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Marketing Chapter 7
| Term | Definition |
|---|---|
| Market penetration | considered the least risky because the company is focused on growth by increasing market share with existing products |
| Product development | considered riskier as the company develops new products for its existing market |
| Market development | considered even more risky as a company seeks to develop new markets with existing products |
| Diversification | considered the riskiest as a company seeks to enter new markets with new products |
| Porter's Five Forces (forces governing competition in an industry) | the industry (jockeying for position among current competitors), threat of new entrants, bargaining power of customers, threat of substitute products/services, bargaining power of suppliers |
| Current competition | companies are always vying for a position amongst current competitors |
| New Entrants | there is always a threat of new competitors entering the market |
| Substitute Products or Services | there is a continual threat of new products or services that render existing offerings obsolete or less desirable |
| Bargaining power of suppliers | companies are typically reliant on other businesses in their supply chain who control inputs and outputs potentially affecting results |
| Bargaining power of customers | companies are always concerned with customers' ability to purchase, price sensitivity, and changing preferences, among others |
| Five-Stage Product Development | 1. Core Benefit, 2. Generic product, 3. Expected Product, 4. Augmented product, 5. Potential product |
| Core Benefit | the fundamental need or want consumers have that a product addresses |
| Generic Product | a simplified version of the product with only features necessary for basic functionality |
| Expected Product | a more enhanced version of the product with features that differentiates it from the competition |
| Augmented Product | a version of the product with additional features that differentiates it from the competition |
| Potential Product | this is the product in the future with additional features and benefits that will delight customers fostering greater loyalty |
| Practical Stages of Product Development | 1. Ideation, 2. Research, 3. Planning, 4. Prototyping, 5. Sourcing, 6. Costing, 7. Production |
| Ideation | coming up with product ideas that are worthy of developing into viable offerings |
| Research | the ideas are discussed internally and feedback is sought from customers, employees, and vendors; the most viable are put forward for further development |
| Planning | entails drawings, sketches, or descriptions of the envisioned final product |
| Prototyping | developing an early stage version of the product that can be shown to manufacturers or shared with designers and developers (if a software product) |
| Sourcing | finding the suppliers, vendors, designers, and developers who will actually develop the product (externally or internally) |
| Costing | ascertaining the COGS (cost of goods sold) as well as other costs including warehousing, distribution, shipping, and other related costs |
| Production | undertaking production either externally or internally to develop the product for market delivery |
| Technology as a product development trend | timelines to develop a product and bring it to market are shorter; ex - cars used to take 6 years and now take 3-4 years |
| Minimum Viable Product (MVP) as a product development trend | many companies build a "basic" or "MVP," which gets them to market where they receive user feedback and iterate on the product by adding features and benefits. Emanates from the agile methodology used in software development |
| Agile as a product development trend | Methodology in software development that emphasizes breaking larger efforts into smaller pieces and iterating on product development by incorporating user feedback |
| Personal Interviews (offline research) | one on one in-person or telephone interviews |
| Focus groups (offline research) | typically 5-10 customers who provide feedback to questions asked by a moderator (often an employee of the company) |
| Shopper intercepts (offline research) | researcher who "intercepts" people while they are shopping to ask questions |
| Warranty cards (offline research) | product warranty cards (physical or online) often contain market segmentation and product usage data |
| Surveys (online research) | a common, cost-effective, and efficient solution to gaining customer feedback |
| Web and app metrics | these tools provide insights on site visitors and app users, and tools like HubSpot provide data on who is on the website as well --not just number of people; these are useful to measure customer and prospect activity |
| Heat maps and eye tracking software | particularly useful for digital products, applications, and software programs, these tools track how users interact with websites and programs |
| Reviews and social sentiment | reviews and monitoring tools are useful for gaining insights into public sentiment about the brand, products, and customer service |
| Product Life Cycle | introduction, growth, maturity, decline |
| Introduction | product is launched typically with heavy promotion |
| Growth | product gains market share and competitors enter the market |
| Maturity | product has considerable awareness and market share |
| Decline | product begins losing market share as new competitive offerings overtake existing products |
| Diffusion of Innovation | innovators, early adopters, early majority, late majority, laggards |
| Innovators | 2.5% of people fall into this category; first to try new products, risk-takers, adventurous, appreciate new ideas |
| Early Adopters | 13.5% of people fall into this category; comfortable with new ideas and change, opinion leaders |
| Early Majority | 34% of people fall into this category; adopt new ideas before the average person, need evidence before adopting new ideas or technology |
| Late Majority | 34% of people fall into this category; skeptical of new ideas, resistant to change, accept innovation after it has been tried by the majority |
| Laggards | 16% of people fall into this category; traditional and conservative, fear of change, unwilling to embrace new ideas |
| Product Line Stretch | when a company pursues additional market share by selling more of its current products or brands to address different segments of the market |
| Down Market Product Line Stretch | when a brand currently serves a middle or upper market and wants to serve a lower-level market; companies want to go down market when there is a compelling market share or as a competitive move |
| Up Market Product Line Stretch | when a brand currently serves a lower market and wants to serve a higher-level or premium market; usually motivated by higher profits that are associated with premium products |
| Two-Way Market Product Stretch | when a brand wants to cover the majority of the market including the lower level and higher end; goal is to increase overall market share and profitability |
| Product Category | when a product exists in terms of classification, used across and within industries |
| Subcategories | categories within general product categories and are the result of companies specializing and differentiating themselves from the competition |
| A Line Extension | when a product is expanded upon to include other variations similar in nature to the original product |
| A Brand Extension or Category Extension | when a company seeks to leverage its brand by moving into a different product category |
| Product | the heart of marketing, including services |
| Marketing | about strategy and execution with the ultimate goal of selling something |
| Marketing is concerned with... | determining what products to bring to market, ascertaining with customers will purchase, and how to reach prospects with relevant messaging about those products |
| Value exchange | providing a product or service in exchange for money (the reason a business has customers) |
| Lean Manufacturing | designed to take waste out of the manufacturing process while increasing efficiency |
| Pricing | affects brand positioning, market acceptance, competitive stance, and profitability |
| Price Skimming | a strategy that prices new and innovative products exceptionally high, where early adopters are willing to pay more to be the first to purchase |
| Competitive Pricing | requires careful market analysis and usually works best in markets with similar products |
| Loss-leader pricing | used in myriad businesses, including Walmart, which sells certain items at a loss to drive store traffic, with the expectation that customers will purchase other and more profitable products during their visit |
| Psychological pricing | leverages human psychology as our minds subconsciously associate a lower cost because $19.99 is still in the "teens" versus $20.00, which feels much higher |
| Value Pricing | a strategy focuses on aligning prices with perceived benefits |
| SWOT | helps marketers and other stakeholders understand important issues that are internal to the company (strengths and weaknesses) as well as external to the company (opportunities and threats) |
| Research helps to identify... | viability of the product idea, ability to undertake new product development, where the company is strong, where the company is weak, level of competition, other external threats (economic, regulatory) |
| Existing customers | the first line of research usually begins with people who are already doing business with a company |
| Prospective customers | customers that the company has yet to earn are often a great resource for feedback as it relates to existing and prospective new products |
| Stakeholders | employees and vendors are ripe sources of information because they see how products are used in the real world through observation, customer feedback, and industry knowledge, these groups also have a vested interest in the successful launch |
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calliemiller729