MKT Exam 3

Trader Joe's

-About 80% of the items offered at Trader Joe's are private label -Trader Joe's offers several sub-brands within the Trader Joe's brand family, such as Trader Ming's for Chinese food and Trader Darwin's for vitamins -Trader Joe's purchases directly from manufacturer and ships directly to its distribution centers, where many of the products are portioned and packaged.

Unique Issues of Non-profit Organizations Target Markets

-Apathetic or strongly opposed targets -Pressure to adopt undifferentiated segmentation -complementary positioning

Non-store Retailing

-Automatic Vending -Direct Retailing -Direct Marketing -Electronic Retailing

Product Related Distinctions between Business and Non-profit Organizations

-Benefit complexity -Weak or indirect benefit strength -Low involvement

Product Characteristics and Rate of Adoption

-Complexity: the more complex the product, the slower the diffusion -Compatibility: incompatible products diffuse more slowly than compatible products -Relative Advantage: the degree to which a product is perceived as superior to existing substitutes -Observability: the degree to which the benefits or other results of using the products can be observed by others and communicated to target customers -Trail-ability: the degree to which a product can be tried on a limited basis

Place Distribution Strategy

-Convenience -Number of outlets: the intensity of distribution should meet the target market's needs and preferences. -Direct or indirect distribution: many service firms use direct distribution or franchising. Newest form; Internet. -Location:the location of a service reveals the relationship between its target market strategy and distribution strategy -Scheduling: the most important factor for time-dependent service providers like airlines, physicians, and dentists.

Development

-Creation of prototype -Sketch marketing strategy -Packaging, branding, labeling -Promotion, price, and distribution strategy -Manufacturing feasibility The development stage can last a long time and is very expensive -10 years for Crest toothpaast -51 years for television

Captive

A brand manufactured by a third party for exclusive retailer, without evidence of a retailer's affiliation. (brand strategy)

Private Brand

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

Global Brand

A brand where at least a third of the earnings come from outside its home country Example: Mercedes, McDonald's

Credence Quality

A characteristic that consumers may have difficulty assessing even after purchase because they do not have the necessary knowledge or experience Example: Dean gives everyone 1,000 dollars to go to the highest end restaurant with 14 courses (something that everyone is unfamiliar with) because we are unfamiliar we would have no good comparison to asses the quality.

Product Life Cycle

A concept that provides a way to trace the stages of a product's acceptance, from its introduction (birth) to its decline (death) This concept can be used to analyze a brand, a product form, or a product category

Warranty

A confirmation of the quality or performance of a good or service

Product Line

A group of closely related product items Example: Soups, Sauces, Frozen Beverages, Biscuits

Supplementary Service

A group of services that support or enhance the core service. Used to create competitive advantage

Convenience Store

A miniature supermarket, carrying only a limited line of high-turnover convenience goods.

Simultaneous Product Development

A new team-oriented approach to new product development where all relevant functional areas and outside suppliers participate in the development process. Big deal in early 90's Example: 787 Dream Liner plane; was one of the first products built with this type of product development. Example: Air Force F35 Fighter Plane. Developed the plane as it was being built, didn't go well, there were many issues with the plane, didn't bring in people from different suppliers, this was their downfall.

Specialty Product

A particular item for which consumers search extensively and are reluctant to accept substitutes. Examples: Wedding Dress, Car, Doctor, Engagement Ring

New Product Strategy

A plan that links the new product development process with the objectives of the marketing department the business unit and the corporation

Consumer Product

A product bought to satisfy an individual's personal wants. Four Types: Convenience Products Shopping Products Specialty Products Unsought Products

Shopping Product

A product that requires comparison shopping, because it is usually more expensive and found in fewer stores. Examples: Washer/Dryer, Television

Unsought Product

A product unknown to the potential buyer or a known product that the buyer does not actively seek Example: Insurance, Funeral, Investments

Business Product

A product used to manufacture other goods and services, to facilitate an organization's operations, or to resell to other customers

Convenience Product

A relatively inexpensive item that merits little shopping effort Example: Candy, Soft Drink

Specialty Store

A retail store specializing in a given type of merchandise

Drugstore

A retail store that stocks pharmacy-related products and services as its main draw.

Off-price Retailer

A retailer that sells at price 25% or more below traditional department store prices because it pays cash for its store and usually doesn't ask for return privileges Example: TJ Maxx

Full-line Discount Store

A retailers that offers consumers very limited service and carries a broad assortment of well-known, nationally branded "hard goods" Example: Ross, Kohl's

Universal Product Code (UPCs)

A series of thick and thin vertical lines (bar codes) readable by computerized optical scanners, that represent numbers used to track products -Helps retailers prepare records of customer purchases, control inventories, and track sales

The Importance of Services

A service is the result of applying human or mechanical efforts to people or objects. 80% of economy is services

Category Killer

A specialty discount store that heavily dominate their merchandise segment Example: Best Buy in Lubbock; because there isn't anywhere else to buy electronics. Or RedBox to Blockbuster

Product Item

A specific version of a product that can be designated as a distinct offering among an organization's product

Department Store

A store housing several departments under one roof. Each department is headed by a buyer, or department head who selects merchandise.

Mass Customization

A strategy that uses technology to deliver customized services on a mass basis. Examples: Land's End. Airline's Video on Demand

Concept Test

A test to evaluate a new product idea, usually before any prototype has been created, Often successful for line extensions.

Express Warranty

A written guarantee

Product Line Extension

Adding additional products to an existing product line in order to compete more broadly in the industry Examples: Apple's logic for the 5c, coming out with two new phones rather than one. Keep up with competitors OR, Coke's seemingly endless line of diet colas; Diet Coke, Diet Coke with Splenda, Diet Coke with Lemon, Diet Vanilla Coke, Coke Light, Coke Zero

Benefits of Product Line

Advertising Economies Package Uniformity Standardized Components Efficient Sales and Distribution Equivalent Quality Example of Product Line: Healthy Choice: types of frozen dinners and soups, all packaging is green and white(advertising economies)

Product Mix

All products that an organization sells Example: Soups: Cream of Chicken, Vegetable Beef, Chicken Noodle, Tomato..

Retailing

All the activities directly related to the sale of goods and services to the ultimate consumer for personal non-business use. Effects all of us directly or indirectly Largest employment

Trademarks

An exclusive right to use a brand. -Many parts of a brand and associated symbols qualify for trademark protection -Trademark right comes from use rather than registration -To renew the trademark, the company must prove use of the mark -Rights continue for as long as the mark is used -Trademark law applies to the online world Example: Texas Tech's Double T, McDonald's Golden Arch

Business Format Franchising

An ongoing business relationship between a franchiser and a franchisee Example: McDonald's, Subway

Nonprofit Organization

An organization that exists to achieve some goal other than the usual business goals of profit, market share, or return on investment. -Government -Museums -Theaters -Schools -Churches

Implied Warranty

An unwritten guarantee that the good or service is fit for the purpose for which it was sold

Green-washing

Attempting to give the impression of environmental friendliness whether or not it is environmentally friendly -Why Green-Washing? People are into buying environmentally friendly products

Major Types of Retail Operations

-Department stores -Specialty stores -Supermarkets -Drugstores -Convenience Stores -Discount Stores -Restaurants

Global Marketing Questions

-Develop product for potential worldwide distribution -Modify for unique market requirements -Design products to meet regulations and key market requirements Increasing globalization of markets and of competition provides a reason for multinational firm to consider new product development from a worldwide perspective.

Direct Retailing

-Door-to-Door: doesn't work as well anymore, worries people -Office-to-Office -Home Sales Parties; Avon and Tupperware

Advantages of Private Brands

-Earn higher profits on own brand -Less pressure to mark down price -Manufacturer can become a direct competitor or drop a brand/reseller -Ties customer to wholesaler or retailer -Wholesalers and retailers have no control over the intensity of distribution of manufacturer's brands Less pressure, they're already cheaper than the manufacturer's price

Customer Service of Online Retailers

-Easy-to-Use Website -Product availability -Simple returns

Presentation of the Retail Store

-Employees type and density -Merchandise type and density -Fixture type and density -Sound -Odors -Visual factors

Choosing the Type of Site

-Freestanding Store -Shopping Center -Mall

Discount Stores

-Full-Line Discounters: -Specialty Discount Stores -Warehouse Clubs -Off-price Retailers

Advantages of Manufacturer's Brands

-Heavy consumer ads by manufacturers -Attract new customers -Enhance dealer's prestige -Rapid delivery, carry less inventory -If dealer carries poor quality brand, customer may simply switch brands and remain loyal to dealer

Nonprofit Organization Marketing Activities

-Identify desired customers -Specify objectives -Develop, manage, eliminate programs and services -Decide on prices -Schedule events or programs -Communicate their availability Often times non profit organization that carry out these functions do not realize they are engaged in marketing

The Service Mix

-determine what new services to introduce -determine target market -decide what existing services to maintain and to eliminate

Growth Stage of Product Life Cycle

-increasing rate of sales -entrance of competitors -market consolidation -initial healthy profits -aggressive advertising of the differences between brands -wider distribution

Decline Stage of Product Life Cycle

-long-run drop in sales -large inventories of unsold items -elimination of all nonessential marketing expenses -"organized abandonment": which is based upon a periodic audit of all goods and services that firm markets. - The rate of decline depends on how rapidly consumer tastes change pr substitute products are adopted. Many convenience products and fad items lose their market overnight.

Why New Products Fail

-no discernible benefits -poor match between features and customer desires -overestimation of market size -incorrect positioning -price too high or too low -inadequate distribution -inferior product

Classification of Retail Operations

-ownership -level of service -product assortment -price

Four Stages of Product Life Cycle

1. Introductory Stage 2. Growth Stage 3. Maturity Stage 4. Decline Stage

Approaches for New Product Development

Brainstorming Focus Group -Creativity is the wellspring of new-product ideas, regardless of who comes up with them, The two approaches considered most useful for generating new product ideas are brainstorming and focus group exercises

Branding Strategies

Brand vs. No Brand Manufacturer's Brand vs. Private Brand Medicine is just about the only generic brand left today. Switch to private brands during recession, ex: Campbell's to Great Value

Repositioning

Changing demographics Declining Sales Changes in Social Environment Example: Old Spice

The Proper Location

Choosing a Community -economic growth potential -competition -geography Example: Harper's story of Funky Door

Product Assortment

Classification based on breadth and depth of product lines

Marketing Implications of Adoption Process

Communication Aids the Diffusion Process 1. Word of Mouth 2. Direct from Marketer

Business Analysis

Considerations in Business Analysis Stage: -Demand -Cost -Sales -Profitability Questions Asked: -What is the likely demand for the product? -How would the introduction of a new product affect existing products? -Would the new product cannibalize existing products? -Would current customers benefit from the product? -What new facilities would be needed? -How might competitors respond? -What is the risk of failure?

Interactivity

Consumers are involved in the retail experience Example: Bass Pro Shop; try out products, activities, displays

New-to-the-World Products

Create an entirely new market and are the smallest category of new products

Idea Generation

Customers Employees Distribution Vendors Competitors R&D Consultants

Product and Trade Name Franchising

Dealer agree to sell in products provided by a manufacturer or wholesaler Example: Mary Kay

Information Processing

Describes services that use technology or brainpower directed at a customer's assets. Examples: Insurance, Consulting, Banking

Mass Merchandising

Discount Store A retailing strategy using moderate to low prices on large quantities of merchandise and lower levels turnover of products Example: Wal-mart

Super center

Discount Store Retail store that combines groceries and general merchandise goods with a wide range of services High volume and high turnover Example: Walmart; which has banking, taxes, nail and hair salon, auto services

Product

Everything, both favorable and unfavorable that a person receives in an exchange Tangible Good Service Idea The start of the marketing mix 4 P's (product, price, promotion, place)

Product Modification

Functional Modification Style Modification Quality Modification Example of Style: Cars update their style every year with new models, this can be big or small changes

Packing

Functions: Contain and Protect Promote Facilitate Storage, Use, and Convenience Facilitate Recycling

Ingredient Branding

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

Franchisee

pays the franchiser for the right to use its name, product or methods

Supermarket

Large, departmentalized, self service retailer. Specializes in food. Some use scrambled merchandising.

Warehouse Membership Clubs

Limited-service merchant wholesalers that sell a limited selection of brand name appliances, household items and groceries on a cash and carry basis to members Example: Sam's, Costo

Maturity Stage of Product Life Cycle

Longest Stage in Product Life Cycle -sales increase at a decreasing rate -saturated markets -annual models appear -lengthened product lines -service and repair assume important roles -marginal competitors drop out -niche marketers emerge

Family Brand

Marketing several different products under the same brand name Example: SC Johnson: Windex, Swiffer Jet, etc.

Possession Processing

Occurs when the service is directed at customers' physical possessions Examples: Lawn Care, Car Repair, Dry Cleaning

Cooperative Branding

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

Branding

One of the top 3 most important concepts in marketing Declares the difference between brands You brand a product with the perception that the quality is higher, then you can raise the price.

Franchisor

Originates the trade name, product, operation methods, etc

Chain Stores

Owned and operated as a group by a single organization

Independent Retailers

Owned by a single person or partnership and not part of a larger retail institution

Labeling

Persuasive -Focuses on promotional theme -Consumer information is secondary Informational Example: "Stay Smooth" on outside of Keystone packaging -Helps make proper selections -Lower cognitive dissonance

Co-branding

Placing two or more brand names on a product or its package. The Benefits of co-branding include, enhancement of prestige or value of a product and increased market presence in markets with little or no market share. Three Types: Ingredient branding Cooperative branding Complementary branding Example: Southwest Airlines Rewards Visa. Baskin Robbins and Dunkin' Donuts store Taco Bell and Pizza Hut store

Product Strategies for Services

Process: Mental stimulus Example: First Class means better service Core and Supplementary: Core: Degree Supplementary:Study Abroad, Career MGMT center, organization Customization: Mass Customization, technology: Rate My Professor website Standardization Service Mix

Promotion Strategy

Services are less tangible and are more difficult to promote than tangible goods. -stressing tangible cues -using personal informational sources -creating a strong organizational image -engaging in post-purchase communication

Inseparable Services

Services are often sold, produced, and consumed at the same time. Consumers are involved in the production of the services that they buy. The quality of services depends on the quality of employees. Example: Restaurant, where service and product occur at the same time.

Perishable Services

Services cannot be stored, warehoused, or inventoried. One of the most important challenges in many service industries is finding ways to synchronize supply and demand. Example: Box of Cheerios. Minutes after the plane takes off

Intangible Services

Services cannot be touched, seen, tasted, heard, or felt in the same way as goods. Tangible cues are often used to communicate a service's quality and nature. Facilities are a critical tangible part of a service experience. Example: Education

Experience Quality

Services tend to exhibit more experience and credence qualities. An experience quality is a characteristic that can be assessed only AFTER USE.

Nonprofit Organization Marketing

Shared Characteristics with Service Organizations -Market intangible products -Production requires customer's presence -Services vary greatly -Services cannot be stored

Symptoms of Over extension

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

Defining a Target Market

Step 1: Segment the Market demographics geographics psycho-graphics Step 2: Choosing the Retailing Mix product, promotion, personnel, place, price, presentation

People Process

Takes place when the service is directed at a customer Example: Health Care, Hairstyling

Brand Name

That part of a brand that can be spoken including letters, words, and numbers

Gross Margin

The amount of money the retailers makes as a percentage of sales after the cost of goods sold is subtracted

Manufacturer's Brand

The brand name of a manufacturer. (brand strategy)

Search Quality

The characteristic that can be easily assessed before purchase. Compared to goods, services tend to exhibit fewer search qualities. -Reliability -Responsiveness -Assurance -Empathy -Tangibles Service quality is more difficult to define and measure than is the quality of tangible goods. Business executives rank the improvement of service quality as one of their most critical challenges. Example: Going on Vacation looking for hotel, things you look for for example pool, breakfast, etc.

Brand Mark

The element of a brand that cannot be spoken Example: Polo Horse, McDonald's Golden Arch, Texas Tech Double T

Screening

The first filter in the product development process, which eliminates ideas that are inconsistent with the organization's new product strategy or are inappropriate for some other reason. -Screening out good and bad ideas runs the risk of getting rid of a good idea

Test Marketing

The limited introduction of a product and a marketing program to determine the reactions of potential customers in a market situations Example: AT&T did this with 3G, made mistake in testing it in NYC Golden Grahams, cereal and milk in same container, did not test this and milk was acidic

Product Offering

The mix of products offered to the consumer by the retailers; also called the product assortment or merchandise mix

Core Service

The most basic benefit the consumer is buying Becomes a commodity product as competition increases

Improvements or Revisions

The new and improved product may be significantly or only slightly changed

Focus Group

The objective of focus group interviews is to stimulate insightful comments through group interaction

Atmosphere

The overall impression conveyed by a store's physical layout, decor, and surroundings

Planned Obsolescence

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

Diffusion

The process by which the adoption of an innovation spreads. By understanding how customers learn about and adopt products, marketing managers have a better chance of successfully marketing products

Brainstorming

The process of getting a group to think unlimited ways to vary a product or solve a problem Example with TTU parking

Franchises

The right to operate a business or to sell a product

Automatic Vending

The use of machines to offer goods for sale. Vending is the most pervasive retail business in the United States with 11.5 million vending machines selling billions of dollars worth of goods annually

Brand Equity

The value of company and brand names Example: Coca-Cola, Apple

Repositioned Products

These are existing products targeted at new markets or market segments

New Product Lines

These products allow a firm to enter an established market

Product Line Additions

These products include new products that supplement a firm's established product line

Lower-Priced Products

This category refers to products that provide performance similar to competing brands at lower price

Relationship Marketing in Services

Three Levels Level 1: Financial. Use price incentives, least effective. Level 2:Social Financial. Design services to meet customer needs Level 3: Structural Social Financial. Creating value-added services not available by competitive firms.

Internal Marketing

Treating employees as customers and developing systems and benefits that satisfy their needs. A firm that makes its employees happy has a better chance of retaining customers.

Price Strategy

Two pricing Challenges: -Defining the unit of service consumption -Determining if multiple elements are bundled.

Individual Brand

Using different brand names for different products -Companies use individual brands when their products vary greatly in use or performance -Individual Brand: Gandy's milk, Silk Milk

Categories of Adapters

-Innovators: many are obsessive about trying new ideas and products, venturesome. -Early Adopters: Respect of other is important, opinion leaders -Early Majority: weigh the pros and cons before adopting a new product -Late Majority: adopts a new product because most if their friend have already adopted it -Laggards: by the time laggards adopt an innovation, it has probably been outmoded, marketers typically ignore laggards, who do not seem to be motivated by promotion and personal selling

Global Issues in Packaging

-Labeling Concern with proper translation of ingredients, promotion, and instructional information on labels -Aesthetics How pleasing something looks -Climate Considerations

New-Product Success Factors

-Listening to customers -Producing the best product -Vision of future market -getting every aspect right -Strong leadership -Commitment to new product development -Project-based team approach

New Product Success Factors

-Long-term commitment Coming out with a new product can take many years -Company-specific approach -Capitalize on experience New Innovations all the time;Apple, Samsung, Google. Employees have time to work on their own individual projects each day, good incentives;meals free of charge, dry-cleaning, etc -Establish an environment 3M was the first in the industry to allow employees to work on their own projects, this is where sticky notes came from

Advantage's of Captive Brands

-No evidence of store's affiliation -Manufactured by third party -Sold exclusively at the chain -Can ask price similar to manufacturer's brand

Cost of Test Marketing

-Often take 1 year or more -Can cost over $1 million -Exposes new product to competitors: allows them time to come to market with a similar product -Competitors can "jam" testing programs with their promotions

Global Issues in Branding

-One brand name everywhere Example: Coca Cola -Adaptations and Modifications Example: Finland company "Uranus" a beauty product, didn't adapt well in the US because of many misconceptions. -Different Brand Names in Different Markets

Commercialization

-Ordering Materials -Production -Inventory Buildup -Distribution Shipments -Sales Force Training -Trade Announcements -Customer Advertising Selling the product. This is a big issue with Apple's iPhone 5s gold, 48 day wait.

Pricing Decisions of Non-profit Organizations

-Pricing Objectives -Nonfinancial prices -Indirect payment -Separation between payers and users -Below-cost pricing

Pricing Objectives

-Revenue-Oriented Pricing: maximize the surplus of income over costs -Operations-Oriented Pricing: Match supply and demand by varying price -Patronage-Oriented Pricing: Maximize the number of customers by varying price

Alternatives to Test Marketing

-Single source research using supermarket scanner data -Simulated (laboratory) market testing -Online test marketing

Choosing a Specific Site

-Socioeconomic characteristics: upper, lower, middle class -Traffic flows -Land Costs -Zoning Regulations -Public Transportation

Restaurants

-Straddle the line between retail and service establishments -Sell tangible products (food,drink) but also services (food prep, food services) -Many could be considered specialty retailers

Direct Marketing

-Telemarketing -Direct Mail -Catalogs and Mail Order: LL Bean -Electronic Retailing -Shop-at-Home Networks: HSN network

Global Issues in Services Marketing

-The U.S. is the world's largest exporter of services -The marketing mix must reflect each country's cultural, technological, and political environment

Two Common Selling Techniques

-Trading Up: Movie Theater "For a Quarter more you can get a Large" -Suggestion Selling: Example about Harper sunglasses

Retail Promotion Strategy

-advertising -public relations -publicity -sales promotion

Benefits of Branding

Product Identification *most important* Repeat Sales New Product Sales *How soon can we identify brands?*

Adjustments to Product Items, Lines and Mixes

Product Modification Product Repositioning Product Line Extension or Contraction Example: Healthy Choice extended from frozen dinners to ice cream and lunch meats, then contracted and got rid of the ice cream line Harley Davidson extended their product line into beef jerky

M-commerce

Purchasing goods through mobile devices

Components of Service Quality

RATER: Reliability, Responsiveness, Assurance, Empathy, Tangibles. Reliability: ability to perform. Responsiveness: prompt service. Assurance: solve issue 100%. Empathy: caring about person/situation. Tangibles: physical evidence or appearance.

Complementary Branding

Refers to products advertised or marketed together to suggest usage.

Mental Stimulus Processing

Refers to services directed at people's minds Examples: Spectator Sports Events, Theater performances, Education

Introductory Stage of Product Life Cycle

Represents the full-scale launch of a new product. During the introductory stage, sales normally increase slowly. Marketing costs are high due to higher dealer margins required to obtain adequate distribution and the cost of consumer incentives to try a product. -high failure rates -little competition -frequent product modification -limited distribution -high marketing and production costs -negative profits with slow sales increases -promotion focuses on awareness and information -communication challenge is to stimulate primary demand

Heterogeneous Services

Services are less standardized and uniform than goods. Because services tend to be labor-intensive, consistency and quality control can be hard to achieve. Standardization and training help increase consistency and reliability