Unit 4
Product life cycle for Fad products
- move thru the entire cycle in weeks. -Spike in sales followed by a rather abrupt decline ex: leapard-print clothing, silly bandz
what are the three issues relating to target markets that are unique to non-profit
-Apathetic or strongly opposed targets -Pressure to adopt undifferentiated segmentation strategies -Complementary position (w/ competitors instead of compete w/)
What are the stages of the product life cycle(PLC)?
-Intro (profits are negative)-> higher cost, promotion -growth (profits increase) -maturity (profits stabilize and then fall "sales increase at a decreasing rate" - new market segments -Decline stages
The maturity stage of the product life cycle
-Period during while sales increase at a decreasing rate -longest state of the PLC
Pricing decisions of a non-profit
-Pricing objectives: nonprofit organizations seek to either partially or fully defray costs rather than to achieve a profit for distribution to stockholders -Non-financial Prices: have non-monetary costs. -Indirect payment -Separation b/w payers and users -Below-cost pricing
Promotion strategy for services (4)
-Stressing tangible cues -Using personal information sources (famous person, using famous quotes) -Creating a strong organizational image ( -Engaging in post-purchase communication
Rate of Adoption of a product is determined by several product characteristics.. such as?
-Superiority/Advantage -Compatibility (degree to which the new product is consistent with existing values and product knowledge, past experiences, and current needs) -Complexity (lower complexity =slower adoption) -"Trialability" (30 day money back guarantee) -Observability (the degree to which the benefits or other results of using the product can be observed by others and communicated to target customers. )
Commercialization? What does it set in motion?
-The decision to market a product. -Tasks in motion: ordering production materials and equipment, starting production, building inventories, shipping the product to field distribution points, training the sales force, announcing the new product to the trade, and advertising to potential customers.
Introductory stage of the product life cycle? It can be characterized as having?
-The full scale launch of a new product into the marketplace -A high failure rate, little competition, frequent product modification, and limited distribution and high cost.
The portfolio of products/services?
-a collection of products and services together. -companies organized the products in the portfolio (by hierarchy)
communication directly from the marketer to potential adopters
-aids in the diffusion process. -directed toward the early majority, the late majority, or the laggards
word-of-mouth communication...among consumers and communication from marketers to consumers
-aids the diffusion process. -Word-of-mouth communication within and across groups, including social media and viral communication, speeds diffusion.
The "whole product" or "whole service" concept
-based on a core benefit, with outer layers (primary & secondary characteristics) of feature and attributes that COMMUNICATE THE OFFER's BENEFIT. -the three rings Ex: UPS: middle: pick up and deliver 1st layer: online tracking, shipping materials, shipping account 2nd layer: insurance
The PLC concept does not tell managers...but it does
-does not tell managers the length of a product's life cycle or its duration in any stage. -It is simply a useful diagnostic tool to help marketers forecast future events and suggest appropriate strategies.
Objectives of a non-profit:
-focus is often on generating enough funds to cover expenses. "greater good"
Product life cycle for Style products
-formal, business or casual clothing -last awhile
Development
-prototype of the product is made -packaging, branding, labeling, etc.
The growth stage of the product life cycle
-sales grow at an increasing rate, many competitors enter the market, profits rise and reach their peak -Distribution = major key for success during this stage
Product categories have ? what does it include?
-they have the longest life cycles -it includes all brands that satisfy a particular type of need, such as shaving products, soft drinks
How can service quality be evaluated? (5 characteristics)
1) Reliability 2) Responsiveness (can you be fast and good at ur job, be a better convinence to others 3)Assurance (respecting customers) 4)Empathy (care, individualized attention to customers) 5)Tangibles (the physical evidence of the service)
what are the four levels of relationship marketing? 1)Financial 2)social 3)customization 4)structural
1) financial - firm uses pricing incentives 2) social - building social bonds with customers; learning about them better; ex: sending birthday cards 3) customization - encourages customer loyalty through intimate knowledge of individual customers 4) Structural - offering value that is only available at the firm
What are the definitions of the following types of service processes?: 1)People processing 2)Possession Processing 3)Mental Stimulus 4)Information Processing
1)People processing - takes place when the service is directed at a customer. Ex: transportation services 2)Possession Processing - occurs when the service is directed at customers' physical possessions Ex: lawn care 3)Mental Stimulus - processing refers to services directed at people's minds Ex: theater performance, education 4)Information Processing - describes services that use technology or brainpower directed at a customer's assets Ex: Insurance & consulting
Price Strategy: Revenue-oriented pricing? Operations-oriented pricing? Patronage-oriented pricing?
1)Revenue-oriented pricing focuses on maximizing the surplus of income over costs. 2)Operations-oriented pricing seeks to match supply and demand by varying prices. 3)Patronage-oriented pricing tries to maximize the number of customers using the service.: Tend to offer discounts to get more ppl to come
What is the new product development process?
1)new product strategy (links the process to the objectives of the marketing department, business unit, and corporation) 2)idea generation (from anyone) 3)idea screening(rated and testing) 4)business analysis(cost demand, sales, profit) 5)product development(market strategy outlined/prototype made) 6) test marketing 7)commercialization (order materials, training, etc)
Knowing that a large proportion of new-product introductions fail, what are the common reasons
1. don't offer any discernible benefit compared to existing products. 2. poor match between product features and customer desires. Others: overestimation of market size, incorrect targeting or positioning, a price too high or too low, inadequate distribution, poor promotion, or simply an inferior product
What is the consumer adoption process?
1.Awareness stage: consumer hears about a new product 2. Interest stage: consumer seeks out information 3.Evaluation stage: consumer considers likely benefits 4:Regular Usage
Product Decisions for a non-profit
Benefit complexity Benefit strength Involvement
All of the following are product characteristics influencing the rate of adoption EXCEPT: distribution. complexity. compatibility. observability. relative advantage.
Distribution
T/F Services tend to exhibit more search qualities than do tangible goods.
F - services exhibit more experience qualities
Nestlé's quest is to make some of its existing products more nutritious and provide a health benefit. This is an example of which type of product modification?
Functional; Functional modifications involve changes in a product's versatility, effectiveness, convenience, or safety. Nestlé is attempting to make its existing products more versatile and effective.
Which of the following is NOT one of the four unique elements to services? Heterogeneity Perishability Inseparability Incoherency Intangibility
Incoherency
What are the 5 categories of adopters participate in the diffusion process(when they adopt to the product):
Innovators: (first 2.5% the first to adopt the project): smart, eager to try new ideas, better educated - worldly outlook Early Adopters: (Next 13.5% to adopt) rely on social norms and values - careful Early Majority (next 34% to adopt) - weighs more on the pros and cons Late Majority (next 34% to adopt) - skeptics; adopt after a major already has Laggards (final 16$ to adopt) - don't rely on social norms, by the time they adopt, product is outdated; typically ignored by marketers
Imagine that you, along with a couple of friends or former colleagues, are setting up a technology consulting firm where you will help people get the most of their personal technology (e.g., their smart TVs, computers, tablets, and smartphones). You need to identify the factors of the service (intangibility, inseparability, heterogeneity/inconsistency, and perishability/inventory) that can make the decision process more difficult to move through for customers and how your company might address each one of them.
Intangibility We can address intangibility of our technology consulting firm by displaying a clear logo and tagline to represent our brand, showing a customer using our service on our website, or even pairing potential customers with a dedicated service representative to make the experience more personable. Inseparability Due to the high degree of contact between the representatives and customers, consulting goes hand-in-hand with inseparability. The customers' experience is directly tied to the way the rep helps them solve their problem, whether with a computer or smartphone. Reps have to be extremely personable, active listeners, and experts in a range of technologies. We can emphasize the expertise of our reps through our tagline or logo, as well as through customer testimonials. Heterogeneity Training of our representatives is crucial to ensure consistent service. We should focus on having a structured process that representatives can fall back on when handling difficult customer requests, but not something too rigid that prevents autonomy. Representatives should be able to delight the customer and exceed their expectations. For instance, helping a repeat customer by offering them a free consultation. Perishability If a customer cancels a consultation at the last minute, we can put policies in place to charge them a cancellation fee. These fees help with perishability since the service is scheduled over a specific time period. We can also offer discounted consulting sessions during non-peak seasons and remote sessions (for customers living out of state) to make the most of the time and expertise of the our representatives.
product strategy for services
Product strategies for service offerings include decisions on the type of process involved, core and supplementary services, standardization or customization of the service product, and the service mix.
A regional utility company needs to change consumers' perceptions of its current service as being harmful to the environment. Which of the following strategies would best allow the company to accomplish this goal?
Repositioning; this is a firm's attempt to chance customer perceptions of a product.
What are the characteristics that differentiate services from goods?
Services: -intangible (no ownership) -inseparable (services are often sold, produced, and consumed at the same time. (customers and producers must BOTH be present ) -heterogenous/inconsistency (differ within each group in their technical and interpersonal skills.) -perishable (inability of services to be stored, warehoused, or inventoried; think of airline seats- an empty seat on an airplane after it takes off)
T/F: Profits typically reach their peak during the growth stage of the product life cycle.
T
Which of the following services would be most likely to exhibit strong credence qualities? 1.Tax return preparation 2.The repair of a leaky drain 3.A math tutorial service 4.Consulting services for insurance coverage
Tax return preparation, A credence quality is a characteristic that cannot easily be assessed even after purchase and experience.
A manufacturer of office furnishings is finding it difficult to compete with cheaper imported merchandise. Which of the following is a potential source of new product ideas that would allow it to compete more effectively?
The company's employees Customers who have requested its catalogs R&D Its foreign competitors, The answer is ALL THE ABOVE!
what's a critical tangible part of the total service offering?
The facilities that customers visit, or from which services are delivered, are a critical tangible part of the total service offering
Business analysis stage
This is the stage where the new-product ideas that survive the initial screening; deals with figures for demand, cost, sales, and profitability. Rev & cost
experience quality
a characteristic that can be assessed only after use, such as the quality of a meal in a restaurant.
search quality?
a characteristic that can be easily assessed before purchase—for instance, the color of an appliance or automobile; Ex: color of car
credence quality
a characteristic that consumers may have difficulty assessing even after purchase because they do not have the necessary knowledge or experience. Medical and consulting services are examples of services that exhibit credence qualities.
Max Customization
a firm implementing both customized and standard services
Adopter categories refer to...?
all of those who will eventually adopt a product, not the entire population
nonprofit organization
an organization that exists to achieve some goal other than the usual business goals of profit, market share, or return on investment - "provide for the greater good of society"
Secondary characteristics of a product that can be used to communicate the value/benefit of that product?
associated services, guarantees and warranties, installation, shipping and credit
Tortilla chips are most likely _____ products, since they are purchased with little shopping effort.
convenience
Place (Distribution) strategy for services
convenience (most important) -location
Core and Supplementary Services?
core service- most basic benefit the customer is buying Supplementary services - support or enhance the core service
Idea screening
eliminates ideas that are inconsistent with the organization's new-product strategy or are obviously inappropriate for some pother reason -The concept test -> which evaluates a new-product idea, usually before any prototype has been created ex:testing w/ consumers, illustrations and edible mock-up
Repositioned products
existing products targeted at new markets or market segments, or ones repositioned to change market's perception of the product or company
the positioning statement informs ...?
how the product/service is created, priced, distributed, and communicated to customers.
Additions to existing product lines
includes new products that supplement a firm's established line; ex: taco bell adding the "quesalupa" - a combo. of a quesadilla and chalupa
Problem with test marketing?
it exposes the new product to competition before its introduction
what is the gap model? what are the gaps?
it identifies five gaps that can cause problems in service delivery and influence customer evaluations of service quality: -gap1: lack of understanding or a misinterpretation of the customers' needs, wants, or desires. -gap2: gap between what management thinks customers want and the quality specifications that management develops to provide the service -gap3: gap between the service quality specifications and the service that is actually provided -gap4:the gap between what the company provides and what the customer is told it provides; misleading/deceptive -gap5: the gap between the service that customers receive and the service they want. *the larger the gap, the lower the service quality
In the adopter categories, the final 16 percent to adopt are similar to innovators in that they do not rely on the norms of the group but are independent because they are bound to tradition. They tend to have the lowest socioeconomic status, are suspicious of new products, and are alienated from a rapidly advancing society. They are called:
laggards
Test marketing
limited introduction of a product and a marketing program to determine the reactions of potential customer in a market situation. -Could last over a year and can exceed $1 million in cost
Nonprofit organization marketing is the effort by nonprofit organizations to bring
mutually satisfying exchanges with target markets
Which of the following is not one of the stages of the product lifecycle? Decline stage New product strategy stage Growth stage Maturity stage Introductory stage
new product strategy stage
The hierarchy
organization of products and services in a portfolio We take products items and group them into product lines; As we add more products items to the product line we deepen the line (depth) As we add more product lines to our product mix, we widen the product mix.
primary characteristics of a product that can be used to communicate the value/benefit of that product?
packaging, styling and form, quality level, branding.
There are a number of detergents marketed under the Tide brand, including detergents with and without fabric softener, with and without bleach, with various pleasing smells, and fragrance-free formulations. These detergents are an example of Tide's:
product line.
new to the world products
products that create an entirely new market.
Lower-priced products
products that provide performance similar to competing brands at a lower price
relative product failure vs. absolute product failure
relative - results when the company returns a profit but fails to achieve sales, profit or market goals. absolute - a company cannot recoup its development, marketing, and production cost- company loses money
The PLC represents
represents the stages through which products and services diffuse through the marketplace
The width of a company's product mix is demonstrated by?
the different kinds of product lines they offer. ex: soups, sauces, fronzen entrees
Many of the reasons behind these product extension failures deal with
the marketing mix (product, place, promotion, and price)
The depth of a company's product mix is shown by?
the number of various products within each product line Ex: under "soups" they is cream of chicken, cream of mushroom, tomato, etc.
Diffusion
the process by which the adoption of an innovation spreads.
An alternative to test marketing: 1)simulated (laboratory) market testing 2)scanner-based research
these are cheaper; test marketing is important bc it cost alot to make a product
new-product lines
these products, which the firm has not previously offered, allow it to enter an established market. Ex: a place that was opening for awhile started selling handbags for the first time ever.
innovators
those are the first to type new products; Innovation - a production perceived as new by a potential adopter
The goal of internal marketing?
treat and reward employees well so that they provide excellent customer service
simultaneous product development
when all the involved areas work together than than sequentially
