BU Final Exam HC 755 Marketing Chapter 8 Questions

What is the difference in marketing strategies of durable goods vs. nondurable and services?
-Nondurable are heavily advertised, frequently purchased (pharmaceuticals, retail DTC)
-Durable-use personal sales, cost more and more complicated to use
-Services-more challenging because of being intangible
Describe the I’s of Services.
1)Intangibility-consumer interactions base of evaluation
2)Inconsistency-people delivered services have inherent variability so training is key
3)Inseparability-services cannot be separated from people who deliver them
4)Inventory-can manage costs by managing service deliverer or shifting the demand
5)Interaction with customers-quality of interaction important
What is a major way to classify consumer products and what three categories are there?
By amount of effort and manner of search the consumer uses in purchasing the product
1-Convenience goods-frequently purchase, little search, inexpensive, little differential advantage on product, little customer loyalty (name recognition and product distribution critical)
2-Shopping Goods-engages in significant amount of search, moderate price, infrequent purchase, use product or price for key marketing mix, prefer brand, but will substitute (sales people used)
3-Specialty Items-consumer specifically seeks out, expensive, brand loyal, very infrequent purchase, identity (brand/product) is differential advantage
What are two types of industrial goods?
1-Production Goods used to become part of the final product(raw materials)
2-Support Goods are items used to assist in the production of other products (can include building, accessory equipment and supplies)
What are some service classifications?
By whether they are delivered by people or equipment. Also, in health care-tax status profit v. non-profit (profit-excess revenues go to shareholders while non-profit excess revenue redirected to organization to continue services
What areas must a company look at when establishing the product element of the marketing mix?
-product mix-entire range of products a firm offers
-product line-groups of related services
-breadth-number of product lines in the mix
-depth-number of product items within each product line
What is the major rationale for cannibalization?
It is better to offer the product oneself than for a competitor to enter the market with the same product. A company would market the product to appeal to a different market segment that would not have a major impact on other product lines
What are the stages of the product life cycle?
1-Introduction
2-Growth 3-Mature 4-Decline
What are the key challenges in the introduction stage of the product life cycle?
-Product quality must be at a level that meets customer expectations
-price-skimming or penetration price strategy
-promotion-must develop primary demand/educate consumers, generating awareness
-place-limited distribution issues, key is to obtain some initial exposure for product
What are the advantages and disadvantages to a skimming price strategy?
Advantage-high intitial price-often early buyers who want product no matter what price so less price sensitive, can achieve a greater margin and recoup cost of developing the new product and then as ccompetition enters market, can reduce price. Also, image-high price sets product as a premium good. Logical rationale for health care because intangible so inferred quality at higher price, especially in services where there is a shakeout period and to discourage too much start up demand until kinks worked out. Disadvantages-high price discourages demand, can attract competitiors
What are the advantages and disadvantages to a penetration price strategy?
Advantage-keeps competitors out and encourages demand
Major disadvantage-setting a low price requires a good understanding of what it costs to product the product so financially risky, especially for HC organization
What are the key challenges in the growth stage of the product life cycle?
Sales grow rapidly, competitors enter, some marketers generate selective demand
-Product-key is whether to expand the product mix? Can expand product line by offering variation of original product to appeal to new market segments,
-Promotion-must develop product preference (advertise) to generate selective demand, personal sales become important
–Price-depends upon initial pricing strategy, its difficult to raise price after introductory offering as can lead to buyer dissatisfaction
-Place-major emphasis on DISTRIBUTION, solidifying loyalty of the middlemen
What are the key challenges of the maturity phase in the product life cycle?
Sales begin to slow, indication of entering this cycle is when marginal competitors begin to exit, key objective is to maintain existing customer base. May gain some market share as competitors exit the market
-Product-few decisions made, develop new product lines to reposition the firm
-Price-becomes competitive, aggressive price discounting
-Promotion-retention of existing customers
-Place-profitable channels are maintained and marginal outlets are dropped
What are the key challenges of the decline phase in the product life cycle? What are an organization’s 3 options at this point?
Must recognize that the service cannot continue to grow. Can consume management time and financial resources so 3 options:
-Drop-eliminate service
-Contract-with another party to provide the service
-Harvest-paring out aspects of the service that are truly not profitable and offering a reduced version of the service for loyal customers
What are other common product life cycles?
-High-learning Product-requires significant intro period, complicated services for which immediate benefits might not be seen by the consumer, need buyer education
-Low-learning Product-short intro period as benefits are clearly seen by consumer
-Fashion Product-there is a decline and an eventual reemergence of the product
-Fad Product-2 stages-introduction and decline. quickly adopted, numerous competitors jump in market reaches saturation. must jump in early to reap financial benefit
Is it possible to affect the length of the product life cycle?
It is difficult to do so. Factors outside of organization’s control, such as demographics, regulation, technology, or new research affect it most.
What concerns are there with the product life style concept?
1-Major criticism is that there is no standard life cycle and that many products defy the life cycle sequence.
2-whether it relates to the product class, product line or the specific product.
3-closely tied to sales and it is difficult to relate some marketing activities with sales
What are some strategies that can be used to stretch the life cycle of a product?
-Product Modification-altering the product by changing its features, performance or appearance
-Market Modification-tries to increase the use of the product by creating new uses or users (strong ethical concerns about promoting more frequent use of HC services)
-Repositioning the product by changing how the product is perceived in the minds of consumers ex. target market, niche and growth market strategies
What is one way to assess the position of a service in the minds of consumers?
Multidimensional scaling (MDS)-a statistical technique creating perceptual maps that can be used to visualize service gaps and show how the competitive set of alternatives is positioned for consumers
What is the difference between a brand, trade name and trademark?
-Brand-any name, term, colors, or symbol that distinguishes one seller’s product from another
-Trade name-commercial name under which a company does business
-Trademark-brand name or trade name given legal protection
To be protected, what must a trademark have?
A distinctive meaning, must be used in interstate commerce and must not be confused with other registered trademarks.
What are some branding strategies a company can employ?
multiproduct, multibrand, reseller, and mixed strategies
Describe multiproduct branding.
The company places one brand name on all the products in its line. Common strategy for HC organizations. Rationale is brand equity. Risks are significant because the organization puts its name on all new products in the product line so puts brand equity at risk.
Describe a multibrand strategy.
A company places a different name on each product. ex. P&G Companies follow this when they are making products that appeal to different market segments. Disadvantage is that each brand must establish consumer recognition and promotional costs are higher and intro period of life cycle may take longer
Describe a reseller strategy and mixed strategy.
A company sells its product under the name of another company. Used when a reseller appeals to a strong segment of the market or if the reseller’s market segments are different from the manufacturer’s. Mixed strategy is when a company sells its product under the name of a reseller and under its own name.
Describe co-branding.
The organization markets its name alongside another brand name-new to HC. Advantage is synergistic effect of 2 positive brand names, maximizing marketing budgets by creating partnerships.
What are the some categories of consumers based on the time at which they adopt a product in respect to the diffusion of innovation.
1-Innovators-first to adopt a new product, highly educated risk-takers who use multiple information services
2-Early Adopters-leaders in a social setting, respected by peers, opinion leaders, turned to for info by their slower adopting friends, above average in education
3-4-Early and Late Majority-represent the bulk of the population-early are deliberate decision makers who have many informal social contacts, late are skeptical and below average in socioeconomic status
5-Laggard-last people to adopt, strong fear of debt and are price conscious.Sources of info are close family and friends, tradition bound
What are some factors that influence the speed of adoption?
1-Relative Advantage-perceived benefit that new product has over existing or substitutable products in marketplace
2-Compatibility-a product compatible with existing values or customs will be adopted more quickly
3-Complexity-more complex products received at a slower rate
4-Divisibility-the degree to which the product can be tried on a limited basis,use of sample
5-Communicability-easier the products benefits communicated, faster adopted
What are some other factors affecting adoption of a new product?
1-Homophilious Groups-degree of similarity among members, among target groups
2-Pace of Innovation-some innovations are stable, others evolve as they are used ex.off-label drug use
3-Norms,roles and social network
4-Infrastructure-depends upon support provided by existing infrastructure