Marketing 3.0:
Six Methods of Product Packaging
1. Promote & Sell the product 2. Provide Information 3. Meet Customer Needs 4. Ensure Safe Use 5. Protect the Product 6. Define Product Identity
Product Depth
number of items offered within each product line
Channel Length
number of levels in a distribution channel.
Vertical Conflict
occurs between channel members at different levels within the same channel
Indirect Distribution
Involves the use of intermediaries Example: Retail Stores: Target, Wal-Mart, CVS, etc...
Horizontal Conflict
occurs between channel members at the same level
3 Main Phases of Product/Service Management
1. Develop New Products 2. Monitoring Existing Products - Sales, Profit, Market Share 3. Eliminate Weak Products
The 4 Stages of the Product Life Cycle
1. Introduction 2. Growth 3. Maturity 4. Decline
Customer Relationship Management (CRM)
A business can track A customer can track an order. CRM ensures customer satisfaction.
Monopolistic Competition
A large number of suppliers offer similar, but not identical products. The similarities ensure elastic demand whereas the slight differences give some monopolistic power to the supplier
Product/Service Management
A marketing function that involves obtaining, developing, maintaining, and improving a product
Intranet
A technological tool which can help a business's employees simultaneously access the same information about the businesses products.
Agent
A type of Intermediary that does not take ownership of a product Get paid commission to get buyers and sellers together Examples: Sports Agents & Real Estate Agents
Trading Up
Adding a higher-priced product to a line to attract a higher-income market and improve the sales of existing lower-priced products.
Trading down
Adding a lower-priced item to a line of prestige products to encourage purchases from people who cannot afford the higher-priced product, but want the status
Brand Licensing
Allows one company to use another's brand name, logo, or character for a fee
6 Common Bases for Positioning
Attribute (Feature/Benefits)- one way of positioning a product is to highlight a product feature or attribute. Price and Quality - this position strategy may stress high price as a sign of quality, or emphasize low price as an indication of value. Use or Application - stressing unique uses or applications can be an effective means of positioning a product. Product User - this positioning strategy encourages use of a product or service by associating a personality or type of user with the product. Product Classification - when positioning according to product class, the objective is to associate the product with a particular category of products. Competitor - sometimes marketers make an effort to demonstrate how they are positioned against the competitors that hold a strong market position.
Three Levels of Brand Loyalty
Brand Recognition: is when consumers become aware of a brand and know a bit about it. Brand Preference: when consumers prefer to purchase a certain product brand based on their positive experience with the brand. Brand Insistence: when the consumer insist on "their" brand and will not accept substitutes
Deep Product Line
Extensive variety within a product line.
Bait and Switch Advertising
First, customers are "baited" by advertising for a product or service at a low price; second, the customers discover that the advertised good is not available or the sales person disparages the advertised item and customers are "switched" to a higher priced product.
Product Alteration
Improvement of an established product
Merchant
Intermediaries take ownership of a product Example: Wholesaler and Retailer
Interactive touch Screen Computers
Kiosks
Planned Obsolescence
Making products that are known to not last long, or change, so that people will need to replace them Example: Cell phones are always coming out with newer functions and it makes consumers want to purchase the new and improved cell phone
Integrated Distribution
Manufacturer acts as wholesaler and retailer for its own products. EX. Sherwin-Williams Paint, Merle Norman Ex. The Gap or Ann Taylor sells its clothing in company-owned retail stores.
Perfect (PURE) Competition
Many buyers and many sellers all dealing in an identical product. Neither producer nor user has any market power and both must accept the prevailing market price
Intemediaries
Middlemen who move products from the manufacturer to the final user
Contraction of Product Lines
Narrowing or decreasing number of product lines carried
Cause Packaging
Occurs when a company promotes a cause or foundation on their packaging in an effort to raise awareness/support for that cause.
Brand Extension
Occurs when an existing brand name is used for a new or improved product line. Starbucks extends its coffee line to include ice cream and candy bars.
Mixed Bundling
Occurs when you sell several items together as one combined unit Cheaper to buy in bulk versus individually. Example: Computer software: Microsoft Office Suite is cheaper than buying Word, PowerPoint, Excel, & Access separately
Monopoly
One seller who dominates many buyers. The monopolists can use his market power to set a profit-maximizing price
Physical Distribution
Organizing and moving products through the channels
Drop Shipper
Own the goods they sell but do not physically handle the actual product Example: Coal, Lumber, Chemicals They sell the goods for the manufacturer & the manufacturer ships it
Blisterpack
Packages with preformed plastic molds surrounding individual items arranged on a backing. Example of a product that is sold using this type of packaging is Dentyne Ice gum
Trade Character
Personified symbol that represents the brand name Example: Tony the Tiger, Energizer Bunny, Mickey Mouse, etc..
Co-Branding Strategy
occurs when companies join forces to increase recognition, customer loyalty, and sales of both brands
Ethical Considerations in Product Packaging
Product labeling must inform customers about a product's contents and give directions for use.
Enterprise Resource Planning Systems
Software that allows all parts of the company's management to be integrated
Product Item
Specific model, brand, or size of a product within a line
Mass Customization
Technologically advanced method that allows businesses to produce products that are specialized for a very few customers.
Selling Price
The amount a seller charges the purchaser for a good or a service
Product Positioning
The image a company wants to create about the product in the minds of consumers.
Distribution Center
The main focus of a distribution center (warehouse) is to MOVE products, not STORE products
Product Width (Broad)
The number of different product lines carried.
Deceptive Pricing
The pricing of goods and services in such a way as to cause a customer to be misled; an example of deceptive pricing is bait-and-switch.
Interactive TV
Where TV is like a computer- order movies, click on Ragu for recipes, order food. Helps marketers to develop a database of their uses
Oligopoly
Where are relatively few competitive companies dominate the market while each large firm has the ability to influence market prices the unpredictable reaction from the other giants makes the final industry price in determinate. Cartels are often formed
Rack jobbers
Wholesalers who buy products and then manage the inventory they purchased Count stock, refill stock, maintain store displays, etc.. Only bill retailer for the amount they sell
Impact of Internet on Product Development
WiFi, Search Engines,Email, E-Commerce. Tracking visitors to your website is one way businesses use technology to obtain information in order to improve the product/service mix.
Fixed Pricing
The same pricing to all customers no matter how many (quantity) are purchased.
Product Life Cycle
The stages that a product goes through during its life.
Intensive Distribution
The use of all suitable outlets to sell a product. The objective is complete market coverage and the ultimate goal is to sell to as many customers as possible, wherever they choose to shop.
Brand
a design, name, symbol, term or word that distinguishes and identifies a company and/or products or services
Selective Distribution
a limited number of outlets in a given geographical area are used to sell the product
Product Mix
all the types of products a company makes or sells
Targeted Pricing
allows a company to charge different prices to new customers it is trying to entice than to established customers who need no other incentive to by the company's brand.
Automated Pricing
allows the programmer to set the qualifications and then the system awards the targeted price when the conditions have been met.
Private distribution brand
also called a store brand For example, Radio Shack brand of batteries, Lowe's brand of macaroni and cheese
Price Fixing
collaborating with other companies (competitors) to set prices for a company's products; agreement among competitors to raise, fix, or otherwise maintain the price at which their goods or services are sold, price fixing is illegal.
Flexible Price Policy
customers are allowed to bargain for merchandise; consumer can negotiate on the final cost; encourages customers to bargain with sellers to obtain the best price; aka "variable pricing policy
Product Expansion
increasing number of product lines carried
Penetration Pricing
initial price for product is set very low; setting a low price on a new product; Setting a low price to motivate customers to purchase when introducing a product into a competitive market and attempting to gain customer
Narrow Product Line
limited product lines carried, typically very specialized.
Shallow Product Line
limited variety within a product line. (Usually less than 4 items in a line)
E-Commerce
means by which products are sold to customers and industrial buyers through the Internet
Product Width
number of different product lines
Price Discrimination
exists when sales of identical goods or services are transacted at different prices from the same provider
Pricing Objectives
goals a company hopes to achieve through it pricing decisions
Product Line
group of closely related products manufactured by a business`
Odd-Even pricing
idea that prices ending in odd digit convey a bargain image ($79.99; .99;) and those that end in even digits convey an image of quality ($100; $50).
Direct distribution
occurs when the producer sells goods or services directly to the consumer without the help of intermediaries
Predatory Pricing
practice of selling a product or service at a very low price, intending to drive competitors out of the market.
loss leader
pricing products near or below cost to attract customers; purpose is to increase customer traffic, thus increase sales of profitable items
Exclusive Distribution
protected territories for distribution of a product in a given geographic area; business maintains tight control over a product
Product Brand
represents a specific product of a company or organization For example, Diet Vanilla Coke, Big Mac, or Windows XP
Corporate brand
represents the entire company or organization For example, Coca-Cola, Ford, McDonalds, Kraft or Microsoft
Retailers
sell goods to the final consumer for personal use
Prestige Pricing
setting higher than average prices to suggest status, quality or exclusiveness. Customers equate high price with high quality. This technique sets a higher-than average price for products to communicate quality and status
Channel Intensity
the number of intermediaries at each level of the marketing channel (Intensive, Selective, Exclusive)
Channel of Distribution
the path a product takes from the manufacturer to the final user.
Dumping
the practice of is any kind of predatory pricing, especially in the context of international trade. It occurs when manufacturers export a product to another country at a price either below the price charged in its home market, or in quantities that cannot be explained through normal market competition
Competitive Advantage
the set of unique features of a company and its products that are perceived by the target market as significant and superior to the competition
False / Deceptive Advetising
the use of false or misleading statements in advertising. As advertising has the potential to persuade people into commercial transactions that they might otherwise avoid. examples of deceptive pricing are Savings claims, price comparisons, "special" sales, "two-for-one" sales, "factory" prices, or "wholesale" prices.
Growth Stage
• Customers are aware of product. Focus shifts to customer satisfaction • Sales will start to increase. Better returns on investment • Competition starts from other companies • Demand, Distribution, Competition, Advertising, & Sales all increase • Secondary or supplemental products increase • Pricing is usually maintained to maximize earnings
Maturity Stage
• Product competition increases to the point where similar products are on market & in same stores • Sales will start to decline • Companies may choose to lower prices to increase market share or gain new customers • Product starts to lose appeal. Becomes less attractive to customers. • Little growth potential for the product • Company tries to extend life cycle & maintain market share • Spend more money trying to defeat competition
Introduction Stage
• Product is launched & the public first sees or hears about it. • The product appears in stores for the first time and will start seeing print & television ads • High Investment, Slow sales (Least Profitable Stage) • Company is focused on production & promotion • Minimal Competition • Pricing is usually higher for new models. Scaled down versions are sold at a cheaper rate
Decline Stage
• Sales = Expenses or Expenses exceed sales. Product may break-even or even lose money • Companies can either maintain the product, reduce the price substantially, or discontinue it • A lot of money is going into product for production and competition • Market is saturated with products similar to yours • Product may exit the market if company becomes cost conscious o Companies will either Reposition, Rebrand, or Eliminate the product o Extend Products Life: Make modifications to the product (e.g.: new car model) Change the packaging , Increase Advertising, or Export product to a new market Introduce new varieties (Coca-Cola, Coke Zero, Vanilla Coke, etc..)
