MAR 6805 final review
Frequency
(F). The number of times within the specified time period that an average person or household is exposed to the message P615
Product mix
(also called a product assortment) is the set of all products and items a particular seller offers for sale. consists of various product lines. NEC's (Japan) product mix consists of communication products and computer products. Michelin has three product lines: tires, maps, and restaurant-rating services. At Northwestern University, separate academic deans oversee the schools of medicine, law, business, engineering, music, speech, journalism, and liberal arts, among others.
New-market penetration strategy
A company can search for new users among three groups: those who might use it but do not (market-penetration strategy), those who have never used it (new-market segment strategy), or those who live elsewhere (geographical-expansion strategy).
market penetration strategy
A company can search for new users among three groups: those who might use it but do not (market-penetration strategy), those who have never used it (new-market segment strategy), or those who live elsewhere (geographical-expansion strategy).
Share of voice
A company's share of advertising expenditures produces a share of voice (proportion of company advertising of that product to all advertising of that product) that earns a share of consumers' minds and hearts and, ultimately, a share of market. (p.599)
reminder advertising
A marketing strategy typically consisting of brief messages sent with the objective of reminding a target consumer group about a product or service or of introducing a new theme into an existing marketing program.
Seasonal discounts
A price reduction to those who buy merchandise or services out of season. Hotels, motels, and airlines offer seasonal discounts in slow selling periods.
Consumer cooperative
A retail firm owned by its customers. Members contribute money to open their own store, vote on its policies, elect a group to manage it, and receive dividends. Local cooperative grocery stores can be found in many markets.
A social media network (in turn part of a social media platform) which focuses on career-minded professionals. It is a part of an important force in both business-to-consumer and business-to-business marketing.
Public Relations
A variety of programs directed internally to employees of the company or externally to consumers, other firms, the government, and media to promote or protect a company's image or its individual product communications.
Voluntary chain
A wholesaler-sponsored group of independent retailers engaged in bulk buying and common merchandising. Independent Grocers Alliance (IGA).
Puffery
Advertisers must not make false claims, use false demonstrations, or create ads with the capacity to deceive, even if no one is actually deceived. A floor wax advertiser can't say the product gives six months' protection unless it does so under typical conditions, and a diet bread baker can't say its product has fewer calories simply because its slices are thinner. The challenge is telling the difference between deception and "puffery"—simple exaggerations that are not meant to be believed and that are permitted by law. P613
Beta testing
After refining the prototype further, the company moves to beta testing with customers.
Private-label brand
Also called a reseller, store, house, or distributor brand is a brand that retailers and wholesalers develop.
Generics
Are unbranded, plainly packaged, less expensive versions of common products such as spaghetti, paper towels, and canned peaches. They offer standard or lower quality at a price that may be as much as 20 percent to 40 percent lower than nationally advertised brands and 10 percent to 20 percent lower than the retailer's private-label brands.
Slotting fee
Because shelf space is scarce, many supermarkets charge a slotting fee for accepting a new brand to cover the cost of listing and stocking it.
Outsourcing
Buying more goods and services from outside domestic or foreign vendors.
Coupons
Certificates entitling the bearer to a stated saving on the purchase of a specific product: mailed, enclosed in other products or attached to them, inserted in magazine and newspaper ads, or emailed or made available online. (p.620)
Pure-click company
Companies that have launched a Web site without any previous existence as a firm
Market-skimming pricing
Companies unveiling a new technology favor setting high prices to maximize market skimming, "in which prices start high and slowly drop over time". (P491).
Communicability
Concept testing presents consumers with an elaborated version of the concept.
Variable costs
Costs that vary directly with the level of production. vary directly with the level of production. For example, each tablet computer produced by Samsung incurs the cost of plastic and glass, microprocessor chips and other electronics, and packaging. These costs tend to be constant per unit produced, but they're called variable because their total varies with the number of units produced.
interactive marketing
Describes the employees' skill in serving the client. Clients judge service not only by its technical quality (Was the surgery successful?), but also by its functional quality (Did the surgeon show concern and inspire confidence?). In interactive marketing, teamwork is often key. Delegating authority to frontline employees can allow for greater service flexibility and adaptability because it promotes better problem solving, closer employee cooperation, and more efficient knowledge transfer.
Network marketing
Direct Selling, also called multi level selling, is a multibillion-dollar industry, with companies selling door to door or through at-home sales parties. A salesperson goes to the home of a host who has invited friends; the salesperson demonstrates the products and takes orders. Pioneered by Amway, the multilevel (network) marketing sales system works by recruiting independent businesspeople who act as distributors. The distributor's compensation includes a percentage of sales made by those he or she recruits as well as earnings on his or her own direct sales to customers. These direct-selling firms, now finding fewer consumers at home, are developing multi-distribution strategies
Functional discounts
Discount (also called trade discount) offered by a manufacturer to trade-channel members if they perform certain functions, such as selling, storing, and record keeping. Manufacturers must offer the same functional discounts within each channel.
Greenwashing
Gives products the appearance of being environmentally friendly without living up to that promise.
Types of advertising timing patterns (continuity, concentration, flighting, pulsing)
In launching a new product, the advertiser must choose among continuity, concentration, flighting, and pulsing. Continuity means exposures appear evenly throughout a given period. Generally, advertisers use continuous advertising in expanding markets, with frequently purchased items, and in tightly defined buyer categories. Concentration calls for spending all the advertising dollars in a single period. This makes sense for products with one selling season or related holiday. Flighting calls for advertising during a period, followed by a period with no advertising, followed by a second period of advertising activity. It is useful when funding is limited, the purchase cycle is relatively infrequent, or items are seasonal. Pulsing is continuous advertising at low levels, reinforced periodically by waves of heavier activity. It draws on the strengths of continuous advertising and flights to create a compromise scheduling strategy. Those who favor pulsing believe the audience will learn the message more thoroughly and at a lower cost to the firm. (p.598)
Everyday low pricing
In retailing, a constant low price with few or no price promotions and special sales. A retailer using everyday low pricing (EDLP) charges a constant low price with little or no price promotion or special sales. Walmart promises on major brands. are thought to be more effective with more functional products, but they may actually harm more image-oriented products like fashion, an important category for JC Penney, for example.
States of the new product process (idea screening, etc)
In screening ideas, the company must avoid two types of errors. A DROP-error occurs when the company dismisses a good idea. It is extremely easy to find. Fault with other people's ideas. Some companies shutter when they look back at ideas they dismissed or breathe sighs of relief when they realize how close they came to dropping what eventually became a huge success. Consider the hit television show Friends. The purpose of screening is to drop poor ideas as early as possible. The rationale is that the product-development costs rise substantially at each successive developmental stage. Most 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 the competition and roughly estimates market size, product price, development time and costs, manufacturing costs, and the rate of return. The executive committee then reviews each idea against a set of criteria. Does the product meet a need? Would it offer superior value? Can it be distinctively advertised or promoted? Does the company have the necessary know-how and capital? Will the new product deliver the expected sales volume, sales growth and profit? Consumer input may be necessary too. Page 443
Merchant wholesalers
Independently owned businesses that take title to the merchandise they handle. They are full-service and limited-service jobbers, distributors, and mill supply houses.
Sealed-bid auctions
Is one of the three major auction-type pricing and it lets suppliers submit only one bid; they cannot know the other bids. The US and other governments often use this method to procure supplies or to grant licenses. A supplier will not bid below its cost but cannot bid too high for fear or losing the job. the net effect of these two pulls is the bid's expected profit
Attribute listening technique for stimulating creativity
Lists the attributes of an object. Then modifies each attribute to enhance or change the object.
Stages of the product life cycle (intro, growth, maturity, decline)
Most product life cycles are portrayed as bell-shaped curves, typically divided into four stages: introduction, growth, maturity, and decline: 1. Introduction—A period of slow sales growth as the product is introduced in the market. Profits are nonexistent because of the heavy expenses of product introduction. 2. Growth—A period of rapid market acceptance and substantial profit improvement. 3. Maturity—A slowdown in sales growth because the product has achieved acceptance by most potential buyers. Profits stabilize or decline because of increased competition. 4. Decline—Sales show a downward drift and profits erode.
Lateral marketing
New product ideas can arise from lateral marketing that combines two product concepts or ideas to create a new offering. Cereal bars are a successful combination of cereal and snacking. Kinder Surprise combined candy with a toy. Lateral marketing is a work process which, when applied to existing products or services, produces innovative new products and services that cover needs, uses, situations, or targets not currently covered. Therefore, lateral marketing is a process that offers a high chance of creating new categories or markets. Page 443 begins with dividing the vertical marketing scheme into three main levels: · the market-definition level · the product-definition level · the level containing the rest of the marketing mix Then marketers decide on a level at which to begin applying lateral-marketing techniques. If we choose the market-definition level, then our objective is to modify the market, and the market includes product utility, the consumer, and purchase situations. If we choose the product-definition level, we focus on product innovations. If we choose the level containing the rest of the marketing mix, we focus on how the product will be sold. The process of lateral marketing consists of generating a lateral displacement in the elements of a selected level to create a gap, which, when bridged by creative output, provides innovative solutions.
Stock-keeping unit
P380 Part of the Product Hierarchy -Item (also called stock-keeping unit or product variant)—A distinct unit within a brand or product line distinguishable by size, price, appearance, or some other attribute. Example: Prudential renewable term life insurance.
Rebates
Pg. 484 -- Cash rebates-- auto companies and other consumer-goods companies offer cash rebates to encourage purchase of the manufacturers' products within a specified time period. Rebates can help clear inventories without cutting the stated list price. Pg. 602 --Cash refund offers (rebates)--Provide a price reduction after purchase rather at the retail shop. Consumers send a specified "proof of purchase" to the manufacturer who "refunds" part of the purchase price by mail.
cummulative advantage
Phenomenon dubbed by Duncan Watts, basically describing a series of small advantages that can accumulate and grow. "The richer get richer and the poor get poorer" as described by some. Overall, techniques used to increase word of mouth. - Identify influential individuals and companies and devote extra effort to them. In technology, influencers might be large corporate customers, industry analysts and journalists, selected policy makers, and early adopters. Companies can trace online activity to identify more influential users who may function as opinion leaders. - Supply key people with product samples. Chevrolet selected about 900 people with a Klout online influence score of more than 50 (of a possible 100) and gave them a free three-day rental of the Chevy Volt, resulting in 46,000 tweets and more than 20.7 million largely positive blog posts about the electric car. - Work through community influentials. Ford's prelaunch "Fiesta Movement" campaign invited 100 handpicked young Millennials to live with the Fiesta car for six months. Drivers were chosen based on their online experience with blogging and size and quality of their online social network as well as a video they submitted about their desire for adventure. After the six months of trial usage, the campaign had drawn 4.3 million YouTube views, more than 500,000 Flickr views, more than 3 million Twitter impressions (the number of times a tweet is read), and 50,000 potential customers, 97 percent of whom were not already Ford owners. - Develop word-of-mouth referral channels to build business. Professionals will often encourage clients to recommend their services. Weight Watchers found that word-of-mouth referrals from someone in the program had a huge impact on business. -Provide compelling information that customers want to pass along. Companies shouldn't communicate with customers in terms better suited for a press release. Make it easy and desirable for a customer to borrow elements from an e-mail message or blog. Information should be original and useful. Originality increases the amount of word of mouth, but usefulness determines whether it will be positive or negative.
Zone of tolerance
Range in which a service dimension would be deemed satisfactory, anchored by the minimum level consumers are willing to accept and the level they believe can and should be delivered.
Determinants of service quality (reliability, assurance)
Reliability—The ability to perform the promised service dependably and accurately. Responsiveness—The willingness to help customers and provide prompt service. Assurance—The knowledge and courtesy of employees and their ability to convey trust and confidence. Empathy—The provision of caring, individualized attention to customers. Tangibles—The appearance of physical facilities, equipment, staff, and communication materials.
Brand elements
Service providers often use brand elements: logos symbols characters slogans to make the service and it's key benefits more tangible. For example "friendly skies" for United or "in good hands" Allstate insurance and "bullish" nature of Merrill Lynch
Captive-product pricing
Some products require the use of ancillary products (ie captive products) For example razors require replacement razor blades or printer requiring print cartridges. If a captive product is prices too high the consumer will resort to counterfeit or substitution products that can erode sales. For example consumers can buy refill cartridges for HP Printers at discount suppliers.rr P386
loss leader pricing
Supermarkets and department stores often drop the price on well known brands to stimulate additional store traffic. This pays if the revenue on the additional sales compensates for lower margins on the loss-leader items. Manufacturers of loss-leader brands typically object because this practice can dilute the brand image and bring complaints from retailers who charge the list price. Manufacturers have tried to keep intermediaries from using loss-leader pricing by lobbying for retail-price-maintenance laws, but these laws have been revoked.
Unbundling
The company maintains its price but removes or prices separately one or more elements that were formerly part of the offer, such as delivery or installation. Car companies sometimes add higher end audio entertainment systems or GPS navigation systems to their vehicles as separately priced extras.
Customer service interface
The dynamic exchange of information between the customer and a company; SSTs (Self Service Technologies)
Payment equity
The perceived economic benefits in relation to the economic costs.
Marketing control
The process by which firms assess the effects of their marketing activities and programs and make necessary changes and adjustments. Annual Plan Control: ensures the company achieves the sales, profits, and other goals established in its annual plan. Efficiency Control: Some companies have established a marketing controller position to work out of the controller's office but specialize in improving marketing efficiency. These marketing controllers examine adherence to profit plans, help prepare brand managers' budgets, measure the efficiency of promotions, analyze media production costs, evaluate customer and geographic profitability, and educate marketing staff on the financial implications of marketing decisions. Profitability Control: Companies should measure the profitability of their products, territories, customer groups, segments, trade channels, and order sizes to help determine whether to expand, reduce, or eliminate any products or marketing activities. Strategic Control: Each company should periodically reassess its strategic approach to the marketplace with a good marketing audit. Companies can also perform marketing excellence reviews and ethical/social responsibility reviews
Perceived value pricing
The value promised by the company's value proposition and perceived by the customer. is made up of a host of inputs, such as the buyer's image of the product performance, the channel deliverables, the warranty quality, customer support, and softer attributes such as the supplier's reputation, trustworthiness, and esteem. Companies must deliver the value promised by their value proposition, and the customer must perceive this value. Firms use the other marketing program elements, such as advertising, sales force, and the Internet, to communicate and enhance perceived value in buyers' minds. The key to perceived-value pricing is to deliver more unique value than competitors and to demonstrate this to prospective buyers.
Crowdsourcing
Using external participants in a new-product development. These participants offer needed expertise or a different perspective on a task or a project that might otherwise be overlooked.
Bulk breaking
Wholesalers achieve savings for their customers by buying large carload lots and breaking the bulk into smaller units.
Learning curve (Experience Curve)
a decline in the average cost with accumulated production experience.
Cojoint analysis
a method for deriving the utility values that consumers attach to varying levels of a product's attributes.85 Conjoint analysis has become one of the most popular concept development and testing tools. respondents see different hypothetical offers formed by combining varying levels of the attributes and rank them. Management can then identify the most appealing offer and its estimated market share and profit.
Co-branding
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. There are 4 types: same company co-branding for example General Mills advertises Trxix Cereal with Yoplait joint venture co-branding such as General electric with Hitachi bulbs multi-sponsor co-branding such as Taligent once alliance between apple, IBM and Motorola retail co-branding such as PizzaHut/Kentucky Fried Chicken/Taco Bell sharing the same location Potential disadvantages are the risks and lack of control in becoming aligned with another brand in consumer's minds To succeed... both brands must separately have brand equity p 387
Fixed costs
also known as overhead, are costs that do not vary with production level or sales revenue. A company must pay bills each month for rent, heat, interest, salaries, and so on, regardless of output.(P494)
Warranties
are formal statements of expected product performance by the manufacturer. Whether expressed or implied warranties are legally enforceable. Extended warranties and service contracts can be extremely lucrative for manufacturers and retailers. Even though studies show they do not pay off; consumers like them because they bring peace of mind. p393
Microsites
are individual webpages or cluster of pages that function as supplements to a primary site. They are particularly relevant for companies selling low-interest products. People rarely visit an insurance company's web site for example, but the company can create a microsite on used-car sites that offers advice for buyers of used cars and a good insurance deal at the same time.
Order processing costs
consist of setup costs and running costs (operating costs when production is running) for the item. If setup costs are low, the manufacturer can produce the item often, and the average cost per item is stable and equal to the running costs. If setup costs are high, however, the manufacturer can reduce the average cost per unit by producing a long run and carrying more inventory. Order-processing costs must be compared with inventory-carrying costs, which include storage charges, cost of capital, taxes and insurance, and depreciation and obsolescence.
contractual vertical marketing system
consists of independent firms at different levels of production and distribution integrating their programs on a contractual basis to obtain more economies or sales impact than they could achieve alone. Sometimes thought of as "value-adding partnerships" (VAPs), contractual VMSs come in three types: 1. Wholesaler-sponsored voluntary chains—Wholesalers organize voluntary chains of independent retailers to help standardize their selling practices and achieve buying economies in competing with large chain organizations. 2. Retailer cooperatives—Retailers take the initiative and organize a new business entity to carry on wholesaling and possibly some production. Members concentrate their purchases through the retailer co-op and plan their advertising jointly, sharing in profits in proportion to their purchases. Nonmember retailers can also buy through the co-op but do not share in the profits. 3. Franchise organizations—A channel member called a franchisor might link several successive stages in the production-distribution process. Franchising has been the fastest-growing retailing development in recent years.
Containerization
consists of putting the goods in boxes or trailers that are easy to transfer between two transportation modes. Piggyback describes the use of rail and trucks; fishyback, water and trucks; trainship, water and rail; and airtruck, air and trucks.
Elastic demand
demand changes considerably. The higher the elasticity, the greater the volume growth resulting from a 1 percent price reduction. If demand is elastic, sellers will consider lowering the price to produce more total revenue. This makes sense as long as the costs of producing and selling more units do not increase disproportionately.(P493)
Inelastic demand
demand hardly changes with a small change in price (P493)
Brick-and-click company
existing companies that have added an online site for information or e-commerce.
vertical marketing system
includes the producer, wholesaler(s), and retailers(s) acting as a unified system. One channel member, the channel captain, sometimes called a channel steward, owns or franchises the others or has so much power that they all cooperate. Stewards accomplish channel coordination without issuing commands or directive by persuading channel partners to act in the best interest of all.
reinforcement advertising
intended to reassure purchasers, to tell them that they have done the right thing in buying the particular product and to explain how to get the best results and most satisfaction from its use; the purpose of reinforcement advertising is to maintain market share.
Loss leading model
is a pricing strategy where a product is sold at a price below its market cost to stimulate other sales of more profitable goods or services.
Integrated marketing communication
is a simple concept. It ensures that all forms of communications and messages are carefully linked together. At its most basic level, means integrating all the promotional tools, so that they work together in harmony.
informative advertising
is advertising that is carried out in an informative manner. The idea is to give the ad the look of an official article to give it more credibility. Also, tend to help generate a good reputation.
Reorder point
is the minimum number of units of a product that you should have on hand before reordering stock. This number is meant to indicate it is time to replenish inventory for a specific product, and should be enough to support sales until new stock arrives. An order point of 20 means reordering when the stock falls to 20 units. The order point should balance the risks of stock-out against the costs of overstock. The other decision is how much to order. The larger the quantity ordered, the less frequently an order needs to be placed.
Contractual sales force
manufacturers' reps, sales agents, and brokers who are paid a commission based on sales.
Service blueprint
maps out the service process, the 16 points of customer contact, and the evidence of service from the customer's point of view.
Concept testing
means presenting the product concept to target consumers, physically or symbiotically, and getting their reactions. The more the tested concepts resemble the final product or experience, the more dependable concept testing is. Concept testing of prototypes can help avoid costly mistakes, but it may be especially challenging with radically different, new-to-the-world products. Visualization techniques can help respondents match their mental state. With what might occur when they are actually evaluating or choosing the new product. Page 446. Concept testing is the process of evaluating likely customer response to a product idea prior to its introduction into the market. Seen through a jobs-to-be-done lens, the goal of concept testing is to validate that a product concept is better than competing solutions at helping customers get a job done. To make this determination, we must know what metrics the customers use to measure the successful execution of the job-to-be-done. Our methods for concept testing work because they are built around these customer metrics.
horizontal channel conflict
occurs between channel members at the same level
Mass customization
p. 267 The ability of a company to meet each customer's requirements - to prepare on a mass basis individually designed products, services, programs, and communications. p. 372 Customized products and marketing allow firms to be highly relevant and differentiating by finding out exactly what a person wants - and doesn't want - and delivering on that. EX. NikeiD which allows customers to personalize and design their own shoes and clothing either online or in store at NikeiD Studios.
Product definition
p. 367 Many people think a product is tangible, but technically a product is 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.
Type of goods (convenience, specialty, etc)
p. 369 When we classify the vast array of consumer goods on the basis of shopping habits, we distinguish among convenience, shopping, specialty, and unsought goods. The consumer usually purchases convenience goods frequently, immediately and with minimal effort. EX: soft drinks, soaps, and newspapers. - Staples are convenience goods consumers purchase on a regular basis Heinz ketchup, Crest toothpaste, and Ritz crackers. - Impulse goods are purchased without any planning or search effort, like candy bars and magazines. - Emergency goods are purchased when a need is urgent - umbrellas during a rainstorm, boots and shovels during first winter snow. Shopping goods are those the consumer characteristically compares on such basis as suitability, quality, price, and style. EX. furniture, clothing, and major appliances. - Homogeneous shopping goods are similar in quality but different enough in price to justify shopping comparisons. - Heterogeneous shopping goods differ in product features and services that may be more important than price. The seller of heterogeneous shopping goods carries a wide assortment to satisfy individual tastes and trains salespeople to inform and advise customers. Specialty goods have unique characteristics or brand identification for which enough buyers are willing to make a special purchasing effort. EX. cars, audio-video components, and men's suits. - A Mercedes is a specialty good because interested buyers will travel far to buy one. - Specialty goods don't require comparisons; buyers invest time only to reach dealers carrying the wanted products. - Dealers don't need convenient locations, though they must let prospective buyers know where to find them. Unsought goods are those the consumer does not know about or normally think of buying, such as smoke detectors. EX. life insurance, cemetery plots, and gravestone. - Unsought goods require advertising and personal-selling support
Style
p. 372 Describes the product's look and feel to the buyer and creates distinctiveness that is hard to copy. Car buyers pay a premium for Jaguars because of their extraordinary looks. Aesthetics play a key role for such brands as Apple computers, Godiva chocolate, and Harley-Davidson motorcycles. Strong style does not always mean high performance -- a car may look sensational but spen a lot of time in the repair shop.
Personal selling
p. 560 Face-to-face interaction with one or more prospective purchases for the purpose of making presentations, answering questions, and procuring orders.
Informational appeal
p. 566 Elaborates on product or service attributes or benefits. Examples in advertising are problem-solving ads (Aleve offers the longest-lasting relief for aches and pains), product demonstration ads (Thompson Water Seal can withstand intense rain, snow, and heat), product comparison ads (AT&T offers the largest 4G mobile network), and testimonials from unknown or celebrity endorses (NBA phenomenon LeBron James pitching McDonald's, Nike, Samsung, Sprite, and others). assume strictly rational processing of the communication on the consumer's part. Logic and reason rule.
Reach
p. 593 The number of different persons or households exposed to a particular media schedule at least once during a specified time period.
Mobile apps definition
p. 628 Is defined as bite-sized software programs that can be downloaded to smartphones. Apps can perform useful functions- adding convenience, social value, incentives, and entertainment and making consumers' lives a little or a lot better.
missionary salesperson
p. 643 - referring to sales representative A salesperson not permitted to take an order but expected rather to build goodwill or educate the actual or potential user (the medical "detailer" representing an ethical pharmaceutical house).
Order taker
p. 643 - referring to sales representative (standing behind the counter) or outside order taker (calling on the supermarket manager).
Steps in the selling process (prospecting, preapproach)
p. 651-652 Prospecting and Qualifying -- the first step is to identify and qualify prospects. More companies are taking responsibility for finding and qualifying leads so salespeople can use their expensive time doing what they do best: selling. Preapproach -- the salesperson needs to learn as much as possible about the prospect company (what it needs, who takes part in the purchase decision) and its buyers (personal characteristics and buying styles). How is the purchasing process conducted at the company? How is it structured? Presentation and Demonstration -- the salesperson tells the product "story" to the buyer, using a features, advantages, benefits, and value (FABV) approach. Features describe physical characteristics of a market offering, such as chip processing speeds or memory capacity. Advantages describe why the feature gives the customer an edge. Benefits describe the economic, technical, service, and social pulses delivered. Value describes the offering's worth (often in monetary terms). Salespeople often spend too much time on product features (a product orientation) and not enough time stressing benefits and value (a customer orientation). Overcoming objections -- customers typically pose objections. Psychological resistance includes resistance to interference, preference for established supply sources or brands, apathy, reluctance to give up something, unpleasant associations created by the sales rep, predetermined ideas, dislike of making decisions, and a neurotic attitude toward money. Logical resistance might be objections to the price, delivery, schedule, or product or company characteristics. To handle these objections, the salesperson maintains a positive approach, asks the buyer to clarify the objection, questions in such a way that the buyer answers his own objections, denies the validity of the objection, or turns it into a reason for buying. Closing -- closing signs from the buyer include physical actions, statements or comments, and questions. Reps can ask for the order, recapitulate the points of agreement, offer to help write up the order, ask whether the buyer wants A or B, get the buyer to make minor choices such as color or size, or indicate what the buyer will lose by not placing the order now. The salesperson might offer specific inducements to close, such as an additional service, an extra quantity, or a token gift. Follow-up and Maintenance -- follow-up and maintenance are necessary to ensure customer satisfaction and repeat business. Immediately after closing, the salesperson should cement any necessary details about delivery time, purchase terms, and other matters important to the customer. He or she should schedule a follow-up call after delivery to ensure proper installation, instruction, and servicing and to detect any problems, assure the buyer of his or her interest, and reduce any cognitive dissonance. The salesperson should develop a maintenance and growth plan for the account.
Transformational appeal
p.567 Elaborates on a nonproduct-related benefit or image. It might depict what kind of person uses a brand (VW advertised to active, youthful people with its famed "Drivers Wanted" campaign) or what kind of experience results from use (Pringles advertised "Once You Pop, the Fun Don't Stop" for years). often attempt to stir up emotions that will motive purchase.
A product concept
proposes that the consumers favor products offering the most quality, performance, or innovative features. Attractive ideas must be refined into testable product concepts. A product idea is a possible product the company might offer to the market. A product concept is an elaborated version of the idea expressed in consumer terms. Concept development is a necessary but not sufficient step for new-product success. Marketers must also distinguish winning concepts from losers by testing. Concept development Imagine a large food-processing company gets the idea of producing a powder to add milk to increase its nutritional value and taste. This is a product idea but consumes don't buy product ideas; they buy product concepts. A product idea can be turned into several concepts. Page 445
Product mix depth
refers to how many variants are offered of each product in the line. If Tide came in two scents (Clean Breeze and Regular), two formulations (liquid and powder), and with two additives (with or without bleach), it would have a depth of eight because there are eight distinct variants.50 We can calculate the average depth of P&G's product mix by leveraging the number of variants within the brand groups.
Product mix length
refers to the total number of items in the mix. In Table 13.2, it is 20. We can also talk about the average length of a line. We obtain this by dividing the total length (here 20) by the number of lines (here 5), for an average product line length of 4.
predatory pricing
selling below cost with the intention of destroying competition- is unlawful, though.
Drop shippers
serve bulk industries such as coal, lumber, and heavy equipment. They assume title and risk from the time an order is accepted to its delivery. Rack jobbers serve grocery retailers in nonfood items. Delivery people set up displays, price goods, and keep inventory records; they retain title to goods and bill retailers only for goods sold to the end of the year.
Alpha testing
tests the product within the firm to see how it performs in different applications.
Purchase frequency
the number of times the average buyer buys the product during the period (p. 598)
Order-to-payment cycle
the time between an order's receipt, delivery, and payment. This cycle has many steps, including order transmission by the salesperson, order entry and customer credit check, inventory and production scheduling, order and invoice shipment, and receipt of payment. The longer this cycle takes, the lower the customer's satisfaction and the lower the company's profits.