Marketing Chapter 8, 9, 10

Good
A tangible product that we can see, touch, smell, hear, or taste.
Attributes
Include features, functions, benefits, and uses of a product. Marketers view products as a bundle of attributes that includes the packaging, brand name, benefits, and supporting features in addition to a physical good.
Core Product
all the benefits the product will provide for consumers or business customers
“problems you’re trying to solve – basic benefits”
Actual Product
the physical good or the delivered service that supplies the desired benefit
“meeting what is at the core”
Augmented Product
the actual product plus other supporting features, such as warranty, credit, services, etc.
consumer packaged good or fast moving consumer good
a low cost good that is consumed quickly and replaced frequently
ex: diapers & dish soap
equipment
expansive goods that an organization uses in its daily operations that last for a long time
maintain, repair, and operating (MRO) products
goods that a business customer consumes in a relatively short time
(repair includes on equipment and business)
raw materials
products of the fishing, lumber, agricultural, and mining industries that organizational customers purchase to use in their finished products
processed materials
products created when firms transform raw materials from the original state
specialized services
services that are essential to the operation of an organization but are not part of the production of a product
component parts
manufactured goods are subassemblies of finished items that organizations need to complete their own product
creativity
a phenomenon whereby something new and valuable is created
knockoff
a new product that copies with slight modification the design of an original product
research and development
a well defined and systematic approach to how innovation is done within the firm
value co-creation
the process by which benefit-based value is created through collaborative participation by customers and other stakeholders in a new product development process
business analysis
the step in the product development process in which company engineers refine and perfect a new product
simulated test marketing
application of special computer software to imitate the introduction of a product into the marketplace allowing the company to see the likely impact of price cuts and new packaging – or even to determine where in the store it should try to place the product
crowdfunding
online platforms that allow thousands of individuals to each contribute small amounts of money in order to fund a new product from a startup company
adoption pyramid
reflects how a person goes from being unaware of an innovation through stages from the bottom up of awareness, interest, elevation, trail, adoption, and confirmation (stages you want customer to move through)
media blitz
a massive advertising campaign that occurs over a relatively short time frame
Durable Goods
Consumer products that provide benefits over a long period of time, such as cars, furniture, and appliances.
Nondurable Goods
Consumer products that provide benefits for a short time because they are consumer (such as food) or are no longer useful (such as newspapers).
Convenience Product
A consumer good or service that is usually low-priced, widely available, and purchased frequently with a minimum of comparison and effort.
Staple Products
Basic or necessary items that are available almost everywhere.
Emergency Products
Products we purchase when we’re in dire need. (not urgent but consumers need now)
Shopping Products
Goods or services for which consumers spend considerable time and effort gathering information and comparing alternatives before making a purchase.
Specialty Product
Goods or services that has unique characteristics and is important to the buyer and for which she will devote significant effort to acquire.
Unsought Products
Goods or services for which a consumer has little awareness or interest until the product or a need for the product is brought to her attention. (things you don’t need now and don’t pay attention to them until you need – diapers)
Innovation
A product that consumers perceive to be new and different from existing products.
Continuous
Innovation A modification of an existing product that sets one brand apart from its competitors.
Dynamically Continuous
Innovation A change in an existing product that requires a moderate amount of learning or behavior change.
Discontinuous Innovation
A totally new product that creates major changes in the way we live.
Convergence
The coming together of two or more technologies to create a new system with greater benefits that its separate parts.
New Product Development
The phases by which firms develop new products including idea generation, product concept development and screening, marketing strategy development, business analysis, technical development, test marketing, and commercialization.
Idea Generation
The first step of product development in which marketers brainstorm for products that provide customer benefits and are compatible with the company mission.
Product Concept Development and Screening
The second step of product development in which marketers test product ideas for technical and commercial success.
Business Analysis
The step in the product development process in which marketers assess a product’s commercial viability.
Technical Development
The step in the product development process in which company engineers refine and perfect a new product.
Prototypes
Test versions of a proposed product.
Patent
A legal mechanism to prevent competitors from producing or selling an invention, aimed to reducing or eliminating competition in a market for a period of time.
Test Marketing
Testing the complete marketing plan in a small geographic area that is similar to the larger market the firm hopes to enter.
Commercialization
The final step in the product development process in which a new product is launched into the market. (becomes first step of product lifestyle)
Product Adoption
The process by which a consumer or business customer begins to buy and use a new good, service, or idea.
Diffusion
The process by which the use of a product spreads throughout a population.
Tipping Point
In the context of product diffusion, the point when a product’s sales spike from a slow climb to an unprecedented new level, often accompanied by a steep price decline.
Impulse Purchase
A purchase made without any planning or search effort. (candy at register)
Innovators
The first segment (roughly 2.5 percent) of a population to adopt a new product.
Early Adopters
Those who adopt an innovation early in the diffusion process, but after the innovators.
Early Majority
Those whose adoption of a new product signals a general acceptance of the innovation.
Late Majority
The adopters who are willing to try new products when there is little or no risk associated with the purchase, when the purchase becomes an economic necessity, or when there is social pressure to purchase.
Laggards
The last consumers to adopt an innovation.
Relative Advantage
The degree to which a consumer perceives that a new product provides superior benefits. (benefits of product)
Compatibility
The extent to which a new product is consistent with existing cultural values, customs, and practices. (how product fits in life)
Complexity
The degree to which consumers find a new product or its use difficult to understand. (make it easier to understand)
Trialability
The ease of sampling a new product and its benefits.
Observability
How visible a new product and its benefits are to others who might adopt it.
Product Management
The systematic and usually team-based approach to coordinating all aspects of a product’s marketing initiative including all elements of the marketing mix.
Product Line
A firm’s total product offering designated to satisfy a single need or desire of target customers.
Product Line Length
Determined by the number of separate items within the same category.
Cannibalization
The loss of sales of an existing brand when a new item in a product line or product family is introduced.
Product Mix
The total set of all products a firm offers for sale.
Product Mix Width
The number of different product lines the firm produces.
Product Quality
The overall ability of the product to satisfy customers’ expectations. (looking at satisfaction of product – did it fill basic needs: core)
Product Life Cycle
A concept that explains how products go through four distinct stages from birth to death; introduction, growth, maturity, and decline. (based on new to world products – they all go through this)
Introduction Stage
The first stage of the product life cycle in which slow growth follows the introduction of a new product in the marketplace.
Growth Stage
The second stage in the product life cycle, during which consumers accept the product and sales rapidly increase.
Maturity Stage
The third and longest stage in the product life cycle, during which sales peak and profit margins narrow.
Decline Stage
The final stage in the product life cycle, during which sales decrease as customer needs change.
Brand
A name, a term, a symbol, or any other unique element of a product that identifies one firm’s products and sets it apart from the competition.
Trademark
The legal term for a brand name, brand mark, or trade character; legally registered by a government obtain protection for exclusive use in that country.
Brand Equity
The value of a brand to an organization.
Brand Meaning
The beliefs and associations that a consumer has about the brand.
Brand Storytelling
Marketers seek to engage consumers with compelling stories about brands.
Brand Extensions
A new product sold with the same brand name as a strong existing brand.
Sub-branding
Creating a secondary brand within a main brand that can help differentiate a product line to a desired target group.
Family Brand
A brand that a group of individual products or individual brands share.
National or Manufacturer Brands
Brands that the product manufacturer owns.
Private-label Brands
Brands that a certain retailer or distributor owns and sells.
Generic Branding
A strategy in which products are not branded and are sold at the lowest price possible.
Licensing
An agreement in which one firm sells another firm the right to use a brand name for a specific purpose and for a specific period of time.
Cobranding
An agreement between two brands to work together to market a new product.
Package
The covering or container for a product that provides product protection, facilitates product use and storage, and supplies important marketing communication.
Universal Product Code
The set of black bars or lines printed on the side or bottom of most items sold in a grocery store and other mass-merchandising outlets. The UPC, readable by scanners, creates a national system of product identification.
Brand Manager
An individual who is responsible for developing and implementing the marketing plan for a single brand.
Product Category Managers
Individuals who are responsible for developing and implementing the marketing plan for all the brands and products within a product category.
Market Manager
An individual who is responsible for developing and implementing the marketing plans for products sold to a particular customer group.
Venture Teams
Groups of people within an organization who work together to focus exclusively on the development of a new product.
stock-keeping unit (SKU)
a unique identifier to each distinct product
total quality management (TQM)
a management philosophy that focuses on satisfying customers through empowering employees to be an active part of continuous quality improvement
internal customers
other employees with whom employees interact with attitude that all activities ultimately impact externe customers
internal customers mind-set
an organizational culture in which all organization members treat each other as valued customers
ISO 9000
criteria developed by the international organization for standardization to regulate product quality in Europe
six sigma
a process whereby firms work to limit product defect to 3.4 per million or fewer (Sigma is SD of mean – 6 Ids from an normal distribution curve)
independent branding
a type of branding in which branded materials become “component parts” of other branded products
Bitcoin
the most popular and fastest growing digital currency
price
the assignment of value, or the amount the consumer must exchange to receive the offering
market share
the percentage of a market (defined in terms of either sales units or revenue) accounted for by a specific firm, product lines, or brands
prestige products
products that have a high price and that appeal to status-conscious customers
price elasticity of demand
the percentage change in unit sales that results from a percentage change in price
elastic demand
demand in which changes in price have large effects on the amount demanded
inelastic demand
demand in which changes in price have little or no effect on the amount demanded
cross-elasticity of demand
when changes in the price of one product affect the demand for another item
variable costs
the costs of production (raw and processed materials, parts, and labor) that are tied to and vary, depending on the number of units produced
fixed costs
costs of production that do not change with the number of units produced
average fixed cost
the fixed cost per unit produced
total costs
the total of the fixed costs ad the variable costs for a set number of units produced
break-even analysis
a method for determining the number of units that a firm must produce and sell at a given price to cover all its costs
break-even point
the point at which the total revenue and total costs are equal and beyond which the company makes a profit; below that point, the firm will suffer a loss
contribution per unit
the difference between the price the firm charges for a product and the variable costs
markup
an amount added to the cost of a product to create the price at which a channel member will sell the product
gross margin
the markup amount added tot he cost of a product to cover the fixed costs of the retailer or wholesaler and leave an amount for a profie
retailer margin
the margin added to the cost of a product by a retailer
wholesaler margin
the amount added to the cost of a product by a wholesaler
list price or manufacturer’s suggested retail price (MSRP)
the price that the manufacturer sets as the appropriate price for the end consumer to pay
cost-plus pricing
a method of setting prices in which the seller totals all the costs for the product and then adds an amount to arrive at the selling prices (fixed and variable + amount wanted to make it)
demand-based pricing
a price-setting method based on estimates of demand at different prices
target costing
a process in which firms identify the quality and functionality needed to satisfy customers and what price they are willing to pay before the product is designed; the product is manufactured only if the firm can control costs to meet the required price (start w/ price you want to charge, consumers say how much they want to pay – design product based off that price; mostly based off customer feedback)
yield management pricing
a practice of charging different prices to different customers in order to manage capacity while maximizing revenues
price leadership
a pricing strategy in which one firm first sets its price and other firms in the industry follow with the same or very similar prices
value pricing or everyday low pricing (EDLP)
a pricing strategy in which a firm sets prices that provide ultimate value to customers
skimming price
a very high, premium price that a firm charges for its new, highly desirable product (lots of money at first and then drop it few weeks in)
penetration pricing
a pricing strategy in which a firm introduces a new product at a very low price to encourage more customers to purchase it
trial pricing
pricing a new product low for a limited period of time in order to lower the risk for a customer
price bundling
selling two or more goods or services as a single package for one price (phone and tv – make customer think they are getting a “bang for your buck”
captive pricing
a pricing tactic for two items that must be used together; one item is priced very low, and the firm makes its profit on another, high-margin item essential to the operation of the first item (printer and ink: taking hit on one item and making it up on another)
F.O.B. origin pricing
a pricing tactic in which the cost of transporting the product from the factory to the customer’s location is the responsibility of the customer
F.O.B. delivered pricing
a pricing tactic in which the cost of loading and transporting the product to the customer is included in the selling price and is paid by the manufacturer
uniform delivered pricing
a pricing tactic in which a firm adds a standard shipping charge to the price for all customers regardless of location
freight absorption pricing
a pricing tactic in which the seller absorbs the total cost of transportation
trade discounts
discounts off list price of products to members of the channel of distribution who perform various marketing functions
quantity discounts
a pricing tactic of charging reduced prices for purchases of larger quantities of a product
cash discounts
a discount offered to a customer to entice them to pay their bill quickly
seasonal discounts
price reductions offered only during certain times of the year
dynamic pricing
a pricing strategy in which the price can easily be adjusted to meet changes in the marketplace
internet price discrimination
an internet pricing strategy that charges different prices to different customers for the same product
online auctions
e-commerce that allows shoppers to purchase products through online bidding
freemium
a business strategy in which a product in its most basic version is provided free of charge but the company charges money (the premium) for upgraded versions of the product with more features, greater functionality, or greater capacity
internal reference price
a set price or a price range in consumers’ minds that they refer to in evaluating a product’s price
price lining
the practice of setting a limited number of different specific prices, called price points, for items in a product line
bait-and-switch
an illegal marketing practice in which an advertised price special is used as bait to get customers into the store with the intention of switching them to a higher priced item
loss-leader pricing
the pricing policy of setting prices very low or even below cost to attract customers into a store
unfair sales act
state laws that prohibit suppliers from selling products below cost to protect small businesses from larger competitors
price fixing
the collaboration of two or more firms in setting prices, usually to keep prices high
surge pricing
a pricing strategy in which the price of a product is raised as demand for that product goes up and lowered as demand goes down
predatory pricing
an illegal pricing strategy in which a company sets a very low price for the purpose of driving competitors out of business
elements of price planning
setting price objectives
estimate demand
determine costs
examine the pricing environment
choose a pricing strategy
develop pricing tactics