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138 Cards in this Set
- Front
- Back
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PRODUCT
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A good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers' needs and is received in exchange for money or something else of value
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SERVICES
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Intangible activities or benefits that an organization provides to satisfy consumers' needs in exchange for money or something else of value
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CONSUMER PRODUCTS
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Products purchased by the ultimate consumer.
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BUSINESS PRODUCTS
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Products that organizations buy that assist in providing other products for resale.
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CONVENIENCE PRODUCTS
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Items that the consumer purchases frequently, conveniently, and with a minimum of shopping effort.
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shopping products
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items for which the consumer compares several alternatives on criteria such as price, quality, or style.
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specialty products
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items that the consumer makes a special effort to search out and buy
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UNSOUGHT PRODUCTS
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ITEMS THAT THE CONSUMER DOES NOT KNOW ABOUT OR KNOWS ABOUT BUT DOES NOT INITIALLY WANT
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product item
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a specific product that has a unique brand, size, or price
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product line
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a group of product or service items that are closely related be cause they satisfy a class of needs, are used together, are sold to the same customer group, are distributed through the same outlets, or fall within a given price range.
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product mix
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consists of all of the product lines offered by an organization
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protocol
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a statement that, before product development begins, identifies a well defined target market; specific customers' needs, wants, and preferences; and what the product will be and do
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new product process
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the seven stages an organization goes through to identify business opportunities and convert them to a salable good or service
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new-product strategy development
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the stage of the new product process that defines the role for a new product in terms of the firm's overall objectives.
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idea generation
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the stage of the new product process that develops a pool of concepts as candidates for new products, building upon the previous stage's results
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screening and evaluation
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the stage of the new-product process that internally and externally evaluates new-product ideas to eliminate those that warrant no further effort.
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customer experience management (CEM)
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the process of managing the entire customer experience within the firm.
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business analysis
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the features of the product and the marketing strategy needed to bring it to market and make financial projections
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development
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the stage of the new-product process that turns the idea on paper into a prototype
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market testing
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the stage of the new-product process that involves exposing actual products to prospective consumers under realistic purchase conditions to see if they will buy
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commercialization
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the stage of the new-product process that positions and launches a new product in full-scale production and sales
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Recognize the various terms that pertain to products and services.
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A product is a good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers and is received in exchange for money or something else of value. A good has tangible attributes that a consumer's five senses can perceive and intangible ones such as warranties; a laptop computer is an example. Goods can also be divided into nondurable goods, which are consumed in one or a few uses, and durable goods, which usually last over many uses. Services are intangible activities or benefits that an organization provides to satisfy consumer needs in exchange for money or something else of value, such as an airline trip. An idea is a thought that leads to a product or action, such as eating healthier foods.
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Identify the ways in which consumer and business products and services can be classified
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By type of user, the major distinctions are consumer products, which are products purchased by the ultimate consumer, and business products, which are products that assist in providing other products for resale. Consumer products can be broken down based on the effort involved in the purchase decision process, marketing mix attributes used in the purchase, and the frequency of purchase: (a) convenience products are items that consumers purchase frequently and with a minimum of shopping effort; (b) shopping products are items for which consumers compare several alternatives on selected criteria; (c) specialty products are items that consumers make special efforts to seek out and buy; and (d) unsought products are items that consumers do not either know about or initially want. Business products can be broken down into (a) components, which are items that become part of the final product, such as raw materials or parts, and (b) support products, which are items used to assist in producing other goods and services and include installations, accessory equipment, supplies, and industrial services. Services can be classified in terms of whether they are delivered by (a) people or equipment, (b) business firms or nonprofit organizations, or (c) government agencies. Firms can offer a range of products, which involve decisions regarding the product item, product line, and product mix.
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Explain the significance of "newness" in new products and services as it relates to the degree of consumer learning involved.
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From the important perspective of the consumer, "newness" is often seen as the degree of learning that a consumer must engage in to use the product. With a continuous innovation, no new behaviors must be learned. With a dynamically continuous innovation, only minor behavioral changes are needed. With a discontinuous innovation, consumers must learn entirely new consumption patterns.
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Describe the factors contributing to a new product's or service's success or failure
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A new product or service often fails for these marketing reasons: (a) insignificant points of difference, (b) incomplete market and product protocol before product development starts, (c) not satisfying customer needs on critical factors, (d) bad timing, (e) too little market attractiveness, (f) poor product quality, (g) poor execution of the marketing mix, and (h) no economical access to buyers.
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Explain the purposes of each step of the new-product process.
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The new-product process consists of seven stages a firm uses to develop a salable good or service: (a) New-product strategy development involves defining the role for the new product within the firm's overall objectives. (b) Idea generation involves developing a pool of concepts from consumers, employees, basic R&D, and competitors to serve as candidates for new products. (c) Screening and evaluation involves evaluating new product ideas to eliminate those that are not feasible from a technical or consumer perspective. (d) Business analysis involves defining the features of the new product, developing the marketing strategy and marketing program to introduce it, and making a financial forecast. (e) Development involves not only producing a prototype product but also testing it in the lab and on consumers to see that it meets the standards set for it. (f) Market testing involves exposing actual products to prospective consumers under realistic purchasing conditions to see if they will buy the product. (g) Commercialization involves positioning and launching a product in full-scale production and sales with a specific marketing program.
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product life cycle
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describes the stages a new product goes through in the marketplace; introduction, growth, maturity, and decline.
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product class
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the entire product category or industry, such as prerecorded music
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product form
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pertains to variations within the product class
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product modification
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involves altering a product's characteristic, such as its quality, performance, or appearance, to increase the product's value to customers and increase sales
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market modification
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strategies, a company tries to find new customers, increase a product's use among existing customers, or create new use situations
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trading up
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involves adding value to the product through additional features or higher-quality materials
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trading down
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involves reducing the number of features, quality, or price
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branding
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an organization uses a name, phrase, design, symbols, or combination of these to identify its products and distinguish them from those of competitors.
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brand name
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an word, device, or combination of these used to distinguish a seller's goods or services
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trade name
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is a commercial, legal name under which a company does business
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trademark
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identifies that a firm has legally registered its brand name or trade name so the firm has its exclusive use, thereby preventing others from using it
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brand personality
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a set of human characteristics associated with a brand name
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brand equity
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the added value a brand name gives to a product beyond the functional benefits provided.
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brand licensing
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a contractual agreement whereby one company allows it brand name or trademark to bu used with products or services offered by another company for a royalty or fee
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multiproduct branding
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a company uses one name for all its products in a product class
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multibranding
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involves giving each product a distinct name
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private branding
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often called private labeling or reseller branding, when it manufactures
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mixed branding
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where a firm markets products under its own name and that of a reseller because the segment attracted to the reseller is different from its own market
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packaging
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component of a product refers to any container in which it is offered for sale and on which label information is conveyed.
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label
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an integral part of the package and typically identifies the product or brand, who made it, where and when it was made, how it is to be used, and package contents and ingredients.
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warranty
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a statement indicating the liability of the manufacturer for product deficiencies.
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Explain the product life-cycle concept
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The product life cycle describes the stages a new product goes through in the marketplace: introduction, growth, maturity, and decline. Product sales growth and profitability differ at each stage, and marketing managers have marketing objectives and marketing mix strategies unique to each stage based on consumer behavior and competitive factors. In the introductory stage, the need is to establish primary demand, whereas the growth stage requires selective demand strategies. In the maturity stage, the need is to maintain market share; the decline stage necessitates a deletion or harvesting strategy. Some important aspects of product life cycles are (a) their length, (b) the shape of the sales curve, (c) how they vary by product classes and forms, and (d) the rate at which consumers adopt products.
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Identify ways that marketing executives manage a product's life cycle
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Marketing executives manage a product's life cycle three ways. First, they can modify the product itself by altering its characteristics, such as product quality, performance, or appearance. Second, they can modify the market by finding new customers for the product, increasing a product's use among existing customers, or creating new use situations for the product. Finally, they can reposition the product using any one or a combination of marketing mix elements. Four factors trigger a repositioning action. They include reacting to a competitor's position, reaching a new market, catching a rising trend, and changing the value offered to consumers.
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Recognize the importance of branding and alternative branding strategies
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A basic decision in marketing products is branding, in which an organization uses a name, phrase, design, symbols, or a combination of these to identify its products and distinguish them from those of its competitors. Product managers recognize that brands offer more than product identification and a means to distinguish their products from competitors. Successful and established brands take on a brand personality and acquire brand equity—the added value a given brand name gives to a product beyond the functional benefits provided—that is crafted and nurtured by marketing programs that forge strong, favorable, and unique consumer associations with a brand. A good brand name should suggest the product benefits, be memorable, fit the company or product image, be free of legal restrictions, and be simple and emotional. Companies can and do employ several different branding strategies. With multiproduct branding, a company uses one name for all its products in a product class. A multibranding strategy involves giving each product a distinct name. A company uses private branding when it manufactures products but sells them under the brand name of a wholesaler or retailer. Finally, a company can employ mixed branding, where it markets products under its own name(s) and that of a reseller.
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Describe the role of packaging, labeling, and warranties in the marketing of a product.
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Packaging, labeling, and warranties play numerous roles in the marketing of a product. The packaging component of a product refers to any container in which it is offered for sale and on which label information is conveyed. Manufacturers, retailers, and consumers acknowledge that packaging and labeling provide communication, functional, and perceptual benefits. Contemporary packaging and labeling challenges include (a) the continuing need to connect with customers, (b) environmental concerns, (c) health, safety, and security issues, and (d) cost reduction. Warranties indicate the liability of the manufacturer for product deficiencies and are an important element of product and brand management.
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Services
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intangible activities or benefits (such as airline trips, financial advice, or automobile repair) that an organization provides to satisfy consumers' needs in exchange for money or something else of value
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four i's of service
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four unique elements to services - intangibility, inconsistency, inseparability, and inventory
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idle production capacity
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when the service provider is available but there is no demand
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service continuum
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what companies bring to the market ranges from the tangible to the intangible or good-dominant to service-dominant offerings
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gap analysis
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differences between the consumer's expectations and experience
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customer contact audit
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a flowchart of the points of interaction between consumer and service provider.
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eight Ps of services marketing
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In addition to the four Ps, the services marketing mix includes people, physical environment, process, and productivity
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off peak pricing
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which consists of charging different prices during different times of the day or during different days of the week to reflect variations in demand for the service
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internal marketing
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based on the notion that a service organization must focus on its employees, or internal market, before successful programs can be directed at customers.
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customer experience management (CEM)
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the process of managing the entire customer experience with the company
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capacity management
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the service component of the marketing mix must be integrated with efforts to influence consumer demand
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Describe four unique elements of services.
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The four unique elements of services—the four I's—are intangibility, inconsistency, inseparability, and inventory. Intangibility refers to the tendency of services to be a performance that cannot be held or touched, rather than an object. Inconsistency is a characteristic of services because they depend on people to deliver them, and people vary in their capabilities and in their day-to-day performance. Inseparability refers to the difficulty of separating the deliverer of the service (hair stylist) from the service itself (hair salon). Inventory refers to the need to have service production capability when there is service demand.
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Recognize how services differ and how they can be classified.
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Services differ in terms of the balance of the part of the offering that is based on goods and the part of the offering that is based on service. Services can be delivered by people or equipment, they can be provided by profit or nonprofit organizations, and they can be government sponsored.
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Explain how consumers purchase and evaluate services
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Because services are intangible, prepurchase evaluation is difficult for consumers. To choose a service, consumers use search, experience, and credence qualities to evaluate the good and service elements of an offering. Once a consumer tries a service, it is evaluated by comparing expectations with the actual experience on five dimensions of quality—reliability, tangibles, responsiveness, assurance, and empathy. Differences between expectations and experience are identified through gap analysis.
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Develop a customer contact audit to identify service advantages.
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A customer contact audit is a flowchart of the points of interaction between a consumer and a service provider. The interactions identified in a customer contact audit often serve as the basis for developing relationships with customers.
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Explain the role of the eight Ps in the services marketing mix.
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The services marketing mix includes eight Ps. An important aspect of the product element is branding—the use of a brand name or logo to help consumers identify a service. Pricing is reflected in charges, fees, fares, and rates and can be used to influence perceptions of the quality of a service and to balance demand for services. Place (or distribution) is used to provide access and convenience. Promotional tools such as advertising and publicity are a means of communicating the benefits of a service. People are responsible for the creation and delivery of the service. Internal marketing and customer experience management are concepts that result from a focus on people within the service organization and their interactions with customers. Physical environment refers to the appearance of the place where the services are delivered. Process refers to the actual procedures, mechanisms, and activities by which a service is created and delivered. Productivity is related to the inseparability of the service from the service provider and is influenced by capacity management.
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Discuss the important roles of internal marketing and customer experience management in service organizations.
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Because the employee plays a central role in creating the service experience, and in building and maintaining relationships with customers, services have adopted a concept called internal marketing. This concept suggests that services need to ensure that employees (the internal market) have the attitude, skills, and commitment needed to meet customer expectations. Customer experience management is the process of managing the entire customer experience with the company to ensure customer loyalty.
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price
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the money or other considerations (including other products and services) exchanged for the ownership or use of a product or service
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barter
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the practice of exchanging products and services for other products and services rather than for money
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value
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the ratio of perceived benefits to price or value = perceived benefits/price
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value pricing
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the practice of simultaneously increasing product and service benefits while maintaining or decreasing price
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profit equation
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profit = total revenue - total cost = (unit price x quantity sold) - (fixed cost + variable cost)
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pricing objectives
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involve specifying the role of price in an organization's marketing and strategic plans
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pricing constraints
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factors that limit the range of prices a firm may set
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demand curve
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a graph relating the quantity sold and price, which shows the maximum number of units that will be sold at a given price
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demand factors
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factors that determine consumers' willingness and ability to pay for products and services
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total revenue
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the total money received from the sale of a product TR = P x Q
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average revenue
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the average amount of money received for selling one unit of a product, or simply the price of that unit. Average revenue is the total revenue divided by the quantity sold: AR = TR/Q = P
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marginal revenue
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the change in total revenue that results from producing and marketing one additional unit of a product MR = change in TR/1 unit increase in Q
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price elasticity of demand
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the percentage change in quantity demanded relative to a percentage change in price. price elasticity of demand = E = percentage change in quantity demanded/ percentage change in price
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total cost
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the total expense incurred by a firm in producing and marketing a product. Total cost is the sum of fixed cost and variable cost
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fixed cost
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the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold. Examples of fixed costs are rent on the building, executive salaries, and insurance
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marginal analysis
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a basic idea in business, economics, and indeed everyday life
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variable cost
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the sum of the expenses of the firm that vary directly with the quantity of a product that is produced and sold. For example, as the quantity sold doubles, the variable cost doubles. Examples are the direct labor and direct materials used in producing the product and the sales commissions that are tied directly to the quantity sold. TC = FC + VC
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unit variable cost
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variable cost expressed on a per unit basis for a product UVC = VC/Q
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marginal cost
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the change in total cost that results from producing and marketing one additional unit of a product
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break-even analysis
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a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output
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break-even point
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the quantity at which total revenue and total cost are equal
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break even chart
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a graphic presentation of the break even analysis
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Identify the elements that make up a price.
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Price is the money or other considerations (such as barter)exchanged for the ownership or use of a good or service. Although price typically involves money, the amount exchanged is often different from the list or quoted price because of incentives (rebates, discounts, etc.), allowances (trade), and extra fees(finance charges, surcharges, etc.).
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Recognize the objectives a firm has in setting prices and the constraints that restrict the range of prices a firm can charge.
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Pricing objectives specify the role of price in a firm's marketing strategy and may include profit, sales revenue, market share, unit volume, survival, or some socially responsible price level. Pricing constraints that restrict a firm's pricing flexibility include demand, product newness, other products sold by the firm, production and marketing costs, cost of price changes, type of competitive market, and the prices of competitive substitutes.
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Explain what a demand curve is and the role of revenues in pricing decisions.
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A demand curve is a graph relating the quantity sold and price, which shows the maximum number of units that will be sold at a given price. Three demand factors affect price: (a) consumer tastes, (b) price and availability of substitute products, and (c) consumer income. These demand factors determine consumers' willingness and ability to pay for goods and services. Assuming these demand factors remain unchanged, if the price of a product is lowered or raised, then the quantity demanded for it will increase or decrease, respectively. Three important forms of revenues impact a firm's pricing decisions: (a) total revenue, which is the total money received from the sale of a product; (b) average revenue, which is the average amount of money received for selling one unit of a product (which is simply the price of the unit); and (c) marginal revenue, which is the change in total revenue that results from producing and marketing one additional unit.
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Describe what price elasticity of demand means to a manager facing a pricing decision.
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Price elasticity of demand measures the responsiveness of units of a product sold to a change in price, which is expressed as the percentage change in the quantity of a product demanded divided by the percentage change in price. Price elasticity is important to marketing managers because a change in price usually has an important effect on the number of units of the product sold and on total revenue.
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Explain the role of costs in pricing decisions.
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Five important costs impact a firm's pricing decisions: (a) total cost, or total expenses, the sum of fixed cost and variable cost incurred by a firm in producing and marketing a product;(b) fixed cost, the sum of expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold; (c) variable cost, the sum of expenses of the firm that vary directly with the quantity of a product that is produced and sold; (d) unit variable cost, variable cost expressed on a per unit basis; and (e) marginal cost, the change in total cost that results from producing and marketing one additional unit of the product.
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Describe how various combinations of price, fixed cost, and unit variable cost affect a firm's break-even point.
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Break-even analysis is a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output. The break-even point is the quantity at which total revenue and total cost are equal. Assuming no change in price, if the costs of a firm's product increase due to higher fixed costs (manufacturing or advertising) or variable costs (direct labor or materials), then its break-even point will be higher. And if total cost is unchanged, an increase in price will reduce the break-even point.
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what is price?
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the money or other considerations exchanged for the ownership or use of a product or service
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what factors impact the list price to determine the final price?
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incentives, allowances and extra fees
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What is the difference between pricing objectives and pricing constraints?
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pricing objectives involves specifying the role of price in an organization's marketing and strategic plans. pricing constraints are factors that limit the range of prices a firm may set
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how does the type of competitive market a firm is in affect its range in setting price?
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pure competition, monopolistic, oligopoly and pure monopoly are the 4 types of competitive markets that influence the range of price competition.
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what is the difference between a movement along and a shift of a demand curve?
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movement along a demand curve is affected by price of product. a shift is when consumers factors change but price stays the same
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what is total revenue and how is it calculated
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total revenue is the total money received from the sale of a product. TR = P x Q
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what does it mean if a product has a price elasticity of demand that is greater than 1?
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a slight decrease in price results in a relatively large increase in demand or units sold
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what is the break-even point?
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the quantity at which total revenue and total cost are equal
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skimming pricing
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setting the highest initial price that customers really desiring the product are willing to pay
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penetration pricing
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setting a low initial price on a new product to appeal immediately to the mass market
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prestige pricing
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setting a high price so that quality or status connscious consumers will be attracted to the product and buy it.
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price lining
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a firm that is selling not just a single product but a line of products may price them at a number of different specific pricing points
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odd-even pricing
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setting prices a few dollars or cents under an even number
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target pricing
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themanufacturer deliberately adjusting the composition and features of a product to achieve the target price to consumers
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bundle pricing
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the marketing of two or more products in a single package price
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yield management pricing
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the charging of different prices to maximize revenue for a set amount of capacity at any given time
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standard markup pricing
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adding a fixed percentage to the cost of all items in a specific product class
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cost-plus pricing
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summing the total unit cost of providing a produt or service and adding a specific amount to the cost to arrive at a price
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experience curve pricing
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based on the learning effect, which holds that the unit cost of many products and sersvices declines by 10 percent to 30 percent each time a firm's experience at producing and selling them doubles
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target profit pricing
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a firm may set an annual target of a specific dollar volume to profit
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target return on sales pricing
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set typicl prices that will give them a profit that is a specified percentagge
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target return on investment pricing
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a method of setting prices to achieve the target of annual return on investment such as ROI of 20 percent
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customary pricing
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a standardized channel of distribution or other competitive factors dictate the price
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above-, at- or below market pricing
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marketing managers often have a subjective feel for the comopetitors' price or market price. using this benchmark, they then may deliberately choose this strategy
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loss leader pricing
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retail stores deliberately sell a product below its customary price to attract attention to it.
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one price policy
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fixed pricing, setting one price for all buyers of a product or service
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flexible price policy
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dynamic pricing, involves setting different prices for products and services depending on individual buyers and purchase situations
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product line pricing
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the setting of prices for all items in a product line
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price war
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successive price cutting by competitors to increase or maintain their unit sales or market share
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quantity discounts
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reductions in unit costs for a larger order
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promotional allowances
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sellers in the marketing channel can qualify for promotional allowances for undertaking certain advertising or sellling activities to promote a product
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everyday low pricing
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the practice of replacing promotional allowances with lower manufacturer promotional allowances that costs manufacturers billions of dollars every year
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FOB origin pricing
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involves the seller's naming the location of this loading as the seller's factory or the the buyer at the point of loading, so the buyer becomes responsible for picking the specific mode of transportation, for all the transportation costs, and for subsequent handling fo the product
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uniform delivered pricing
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method is used, the price the seller quotes includes all transportation costs
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basing-point pricing
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involves selecting one or more geographical locations from which the list price for products plus freight expenses are charged to the buyer
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price fixing
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a conspiracy among firms to set prices for a product
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price discrimination
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the practice of charging different prices to different buyers for goods of like grade and quality
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predatory pricing
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the practice of charging a very low price for a product witht he intent of driving competitors out of business
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Describe how to establish the "approximate price level" using demand-oriented, cost-oriented, profit-oriented, and competition-oriented approaches.
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Demand, cost, profit, and competition influence the initial consideration of the approximate price level for a product or service. Demand-oriented pricing approaches stress consumer demand and revenue implications of pricing and include eight types: skimming, penetration, prestige, price lining, odd-even, target, bundle, and yield management. Cost-oriented pricing approaches emphasize the cost aspects of pricing and include three types: standard markup, cost-plus, and experience curve pricing. Profit-oriented pricing approaches focus on a balance between revenues and costs to set a price and include three types: target profit, target return-on-sales, and target return-on- investment pricing. And finally, competition-oriented pricing approaches stress what competitors or the marketplace are doing and include three types: customary; above-, at-, or below-market; and loss-leader pricing. Although these approaches are described separately, some of them overlap, and an effective marketing manager will consider several in searching for an approximate price level.
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Recognize the major factors considered in deriving a final list or quoted price from the approximate price level.
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Given an approximate price level for a product or service, a manager sets a list or quoted price by considering three additional factors. First, a manager must decide whether to follow a one-price versus a flexible-price policy. Second, the manager should consider the effects of the proposed price on the company, customer, and competitors. Finally, consideration should be given to balancing incremental costs and revenues, particularly when price and cost changes are planned.
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Identify the adjustments made to the approximate price level on the basis of discounts, allowances, and geography.
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Numerous adjustments can be made to the approximate price level. Discounts are reductions from the list or quoted price that a seller gives a buyer as a reward for some activity of the buyer that is favorable to the seller. These include quantity, seasonal, trade (functional), and cash discounts. Allowances offered to buyers also reduce list or quoted prices. Trade-in allowances and promotional allowances are most common. Finally, geographical adjustments are made to list or quoted prices to reflect transportation costs from sellers to buyers. The two general methods for quoting prices related to transportation costs are FOB origin pricing and uniform delivered pricing.
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Name the principal laws and regulations affecting specific pricing practices.
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There are four principal laws that affect six major pricing practices. The Sherman Act specifically prohibits horizontal price fixing and predatory pricing. The Consumer Goods Pricing Act makes it illegal for companies to engage in vertical price fixing or resale price maintenance agreements. The Federal Trade Commission Act outlaws deceptive pricing. Provisions in this act also address aspects of predatory pricing and geographical pricing. Finally, the Robinson-Patman Act prohibits price discrimination for goods of like grade and quality, covers the use of promotional allowances, and addresses certain aspects of geographical pricing.
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