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MKTG 250 - Unit 3
| Term | Definition |
|---|---|
| Product Life Cycle | describes the stages a new product goes through in the marketplace: introduction, growth, maturity, and decline |
| Introduction Stage | stage in the Product Life Cycle; gaining awareness using skimming or penetration |
| Growth Stage | stage in the Product Life Cycle; differentiation introducing your product and other competitors start coming into the market gaining market share |
| Maturity Stage | stage in the Product Life Cycle; brand loyalty where there is the most full product line and we slow the total industry sales or the revenue of the product class Gatorade is in this stage promotional expenses are for maintaining market share and profit |
| Decline Stage | stage in the Product Life Cycle; harvesting or deletion price goal is to stay profitable |
| Skimming Pricing Strategy | Used in the introductory phase of the product life cycle; initially pricing high for prestige and to make money back after the commercialization process |
| Penetration Pricing Strategy | Used in the introductory phase of the product life cycle; initially pricing low so that people will try the product |
| Harvesting | Used in the Decline phase of the product life cycle; a company retains the product but reduces marketing costs/the product continues to be offered but salespple do not allocate time in selling and limited advertising dollars are spent to support it |
| Deletion | Used in the Decline phase of the product life cycle; taking the product off the market (need to know an example for it) |
| Fashion | a style of the times; the product is introduced, declines, and then seems to return later |
| Fad | the product increases quickly and declines as quickly Ex: Fidget Spinner |
| Product Class | refers to the entire product category or industry |
| Product Form | pertains to variations of a product within the product class |
| Innovator | the earliest adopter of a product; venturesome, higher educated, use multiple information sources Ex: people staying overnight to get a new phone |
| Product/Brand Manager | Responsibilities: manage product life cycle stages new-product development marketing program implementation extensive data analysis, including Category Development Index and Brand Development Index |
| Product Modification | involves altering one or more of a product's characteristics, such as its quality, performance, or appearance, to increase the product's value to customers and increase sales; common approach is bundling |
| Bundling | the sale of two or more separate products in one package |
| Market Modification | strategies by which a company tries to find new customers, increase a product's use among existing customers, or create new use situations Ex: kids playing with shaving cream |
| Trading Up | adding value to the product (or line) through additional feature or higher-quality materials; giving you something additional that you didn't expect |
| Trading Down | reducing a product's number of features, quality, or price also exists in shrinkflation or downsizing Ex: airline industry where you used to get a checked bag for free |
| Branding | a marketing decision in which an organization uses a name, phrase, design, symbols, or combination of these to identify its products and distinguish them form those of competitors |
| Brand Name | any word, device (design, sound, shape, or color), or combination of these to identify its products and distinguish them from those of competitors |
| Brand Personality | a set of human characteristics associated with a brand name; assigning personality traits to products |
| Brand Equity | the added value a brand name gives to a product beyond the functional benefits provided Advantages: competition, and consumers are often willing to pay a higer price for a product with brand equity |
| Brand Licensing | a contractual agreement whereby one company (licensor) allows its brand name(s) or trademarks(s) to be used with products or services offered by another company (licensee) for a royalty or fee |
| Packaging | a component of a product that refers to any container in which it is offered for sale and on which label information is conveyed |
| Labeling | an integral part of the package that typically identifies the product or brand, who made it, where and when it was made, how it is to be used, and package contents and ingredients |
| Functional Benefits of Packaging | providing storage, convenience, or protection to products or ensuring product quality Ex: making products stackable, convenience dimensions of packaging, tamper-resistant containers |
| Communication Benefits of Packaging | label information conveyed to the customer (directions on how, where, and when to use the product and the source and composition of the product, which is needed to satisfy legal requirements of a product |
| Services | intangible activities or benefits that an organization provides to satisfy consumers' needs in exchange for money or something else of value Spent almost twice as much on than goods in the US Different from goods and ideas! |
| 4 I's of Services | the four unique elements to services: intangibility, inconsistency, inseparability, and inventory |
| Intangibility | element of services; cannot be touched, held, seen before the purchase decision |
| Inconsistency | element of services; quality is often inconsistent, and services depend on the people who provide them, meaning quality varies with each person's capabilities and day-to-day performance |
| Inseparability | element of services; the consumer cannot separate the deliverer of the services from the service itself, and the interaction between the service provider and the consumer means that they often co-create value together |
| Inventory | element of services; many items are perishale and there are costs associated with handling it, but with services, it's carrying costs are more subjective and are related to idle production capacity |
| Idle Production Capacity | occurs when the service provider is available but there is no demand for the service |
| Inventory Carrying Costs | cost to store services Ex of low cost: real estate agency and hair salon Ex of high cost: airplane and hospital |
| Service Continuum | the range of offerings companies bring to the market, from the tangible to the intangible or the product-dominant to the service-dominant Product Dominant: Salt Balanced: fast-food restaurant Service Dominant: nursing, teaching |
| Search Properties | tangible products; color, size, and style that can be determined before purchase ex: clothing, jewelry, furniture, houses, automobiles |
| Experience Properties | restaurants and child care; can be discerned only after purchase or during consumption ex: restaurant meals, vacation, haircuts, child care |
| Credence Properties | specialized professionals; characteristics that the consumer may find impossible to evaluate even after purchase and consumption ex: television repair, legal services, root canal, auto repair, medical diagnosis |
| Customer Contact Audit | a flowchart of the points of interaction or "service encounters" between consumers and a service provider |
| Gap Analysis | a type of analysis that compares the differences between the consumer's expectations about and experiences with a service based on dimensions of service quality |
| 7 P's in the Service Marketing Mix | Product, Place, Price, Promotion - and - people, physical environment, and process |
| Off-Peak Pricing | charging different prices during different times of the day or during different days of the week to reflect variations in the demand for the service |
| Internal Marketing | the notion that a service organization must focus on its employees, or internal market, before successful programs can be directed at customers |
| Capacity Management | Part of the Process of the 7 P's; integrating the service component of the marketing mix with efforts to influence consumer demand |
| Price | the money or other considerations (including other products and services) exchanged for the ownership or use of a product or service Also called fees, fares, tuition, etc. |
| Barter | the practice of exchanging products and services for other products and services rather than for money |
| Price Equation | = Cost + Profit |
| Value | the ratio of perceived benefits to price; relationship shows that for a given price, as perceived benefits increase, value increases = (Perceived Benefits/ Price) |
| Value Pricing | the practice of simultaneously increasing product and service benefits while maintaining or decreasing price |
| Profit Equation | Profit = (Unit Price x Quantity Sold) - (Fixed Cost + Variable Cost) |
| Setting Price Steps | 6 steps for setting the price for a product |
| Identify Pricing Objectives and Constraints step in the Price Setting Process | step in the price setting process; objectives like profit, market share, and survival constraints like demand for product class and brand, newness, costs, and competition |
| Estimate Demand and Revenue step in the Price Setting Process | step in the price setting process; demand estimation sales revenue estimation price elasticity estimation |
| Determine Cost, Volume, and Profit Relationships step in the Price Setting Process | step in the price setting process; cost estimation marginal analysis, in relation to profit break-even analysis, in relation to profit |
| Goals for Pricing Objectives | profit, sales revenue ($), market share ($ or %), unit volume (#), survival, social responsibility |
| Market Share Objective for Pricing | anything about pricing and it's a percentage |
| Unit Volume Objective for Pricing | anything about a number we want to sell of a product ex: Washburn guitars |
| Survival Objective for Pricing | anything about pricing to keep the company alive |
| Pricing Constraints | 1. Demand for product class, group, or brand 2. Newness of product stage in product life cycle 3. cost of producing/marketing the product 4. type of market 5. single product v. line 6. competition price/awareness 7. legal/ethical considerations |
| Demand Curve Increase | If we changed the price of a pizza from $8 to $6, what will happen to demand? |
| Demand Factors | factors that determine consumers' willingness and ability to pay for products and servies; movement along a demand curve means that an increased demand could shift the line ex: consumer taste, price and availability of products, consumer income |
| Elastic Demand | exists when a 1% decrease in price produces more than a 1% increase in quantity demanded, thereby actually increasing total revenue ex: cereal, potato chips more substitutes = more elastic |
| Inelastic Demand | exists when a 1% decrease in price produces less than a 1% increase in quantity demanded, thereby actually decreasing total revenue ex: necessities; gasoline prices and baby items (diapers and formula) lower price doesn't mean big quantity increase |
| Total Revenue | the total money received from the sale of a product = Price (P) x Quantity (Q) |
| Fixed Costs | the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold something that is about the same for at least a year |
| Variable Costs | the sum of the expenses of the firm that vary directly with the quantity of a product that is produced and sold Ex: direct labor and direct materials used in oroduction, sales commissions, gasoline |
| Calculating a Break-Even Point | = Fixed Cost/(Price - Unit Variable Cost) memorize the formula!^ |
| Washburn Guitars | successful because they have different product lines at different price points for different segments |
| Odd-Even Pricing | setting prices a few dollars or cents under an even number |
| Target Profit Pricing | setting an annual target of a specific dollar volume of profit |
| Quantity Discounts | reductions in unit costs for a larger order |
| Everyday Low Pricing | the practice of replacing promotional allowances with lower manufacturer list prices Ex: Walmart |
| The Place aspect of the 4 P's | what chapter 15 has to deal with |
| Transactional Marketing Functions | buying, selling, risk taking |
| Logistical Marketing Functions | assorting, storing, sorting, and transporting |
| Facilitating Marketing Functions | financing, grading, marketing information and research |
| Multichannel Distribution | the blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop and buy in traditional intermediaries and online also called omnichannel marketing |
| Dual Distribution | reaching different buyers via different channels ex: buying a car or dishwasher |
| Vertical Marketing Systems | professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact; lead to franchises |
| Franchising | a contractual arrangement between a parent company and an individual or firm that allows the franchisee to operate a certain type of business under an established name and according to specific rules |
| Exclusive Distribution Strategy | a level of distribution density whereby only one retainer in a specific geographic area carries the firm's products ex: Rolls Royce, Rolex |
| Intensive Distribution Strategy | a level of distribution density whereby a firm tries to place its products and services in as many outlets as possible |
| Selective Distribution Strategy | a level of distribution density whereby a firm selects a few retailers in a specific geographical area to carry its products |
| Buyer Requirements | Know all of these: information convenience variety pre- or post-sale service profitability: margins earned per channel member |
| Channel Conflicts | arises when one channel member believes another channel member is engaged in behavior that prevents it form achieving its goals; vertical conflict |
| Disintermediation | a source of channel conflict that occurs when a channel member bypasses another member and sells or buys products directly; horizontal conflict |
| Logistics | those activities that focus on getting the right amount of the right products to the right place at the right time at the lowest possible cost |
| Supply Chain | the various firms involved in performing the activities required to create and deliver a product or service to consumers or industrial users |
| Direct Channel | when producers and ultimate consumers deal with each other and no intermediaries Ex: Schwann's, IBM, and Dell.com |
| Indirect Channel examples | Toyota, Mars, Mansar Products, Caterpillar, Stake Fastener Company, Hartman Electric, Amazon.com, Autobytel.com, Orbitz.com |
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