Exam 2

Family Brand Strategy

- Brand extensions offering a similar value proposition. - For multiple segments to gain margin and volume. - Useful for growing and mature markets with heterogeneous customer needs (every single customer differs from another). Example: Crest offers multiple product categories with different features and benefits such as toothpaste, mouthwash, and toothbrushes.

Portfolio Brand Strategy

- Each brand offering a different value proposition. - For multiple segments to gain margin and volume. - Useful for growing and mature markets with heterogeneous customer needs (every single customer differs from another). Example: Proctor and Gamble offers different brands of laundry detergent such as Tide, Gain, Ivory, Era, and Cheer.

sharing economy

A Changing Pricing Environment Where consumers share bikes, cars, clothes, apartments, tools, skills and extracting more value from what they already own.

width, length, depth and consistency.

A company's product mix has a certain:

Flankers

A fighter brand that positions with respect to competitors' brands so that the more important and more profitable flagship brands can retain their desired positioning. Must neither be so attractive that they take sales away from their higher-priced comparison brands nor designed so cheaply that they reflect poorly on them. These brands compete with themselves in their one segment, but prevents a direct competitor from taking market share away. Example: MillerCoors created flanker brands around their Miller Lite brand such as Miller 64, Keystone Light, and Coors Light.

Market-penetration pricing

A firm set the lowest price, assuming the market is price sensitive.

Master (or family) brand

A parent brand that is already associated with multiple products through brand extensions. Example: Nike

Ingredient branding

A special case of co-branding, which creates brand equity for materials, components, or parts that are necessarily contained within other branded products. Is any brand inside of another brand. Example: Chocolate chip cookie mix that advertises "Real Nestles Chocolate Chips", Westin Hotels that offer "Heavenly Beds", computers that say "Intel inside". For host products whose brands are not that strong, it can provide differentiation and important signals of quality.

Brand line

All products, including line and category extensions, sold under a particular brand.

Warranties

All sellers are legally responsible for fulfilling a buyer's normal or reasonable expectations. Are formal statements of expected product performance by the manufacturer. Products can be returned to the manufacturer or designated repair center for repair, replacement, or refund. Whether expressed or implied, it is legally enforceable.

Guarantees

All sellers are legally responsible for fulfilling a buyer's normal or reasonable expectations. It reduces the buyer's perceived risk provide assurance that the company and its offerings are dependable. Helpful when the company or product is not well known or when the product's quality is superior to that of competitors.

Packaging

An element of product strategy. Includes all the activities of designing and producing the container for a product. The most important because it is the buyer's first encounter with the product.

Parent brand

An existing brand that gives birth to a brand extension or sub-brand. Example: Nestle KitKat or Sony PlayStation.

Perceived-Value Pricing

An increasing number of companies now base their price on the customer's perceived value.

Brand revitalization

Any new development in the marketing environment can affect a brand's fortunes. - Are positive associations losing their strength or uniqueness? - Have negative associations become linked to the brand?

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.

English auctions

Auction-Type Pricing: Ascending bids, have one seller and many buyers.

Dutch auctions

Auction-Type Pricing: Features descending bids and have two types. - An auctioneer announces a high price and then slowly decreases the price until a bidder accepts. - The buyer announces something he or she wants to buy, and the potential sellers compete to offer the lowest price.

Sealed-bid auctions

Auction-Type Pricing: Suppliers submit only one bid, they cannot know the other bids.

Brand equity

Brand equity is the marketing effects or outcomes that accrue to a product with its brand name compared to those that would accrue if the same product did not have that brand name.

Heterogeneous shopping goods

Brands that are all different and the consumer is shopping around for the best bundle of attributes. You would not buy the cheapest sofa you can find; rather you look at style, size, comfort, price, color, and etc.

Harvesting

Calls for gradually reducing a product or business costs while trying to maintain sales.

self-service technologies (SSTs)

Can make service transactions more accurate, convenient, faster, and reduce costs. Successfully integrating technology into the workforce this requires a comprehensive reengineering of the front office to identify what people do best, what machines do best, and how to deploy them separately and together.

communicability

Characteristics influence an innovation's rate of adoption: The degree to which the benefits of use are observable or describable to others. Observation of a product in public tends to encourage social acceptance, resulting in more rapid adoption and diffusion. If a product is used privately, other consumers cannot see it. Example: Fashion items and cars are highly visible and more observable than personal care items.

relative advantage

Characteristics influence an innovation's rate of adoption: The degree to which the innovation appears superior to existing products. Helps products diffuse more quickly. Example: Microwave ovens had clear advantages over conventional ovens when they were first introduced in terms of energy usage, fast cooking, and not heating up the kitchen.

complexity

Characteristics influence an innovation's rate of adoption: The degree to which the innovation is difficult to understand or use. Products high in this diffuses relatively slowly. Example: 35mm cameras were initially only used by professionals and hobbyists because they were too difficult to understand and use

compatibility

Characteristics influence an innovation's rate of adoption: The degree to which the innovation matches consumer's existing values and experiences. Products diffuse more quickly. Example: Betty Crocker cake mixes initially diffused slowly in the US. To use the mix, one only had to add water, stir and bake. Sales were sluggish, so Betty Crocker enlisted the help of two psychologists who determined that the egg was the problem. When the powdered eggs were removed from the mix and the box label changed to indicate that fresh eggs were needed, people felt like they were making homemade cakes again, and the product took off The problem was that the quick and easy cake mix was incompatible with the existing values of women who took pride in family recipes and baking from scratch.

divisibility or trialability

Characteristics influence an innovation's rate of adoption: The degree which the innovation can be tried on a limited basis. Facilitates diffusion. Not all products can be handed out as free samples. Example: Allowing customers to sleep 30 days free on a waterbed, visit a sound room for a sound system, or test drive a car so that consumers can try a product on a limited basis.

Sub-brand name

Combine two or more of the corporate brands, family brand, or individual product brand names. Example: Kellogg does this by combining the corporate brand with individual product brands such as Kellogg and Rice Krispies.

Sub-brand

Combining a new brand with an existing brand. Example: Coke "Zero" or FedEx "Express".

Value Pricing

Companies adopt value pricing win loyal customers by charging a fairly low price for high-quality offering. Requires reengineering the company's operations to become a low-cost producer without sacrificing quality to attract a large number of value-conscious customers.

Individual or separate family brand names

Companies often use different brand names for different quality lines within the same product class. A major advantage is that if a product fails or appears low quality, the company has not tied its reputation to it. Example: Proctor and Gamble offers different brands of laundry detergent such as Tide, Gain, Ivory, Era, and Cheer.

Line filling

Companies seeking high market share and market growth will generally carry longer product lines. A firm lengthens its product line by adding more items within the present range. The goals are to reach incremental profits, satisfy dealers who complain about lost sales because of items missing from the line, utilize excess capacity, try to become the leading full-line company, and plug holes to keep out competitors.

Line stretching

Companies seeking high market share and market growth will generally carry longer product lines. Occurs when a company lengthens its product line beyond its current range.

incremental innovation

Companies that fail to develop new products leave themselves vulnerable to changing customer needs and tastes, shortened product life cycles, increased domestic and foreign competition, and especially new technologies. Focusing on (...) to enter new markets by tweaking products for new customers, using variations on a core product to stay one step ahead of the market, and creating interim solutions for industry-wide problems.

disruptive technologies

Companies that fail to develop new products leave themselves vulnerable to changing customer needs and tastes, shortened product life cycles, increased domestic and foreign competition, and especially new technologies. New companies create (...) that are cheaper and more likely to alter the competitive space.

Reference points

Consumer Psychology and Pricing: Compares an observed price to an internal reference price they remember or an external frame of reference such as a posted "regular retail price".

Price endings

Consumer Psychology and Pricing: Key topics for understanding how consumers arrive at their perceptions of prices: Customers perceive an item priced at $299 to be in the $200 range rather than the $300 range, they tend to process prices "left to right" rather than by rounding. Price encoding in this fashion is important if there is a mental price break at higher, rounded prices. The popularity of "9" endings suggest a discount or bargain, so if a company wants a high-price image, it should probably avoid the odd-ending tactic.

Price-quality inferences

Consumer Psychology and Pricing: Key topics for understanding how consumers arrive at their perceptions of prices: Many consumers use price as an indicator of quality. Image pricing is especially effective with ego-sensitive products such as perfumes, expensive cars, and designer clothing. When information about true quality is available, price becomes a less significant indicator of quality. For luxury-goods customers who desire uniqueness, demand may actually increase price because they believe fewer other customers can afford the product.

Reference prices

Consumer Psychology and Pricing: Key topics for understanding how consumers arrive at their perceptions of prices: When examining prices, consumers often employ reference points. Marketers encourage this thinking by stating a high manufacturer's suggested price, indicating that the price was much higher originally, or pointing to a competitor's high price. Marketers try to frame the price to signal the best value possible. Example: A relatively expensive item can look less expensive if the price is broken in smaller units, such as a $500 annual membership for "under $50 a month", even if the total cost is the same.

Awareness

Consumer-Adoption Process: Consumer becomes aware of the innovation but lacks information about it.

Evaluation

Consumer-Adoption Process: Consumer considers whether to try the innovation.

Adoption

Consumer-Adoption Process: Consumer decides to make full and regular use of the innovation.

Interest

Consumer-Adoption Process: Consumer is stimulated to seek information about the innovation.

Trial

Consumer-Adoption Process: Consumer tries the innovation to estimate its value.

Shopping goods

Consumers compare on such bases as suitability, quality, price and style. They are purchased infrequently and tend to cost more, so consumers spend considerable time comparing the various alternatives. Example: Furniture, clothing, cars, and houses.

self-service technologies (SSTs)

Consumers value convenience in services and many person-to-person service interactions are being replaced by (...) intended to provided that convenience.

Total sales revenue and total variable costs. Unit sales price and unit variable costs.

Contribution Analysis and Profit Impact Contribution is the difference between (...) and (...). Contribution Per Unit is the difference between (...) and (...).

Trade Margin

Contribution Analysis and Profit Impact: The difference between the unit sales price and the unit cost at each level of a marketing channel. Referred to as a markup by channel members and is usually expressed as a percentage. Unit sales price - Unit cost at each level of a marketing channel

consistency of the product mix

Describes how closely related the various product lines are end use, production requirements, distribution channels, or some other way. Permits the company to expand by pursuing more product line:

Cross-price elasticity

Describes how demand for one product responds to changes in the price of another product. The brands affected may be offered from a single manufacturer, or they may offer by different manufacturers. Example: If the price of pie filling increases sharply thereby reducing demand for pie filling, the demand for pie crust is also likely to fall

number of uses

Determinants of Elasticity of Demand: Another determinant of elasticity is the (...) for a product. Example: If a product has only one use, as may be true of a new medicine, only the prescribed amount will be taken. Alternatively, a pain reliever which has multiple applications will be consumed on more occasions.

brand elasticity.

Determinants of Elasticity of Demand: Customers are willing to pay a higher price for a particular brand when the brand is unique. On the other hand, demand for the product category may be inelastic, while demand at the brand level is elastic (gasoline - have to have it, but customers can switch among brands that are virtually the same). Example: Demand for a product category may be elastic (motorcycles), but demand for specific brands may be inelastic (Harley Davidson, due to uniqueness and prestige).

differentiated

Determinants of Elasticity of Demand: Finally, when brands are not (...), in other words, brands are perceived to be all about the same, consumers tend to buy based on price and demand becomes more elastic. Ties in with brand loyalty, as in the case of Bose stereo systems.

inelastic, elastic

Determinants of Elasticity of Demand: Logically, demand for necessities is likely to be relatively (...) while demand for luxury goods and services such as things we can do without if the price gets too high tends to be more (...).

substitutes

Determinants of Elasticity of Demand: Perhaps the most important determinant of elasticity is the availability of (...). Example: When the price of tangerines increases by 30%, consumers decrease their demand by 70% in favor of buying other citrus fruit, such as oranges, tangelos, or nectarines.

cost is shared

Determinants of Elasticity of Demand: Somewhat related to purchasing power is the extent to which (...). Example: You are splitting the cost of a hotel room with five friends (such as spring break where everyone is willing to sleep on the floor), you will be less concerned about a price of $180 ($30 your share) than if you had to foot the entire bill by yourself.

loyal

Determinants of Elasticity of Demand: The more (...) a customer is to a brand or company, the less likely they will be to reduce demand when prices increase. Example: Bose stereo equipment is priced 300 to 500 percent higher than other stereo brands, yet consumers are willing to pay the price.

purchasing power

Determinants of Elasticity of Demand: The price of the product relative to an individual's (...). Example: Salt is very inexpensive and such a small part of most people's budgets that a sizeable price increase (25%) would have an inconsequential effect on demand. We would still buy it. Demand for salt is relatively inelastic. Example 2: Buying a new car, which represents a more significant portion of our purchasing power, would be associated with elastic demand.

elastic or inelastic

Determinants of Elasticity of Demand: This approach looks at determinants of elasticity of demand to assess the extent to which we might expect demand to be relatively (...) or relatively (...).

prices are easy to compare

Determinants of Elasticity of Demand: When (...), buyers are more sensitive to price changes. Example: The Internet makes it quick and easy to compare prices of different brands, or of a particular brand at different stores. They adjust their demand by purchasing at the lowest price.

yield pricing

Differentiated Pricing: Airline and hospitality industries use yield management systems and (...), offering discounted but limited early purchases, higher-priced purchases and the lowest rates on unsold inventory just before it expires

Price discrimination

Differentiated Pricing: Occurs when a company sells a product or service at two or more prices that do not reflect a proportional difference in costs. Example: Charging students and senior citizens lower prices, pricing versions of the product differently, pricing the same product at different levels depending on image differences, charging differently for a product sold through different channels, pricing a product different at different locations, varying prices by season, day, or time.

Perishability

Distinctive Characteristics of Services: Four distinctive service characteristics greatly affect the design of marketing programs. Services cannot be stores, so it can be a problem when demand fluctuates

Variability (Heterogeneity)

Distinctive Characteristics of Services: Four distinctive service characteristics greatly affect the design of marketing programs. The quality of services depends on who provides them, when and where, and to whom, services are highly variable.

Intangibility

Distinctive Characteristics of Services: Four distinctive service characteristics greatly affect the design of marketing programs. Unlike physical products, services cannot be seen, tasted, felt, heard, or smelled before they are bought. To reduce uncertainty, link the service by drawing inferences from the place, people, equipment, communication material, symbols, and price.

Inseparability

Distinctive Characteristics of Services: Four distinctive service characteristics greatly affect the design of marketing programs. Physical goods are manufactured, then inventoried, then distributed, and later consumed, services are typically produced and consumed simultaneously.

Relevant Costs

Expenditures that are expected to: - Occur in the future as a result of some marketing action. - Differ among marketing alternatives being considered. Example: Suppose a manager is trying to decide whether or not to add a new product to the product mix. Relevant costs include the incremental costs to manufacture and promote the new product.

Switching costs

Factors Impacting Elasticity Customers are less sensitive to price when: (...) are involved, the cost to change Internet providers and loss of current email address.

fair

Factors Impacting Elasticity Customers are less sensitive to price when: Perceive the price as (...), do not go looking for a better price.

bundled

Factors Impacting Elasticity Customers are less sensitive to price when: Products are (...), the famous bundling commercials for phone, cable and Internet service.

Personal influence

Factors Influencing the Adoption Process: The effect one person has on another's attitude or purchase probability, has greater significance in some situations and for some individuals than others, and it is more important in evaluation than in the other stages. Has more power over late than early adopters and in riskier situations.

Discontinuous Innovation

Fairly revolutionary anad changes buyer behavior patterns. These products address needs that have previously gone unmet or change the ways that the customer satisfies the need. Example: 3D printing is where you download a digital file for a design you like, the printer reads the file and then shoots out layer upon layer of specialized plastic through a heated nozzle in the specified shape. The technology is about 30 years old, but only recently became cheaply available and widespread.

countertrade

Geographical Pricing: Many want to offer items as payment, a practice known as (...), and U.S. companies are often forced to accept if they want the business.

Barter

Geographical Pricing: The buyer and seller directly exchange goods, with no money and third party involved.

Offset

Geographical Pricing: The firm receives full payment in cash for a sale overseas but agrees to spend a substantial amount of the money in that country within a stated period of time.

Buyback agreement

Geographical Pricing: The firm sells a plant, equipment, or technology to a company in another country and agrees to accept as partial payment products manufactured with the supplied equipment.

Compensation deal

Geographical Pricing: The seller receives some percentage of the payment in cash and the rest in products.

product system

Group of diverse but related items that function in a compatible manner.

product line

Group of products that are all similar in some way.

Auction-Type Pricing

Growing more popular, especially with electronic marketplaces.

Dynamically Continuous Innovation

Has some disruptive effects. The improvement of performance and similar consumption pattern. Example: The electric typewriter and the cellular phone, when each was introduced.

failure frequency

Identifying and Satisfying Customer Needs: Customers have had three specific worries about product service. First, they worry about reliability and (...). Example: A farmer may tolerate a combine that will break down once a year, but not one that foes down two or three times a year.

downtime, service dependability

Identifying and Satisfying Customer Needs: Customers have had three specific worries about product service. Second, they worry about (...), the longer the downtime, the higher the cost. Which is why customer counts on the seller's (...), the ability to fix the machine quickly or at least provide a loaner.

out-of-pocket costs

Identifying and Satisfying Customer Needs: Customers have had three specific worries about product service. Third, is the (...), how much the customer has to spend on regular maintenance and repair costs.

cannibalizing the parent brand

If sales of a brand extension meet high targets, the revenue may be coming from consumers switching from existing parent-brand offerings. - Intrabrand shifts in sales may not be desirable. Example: Coke launched sub products like Minute Maid, Sprite, Fanta etc.

down-market stretch

In line stretching, introduces a lower-priced line to attract shoppers who want value-priced goods, battle low-end competitors, or avoid a stagnating middle market.

up-market stretch

In line stretching, the firm aims to achieve more growth, realize higher margins, or simply position itself as a full-line manufacturer.

product map

In offering a product line, companies normally develop a basic platform and modules that can be added to meet different customer requirements. Product line managers need to know the sales and profits of each item in each line to determine which ones to build, maintain, harvest, or digest. To see which competitors' items are competing against their own items and to identify market segments so they can gauge how well their items are positioned to serve the needs of each segment.

Product Levels: The Customer-Value Hierarchy

In planning its market offering the marketer needs to address five product levels. Each level adds more customer value, and together the five constitute a customer-value hierarchy.

Standardize the Service

In variability (Heterogeneity) where quality of services depends on who provides them, when and where, and to whom, services are highly variable. Invest in good hiring and training procedures to (...).

Automate the service

In variability (Heterogeneity) where quality of services depends on who provides them, when and where, and to whom, services are highly variable. Rely on technology and let machines deliver the service to (...).

Excess plant capacity

Initiating Price Cuts: A firm needs additional business and cannot generate it through increased sales effort, product improvement, or other measures.

lower costs

Initiating Price Cuts: Companies sometimes initiate price cuts in a drive to dominate the market through (...).

Services

Intangible, inseparable, variable, and perishable products that normally require more quality control, supplier credibility, and adaptability. Example: Haircuts

Companion Products

Involve driver products and add-ons. - Most buyers are smart and consider the price of the system. - Buyers need assurance that prices of add-ons will not be exploited over time.

brand spokescharacter

Is a real or fictional animated being or animated object that has been created for the promotion of a product. - To give meaning to the brand by symbolizing the brand's character. - To provide an emotional appeal for the brand. Do not confuse brand spokescharacters (created) with advertising spokespersons or endorsers who are real people such as celebrities, company representatives, or famous athletes, etc. Example: Flo for Progressive Insurance or the Test Guy for Verizon, "Can you hear me now?"

product mix or product assortment

Is the set of all products and items a particular firm offers for sale.

Strategic Implications

Looking at the concentric-circle model of a product, the marketer can think about the many ways a product can be changed or customized to reflect market conditions or the needs of individual customer segments.

Perceived value

Made up of a host of inputs, such as buyer's image of product performance, channel deliverables, warranty quality, customer support, and the supplier's reputation. Companies must deliver the value promised by their value proposition, and the customer must perceive this value. The key is to deliver more unique value than competitors and to demonstrate this to prospective buyers.

Product-quality leader

Major Price Objective: A company might aim to be the product-quality leader in the market. Many brands strive to be "affordable luxuries", products or services characterized by high levels of perceived quality, taste, and status with a price just high enough not to be out of consumers' reach.

Maximize current profits

Major Price Objective: A firm estimates the demand and costs associated with alternative prices and chooses the price that produces maximum current profit cash flow, or rate of return on investment. The company may sacrifice long-run performance by ignoring the effects of other marketing variables, competitors' reactions, and legal restraints on price.

Maximize their market share

Major Price Objective: Believing higher sales volume will lead to a lower unit costs and higher long-run profit.

Survival

Major Price Objective: Companies pursue survival as their major object if they are plagued with overcapacity, intense competition, or changing consumer wants. As long as prices cover variable cost and some fixed costs, the company stays in business.

Maximize market skimming

Major Price Objective: Companies unveiling a new technology favor setting high prices.

Partial cost recovery

Major Price Objective: Nonprofit and public organizations may have other pricing objectives. A university aims for partial cost recovery, knowing that it must rely on private gifts and public grants to cover its remaining costs. Example: A nonprofit hospital may aim for full cost recovery in its pricing or a nonprofit theater company may price its productions to fill the maximum number of seats.

service delivery and external communications

Managing Customer Expectations: Gap between (...), consumers expectations are affected by statements made by company representatives and ads. Example: If a hospital brochure shows a beautiful room but the patient finds it cheap and tacky looking, external communications have distorted the customer's expectations.

service-quality specifications and service delivery

Managing Customer Expectations: Gap between (...), employees might be poorly trained or incapable of or unwilling to meet the standard. They may be held to conflicting standards. Example: Taking time to listen to customers and serving them fast.

consumer expectation and management perception

Managing Customer Expectations: Gap between (...), management does not always perceive what customers want Example: Hospital administrators may think patients want better food, but patients may be more concerned with nurse responsiveness.

management perception and service-quality specification

Managing Customer Expectations: Gap between (...), management might correctly perceive customers' wants but not set a performance standard. Example: Hospital administrators may tell the nurses to give "fast" service without specifying speed in minutes.

perceived service and expected service

Managing Customer Expectations: Gap between (...), the consumer may misperceive the service quality. Example: The physician may keep visiting the patient to show care, but the patient may interpret this is an indication that something is really wrong.

life-cycle cost

Managing Product-Support Services: A buyer takes all these factors into consideration and ties to estimate the (...), which is the product's purchase cost plus the discount cost of maintenance and repair less the discounted salvage value.

facilitating services

Managing Product-Support Services: For expensive products, manufacturers offering (...) such as installation, staff training, maintenance and repair services, and financing.

product-support services

Managing Product-Support Services: Manufacturers of equipment such as small appliances, office machines, tractors, mainframes, and airplanes must provide (...), now a battleground for competitive advantage.

service contracts

Managing Product-Support Services: Many companies offer (...) also known as extended warranties, agreeing to provide maintenance and repair services for a specified period at a specified contract price.

value-augmenting services

Managing Product-Support Services: They include (...) that extend beyond the product's functioning and performance.

Corporate umbrella or company brand name

Many firms use their corporate brand as an umbrella brand across their entire range of products. Development costs are lower, and sales of the new product are likely to be strong if the manufacturer's name is good. Example: Apple or Samsung

Two-part pricing

Many service firms charge a fixed fee plus a variable usage fee. The challenge is deciding how much to charge for basic service and variable usage. Example: Cell phone users often pay a monthly fee plus charges for calls that exceed their allotted minutes.

Brand reinforcement

Marketers can reinforce brand equity by consistently conveying the brand's meaning in terms of: - What products it represents, core benefits it supplies, and needs it satisfies. - How the brand makes the product superior and which strong, favorable, and unique brand associations should exist in the consumer's mind.

co-branding

Marketers often combine their products with products from other companies in various ways. In (...), also called dual branding or brand bundling, two or more well-known brands are combined into a joint product or marketed together in some fashion.

Provide appropriate cues

Marketing implication for inseparability:

Demand management

Marketing implication for perishability:

Increase tangibility

Marketing implication for tangibility.

Increase homogeneity

Marketing implication for variability (Heterogeneity):

Stimulated test marketing

Methods of Market Testing Consumer Goods: 30 - 40 qualified shoppers are asked about brand familiarity and preferences in a specific product category and attend a brief screening of advertising. Consumers receive a small amount of money and are invited into a store to shop. The company notes how many consumers buy the new brand and competing brands and asks consumers why they bought or did not buy. Those who did not buy the new brand are given a free sample and are reinterviewed later to determine, attitudes, usage, satisfaction and repurchase intention.

Controlled test marketing

Methods of Market Testing Consumer Goods: A research firm delivers the product to a panel of participating stores and controls shelf position, pricing, and number of facings, displays, and point-of-purchase promotions. The company can evaluate sales, the impact of local advertising and promotions, and customers' impressions of the product.

Sales-wave research

Methods of Market Testing Consumer Goods: Consumers who initially try the product at no cost are reoffered it, or a competitor's product, at slightly reduced prices. The offer may be made as many as five times, while the company notes how many customers select it again and their reported level of satisfaction.

Test markets

Methods of Market Testing Consumer Goods: The company chooses a few representative cities, implements a full marketing communication campaign, and sells the trade on carrying the product. Marketers must decide how many cities to use, how long the test will last, and what data will be collected. At the conclusion, they must decide what action to take. Many companies today skip test marketing and rely on faster and more economical testing methods.

Standardized test markets

Methods of Market Testing Consumer Goods: The product is sold through normal channels of distribution. Example: In 1991, McDonalds test marketed a pasta menu (lasagna, spaghetti, and fettuccini) in NY and TN for 6-12 months. They learned people did not want pasta from McDonalds.

Search qualities

Nature of Services: Are goods high in search qualities with characteristics the buyer can evaluate before purchase.

Credence qualities

Nature of Services: Goods and services high in credence qualities with characteristics the buyer normally finds hard to evaluate even after consumption.

Experience qualities

Nature of Services: Goods and services high in experience qualities with characteristics the buyer can evaluate after purchase.

Idea Screening

New Product Development: The purpose is to drop poor ideas as early as possible because product-development costs rise substantially at each successive development stage. Companies require new-product ideas to be described on a standard form for a committee's review. The description states the product idea, target market, and competition and estimates market size, product price, development time and costs, manufacturing costs, and rate of return. It is used eliminate ideas that are inconsistent with organizational objectives or otherwise inappropriate.

Market Testing

New Product Development: Once management is satisfied with functional and psychological performance, the product is ready to be branded with a name, logo, and packaging and go into a market test. The amount of testing is influenced by the investment cost and risk on the one hand and time pressure and research cost on the other. High-investment-high-risk products, whose chance of failure is high, must be market tested; the cost will be an insignificant percentage of total project cost.

Product Development

New Product Development: Represents a jump in investment that dwarfs the costs incurred so far. The company will determine whether the product idea can translate into a technically and commercially feasible product.

Commercialization

New Product Development: The costliest stage in the process because the firm will need to contact for manufacture, build or rent a full-scale manufacturing facility, start production, ship the product, train the sales force, announce the new product. Most new-product campaigns require a sequenced mix of market communication tools to build awareness and ultimately preference, choice, and loyalty. Market timing is critical.

Idea Generation

New Product Development: The new-product development process starts with the search for ideas. Marketing experts believe we find the greatest opportunities and highest leverage for new products by uncovering the best possible set of unmet customer needs or technological innovation.

first entry

New Product Development: Commercialization If a firm learns that a competitor is readying a new product: The first choice is (...) (for "first mover advantages" of lock up key distributors, customers and gaining leadership). This can backfire if the product has not been thoroughly debugged.

parallel entry

New Product Development: Commercialization If a firm learns that a competitor is readying a new product: The second choice is (...) (timing its entry to coincide with the competitor's entry to gain both products more attention).

late entry

New Product Development: Commercialization If a firm learns that a competitor is readying a new product: The third choice is (...) (delaying its launch until after the competitor has borne the cost of educating the market). Might reveal flows the late entrant can avoid and also show the size of the market.

brand-positioning map

New Product Development: Concept Development and Testing A perceptual map showing the current positions of existing brands which preferences are clustered around the points on the map. - Helps the company decide how much to charge and adjustments needed to make the product. - Concept testing means presenting the product concept to target consumers, physically or symbolically, to get consumer reactions. - The more the tested concepts resemble the final product or experience, the more dependable concept testing is.

virtual reality

New Product Development: Concept Development and Testing Companies use (...) to test product concepts. Consumer reactions indicate whether the concept has a broad and strong consumer appeal, what products it competes against, and which consumers are the best targets.

Marketing Strategy Development

New Product Development: Concept Development and Testing Following a successful concept test, the firm develops a preliminary three-part strategy for introducing the new product. - The first part described the target market's size, structure, and behavior; planned brand positioning, sales, market shares, and profit goals sought in the first few years. - The second part outlines the planned price, distribution strategy, and marketing budget for the first year. - The third part describes the long-run sales and profit goals and marketing-mix strategy over time.

rapid prototyping

New Product Development: Concept Development and Testing In the past, creating physical prototypes was costly and time consuming, but firms today can use (...) to design products on a computer and then product rough models to show potential consumers for their reactions.

product concept

New Product Development: Concept Development and Testing Is an elaborated version of the idea expressed in consumer terms. - Who will use this product? - What primary benefit should this product provide? - When will people consume or use it? By answering these questions, a company can form several concepts, select the most promising, and create a product-positioning map for it

product idea

New Product Development: Concept Development and Testing The (...) is a possible product the company might offer to the market. During concept testing, it is evaluated before any prototype of the product has been developed. Example: Focus group research involving members of the target market is often used to evaluate new product ideas and adjust the plan based on the findings. Ideas that are not acceptable to consumers are discarded.

brainstorming

New Product Development: Idea Generation Ideas come from many sources: customers, employees, suppliers, distributors, etc. The group comes up with as many ideas as possible, and none are evaluated or criticized. Example: To come up with new products, Proctor and Gamble leverages technologies across product lines to come up with entirely new ideas. Example 2: Crest White Strips, they adapted bleaching methods from Proctor and Gamble's laundry business, film technology from the food wrap business, and glue technologies from the paper business.

crowdsourcing

New Product Development: Idea Generation Through Internet-based (...), paid or unpaid outsiders can offer needed expertise or a different perspective on a new-product project that might otherwise be overlooked.

quality function development (QFD)

New Product Development: Product Development A method of translating target customer requirements into a working prototype. Improves communication between marketers, engineers, and manufacturing people.

beta testing

New Product Development: Product Development After refining the prototype, the company moves to (...) with customers, bringing consumers into a laboratory or giving them samples to use at home.

Alpha testing

New Product Development: Product Development Tests the product within the firm to see how it performs in different applications.

customer attributes (EAs)

New Product Development: Product Development The methodology takes the list of desired (...) that engineers can use. Example: Customers of a proposed truck may want a certain acceleration rate (CA). Engineers can turn this into the required horsepower and other engineering equivalents.

Brand dilution

Occurs when a consumer no longer associates with a brand of a specific or highly similar set of products and start thinking less of the brand. When a firm launches extensions consumers deem inappropriate and question the integrity of the brand, become confused or even frustrated. - Which version of the product is the "right one" for them? - Do they know the brand as well as they thought they did? Example: Cadbury's expansion into instant mashed potatoes created a new revenue stream and even generated more sales for them, but it damaged their upscale brand as a whole. When Cadbury started producing low-end food products, like instant mashed potatoes, the association with the finest chocolates weakened.

Add-on Components

Often priced for high margins and necessary to keep using the driver product over time. Example: A video game console is of no use without the video games. Example: Schick Quattro for Women razor $8, and razor refills $17.70. A razor is no good without the refill blades.

Driver Product

Often priced low for market penetration and a one-time investment.

same-company

One form of co-branding is (...) co-branding. Example: General Mills advertises Trix Cereal and Yoplait yogurt. Example 2: Nike partnered with Apple for Apple Watch Nike+.

Brand name

Part of the brand that can be spoken such as letters, words, and numbers.

Brand mark

Part of the brand that cannot be spoken such as symbols and drawings.

elastic

Price Elasticity of Demand: If demand changes significantly when a small price change increases or decreases, it is (...).

inelastic

Price Elasticity of Demand: If demand hardly changes with a small change in price, it is (...).

lowest total cost of ownership (TCO)

Price Setting Decision Process: Determining Demand A seller can successfully charge a higher price than competitors if it can convince customers that it offers the (...).

Price Elasticity of Demand

Price Setting Decision Process: Determining Demand Marketers need to know how response, or elastic, demand is to a change in price.

Price Sensitivity

Price Setting Decision Process: Determining Demand The demand curve shows the market's probable purchase quantity at alternative prices, summing the reactions of many individuals with different price sensitivities.

Fixed costs

Price Setting Decision Process: Estimating Costs Known as overhead, are costs such as rent salaries that do not vary with production level or sales revenue. Example: Overhead expenses such as rent and payroll.

Variable costs

Price Setting Decision Process: Estimating Costs Vary directly with the level of production. Costs tend to be constant per unit produced. Example: Each calculator produced by Texas Instruments incurs the cost of plastic, microprocessor chips, and packaging.

Market, you cannot price above what at least some customers are willing to pay or you cannot make any sales.

Price Setting Decision Process: New Product Pricing What determines the "ceiling," or the highest price you can set?

Costs, you cannot price below cost or you will go out of business.

Price Setting Decision Process: New Product Pricing What determines the "floor," or lowest price you can set?

Negotiated Pricing (B2B)

Price Setting Decision Process: Selecting a Pricing Method Buyer and seller negotiate the price.

break-even analysis

Price Setting Decision Process: Selecting a Pricing Method Can explain what would happen at other sales levels. Identifies the unit or dollar sales volume at which an organization neither incurs a loss or makes a profit.

Fixed Pricing

Price Setting Decision Process: Selecting a Pricing Method Customers in the targeted segment pay the price set (fixed) by the marketer. Example: Grocery items or McDonald's menu items.

Dynamic Pricing

Price Setting Decision Process: Selecting a Pricing Method Prices vary from customer to customer or situation to situation. Example: Airlines

Value-based Pricing

Price Setting Decision Process: Selecting a Pricing Method Research customers' perceptions of value and the price they are willing to pay. Find a way to make the product at a reasonable cost (target costing) to return a reasonable profit.

Cost-based Pricing

Price Setting Decision Process: Selecting a Pricing Method Starts with the product and its cost and sets a price that covers the cost plus a fair margin. Most common approach.

Target-Return Pricing

Price Setting Decision Process: Selecting a Pricing Method The firm determines the price that yields its target rate of return on investment. Example: Public utilities which need to make a fair return on investment often use this method.

Markup Pricing

Price Setting Decision Process: Selecting a Pricing Method The most elementary pricing method is to add a standard markup to the product's costs.

Step 5

Price Setting Decision Process: Selecting a Pricing Method Three major considerations in price setting: - Costs set a floor to the price. - Competitors' prices and the price of substitutes provide an orienting point. - Customers' assessment of unique features establishes the price ceiling. What step is this?

Geographical Pricing

Price Setting Decision Process: Selecting the Final Price A company decides how to price its products to different customers in different locations and countries.

Gain-and-Risk-Sharing Pricing

Price Setting Decision Process: Selecting the Final Price Buyers may resist accepting a seller's proposal because they perceive a high level of risk such as in a big computer hardware purchase or company health plan. Sellers have the option of offering to absorb part or all the risk if it does not deliver the full promised value.

Impact of Price on Other Parties

Price Setting Decision Process: Selecting the Final Price Distributors and dealers need to make enough profit, or they may not choose to not bring the product to the market.

Company Pricing Policies

Price Setting Decision Process: Selecting the Final Price Price must consistent with (...). It should be used judiciously and not to alienate customers.

Status quo

Price Setting Decision Process: Selecting the Pricing Objective Involves maintaining existing prices or matching competitors' prices. - Maintain existing prices - Match competitors' prices Example: When faced with rising industry costs you may wish to maintain your prices rather than pass on the increased costs in the form of increased prices to customers.

Sales-oriented

Price Setting Decision Process: Selecting the Pricing Objective Objectives focus on sales volume and usually associated with lower prices (lower margins). - Target market share - Target dollar revenue or unit sales It is not that profits are not important; it's that when you pursue sales-oriented objectives you are hoping to make your profits on volume and economies of scale or saturate the market and generate brand loyalty to create barriers to competition. You can see that the price implications for profit-oriented objectives are contrary to the price implications for sales-oriented objectives; you cannot pursue both simultaneously. Example: A company may wish to achieve a 28% market share, generate $9 million in revenues, or sell 900,000 units of a product.

Profit-oriented

Price Setting Decision Process: Selecting the Pricing Objective Objectives usually associated with higher prices. - Target profits - Target return-on-investment - Target margin Example: May include a target profit of $3 million, a target ROI of 3.0, or a target margin of 35%.

Market-skimming pricing

Prices start high and slowly drop over time.

product potential

Product Levels: The Customer-Value Hierarchy The fifth level stands with all the possible augmentations and transformations the product or offering undergo in the future.

core-benefit

Product Levels: The Customer-Value Hierarchy The first fundamental level, the service or benefit the customer is really buying. Example: The hotel offers a room for rest and sleep. Example 2: An HP scanner with the ability to transfer hard copy documents to the computer.

augmented product

Product Levels: The Customer-Value Hierarchy The fourth level, the marketer includes all the added attributes or benefits that exceeds customer expectations. - It depends on not being expected. - Differentiating from competitive brands. - May include unique aspects of packaging, services, advice, financing, delivery, etc. Example: A hotel may include fresh baked cookies upon check-in, terrycloth bathrobes in the bathroom, complimentary newspaper in the morning, grab-n-go breakfast bag in the morning, or complimentary shuttle service. Example: HP lets you easily access and replace toner with a superb touchscreen that makes it easy to navigate through tasks.

basic product or actual product.

Product Levels: The Customer-Value Hierarchy The second level, the marketer must turn the core-benefit into: To build the tangible product to deliver the core product. It includes the physical design, styling, packaging, features, quality and reliability. Example: The hotel room includes a bed, bathroom, and towels. Example 2: An all-in-one HP printer/scanner/fax/Wi-Fi

expected product

Product Levels: The Customer-Value Hierarchy The third level, the marketer prepares a set of attributes and conditions buyers normally expect when they purchase this product. Example: The hotel guests expect a clean bed, fresh towels, and so on. Example: Buyers expect HP scanners to scan, print, and copy documents.

growth stage

Product Life Cycles: Product life cycles are portrayed as bell-shaped curves, typically divided into four stages: A period of rapid market acceptance and substantial profit improvement.

decline stage

Product Life Cycles: Product life cycles are portrayed as bell-shaped curves, typically divided into four stages: Sales drift downward and profits erode.

introduction stage

Product Life Cycles: Product life cycles are portrayed as bell-shaped curves, typically divided into four stages: Sales grow slowly as the product is introduced, profits are nonexistent because of the heavy introductory expenses..

maturity stage

Product Life Cycles: Product life cycles are portrayed as bell-shaped curves, typically divided into four stages: Sales growth slows because the product has achieved acceptance by most potential buyers, profits stabilize or decline because of increased competition.

Complementary products

Products that are purchased and/or used together. Example: Peanut butter and jelly, or pie crust and pie filling, or potato chips and dip.

Homogeneous shopping goods

Products where the major brands all appear to be about the same and so the consumer is shopping around for the best price. Example: Washers, dryers, microwave ovens, and refrigerators.

Convenience goods

Purchased frequently, immediately, with minimal effort and usually inexpensive. When a customer goes shopping for a gallon of milk, they tend to purchase out of habit. If the brand they typically buy is not available, they are likely to accept a comparable substitute brand. There are two types: staple items (milk, bread, car wash, dry cleaning) and impulse items (candy, gum, tabloid magazines). Example: Soft drinks

Product-bundling pricing

Pure bundling occurs when a firm offers its products only as a bundle.

umbrella corporate or company brand name

Referred to as a "branded house" strategy.

individual or separate family brand names

Referred to as a "house of brands" strategy.

width of a product mix

Refers to how many different product lines the company carries. Permits the company to expand by adding new product lines its product mix.

depth of a product mix

Refers to how many variants are offered of each product in the line. Permits the company to expand by adding more product variants to deepen its product mix.

length of a product mix

Refers to the total number of items in the mix. Permits the company to expand by lengthening each product line.

Branding strategy or brand architecture

Reflects the number and nature of both common and distinctive brand elements.

Brand reinforcement

Requires that the brand should always move forward, in the right direction, with new compelling offerings and ways to market them. When change is necessary, marketers should vigorously preserve and defend sources of brand equity.

everyday low pricing (EDLP)

Retailers using (...) charges a constant low price with little or no price promotion or special sales. Constant prices eliminate week-to-week price uncertainty and the high-low pricing of promotion-oriented competitors.

service guarantees

Service buyer are aware of potential variability and often talk to others or go online to collect information before selecting a specific service provider. To reassure customers, some firms offer (...) that may reduce consumer perceptions of risk.

physical evidence and presentation

Service companies try to demonstrate their service quality through (...) and (...). Example: A person getting cosmetic surgery cannot see the results before the purchase.

Imitation

Simply replicating someone else's innovation. Example: 3M introduced Post-It Notes many years ago, a number of competitors came out with virtually identical notepads.

Cash cows

Some brands may be kept around despite dwindling sales because they manage to maintain their profitability with virtually no marketing support. - Companies can effectively milk these "cash cows" brands by capitalizing on their reservoir of brand equity. Example: The iPhone is Apple's cash cow. Its return on assets is far greater than its market growth rate. Apple can invest the excess cash generated by iPhone into other projects or products.

Captive-product pricing

Some products require the use of ancillary or captive products. If the captive product is priced too high, counterfeiting and substitutions can erode sales. Example: Manufacturers of razors often price them low and set high markups on razor blades.

Branded variants

Specific brand lines supplied to specific retailers or distribution channels.

innovation

Stages in the Adoption Process: Any good, service, or idea that some perceives as new, no matter how long its history.

consumer-adoption process

Stages in the Adoption Process: The mental stages through which an individual pass from first hearing about an innovation to final adoption.

innovation diffusion process

Stages in the Adoption Process: The spread of a new idea from its source of invention or creation to its ultimate users or adopters.

Top-Management Commitment

Strategic Concept: Companies have a thorough commitment to service quality. Managers look monthly not only at financial performance, but also at service performance. Example: USAA, Allstate, Dunkin' Brands, and Oracle have high-level senior executives with titles such as Chief Customer Office, Chief Client Officer, or Chief Experience Officer, giving these executives the power to improve customer service across every customer interaction.

Profit Tiers

Strategic Concept: Firms decided to coddle big spenders to retain their patronage as long as possible. Companies that provide differentiated levels of service must be careful about claiming superior service, however, customers who receive lesser treatment will bad-mouth the company and injure its reputation. Example: Customers in high-profit tiers get special discounts, promotional offers, and lots of special service, those in lower-profit tiers who barely pay their way may get more fees, stripped down service and voice messages to process their inquiries.

Satisfying Customer Complaints

Strategic Concept: On average, 40 percent of customers who suffer through a bad service experience stop doing business with the company. Companies encourage disappointed customers to complain and also empower employees to remedy the situation on the spot, have been shown to achieve higher revenues and greater profits than companies without a systematic approach for addressing service failures.

High Standards

Strategic Concept: The best service providers set high quality standards. Standards must be set appropriately high. Example: 98 percent accuracy standard may sound good, but it would result in 400,000 incorrectly filled prescriptions daily, 3 million lost pieces of mail each day, and no phone, Internet, or electricity for eight days per year.

Monitoring Systems

Strategic Concept: Top firms audit service performance, both their own competitors on a regular basis. They collect voice of the customer (VOC) measurements to probe customers satisfiers and dissatisfiers and use comparison shopping, mystery of ghost shopping, customer surveys, suggestion, complaint forms, service-audit teams, and customers' letters.

Nondurable goods

Tangible goods that is normally consumed once or a few uses. These are purchased frequently and the appropriate strategy is to make them available in many locations, charge a small markup, and advertised to induce trail and build preference. Example: Shampoo

Durable goods

Tangible goods that survive by many users, require more personal selling and service, command a higher margin, and require more seller guarantees. Example: Refrigerators

Adoption

The Consumer-Adoption Process: An individual's decision to become a regular user of a product and is followed by the consumer-loyalty process. New-product marketers typically aim at early adopters and use the theory of innovation diffusion and consumer adoption to identify them.

Diffusion

The Consumer-Adoption Process: The process by which an innovation spreads. In other words, how fast the product catches on. As marketers, we are interested in rapid diffusion. The horizontal dimension of the curve is measured by time. How fast we travel along this curve is diffusion.

brand portfolio

The basic principle is to maximize market coverage so no potential customers are being ignored, but minimize brand overlap so brands are not competing for customer approval.

Unsought goods

The consumer does not know about or normally think of buying. Example: Smoke detectors, various kinds of insurance, coffins or gravesites.

add-on product

The driver product is no good without the (...).

Going-Rate Pricing

The firm bases its price largely on competitor's prices. Smaller firms "follow the leader", changing their prices when the market leader's prices change. Some may charge a small premium or discount, but preserve the difference.

Business Analysis

The firm evaluates the proposed product's attractiveness. This is the number-crunching stage where preliminary figures for demand, cost, and profitability are projected. Management needs to prepare sales, cost, and profit projections to determine whether they satisfy company objectives.

product mix pricing

The firm searches for a set of prices that maximizes profits on the total mix. The process is challenging because the various products have demand and cost interrelationships which are subject to different degrees of competition.

- Survival - Maximum current profit - Maximum market share - Maximum market skimming - Product-quality leadership

The five major prices objectives are:

identifies

The label can be a simple attached tag or an elaborately designed graphic that is part of the package. It (...) the product or brand. Example: The name Sunkist stamped on oranges.

grade

The label can be a simple attached tag or an elaborately designed graphic that is part of the package. It might (...) the product. Example: Canned peaches are grade labeled A, B, and C.

describe

The label can be a simple attached tag or an elaborately designed graphic that is part of the package. It might (...) the product: who made it, where and when, what it contains, how it is to be used, and how to use it safely.

promote

The label can be a simple attached tag or an elaborately designed graphic that is part of the package. The label might (...) the product through attractive graphics.

Continuous Innovation

The most common type of innovation. Little or no disruptive effect. Existing products are improved incrementally. New features may be added or quality may be increased. The risk to the buyer is lower, but so is the profit potential to the seller. Example: The development of the Sensor razor (2 blades), followed by the Mach 3 (3 blades), the Quattro (4 blades) and the Fusion (five blades).

By-product pricing

The production of certain goods that often yields and should be priced on their value. Income from this product will make it easier for the company to charge less for its main product if competition forces it to do so.

High-low pricing

The retailer charges higher prices on an everyday basis but runs frequent promotions with prices temporarily lower than the EDLP level. Sales and promotions are costly and have eroded consumer confidence in everyday prices.

High-end prestige

The role of a relatively high-priced brand is to add prestige and credibility to the entire portfolio. Example: Marriott: Ritz-Carlton (high-end), Renaissance (in-between), and Residence Inn (low-end).

Low-end entry level

The role of a relatively low-priced brand in the portfolio as a way to attract customers to the brand franchise. - Retailers like to feature these as "traffic builders" because they are able to trade up customers to a higher-priced brand. Example: Marriott: Ritz-Carlton (high-end), Renaissance (in-between), and Residence Inn (low-end).

Price discrimination

The seller charges a separate price to each customer depending on the intensity of his or her demand.

Price discrimination

The seller charges different amounts to different classes of buyers.

Price discrimination

The seller charges less to buyers of larger volumes.

Product line pricing

The seller introduces price steps within a product line and strives to establish perceived quality differences that justify the price differences.

mixed bundling

The seller offers goods both individually and in bundles, normally charging less for the bundle than for the items purchased separately. Savings on the price bundle must be enough to induce customers to buy it.

Optional-feature pricing

The seller offers optional products, features, and services with the main product. The challenge is which options to include in the standard price and which to offer separately. Example: The way automakers offer different trim levels.

Brand mix

The set of all brand lines sold by a particular seller. Example: Michelin manufactures and sells tires under its own name, but it also allows the retail giant Sears to place its name on Michelin tires.

brand portfolio

The set of all brands and brand lines that a particular firm offers for sale in a particular category or market segment.

voice of the customer (VOC) measurements

They collect (...) to probe customers satisfiers and dissatisfiers and use comparison shopping, mystery of ghost shopping, customer surveys, suggestion, complaint forms, service-audit teams, and customers' letters.

self-service technologies (SSTs)

To traditional vending machines we can add automated teller machines (ATMs), self-pumping at gas stations, self-checkout at hotels, and a variety of activities on the Internet, such as ticket purchasing.

Specialty goods

Unique characteristics or brand identification for which enough buyers are willing to make a special purchasing effort. The customer knows what brand they want to buy before they leave the house and the customer will exert considerable effort to obtain the brand. Brand name and brand quality are very important; customers will not accept a substitute. Example: Rolex, Rolls Royce, Mont Blanc Pen. A Rolls Royce is a car, but cars are shopping goods. The Rolls Royce brand is a: Pens are convenience goods, but Mont Blanc Pens are:

Single brand strategy

Useful for emerging markets with homogeneous customers (customers with fairly similar common needs). Bad idea to market one brand to different segments. - One brand offering and value proposition. - For mass market to gain greater volume. - For smaller segments to gain greater margin. Example: Qtips

Category extension

Using a parent brand on a new product to enter a new category, different from the one it currently serves. Example: Sony which started out as a player in Walkman, now offers mobile phones, smartwatches, speakers, headphones and other extended products.

Line extension

Using a parent brand on a new product within a category it currently serves, such as new flavors or colors. Example: Coca Cola offering multiple sub-brands and flavors.

Brand extension

Using an established brand to launch a new product. Example: Coca Cola launching different flavors.

Licensed product

Using the brand name licensed from one firm on a product made by another firm. Example: Acura uses auto parts made by Honda.

divest

When a company decides to (...) a product with strong distribution and residual goodwill, it can probably sell it to another firm.

flagship product

With a branded house strategy, it is often useful to have a well-defined product one that best represents or embodies the brand as a whole to consumers. - Often the first product where the brand gained fame by a widely accepted best-seller, highly admired or award-winning product. Example: Apple's iPhone, iPad, and iMac.