Foundations Chapter 12

Anything that an organization offers to satisfy consumer needs and wants, including both goods and services.
Pure goods
Products that do not include any services
Pure services
Products that do not include any goods.
Product layers
1. Core benefit
2. Actual product
3. Augmented product
Core benefit
One of the product layers. At the most fundamental level, consumers buy a core benefit that satisfies their needs.
Actual product
A product layer that consists of the product itself; the physical good or the service that provides the core benefit.
Augmented Product
One of the product layers. Most marketers wrap their actual products in additional goods and services, called this, that sharpen their competitive edge. They come in a range of different forms.
Eg. Many upscale movie theaters in L.A. display props that have been played in the theater.
consumer products
Products purchased for personal use or consumption.
business products
Products purchased to use either directly or indirectly in the production of other productions.
Consumer product categories
1. Convenience products
2. Shopping products
3. Specialty products
4. Unsought products
Convenience products
A type of consumer product category. They are the inexpensive goods and services that consumers buy frequently with limited consideration and analysis. Distribution tends to be widespread, with promotion by the producers.
Eg. Coffee, toliet paper, chewing gum
Shopping products
A type of consumer product category. They are the more expensive products that consumers buy less frequently. Distribution is widespread but more selective than for convenience products.
Eg. Electronics, banking services, and athletic equipment
Specialty products
A type of consumer product category. They are much more expensive that consumers seldom purchase. Most perceive these as so important that they are unwilling to accept substitutes.
Eg. Sports cars, Tiffany jewlery, cosmetic surgery
Unsought products
Goods and services that hold little interest for consumers. Price and distribution vary wildly, but promotion tends to be aggressive to drum up consumer interest.
Eg. Disability insurance, prepaid burial plots, and blood donations.
Business product categories
1. Installations
2. Accessory equipment
3. Maintenance, repair, and operating products
4. Raw materials
5. Component parts and processed materials
6. Business services
A type of business product. They are large capital purchased designed for a long productive life. Marketing of these emphasizes personal selling and customization.
Eg. Industrial robots, new buildings, airplanes, and railroad cars
Accessory equipment
A type of business product. It includes smaller, movable capital purchases designed for a shorter productive life than installations. Marketing focuses on personal selling buy includes less customization than installations.
Eg. Personal computers, power tools, furniture
Maintenance, repair, operating products
A type of business product. It consists of small ticket items that businesses consume on an ongoing basis but don’t become part of the final product. Marketing tactics emphasize efficiency
Eg. Cleaning supplies, lightbulbs, and copy paper.
Raw materials
A type of business product. Includes the farm and natural products used in producing other products. Marketing emphasizes price and service rather than product differentiation.
Eg. Cotton, timber, wheat
Component parts and processed materials
A type of business product. Include finished (or partially finished) products used in producing other products. Marketing emphasizes product quality as well as price and service.
Eg. Batteries and spark plugs for cars, aluminum ingots for soda cans, and intel computer chips
Business services
A type of business product. They are those services that businesses purchase to facilitate operations. Marketing focuses on quality and relationships; the role of price can vary.
Eg. payroll services, janitorial services, and legal services.
Product differentiation
The attributes that make a good or service different from other products that compete to meet the same or similar customer needs.
Quality level
How well a product performs its core functions
Product consistency
How reliably a product delivers its promised level of quality.
Dimensions of product quality
1. Quality level
2. Product consistency
Product features
The characteristics of the product you offer. If a product is well designed, each feature corresponds to a meaningful customer benefit.
Customer benefit
The advantage that a customer gains from specific product features.
product line
A group of products that are closely related to each other, either in terms of how they work, or the customers they serve.
Product mix
The total number of product lines and individual items sold by a single firm.
One of the risks of adding new lines. This occurs when a producer offers a new product that takes sales away form its existing products.
A product’s identity that sets it apart from other players in the same category.
Typically they represent the combination of elements such as
1. Product name
2. Symbol
3. Design
4. Reputation
5. Image
Brand name categories
1. Location based
2. Founder’s name
3. Descriptive or functional
4. Evocative
brand extensions
A new product, in a new category, introduced under an existing brand name.
line extensions
Similar products under the same name.
Eg. New flavors, sizes, colors, ingredients, and forms.
Purchasing the right to use another company’s brand name or symbol.
When established brands from different companies join forces to market the same product.
Eg. TGI Friday’s markets a broad range of Jack Daniel’s flavored food.
National brands (manufacturers’ brands)
The brands that the producer owns and markets. Many are well known and widely available.
Eg. Oreo cookies, Dial soaps, and Nutella.
Store brands (private label)
Brands that the retailer both produces and distributes.
Discontinuous innovation
Brand new ideas that radically change how people live.
Eg. The first car, the first TV, the first computer.
Dynamically continuous innovation
Innovations that are characterized by marked changes to existing products.
Eg. Cell phones, digital cameras.
Continuous innovation
A slight modification of an existing product.
Eg. New sizes, flavors, shapes, packaging, and design.
Types of innovation
1. Discontinuous innovation
2. Dynamically continuous innovation
3. Continuous innovation
Stages of new product development
1. Idea generation
2. Idea Screening
3. Analysis
4. Development
5. Testing
6. Commercialization
In order to become a commercial success, new products must spread throughout a market after they are introduced.
It happens at different speeds, depending on the individual consumer and on the product itself.
Product characteristics that affect the rate of diffusion
1. Observability
2. Triability
3. Complexity
4. Compatibility
5. Relative advantage
Product life cycle
A pattern of sales and profits that typically changes over time
Stages of PLC
1. Introduction
2. Growth
3. Maturity
4. Decline
The power to influence customers–to remind them, to inform them, to persuade them.
Integrated marketing communication
The coordination of marketing messages through every promotional vehicle to communicate a unified impression about a product.
positioning statement
A brief statement that articulates how the marketer would like the target market to envision a product relative to the competition.
promotional channels
Specific marketing communication vehicles, including traditional tools, such as advertising, sales promotion, direct marketing, and personal selling, and newer tools such as product placement, advergaming, and internet minimovies.
product placement
The paid integration of branded products into movies, television, and other media.
Video games, created as a marketing tool, usually with brand awareness as the core goal.
buzz marketing
The active simulation of word-of-mouth via unconventional, and often relatively low cost, tactics. Other terms for this are “guerrilla marketing” and “viral marketing”
A deep association between a marketer and a partner (usually a cultural or sporting event), which involves promotion of the sponsor in exchange for either payment or the provision of goods.
Paid, nonpersonal communication, designed to influence a target market with regard to a product, service, organiation, or idea.
Sales promotion
Marketing activities designed to stimulate immediate sales activity through specific short-term programs aimed at either consumers or distributors.
Advantages of Broadcast TV
1. Mass audience
2. High impact
Disadvantages of Broadcast TV
1. Disappearing viewers
2. Jaded viewers
3. High cost
Advantages to Cable TV
1. Targeted programming
2. Efficient
3. High impact
Disadvantages to Cable TV
1. DVRs
2. Uneven quality
Advantages to Newspapers
1. Localized
2. Flexible
3. Consumer acceptance
Disadvantages of newspapers
1. Short life span
2. Clutter
3. Quality
Advantages to direct mail
1. Highly targeted
2. International opportunity
3. Email option
Disadvantages to direct mail
1. Wasted resources
2. High cost
3. Spam
Advantages to radio
1. Highly targeted
2. Low cost
3. very flexible
Disadvantages to radio
1. Low impact
2. Jaded listeners
Advantages to magazines
1. Highly targeted
2. Quality
3. Long life
Disadvantages to magazines
1. High cost
2. Inflexible
Advantages to outdoor advertising
1. High visibility
2. Repeat exposure
3. Breakthrough ideas
Disadvantages to outdoor advertising
1. Simplistic messages
2. Visual pollution
3. Limited targeting
Advantages to the internet
1. 24/7 global coverage
2. Highly targeted
3. Interactive
Disadvantages to the internet
1. Intrusive
2. Limited relationship
Consumer promotion
Designed to generate immediate consumer sales, using tolls such as premiums, coupons, promotional products, rebates, and displays.
Trade promotion
Marketing activities designed to stimulate wholesalers and retailers to push specific products more aggressively in the short term.
public relations (PR)
The ongoing effort to create positive relationships with all of a firm’s different publics, including customers, employees, suppliers, the community, the general public, and the government.
Unpaid stories in the media that influence perceptions about a company or its products.
Biggest advantage is that it is usually credible.
Downside is that marketer usually has no control.
Personal selling
The world’s oldest form of promotion. It is person to person presentation of products to potential buyers.
missionary selling
Promoting goodwill for a company by providing information and assistance to customers.
Sales process
1. Prospect and Qualify
2. Prepare
3. Present
4. Handle Objections
5. Close sale
6. Follow-up
consultative selling
A type of personal selling that involves shifting the focus from the products to the customers.
Team selling
A type of personal selling that tends to be especially effective for large, complex accounts. The approach includes a group of specialists from key functional areas of the company. The goal is to uncover opportunities and respond to needs that would be beyond the capacity of a single salesperson.
Factors affecting the promotional mix
1. Product characteristics
2. Stage in the PLC
3. Target audience
4. Push vs. pull
5. Competitive environment
6. udget
push strategy
A marketing approch that involves motivating distributors to heavily promote a product to final customers. Usually through heavy trade promotion and personal selling.
Pull strategy
A marketing approach that involves creating demand from the ultimate consumers so that they can pull your products through the distribution channels by actively seeking them.