BUSN101 - Chapter 14

Product life cycle

- Introduction - Growth - Maturity - Decline

New-product failures

- Not delivering what is promised (lead cause) - Getting ready for marketing too late - Poor positioning - Too few differences from competitors - Poor packaging

Total product offer

Everything that consumers evaluate when deciding whether to buy something; also called a value package. You may here some people call the basic product the "core product" and the ____ product ____ the "augmented product"

Distributed product development

Handing off various parts of your innovation process - often to companies in other countries. The increase in outsourcing and alliance building has resulted in innovation efforts that often require using multiple organizations separate by cultural, geographic, and legal boundaries.

Knockoff brands

Illegal copies of national brand-name goods.

Product analysis

Making cost estimates and sales forecasts to get a feeling for profitability of new-product ideas.

Generic goods

Nonbranded products that usually sell at a sizable discount compared to national or private-label brands.

Demand-oriented pricing

Recognizing that different consumers may be willing to pay different prices, marketers sometimes price on the basis of consumer demand rather than cost or some other calculation (ex: movie theaters with low rates for children and drugstores with discounts for senior citizens)

Trademark

a brand that has exclusive legal protection for both its brand name and its design.

Unsought goods and services

products consumers are unaware of, haven't necessarily thought of buying, or suddenly find they need to solve an unexpected problem (emergency car towing, burial services, and insurance)

Pricing Objectives

1. Achieving a target return on investment of profit - naturally, one long-run pricing objectives of almost all firms is to optimize profit (ex. Reducing the amount provided to customers) 2. Building traffic - supermarkets advertise certain products at or below cost to attract people to the store (loss leaders) 3. Achieving greater market share - offer lower prices, low finance rates, low lease rates, or rebates 4. Creating an image 5. Furthering social objectives

Value

Good quality at a fair price. When consumers calculate the _____ of a product, they look at the benefits and then subtract the cost to see if the benefits exceed the costs. The best way to compete is to design and promote better products, meaning products that customers perceive to have the best ______.

Dealer (private label) brands

Products that don't carry the manufacturer's name but carry a distributor or retailer's name instead. Products that carry a retailer's or distributor's brands name instead of a manufacturer's (Sear's Kenmore, Target Archer Farms)

Product line

a group of products that are physically similar or are intended for a similar market. They usually face similar competition.

Brand

a name, symbol, or design (or combination thereof) that identifies the goods or services of one seller or groups of sellers and distinguishes them from the goods and services of competitors

Product screening

a process designed to reduce the number of new-product ideas being worked on at any one time. Screening applies criteria to determine whether the product fits well with present products, had good profit potential, and is marketable.

Total fixed costs

all the expenses that remain the same no matter how many products are made or sold

Capital items

are expensive products that last a long time. A new factory building is both a _______ and an installation.

Installations

consist of major capital equipment such as new factories and heavy machinery.

Accessory equipment

consists of capital like items that are not quite as long-lasting or expensive as installations

Specialty goods and services

consumer products with unique characteristics and brand identity (fine watches, expensive wine, fur coats)

Brand preference

consumers prefer one brand over another

Consumer goods and services has four general categories

convenience, shopping, specialty, and unsought

Variable costs

costs that change according to the level of production. Included are the expenses for the materials used in making products and the direct costs of labor used in making those goods

Target costing

designing a product so that it satisfies customers and meets the profit margins desired by the firm.

Brand manager (product manager)

direct responsibility for one brand or product line, and manages all the elements of its marketing mix: product, price, place, and promotion. A way to have greater control over new product development and product promotion.

Bundling

grouping two or more products together and pricing them as a unit. When combining goods or services into one package, marketers must not include so much that the price gets too high. It's best to work with customers to develop value enhancers that meet their individual needs.

Brand awareness

how quickly or easily a given brand name comes to mind when a product category is mentioned.

Psychological pricing

pricing goods and services at price points that make the product appear less expensive than it is

Shopping goods and services

products the consumer buys only after comparing value, quality, price, and style from a variety of sellers (Target)

Convenience goods and services

products the consumer wants to purchase frequently and with a minimum of effort, like candy, gum, milk, snacks, gas, and banking services (Wawa, 7-Eleven)

Industrial goods

products used in the production of other products. Sometimes called business goods (B2B goods).

Commercialization

promoting a product to distributors and retailers to get wide distribution, and developing a strong advertising and sales campaigns to generate and maintain interest in the product among distributors and consumers.

Everyday low pricing (EDLP)

setting prices lower than competitors and then not having any special sales

Skimming price strategy

strategy in which a new product is priced high to make optimum profit while there's little competition

Penetration strategy

strategy in which a product is priced low to attract many customers and discouraged competition

Concept testing

taking a product idea to consumers to test their reactions

Manufacturers' brands

the brand names of manufacturers that distribute products nationally.

Product mix

the combination of product lines offered by a manufacturer Proctor & Gamble (P&G) has many brands in its laundry detergent product line: Tide, Era, Downy, and Bold

Product Differentiation

the creation of real or perceived product differences. Actual product differences are sometimes quite small, so markets use a creative mix of branding, pricing, advertising, and packaging (value enhancers) to create a unique, attractive image

Brand loyalty

the degree to which customers are satisfied, like the brand, and are committed to further purchases.

Brand association

the linking of a brand to other favorable images, like famous product users, a popular celebrity or a particular geographic area.

Break-even analysis

the process used to determine profitability at various levels of sales.

Brand insistence

the product becomes a specialty good

Tangible vs Intangible

the product itself and its package vs the producer's reputation and the image created by advertising

Price leadership

the strategy by which one or more dominant firms set the pricing practices that all competitors in an industry follow

Brand equity

the value of the brand name and associated symbols. Perceived quality is an important part of _____ equity.

High-low pricing strategy

Setting prices that are higher than EDLP stores, but having many special sales where the prices are lower than the competitors' prices

Packages must perform the following functions:

1. Attract the buyer's attention. 2. Protect the goods inside, stand up under handling and storage, be tamperproof, and deter theft. 3. Be easy to open and use. 4. Describe and give information about the contents. 5. Explain the benefits of the good inside. 6. Provide information on warranties, warnings, and other consumer matters. 7. Give some indication of price, value, and uses.

Competition-based pricing

A pricing strategy based on what all the other competitors are doing. The price can be set at, above, or below competitors' prices.