Exam 3: Ch. 8, 9, 10 Flashcards

Question

Innovation

Answer 1

anything that customers perceive as new and different may be minor or game changing alteration to an existing good/ service (rare) possible brand new product category

Answer 2

idea generation through alternation between divergent and convergent thinking Divergent: Diverse people coming up with out of the box alternatives Convergent: analytical focus on the different ideas in order to come to a decision on the best choice

Answer 3

Continuous Innovation Dynamically Continuous Innovation Discontinuous Innovation

Answer 4

1st Level of innovation: least difficult Modification to an existing product Squeeze ketchup bottle Most common form. Can suffer from "knockoffs" where design changes are harder to legally protect

Answer 5

2nd Level Innovation: middle difficulty pronounced modification to an existing product Ex. iphone - record player to cassettes to CDs requires a modest amount of learning for consumers to use, or behavior change includes Convergence ... where two products come together

Answer 6

3rd Level Innovation: hardest Difficulty product creates major change in the way people live ex. telephone, car, airplane, personal computer Rare. Consumers have to learn a great deal in order to be able to effectively use the product

Answer 7

new product development model is funded with R&D - discover and create innovations R&D central metric for measuring innovation 1) Idea Generation, 2) Product Concept Development and Screening, 3) Marketing Strategy Development, 4) Business Analysis, 5) Technical Development, 6) Test Marketing, 7) Commercialization

Answer 8

Ideation (Idea Generation) marketers use a variety of sources and methods to come up with ideas for new products Value Co-creation via collaboration with customers, salespeople, service personnel, and other stakeholders

Answer 9

refers to the process by which an organization creates worth through collaborative participation by customers and other stakeholders in the new product development process

Answer 10

Product Concept Development and Screening | test product ideas for Technical (technologically feasible) and Commercial (anyone is likely to buy) success

Answer 11

Marketing Strategy Development | Introduce the product to the marketplace

Answer 12

Business Analysis | marketers assess a product's commercial viability

Answer 13

Technical Development even seemingly simple continuous innovations - like a new beverage flavor - may require multiple prototypes and consumer tests as part of the technical development phase Prototypes test versions of a proposed product

Answer 14

Market Test or Test Market ... testing the complete marketing place in a small geographic area that is similar to the large market the firm hopes to enter

Answer 15

Commercialization | a new product is launched into the market ... cannot happen overnight

Answer 16

the process by which individual consumers or businesses begin to buy and use a new good, service, or idea

Answer 17

the process by which a population adopts a product or innovation - spreads throughout a population

Answer 18

1) Awareness - Lots of promotion - massive advertising - media blitz 2) Interest - Teaser Ads, prospective adopter sees how new product might satisfy existing or new need 3) Evaluation - Explain benefits, provide info on benefits of product, weigh costs and benefits 4) Trial - Demos, trials, samples, experience or use product for first time 5) Adoption - distribution & after-sale support, product available & product use info 6) Confirmation - reinforce the benefits, reinforce customer's choice w/ sales promotion etc weight expected vs actual benefits and costs

Answer 19

Diffusion Cycle - mostly concerned with innovator and early adopters, otherwise failure 1) Innovators 2.5% - adventurous, risk taker, well-educated - first to adopt new product often sought by marketers for "thought leadership" 2) Early Adopters 13.5% - concerned with social acceptance, heavy media users usually paying higher prices for the latest products "thought leaders" critical to new product success 3) Early Majority 34% - avoid being first or last, middle class, deliberate and cautious Competitors are on the scene by now - slightly above average education/ income levels at this point product not new, but considered established 4) Late Majority 34% - older, conservative, lower than average education/ income market has stabilized - avoid trying new product until it is no longer risky at point product is economic necessity or they have peer pressure 5) Laggards 16% - lower education/income, bound by tradition may not be worth the cost of acquisition - product may have been superseded by new innovation by the time they adopt

Answer 20

Facilitating Adoption: Diffusion marketers look for barriers in these categories and try and remove them so consumers will see the value, try then buy using goals, improve product to improve adoption to improve diffusion 1) Relative Advantage - describes the degree to which a consumer perceives that a new product provides superior benefits (microwave benefit between 60s and 70s) 2) Compatibility - the extent to which a new product is consistent with existing cultural values, customs, and practices - consumer education to overcome objections 3) Complexity - the degree to which consumers find a new product or its use difficult to understand 4) Trialability - the ease of sampling a new product and its benefits testing it in store before buying 5) Observability - how visible a new product and its benefits are to others who might adopt it Ex. friends using product

Answer 21

one of many cognitive biases "anchor" is an initial prompt that influences your subsequent answer initial prompt can be wholly unrelated to the subsequent answer

Answer 22

Brand Management systematic and usually team-based approach to coordinating all aspects of a product's strategy development and execution effective product planning is guided by a continuous process of product management 1) Develop Product Objectives - individual products, product lines and mixes 2) design Product Strategies 3) Make Tactical Product Decisions - product branding & packaging and labeling design 4) organize for product management

Answer 23

a firm's total product offering designed to satisfy a single need or desire of target customers is the ...

Answer 24

Line Length is determined by the number of SKUs (stock keeping units) in a product group # of separate items within same category

Answer 25

number of Lines (different groups) offered

Answer 26

loss of sales in one line that are taken by another line (iphone eats ipods)

Answer 27

total set of products offered | describes a firm's entire range of products

Answer 28

Total Quality Management focuses on satisfying customer needs and attempts to cross silos within companies using a concept that everyone is a customer

Answer 29

Quality as an Objective | Marketing, Engineering, Operations, Finance/Accounting, Sales, Customer Service

Answer 30

an organizational culture in which all organization members treat each other as valued customers 1) employees who receive my work are my customers 2) meeting the needs of employees who receive my work are my customers 3) it is important to receive feedback from employees who receive my work 4) i focus on the requirements of the person who receives my work

Answer 31

Six Sigma - firms work to limit product defects to 3.4 per million or < effectiveness - more profit by higher quality Lean - efficiency (more profit by streamlined processes)

Answer 32

ability to satisfy customer expectations for high-involvement, these represent risks to the consumer and are objections to overcome and needs to be met Degree of Pleasure, Product Safety, Ease of Use, Precision, Durable, Reliable, Versatile, Satisfies needs

Answer 33

Stages ... 1) Introduction, 2) growth, 3) Maturity, 4) Decline products have long lives or are fads (PLC) explains how a market's response and marketing activities change over the life of a product many products never leave the introduction stage (up to 95%) Tipping Point occurs at Growth Stage - where profits start to shrink products decline when they no longer meet consumer needs

Answer 34

1) Introduction Stage - get first-time buyers to try the new product often no or negative profits - recovering R&D costs 2) Growth Stage - new competition enter the market creating new variations of the product encourage brand loyalty - advertise heavily to counter competition 3) Maturity Stage - attract new users, new features added, sales are mostly replacement products - sales are at their peak 4) Decline Stage - profits falling, number of variations in the product reduced

Answer 35

a name, term, symbol, or any other unique element of a product that identifies one firm's product and sets it apart form the competition

Answer 36

Logo - graphic design element related to brand name, not all brand names are associated with a distinct logo, technically not all logos are a brand mark (carry any brand promise) Good Logo Designs - are natural neither too simple or complex readily recognized, convey same meaning to all target market members, evoke positive feelings - suited for periodic updating

Answer 37

words and/or phrases 10 year renewable periods $275 - $325 Pending = TM & Registered = R

Answer 38

authorship life of author plus 70 years * "work for hire" 95 years from date of publication or 120 years from its creation, whichever expires first * C for all recordings, P for recordings

Answer 39

inventions and discoveries 20 years non renewable, except improvements utility, design, and plant patents filing fee: $190 small entity, $380 normal (utility patent) patent # is issued, after long process

Answer 40

USPTO expects the idea being presented to be "novel" copyrighted material has to be sufficiently creative to win protection "reasonable person" test, if consumers think it's new, then it's new

Answer 41

1) Masterbrand - think google maps, books etc 2) Endorsed - Marriott with different hotel chains under their name 3) Individual - P&G will different products but company is unknown

Answer 42

same name but can be for different industries

Answer 43

the value of a brand to an organization | "goodwill"

Answer 44

a new product sold with the same brand name as a strong existing brand

Answer 45

creating a secondary brand within a main brand that can help differentiate a product line to a desired target group

Answer 46

1) Family Brand - multiple items marketed under the same brand name 2) Licensing - an agreement in which one firm sells another firm the right to sue a brand name for a specific purpose and for a specific period of time 3) Co-Branding - an agreement between two brands to work together to market a new product 4) Generic Brands - a strategy in which products are not branded are sold at the lowest price possible 5) National/ Manufacture Brand - brands that the product manufacturer owns 6) Private Label Brands/ store brands - brands that a certain retailer or distributor owns and sells

Answer 47

ICANN internet corporation for assigned names and Numbers administers names and numbers on the internet Internet Protocol (IP) numbers blocks of volume Top Level Domain (TLD) names like com or edu fully independent now

Answer 48

View Model V - Visibility: ability to stand out I - information: on packaging E - Emotional Appeal: cues to suggest specific benefits W - Workability: does the package fit easily onto the retail shelf

Answer 49

packaging designed to mimic the look of a similar or functionally identical national branded product often meant to lead the consumer to perceive the two products are comparable

Answer 50

Fair Packaging and Labeling Act (1966) * Federal Legislation to make labels more helpful to consumers by providing useful (and honest) information Nutrition Labeling and Education Act (1990) * law requires food labels to state how much fat, saturated fat, cholesterol, calories, carbohydrates, protein, and vitamins are in each product serving

Answer 51

in large firms, product management is usually organized in one of three common ways 1) Brand Manager - responsible for developing and implementing the marketing plan for a single brand ex. all knorr products 2) Category Manager - marketing plan for all the brands and products within a product category ex. all ice cream, teas, or condiments 3) Market Manager - marketing plans for products sold to a particular customer group can geographic or segment

Answer 52

groups of people within an organization who work together to focus exclusively on the development of a new product

Answer 53

price includes money, goods, services, favors, votes, or anything that has value to the seller and is given by the buyer in the exchange the assignment of value, or the amount the consumer must exchange to receive the offering or product

Answer 54

Total Value Buyer/Seller Increase Price: Buyer (absorb decrease), Seller (gets increase) Cost: buyer (absorbs decrease) Seller (no effect)

Answer 55

individual attributes or elements of a product or decision that consumers use in decision making Two most often used ... Quality, Price * remember all the ways consumer define quality (see chapter 9)

Answer 56

``` Step 1 - Set Pricing Objective Step 2 - Estimate Demand Step 3 - Determine Costs Step 4 - Examine the Pricing Environment Step 5 - Choose a Pricing Strategy Step 6 - Develop Pricing Tactics ```

Answer 57

Develop Pricing Objectives these must support the broader objectives of the firm as well as its overall marketing objectives 1) Profit - set prices for certain profit margin 2) Sales/ Marketing Share - bundle pricing offers to increase market share 3) Competitive Effect - alter pricing strategy during first quarter of the year to increase dales during competitors introduction of a new product 4) Customer Satisfaction - alter price levels to match customer expectations 5) Image Enhancement - alter pricing policies to reflect the increased emphasis on the product's quality image

Answer 58

to set the right price, marketers must understand many factors influencing pricing success Costs, Demand, Revenue, Pricing Environment

Answer 59

Estimate Demand customers desire for a product based on price see slide for demand curve and prestige products demand curve ch. 10

Answer 60

Step 2: Estimate Demand Primarily used to show the quantity of a product that customers will buy in a given time period, at different prices that might be charged

Answer 61

Step 2: Estimate Demand | factors other than price can shift demand curve up or down

Answer 62

Step 2: Estimate Demand is a measure of the sensitivity of customers to changes in price, elasticity indicates that changes in price usually cause demand to stretch or retract like a rubber band Price Elasticity of Demand = % change in quantity demanded / % change in price

Answer 63

Step 2: Estimate Demand sometimes customers are sensitive to changes in prices, and a change in price results in a substantial change in the quantity they demand like a rubber band, changes in relation to price changes

Answer 64

Step 2: Estimate Demand | a change in price has little or no effect on the quantity consumers are willing to buy

Answer 65

Step 2: Estimate Demand when changes in the price of one product affect the demand for another item 1) Substitutes - an increase in the price of one will increase demand for the other 2) Compliments: one product is essential for use of second, an increase in the price of one decreases demand for the other

Answer 66

Determine Costs making sure the price will cover costs Fixed Costs - costs that do not vary with the number of units produced and are fixed in the "long run" Variable Costs: per-unit costs of production that changes depending on how many units are produced

Answer 67

Step 3: Determine Costs | the fixed cost per unit - the total fixed costs divided by the number of units produced and sold

Answer 68

is the point at which the company doesn't lose any money and doesn't make any profit

Answer 69

Step 3: Determine costs | an amount added to the cost of a product to create the price at which a channel member will sell the product

Answer 70

Step 3: Determine Costs the markup amount added to the cost of a product to cover fixed costs of the retailer or wholesaler and leave an amount for a profit Retailer Margin - gross margin on retail level Wholesaler Margin - gross margin calculated at the wholesale level

Answer 71

Manufacturer's suggested retail price aka List Price used to suggest value to the consumer or for "price maintenance" strategies (uses anchoring)

Answer 72

Step 4: examine the Pricing Environment the pricing environment looks at influences of demand, other than price 1) Economy - consumer confidence can affect sales of goods, especially discretionary/ high priced goods 2) Competition - how saturated the market is will affect pricing abilities 3) Regulations - regulated markets have prices (or price ranges) set by state or federal agencies 4) Consumer Trends/ Demographics - toward or away from your product (boomers retiring) 5) International Environment - pressures vary across countries and cultures

Answer 73

``` Strategies = how do we set the price Tactics = how do we get the money? ```

Answer 74

Choose a Pricing Strategy | based on an objective - see step 1

Answer 75

Step 5: choose a pricing Strategy 1) Cost based pricing - common easy to calculate, relatively risk-free internal-facing - does not consider nature of target market or competitors 2) 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 price

Answer 76

cost-based strategies are often found when the product is closer to a commodity, as there is little value that one vendor can bring to a diamond ring vs. another Differentiate Commodity by ... * adding creativity, scarcity, prestige think of Tiffany and Jewelry

Answer 77

Step 5: choose a pricing Strategy 1) Demand Based - Firm bases price on estimated volume it can sell. Often different prices in different markets. 2) Yield Management - prices to maximize perishable resources (airlines, movie theaters) 3) Target Costing - identifies needs with product attribute value and designs product based on price.

Answer 78

pricing strategy of charging a high fee for operating cars during peak traffic times to reduce congestion

Answer 79

Step 5: choose a pricing Strategy 1) Price Leadership - often used in oligopolistic industries when a dominant firm announces its new price, and competitors get in line or drop out, in order to minimize competition 2) EDLP (Value or Everyday Low Pricing) * considers customer's view and competitors price 3) Hybrid EDLP - EDLP for most products but also offers added levels of service or specialty sections

Answer 80

Step 5: choose a pricing Strategy | the focus is on a target level of profit growth or a desired net profit margin

Answer 81

Step 5: choose a pricing Strategy when lack of demand data makes it difficult to use previous strategies 1) Skimming Price - pricing very high to capture as much profit as possible before competition moves into the market (often new technology) 2) Penetration Pricing - opposite of skimming. Low price to gain share. 3) Trail Pricing - offers low price for short-term (with clear increase stated, ie "limited time) to capture market then maintain margins

Answer 82

Step 5: choose a pricing Strategy companies legally discriminate pricing based on value different groups get from the product. This is, in fact, the origin of modern segmentation. 1) Price Segmentation - charging different prices to different groups (seniors) 2) Peak Load Price - a pricing plan that sets prices higher during periods with higher demand 3) Surge Pricing - a pricing plan that raises prices of a product as demand goes up and lowers it as demand slides

Answer 83

Develop Pricing Tactics | * methods companies use to set their pricing strategies in motion

Answer 84

Step 6: Develop Pricing Tactics >Individual Products 1) Two Part Pricing - initiation fee plus monthly dues (night club) 2) Payment Pricing - Split costs over time > Multiple Products 1) Price Bundling - discount for buying multiple types of items (value meal) 2) Captive Pricing - Low Price for fixed item, higher for consumable (razor, printer)

Answer 85

a pricing tactic in which a firm adds a standard shipping charge to the price for all customers regardless of location, usually used when shipping charges are very low

Answer 86

discounts off list price of products to members of the channel of distribution who perform various marketing functions

Answer 87

real time data provides even more pricing options 1) Dynamic Pricing - based on individual's known interests, time-based, predicted pricing, etc 2) Online Auctions - price is set of buyers in real-time 3) Freemium - some minimal functionality is free and upgrades are priced. Internet makes upgrading (and paying) easy

Answer 88

buyers form expectations of what is fair or customary prices 1) internal Reference Prices: a price or price range consumers have in mind when evaluating a product's price * can be affected by anchoring, epistemic shopping, or set absent info 2) Price- Quality Inferences - when consumers use price as a cue to infer product quality High = bad deal Low = bad quality

Answer 89

1) Odd-Even Pricing - 9.99 instead of $10, more common in US and could indicate value and not quality 2) Price Lining - Similar to price bundling, but often varies attributes of product to create a "line" separating, say, "good" "better" "best" 3) Prestige Pricing - status conscious consumer more likely to buy as price goes up

Answer 90

1) Bait-and-Switch * Bait: Advertise very low-priced item to lure customer to store * Switch: arriving customers find product is out of stock and are offered more expensive item 2) Loss Leader Pricing - use very low prices (sometimes under cost) to get customers into the store, making up the "loss" through sale of other products

Answer 91

1) Illegal Price Discrimination - firms sell product to channel members at different prices in a way that lessens competition. Or charges more to a protected class. 2) Price Fixing - competitors conspire to set prices * Horizontal - when retailers collude * Vertical - when a manufacturer requires a retail price (not suggested in MSRP) 3) Predatory Pricing - Firm sets very low price for purpose of driving rival out of business 4) Price Gouging - overcharging for essential goods during an emergency 5) Deceptive Pricing - hidden costs to the consumer, fake discounts, etc

Exam 3: Ch. 8, 9, 10 Flashcards

(115 cards)