MKTG 310 Ch: 6-10

Style

A basic and distinctive mode of expression

Horizontal marketing system

A channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity.

Convenience Products

A consumer product that customers usually buy frequently, immediately, and with minimal comparison and buying effort. (low priced, placed in many locations, available, magazines, fast food, candy)

Unsought Products

A consumer product that the consumer either does not know about or knows about buy does not normally consider buying. (require lots of advertising, new innovations, preplanned funeral services, life insurance)

Shopping Products

A consumer product that the customer, in the process of selecting and purchasing, usually compare on such attributes as suitability, quality, price, and style. (less frequently purchased, few have, greater sales supports, furniture, clothing, used cars)

Specialty Products

A consumer product with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort. (brand are not compared, high priced, desigher clothing, services, medical, legal)

Fashion

A currently accepted or popular style in a given field

Product Concept

A detailed version of the new-product idea stated in meaningful consumer terms

Product Line

A group of products that are closely related because they function with similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges.

Distribution center

A large, highly automated warehouse designed to receive goods from various plants and supplies, take orders, fill them efficiently, and deliver goods to customers as quickly as possible

Undifferentiated Marketing

A market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer. Focuses on what is common in the needs of consumers, designs a product that will appeal the the largest number of buyers.

Differentiated Marketing

A market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each. (Hallmark ethnic lines)

Concentrated Marketing

A market-coverage strategy in which a firm goes after a large share of one or a few segments or niches. Can fine-tune its products, prices, and programs to the needs of carefully defined segments. (online)

Price elasticity

A measure of the sensitivity of demand to changes in price

Brand/Branding

A name, term, symbol, or design, or a combination of these, that identifies the products or services of one seller or group of sellers and differentiates them from those of competitors. Customers attach meaning to them and develop relationships.

Consumer Products

A product bought by final consumers for personal consumption. Classified by how consumers buy them: Convenience, Shopping, Specialty, or Unsought Products

Industrial Product

A product bought by individuals and organizations for further processing or for use in conducting a business

Business Analysis

A review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the company's objectives.

Target Market

A set of buyers sharing common needs or characteristics that the company decides to serve.

Positioning Statement

A statement that summarizes company or brand positioning using this form: to (target segment and need) our (brand) is (concept) that (point of difference). All the company's marketing mix efforts must support the chosen positioning strategy.

Fad

A temporary period of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity

Contractual VMS

A vertical marketing system in which independent firms at different levels of production and distribution join together through contracts

Cost-plus pricing (markup pricing)

Adding a standard markup to the cost of the product

Line Filling

Adding more items within the present range of the line. Reaching for extra profits, keeping out competitors.

Dynamic pricing

Adjusting prices continually to meet the characteristics and meets of individual customers and situations.

Three segmentation stemming from Demographic Segmentation

Age & life-cycle, Gender, & Income

Service

An activity, benefit, or satisfaction offered for sale that is essentially intangible and does not result in the ownership of anything.

Competitive Advantage

An advantage over competitors gained by offering greater customer value, either by having lower prices or providing more benefits that justify higher prices

Product Idea

An idea for a possible product that the company can see itself offering to the market

Third-party logistics (3PL) provider

An independent logistics provider that performs any or all of the functions required to get a client's product to market.

Product

Anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need.

Positioning

Arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers

More for the same

Attack a competitor's positioning by introducing a brand offering comparable quality at a lower price

Major Brand Strategy Decisions

Brand positioning -> brand name/selection -> brand sponsorship -> brand development

Store Brands

Brands created and owned by a reseller of a product or service

Loyalty Status

Buyers can be divided into groups according to their degree of loyalty.

Identify the major channel alternatives open to a company

Channel alternatives very from direct selling to using one, two, three, or more intermediary channel levels, Marketing channels face continuous and somethings dramatic change. Three of the most important trends are the growth of vertical, horizontal and multichanel marketing systems.

Factors to consider when choosing a targeting strategy

Company resources, market variability, products life-cycle stage, market variability, & competitors' marketing strategies

Segmenting Business Markets

Consumer & business markets use many of the same variables for segmentation. Business marketers can also use: operating characteristics, purchasing approaches, situation factors, & personal characteristics.

Marketing Strategy Statement

Describes the target market, planned value proposition, sales, market share, and profit goals. Outlines planned price, budget, goals, mix strategy

Marketing Strategy Development

Designing an initial marketing strategy for a new product based on the product concept

Product Development

Developing the product concept into a physical product to ensure that the product idea can be turned into a workable market offering. Prototypes are made, consumer tests are conducted.

Product Features

Differentiate the company's product from competitors' products. Product style and design.

Differentiation

Differentiating the market offering to create superior customer value

Five statuses Behavioral Segmentation is divided into

Divided into occasions, benefits sought, user status, usage rate, & loyalty status.

Age & Life-Cycle Segmentation

Dividing a market into different age and life-cycle groups. Markets must guard against using stereotypes. (Disney Cruise lines with parents and children)

Gender Segmentation

Dividing a market into different segments based on male or female status.

Psychographic Segmentation

Dividing a market into different segments based on social clas, lifestyle, or personality characteristics. The products people buy reflect their lifestyles.

Income Segmentation

Dividing a market into different segments based on their earnings. Some target high-end; retailers who target low & middle-segments are thriving.

Geographic Segmentation

Dividing a market into different units, such as nations, states, regions, countries, cities, or neighborhoods. Companies are localizing their products, advertising, promotion, & sales efforts to fit the needs of individual regions.

Behavioral Segmentation

Dividing a market into segments based on consumer knowledge, attitudes, uses, or responses to a products.

Market Segmentation

Dividing a market into smaller segments of buyers with distinct needs, characteristics, or behaviors that might require separate marketing strategies or mixes

Benefit Segmentation

Dividing the market according to the different benefits that consumers seek from the product.

Occasion Segmentation

Dividing the market into segments according to occasions when buyers get the idea to buy, actually make their purchase, or use the purchased item. (M&M run adds based on Holidays)

Demographic Segmentation

Dividing the market into segments based on variables such as age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, & generation.

Line Extension

Extending an existing brand name to new forms, colors, sizes, ingredients, or flavors of an existing product category

Brand Extension

Extending an existing brand name to new product categories

Three types of service marketing

External, Internal, Interactive

Licensing

For a fee, companies use names and symbols created by other companies

Intermarket Segmentation (cross-market)

Forming segments of consumers who have similar needs and buying behavior even though they are located in different countries (coca-cola)

Segmenting International Markets

Geographic location, economic factors (income), political & legal factors (type of govt, foreign films, regulations, bureauctacy), cultural factors (language, religion, values, customs)

Four segmenting consumer markets

Geographic, Demographic, Psychographic, & Behavioral

Exclusive distribution

Giving a limited number of dealers the exclusive right to distribute the company's products in thier territories

Consistency

How closely related various lines are in end use (soup, drinks, etc.)

Steps in New-Product Development

Idea Generation -> Idea screening -> concept level & testing -> marketing strategy level -> business analysis -> product development -> test marketing -> Commercialization

Service Quality

Identify what customers expect, set high quality standards, emphasize service recovery in case of a mistake

Choosing the right competitive advantages whether to promote a single or multiple benefits, promotion differences that are

Important, Distinctive, Superior, Communicable, Pr-emptive, Affordable, & Profitable.

Four Service Characteristics

Intangibility, Inseparability, Variability, & Perishability

Commercialization

Introducing a new product into the market. Last step, companies must decide when to introduce, where to introduce product.

Crowdsourcing

Invites customers, employees, independent scientists and researchers, and even the public at large, into the new-product innovation process (Netflix)

Line Streatching

Lengthening the product line beyond the current range. Downward - to cater to lower-end segments. Upper - to add prestige to existing products.

Supply chain management

Managing upstream and downstream value-added flows of materials, final goods, and related info among suppliers, the company, resellers, and final consumers

Discuss the mature and importance of marketing logistics and integrated supply chain management

Marketing logistics addresses not only outbound logistics but also inbound and reverse logistics. that is , it involves the entire supply chain management- managing value-added flows between suppliers, the company, resellers, and final users.

Usage Rate

Markets can also be segmented into light, medium, and heavy product users.

To be useful, market segments must be

Measurable, accessible, substantial, differnetiable, & actionable

Less for much less

Meet consumers' lower performance or quality requirements at a much lower price

Targeting Narrowly

Micromarketing (local or individual) marketing - most Concentrated (niche) marketing

Team-Based New-Product Development

New-product development in which various company departments work closely together, overlapping the steps in the product development process to save time and increase effectiveness. Cross-functional teams lead to fast and flexible development. Causes more org. tension and confusion than the sequential approach.

A

New-product development starts with the step of ________. A) idea generation B) idea screening C) concept development D) concept testing E) test marketing

Customer-Centered New-Product Development

New-product development that focuses on finding new ways to solve customer problems and create more customer-satisfying experiences

Co-Branding

Occurs when two established brand names of different companies are used on the same product

The same for less

Offer similar products at much reduced prices

More for less

Offer the best products at the lowest prices

Internal Marketing

Orienting and motivating customer contact employees and supporting service employees to work as a team to provide customer satifaction

New-Product Failures

Overestimation of market size, design problems, incorrect pricing or positioning, high development costs, competitor reaction

Target costing

Pricing that starts with an ideal selling price, then targets costs that will ensure that the price is met

Individual Product Decision

Product attributes -> branding -> packaging -> labeling -> product support services

A firm can create differentiation on

Product, Services, Channels, People, & Image

National Brands

Products are marketed under the manufacturer's own name

More for more

Provided the most upscale products and chage a higher price to cover the higher costs

competitor cuts price and lowering your price will affect your market share and profits. if actions need be taken what can be done?

Reduce price, Raise perceived value, Improve quality and increase price, Launch low-price "fighter brand"

Idea Screening

Screening new-product ideas to spot good ideas and drop poor ones as soon as possible

In evaluating different market segments, a firm must look at

Segment size and growth, segment structural attractiveness, & company objectives and resources

Major steps in designing a customer-driven marketing strategy

Segmentation, targeting, differentiation, & positioning

User Status

Segments include nonusers, exusers, potential users, first time users, and regular users.

Segmented pricing

Selling a product or service at two or more prices, where the difference in prices is not based on differences in costs

Service Inseparability

Services are produced and consumed at the same time and cannot be seperated from their providers

Service Intangibility

Services cannot be seen, tested, felt, heard, or smelled before they are bought.

Service Perishability

Services cannot be stored for later sale or use

Market-skimming pricing (price skimming)

Setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales.

By-product pricing

Setting a price for by-products in order to make the main product's price more competitive.

Competition-based pricing

Setting prices based on competitors' strategies, prices, costs, and market offerings.

Product line pricing

Setting the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors' prices.

E

Silkskin Cosmetics is advertising its newest line of eye makeup. Made from all-natural ingredients, the products are hypoallergenic. Silkskin is selling the products in specially designed tubes that make it easier to apply to the skin. Which of the following is the core product value for Silkskin's line of eye makeup? A) the natural ingredients B) the Silkskin brand C) the products' revolutionary packaging D) the hypoallergenic properties of the products E) the possibility of having beautiful eyes

B

Silkskin Cosmetics is advertising its newest line of eye makeup. Made from all-natural ingredients, the products are hypoallergenic. Silkskin is selling the products in specially designed tubes that make it easier to apply to the skin. Which of the following would be considered the augmented product for Silkskin's line of eye makeup? A) the natural ingredients B) after-sales beauty advice offered by Silkskin C) the products revolutionary packaging D) the hypoallergenic properties of the products E) the Silkskin brand

Micromarketing

Tailored products and marketing programs to the needs and wants of specific individuals and local customer segments. Local or individual marketing.

Local Marketing

Tailoring brands and promotions to the needs and wants of local customer segments - cities, neighborhoods, and even specific stores.

Individual Marketing

Tailoring products and marketing programs to the needs and preferences of individual customers. (personalizing) Groupon.

Promotional pricing

Temporarily pricing products below the list price, and sometimes even below cost, to increase short - run sales.

Concept Testing

Testing new-product concepts with a group of target consumers to find out if the concepts have strong consumer appeal. Using a description, picture, model of product. Asking consumers ractions.

Introduction Stage

The PLC stage in which a new product is first distributed and made available for purchase. Low slaes, high costs, negative or low profits, few competitors, innovators customers, create product awareness/trial

Decline Stage

The PLC stage in which a product's sales fade away. Low costs, declining, laggard customers, reduce expenditures, milk the brand, phase out weak items, cut price, reduce promotion

Maturity Stage

The PLC stage in which a product's sales growth slows or levels off. Peak in sales, low cost, high profits, middle majority customers, stable competitors/decline, defend market share, modify the product through improve, add new features (Special K is 55 years old, but modified to a slimming lifestyle brand and is growing)

Growth Stage

The PLC stage in which a product's sales start climbing quickly. Rapid rising, average cost, rising profits, early adopter customers, growing number of competitors, maximize market share

Packaging

The activities of designing and producing the container or wrapper for a product. Protects the product, attracts customers to products. Labels identify, describe, and promote the product.

Service Profit Chain

The chain that links service firm profits with employee and customer satisfaction

Product Quality

The characteristics of a product or service that bear on its ability to satisfy stated or implied customer needs

Product Life Cycle PLC

The course of a product's sales and profits over its lifetime. All products do not follow all 5 stages. Can be applied to what are known as styles, fashions, and fads.

New-Product Development

The development of original products, product improvements, product modifications, and new brands through the firm's own product development efforts.

Brand Equity

The differential effect that knowing the brand name has on customer response to the product or its marketing

Value Proposition

The full positioning of a brand - the full mix of benefits on which it is positioned. More of more wins, less for less loses.

integrated logistics management

The logistics concept that emphasizes teamwork- both inside the company and among all the marketing channel organizations- to maximize the performance of the entire distribution system

Width

The number of different product lines the company carries (Campbells)

Length

The number of items within a product line (3 kinds of soups)

Depth

The number of versions offered of each product in the line (kinds of soups)

Market Targeting

The process of evaluating each market segment's attractiveness and selecting one or more segments to enter

Service Variability

The quality of services may vary greatly depending on who provides them and when, where, and how they are provided

Product Mix (Product Portfolio)

The set of all product lines and items that a particular seller offers for sale.

Test Marketing

The stage of new product development in which the product and its proposed marketing program are tested in realistic market settings.

Idea Generation

The systematic search for new product ideas. Internal & exteranl sources, crowdsoursing.

Product Position

The way a product is defined by consumers on important attributes - the place the product occupies in consumers' minds relative to competing products.

Product Image

The way consumers perceive an actual or potential product

Concept Development

To develop a new product into alternative product concepts, find out how attractive each concept is to customers, and choose the best one

B

Toby's specialized in producing a wide range of clothes and accessories for newborns and infants up to the age of 1 year. Pink is a market leader in the industry for clothes and accessories for toddlers and children up to age four. Recently, Pink and Toby's reached an agreement by the terms of which Pink will be able to sell all of Toby's products and thus target a larger market of children ranging from newborns to toddlers. Which of the following statements would explain this increase in Pink's product offerings? A) Pink and Toby's are competing in different market segments in the same industry. B) Pink acquired Toby's and thus has new products that it can sell in the market. C) Pink commercialized its existing products for children between the ages of two and four. D) Toby's purchased 51% of the shares of Pink and its holdings. E) Toby's and Pink have engaged in an internal marketing strategy in this scenario.

External Marketing

Traditional marketing via the 4 P's: product, place, price, promotion

Service Productivity

Train current employees better or hire new ones, increase quantity by reducing quality, use technology

Interactive Marketing

Training service employees in the fine art of interacting with customers to satisfy their needs

Targeting Broadly

Undifferentiated (mass) marketing - most Differentiated (segmented) marketing

Marketing generates concern when targeting

Vulnerable, minority or disadvantaged populations, children and teens. Controversy arises when an attempt is made to profit at the expense of these segments. Critics worry that marketers directly target young girls with products promoting sex and appearance.

C

What are the two ways in which a company can obtain new products? A) rebranding and brand management B) internal development and product audits C) new-product development and acquisition D) market development and product extension E) market mix modification and integrated marketing

A

Which of the following is a pure tangible good? A) shampoo B) a spa treatment C) financial advice D) a meal at a restaurant E) a medical check-up

D

Which of the following represents an internal source of new-product ideas? A) customers B) distributors C) suppliers D) employees E) competitors

E

Which of the following statements is true with regard to the new-product development process? A) The first stage in the new-product development process is an idea-reducing step. B) When developing new-product ideas, firms restrict the process to internal sources of ideas. C) Intrapreneurial programs are an external source of new-product ideas. D) Crowdsourcing is an internal source of new-product ideas. E) The first stage in this process involves a systematic search for new-product ideas.

B

Which of the following would be considered part of the augmented product rather than the actual product or core customer value? A) product quality B) warranty C) brand name D) design E) packaging

Product Mix Decisions

Width, Length, Depth, & Consistency

C

________ are a form of product that consists of activities, benefits, or satisfactions offered for sale that are essentially intangible. A) Co-brands B) Line extensions C) Services D) Pure products E) Horizontal extensions

Conversational distribution channel

a channel consisting of one or more independent producer,wholesalers, and retailers,each a separate business seeking to maximize its own profits, perhaps even at the expense of profits for the system as a whole

Vertical marketing system (VMS)

a channel structure in which producers, wholesalers, and retailers act as a unified stem. one channel member owns the others, has contracts with them, or has so much power that they all cooperate

franchise organization

a contractual vertical marketing system in which a channel member, called a franchiser, links several stages in the production-distribution process

Demand curve

a curve that shows the number of units the market will buy in a given time period, at different prices that might be charged

Multichannel distribution system

a distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segments

Indirect marketing channel

a marketing channel containing one of more intermediary level

Direct marketing channel

a marketing channel that has no intermediary levels

Value delivery network

a network composed of company, supplier, distributor, and ultimately, customers who partner with each other to improve the performance of the entire system in delivering customer value

Marketing channel (or distribution channel)

a set of interdependent org. that help make a product or service available for use or consumption by the consumer or business user.

Discount

a straight reduction in price on purchases during a stated period of time or in larger quantities.

Corporate VMS

a vertical marketing system that combines successive stages of production and distribution under single ownership- channel leadership is established through common ownership.

Administered VMS

a vertical marketing system that coordinates successive stages of production and distribution through the size and power of one of the parties

Services

are a form of product that consists of activities, benefits, or satisfactions offered for sale that are essentially intangible.

Value-based pricing

asses customer needs and value perceptions, set target price to match customer perceived value

Value-added pricing

attaching value-added features and services to differentiate a company's offers and changing higher prices.

What are the key issues related to initiating and responding to price changes?

buyers reactions to change are influenced by the meaning customers see in the price change. Competitors reactions flow from a set reaction policy or a fresh analysis of each situation.

Product bundle pricing

combining several products and offering the bundle at a reduced price

Multimodal transportation

combining two or more modes of transportation

Fixed costs

cost that do not very with production or sales level, over head

Variable costs

costs that vary directly with the level of production

Identify the three major pricing strategies?

customer value-based pricing, cost -based pricing, and competitor- based pricing

Cost -based pricing

design a good product, determine product cost, set price based on cost, convince buyers of products value

Marketing Channel design

designing effective marketing channels by analyzing customer needs, setting channel objectives, identifying major channel alternatives, and evaluating those alternatives.

Channel conflict

disagreements among marketing channel members on goals, roles, and rewards- who should do what and for what rewards

what are two strategies for pricing new products?

market-skimming pricing, Market penetrative pricing

Explain why companies use marketing channels and discuss the functions these channels perform

marketing channels perform many key functions. some help complete transactions by gathering and distribution info needed for planning and aiding exchange, developing and spreading persuasive communications about and offer, performing contact work, matching, and entering into negotiation to reach an agreement on price and other terms of the offer so that ownership can be transferred.

Good-value pricing

offering just the right combination of quality and good service at a fair price.

Marketing logistics ( or physical distribution)

planning, implementing and controlling the physical flow of materials, final goods, and related information from points of origin to points of consumption to meet customer requirement at a profit

Reference prices

prices that buyers carry in thier minds and refer to when they look at a given product

Psychological pricing

pricing that considers the psychology of prices and not simply the economics; the price is used to say something about the product.

Allowances

promotional money paid by manufactures to retailers in return for an agreement to feature the manufacturers products in some way

Marketing channel management

selecting managing, and motivating individual channel members and evaluating their performance over time.

Marketing-penetration pricing

setting a low price for a new product in order to attract a large number of buyers and a large market share.

Captive-product pricing

setting a price for products that must be used along with a main product, such as blades for a razor and games for a game console.

Customer value-base pricing

setting price based on buyers perceptions of value rather then on the sellers cost

Break-even pricing (target return pricing)

setting price to break even on the costs of making and marketing a product, or setting price to make a target return

Cost-based pricing

setting prices based on the costs of producing, distributing, and selling the product plus a fair rate of return for effort and risk.

intensive distribution

stocking the product in as many outlets as possible

Price

the amount of money charged for a product of service, or the sum of the values that customers exchange for the benefit of having or using the product or service

Disintermediation

the cutting out of marketing channel intermediaries by product or service producers or the displacement of traditional re sellers by radical new types of intermediaries.

Channel level

the layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer

Optional-product pricing

the pricing of optional or accessory products along with the main product

Total costs

the sum of the fixed and variable costs for any given level of production.

Selective distribution

the use of more than one but fewer than all the intermediaries that are willing to carry the company's products

Explain how companies select, motivate and evaluate channel members

when selecting channel intermediaries, the company should evaluate each channel member's qualifications and select those that best fit its channel objectives. Motivate to do their best and sell through the intermediaries. should forge a strong partnership to create a marketing system the meets the needs of both the manufacturer and the partner