MKT Exam 3
favorable branding conditions
- Branding helps customers make buying decisions but is not always easy to do, can be costly 1. The product is easy to label and identify by brand or trademark 2. The product quality is easy to maintain and the best value for the price 3. Dependable and widespread availability is possible. When customers start using a brand, they want to be able to continue using it 4. Demand is strong enough that the market price can be high enough to make the branding effort profitable 5. There are economies of scale. If branding is really successful, costs should drop and profits should increase 6. Favorable shelf locations or display space in stores help. This is something retailers can control when they brand their own products
brand insistence
- Customers insist on a firm's branded product and are willing to search for it - Loyalty is a benefit and customers spread positive word-of-mouth
brand equity
- The value of a brand's overall strength in the market - Is likely to be higher if many satisfied customers insist on buying the brand and if retailers are eager to stock it, customers are more likely to buy/pay higher prices guaranteeing ongoing profits
Place
- making goods and services available in the right quantities and locations, when customers want them - When different target markets have different needs, a number of place variations may be required - New place arrangements can dramatically change the competition of the product market
Divided into 4 major stages
- market introduction, market growth, market maturity, sales decline
Lanham Act of 1946
- spells out what kinds of marks (including brand names) can be protected and the exact method of protecting them - applies to goods shipped in interstate or foreign commerce - Registering is a first step towards protecting a trademark to be used in international markets
brand familiarity
-How well customers recognize and accept a company's brand -The degree of brand familiarity affects the planning for the rest of the marketing mix, especially where the product should be offered and what promotion is needed -Five levels: 1) Rejection 2) Nonrecognition 3) Recognition 4) Preference 5) Insistence
brand rejection
-Potential customers won't buy a brand unless its image is changed or if they have no other choice -May suggest a change in the product of perhaps a shift to target customers who have a better image brand
capital item
A long-lasting product that can be used and depreciated for many years. Often very expensive, cost is spread over a number of years
individual product
A particular product within a product line
expense item
A product whose total cost is treated as a business expense in the year its purchased
licensed brand
A special kind of family brand, is a well-known brand that sellers pay a fee to use
dealer brands
Also called private brands, brands created by intermediaries
c) Prototype
An early sample or model built to test a concept
Channel of distribution
Any series of firms or individuals who participate in the flow of products from producer to final user or consumer
Business product classes
Based on how buyers think about products and how the products will be used
brand recognition
Customers remember the brand
derived demand
Demand for business products derives from the demand for final consumer products
brand nonrecognition
Final customers don't recognize a brand at all even though intermediaries may use the brand name for identification and inventory control
Formal new-product development process
Five steps: similar process for both consumer and business markets and for both goods and services
consumer product classes
Four classes based on the way people think about and shop for products
service mark
Is the same as a trademark except that it refers to a service offering
a) homogeneous shopping product
Items customers see as the same and want at a lower price. A low-cost producer might try to promote that its products are just as good as higher-priced alternatives
trademark
Legal term, includes only those words, symbols, or marks that are legally registered for use by a single company
1) Convenience
Products a consumer needs but isn't willing to spend much time or effort shopping for. These products are bought aften, require little service or selling, don't cost much, and may even be bought by habit. A convenience product may be a staple, impulse product, or emergent product
a) New unsought products
Products offering really new ideas that potential customers don't know about yet. Informative promotion can help convince customers to accept the product, ending its unsought status.
2) shopping
Products that a customer feels are worth the time and effort to compare with competing products. They can be divided into two types, homogeneous/heterogeneous, depending on what customers are comparing. Can be either homogeneous or heterogeneous depending on how a particular target market thinks about the shops for the product
a) staples
Products that are bought often, routinely, and without much thought
b) impulse products
Products that are bought quickly, as unplanned purchases, because of a strongly felt need. True impulse products are items that the customer hadn't planned to buy, decides to buy on sight, may have bought the same way many times before, and wants it right now. If the buyer doesn't see this product at the right time, the sale may be lost.
c) Emergency products
Products that are purchased immediately when the need is great. The customer doesn't have time to shop around in certain circumstances occur
4) Unsought
Products that potential customers don't yet want to know they can buy, so they don't search for them all. Consumers probably won't buy these products if they see them, unless promotion can show their value.
b) Regularly unsought products
Products that stay unsought but not unbought forever (gravestones, life insurance). There may be a need, but potential customers aren't motivated to satisfy it. Personal selling is very important here
Planned obsolescence
Releasing new products that the company plans to soon replace with improved new versions
individual brands
Separate brand names for each product, when it's important for the products to each have a separate identity as when products vary in quality or type
brand preference
Target customers usually choose the brand over other brands, perhaps because of habit or favorable past experience
family brand
The same brand name for several products, or individual brands for each product
product assortment
The set of all product lines and individual products that a firm sells
e) Market testing
To get customer reactions of your real market conditions or two test variations in the marketing mix not just the product
brand name
a word, letter, or group of words or letters
3) specialty
a) Consumer products that the customer really wants and makes a special effort to find. Shopping for this product does not mean comparing, the customer's willingness to search, not the extent of searching, that makes it a specialty product b) Any branded product that consumers insist on by name c) Marketing managers want customers to see their products as speciality and ask for them repetitively. This means satisfying the customer every time
2) Screening
a) Evaluating the new ideas with SWOT analysis and the product-market screening criteria (combined output of a resources analysis, a long-run trends analysis and a thorough understanding of the company's objectives b) A good new idea leads to a product and marketing mix that will give the firm a competitive advantage c) The life-cycle stage of the firm's new product enters the market has direct bearing on its prospects for growth d) Should consider how the strategy for a new product will hold up over the whole product life cycle
5) Supplies
a) Expense items that do not become part of a finished product. b) Three types: maintenance, repair, and operating supplies (MRO supplies) c) Maintenance and small operating supplies are like convenience products. The item will be ordered because it is needed but buyers won't spend much time on it. Intermediaries usually handle the many supply items. d) Important operating supplies receive special treatment. There are several sources for such commodity products and large volumes may be purchased at global exchanges on the Internet.
1) Idea generation
a) Firm's need a formal procedure to generate a continuous flow of ideas or constant investment in research and development for new technology with new-product applications b) Ideas can come from within a company or other sources such as trade associates, advertising agencies, or government agencies c) By analyzing new/different views of the company's markets and studying present consumer behavior, a marketing manager can spot opportunities that have not yet occurred to competitors or even to potential customers
4) Development (of product and marketing mix)
a) Further investment of time and money that involves more research and development to design and develop the physical part of the product b) For a new service offering the firm works out the details of what training, equipment, staff, etc will be needed to deliver on the idea. Previous efforts guide this technical work
1) Installations (buildings, land rights, major equipment)
a) Important capital items. One-of-a-kind installations require special negotiations for each sale involving top management and can last months to years. Standardised major equipment is treated more routinely b) Boom-or-bust business. During growth periods, firms may by installations to increase capacity but during downswing, sales fall sharply c) Suppliers sometimes include special services with an installation at no extra cost
2) Market growth
a) Industry sales grow fast but industry profits rise and then start falling b) The innovator begins to make big profits as more customers buy but competitors see the opportunity and enter the market. New entrants result in much product variety so monopolistic competition, with down-sloping demand curves, is typical of the market growth stage c) Biggest time of profits for the industry and a time of rapid sales and earnings growth for companies with effective strategies but it is toward the end of this stage when industry profits begin to decline as competition and consumer price sensitivity increase
3) Idea evaluation
a) Involves getting more reactions from customers even though at this stage an actual product has yet to be developed b) Marketing managers describe and relate the assumptions (value customers place on convenience) they are making about each new idea. The product idea represents a hypothesis about how to be customer needs c) Initial evaluation may come from informal focus groups whose reactions can show the potential's users emotions about the new idea.
4) Sales decline
a) New products replace the old b) Price competition from dying products become more vigorous but firms with successfully differentiated their products c) As new products go through the introduction stage, old ones keep some sales by appealing to their most loyal customers or those who are slow to try new ideas. These conservative buyers might switch later smoothing the sales decline
3) Market maturity
a) Occurs when industry sales level off and competition gets tougher, aggressive competitors enter and race for profits. Industry profits go down throughout the market maturity stage because promotion costs rise and come competitors cut prices to attract business. Long-run downward pressure on prices. Late entries skip the early-life-cycle stages including the profitable market growth stage. b) Persuasive promotion is even more important during this stage
4) Components
a) Processed expense items that become part of a finished product. Parts are finished items that are ready for assembly into the final product. Quality is important with components because they become part of the firm's own product. Some components are custom-made so teamwork between the buyer and seller may be needed to arrive at the right specifications and a buyer may develop a close partnership with a dependable supplier. Standardized component materials are more likely to be purchased online using a competitive bidding system b) Because these parts go into finished products, a replacement market often develops
5) Commercialization
a) Putting a product on the market. is expensive and success usually requires the cooperation of the whole company. Manufacturing or service facilities have to be set up. Goods have to be produced to fill the channels of distribution or people must be hired and trained to provide services. Further introductory promotion is costly especially if the company is entering a very competitive market b) Depending on the size of the job some firms introduce their product city by city or region by region in a gradual roll out until they have complete market coverage. c) Rollouts permit more market testing but the main purpose is to do a good job implementing the marketing plan. Marketing managers need to pay close attention to control to ensure that the implementation effort is working and that the strategy is on target
1) Market introduction
a) Sales are low as a new idea is first introduced to market. Even if the product is superior value, customers don't know about it yet. b) Informative promotion is needed to tell potential customers about the advantages and uses of the new-product concept c) Most companies experience losses here because they spend so much money for Product, Place, and Promotion development
2) Accessories
a) Short-lived capital items. More standardized than installations and they're usually needed by more customers b) Because they cost less and last a shorter amount of time than installations, multiple buying influences are less important. Operating people and purchasing agents, rather than top managers, may make the purchase decision. Some customers may wish to lease or rent to expense costs
6) Professional services
a) Specialized services that support a firm's operations, usually expense items. Management consulting services can improve the company's efficiency, information technology services can maintain a company's networks and websites, advertising agencies can help promote the firm's products, food services can improve morale. b) Managers compare the cost of buying professional services outside the firm (outsourcing) to the cost of having company people do them. Work done by an employee is now often purchased from an independent specialist
6) Steps should not be skipped
a) Speed is important but the process moves in steps by gathering different types of information. Skipping steps can cause a firm to miss an important aspect that could make a whole strategy less profitable or actually cause it to fail
3) Raw materials
a) Unprocessed expense items that are moved to the next production process with little handling. Unlike installations and accessories, raw materials become part of a physical good and are expense items b) Farm products i) Grown by farmers c) Natural products i) Products that occur in nature (timber) d) Need for grading is one of the important differences between raw materials and other business products. Nature produces what it will and someone must sort and grade raw materials to satisfy various market segments e) Most buyers want ample supplies in the right grades for specific uses. To ensure stead quantities, raw materials customers often sign long-term contracts at guaranteed prices
d) Concept testing
i) A formal method of getting reactions from customers about how well a new product idea fits their needs. Uses marketing research ranging from focus groups to surveys of potential customers. Online tests can lower costs and speed feedback. Follow-up survey questions gauge consumer reactions
d) Co-creation process
i) Customers react to prototypes and suggest improvements ii) Uses rapid prototyping where customer input is received and quickly designed into original vision of the product and then fed back to customers for further input. The repetitive process encourages innovations to fail early and fail often so the best ideas get to market more quickly:
b) heterogeneous shopping product
i) Items customers see as different and want to inspect for quality and suitability. Target customers seek info from a knowledgeable websites to read professional and user reviews ii) Branding is less important for these products; is consumers compare price and quantity, they are less likely to rely on brand names or labels
f) Product liability
i) Legal obligation of sellers to pay damages to individuals who are injured by defective or unsafe products no matter how the items were used or how well they're designed (return on investment)
e) Consumer Product Safety Act of 1972
i) Set up the Consumer Product Safety Commission to encourage safety in product design and better quality control ii) Product safety complicates strategy planning because not all customers will pay more for safety and a firm can no longer be held liable for unsafe products
g) ROI
i) Way for ideas to evaluate an investment ii) Once ideas pass the screening criteria, a firm must set priorities to determine which ones go on to the next step in the process by comparing the ROI for each idea (if the firm is ROI-oriented) iii) Involves making rough estimates of profits and development cost iv) Can be increased by increasing the profit margin, increasing the sales revenue or decreasing the investment in the new product
consumer products
products meant for the final consumer
business products
products meant for use in producing other products
brand awareness
to assess brand recognition
Continuous improvement
○ A commitment to constantly make things better one step at a time for Product Managers ○ Firms that adopt TQM use continuous improvement to improve implementation ○ Quality efforts, to support continuous improvement efforts, aided by data and artificial intelligence
quality
○ A product's ability to satisfy a customer's needs or requirements ○ Focuses on customer and how they think a product will fit some purpose
product line
○ A set of individual products that are closely related ○ Is usually differentiated by brand, level of service offered, price, or other
good/service product
○ A tangible (good) or intangible (service) offering involving a deed, performance, or effort ○ Many products are a blend of both good and service (restaurant service)
manufacturer brands
○ Brands created by producers, sometimes called national brands because the brand is promoted all across the country or in large regions ○ Many are distributed globally
Product life cycle
○ Describes the stages a new-product idea goes through from beginning to end. ○ Concerned with new types of products in the market, not just what happened to an individual brand ○ A particular firm's marketing mix must change during the cycle creating total sales of the product to vary in each of the four stages ○ Industry profits decline while industry sales are still rising ○ Don't relate to individual products; describes the industry sale and profits for a product idea within a particular product-market ○ Life cycles vary in length Getting shorter Some products grow more quickly ● The greater the comparative advantage the more rapidly the product's sales will grow ● Sales growth is faster when product is easy to use, if its advantages are easy to communicate, if the product can be tried on a limited basis, if it is compatible with the values and experiences of target customers they are likely to buy it quicker Pioneer (first to market with a new product or idea) or follower Second-mover (one that quickly follows pioneer) Fashion ● The currently accepted or popular style ● These products have short life cycles, what is popular can change quickly so fast product changes are needed Fad ● An idea that is fashionable only to certain groups who are enthusiastic about it ● Even more short-lived than regular fashion but do well during a short-lived cycle
New product planning
○ Firms must develop new products or modify current products to meet changing needs and competitor's actions ○ Not optional; essential for survival in today's dynamic markets
Patent
○ Grants the inventor the ability to exclude others from making, using, offering for sale, or selling the invention ○ Provides incentive for inventors to share their new technology in exchange for a short-term monopoly on its use
Artificial intelligence
○ Having machine operate like humans with respect to learning and decision making ○ Intelligent agents ■ Devices that observe an environment
Organized new-product development process
○ Identifying and developing new-product ideas and effective strategies to go with them is often the key to a firm's success/survival but costs of new-product development and the risks of failure are high ○ A new product may fail because the company does not offer a unique benefit or they underestimate the competition or have design/cost problems ○ Products fail if they are rushed without developing a complete marketing plan or takes too slow that customer needs change when the product is actually introduced
packaging
○ Involves promoting, protecting, and enhancing the product ○ Can be important to both sellers and customers, can make a product more convenient to use or store, can prevent spoiling or damage ○ Good packaging makes products easier to identify and promotes the brand at the point of purchase and even in use ○ Can lower distribution costs
Delivery quality at each touchpoint
○ Marketing managers must deliver quality throughout the entire customer experience if they do not even one problem can affect how the customer perceives the firm's quality. ○ the purchase and consumption process for many products involves multiple touchpoints ■ points where there is contact between the customer of the company
Continuous innovations
○ New products that don't require customers to learn new behaviors ○ Usually entail minor variations on existing products ○ Promotion for this innovation emphasizes awareness often with new packaging or advertising that touts an added feature
Discontinuous innovations
○ New products that require customers adopting the innovation significantly change their behaviors ○ Results in an completely new product-market and new-product life cycle ○ Promotion requires personal selling and product demonstrations to educate customers about new behaviors
Dynamically continuous innovations
○ New products that require minor changes in customer behaviors ○ Requires new behaviors by removing the need to key in information ○ Promotion for this innovation needs to clearly communicate the benefits of the innovation
New product
○ One that is new in any way for the company concerned ○ Can be loosely grouped into three categories based on the extent to which customers have to change their behavior to adopt the new product
Augmented reality (AR)
○ Overlays a computer-generated image, sound, text, or video on a user's view of the physical world ○ Can occur when users view the "real world" through technology while an AR app overlays that picture with useful information
Place decisions are guided by ideal place objectives
○ Product classes suggest place objectives - Widespread distribution is needed to make products available when the need strikes - If customers want to compare shopping products distribution channels can make that process easier - Heterogeneous shopping good should have outlets that provide information knowledgeable sales people who can provide insights about different brands and models and online stores with videos or information how old Julia shopping good favor low-cost retailers as customers focus mostly on low prices customers will search for specialty good so the higher cost of widespread distribution may not be needed on site product should be sold out locations where other related products are available ○ Place system is not automatic ■ Marketing managers need to develop several strategies each with its own place ○ Place arrangements decisions have long-run effects ■ Marketing managers must consider place objectives in relation to the product life cycle and need to keep the future in mind when they develop place objectives
generic products
○ Products that have no brand at all other than identification of their contents and the manufacturer or intermediary ○ Products that consumers see as commodities may be difficult or expensive to brand ○ Usually offered in plain packages at lower price, common in less-developed nations
Copyright
○ Protects the producer of a creative work giving them exclusive right to reproduce their work ○ These laws are designed to protect inventors and provide an incentive for innovation
Getting a return on quality is important
○ Quality efforts can increase costs but money can be lost from unnecessary costs towards improving quality that isn't important to customer satisfaction or customer retention. This may satisfy customers but the firm won't make profit because of higher costs and no financial return on money spent to improve quality ○ Managers should focus on quality efforts that really provide the customer with superior value; quality that costs no more to provide than customers will ultimately be willing to pay
the Federal Fair Packaging and Labeling Act of 1966
○ Requires that consumer goods be clearly labeled in easy-to-understand terms to give consumers more information ○ Tries to reduce the confusing number of package sized and make labels more useful ○ Nutrition Labeling and Education Act of 1990 ■ Requires food manufacturers to use a uniform format that allows consumers to compare the nutritional value of different products
battle of the brands
○ The competition between dealer brands and manufacturer brands ○ A question of which brands will be more popular and who will be in control ○ Manufacturer and dealer brands often sell in the same retail stores but manufacturers brands are more popular
Federal Trade Commission (FTC)
○ The federal government agency that policies anti-monopoly laws ○ To be new, a product must be entirely new or changed in a functionally significant or substantial respect
product
○ The need-satisfying offering of a firm ○ Concept of potential customer satisfaction or benefits ○ Customers see product in terms of the total satisfaction it provides ■ Requires "total" product offering: combination of physical good, right features, helpful instructions, convenient packaging, trustworthy warranty, excellent service, familiar name
product line length
○ The number of individual products in a product line ○ Extending the length of a product line offers marketing managers new opportunities
Total quality management (TQM)
○ The philosophy that everyone in the organization is concerned about quality, throughout all of the firm's activities, to better serve customer needs ○ The cost of poor quality is lost customers ■ Firms that adopt the TQM methods to reduce manufacturing defects used the same approaches to overcome many problems
branding
○ The use of a name, term, symbol, or design (or combination of these) to identify a product ○ Includes the use of brand names, trademarks, and all other means of product identification
New-product development: total company effort
○ Top-management support is vital - Companies with enthusiastic top management support for new product development are particularly successful at developing new goods and services. - Someone with top level support and authority to get things done needs to be responsible for new product development ○ A culture of Innovation - consists of people open to exchanging ideas, willing to listen to others, and pushing good ideas forward. companies encourage employees to pursue innovation by giving them time - Top management drives the organization's culture. A culture that supports innovation generates more ideas ○ Successful companies put someone in charge ○ Balance market needs and company resources - Marketing-oriented firms seek to satisfy customer needs at a profit with an integrated, whole-company effort - A company's research and design specialists, operations, and marketing personnel must work together to evaluate the feasibility of new ideas guided by a clear understanding of customer needs - Marketing managers must recognize that new product projects need to meet ROI goals
Train people and empower them to serve
○ Two keys to improving service quality are: training and empowerment ○ A service provider usually deals directly with the customer, making it difficult to provide consistent service quality. ○ In addition service quality often depends on a service provider interpreting each customer's needs. As a result a person doing a specific service job may perform one specific task correctly but fail the customer in other ways
warranty
○ What the seller promises about its product ○ Marketing managers decide whether to offer a specific warranty, warranty coverage, and how it will be communicated to target customers
Need for product managers
○ When a firm has several different product categories, management may decide to put someone in charge of each category or each brand, to be sure that attention to these products are not lost ○ Product managers or brand managers Manage specific products often taking over the jobs formerly handled by an advertising manager Gives a clue to Promotion (their major responsibility) because the products have already been developed by the new-product people. However, some brand managers start at the new-product development stage and carry on from there
Length of Product Life Cycle affects strategy planning
○ Where the product is in the life cycle and how fast its moving to the next stage affects the marketing strategy planning ○ Marketing manager must make realistic plans for the later stages
