Busn 341 Pr of Marketing Exam review 3

Why companies produce new products

market saturation changing customer needs improving business relationships fashion cycles managing risk through diversity

Define Types of products (i.e. shopping, convenience, etc.)

1) A convenience product is a relatively inexpensive item that merits little shopping effort—that is, a consumer is unwilling to shop extensively for such an item. Candy, soft drinks, aspirin, small hardware items, dry cleaning, and car washes fall into the convenience product category. 2) A shopping product is usually more expensive than a convenience product and is found in fewer stores. Consumers usually buy a shopping product only after comparing several brands or stores on style, practicality, price, and lifestyle compatibility. They are willing to invest some effort into this process to get the desired benefits 3) When consumers search extensively for a particular item and are very reluctant to accept substitutes, that item is a specialty product. Omega watches, Rolls-Royce automobiles, Bose speakers, Ruth's Chris Steak House, and highly specialized forms of medical care are generally considered specialty products. 4) A product unknown to the potential buyer or a known product that the buyer does not actively seek is referred to as an unsought product. New products fall into this category until advertising and distribution increase consumer awareness of them.

Steps in new product development and what happens at each step

1) New product strategy - links product development 2) Idea generation - generate ideas, crowdsourcing 3) Screening - first filter in product development, Concept testing 4) Business analysis - demand, costs, sales, profitability 5) Product development - prototype, sketch strategy, packaging, 4 p's, examine 6) Test marketing - determine reactions of potential customers 7) Commercialization New-Product Success

Product Life cycle and what happens at each stage

4 stages 1) Introductory Stage, represents the full-scale launch of a new product into the marketplace. Marketing costs in the introductory stage are normally high for several reasons. High dealer margins are often needed to obtain adequate distribution, and incentives are needed to get consumers to try the new product. Advertising expenses are high because of the need to educate consumers about the new product's benefits. Production costs are also often high in this stage, as product and manufacturing flaws are identified and corrected and efforts are undertaken to develop mass production economies. 2) Growth Stage, sales typically grow at an increasing rate, many competitors enter the market, and large companies may start to acquire small pioneering firms. Profits rise rapidly in the growth stage, reach their peak, and begin declining as competition intensifies. Emphasis switches from primary demand promotion (e.g., promoting e-readers) to aggressive brand advertising and communication of the differences between brands. Distribution becomes a major key to success during the growth stage, as well as in later stages. 3) Maturity Stage, New users cannot be added indefinitely, and sooner or later the market approaches saturation. Normally, this is the longest stage of the PLC. Many major household appliances are in the maturity stage of their life cycles. For shopping products such as durable goods and electronics, and many specialty products, annual models begin to appear during the maturity stage. Product lines are lengthened to appeal to additional market segments. 4) Decline Stage A long-run drop in sales signals the beginning of the decline stage. The rate of decline is governed by how rapidly consumer tastes change or substitute products are adopted. Many convenience products and fad items lose their market overnight, leaving large inventories of unsold items, such as designer jeans. Others die more slowly. Landline telephone service is an example of a product in the decline stage of the product life cycle.

Private label brands

A brand name owned by a wholesaler or retailer, also known as a private label or store brand. Private labels are increasing in popularity and price as customers develop loyalties to store brands such as Archer Farms. Private brands have seen strong growth since the start of the Great Recession in 2008, more than doubling in sales and capturing about 25 percent of all grocery store volume. Much of this growth has occurred in the dry groceries and non-foods categories because of changing shopper behavior and heavy competition. Retailers love consumers' greater acceptance of private brands. Because overhead is low and there are no marketing costs, private label products bring 10 percent higher profit margins, on average, than manufacturers' brands. More than that, a trusted store brand can differentiate a chain from its competitors.

Why brands engage in product line extensions

A product line extension occurs when a company's management decides to add products to an existing product line in order to compete more broadly in the industry. Donut maker Krispy Kreme recently launched a series of ready-to-drink iced coffees that consumers can purchase nationwide in grocery, convenience, and mass merchandise stores. The drinks are relatively inexpensive, convenient, and are offered in mocha, vanilla, and caramel flavors. The company hopes to attract more coffee drinkers, as well as retail customers, to its products.*

Components of service (how service is built and evaluated by consumers)

A service is the result of applying human or mechanical efforts to people or objects. Services involve a deed, a performance, or an effort that cannot be physically possessed. Research has shown that customers evaluate service quality by the following five components: 1) Reliability 2) Responsiveness 3) Assurance 4) Empathy 5) Tangibles

Positioning statement - why should I buy this product from you?, benefits and "reasons to believe", Pricing, Sales Outlets (place)

A true measure of a [positioning] concept is its simplicity. When presenting the concept to the consumer, [we] must provide a clean, easily defensible, clearly articulated, emotionally satisfying, thoroughly convincing, superior answer to the deceptively simple question, "Why should I purchase from you?"

Know why supply chain mgt. adds value for consumers and benefits of effective Supply Chain Management

Benefits of Effective Supply Chain Management Supply chain management is a key means of differentiation for a firm, and therefore represents a critical component in marketing and corporate strategy. Companies that focus on supply chain management commonly report lower inventory, transportation, warehousing, and packaging costs; greater logistical flexibility; improved customer service; and higher revenues. Research has shown a clear relationship between supply chain performance and both profitability and company value. Additionally, because well-managed supply chains are able to provide better value to customers with only marginal incremental expenditure on company assets, best-in-class supply chain companies such as air conditioner manufacturer Lennox International are becoming significantly more valuable investments for investors.

Benefits of Brands to consumer and seller

Branding has three main purposes: product identification, repeat sales, and new-product sales. The most important purpose is product identification. Branding allows marketers to distinguish their products from all others. Many brand names are familiar to consumers and indicate quality.

Internal marketing

Employees who like their jobs and are satisfied with the firm they work for are more likely to deliver superior service to customers. In other words, a firm that makes its employees happy has a better chance of retaining customers. Thus, it is critical that service firms practice internal marketing, which means treating employees as customers and developing systems and benefits that satisfy their needs. While this strategy may also apply to goods manufacturers, it is even more critical in service firms. This is because in service industries, employees deliver the brand promise—their performance as a brand representative—directly to customers. To satisfy employees, companies have designed and instituted a wide variety of programs such as flextime, on-site day care, and concierge services

Relationship marketing in services

Many services involve ongoing interaction between the service organization and the customer. Thus, they can benefit from relationship marketing, as a means of attracting, developing, and retaining customer relationships. The idea is to develop strong loyalty by creating satisfied customers who will buy additional services from the firm and are unlikely to switch to a competitor. Satisfied customers are also likely to engage in positive word-of-mouth communication, thereby helping to bring in new customers. Many businesses have found that it is more cost-effective to hang on to the customers they have than to focus only on attracting new ones. 4 levels 1) financial, 2) social, 3) customization, 4) structural

Basic Types of retailers (i.e. supercenter, specialty store, etc.)

Retail establishments can be classified in several ways, such as type of ownership, level of service, product assortment, and price. These variables can be combined in several ways to create numerous unique retail operating models. 1) Department store 2) Specialty store 3) Supermarket 4) Drugstore 5) Convenience store 6) Full-line discount store 7) Specialty discount store 8) Warehouse club 9) Off-price retailer 10) Restaurant

Success factors for new products

SEVEN CHARACTERISTICS OF SUCCESSFUL PRODUCT INTRODUCTIONS Firms that routinely experience success in new-product introductions tend to share the following seven characteristics: A history of listening carefully to customers An obsession with producing the best product possible A vision of what the market will be like in the future Strong leadership A commitment to new-product development A project-based team approach to new-product development Getting every aspect of the product development process right

Characteristics of services that differentiate them from goods

Services have four unique characteristics that distinguish them from goods. Services are intangible, inseparable, heterogeneous, and perishable.

Vendor managed inventory and trends

Several technological advances and business trends are affecting the job of the supply chain manager today. Some of the business trends that are affecting supply chain management include outsourcing logistics, maintaining a secure supply chain and minimizing supply chain risk, and maintaining a sustainable supply chain. While these trends exert pressure on managers to change the way their supply chains function, electronic distribution is being used and changed frequently to help make supply chain management more integrated and easier to track.

Benefits of manufacturers vs. private label brands for retailers

The brand name of a manufacturer—such as Kodak, La-Z-Boy, and Fruit of the Loom—is called a manufacturer's brand. Sometimes "national brand" is used as a synonym for "manufacturer's brand." This term is not always accurate, however, because many manufacturers serve only regional markets. Using "manufacturer's brand" precisely defines the brand's owner. A private brand, also known as a private label or store brand, is a brand name owned by a wholesaler or a retailer. Target's Archer Farms brand is a popular private label, for example. Retailers love consumers' greater acceptance of private brands. Because overhead is low and there are no marketing costs, private label products bring 10 percent higher profit margins, on average, than manufacturers' brands. More than that, a trusted store brand can differentiate a chain from its competitors. Exhibit 10.3 illustrates key issues that wholesalers and retailers should consider in deciding whether to sell manufacturers' brands or private brands. Many firms offer a combination of both.

what is Supply Chain Management

The goal of supply chain management is to coordinate and integrate all of the activities performed by supply chain members into a seamless process, from the source to the point of consumption, ultimately giving supply chain managers "total visibility and control" of the materials, processes, money, and finished products both inside and outside the company they work for. The philosophy behind supply chain management is that by visualizing and exerting control over the entire supply chain, supply chain managers can balance supply and demand needs, maximize strengths, and increase efficiencies at each level of the chain. Understanding and integrating supply and demand-related information at every level enables supply chain managers to optimize their decisions, reduce waste, and respond quickly to sudden changes in supply or demand.

Branding

The success of any business or consumer product depends in part on the target market's ability to distinguish one product from another. Branding has three main purposes: product identification, repeat sales, and new-product sales. The most important purpose is product identification. Branding allows marketers to distinguish their products from all others. Many brand names are familiar to consumers and indicate 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). 4 stages 1) Introductory Stage, 2) Growth Stage, 3) Maturity Stage, 4) Decline Stage The PLC concept can be used to analyze a brand, a product form, or a product category. The PLC for a product form is usually longer than the PLC for any one brand. The exception would be a brand that was the first and last competitor in a product form market. In that situation, the brand and product form life cycles would be equal in length. Product categories have the longest life cycles. A product category includes all brands that satisfy a particular type of need, such as shaving products, passenger automobiles, or soft drinks.

Brand definition and elements

a name, term, symbol, design, or combination thereof that identifies a seller's products and differentiates them from competitors' products

big data analytics

a process whereby retailers use complex mathematical models to make better product mix decisions.

Consumer Products

a product bought to satisfy an individual's personal wants convenience shopping products

Business product

a product used to manufacture tiger finds ir services, to facilitate an organizations or to resell ti other customers speciality unsought products

Concept testing

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

Product line extension

adding additional products to an existing product line in order to compete more broadly in the industry a product line is a group of closely related product items

Amazon GO

an e-commerce mobile application that enables consumers to purchase items in physical stores without waiting in lines or checking out with registers.

Empathy

caring, individualized attention to customers Firms whose employees recognize customers and learn their specific requirements are providing empathy. Knowing more about customers' wants and needs maximized employees' opportunities for providing great service

beacons

devices that send out connecting signals to customers' smartphones and tablets. These devices recognize when a customer is in or near the store and indicate to an automated system that the customer is ripe to receive a marketing message via e-mail or text. Beacons can also notify sales associates to offer (or not offer) a coupon at the point of sale.

Co-branding

entails placing two or more brand names on a product or its package. Three common types of co-branding are ingredient branding, cooperative branding, and complementary branding. Ingredient branding identifies the brand of a part that makes up the product. Cooperative branding occurs when two brands receiving equal treatment (in the context of an advertisement) borrow from each other's brand equity. Cooperative branding occurs when two brands receiving equal treatment (in the context of an advertisement) borrow from each other's brand equity. Co-branding is a useful strategy when a combination of brand names enhances the prestige or perceived value of a product or when it benefits brand owners and users. Co-branding may also be used to increase a company's presence in markets where it has little room to differentiate itself or has limited market share.

Concept testing - Brief product description including the Competitive Advantage (...superiority in ....)

evaluates a new-product idea, usually before any prototype has been created. Typically, researchers get consumer reactions to descriptions and visual representations of a proposed product. Concept tests are considered fairly good predictors of success for line extensions.

Brand associations

is anything which is deep seated in customer's mind about the brand. Brand should be associated with something positive so that the customers relate your brand to being positive. Brand associations are the attributes of brand which come into consumers mind when the brand is talked about.

Click and collect

make their purchases online. Rather than waiting for orders to arrive at their homes, customers drive to physical stores to pick their orders up.* When retailers use this strategy, customers benefit from greater speed of delivery (in fact, they become the delivery vehicle), while retailers themselves benefit from the fact that customers must enter their stores in order to claim their purchases.

What is product?

may be defined as everything, both favorable and unfavorable, that a person receives in an exchange. A product may be a tangible good like a pair of shoes, a service like a haircut, an idea like "don't litter," or any combination of these three. Packaging, style, color, options, and size are some typical product features. Just as important are intangibles such as service, the seller's image, the manufacturer's reputation, and the way consumers believe others will view the product. To most people, the term product means a tangible good. However, services and ideas are also products.

Inseparability

means that, because consumers must be present during the production of services like haircuts or surgery, they are actually involved in the production of the services they buy. That type of consumer involvement is rare in goods manufacturing. Simultaneous production and consumption also means that services normally cannot be produced in a centralized location and consumed in decentralized locations, as goods typically are.

Reliability

the ability to perform a service dependably, accurately, and consistently the ability to perform the service dependably, accurately, and consistently. Reliability is performing the service right the first time. This component has been found to be the one most important to consumers

Responsiveness

the ability to provide prompt service Examples of responsiveness include calling the customer back quickly, serving lunch fast to someone who is in a hurry, or mailing a transaction slip immediately. The ultimate in responsiveness is offering service twenty-four hours a day, seven days a week.

Manufacturer brands

the brand name of a manufacturer. The brand name of a manufacturer—such as Kodak, La-Z-Boy, and Fruit of the Loom—is called a manufacturer's brand. Sometimes "national brand" is used as a synonym for "manufacturer's brand." This term is not always accurate, however, because many manufacturers serve only regional markets. Using "manufacturer's brand" precisely defines the brand's owner.

Perishability

the inability of services to be stored, warehoused, or inventoried

Intangibility

the inability of services to be touched, seen, tasted, heard, or felt in the same manner that goods can be sensed

Assurance

the knowledge and courtesy of employees and their ability to convey trust the knowledge and courtesy of employees and their ability to convey trust. Skilled employees, who treat customers with respect and make customers feel that they can trust the firm, exemplify assurance.

Tangibles

the physical evidence of the service. The tangible parts of a service include the physical facilities, tools, and equipment used to provide the service, as well as the appearance of personnel.

Brand equity

the value of a company or brand name

Heterogeneity

the variability of the inputs and outputs of services, which causes services to tend to be less standardized and uniform than goods