Marketing Chapters 7-10

Segmentation
The process of dividing a larger market into smaller pieces based on one or more meaningfully shared characteristics
Demographics
Statistics that measure observable aspects of a population, including size, age, gender, ethnic group, income, education, occupation, and family structure.
Generational Marketing
Marketing to members of a generation, who tend to share the same outlook, values, and priorities
Generation Z
Group of consumers born after 1994. Most diverse generation. Accustomed to blurred gender roles. They are also digital natives, who spend a lot of time online.
Generation Y, or Millennials
Group of consumers born between 1979 and 1994. First generation to grow up online. Approximately 27% of population and spend a lot of money. Hard to reach through traditional media.
Generation X
Group of consumers born between 1965 and 1978. Have a cynical attitude towards toward marketing.
Baby Boomers
Segment of people born between 1947 and 1964. Many of them have a lot of money.
Buying Power
Based on an understanding of what discretionary and non-discretionary income of customers and what they can afford to buy.
Content Marketing
Strategy of establishing thought leadership in the form of bylines, blogs, commenting opportunities, videos, sharable social images, and infographics
VALS
Pyschographic segmentation system that divides US adults into 8 groups according to what drives them psychologically as well as by their economic resources
Gamer segment
A consumer segment that combines a psychographic/lifestyle component with a heavy dose of generation marketing. Segmented towards those who play video games
80/20 rule
Marketing rule of thumb that 20% of purchases account for 80% of a product’s sales
Long Tail
idea that companies can make money by selling small amounts of items that only a few people want, provided they sell enough different items
Targeting
Evaluating the attractiveness of each potential segment and decide which of these groups they will invest resources to try to turn them into customers.
Positioning
Developing a marketing strategy to influence how a particular market segment perceives a good or service in comparison to the competition
Retro Brands
A once-popular brand that has been revived to experience a popularity comeback, often by riding a wave of nostalgia
Brand anthropomorphism
The assignment of human characteristics and qualities to a brand
Attributes
Features, functions, benefits, and uses of a product.
Includes packaging, brand name, and supporting features
Core product
All the benefits the product will provide for consumers or business customers
Actual Product
The physical good or the delivered service that supplies the desired benefit
Augmented Product
Actual product plus other supporting features such as warranty, credit, delivery, installation
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 Product
Basic or necessary items that are available almost everywhere
Consumer packaged good
Low cost good that is consumed quickly and replaced frequently
Shopping Products
Goods or services where customers spend considerable time and effort gathering information and evaluating alternatives before making a purchase
Maintenance, repair, and operating (MRO)
Goods that a business customer consumes in a relatively short time
Continuous Innovation
Modification to an existing product
Dynamically continuous innovation
Change in an existing product that requires a moderate amount or learning or behavior change
Discontinuous innovation
Totally new product that creates major changes in the way we live
Phases in New Product Development
1. Idea Generation
2. Product Concept Development and Screening
3. Marketing Strategy Development
4. Business Analysis
5. Technical Development
6. Test Marketing
7. Commercialization
Technical Success
Indicates if product concept is feasible from the standpoint of whether or not it is possible to physically develop it
Commercial Success
Indicates if the product concept is feasible from the standpoint of whether or not there will sufficient customer demand for the product
Business Analysis
Step in the product development process in which markets assess a product’s commercial viability
Simulated Market Test
Application of special computer software the simulates the product launching
Product adoption
Process by which a consumer or business customer begins to buy and use a new good, service, or idea
Diffusion
Process how a product spreads through 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
Media Blitz
Massive advertising campaign that occurs over a relatively short time
Observability
How visible a new product and its benefits are to others who might adopt it
Product Line
A firm’s total product offering designed to satisfy a single need or desire of target customers
Product Line Length
Determined by the number of separate items within the same category
Stock Keeping Unit
Unique identifier for each distinct product
Cannibalization
Loss of sales of an existing brand when a new item in a product line or product family is introduced
Product mix
Total set of all products a firm offers for sale
Product mix width
Number of different product lines the firm produces
Product Quality
Overall ability of the product to satisfy customer expectations
Total Quality Management
Management philosophy that focuses on satisfying customers through empowering employees to be an active part of continuous quality improvement
Internal customers
Coworkers that interact who harbor the attitude and belief that all activities ultimately impact external customers
Internal customer 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 Method
Process whereby films work to limit product defects to 3.4 million or fewer
Product Life Cycle
Introduction
Growth
Maturity
Decline
Brand Equity
Value of a brand to an organization
Brand Meaning
The beliefs and associations that a consumer has about the brand
Sub-branding
Creating a secondary brand within a main brand, that can help differentiate a product line to a desire target group
Ingredient Branding
Type of branding in which branded materials become “component parts” of other branded products
Universal Product Code (UPC)
Bar codes on items that correspond to a unique 10 digit number
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 is opposite
Cross elasticity of demand
When changes in the price of one product affect the demand for another item
Variable costs
Costs of production (raw and processed materials, parts, and labor) that are tired to and vary, depending on the number of units produced
Break-even point
Point which total revenue and total costs are equal
Contribution per unit
The difference between the price the firm charges for a product and the variable costs
Gross Margin
The markup amount added to the cost of a product to cover the fixed costs of the retailer or wholesaler and leave an amount for a profit
MSRP (manufactured suggested retail price)
The price the manufacturer sets as the appropriate price for the end consumer to pay
Vertical Integration
The combining of manufacturing operations with channels of distribution under a single ownership to reduce costs and increase profits
Shopping for control
Consumers buying products for safety and control, such as installing smart home technology, or moving to gated communities
Keystoning
Retail pricing strategy in which the retailer doubles the cost of the item
Yield Management Pricing
Practice of charging different prices to different customers 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 same or similar prices
High/low pricing
Retail pricing strategy in which the retailer prices merchandise at list price, but runs frequent promotions that heavily discount some products
Skimming Price
Very high premium price that a firm charges for its new, highly desirable product
Penetration Pricing
Introduce new products at a very low price to encourage more customers to purchase it
Price Segmentation
Practice of charging different prices to different market segments for the same product
Peak-load pricing
Pricing plan that sets prices higher during periods with higher demand
Surge pricing
Pricing plan that raises prices of a product as demand goes up and lowers it as demand slides
Payment pricing
Pricing tactic that breaks up the total price into smaller amounts payable over time
Price bundling
Selling two or more goods or services as a single package for one price
Captive pricing
Pricing tactic for two items that must be used together. One item is priced very low, but the firm makes the profit on the other item that is priced very high.
F.O.B. Factory Pricing
Price of shipping is dependent on the location of the customer and the cost is the responsibility of the customer
Freight absorption pricing
Pricing tactic in which the seller absorbs the total cost of transportation
Trade discount
Discounts off list price of products to members of the channel of distribution who perform various marketing decisions
Dynamic Pricing
Price can be easily adjusted to meet changes in the marketplace.
Freemium
Product is free, but an upgraded full version has a price
Internal Reference Price
Set price or price range in consumer’s minds that they refer to in evaluating a product’s price
Unfair Sales Acts
State laws that prohibit suppliers from selling products below cost to protect small businesses from larger competitions
Predatory Pricing
Illegal pricing strategy where a company sets a very low price for the purpose of driving competitors out of business.