Marketing Test 3 (chapter 12-15)

Introduction phase of product life cycle

sales low profits low and often negative vey few competitors EX: Alexa, tesla, google home

Step 6: Evaluation of Results

satisfaction of technical requirements, customer acceptance, satisfaction of the firm's financial requirements

customer objectives

satisfy wants/needs, build relationships

Advanced Supply Chain Technology

*Automatic Identification Systems -Bar coding -Radio frequency technology *Communications technology *Supply chain software systems

Go Pro Example

-10 year overnight success -invented as wrist camera for surfers -releasing peripherals/cameras quickly -give customers the ability to innovate -investment perspective not enough diversification/ focused in too small segment challenges in competing with phones.

Step 2: 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

factors influencing price elasticity of demand

Availability of substitutes Price relative to purchasing power Product durability A product's other uses Rate of inflation

innovative/ value (why do firms creative new products)

-changing customers needs -market saturation -managing risk through diversity -fashion cycles (new car model each year) -improving business relationships

Brainstorming

-groups work together to generate ideas -no idea can be immediately dismissed

internal R+D (research and development)

-high product development costs -often the source of technological products -often the source of the breakthrough products

Logistical Components

-sourcing and procurement -production scheduling -order processing -inventory control -warehouse and materials handling -transportation

Role of Prices

1). Provide incentives for suppliers to use capital more (or less) intensively 2). Provide incentives for demanders to substitute

5 C's of Pricing

1. Competition 2. Costs 3. Company Objectives 4. Customers 5. Channel Members

5th C: Channel Members

1. Manufacturers, wholesalers, and retailers 2. Can have different perspectives when it comes to pricing strategies 3. Manufacturers must protect against gray market transactions 4. A gray market employs irregular but not necessarily illegal methods; generally, it legally circumvents authorized channels of distribution to sell goods at prices lower than those intended by the manufacturer (Buy for cheap, Sell for high)

service as a process

1. People processing 2. Possession processing 3. Mental stimulus processing 4. Information processing

When are services assessed?

1. Search quality 2. Experience quality 3. Credence quality

How firms develop new products

1. idea generation 2. concept testing 3. product development 4. market testing 5. product launch 6. evaluation of results

Maturity phase of the product life cycle

1. sales increase at a decreasing rate 2. market becomes saturated 3. annual models appear 4. lengthened product lines 5. marginal competitors drop out here 6. niche markets EX- laptops, facebook and fridges

vendor

A business from which merchandise is purchased or supplies or other assets are bought

prototype

A full-scale working model used to test a design concept by making actual observations and necessary adjustments.

simultaneous product development

A team-oriented approach to new-product development where all relevant functional areas and outside suppliers participate in the development process.

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

CPFR

Collaborative Planning, Forecasting, and Replenishment

supply chain streamline distribution

Reduce number of transactions Increase value for consumers More efficient and effective

EDI

Electronic Data Interchange

FedEx CEO

Fred Smith

Price as a signal

If it is set too low it may signal low quality, Set too high signals low value.

decline stage

Long-run drop in sales Large inventories of unsold items Elimination of all nonessential marketing expenses "Organized abandonment" EX crisco, comet cleaner, Diesel and CDs

Benefits of Supply Chain Management

Lower inventory, transportation, warehousing, and packaging costs Greater supply chain flexibility Improved customer service Higher revenues Increased performance and profitability

Heterogeneous (Variable)

Means that the quality of services depends on who provides them as well as where, when, and how they are provided

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

pull supply chain

Orders for merchandise are generated at the store level on the basis of POS sales data

Factors that affect product diffusion

Relative advantage (perceived as better than substitutes) compatibility (doesn't apply to everything) observability (can you observe the products features) trial ability(more complex-> slower to diffuse) Ex- CD is not as good as an MP3 player

what is price?

The Sacrifice Effect of Price --Price is that which is sacrificed to get a good or service. The Information Effect of Price ---People infer quality information based on price. Value Is Based upon Perceived Satisfaction ---"Reasonable price" means "perceived reasonable value."

zone of tolerance

The area between customers' expectations regarding their desired service and the minimum level of acceptable service—that is, the difference between what the customer really wants and what he or she will accept before going elsewhere.

3rd C: Costs

Variable Costs Vary with production volume Fixed Costs Unaffected by production volume Total Cost Sum of variable and fixed costs

service recovery -> increase

resolve the problems quickly provide a fair solution listen to customers

perishable

a characteristic of a service: it cannot be stored for use in the future

Idea Screening

a filter in the product development process, which eliminates ideas that are inconsistent with the organization's new product strategy or are inappropriate for some other reason

price maker

a firm that does not have to consider competitors when setting the prices of its products

Supply Chain Management

a management system that coordinates and integrates all of the activities performed by supply chain members into a seamless process, from the source to the point of consumption, resulting in enhanced customer and economic value

the knowledge gap

a type of service gap; reflects the difference between customers' expectations and the firm's perception of those expectations

standard markup pricing

adding a fixed percentage to the cost of all items in a specific product class

Electronic data exchange

advanced shipping notice intranet-company internet extranet- external small peice given

price fixing

an agreement among firms to charge one price for the same good (illegal)

service economy

an economy or the sector of an economy that is based on trade in services.

understanding customers expectations

based on knowledge and experience expectations vary according to typeof service vary depending on situation

Step 5: Product Launch

call into play marketing mix

prestige pricing

charging a high price to help promote a high-quality image

the communications gap

communicating the service promise

Premarket Tests (market testing)

customer exposed customer surveyed firms make decisions

the delivery service gap

delivering service gap

logistics management

from the point of origin to the point of production

SCM affects marketing

fulfilling delivery promises meeting customer expectations reliant on an effient supply chain.

beta testing

having potential consumers examine a product prototype in a real-use setting to determine its functionality, performance, potential problems, and other issues specific to its use

Step 1: Idea Generation

ideas from customers and users marketing research competitors other markets company people, intermediaries, etc.

Growth Phase of PLC

increase rate of sales a lot of competitors initial healthy profits aggressive advertising in differences wider distribution EX: electronic cars 3DTV and instant pot

the product life cycle

inductory stage growth stage maturity stage decline stage

Empowering employees means giving employees:

information, knowledge, power, rewards

Factors differentiating services from goods

inseparable, heterogeneous, perishable, intangible

R+D Consortia

lower costs and risks and firms join together form research consortiums benefits spreads to all firms EX- pharmaceutical industry research

closing the knowledge gap

matching customer expectations with actual service through research

push supply chain

merchandise is allocated to stores on the basis of forecasted demand

competitors products

reverse engineering "me too" or copycat products

4th C: Competition

monopoly, oligopoly, monopolistic competition, pure competition

bait and switch pricing

occurs when a firm advertises a low price on a desirable product but, in an attempt to trade customers up to more expensive items, it does not make a good faith effort to carry sufficient quantities of that product (illegal)

New Product Introductions

pioneers radically change competition and consumer preferences

inspeprable production and consumption

production and consumption are simultaneous little opportunity to test a service before use lower risk by offering garuntees or warranties

Company Objectives

profit oriented, sales oriented, competitor oriented, customer oriented

Step 3: Product Development

prototype, alpha testing, beta testing

service continuum

range of product-dominant to service-dominant offerings

Intagibility

requires using cues to aid customers atmosphere is important to convey value images are used to convey benefit of value

predatory pricing

selling a product below cost to drive competitors out of the market

Licensing

selling the right to use some process, trademark, patent, or other right for a fee or royalty

Economics of Services

services that bear a positive economic cost

target pricing

set prices based on what you think customers are willing to pay based on perceived value

penetration pricing

setting a low initial price on a new product to appeal immediately to the mass market

target return-on-sales pricing

setting a price to achieve a profit that is a specified percentage of the sales volume

odd-even pricing

setting prices a few dollars or cents under an even number

The Standards Gap: Setting Service Standards

setting standards for quality, developing systems to ensure high quality service

skimming price strategy

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

marketing channel

takes over at production to the point of consumption

concept testing

testing new product concepts with a group of target consumers to find out if the concepts have strong consumer appeal

price

that which is given up in an exchange to acquire a good or service

price discrimination

the business practice of selling the same good at different prices to different customers

income effect

the change in the quantity demanded of a good that results from the effect of a change in the good's price on consumers' purchasing power

yield management pricing

the charging of different prices to maximize revenue for a set amount of capacity at any given time

What is a supply chain?

the connected chain of all of the business entities, both internal and external to the company, that perform or support the logistics function

alpha testing

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

Step 4: Market Testing

the limited introduction of the product and a marketing program to determine the reactions of potential customers in a market situations.

bundle pricing

the marketing of two or more products in a single package price

Target Profit

the operating income that results when sales revenue minus variable and fixed costs equals management's profit goal

cross-price elasticity of demand

the percentage change in the quantity demanded of one good divided by the percentage change in the price of another good

loss leader pricing

the pricing policy of setting prices very low or even below cost to attract customers into a store

test marketing

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

diffusion of information

the way in which information spreads through a public

Logistics

those activities that focus on getting the right amount of the right products to the right place at the right time at the lowest possible cost

customary pricing

tradition, a standardized channel of distribution, or other competitive factors dictate the price

substitution effect

when consumers react to an increase in a good's price by consuming less of that good and more of other goods