marketing chapter 8-11 – Flashcards
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Product
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Anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need
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Service
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Any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything
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Consumer product
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Product bought by final consumer for personal consumption
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Convenience product
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Consumer product that the customer usually buys frequently, immediately, and with a minimum of comparison and buying effort
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Shopping product
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Consumer good that the customer, in the process of selection and purchase, characteristically compares on such bases as suitability, quality, price, and style
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Specialty product
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Consumer product with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort
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Unsought product
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Consumer product that the consumer either does not know about or knows about but does not normally think of buying
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Industrial product
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Product bought by individuals and organizations for further processing or for use in conducting a business
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Social marketing
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The design, implementation, and control of programs seeking to increase the acceptability of a social idea, cause, or practice among a target group
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Product quality
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The ability of a product to perform its functions—it includes the product's overall durability, reliability, precision, ease of operation and repair, and other valued attributes
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Brand
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A name, term, sign, symbol, or design, or a combination of these intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors
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Packaging
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The activities of designing and producing the container or wrapper for a product
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Product line
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A group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges
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Product mix (or product assortment)
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The set of all product lines and items that a particular seller offers for sale
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Brand equity
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The positive differential effect that knowing the brand name has on customer response to the product or service
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Private brand (or store brand)
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A brand created and owned by a reseller of a product or service
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Co-branding
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The practice of using the established brand names of two different companies on the same product
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Line extension
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Using a successful brand name to introduce additional items in a given product category under the same brand name, such as new flavors, forms, colors, added ingredients, or packaging sizes
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Brand extension
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Using a successful brand name to launch a new or modified product in a new category
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Service intangibility
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A major characteristic of services—they cannot be seen, tasted, felt, heard, or smelled before they are bought
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Service inseparability
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A major characteristic of services—they are produced and consumed at the same time and cannot be separated from their providers
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Service variability
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A major characteristic of services—their quality may vary greatly, depending on who provides them and when, where, and how
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Service perishability
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A major characteristic of services—they cannot be stored for later sale or use
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Service-profit chain
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The chain that links service firm profits with employee and customer satisfaction
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Internal marketing
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Marketing by a service firm to train and effectively motivate its customer-contact employees and all the supporting service people to work as a team to provide customer satisfaction
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Interactive marketing
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Marketing by a service firm that recognizes that perceived service quality depends heavily on the quality of buyer-seller interaction
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Market Offering
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basis upon which the company builds profitable customer relationships
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pure tangible good
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such as soap, toothpaste, or salt - no services accompany the product
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pure services
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doctor's exam, financial services - offer consists primarily of a service
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core customer value
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What is the customer really buying? What consumers seek from the product
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actual product
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product and service features, design, a quality level, a brand name, and packaging
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augmented product
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additional consumer services and benefits
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materials and parts
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raw materials and manufactured materials and parts. Raw materials consist of farm or natural products
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capital items
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industrial products that aid in the buyer's production or operations, including installations and accessory equipment
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supplies and services
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operating supplies, and repair and maintenance items; purchased with minimum effort or comparison
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organization marketing
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activities undertaken to create, maintain, or change the attitudes and behavior of target consumers toward an organization
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corporate image advertising
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polishing your image
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person marketing
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activities undertaken to create, maintain, or change attitudes or behavior toward particular people
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place marketing
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activities undertaken to create, maintain, or change attitudes or behavior toward particular places
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Total Quality Management
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the company's people are involved in constantly improving the quality of products, services, and business processes
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product line length
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the number of items in the product line
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product mix width
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the number of different product lines the company carries
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mix length
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total number of items the company carries within its product lines
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product mix depth
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number of versions offered of each product in the line
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Price
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The amount of money charged for a product or service, or the sum of the values that customers exchange for the benefits of having or using the product or service.
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Value-based pricing
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Setting price based or buyers' perceptions of value rather than on the seller's cost.
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Good-value pricing
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Offering just the right combination of quality and good service at a fair price.
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Value-added pricing
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Attaching value-added features and services to differentiate a company's offers and charging higher prices.
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Cost-based pricing
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Setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk.
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Fixed costs
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Costs that do not vary with production or sales level.
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Variable costs
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Costs that vary directly with the level of production.
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Total costs
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The sum of the fixed and variable costs for any given level of production.
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Experience curve (learning curve)
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The drop in the average per-unit production cost that comes 4jth accumulated production experience.
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Cost-plus pricing
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Adding a standard markup to the cost of the product.
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Break-even pricing (target profit pricing)
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Setting price to break ever' on the costs of making and marketing a products or setting price to make a target profit.
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Target costing
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Pricing that starts with an ideal selling price, then targets costs that will ensure that the price is met.
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Demand curve
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A curve that shows the number of units the market will buy in a given time period, at different prices that might be charged.
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Price elasticity
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A measure of the sensitivity of demand to changes in price.
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Market-skimming pricing
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Setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales.
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Market-penetration pricing
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Setting a low price for a new product in order to attract a large number of buyers and a large market share.
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Product line pricing
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Setting the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors' prices.
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Optional-product pricing
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The pricing of optional or accessory products along with a main product.
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Captive-product pricing
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Setting a price for products that must be used along with a main product, such as blades for a razor and film for a camera.
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By-product pricing
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Setting a price for by-products in order to make the main-product's price more competitive.
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Product bundle pricing
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Combining several products and offering the bundle at a reduced price.
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Discount
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A straight reduction in price on purchases during a stated period of time.
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Allowance
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Promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacture products in some way.
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Segmented pricing
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Selling a product or service at two or more prices, where the difference in prices is not based on differences in costs.
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Psychological pricing
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A pricing approach that considers the psychology of prices and not simply the economics; the price is used to say something about the product.
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Reference prices
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Prices that buyers carry in their minds and refer to when they look at a given product.
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Promotional pricing
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Temporarily pricing products below the list price, and sometimes even below cost, to increase short-run sales.
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Geographical pricing
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Setting prices for customers located in different parts of the country or world.
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FOB-origin pricing
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A geographical pricing strategy in which goods are placed free on board a carrier; the customer pays the freight from the factory to the destination.
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Uniform-delivered pricing
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A geographical pricing strategy in which the company charges the same price plus freight to all customers, regardless of their location.
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Zone pricing
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A geographical pricing strategy in which the company sets up two or more zones. All customers within a zone pay the same total price; the more distant the zone, the higher the price.
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Basing-point pricing
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A geographical pricing strategy in which the seller designates some city as a basing point and charges all customers the freight cost from that city to the customer.
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Freight-absorption pricing
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A geographical pricing strategy in which the seller absorbs all or part of the freight charges in order to get the desired business.
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Dynamic pricing
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Adjusting prices continually to meet the characteristics and needs of individual customers and situations.
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Price: Internal Factors
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Pricing Objectives; Marketing Mix strategies; Other products; Costs
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Pricing Objectives
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What does the company want to achieve? Profit maximization; Sales; Market share leadership (common); Unit volume; Survival (keep in business); Decrease demand (peak/off-season); Social responsibility (rare drugs)
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Marketing Mix strategies
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Price must match quality, customer expectation
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Other products
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differentiate from other products on the market
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Costs
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Costs of producing; Cost of changing price (stamps, catalogue); Learning curve (where in product life cycle); Economies of scale; Total Revenue =P*Q Total Cost (TC = (VC*Q) + FC Fixed cost (FC) Variable Cost (VC); Profit = Total Revenue-Total Cost;
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External Factors
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Competitive market; Consumers perceptions; Stage in PLC; Competitors' prices; Demand
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Competitive market
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pure monopoly; oligopoly; monopolistic competition; pure competition
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pure monopoly
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regulated: utilities, price set by government; non-regulated: baseball, price limited by consumer
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oligopoly
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few companies control majority of market; tobacco, beer
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monopolistic competition
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company captures niche market and acts like mini-monopoly; prices based on prestige
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pure competition
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no differentiation between products (commodities); price set by supply and demand
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Consumers perceptions
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prices are high if customers really like product; balance based on quality and value
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Stage in Product Life Cycle
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brand new products are expensive; mature products are cheaper
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Competitors' prices
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prices limited by prices of similar products
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Estimating Demand and Revenue
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curve plotted with intent of showing demand at different price points
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Demand (shifts in demand curve)
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seek to shift curve allow increased prices and sales; based on Consumer tastes; Substitute products; Consumer income
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Consumer tastes
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shifts demand curve if great product or trendy
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Substitute products
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alternatives limit ability to shift curve, may even lower it
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Consumer income
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convince higher income groups to buy
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Price Demand Relationship
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Demand curves; Price elasticity
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Demand curves
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most goods - straight line, higher price, lower quantity; prestige goods - curved line, low quantity at high & low prices, highest quantity and middle price
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Price elasticity
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inelastic - price doesn't effect demand (prestige) elastic - demand drops as price increases
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Select an Appropriate Price Level
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Cost-based methods; Break-even Analysis; Value-Based Pricing; Competition-based methods
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Cost-based methods
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standard markup; markup chain
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standard markup
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markup = price - cost; % = markup/price; price = cost/1-%; might round price up to make it more acceptable to consumer
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markup chain
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manufacturer - wholesaler - retailer - customer; manufacturer price is wholesaler cost; wholesaler price is retailer cost;
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Break-even Analysis
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profit = 0; Q = FC / P-VC
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Value-Based Pricing
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price and quality must satisfy customer; B2B - sell products that reduce costs
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Competition-based methods
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Going rate - competitors; Loss-leader -- designed to get customers into store; Sealed-bid -- don't know competition price
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New Product Pricing Strategies
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Market Skimming pricing - price high to get rich/innovators, slowly lower to maximize each stage; Market Penetration pricing - price low to generate sales in order to benefit from economies of scale (must be elastic product)
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Product Mix Pricing Strategies
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Product Line pricing; Optional-Product Pricing; Captive Product Pricing; Product bundle Pricing
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Product Line pricing
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price must be enough different to get customer to notice otherwise won't buy cheaper line
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Optional-Product Pricing
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negotiate price
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Captive Product Pricing
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sales to customers that don't have choice: theater, amusement park
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Product bundle Pricing
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group products, may not be cheaper
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Price Adjustment Strategies
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Discount / Allowance; Segmented; Psychological; Promotional; Geographic; International
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Discount / Allowance
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discount (cash, student, ladies-night); allowance (trade-in)
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Segmented
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different customer segments
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Psychological
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price at 99 cents; prestige pricing
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Promotional
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put on sale below normal price
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Geographic
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shipping, tax
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International
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transportation, tariffs, median income
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Legal aspects
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Price-fixing; Price discrimination; Deceptive; Predatory
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Price-fixing
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must prove collusion
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Price discrimination
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Customer - student, seasonal; Product form - change image/packaging, package with other desirable items; Location - seat in stadium, hotel rooms with view; Time - parking pre-sale, matinee
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Deceptive
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bait & switch; inflating price before 2for1; comparable value must be legit
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Predatory
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lower prices to drive competition out of business, then raise prices.
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New-product development
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The development of original products, product improvements, product modifications, and new brands through the firms own R&D efforts.
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Idea generation
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The systematic search for new-product ideas.
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Idea screening
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Screening new-product ideas in order to spot good ideas and drop poor ones as soon as possible
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Product concept
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A detailed version of the new-product idea stated in meaningful consumer terms.
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Concept testing
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Testing new-product concepts with a group of target consumers to find out if the concepts have strong consumer appeal.
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Marketing strategy development
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Designing an initial marketing strategy for a new product based on the product concept.
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Business analysis
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A review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the company's objectives.
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Product development
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Developing the product concept into a physical product in order to ensure that the product idea can be turned into a workable product.
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Test marketing
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The stage of new-product development in which the product and marketing program are tested in more realistic market settings.
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Commercialization
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Introducing a new product into the market.
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Sequential product development
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A new-product development approach in which one company department works to complete its stage of the process before passing the new product along to the next department and stage.
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Simultaneous (or team-based) product development
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An approach to developing new products in which various company departments work closely together, overlapping the steps in the product-development process to save time and increase effectiveness.
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Product life cycle (PLC)
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The course of a product's sales and profits over its lifetime. It involves 5 different stages: product development, introduction, growth, maturity, and decline.
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Style
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A basic and distinctive mode of expression
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Fashion
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A currently accepted or popular style in a given field
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Fad
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A temporary period of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity
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Introduction stage
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The product life-cycle stage in which the new product is first distributed and made available for purchase.
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Growth stage
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The product life-cycle stage in which a product's sales start climbing quickly
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Maturity stage
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The stage in the product life cycle in which sales growth slows or levels off
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Decline stage
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The product life-cycle stage in which a product's sales decline
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Distributors
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close to the market and can pass along information about consumer problems and new-product possibilities.
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Suppliers
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tell the company about new concepts, techniques, and materials that can be used to develop new products.
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Competitors
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buy competing new products, take them apart to see how they work, analyze their sales, and decide whether they should bring out a new product of their own
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R-W-W
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real, win, worth it; is it real? can we win? is it worth doing?
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product idea
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idea for a possible product that a company can see itself offering to the market
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product concept
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detailed version of the idea stated in meaningful consumer terms
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product image
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the way consumers perceive an actual or potential product
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marketing strategy statement
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3 parts: 1) target market, planned value proposition, sales and market share.; 2) product's planned price for distribution and marketing budget.; 3) planned long-run sales, profit goals, and marketing mix strategy
