading have higher reference price for popular paperback that occasional reader -if firms price lower that reference point customers may view product as better value and demand may increase, sometimes try to position product in such a way that consumers compare it with product that has higher reference price

*Trade-In Allowance*

-price reduction given for used products when similar new products are bought -give manager easy way to lower effective price without reducing list price -sometimes producers want to get older products off the markets or move them to a new market ex)Apple offered trade in incentive for iPhones and shipped the older models to developing counties that couldn't afford higher price of new phone

*Advertising Allowances*

-price reductions given to firms in the channel to encourage them advertise or otherwise promote the suppliers product locally ex) Sony gives an allows of 3% of sales to its retailer who in turn are expected to spend the allowance on local advertising

*Phony List Prices*

-prices customers are show to suggest that the prices has been discounted from list -some customers seem more interested in the discount than the actual price -most condor this unethical

*Basic List Prices*

-prices final customers or users are normally asked to pay for products

*Dealer Brands/Private Brands*

-private labels -brands created by intermediaries ex) Craftsman and Kenmore by Sears, Primo Taglio and Priority Pet by Safeway, Up & Up by Target, and Sam's choice and Equate by Walmart

Components

-processed expense items that become part of a finished product -multiple buying influence is common, competitive pricing -product quality and delivery reliability are important, negation and technical selling common on less standardized items -component parts are finished or nearly finished items that are ready for assembly in the the final product ex) TRW's airbags and Intel's microprocessors -component materials are items that have already been processed but must be processed further before becoming part of the final product ex) wire, plastic, and textiles -quality is important with component bc they become part of the firms own product -some components are custom-made where teamwork between the buyer and seller is need to arrive at the right specifications and a close relationship might develop with a dependable supplier -standardized component materials are more likely to be purchased online using competitive bidding system -a replacement market often develops bc they go into the finished product ex) car tires are components in the original equipment market, but bemuse consumer product in the aftermarket

*Integrated Marketing Communications*

-produced by effective blending of all the firm's promotion efforts -intentional coordination of every communication from a firm to a target customer to convey a consistent and complete message -methods should be coordinated so the sum is greater than the parts, separate messages are complementary but also consistent -when number of different people are working on different promotion elements they are likely to all see the same big picture only if the marketing manager ensures they do -harder to get consistency when different firms handle different aspects of the promotion efforts -everyone involved must clearly understand the plan for the overall marketing strategy, need to understand how each promotion method will contribute to achieve specific promotion objectives

*Pulling*

-producers focus significant amount promotion on customers at the end of the channel which helps stimulate demand and pull the product through the channel of distribution -getting customers to ask intermediaries for the product -usually used in combo with pushing -if intermediaries won't work with a producer bc already carrying a competing brand, they use pulling by itself -highly aggressive promotion to final customers using coupons and samples to temporarily bypass intermediaries, if promotion works the intermediaries are forced to carry the product to satisfy customers -risky, customers may lose interest before reluctant intermediaries make the product available -intermediares should be told about the planned pulling effort so they can be ready if the promotion works -producers promotion blend to business customers makes them request the product -producer promotion bend to final consumers makes them request the product

*Quality*

-product's ability to satisfy a customer's needs or requirements -products with better features is not a higher-qualtiy product if the features aren't what the target market wants ex) best satellite TV service may not be the one with the most channels, but the one that includes a local channel the consumer wants to watch

*Consumer Products*

-products meant for the final consumer -consumer product classes based on how consumers think about and shop for products -all products fit into these two broad groups, either consumer or business -4 classes, each based on the way people think about and shop for products: 1) Convenience 2) Shopping 3) Speciality and 4) Unsought -1 product may be seen as a different class by different target markets, such as staples in the USA being seen as heterogenous products in other affluent countries

Business Products

-products meant for use in producing other products -the same products might be both a business and a consumer product, but requires two different strategies ex) Bertolli Olive Oil, consumers buy it to use in their own kitchens but businesses buy it in large quantities as an ingredient for a product they sell -business product classes are based on how buyers think about products and how they'll be used -6 classes: 1) installations 2) accessories 3) raw materials 4) components 5) supplies and 6) professional services

*Generic Products*

-products that have no brand at all other than identification of their centers and the manufacturer or intermediary -offered in plain packages at lower prices, common in less-developed nations -overcomes problem of products that consumers see as commodities being difficult or expensive to brand

*Sales Promotion*

-promotion actives other than advertising, publicity, and personal selling that stimulate interest, trial, or purchase by final customers or others in the channel -aimed at consumers, intermediaries, own employees ex) contests and coupons for consumers, trade shows and calendars for intermediaries, sales contests and meetings for own employees -tries to spark immediate interest -can be implements quick and get results faster, designed to produce immediate results

*Pushing*

-pushing a product through a channel -using normal promotion effort, personal selling/advertising/sales promotion, to help sell the whole marketing mix to possible channel members -emphasized importance of securing the wholehearted cooperation of channel members to promote the product in the channel and to the final consumer -producers usually take on much of the responsibility, but wholesales handle some of the promotion -retailers handle promotion in local markets -effective when all the individual messages are carefully integrated -salesperson sells to intermediaries who want to know what they can expect in return for their cooperation and help, focus on short term arrangements that will improve the intermediary's profits, run ads in trade magazines ex) soft-drink bottler offer connivence store free case of drink with each two cases it buys -internal marketing variation on the push approach, use promotion to motivate employees to provide better customer service or achieve higher sales, common where the quality of employee's efforts is a big part of the product ex) advertising for McDonalds used theme "we love to see you smile" reminded employees the service they provide is crucial to customer satisfaction -producers promotion blend to channel members makes wholesalers promotion push, can lead to retailer promotion push, sometimes combine with final consumers pull

*Unfair Trade Practice Acts*

-put lower limit on prices, especially at the whole sale and retail level -been passed in more than half the states in the US, selling below cost in these states is illegal -wholesalers and retailers required to take certain minimum percentage markup over their merchandise plus transportation costs -practical effects of these laws to protect creation limited line foot retails scubas milk from the kind of ruinous competition supermarket might offer if they sold milk as a leader by offering it below cost for a long time

*Break-Even Point (BEP)*

-quantity where the firm's total cost will just equal its total revenue

*Cash Discounts*

-reduction in price to encourage buyers to pay their bills quickly -modify the net terms

*Rebates*

-refunds paid to consumers after a purchase -sometimes very large like with cars, but also used on lower price items like batters and wine -give producer way to be certain that final consumers actually get the price reduction, if rebate amount were just taken off the price charged intermediaries they might not pass savings along to consumers -many are never redeemed, the paper work and hassle deters them or they simply forget -growing consumer backlash and threat of government regulation has prompted may to drop rebates

*Federal Fair Packaging and Labeling Act of 1966*

-requires that consumer goods be clearly labeled to in easy-to-understand terms to give consumers more information -calls on industry to try to reduce the confusing number of package sizes and make labels more useful -more guidelines since then, most far reaching one requires food manufactures to use a uniform format that allows consumers to compare the nutritional value of different products. Recently also have to clearly show fat content and ingredients that trigger common food allergies -many ethical decisions still remain ex) packages that conceal a downsized product giving consumers less for their money, design packages and labels for private label products that look just like and are easily confuse with manufacturer brands, and use of words such as "organic" and "low fat" on label

*Service Mark*

-same as a trademark except that its refers to a service offering

*Magnuson-Moss Act of 1975*

-says that producers must provide a clearly written warranty if they choose to offer any warranty -warranty doesn't have to be strong, but the FTC guidelines try to ensure its clear, definitive, and not deceptive -the warranty must also be available for inspection before the purchase -company has to be clear if it's offering a full or limited warranty, most offer limited if they offer one at all and in recent years many firms have reduced the period of warranty coverage -service guarantees are becoming more common as a way to attract and keep customers ex) Pizza Hut guarantees a luncheon pizza in 5 mins or it's free

*Sales-Oreiented Objective*

-seeks some level of unit sales, dollar sales, or share of market without referring to profit -more concerned about sales and growth than profits, think sales growth always lead to more profits which sometimes makes sense over the short term or when product in intro or early growth stages of product life cycle ex) Proctor and Gamble kept prices low and scarified profits to recover market shares in receiving economy -usually pay more attention to profits, not just sales -nonprofits set prices to increase market shares bc aren't trying to earn a profit ex) cities set low fares to fill up buses, reduce traffic, and help the environment. Buses cost same to run empty or full, more benefit if full

*Profit Maximization Objective*

-seeks to get as much profit as possible, desire to earn a rapid return on investment or the charge all the traffic will bear -doesn't always lead to high prices, low prices may expand the size of the market and result in greater sales and profits ex) prices of cellphones super high only businesses and the wealthy bought them, when lowered the price everybody bought them -if firm is earning very large profit, other will try to copy or improve on what the company offers which leads to lower prices

*Price Discrimination*

-selling the same products to different buyers at different price

*Individual Brands*

-separate brand names for each product -used when it's important for the products to each have a separate identity, as when products vary in quality or type -if products are really different, individual brands can avoid confusion ex) Elmer's glue and Borden's ice cream -some use individual brands with similar products to make segmentation and positioning efforts easier ex) General Mills organic line of cereal under the name Cascading Farm and didn't include the big G logo, consumers trying to avoid additives might not trust big corporate brands

*Markup Chain*

-sequence of markups firms use at difference levels in a channel, determines the price structure in the whole channel -figured on the selling price at each level of demand -high markup don't always mean big profits

*Product Assortment*

-set of all product lines and individual products that a firm sells

*Product Line*

-set of individual products that are closely related -produced or operate in a similar way, sold to the same target market, sold through the same types of outlets, or priced at about the same level ex) Sara Lee many lines in its assortment: beverages, luncheon meats, desserts, insecticides, body car, air car, and shoe care ex) Enterprise has one line: different types of vehicles to rent -strategy decision about product line length: number of individual product in a product line, sometimes extending the length offers new opportunities -make product line length decisions with knowledge about intermediaries and customers needs and wants in mind, as well as the company's own costs. Extending the line can raise costs and confuse customers, Apple is successful with its narrow line of iPhones ex) Coke has added Vanilla Coke, Cherry Coke, and Coke Zero to appeal to a wider range of customers

*Target Return Objective*

-sets a specific level of profits as an objective -amount stated as a percentage of sales or of capital investment, larger manufacture aims for higher percent return on investment -administrative advantages in large company, performance can be compared against the target and some end up eliminating divisions or dropping products that aren't yielding the target rate of return

*Value Pricing*

-setting a fair price level for a marketing mix that really give the target market superior customer value -doesn't necessarily mean cheap but doesn't mean high prestige either, focus on the customers requirements and how the whole marketing mix meets those ex) Wendy's dollar menu -companies deliver on their promises, try to give consumer pleasant surprises bc if increase value and builds customer loyalty -return the price if the customer isn't completely satisfied -avoid unrealistic price levels such as prices that are high only bc consumers know the brand name -build relationships with customers so they will come back again

*Price Lining*

-setting a few price levels for a product line and then marketing all items at these prices -assumes customers have a certain reference price in mind that they expect to pay for a product ex) ties priced between $20-$50, only a few prices within the range. $20, $30, $40, $50.

*Everyday Low Pricing*

-setting a low price rather than relying on frequent sales, discounts, or allowances -used by supermarkets -avoids problems of sales

*New Unsought Products*

-type of unsought product -products offering really new ideas that potential customers don't know about yet, need for product not strongly felt yet, unaware of benefits or not yet gone through adoption process *-must be available in places where similar or related products are sought, needs attention getting promotion* -informative promotion can help convince customers to accept the product, ending its unsought status *ex) Dannon's yogurt and Litton's microwave are popular now, but used to be unsought*

*Demand-Backward Pricing*

-setting an acceptable final consumer price working backward to what a producer can charge -used by producers of consumer products, especially as shopping products such women's clothing an appliances -used with gift items where customers will spend a certain amount ex) many low income Mexicans only carry 5 or 10 peso coins so Ace laundry detergent developed new version that could cost 10 pesos -start with retail price for an item and work backward, subtracting typical margins that channel members expect and then average marketing expenses can be subtracted from this price to find how much can be spent producing the item ex) candy bars alter size to keep it at expected price

*Product-Bundling Pricing*

-setting one price for a set of products -set overall price so that its cheaper for customer to buy the products at the same time rather than separately ex) back offer bundle price for safe deposit box, travelers check, and savings account -encourages to spend more and buy products that they might not otherwise buy bc the added cost of the extras is not as high as it would normally be, the value is better -also set individual prices for unbundled products which may increase demand by attracting customers who want one items in assortment but not the extras

*Odd-Even Pricing*

-setting prices that ending certain numbers -products selling below $50 often end in the numbers 5 0r 9 -prices for higher priced products are often 1 or 2 dollars below the next even dollar figure -think consumers react better to these prices

*Psychological Pricing*

-setting prices that have special appeal to target customers -whole range of prices potential customers see as the same, so price cuts have to be just below that for them to buy more -at even lower prices quantity demanded stays the same, and so on

*Value In Use Pricing*

-setting prices that will capture some of what customers will save by substituting the firm's product for the one currently being used ex) producer of computer-controlled machines used to assemble cars know it doesn't just replace stranded machine but also reduces labor costs, quality control costs, and costs of warranty repairs. estimate what auto producer will save by using machine and then set price that makes it less expensive for the auto producer to buy the machine than stick with old methods -used in those who aim at business markets

*Prestige Pricing*

-setting rather high price to suggest high quality or high status -some customers wants the best so they will buy at high price, but if price seems cheap they worry about quality and don't buy -most common for luxury goods like furs, jewelry, and perfume -common in service industries where customers can't see the product in advance and relies on price to judge quality, unusual demand curve that goes up fro a little

*Bait Pricing*

-setting some very low prices to attract customers buy trying to sell more expensive models or brands once the customer is in the store ex) furniture store advertise tv for $199 but salespeople point out its disadvantages and try to convince them to buy more expensive model -like bait pricing but don't expect to sell many at the low price -if successful, demand for higher quality expands -good strategy to trade up customers, and customers may be well served in more expensive product is better -unethical bc some make it very hard to buy the bait item, bait and switch pricing

*Leader Pricing*

-setting some very low prices, real bargains, to get customers into retail stores -to get customers into the store so they buy other products -in food stores leader prices are specials that re advertised regularly to give an image of low prices, usually used with products that don't have a specific reference price -can backfire if customers only buy the low-priced leaders, so usually pick ones that don't directly compete with major lines

Accessories

-short-lived capital items, tools and equipments used in production or office activities ex) Canon's small copy machines, Rockelwell's portable drills, and Steelcase's filing cabinets -more standardized than installations and usually more needed by customers -purchasing and operating personnel usually make decisions, shorter decision period, internet sourcing -need fairly widespread distribution and numerous contacts by experienced personnel, price competition intense, quality is important -bc they cost less and last shorter time than installations, multiples buying influences are usually not needed -some may wish to lease or rent, or expense the cost

*Adoption Curve*

-shows when difference groups accept ideas -emphasized relations among groups and shows that individuals in some groups act as leaders in accepting a new idea -promotion efforts need to adjust to difference among the adopter groups -5 groups: 1) innovators, 2) early adopters, 3) early majority, 4) late majority, 5) laggards or nonadopters

*Stocking Allowances*

-slotting allowances -given to an intermediary to get shelf space for a product ex) produce offer retailer cash or free merchandise to stock a new item -commonly used to get supermarket chains to handle new products, more willing to give space to new product if the supplier will offset their handling costs and risks -with big allowance, intermediary makes extra profit even if a new product fail and the producer loses money

*Licensed Brand*

-special kinds of family brand -well-known brand that sellers pay a fee to use ex) Sunkist licensed to many companies for use on more than 400 products in 30 countries, Betty Crocker sell Sunkist Lemon Bar mix and Dr Pepper produces Sunkist Orange Soda. Sunsets earns extra revenue and partners get instant brand recognition, but Sunset must carefully choose partners that sell quality products and promote the brand in ways that won't harm its image

*Langham Act of 1946*

-spells out what kinds of marks (including brand names) can be protected and the exact method of protecting them -applies to goods shipped interstate and foreign commerce -*doesn't force registration, but registering under the act is often a first step towards protecting a trademark to be used in international markets bc some nations require a trademark be registered in a home country before they will register or protect it* -*you must protect your own, firm must try to see that its brand doesn't come a common descriptive term for its kind of product bc then it becomes public property and the owner loses all right to it* ex) Cellophane, aspirin, shredded wheat, and kerosene all became public property -the trademark needs to be protected around the globe, when introducing a brand name marketing managers must be sure to have rights to the trademark in all its markets -counterfeiting is accepted in some cultures, especially in developing countries where regulation is weak or cultural values differ. This can cause the brand to lose sales and jeopardize their reputation ex) In China many DVDs, CDs, and software programs are bootleg copies

Idea generation

-step 1 of the new-product development process -finding new product ideas can't be left to chance, firms need a formal procedure to generate continuos flow of ideas -ideas can come from customers: if they suggest it they are more likely to buy it, comb through product reviews, set up contests, crowdsourcing, leaving behind data-exhaust -ideas can come from other companies and markets: reverse engineering, shop in international markets, ideas can be adapted into new products. ex) buy other firms cars as soon as they're available and take them apart to look for new ideas or improvements -marketing research, company people, intermediaries, etc.

Screening

-step 2 of the new-product development process -evaluate new ideas with SWOT analysis and product-market screening criteria -safety must be considered -products can turn into liabilities -potential return on investment (ROI) compared between ideas that pass the screening criteria

Development

-step 4 in the new-product development process -involves more research and development to design and develop the physical part of the product or work out details of training, equipment, staff, etc. for a new service -customers can react to prototypes -firms often use full-scale market testing to get customer reactions under real market conditions or to test variations in the marketing mix, tests the whole marketing mix and not just the product, running these tests is costly but no doing it is risky ex) test alternate brand names, prices, or advertising copy in test cities

*Total Variable Cost*

-sum of those changing expenses that are closely related to output ex) parts, wages, packaging materials, outgoing freight, sales commissions -at zero output total variable cost is zero, as output increases so does variable costs

*Total Fixed Cost*

-sum of those costs that are fixed in total, no matter how much is produced ex)rent, depreciation, managers salaries, property taxes, insurance -costs stay the same even if production stops temporarily

*Total Cost*

-sum of total fixed and total variable costs -changes in total cost depends on variations in total variable costs since total fixed cost stay the same

*Sale Price*

-temporary discount from the list price -encourage immediate buying, to get the sale pice customers give up the convenience of buying when they want to buy and instead buy when the seller want to sell -provide manager a quick way to respond to changing conditions without changing the basic marketing strategy ex) retailer use sale to clear extra inventory or meet competing stores prices -more common recent years, some consumers wait to purchase bc they are so often and some checkout websites to figure out where a product is on sale -prices that change constantly erode brand loyalty

Derived Demand

-the big difference between consumer products market and business products market -the demand for business products derives from the demands for final consumer products ex) car manufacturers buy about 1/5th of all still products, but if demand for cars drop they'll buy less steel and then even the steel supplier with the best marketing mix will lost sales -total industry demand for business products is fairly inelastic bc firms must buy what they need to produce their products no matter what the price is, but business buyers do try to buy economically as possible so the demand facing individual sellers may be extremely elastic if similar products are available at a lower price -price increase might not reduce quantity purchased

*Product Liability*

-the legal obligation of sellers to pay damages to individuals who are injured by defective or unsafe products -serious matter, settlements may exceed company's insurance coverage and its total assets -relative to other countries, US courts enforce strict product liability standards

*Product*

-the need-satisfying offering of a firm -purchases deliver the highest level of satisfaction when the customer's entire experience with the product meets of exceeds the customer's needs -maybe a good, service, or a blend. Most are a blend ex) fast food you pay fro the food and the staff service -some add a service to differentiate their product, and some services emphasis a product to differentiate ex) Benjamin Moore paint company's app "ben Color Capture" lets iPhone users take a photo of a color and have it matched to a paint color. Westin Hotel has a service emphasis, but their ads hight the Heavenly Bed

*Markup (Percent)*

-the percentage of selling pice that is added to the cost o get the selling price -related to selling price for convenience -state clearly which markup percent you're using, what it's based on -many use standard markup percent and apply it to all their products which makes pricing easier

*Decoding*

-the receiver translating the message -this process can be tricky, other place where basic difficulty of the process occurs -meanings of various words and and symbols may different depending on the attitude and experiences of the two groups -people need a common from of reference to communicate effectively -different audiences may interpret a message differently, common in international markets where cultural differences or translations are problems

*Family Brand*

-the same brand name for several products vs. individual brands for each product ex) Keebler snack food products and Sears Kenmore appliances are family brands -makes sense if all are smiler in type and quantity -goodwill attached to 1 product may help another product, and money spent to promote the brand name benefits more than one product which cuts promotion costs for each product

*Source*

-the sender of the message -trying to send a message to a receiver

*Encoding*

-the source deciding what it wants to say and translating it onto words or symbols that will have the same meaning to the receiver -where basic difficulty of the process occurs ex) Maidenform ran ads of female stockbrokers in their lingerie next to fully clothed men, meant to show maidenform wearing women worked in positions of authority but women decoded it as it portraying them as sex symbols

*Skimming Price Policy*

-tries to sell the top (skim the cream) of a market, the top of the demand curve, at a high price before aiming at more price-sensitive customers -may maximize profits in the introduction stage for an innovation, especially if few substitutes or or if they customers aren't price sensitive -useful when don't know much about the shape of the demand curve, safer to start with high price that can be reduced if customers balk -shouldn't do it on products that have important social consequences, like a patented protected life saving drug or technique that improves crop yields bc many who need it don't have the money -problem if firms don't have incentive to take risks and develop new products

*Penetration Pricing Policy*

-tries to sell the whole market at one low price -wise when the elite market, those willing to pay a high price, is small which is when whole demand curves fairly elastic -attractive if selling larger quantities results in lower cots bc of economies of scale -wise if the firm expects strong competition very soon after introduction -cant keep competitors out permanently, product life cycles do march on, but a firm that gains a head start can maintain its advantage ex) Sony's blu ray came out same time as Toshiba's HD-DVD so Sony cut the prices of blu-ray players to the bone and included them in their new PS3, which they sold below production cost, and Toshiba threw in the towel

*Direct Competitive Advertising*

-type of competitive advertising -aims for immediate buying action ex) Delta ads with prices, timetables, and phone numbers

*Comparative Advertising*

-type of competitive advertising -making specific brand comparisons using the actual product names ex) Verizon ads show maps proving better service than AT&T -many countries forbid this, but encouraged in US bc thought they would increase competition and provide consumers with more useful info -superiority claims supposed to be supported by research evidence, guidelines aren't clear -some keep running tests until they get the results they want, others talk about minor differences that don't reflect real customer value -can backfire by calling attention to competing products the consumer had not previously considered

*Indirect Competitive Advertising*

-type of competitive advertising -points out product advantages to affect future buying decisions ex) Delta ads focus on quality of service and suggest you check their website next time you travel

*Staple*

-type of convenience product -products that are bought often, routinely, and without much thought, low involvement -*max exposure with widespread low cost distribution, mass selling by producers, low price, branding important* *ex) breakfast cereal, canned soup, and most other packaged foods used almost everyday in almost every household*

*Emergency Products*

-type of convenience product -products that are purchased immediately when the need is great, planned purchases with time pressure -need widespread distribution near probable point of need, price sensitivity is low -customer doesn't have time to shop around, price won't be important

*Impulse Products*

-type of convenience product -products that are bought quickly, as unplanned purchases, because of a strongly felt need -items customers hadn't planned to buy, decides to buy on post, and may have bought the same way many times, and wants right now -widespread distribution with display at point of purchase -if the buyer doesn't see the impulse product at the right time, the sale may be lost

*Reminder Advertising*

-type of product advertising -tires to keep the products name before the pubic -useful when product has achieved brand preference or insistence, market maturity or sales decline stage of the life cycle -use soft sale ads that just mention or show the name as a reminder

*Pioneering Advertising*

-type of product advertising -tries to develop primary demand for a product category rather than demand for a specific brand -done in early stages of the life cycle, informs potential customers about the new product and helps turn them into adopters ex) ads for digital cameras early on had to explain basics like benefits, why they'd want one, and how to print pictures; and build primary demand

*Competitive Advertising*

-type of product advertising -tries to develop selective demand for a specific brand -forced into it as the product life cycle moves along to hold its own against competitors ex) digital cameras moved to growth stage of the life cycle ads emphasized features and benefits like face recognition

Farm Products

-type of raw material -grown by farmers ex) oranges, sugar cane, and cattle

Natural Products

-type of raw material -products that occur in nature ex) timber, iron ore, and coal

*Homogenous Shopping Products*

-type of shopping product -items customers see as basically the same and want the lowest price, see little difference *-need enough exposure to facilitate price comparison, price sensitivity is high* *ex) believe all gasoline is the same so seeks out and buys at the stations with the lowest prices* -low cost producer might try to promote that its products are as good as higher priced alternatives, has worked for Vizio in the TV market

*Heterogenous Shopping Product*

-type of shopping product -items customers see as different and wants to inspect for quality and suitability, extensive problem solving, consumer may need help in making a decision *-need distribution near similar products, promotion to highlight product advantages, less price sensitivity* *ex) furniture, clothing, and spa memberships* -customers seek info from knowledgable salespeople or reputable websites -quality, features, and style matter more than price -branding less important, the more carefully customers compare quality the less they rely on brand name, some retailers carry competing brands so consumers won't go to a competitor to compare items

*Regularly Unsought Products*

-type of unsought product -are products that stay unsought but are not unsought forever, aware of products but not interested, possible negative attitude towards product *-requires very aggressive promotion, usually personal selling* *ex) grave stones, life insurance, and nursing homes* -may be a need but potential customers aren't motivated to satisfy it, personal selling is very important -many nonprofits try to sell their unsought products ex) American Red Cross regularly holds blood drives to remind prospective donors of how important it is to give blood

*Branding*

-use of a name, term, symbol. or design (or combination of these) to identify a product -includes use of brand names, trademarks, and practically all other means of product identification -*well-recognized brands make shopping easier, customers trust brand names if they consistently have a positive experience with the brand or hear good things from the firm's promotions* -*good brands reduce the marketers selling time and efforts, the can improve company's image, and speed acceptance of new products marketed under the same name* ex) many quickly tried Listerine PocketPaks breath fresheners bc they already knew and trusted Listerine Mouthwash -branding is costly and doesn't always make sense as part of the marketing strategy, such as for bed frames and nails -*favorable to branding if: 1) product is easy to label and identify by brand or trademark, 2) product quality is easy to maintain and is the best value for the price, 3) if dependable and widespread availability is possible, 4) if demand is high enough that the market price can be high enough to make the cost of branding profitable, 5) if there are economies of scale so cast can drop and profits can increase, and 6) if favorable shelf locations or displays space in stores will help bc this is something relaters can control when they brand their own products*

*Price Fixing*

-usually occurs when competing marketing mixes are quite similar, success of an entire marketing strategy depends on price so there is pressure to make agreements with competitors -competitors getting together to raise, lower, or stabilize prices is coming and relatively easy -completely illegal in the US -considered conspiracy, companies and individual mangers are both responsible -different countries have different rules which as created problems in international trade

*Brand Equity*

-value of a brand's overall strength in the market, value to current owner or firm that wants to buy it -likely to be higher if many satisfied customers insist on buying the brand and if retailers are eager to stock it, that almost guarantees ongoing profits -respected name builds brand equity ex) Much of Coke's value comes from association people have with the brand name, in a blind test taste with Pepsi preferences were split evenly but when they were labeled most preferred Coke

*Discounts*

-variation from basic list price -reductions from list price given by a seller to buyers who either give up some marketing functions or provide the function themselves -useful in marketing strategy planning

Early Adopters

-well respected by their peers and are often opinion leaders -tend to be younger, more mobile, and more creative than later adopters -fewer contacts outside social group than innovators -business firms in this category are specialized -greatest contact with salespeople than any other group -markerters concerned with attacking and selling the early adopter group, their acceptance is crucial bc next group looks to them -help promotion by spreading word of mouth info and advice -opinon leaders help spread the word

*Product Managers or Brand Managers*

-when a firm has products in several different product categories put somebody in charge of each category or brand to be sure that attention to these products in not lost -manage specific brands and often take over the jobs formerly handed be an diverting manager -major responsibility is promotion since the product has already been developed by the new-product people, although some do start at that stage -common in large companies that produce many kinds of products -to avoid problems, sometimes the manager is just a product champion concerned with planning and getting the promotion effort implemented -activities very a lot depending on their experience, aggressiveness, and company's organization philosophy with emphasis on experience -work with managers in different countries on how to adapt products for different markets -*brand equity*: added value endowed to products and services encompassing 1) brand elements, those trademark able devices that service to identify and differentiate the brand such as brand name/logo/character 2) brand image, perceptions and beliefs held by consumers as reflected by the association held in the consumer memory 3) brand knowledge, all the thoughts/images/beliefs/experiences etc that become associated with the brand. Its about knowing your consumer, innovation, creating excitement, and creating value.

Planning for Different Stages of the Product Life Cycle

-where a product is in its life cycle and how fast its moving to the next stage should affect marketing strategy planning -lots of strategy planning to introduce a really new product and money must be spent developing the product, even if its unique that doesn't mean everybody will immediately come running -new products will have to build channels of distribution and promotion is needed to build demand for the whole idea, not just to sell a specific brand -introducing new product is expensive so might try to skim the market, charging a relatively high price to help pay for the introductory costs, but the correct strategy depends on how quickly the new idea will be accepted by customers and how quickly competitors will follow with their own versions -when the early stages of the cycle will be fast, low initial or penetration price makes sense to help develop loyal customers and keep out competition -hard to predict customer response to really new product so managers should carefully monitor reactions and be prepared to pivot or move to a new marketing mix ex) Game Neverending wasn't initially popular but the photo sharing aspect of it was, so they pivoted and became Flickr -sometimes pioneers need help, a number of different companies need to come together, such as with Netflix -its important for firm to have some competitive advantage as it moves into market maturity ex) Nabisco Graham crackers used same ingredients to create Teddy Grahams -firms shouldn't sit by as sales decline, it can improve its product or develop an innovate new product for the same market, or develop a new strategy for a new market where the life cycle isn't as far along ex) InSinkErator garbage disposals in Europe where most don't have them but can afford them -in highly competitive market maturity stage many firms slash prices to maintain market share, find other ways to create value and maintain margins ex) Elkay water fountain added top nozzle for refilling water bottles -firms can find new uses for their products to stimulate overall demand ex) Teflon resin not just for pots and pans, but now coats wires, Phildelphia Cream Cheese launched ad campaign to promote adding it to recipes -phase out a product if it's not going to be profitable enough to reach the company's objectives, better to phase out gradually so firm doesn't experience loss, possible to milk a dying product for some time if competitors move out more quickly and there is ongoing demand bc customers are willing to pay good prices for their old favorites -ethical issues with new-product decisions and with decisions to abandon old products ex) drug firms criticized for holding back important new product innovations until patents run out or sales are down on their existing products

*Brand Name*

-word, letter, or a group of words or letters -important bc sometimes a firms brand name is the only element in its marketing mix the competitor can't copy -a good brand name can help build brand familiarity bc it can help tell something important about the company or product, hard in international markets bc a name that convey a positive image in one language may be meaningless or have unintended meanings in another ex) America Online (AOL), WD-40, 3M Post-its, and PT Cruiser -*characteristics of a good brand name: short and simple, easy to spell and read, easy to recognize and remember, easy to pronounce, pronounced in only one way, pronounced in all languages, suggestive of product benefits, adaptable to packaging needs, no undesirable imagery, always timely, adaptable to any advertising medium, legally available*

*Dynamic Pricing*

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Commercialization

step 5 in the new-product development process -idea that survives this far can finally be placed on the market, putting a product on the market is expensive and success usually requires cooperation of the whole company -manufacturing or service facilities have to be set up, goods have to be produced to fill the channels of distribution or people must be hired and trained to proved service -introductory promotion is pricey -some introduce product city by city or region by region in a gradual rollout, permits more market testing -pay attention to control so that implementation is working and the strategy is on target