Marketing Chapter 7

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diffusion of innovations

- The manner by which a new product spreads through a market is basically a group phenomenon. - New products can be placed on a continuum from no change to radical change, depending on the market's perception.

characteristics of opinion leaders

-- Greater long-term involvement with the product category than the non-opinion leaders in the group. This is called enduring involvement. -- They tend to be only opinion leaders for specific products or activity clusters. --- Seldom differ demographically from the people they influence. --- They have higher levels of exposure to relevant media. --- Because of the WOM factor, they tend to be very satisfied customers with the product category.

characteristics of market mavens

-- They provide significant amounts of information to others across a wide array of products. -- They provide info on quality, sales, price, product availability, store personnel characteristics, and other features of relevance to the consumer. -- Like opinion leaders, they do not differ demographically from those to whom they provide the information. -- Extensive users of media and are usually more extroverted and conscientious than other. More likely to be female.

brand identity

---Those "brand elements," or trademarkable devices that serve to identify and differentiate the brand (Trademark - the exclusive right to use a brand or part of a brand (e.g., brand name, mark, shapes, colors, slogan, sounds); based on use (3 years) vs. registration) ---Includes brand name, mark/symbol, character, slogan, jingle, product design, packaging. should be MEMORABLE, likable, consistent w meaning

service

--The result of applying human or mechanical efforts to people or objects. --involve a deed, performance or effort that cannot be physically possessed.

Advantages of Private Brands

-Earn higher profits on own brand -Less pressure to mark down price -Ties customer to wholesaler or retailer -Wholesalers and retailers have no control over the --------intensity of distribution of manufacturers' brands. -Only marked down a little from manufacturer's brand.

adjustments to product lines, items, mixes

........leads to product modification, product repositioning, and product line extension/contraction

upper middle class

12.5% : premium price, status = professional, grounds

middle class

36% : premium price, achievement, sharing themes; middle class backgrounds

working class

38% : popular price, sports themes, working-class backgrounds

product life cycle

A biological metaphor that traces the stages of a product's acceptance, from its introduction (birth) to its decline (death).

Private Brand

A brand name owned by a wholesaler or a retailer. Also known as private label or store brand.

product line

A group of closely-related product items.

speciality product

A particular item for which consumers search extensively and are reluctant to accept substitutes

consumer product

A product bought to satisfy an individual's personal needs or wants.

new product

A product new to the world, the market, the producer, the seller, or some combination of these

shopping product

A product that requires comparison shopping, because it is usually more expensive and found in fewer stores

unsought product

A product unknown to the potential buyer or a known product that the buyer does not actively seek

business product

A product used to manufacture other goods or services, to facilitate an organization's operations, or to resell to other consumers. B to B: business for another business.

convenience product

A relatively inexpensive item that merits little shopping effort

information processing

A series of activities by which stimuli are perceived, transformed into information, and stored. exposure: does not have to be "seen" attention: when the add is seen interpretation: the meaning associated

product item

A specific version of a product that can be designated as a distinct offering among an organization's products; receives its own UPC code

simultaneous product development

A team-oriented approach to new-product development where all functional areas participate in all stages of the development process. allows firms to shorten the development process and reduce costs.

concept test

A test to evaluate a new-product idea, usually before any prototype has been created. Considered fairly good predictors of success for line extensions and for products that do not require major changes in consumer behavior.

product line extension

Adding additional products to an existing product line in order to compete more broadly in the industry.

campbell's example

All of Campbell's products constitute its product mix. Each product in the product mix may require a separate marketing strategy. In some cases, product lines and mixes share some marketing strategy components. Consider Nike's theme, "Just Do It."

product mix

All products that an organization sells. Rarely does a company sell a single product. Instead, it sells a variety of things that may be categorized into product lines and product mixes.

attitude

An enduring organization of motivational, emotional, perceptual, and cognitive processes with respect to some aspect of our environment. .. the way one thinks, feel, and acts toward some aspect of his or her environment.

brand hierarchy

An important product decision involves determining whether different offerings in a company's product line should be positioned as individual brands or share the same brand name. Brand hierarchy (or architecture) reflects the relationship among different brands in a company's portfolio

motive

An unobservable inner force that stimulates and compels a behavioral response and provides specific direction to that response.

product

Anything that can be offered to a market to satisfy a want or need, including physical goods, services, experiences, events, persons, places, properties, organizations, information, and ideas. includes: "Tangibles" like physical unit, package, warranty "Intangibles" like brand, image, and overall value

benefits of greater depth

Attracts buyers with different preferences Increases sales/profits by further market segmentation Capitalizes on economies of scale

measuring brand power

Brand awareness Type of brand associations Strength of brand associations Price willing to pay for branded vs. identical unbranded product

financial based approach

Brand equity = NPVFutureCashFlows* Brand contribution factor * Risk factor

market based approach

Brand equity = RevenuesBrand - RevenuesGeneric - Branding costs

brand elements

Brand name: Kellogg Frosted Flakes Brand marks (logo, etc.) Character Tony is 6 feet 6 inches tall with a muscular build and walks on two legs. He's a strong, self-assured friend who offers encouragement to kids and grown-ups alike Slogan: They're Gr-r-reat!® Packaging Endorsements Sponsorships

brand meaning

Brand-related perceptions and beliefs held by consumers (i.e., consumers' understanding of the brand's value proposition). Creates value by ... Signaling product quality Providing emotional, social, and self-expressive benefits

cost based approach

Calculating the costs involved if the brand needed to be created from scratch at the time of valuation (e.g., marketing research, advertising, legal)

brand meaning

Creates value for the customer, the company, and collaborators

development

Creation of prototype Marketing strategy Packaging, branding, labeling Promotion, price, and distribution strategy Manufacturing feasibility Final government approvals if needed

probability of experiencing dissonance

Degree of commitment or irrevocability Importance of the decision Difficulty in choosing Individual's tendency to experience anxiety

commonalities

Demographics Extracurricular Activities Media Usage Marketing Strategy

benefits of product mix width

Diversifies risk Capitalizes on established reputations

laggards

Dogmatic and oriented toward past Locally oriented and engage in limited social interaction Adopts innovations with reluctance.

Universal Product Code

Each and every product produced gets its own UPC. A 12-digit "universal" number imprinted on a product A scanner automatically reads the UPC, looks up the price, and prints the description and price on the receipt

interdependent self-concepts

Emphasizes family, cultural, professional, and social relationships. Obedient, sociocentric, holistic, connected, and relation oriented Define themselves in terms of social roles, family relationships, and commonalities with other members of their group

independent self-concepts

Emphasizes personal goals, characteristics, acheivements, and desires Individualistic, egocentric, autonomous, self-reliant, and self contained. Define themselves in what they have done, what they have, and their personal characteristics.

benefits of cobranding

Enhancement of prestige or value of a product and increased market presence in markets with little or no market share.

product failure

Failure can be a matter of degree. Absolute failure occurs when a company cannot recover its development, marketing, and production costs. A relative product failure occurs when the product returns a profit but fails to achieve sales, profit, or market share goals.

laggards

Final 16% of consumers

innovators

First 2.5% of consumers

Advantages of Manufacturers' Brands

Heavy consumer ads by manufacturers Attract new customers Enhance dealer's prestige Rapid delivery, carry less inventory

brand functions

Identify a company and/or offering Meaningfully differentiate it from the competition

growth stage

In the growth stage, sales grow at an increasing rate, many competitors enter the market, and larger companies may acquire small pioneering firms. Profits rise rapidly, peak, and begin declining as competition increases. Aggressive brand advertising and communication of the differences between brands is the preferred promotion strategy. Adequate distribution is a major key to establish a strong market position and product success.

first mover advantage

Increased sales through longer sales life Increased margins Increased product loyalty More resale opportunities Greater market responsiveness A sustained leadership position

brand hierarchy core approaches

Individual branding - using different brand names for different products Family branding (a.k.a. umbrella branding) - marketing several different products under the same brand name

brand decison

Individual brand—different brands for different products Family brand—common names for different products or a combination of individual branding and family branding.

market mavens

Individuals who have information about many kinds of products, places to shop, and other aspects of markets. They take being an opinion leader to the next extreme.

how services differ from goods

Intangibility: Services cannot be touched, seen, tasted, heard, or felt in the same way as goods. Services cannot be stored and are easy to duplicate. Tangible cues are often used to communicate a service's quality and nature. Facilities are a critical tangible part of a service experience. Produced and Consumed Simultaneously: Goods are produced, sold, and then consumed. In contrast, services are often sold, produced, and consumed at the same time. Consumers are involved in the production of the services that they buy. The quality of services depends on the quality of employees. Heterogeneity: Services are less standardized and uniform than goods—a characteristic known as heterogeneity. Because services are labor-intensive, consistency and quality control can be hard to achieve. Standardization and training help increase consistency and reliability. Perishability: Services cannot be stored, warehoused, or inventoried. If not used, the revenue is lost. One of the most important challenges in many service industries, such as hotels and airlines, is finding ways to synchronize supply and demand. Deep discounts and off-peak pricing strategies encourage demand during nonpeak times.

functions of attitude

Knowledge - your way of organizing beliefs, ex. colas Value-expressive - allows you to express yourself in what every way you deem fit, ex. Green Peace Utilitarian - favorability towards rewards and negativity to non-rewards Ego-defensive - defense of self-image, ex. Dandruff shampoo

why new products succeed

Match between product and market needs Different from substitute products Benefit to large number of people

early adopters

Next 13.5% of consumers

early majority

Next 34% of consumers

late majority

Next 34% of consumers

why new products fail

No discernible benefits Overestimation of market size Incorrect positioning Priced too high or too low Inadequate distribution Poor promotion Inferior product Poor match between features and customer desires

late majority

Older with less social status and less mobility Skeptical about innovations Adopts out of social pressure, decreased previous product availability, or positive evaluation of innovation

decision process

Problem recognition, information search, alternative evaluation + selection, outlet selection and purchase, postpurchase processes

types of product modifications

QUALITY modification: change in a product's dependability or durability. FUNCTIONAL modification: change in a product's versatility, effectiveness, convenience, or safety. STYLE modification: an aesthetic product change (like color) rather than a quality or functional change. Planned obsolescence is a style modification change to make old products "obsolete" to the consumer.

search qualities

Qualities that are identifiable through inspection before purchase; associated with the least amount of uncertainty (like size)

experience qualities

Qualities that are revealed only through consumption; associated with greater uncertainty like TASTE or RELIABILITY

credence qualities

Qualities that consumers may have difficulty assessing even after consumption; associated with the most uncertainty

benefits of product line contraction

Resource concentration on the most important products. * No waste of resources on poorly performing products. * Greater likelihood of the success of new product items due to more financial and human resources to manage them.

brand identity

Signals value to the customer, the company, and collaborators

product line overextension

Some products have low sales or unduly cannibalize sales of other items Resources are disproportionately allocated to slow-moving products Items have become obsolete because of new product entries

early majority

Somewhat older, less educated, less socially mobile Cautious about innovations Adopts sooner than most of their social group, but after innovation is proven successful Socially active but seldom leaders Relies heavily on interpersonal sources of information

new product strategy

Specifies the roles that new products must play in the organization's overall plan Describes the characteristics of products the organization wants to offer and the markets it wants to serve

brand hierarchy

Subbrands often used to avoid brand dilution while capitalizing on the brand name: Courtyard by Marriott (Marquis) / Gillette Good News razors (Sensor) / Mercedes C class (S).

early adopters

Successful, well educated, and younger than peers Tend to be opinion leaders in local reference groups Will to take risk, but concerned with failure of innovation Use commercial media, professional, and interpersonal information sources Provides information to others

Manufacturer's Brand

The brand name of manufacturer.

idea screening

The first filter in the product development process, which eliminates ideas that are inconsistent with the organization's new product strategy or are inappropriate for some other reason.

introductory stage

The introductory stage represents the full-scale launch of a new product. During the introductory stage, sales normally increase slowly. Marketing costs are high due to higher dealer margins required to obtain adequate distribution and the cost of consumer incentives to try a product. Production costs are high. Advertising expenses are high because consumers must be educated about the product's benefits. Promotion strategy focuses on developing product awareness and informing consumers about the product's potential benefits. Intensive personal selling is often required. Promotion of convenience products may require heavy consumer sampling and couponing. Shopping and specialty products demand educational advertising and personal selling to the final consumer.

market testing

The limited introduction of a product and a marketing program to determine the reactions of potential customers in a market situation.

maturity stage

The maturity stage begins when sales increase at a decreasing rate, and the market approaches saturation. This is normally the longest stage of the PLC. Annual models may appear during the maturity stage for shopping and specialty products. Product lines are lengthened to appeal to additional market segments. Service and repair help manufacturers distinguish their products from others. Heavy promotion is required to maintain market share. For example, consider the competitive "wars" between Coke and Pepsi, Budweiser and Miller, and McDonalds against Burger King and Wendy's. As prices and profits continue to fall, marginal competitors drop out of the market. Niche marketers that target narrow, well-defined segments of a market emerge.

product line depth

The number of product items in a product line.

product mix width

The number of product lines an organization offers.

planned obsolescence

The practice of modifying products so those that have already been sold become obsolete before they actually need replacement.

learning

The process by which memory and behavior are changed as a result of conscious and non-conscious information processing.

brainstorming

The process of getting a group to think of unlimited ways to vary a product or solve a problem. Ideas are not criticized or scrutinized at this stage The goal is quantity, not quality

decline stage

The rate of decline depends on how rapidly consumer tastes change or substitute products are adopted. Many convenience products and fad items lose their market overnight. A strategy for declining products includes elimination of nonessential marketing expenses, and the eventual product withdrawal as sales decline. Management expert Peter Drucker says that all companies should practice organized abandonment, which entails reviewing every product every 2-3 years and asking the question, "If we didn't do this already, would we launch it now?" If the answer is no, begin the abandonment process.

self-concept

The totality of the individual's thoughts and feelings having reference to him-or herself as an object. actual: how I/others actually see me ideal: How I would like/ would like others to see me

opinion leaders

They are individuals who actively filter, interpret, or provide product and brand information that is relevant to their family, friends, and colleagues.

innovators

Younger, educated, socially mobile, venturesome risk takers Cosmopolitan view toward innovations Capacity to adopt an unsuccessful product Extensive use of commercial media, sales personnel and professional sources

collins' theory

__________ ___________ is about long-term emotional energy that builds up and is sustained across an individual's entire interaction ritual chain.

packaging

___________________ serves not only the practical function of containing and protecting products as they travel through the distribution channel, but it is also a container for promoting the product and making it safer and easier to use.

postpurchase dissonance

a consumer reaction after making a difficult decision that involves doubt and anxiety

social class system

a hierarchical division of a society into relatively distant and homogenous groups with respect to attitudes, values and lifestyles

efficient sales and distribution

a product line enables a full range of choices to customers, and as a result, better distribution and retail coverage.

subculture

a segment of a larger culture whose members share distinguishing patterns of behavior. - these patterns are based on the social history of the group as well as on its current situation. - They are also influenced by the larger culture in which they exist.

high involvement learning

a situation in which the consumer is motivated to process or learn the material. Ex. Reading a computer magazine before buying a computer.

low involvement learning

a situation where the consumer has little or no motivation to process or learn the material. Ex. Seeing an ad for polydent. Can include classical conditioning.

component

affective, cognitive, behavioral

component manifestation

affective-- emotions or feelings about specific attributes or overall objects cognitive: beliefs about overall or specific object behavioral: intentions with respect to specific attributes or overall objects

equivalent quality

all products in a line are perceived as having similar quality.

innovation

an idea, practice, or product perceived to be new by the relevant individual or group.

problem recognized

between desired and actual states

Ingredients of Collins' ritual

co-presenece of bodies, barriers to outsides, mutual focus of attention, and shamed mood

reference groups

co-workers at weekend job, hometown friends, friends from apartment complex, classmates, family, teammates

aspects of culture

comprehensive (containing all), acquired (inherited), boundaries (no detailed prescriptions but guidelines instead), seldom aware (seems natural)

functions of packaging

contain and protect, promote, facilitate storage use and convenience, facilitate recycling

brands

create value that goes beyond the functional aspects of the product. Includes: "Tangibles" like brand name, logo, characters "Intangibles" like brand image, personality, meaning

selection process

criteria evaluation / importance / alternatives, apple decision rules, select alternative

external influences

culture, subculture, demographic, social status, reference group, family, marketing activities

idea generation

customers, employees, distributing, retailers, competitors, R + D, consultants

microsociological

defines society in terms of a series of face - to face interactions (chains)

nature of discrepancy

difference between consumer's desired and perceived conditions

advertising economies

economies of scale in advertising (more impact for equivalent spending).

types of subcultures

ethnic, religious affiliation, regional differentiation, activity/brand consumption

high involvement purchase

extended decision making.... problem recognition: generic, information search: internal + external, alternative evaluation: many attributes, complex decision rules, many alternatives, PURCHASE + dissonance, complex evaluation

external search

external information relevant to solving the problem

Outcomes of collins' ritual

group solidarity (belonging), enhanced emotional energy, symbols marked as sacred objectivity, standards of morality regarding searched objects

introductory stage

high failure rates, little competition, frequent product modification, limited distribution, high marketing and production costs, negative profits with slow sales increases, promotion focuses on awareness and information

product life cycle

highest point is right before you get to maturity stage/major competition

ingredient branding

identifies the brand of a part that makes up the product. Examples: Intel in Dell computers, Coach interiors in Lincoln automobiles.

growth stage

increasing rate of sales, entrance of competitors, marketing consolidation, initial healthy profits, aggressive advertising of the differences between brands

conceptualization

interaction ritual theory

brand power

is a measure of the value of the brand to customers (current and potential)

brand equity

is a measure of the value of the brand to the company

affective cultural factors

language, demographics, values, nonverbal communications... all leads into consumer behavior and marketing strategy

medium involvement purchase

limited decision making.... problem recognition: generic, information search: internal + limited external, alternative evaluation: few attributes, simple decision rules, few alternatives, PURCHASE + no dissonance, limited evaluation

Interaction Ritual Theory

link to consumer subcultures etc.

successful new product firms

listening to customers, producing the best product, VISION OF FUTURE MARKET, getting every aspect right, STRONG LEADERSHIP, commitment to new product development, project-based team approach, WILLINGNESS TO FAIL OCCASIONALLY

decline stage

long-run drop in sales, large inventories of unsold items, elimination of all nonessential marketing expenses, "organized abandonment"

business analysis

looks at demand, cost, sales, profitability. asks, * What is the likely demand for the product? * What impact would the new product have on total sales, profits, market share, and return on investment? * How would the introduction of a new product affect existing products? * Would the new product cannibalize existing products? * Would current customers benefit from the product? * Would the product enhance the image of the company's overall product mix?

consuming and consumer behavior

most of us spend more time buying + consuming than we do working or sleeping. We consume products such as fuel, services such as monster.com, and entertainment like concerts. - marketers spend billions attempting to influence our purchasing decisions and millions studying our behavior - but in turn, we can study their practices as well, speculating on their objectives, target audiences, and underlying behavior assumptions

new product development process

new product strategy, idea generation, idea screening, business analysis, development, market testing, commercialization, new product

categories of new products

new-to-the-world, new product lines, product line additions, improvements or revisions, repositioned products, lower-priced products

low involvement purchase

nominal decision making... problem recognition: selective, information search: limited internal, PURCHASE + with no post-purchase dissonance

socioeconomic factors

occupation, education, ownership, income, heritiage

cooperative branding

occurs when two brands receive equal treatment. Examples: Promotional contest sponsored by Ramada Inns, American Express, and Continental Airlines.

lifestyle

outward expression of self concept. 5 types... Excitement-seeking competitives (16%): Like risk, some danger, and lots of competition. Participate in team and individual sports. 2. Getaway actives (33%): Like to opportunity to be alone or experience nature like camping, fishing, and birdwatching. 3. Fitness driven (10%): Engage strictly for fitness benefits like walking, bicycling, and jogging. 4. Health-conscious sociables (33%): Relatively inactive despite health concerns. Enjoy sightseeing, pleasure drives, and zoos. 5. Unstressed and Unmotivated (8%): Not interested in outdoor activities except for the family to be together.

package uniformity

packages may have a common look but maintain individual identities.

new product strategy

part of the organization's overall marketing strategy. It sharpens the focus and provides general guidelines for generating, screening, and evaluating new product ideas. It links the new-development process with the objectives of the marketing department, the business unit, and the corporation. All objectives must be consistent with one another.

sanctions

penalties for violating norms

internal influences

perception, learning, memory, motives, personality, emotions, attitudes

labeling

persuasive: Focuses on promotional theme Consumer information is secondary informational: Helps make proper selections Lowers cognitive dissonance Includes use/care

cobranding

placing two or more brand names on a product or its package.

unique behaviors

preferences, purchases, consumption, communication

commercialization

production, inventory buildup, distribution shipments, sales training, trade announcements, customer advertising

postpurchase consumer behavior

purchase (sometimes dissonage or nonuse), usage (sometimes leads to disposal), evaluation (sometimes complaints), satisfaction.. leads to loyal customers who repeat purchases and either increase or discontinue use

standardized components

reductions in manufacturing and inventory costs.

complementary branding

refers to products advertised or marketed together to suggest usage.

internal search

relevant information from long-term memory

maturity stage

sales increase at a slower rate, saturated markets, annual models appear, lengthened product lines, service and repair assume important roles, heavy promotions to consumers and dealers, marginal competitors drop out, niche marketers emerge

maslow's hierarchy

self-actualization (set goals), esteem(rising to potential), belongingness (find your groups), safety, physiological

expectancy disconfirmation theory

some level of problem recognition in the difference between desired and actual state

initiator

stimuli: products, situations, retail outlets, sales personnel, advertisements, other attitude objects

influencers of household purchase and consumption

structure of household unit, state of the household life cycle, household decision process

current situation

temporary factors affecting consumer

actual state

the condition the consumer perceives himself to be in at this point in time

diffusion process

the manner in which innovations spread throughout a market. Follows a pattern of : - a period of relatively slow growth - followed by a period of rapid growth - followed by a final period of slower growth

consumer behavior

the study of - individuals, groups or organizations and the processes they use to -select, source, use, and dispose of- products, services, experiences, or ideas to satisfy needs AND the impacts that these processes have on the consumer and society

culture

the values, beliefs, preferences and tastes handed down from one germination tot the next

desired consumer lifestyle

the way the customer would like to live and feel

ongoing search

to acquire information for possible later use and because the process itself is pleasurable

social standing

upper middle working lower class

referent group influence

visible usage, high relevance of product to group, low individual purchase confidence, strong individual commitment to group, non-necessary item

expectation dissonance

when actual and satisfaction are not equal

ratchet effect

when something exceeds are expectations so we have higher ones next time and eventually can't be satisfied

actual state

where a consumer actually is

learning

where culture, subculture, social class, family, friends, institutions, experiences, mass media, etc teach us our values, attitudes, tastes, preferences, skills, feelings, meanings, and behaviors, which then affect our purchase and use of products


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