MKTG Exam 3
Analyzes the unfulfilled needs of customers in regards to their perceptions of the performed service used to modify future performance:
Customer complaint behavior
A restaurant usually serves fresh bread made on the premises, but at the end of the day the ovens are shut down early and only cold loaves are available:
Delivery gap
Packaging:
Helps determine the success of a product
Product labeling:
To give instructions Nutrition facts
T/F: Delivery gaps always result in a service failure
True
A break-even analysis graph contains what?
fixed costs, total costs, and total revenue
Standards gap:
set appropriate service levels for performance and measure service performance
Ability to perform the service dependably and accurately:
reliability
KNOW Innovators: Early adopters: Early majority: Late majority: Laggards:
2.5% 13.5% 34% 34% 16%
Laggards make up roughly ______ of the market
16%
Components of brand equity?
Brand awareness, perceived value, brand associations, and brand loyalty.
Co-branding:
Coco puffs Two brands: General Mills and Hersheys
_________ testing is a written description of a product and its technology and is presented to potential buyers or users to obtain their reactions. This occurs very early in the new product introduction process, even before the real product has been made and it helps the firm to avoid the costs of unnecessary product development
Concept
Product development process:
Idea generation Concept testing Product development Market testing Product launch Evaluation of Results
Difference between customer expectations what what the firm perceives the customer to expect:
Knowledge gap
Diners at a restaurant think the portions are too small, but the managers is unaware of this complaint:
Knowledge gap
GAP MODEL OF SERVICE QUALITY MODEL:
LOOK UP ON INTERNET
More price competition and fewer firms:
Oligopoly A handful of firms control the market
They cannot be stored for later use:
Perishable
__________ __________ refers to taking apart a competitor's product, analyzing it, and creating an improved product that does not infringe on the competitor's patents (if any exist)
Reverse engineering
Core product:
Shirt
Aided awareness:
The brand or brands that I recognize or profess familiarity with in response to this sort of prompt, fall into the aided awareness category.
Hardest product to market?
Unsought
New products and services that consumers accept quickly will have a high _______ rate early in their product life cycle which will accelerate the diffusion process across the various stages
adoption
The speed with which products diffuse depends on a number of different product characteristics. Which of the following is NOT a product characteristic to consider? Affability Relative advantage Compatibility Observability Complexity
affability
Premarket tests:
are conducted by firms before they actually bring a product or service to market to determine how many customers will try and then continue to use the product or service according to a small group of potential consumers
Associated services also known as:
augmented services
Maturity stage:
characterized by the adoption of the product by the late majority and intense competition for market share among firms
The process by which the use of an innovation, whether it be a product or service, is spread throughout a market group over time and over various categories of adopters, is known as:
diffusion of innovation
The theory that helps marketers understand the product or service adoption rates of consumers is called the:
diffusion of innovation
Using the _______ theory, a firm can predict which types of consumers will buy a new product or service immediately after its introduction and which consumers will buy it later, once the product is more widely accepted by the market
diffusion of innovation
product adaptation:
don't change promotion adapt product
Straight extension:
don't change promotion don't change product
For most products, demand increases as the price decreases. Because of this general trend, demand curves usually have a ______ slope
downward
Along the diffusion of innovation curve, ______ make up the second group of consumers to adopt an innovation; they tend to be leaders in the social setting
early adopters
Crucial to the success of new products are _________ _________, who are responsible for influencing the final three categories of consumers to purchase the product
early adopters
If McD's reduced the price of a Big Mac by 25% and sales increased by more than 50%, the firm could describe demand as:
elastic price sensitive
Caring, individualized attention provided to customers:
empathy
When a firm such as Ruther's Chris Steak House tells servers to "use your best judgment" in serving a customer who is not satisfied with his $40 steak, it is allowing the server to make decisions at the point of delivery. This is called:
empowerment
In the customer orientation strategy, firms might sell their products or services at high prices in order to:
enhance the company's reputation and image enhance the value of the products in consumers' minds communicates exclusivity
When a firm launches a new product, it needs to review the sales and profit levels of the product to determine if the product is successful. This stage of the new product development process is known as the _________ of results stage
evaluation
A continuing dilemma for marketers of services is to understand buyers' _________, which means to understand in advance what they think will be delivered based on their previous experiences and knowledge
expectations
Premarket tests and test marketing are very:
expensive
The customer orientation strategy increases value by:
focusing on customer satisfaction and setting prices to match consumer expectations
Introduction stage:
for a new, innovative product or service usually starts with a single firm, and innovators are they ones to try the new offering
Product launch:
full-scale commercialization of the product
Delivery gap:
get employees to meet or exceed service standards
Brainstorming:
groups work together to generate ideas no idea can be immediately dismissed
During the _______ stage of the PLC, sales and profits increase due to the economies of scale associated with manufacturing and marketing costs
growth
During which stage of the PLC does the product gain acceptance, experience increased demand and sales, and encounter increasing competition?
growth
A disadvantage from being a first mover:
having to establish the market all alone
The primary reason there is greater heterogeneity in services than in products is because:
human inputs generate differences
Line pairing:
increase some and decrease some (depth) Out with old in with the new
In the ________ stage of the PLC, a firm may want to start looking for new market segments in order to find new opportunities
maturity
$350 million was spent on this product over the Halloween Weekend?
pet costumes
Firms that believe increasing sales will help the firm more than increasing profits use the:
sales orientation strategy
Focus on increasing sales Does not always imply setting low prices More concerned with overall market share
sales-orientation
Plane, date, & hotel are perishable because:
services are perishable, because as soon as the plane/ship departs, the date ends, or the meal is served, there is no possibility of changing. Unsold seats or rooms are lost revenue.
One of the gaps customers experience is a _________ gap, when quality is unreliable because there are not predictable guidelines or benchmarks systematically establish by the service provider's management. Consequently, the service employee does not know how to provide the service effectively
standards
management perceptions of customer expectations vs. standards specifying service to be delivered
standards gap
Changes prices only to meet those of competition:
status quo pricing
Private-label brands are also called:
store brands, house brands, or own brands
Market testing:
testing the actual products in a few test markets
Concept testing:
testing the new product idea among a set of potential customers
The zone of tolerance refers to:
the area between customers' desired expectations and the minimum level of acceptable service
When there is a service failure, customers like an apology but they also want distributive fairness. In other words, they want:
to receive tangible restitution
Promotions to wholesales and retailers to get them to purchase new products are called __________ __________
trade promotions
Actual product:
Ex: Haines vs. Nike Brand name Quality level Packaging Features/Design- cotton vs. polyester vs. dri-fit
Break-Even Point (units):
FC/contribution per unit
Some analysts have attributed the success and quick diffusion of the Apple iPod in part to the white earbuds. At the time, earbuds were not seen as often, and most headphones were black, not white. As knowledge of the iPod spread, the white earbuds could be seen even if the iPod itself was out of sight. This is an example of which of the factors that affect speed of diffusion?
Observability
Break-even analysis examines the relationships between?
Profit price and cost
238 million for:
R&D
Types of Products:
Specialty Shopping Convenience (Circle K) Unsought
Heterogeneous:
The more humans are needed to provide a service, the more likely is to be heterogeneity or variability in the service's quality -On Fridays and Saturdays, the staff is different and the normal process is shortened from 55 to 45 minutes per customer
Due to the human element it tends to deviate from use to use:
Variable
Systematically collects customer inputs and integrates them into managerial decisions:
Voice of customer program
actual service delivered vs. retailer communications about service quality:
communication gap
Since service delivery is not always uniform, it is important for the provider to be sure to close the _____ gap and not promise more in their messages to buyers than they can deliver on a regular basis
communications
If a firm produces a visual image of an imagined or projected product to bring an idea to life, this is an example of ________ testing
concept
In ________ testing, a statement is presented to potential buyers or users to obtain their reactions
concept
Product invention:
develop new product
Idea generation:
development of viable new product ideas
Commitment to delivering quality service:
is driven primarily from the top down
When a product such as "nick-free" razor blade is launched, it may diffuse more slowly than a product like the Apple iPad, which is easily seen and whose benefits or uses are easily communicated to others. This comparison exemplifies a difference in _________, one of the product characteristics that affects the speed of diffusion
observability
Monopolistic competition:
occurs when there are many firms competing for customers in a given market but their products are differentiated
Specialty:
product breadth is narrow
Total cost:
sum of the variable and fixed costs
Other elements in the marketing mix may or may not be perfect, but if the price is wrong, revenue:
will not accrue
How many brands does Coca Cola have?
350
79% of workers are in service sector & ______% GDP in 2013
68
Automation Training Technology
Heterogeneous
Brand Equity: Perceived Value
How do discount retailers like target, TJ Maxx, and H&M create value for customers? These retailers offer designer products at reduced prices. In some cases, they use well known designers for their lines of clothing.
There are typically the fewest competitors in which stages of the PLC?
Introductory and Decline
T/F: A company may choose to launch a new product without extensive test marketing and instead rely on instinct, since test marketing costs are high. Additionally, test markets may offer an advantage to competitors that have a similar product
True
How do brands create value for the customer and the firm?
Brands facilitate the consumer search process are valuable in a legal sense, can lead to lower marketing costs because the brand and its associations help sell the product and brands have real market value as a company asset.
Innovation and value: Why do firms create new products?
Changing customer needs Market saturation Managing risk through diversity (if you only have 1 white t-shirt & white goes out you're SOL) Fashion cycles Improving business relationships
Some markets demand a higher frequency of new product releases than others. In which of the following markets do sales come from new products? Clothing Over-the-counter medicines Video games Movies Books
Clothing Video games Movies Books
A restaurant advertises they are open for breakfast, but when guests arrive on Sunday morning, there is a sign on the door indicating they only open for brunch at 11:00:
Communication gap
Identify different sources of new product ideas
Internal research and development (R&D) efforts, collaborate with other firms and institutions, license technology from research-intensive firms, brainstorm, research competitors' products and services, and/or conduct consumer research;
Denise and Janet attend a large university in Texas. Denise asked for Janet's e-mail address, but Janet said she didn't have one. Janet would probably be considered a _________ in the diffusion of innovation process
Laggards
T/F: Managers can use the PLC model to help predict what pricing, product, promotional, and placement strategies they should employ at each of the four stages
True
Under normal conditions, the hotel never runs out of towels, but during Christmas when the hotel is filled, there is a ______ gap and the hotel laundry cannot keep up with the linen usage
delivery
Test marketing:
introduces the offering to a limited geographical area prior to a national launch
Products go through a number of stages in the product life cycle. The life cycle stage where a product begins the product life cycle this is known as the ________ stage
introduction
One of the best methods to ensure that guests at Hilton hotels receive quality service is to:
involve employees in goal setting
Effective service recovery for an airline when facing a problem, such as a huge snowstorm that shut down all flights for three days, includes resolving the dilemmas quickly, responding fairly, and _______ customers and their complaints
listening to
Prototype: Alpha testing: Beta testing:
lots of bugs less bugs even less bugs
A brand can use:
name, logo, symbols, characters, slogans, jingles and even distinctive packages
During the maturity stage firms may pursue several strategies to increase their customer base or defend their market share, once such strategy may be to develop __________ features or reposition them
new
Entry into a _______ market may emerge through simple product design changes. For example Clorox has added pre-moistened Armor All wipes to its do-it-yourself car cleaning line
new
Pioneers or breakthroughs are:
new product introductions, especially new-to-the-world products that create new markets
Service recovery:
resolve problems quickly provide a fair solution -distributive fairness -procedural fairness increase service recovery listen to the customer -customers get emotional over a service failure -often customers just want someone to listen
One of the most important factors to adequate service recovery is for the provider to:
respond to the customer and resolve the problem quickly
Willingness to help customers and provide prompt service:
responsiveness
Whenever we see a copycat consumer good appearing for sale in grocery or drugstore products, we know that some other firm has successfully ____________-engineered a previous firm's product
reverse
Why can't we separate firms into just service or just product sellers?
Many of them are a blend and fall within the product-service continuum
Less price competition and many firms:
Monopolistic competition Many firms selling differentiated products at different prices
Typically during the _______ stage of the product life cycle the typical consumers would be early adopters and early majority and there would be increases in the number of competitors
growth
Concept testing:
-concept is a brief written description of the product -customers reactions determine whether or not it goes forward -triggers the marketing research process -Concepts are presented to potential buyers or users to gauge their reactions. Marketing research techniques discussed in chapter 9 are used to test these concepts. -Lisa Frank
What % of new products fail?
80-90%
When incomes drop, the demand for an elastic product:
tends to decrease
Understanding customer expectations:
knowledge gap- marketing research: understanding customers evaluating service quality understanding customer expectations
A useful tool used by managers is the product ________ ________ which helps to analyze the types of strategies that may be required over the life of a product
life cycle
Cross-price elasticity"
the percentage change in the quantity of Product A demanded compared with the percentage change in price in Product B
Competitor-oriented:
to discourage more competitors from entering the market, set prices very low
Customer input:
As much as 85% of new business to business products come from customers Lead users modify existing products according to their own specific needs Have you ever modified a product, e.g. apparel, a car?
Products and consumption are simultaneous Little opportunity to test a service before use Lower risk by offering guarantees or warranties
Inseparable -When staying at a hotel, you can't test it out before you stay. Some hotels offer satisfaction guarantees to lower risk
They cannot be touched, tasted, or seen:
Intangible
Distribution:
Intensive Selective Conclusion
Source of ideas:
Internal R&D R&D consortia Licensing Brainstorming Outsourcing Competitor' products Customer input
Level of profitability with the stage of the product life cycle:
Introduction-low or negative Growth-rapidly rising Maturity-peaking or beginning to decline Decline-dropping
Firms that are less concerned with the level of profits and more interested in the rate at which profits are generated, relative to their investments, tend to use:
target return pricing
One of the aspects of service provision in recent years that has dramatically changed the delivery of services and improved consistency and efficiency is the use of:
technology
When Burger Kind introduced the new Whopper Bar to a limited geographical area prior to a national launch, it was engaging in __________
test marketing
When Subway introduced a new Southwestern Club sandwich in South Florida before launching it nationwide, it was engaging in:
test marketing
A service provider offers many amenities that he believes the customer desires, but the delivered services are not what is expected by the customers. This is an example of a _______ gap.
knowledge
One of the best ways for managers to reduce the _______ gap is to conduct ongoing research and regularly talk with customers to determine what they expect to get from the brand and the firm
knowledge
New-product development process:
new product strategy idea generation idea screening business analysis development test marketing commercialization new product
Firms with products in the decline stage either position themselves for a:
niche segment of diehard consumers or those with special needs or they completely exit the market
Price elasticity of demand=
% change in quantity demanded/% change in price
Brand Dilution:
-Evaluate the fit between the product class of the core brand and the extension -Evaluate consumer perceptions of the attributes of the core brand and seek out extensions with similar attributes -Refrain from extending the brand name to too many products -Is the brand extension distanced enough from the core brand?
Internal R&D:
-High product development costs -Often the source of technological products -Often the source of breakthrough products
Communication gap: Manage customer expectations Promise only what you can deliver Communicate service expectations
-Many people have never stayed in a five-star hotel, but they know what level of service quality they expect. Often, such expectations develop in response to the promises made in promotional materials provided by the firm.
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 -Poor promotion -Inferior product
While early adopters are crucial to the success of a new product, they still only make up a relatively small percentage of the total consumers in a given product market. This percentage is approximately how big?
13.5%
While innovators are crucial to the success of a new product or service, this category of consumers is actually very small. Approximately what percentage of a total market does this category of consumers represent?
2.5%
The early majority represents approximately _______ of the total consumer market and is crucial to the profitability of a product or service. Without them, the market for the product or service will typically fail to ever become large enough
34%
Pure competition:
A large l=number of sellers offer standardized products or commodities that consumers perceive as substitutable, such as grains, gold, meat, spices, or minerals
Unaided awareness:
A valued measure of brand strength, but just not as high a hurdle as unaided brand awareness.
Complexity of Products:
Actual Core Associated (augmented) Services
When Ben & Jerry's Ice Cream tests all of its new flavors on its own employees at its corporate headquarters in Vermont, it is engaging in what kind of testing?
Alpha testing
True pioneer products are products that have never been seen before and literally create new markets. Which of the following products would be considered a pioneer product at the time it was introduced? Amana's microwave oven in 1971 Pampers disposable diapers in the early 1960s Coca-Cola's New Coke in 1984 Microsoft's Bing Search Engine in 2009
Amana's microwave oven in 1971 Pampers disposable diapers in the early 1960s
Evaluation of results:
Analysis of the performance of the new product and making appropriate modifications
Innovators on the diffusion of innovation curve usually stay well informed about the product category. Which of these are ways an innovator might keep up-to-date about new developments in 3D televisions?
Attend the annual Consumer Electronics Show to see the newest models Participate in a discussion forum about 3D TV technology
Brand Equity: Brand Awareness
Brand equity cuts both ways; customers dislike some brands because of the firm's actions or their negative perceptions. Nike has been the target of many labor activists, which causes some consumers to refuse to purchase or wear Nike products. Remind students what they have learned about consumer behavior. When consumers recognize a need, they begin with an internal search, during which they consider any brand they already know. If consumers are not aware of the brand, they simply will not purchase it.
Branding?
Brand name -J. Crew URLs -www.eBay.com Logos and symbols -Tag Heuer Characters -Froot Loops Parrot Slogans -Real Taste and Zero Calories Jingles/Sounds "Law & Order"
How do brands create value for the customer and the firm?
Brands facilitate the consumer search process are valuable in a legal sense, can lead to lower marketing costs because the brand and its associations help sell the product and brands have real market value as a company asset
What are the reasons firms innovate?
Changing customer needs, market saturation, managing risk through diversity, and fashion cycles
Difference between actual service provided to customers and the service that the firm's promotion program promises:
Communication gap
Potential impacts to the company when a new product launch is a failure
Company may fail Negative financial impacts Product may not recover from failure
The 5 C's of Pricing:
Competition Costs Company objectives Customers Channel members
Innovators are those who must be first on the block to have a new product or service. Identify who can be considered an innovator.
Consumers
Brand Equity: Brand Loyalty
Consumers are often less sensitive to price Marketing costs are much lower Firm insulated from competition
Meet Kendra, self-supporting college student: Buys a new printer on sale for a great price Learns it requires special ink cartridges that cost more than the printer
Cross-Price elasticity -Just like Kendra, many people buy products without considering the price of necessary peripherals. Kendra is caught in a cross-elasticity trap, because her demand for one product generated demand for the other.
Difference between the firm's service standards and the actual service it provides to customers:
Delivery gap
Why is service recovery so important to companies?
Despite a firm's best efforts, sometimes service providers fail to meet customer expectations. Effective service recovery efforts can significantly increase customer satisfaction, purchase intentions, and positive word of mouth, though customers' post recovery satisfaction levels usually fall lower than their satisfaction level prior to the service failure.
________ fairness refers to the manger in which customers want to be compensated a fair amount to correct a perceived loss that resulted from a service failure
Distributive
What questions are likely to be asked of customers during concept testing?
Does the product meet a need that is not currently being satisfied? Does the proposed price seem like a good value? How often and in what quantities would the customer buy the product?
What is the Apple Watch?
Dog
Decreasing depth, which categories of the BCG would be associated with this?
Dog Question marks
Decrease Breadth:
Due to competitive changes, TCBY us now focusing on Yogurt
The first year they offered, John wanted a tablet computer, but he did not know which one to choose. He waited until there were more choices, lower prices, and improved quality. John is part of the ___________ diffusion of innovation group
Early majority
Which Diffusion of Innovation adopter group waits until the "bugs" are worked out of a particular product, in order to avoid risk?
Early majority
What is the difference between elastic versus inelastic demand?
Elastic demand is when relatively small changes in price will generate fairly large changes in the quantity demanded, so if a firm is trying to increase its sales, it can do so by lowering prices. The market for a product is generally viewed as inelastic when lowering prices will not appreciably increase demand; customers just don't notice or care about the lower price.
Value of Branding for the Customer:
Facilitate Purchasing Establish Loyalty Protect from Competition Are Assets Impact Market Value
Associated services:
Financing Product Warranty (ex: hyuandai/kia warranty) Product support
New product launch steps:
Firm confirms its target market Firm decides how the product will be positioned Firm finalizes the remaining marketing mix variables for the new product
Licensing:
Firms purchase the rights to technology or ideas from other research-intensive firms
What are the steps in the new product development process?
First, they generate ideas for the product or service. Second, firms test their concepts by either describing the idea of the new product or service to potential customers or showing them images of what the product would look like. Third, the design process entails determining what the product or service will actually include and provide. Fourth, firms test market their designs. Fifth, if everything goes well in the test market, the product is launched. Sixth, firms must evaluate the new product or service to determine its success.
What is the difference between fixed costs and variable costs?
Fixed costs are those costs that remain essentially at the same level, regardless of any changes in the volume of production. While variable costs are those costs, primarily labor and materials, that vary with production volume.
Tiffany always asks Samantha about beauty supply products. She considers her a well-informed friend who always knows the latest trends. For Tiffany, Samantha is a __________ in the diffusion of innovation curve
Innovators
Production and consumption occur at the same time:
Inseparable
Requires using cues to aid customers Atmosphere is important to convey value Images are used to convey benefit of value
Intangible
_______ _______ are innovative consumers who modify existing products according to their own ideas to suit their specific needs
Lead users
_________ refers to a firm buying the rights to use the technology or ideas from other research-intensive firms
Licensing
R&D Consortia:
Lower costs and risks; firms join together Form research consortiums benefits spread to all firms Ex: pharmaceutical industry research
Brand Ownership:
Manufacturer brands or national brands Private-label brands or store brands: -Premium -Generic -Copycat -Exclusive co-branded
Decrease depth:
McCormick spices eliminates dozen go products each year
Less price competition & fewer firms:
Monopoly One firm controls the market
Burkerg King launched the "Whopper Bar", serving beer as well as burgers in a test market in Miami. Which of the following would have been elements of a good plan for this test market? Testing a scale-back version of the full Whopper Bar, with only one type of beer Selling beer at 50% off the price to be charged for the full launch Offering the complete menu planned for the full launch Running the TV ads planned for the full launch
Offering the complete menu planned for the full launch Running the TV ads planned for the full launch
Inexpensively collects customer's service perceptions in the process of exchange:
Point of purchase surveys
Identify the steps taken by firms who have products in the decline stage of the product life cycle
Position themselves for a niche segment of diehard consumers or those with special needs Completely exit the market
What are the factors influencing price elasticity?
Price elasticity is influenced by income effect, substitution effect, and cross-price elasticity
More price competition and many firms:
Pure competition Many firms selling commodities for the same prices
In distinguishing between firm strategies for developing new products, a pioneer firm will be more likely to rely on its ______, whereas a follower firm will be more likely to ________ for ideas
R&D department; scan the market
Factors affecting product diffusion:
Relative advantage Compatibility Observability Complexity and Trialability (able to try it out)
Service Product Continuum:
Service Dominant Doctor Hotel Dry cleaners (hydro product, service & product) Restaurant Apparel specialty store Grocery store Product Dominant
Perishable:
Services are perishable in that they cannot be stored for use in the future. You can't stockpile your membership at Planet Fitness like you could a six-pack of V8 juice. Ex: airlines, cruise ships, movie theaters, and restaurants -There is a waiting line on Friday and Saturday afternoons but those time slots cannot be inventoried for when there is no demand
Inseparable:
Services are produced and consumed at the same time; that is, service and consumption are inseparable -Customers tend to get upset when their favorite manicurist is not working
As a consumer, being an innovator in a given product category can mean engaging in a number of behaviors. Which behavior would best illustrate an innovator?
Sleeping outside Best Buy for the latest game console
Difference between the firm's perceptions of customers wants and the service standards it sets:
Standards gap
Management believes that customers in a restaurant think the service is very slow, however, management allows servers to stand around and chat:
Standards gap
Increasing depth, which categories of the BCG would be associated with this?
Stars Cash Cow
Firms engaged in competitor orientation might use what strategies?
Status quo pricing Competitive parity
Pete, a college student on a budget, he is an Old Spice deodorant user At the store he notices that Old Spice is more expensive Pete decides to give another brand a try and save money
Substitution effect -Discuss the case of Pete and how the income and substitution effects alter his buying behavior. As a college student, he prefers a less expensive substitute deodorant, because it demands less of his total income
Brand Repositioning:
Takes a lot of time & marketing
The types of strategies that could be implemented in a profit orientation strategy include:
Target profit pricing Maximizing profits Target return pricing
Brand Equity: Brand Associations
Target teamed up with high-fashion designer Jason Wu to create reasonably priced, yet very fashionable apparel. Consumers develop links between brands and their own identity. Some brands are just "not for them."
Brand Licensing:
The NBA licenses products like these bobble head figures of Dallas Mavericks and San Antonio Spurs players to a manufacturer in exchange for a negotiated fee
Explain the four service gaps identified by the Gaps Model:
The knowledge gap reflects the difference between customers' expectations and the firm's perception of those customer expectations. Firms can understand consumer expectations and evaluate service quality The standards gap pertains to the difference between the firm's perceptions of customers' expectations and the service standards it sets. Firms can set appropriate service standards and measure service performance The delivery gap is the difference between the firm's service standards and the actual service it provides to customers. This gap can be closed by getting employees to meet or exceed service standards by providing incentives and support. The communication gap refers to the difference between the actual service provided to customers and the service that the firm's promotion program promises. If firms are more realistic about the services they can provide and manage customer expectations effectively, they generally can close this gap.
_________ defines the stages products move through as they enter, get established in, and ultimately leave the marketplace
The product life cycle
What are the advantages of brand extension?
They should reply that the firm can spend less on brand awareness. That the positive consumer acceptance will spread to the new product and a synergy exists between the two products
Which of the following is NOT a method to reduce delivery gaps? Provide support and incentives Threat of termination of employees Empower employees Use technology to minimize errors
Threat of termination of employees
Advantage for a firm that chooses to use brainstorming for its new products as opposed to other idea generation methods?
Through brainstorming those ideas or combination of ideas which receive the most votes are carried forward to the next stage
How does one calculate the break-even point in units?
To determine the break-even point in units mathematically, we must introduce one more variable, the contribution per unit, which is the price less the variable cost per unit. Therefore, the break-even point becomes Break-even point (units) = fixed costs/contribution per unit
T/F: when using zone of tolerance marketing metrics, the five scores assigned to service quality dimensions will always total 100 percent
True
T/F: It is usually easier to start out with a high MSRP and then over time lower it
True MSRP (Manufacturers Suggested Retail Price)
Increase Breadth:
True Religion brand Jeans now are a lifestyle brand with apparel, belts, swimwear and fragrances
Shopping:
Wedding dress- Is there going to be comparison? Higher involvement Greater risk
Creates the area between the desired and minimum standard of acceptable service based on five service dimensions:
Zone of tolerance
Customer orientation:
a firm sets its pricing strategy based on how it can add value to its products or services
Irregular, though not necessarily illegal, methods of pricing are known as:
a gray market
When firms compete by lowering price at retail, they are engaged in:
a price war
Dual adaption:
adapt product adapt promotion
Communication adoption:
adapt promotion don't change product
The diffusion of innovation refers to the rate in which consumers ________ a given product or service
adopt
One of the side benefits of listening to customers' complaints is:
airing the complaint can be very therapeutic for the buyer
In ________ testing, the firm attempts to determine whether the product pro type will perform according to its design and whether it satisfies the need for which it was intended, by performing tests in the R&D department
alpha
A new product can be:
anything from a slight redesign to new-to-the-world offerings
When a service delivery fails, customers need to be told _______ in order to reduce buyers' irritation and dissatisfaction and reduce the perceived time for resolution
approximately how long it will take the firm to resolve the issue
Early adopters, although not as fast as innovators, are quick to purchase a new product or service. Identify characteristics that are typically associated with early adopters:
are less risk seeking than innovators tend to be opinion leaders of particular product categories
Knowledge and courtesy by employees and their ability to convey trust and confidence:
assurance
Increase depth:
band-aid now has over 40 products to heal cuts
In addition to empowering, rewarding the service provider, and offering instrumental support, service managers are advised to:
be consistent and predictable in their support
Communication gap:
be realistic in telling potential buyers about the services that can be provided and manage those customer expectations effectively
Even if they eventually receive a solution that seems fair, when consumers must work hard to achieve it, their low procedural fairness perceptions may cause them to:
believe that they are being punished for receiving bad service.
Co-branding:
benefits the participating brands by attracting the consumers of one brand to the others Ex: FedEx/Kinko's example The synergy between these two brands helped ensure a successful co-branding effort
Unsought:
blood drive life insurance
When a group works together to generate a number of ideas and then determines which is the best idea, this is referred to as _________
brainstorming
Susan is looking to purchase a cruise to Alaska. In the search process, she discovers this purchase is different from purchasing an automobile, in that the cruise:
cannot be easily separated from the service providers such as the stewards and crew
Status quo pricing:
changes prices only to meet those of the competition
The five Cs of pricing are:
company objectives customers channel partners competition costs
Despite market saturation, firms are constantly introducing products with new and improved features or in order to gain market share against intense __________
competition
Pioneers radically change:
competition and consumer preferences
If a firm INITIALLY sets prices similar to major competitors' prices, this is an example of ______ pricing
competitive parity
This strategy is particularly common among smaller firms that lack knowledge or experience in setting prices. Non-market leader firms also use it to signal they are similar to the market leader:
competitor orientation
Products whose demands are positively related to one another are known as:
complementary products
Through the effective use of __________ testing, firms may be able to avoid high costs of product development for product ideas that do not meet customer's expectations
concept
R & D _________ are groups of firms and institutions who collaborate to do research and development
consortia
While product development costs are very high for firms with R&D departments, they are not always expected to produce a successful new product. A firm might lose money in the short term, but because R&D departments are viewed as _______, the firms hope that they will be profitable in the long term
continuous investments
Sometimes, firms have difficulty moving through the brainstorming process themselves. When this occurs, they can hire outside firms such as IDEO, which help to create an environment that is conducive to:
creativity
Premarket tests:
customers exposed customers surveyed Firm makes decision
Service quality is defined as:
customers' perceptions of how well a service meets or exceeds their expectations
During the ______ stage of the PLC, few laggards who have not yet tried the product will be entering the market for the first time
decline
When a product goes into the _______ stage of the product like cycle, it eventually exits the market
decline
In a pure competition market, to differentiate products, firms are advised to ________
decommoditize products
standards specifying service to be delivered vs. actual service delivered
delivery gap
Product development:
development of prototypes and/or the product
A restaurant is facing a problem in service delivery on a night when there are twice as many customers dining as usual. An integral part of recovery of the service dilemma is to provide both distributive and procedural __________ in resolving the delays in getting all customers served
fairness
When products reach the growth stage of the product life cycle, you must study your customers and know their preferences such as:
features styles varied color
In terms of their place on the diffusion of innovation curve, innovators are the ______ category of consumers
first
Three of the dermatologist's patients have very different skin problems. Because of the ______ of services, the doctor needs to customize each patient's diagnosis and treatment
heterogeneity
When many students are complaining about a problem at an online university, one of the best things the university can do to better serve its students is to _________.
honestly listen to students' complaints and use their messages to build a committed relationship
While pioneers capture an early and commanding market share, ________ often enter the market, capitalize on the pioneer bend's weaknesses, and subsequently gain advantage in the market
imitators
In addition to providing service employees with emotional and instrumental support, management should offer the staff ________ that reward them for providing good service
incentives
Buying a service such as a haircut, medical treatment, or a lawyer's advice is perceived as more risky to the consumer, to a large extent, because of the service characteristic of _______. The service cannot really be sampled in advance nor can it be returned.
inseparability
Claire's accessory stores sell many girls their first pair of earrings alone with the process of piercing their ears. The store tries to create an entire experience for the event, and both the customer and the store employee are integral to the process. Claire relies on the service attribute of ________ as an opportunity to involve the customer and increased perceived value
inseparability
When a dentist fills a cavity, there is the element of _______ that indicates the dentist should try to engage the patient in the process as much as possible since she must be present for the service
inseparability
Factors differentiating services from goods:
inseparable heterogeneous intangible perishable
Identify which two of the following are fundamental differences involved in service as differentiated from goods: homogeneous inseparable intangible cheaper
inseparable intangible
Profit-oriented:
institute a companywide policy that all products must provide for at least 18 percent profit margin to reach a particular profit goal for the firm
In-store computer displays are increasingly used by service providers for ________ support, which refers to the systems and equipment used to deliver the information properly
instrumental
Sally is having trouble deciding which college to attend. While there are buildings, classrooms, and libraries to evaluate, the actual learning is much more difficult to evaluate. It is this _______ of the purchase that makes marketing the service, a college education, complicated.
intangibility
Bill's father is going to have heart surgery. The uncertainty the family is feeling is in part due to health care services being ________. The patient and his family are not able to precisely measure the quality of his care and treatment
intangible
Factors differentiating services from goods:
intangible heterogeneous inseparable intangible
Reverse engineering:
involves taking apart a product, analyzing it, and creating an improved product that does not infringe on the competitors' patents, if any exist
Alpha testing:
is testing where the firm attempts to determine whether the product will perform according to its design and whether it satisfies the need for which it was intended
Prototype:
is the first physical form or service description of a new product, still in rough or tentative form, that has the same properties as a new product but is produced through different manufacturing processes—sometimes even crafted individually.
Diffusion of innovation:
is the process by which the use of an innovation spreads throughout a market group, over time and over various categories of adopters
Limitations to a break-even analysis:
it cannot predict how many units will sell that firms have to perform several analyses at different quantities that it represents an average price to account for variances
Ethical guidelines for advertising by service firms (such as law firms) are important because:
it is difficult to separate the provider from the service and lawyers have the potential to abuse the buyer
If a company invests all its time and effort into a new product and the product fails,
it will be extremely difficult for the firm to recover
A service provider offers many amenities that he believes the customer desires, but the delivered services are not what is expected by the customer. This is an example of a _____ gap.
knowledge
Customer expectations for service quality vs. management perceptions of customer expectations:
knowledge gap
When the ________ majority of consumers enters the market, the market has already reached its full market potential
late
When a firm uses the _______ _______ customer input approach, they customize their products based on the input of these innovative consumers
lead user
Pricing is the _______ of the four Ps and therefore process to be the most challenging to manage
least understood
Consumers are generally ______ sensitive to price increases for necessities like milk than for items such as restaurant fining
less
Purchasing a Starbucks coffee is a(n) ________ purchase decision in terms of complexity. However, purchasing a laptop computer can be a much more difficult purchase decision
less complex
The product ________ _________ concept is indeed a valid idea, and new analytical tools now provide "rules" for detecting key turning points in the cycle
life cycle
A tool that is increasingly used by service providers to minimize the variance between those who deliver the service is to employ _______.
machines such as ATMs and service kiosks
The delivery of quality service is the task of everyone in the firm, but the commitment to quality service is established and illustrated best by _______, which establishes policy and sets examples for the entire company
management
One of the problems in using customer complaint behavior to assess buyers' service expectations is that:
managers often are more concerned with resolving the complaint than analyzing the essence of the problem
Channel members:
manufacturers, wholesalers, and retailers -have different perspectives when it comes to pricing strategies
Growth stage:
marked by a growing number of product adopters, rapid growth in industry sales, and increases in both the number of competitors and the number of available product versions
Licensing is a trade-off in that it can save a firm from the high costs of in-house R&D, but instead the firm is banking on a solution (product) that already exists but has not been:
marketed
Knowledge gap:
match customer expectations with actual service provided through research
In the ________ stage of the product life cycle, a firm may want to start looking for new market segments in order to find new opportunities
maturity
The _______ (need actual name) stage of the product life cycle is characterized by the adoption of the product by the late majority and good profitability
maturity
Profit orientation:
maximizing profits target return pricing target profit pricing
Test marketing:
mini product launch more expensive than premarket tests market demand is estimated
In many geographic areas, utilities such as water and electricity are available from only one provider. This is an example of a level of competition called:
monopoly
An important element of offering emotional support to employees it to ________ when they have been empowered to make decisions in dealing with the customer
not punish them
Depth:
number of categories within a product line -basketball shoes Nike has
Breadth:
number of product lines
Setting prices with a close eye on how consumers develop their perceptions of value is considered:
one of the most effective pricing strategies
Oligopolistic competition:
only a few firms dominate Examples: soft drink market and commercial airplane travel
United Airlines flies a plane on Tuesday that is 25% full. On friday, the same flight is overbooked 15%. One of the traits of service marketing is this quality of ______, in which flights must be delivered on the day scheduled or it is lost.
perishability
Distributive fairness;
pertains to a customer's perception of the benefits he or she received compare with the costs (inconvenience or loss)
Loyalty toward a particular brand makes other brands seem less substitutable, which decreases:
price elasticity of demand
The 5 Cs make a significant contribution to:
pricing strategies
Previously retailers offered no questions asked returns and have changed policies in recent years due to customers who took advantage of the policy. Since most buyers appreciate ______, some electronics stores have instituted a restocking fee
procedural fairness
If a firm has a positive result from the market testing the next step is known as __________ launch
product
Private-label brands, also called store brands, house brands, or own brands are:
products developed by retailers
Complementary products:
products whose demands are positively related, such as they rise or fall together
Key characteristics of the introduction stage are that:
profits are low few or no competitors exist
New product marketing mix:
promotion place price timing -The right product must hit the market at the right time and for the right price. It matters little how good a product is if the launch lacks sufficient resources. The timing of the launch may be important, depending on the product.
One of the surprising effects of the Internet being used in delivery of services in recent years has been _____ through the use of in-store kiosks
reducing service heterogeneity
Substitution effect:
refers to the consumers' ability to substitute other products for the focal brand. The greater the availability of substitute products, the higher the price elasticity of demand for any given product will be.
Procedural fairness;
refers to the perceived fairness of the process used to resolve them. Customers want efficient complaint procedures over whose outcomes they have some influence.
Evaluating service quality:
reliability: The ability to perform the service dependably and accurately. responsiveness: The willingness to help customers and provide prompt service. assurance: The knowledge of and courtesy by employees and their ability to convey trust and confidence empathy: The caring, individualized attention provided to customers tangibles: The appearance of physical facilities, equipment, personnel, and communication materials.
Firms are able to gain a better understanding of customers' service expectations by engaging in quantitative and qualitative market _______, which can be extensive and expensive.
research
Premarket tests are conducted by:
research firms, such as ACNielsem Because test marketing reveals a new product to competitors, it might be inappropriate to expose some new products this way.
Evaluation of results:
satisfaction of technical requirements customer acceptance satisfaction of the firm's financial requirements
New product and service innovation is important because the longer a product or service exists in a given marketplace, the more likely that the market will become _______
saturated
Customer _________ refers to human or mechanical activities undertaken by firms to help satisfy their customers' needs and wants
service
According to Theodore Levitt, all products are:
services
Competitive parity:
set prices that are similar to those of their major competitors
Sales-oriented:
set prices very low to generate new sales and take sales away from competitors, even if profits suffer
Demand curves can be described as:
showing many units of a product or service consumers will demand during a specific period of time at different prices relating to demand to prices assumes that everything else remains unchanged
A customer's expectations might vary substantially for the same service provider based on the __________.
situation
Retailers may not only need to make a profit on a sale, but they may also receive a __________ __________ as an encouragement to give better shelf space to new products
slotting allowance
By the time the late majority enters the market, sales tend to _______ or even _______.
stabilize; decrease
Involving employees in setting service performance goals can be very instructive in helping a firm reduce the ______ gap by increasing their input into systematizing the expected output
standards
McDonald's has a policy that a drive-through customer will receive his order within 1 minute of paying for the order. This contributes to efforts to reduce the ________ gap and provide measurable service quality based on expectations
standards
Product life cycles for:
style fashion fad
Products with patents or other proprietary protections cannot be copied, so reverse engineered products must be:
substantively different from their source product
Much more than when marketing products, service providers such as seaside hotels and restaurants have a dilemma of matching _______.
supply and demand
Promotion for new products is required at each link in the _________
supply chain
A firm may set low prices to:
take market share away from competitors discourage firms from entering the market encourage current firms to leave the market
Appearance of physical facilities, equipment, personnel, and communication materials:
tangibles
Customer-oriented:
target a market segment of consumers who highly value a particular product benefit and set prices relatively high (referred to as premium pricing)
For example, consider eBay:
the brand facilitates instant recognition, consumers are avidly loyal, which reduces competition from other online auctions and reduces expensive marketing ads. The brand is a valuable asset that they protect through copyrights, and directly affects their profits
The price, minus the variable cost per unit, is known as:
the contribution per unit
Some manufacturers prefer to make only private-label merchandise because:
the costs of developing and marketing a manufacturer's brand are prohibitive
If an authorized retailers sells products to an unauthorized retailer who then sells to consumers at prices far below authorized dealers can charge:
the discount retailers might fail to provide sufficient service
A grocery store is at the product-dominant side of the Service-Product continuum since most items are selected self-service from the shelves therefore:
the firm can still view service as a viable competitive advantage
By compounding a service failure with long delays in correcting it:
the firm creates a hostile customer.
A customer with a complaint about the way in which a washing machine repair was made will be become increasingly more annoyed with the service provider:
the longer it takes to get an answer from the firm
Resolving problems quickly:
the longer it takes to resolve service failure the more irritated the customers it is in the firms best interest to solve prelims quickly
Price is best defined as:
the overall sacrifice a consumer is willing to make to acquire a specific product or service
Consumers' ability to replace other products with the focal brand is known as:
the substitution effect
Intangible:
they cannot be touched, tasted, or seen like a pure product can. It makes it difficult to convey the benefits of services-try describing whether the experience of visiting your dentist was good or bad and why. -It is difficult for the salon to convey the benefits of a new type of a new hand cleaning technique
Competitor orientation:
they strategize according to the premise that they should measure themselves primarily against their competition
Your company manufactures pool toys and has recently developed the latest "swirly slide." You have contacted your distributors who must place an order in January to be in _________ for the May summer season and be able to satisfy demand for the product
time
THE PLC represents an important tool managers use:
to plan their marketing activities
IMC (integrated marketing communications) encompasses a variety of communication disciplines used during the introductory phase such as:
trade promotions price promotions
A _________ _________ is a temporary concentration of manufacturers, giving retailers an opportunity to see what is available in the marketplace
trade show
Expectations are based on knowledge and experience Expectations vary according to type of service Expectations vary depending on the situation
understanding customer expectations
Beta testing:
uses potential consumers, who examine the product prototype in a "real use" setting to determine its functionality, performance, potential problems, and other issues specific to its use
The relationship between a product's benefits and the consumer's costs is known as its:
value
Laggard:
very cheap
Concept testing can be as simple as a brief written description of the product that might also include:
visual images customer needs its satisfies
A systematic program that collects customers inputs and integrates them into managerial decisions is a ________ program:
voice of customer
Late majority:
waiting for price to go down less affluent
While new products can become huge success stories, they have a high failure rate. In many cases imitators capitalize on the _______ of pioneers and subsequently gain advantage in the market
weakness
Predatory pricing:
when a firm sets a very low price for one or more of its products with the intent to drive its competition out of business. -Predatory pricing is illegal in the United States
Price war:
which occurs when two or more firms compete primarily by lowering their prices