MKTG ch. 11 – Flashcards
Unlock all answers in this set
Unlock answersquestion
a concept that describes the stages a new product goes through in the marketplace: introduction, growth, maturity, decline.
answer
Product life cycle
question
Introduction Growth Maturity Decline
answer
Product life cycle stages
question
occurs when a product is introduced to its intended target market
answer
Introduction stage
question
grow slowly
answer
how do sales change in the introduction stage?
question
to create consumer awareness and stimulate trail (the initial purchase by a consumer)
answer
What is the marketing objective in the introduction stage?
question
the desire for the product class rather than for a specific brand, since there are few competitors with the same product. This is stimulated in the introduction stage.
answer
Primary demand
question
the preference for a specific brand, occurs as more competitors launch their own products and the product progresses along its life cycle
answer
Selective demand
question
a high price set by the company, which helps the company recover the costs of development, and to capitalize on the price insensitivity of early buyers. 3M is a master
answer
Skimming strategy
question
when the company enters the market at a low price which can help build unit volume. Requires close monitoring.
answer
Penetration pricing
question
characterized by rapid increases in sales. Competitors appear in this stage.
answer
Growth stage
question
characterized by a slowing of total industry sales or product class revenue (marginal competitors start to leave the market)
answer
Maturity Stage
question
occurs when sales drop. A product enters this stage mostly due to environmental changes.
answer
Decline stage
question
1. Products have a limited life 2. Profit and sales are not the same thing 3. Marketing strategies must change over time (most important)
answer
3 things that the product life cycle tells us
question
Total Revenue - Total Costs
answer
Profit=
question
1. Define the target market 2. Create a marketing mix decision regarding the 4 p's that will satisfy the target.
answer
Marketing Strategy
question
Rate of technological change Rate of market acceptance Ease of competitive entry
answer
FActors that influence the Length of the Product Life Cycle
question
Make changes gradually Keep old product Conduct marketing research
answer
Risk Hedges (to reduce the risk)
question
the product mix affects company profits the optimal product mix is difficult to determine
answer
product mix concepts
question
how much profit you can make
answer
product mix sets the upper limit of
question
Chronic excess production capacity Disproportionately Total profits/few products Exploit sales force Declining profits/sales
answer
Suboptimal Product Mix
question
A name, a term, a symbol, or any other unique element of a product that identifies one firm's product(s) and sets them apart from the competition
answer
Brand
question
deletion harvesting
answer
Two strategies to handle a declining product
question
dropping the product from the product line
answer
deletion
question
the company retains the product by reduces marketing costs
answer
harvesting
question
1. length 2. shape of sales curve 3. how they vary with different levels of products 4. the rate at which consumers adapt their products.
answer
Four aspects of the Product Life Cycle
question
High learning Low learning Fashion products Fad Product
answer
product life cycle curves
question
is a curve for which significant customer education is required and there is an extended period
answer
High Learning product curve
question
sales begin immediately since little learning is required by the customer, and the benefits of purchase are readily apparent. Can be easily imitated by competitors, so marketing strategy is to broaden distribution quickly.
answer
Low learning product curve
question
is a style of the times, appear in women's and men's apparel. These products are introduced, decline, and then seem to return.
answer
Fashion products curve
question
experiences rapid sales on introduction and then an equally rapid decline. Short life cycle.
answer
Fad Product curve
question
refers to the entire product category or industry, such as prerecorded music
answer
Product class
question
refers to variations within the product class (technology to create cd's and digital players in reference to the class of prerecorded music)
answer
Product form
question
sales to consumers
answer
the life cycle of a product depends on what?
question
when a product diffuses, or spreads, through the population
answer
Diffusion of innovation
question
o Innovators (venturesome, higher educated, use multiple info sources) o Early adopters (leaders in social setting, slightly above average education) o Early Majority (deliberate, many informal social contacts) o Late Majority (Skeptical, below average social status) o Laggards (Fear of debt, neighbors and friends are info sources)
answer
Five categories of product adopters (the diffusion process)
question
o Usage Barriers: this product is not comparable with existing habits o Value Barriers: the product provides no incentive to change. o Risk Barriers: physical, economic, or social. o Psychological barriers: cultural differences or image.
answer
Common reasons for resisting a product in the intro stage
question
warranties, money back guarantees, extensive usage instructions, demonstrations, free samples.
answer
Methods to overcome these barriers
question
free trial (71%)
answer
most popular means to gain a consumer
question
1. Modifying the product 2. Modifying the market 3. Repositioning the product
answer
Three ways to manage a product through its life cycle
question
product bundling, new features
answer
Examples of Modifying the product
question
new customers (prunes and harley), increase product use among existing customers (Campbells soup) create new use (Dockers)
answer
Examples of modifying the market
question
1. Reacting to a competitor's position (new balance vs. Nike, etc.) 2. Reaching a new market (carbonated tea in England, St. Joseph aspirin low dose) 3. Catching a rising trend (Quaker oats, Kraft cheese, Uncle bens rice) all going healthy 4. Changing the value offered (trade up or down)
answer
Four factors that trigger the need for a repositioning action
question
involves adding value to the product (or line) through additional features or higher quality materials. (run flat tires)
answer
Trading up
question
involves reducing the number of features, quality, or price. (Airlines have added more seats, reducing legroom, limited snacks.)
answer
Trading down
question
an organization uses a name, phrase, design, symbol or combination of these to identify its products and distinguish them from those of competitors.
answer
Branding
question
is any word, device (design, sound, shape or color) or combination of those used to distinguish a seller's goods or services
answer
Brand name
question
is a commercial, legal name under which a company does business
answer
Trade name
question
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.
answer
Trademark
question
involves low cost copies of popular brands not manufactured by the original producer
answer
Product counterfeiting
question
Consumers
answer
________________may benefit most from branding
question
a set of human characteristics associated with a brand name that successful and established brands have.
answer
Brand personality
question
the added value a brand name gives to a product beyond the functional benefits provided.
answer
Brand equity
question
1. Provides competitive advantage 2. Consumers are willing to pay a higher price for a product with brand equity
answer
Two advantages of brand equity
question
1. Bottom: Brand awareness 2. Brand performance and brand imagery 3. Consumer judgements and consumer feelings 4. Top; consumer brand connection
answer
4 step brand equity building process
question
is a contractual agreement whereby one company allows its brand name or trademark to be used with products or services offered by another company for a royalty or fee. Comes from having brand equity.
answer
Brand licensing
question
o Multiproduct branding strategy o Multibranding strategy o Private branding strategy o Mixed branding strategy
answer
Branding strategies
question
a company uses one name for all its products in a product class (Toro snowblower, Toro mower)
answer
Multiproduct branding strategy
question
involves giving each product a distinct name. Useful when each brand is intended for a different market segment (Tide, Cheer)
answer
Multibranding strategy
question
private labeling or re-seller branding, when it manufactures products but sells them under the brand name of a wholesaler or retailer (Kenmore)
answer
Private branding strategy
question
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 (Michelin makes sears tires)
answer
Mixed branding strategy
question
refers to any container in which it is offered for sale and on which label information is conveyed.
answer
Packaging
question
is 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.
answer
Label
question
Communication, functional, perceptional
answer
The three major benefits of packaging and labeling
question
1. The continuing need to connect with customers 2. Environmental concerns 3. Health, safety, and security issues 4. Cost reduction
answer
4 challenges of packaging and labeling
question
a statement indicating the liability of the manufacturer for product deficiencies
answer
Warranty
question
Magnuson-Moss Warranty/RTC Improvement Act of 1975
answer
regulates the content of consumer warranties.
question
written statements of liabilities
answer
Express warranty
question
covers it all
answer
Full coverage warranty
question
assign responsibility for product deficiencies to the manufacturer.
answer
Implied warranties
question
don't
answer
It is easier to determine the product mix if you _______ have the best mix
question
disproportionate
answer
You have a suboptimal product mix if your total profits are _______________ from a few products
question
Brand equity Protect the brand "Act as if it is yours"
answer
Importance of Branding
question
associate the name with the product class rather than with the brand.
answer
Generic
question
Product benefits Memorable, etc. Image fit Legal Simple
answer
Good Brand Name
question
the power of expectations
answer
the electrolux vacuum cleaner example was relative to
question
service expectations
answer
The ratchet effect can be applied to
