MARK 3001 Test 2 Flashcards

Question

Why increase breadth?

Answer 1

new product lines can capture growth from new or evolving categories Ex: developing a new line of non-dairy products to attract health-conscious consumers

Answer 2

poor sales, increased competition, shifting internal properties or manufacturing efficiencies are all reasons to discontinue a product line Facing increased competition from talenti and others, Haagen-Daxs stopped producing gelato

Answer 3

adding new items can help maintain share while addressing changing consumer preferences Can be way to preempt competitors

Answer 4

firms periodically review performance and delta products that are poor performing or an inefficient use of resources; sometimes referees to as a SKU rationalization EX: Removing a flavor with low sales and unique ingredients

Answer 5

increases awareness of goods and services Brands serve as symbols of quality and act as points of differentiation

Answer 6

Brand Name URLs & Domain Logos & Symbols Charcters Slogans Jingles or Sounds

Answer 7

Name of the brand can either: - Describe or allude to the product offering ex: Chick fil a. Extended Stay America - Leverage a word or term that has nothing to do with the product ex: Apple, regal - Be an invented term ex: Zillow, xero

Answer 8

Owning web properties and social media handles associated with your brand is critical Consumers need to easily find info about a brand or product online Ex: peloton.com is owned by an oil and ga software firm

Answer 9

Visual branding elements helps quickly and memorably identify a brand to consumers Logos → typically a mix of words and iconography Symbols → icons or logos without words

Answer 10

Brand symbols that seek to exemplify or personify characteristics or attributes about the brand ex: Human(Progressive), animal, animation (Mr.Clean)

Answer 11

Short, memorable phrases that are used to describe elements of the brand offering or persuade consumers to consider the brand ex: Dunkin → American runs on dunkin

Answer 12

Memorable and distinctive audio clips comprised of music, message, or both

Answer 13

Brand Equity (value derived from the brand itself) can: 1. Facilitate purchase through awareness and association 2. Establish loyalty from consumers 3. Protect from price competition through perceived value 4. Serve an asset to the firm 5. Impact the market value of the firm

Answer 14

“Company lives or dies based on brand awareness” More consumers are aware of a brand, higher the likelihood of purchase Awareness is critical for convenience products that are bought without much evaluation (snacks, gum) Important for infrequently purchased items or those the consumers has never purchased before

Answer 15

Brand association reflect the mental and emotional links that consumers make between a brand and its key attributes Often the results of a firm’s advertising and promotional efforts Consumers develop links between brands and their own identify Some brands are congruent with our identify while others are just “not for us” ex: Abercrombie & Fitch has undergone a massive repositioning effort to distance itself from past brand association

Answer 16

Brand loyalty occurs when a consumer buys the same brand’s product or service repeatedly Brand-loyal customers are an important source of value - Loyal consumers are less sensitive to price - Marketing costs to loyal customers are much lower - Base of loyal consumer can insulate forms from competitive pressure

Answer 17

Perceived value of a brand is the relationship between a product’s benefits and cost Value is typically evaluated relative to a comparable set of competitors

Answer 18

Value of a brand contributes to a firm’s worth in terms of assets

Answer 19

1. Attracts consumer’s attention 2. Provides info on consumer needs 3. Enables products to stand out from competitors 4. Allows for same products to appeal to different markets through different sizes and formats

Answer 20

- One consumer uses - consumers seek conveniences with storage, use, and consumption ex: toothpaste tube, can of soda

Answer 21

synonymous with brand identity Ex: Tiffany; blue packaging

Answer 22

exterior that contains primary package and provides UPC label (used by retail scanners) Provides info not available on primary package

Answer 23

Label info is determined by regulations and labeling rules vary from country to country To use “natural” or “organic” or “made in the USA” → products must meet specific tests or thresholds

Answer 24

labels are required by the FDA to plainly state using common terms, what is in the product

Answer 25

strategies to create and manage their brands as assets: Private Label Brand Families Line Extensions Co-Branding & Licensing Repositioning

Answer 26

National Brands are owned and managed by manufactuers - Owning production and marketing → manufacturers can maintain control over product quality and brand image -Majority of consumer brands in US are national manuters brands ex: Kraft, Coca Cola Private Label or retail or store brands are products developed by and sold by retailers - Retailer manufacturer their own products, but in most cases private label products are produced by the same manufacturer who products national brand products Ex: Target ; Good and Gather

Answer 27

Brand Family: Firms can use their corporate name across all product lines, marketing them as a brand family (e.g., Heinz Family of Products) A strong corporate brand reputation helps individual products benefit from awareness and quality perceptions Individual Brand Name: firms can give each product line individual brand names to establish unique identities Example: P&G owns multiple brands across various categories, some appearing as competitors. This strategy helps firms capture greater market share

Answer 28

Line extension → new product under the same brand name within the same product line (same category) Ex: Pro-Health and 3DWhite are Crest line extensions Brand extension → Introducing a new product under an existing brand name but in a different product category (e.g., mouthwash, whitening strips, whitening pastes) Benefits: Leverages existing brand awareness Key Rules for Success: - Evaluate the fit between the core brand’s product class and the extension. - Ensure consumer perception aligns limit extensions to categories with similar attributes. - Avoid brand dilution by not overextending the brand name. - Consumer acceptance depends on a logical relationship between the core brand and the new product.

Answer 29

Co-branding refers to marketing 2 or more brands together -Potentially beneficial to the participating brands by attracting the consumer of 1 brand to the others - Can enhance perceptions of quality through links between brands Brand licensing refers to contractual agreement between firms allowing to leverage rights and marks for mutual benefit - Common for toys, apparel, accessories, and entertainment products such as video games - Help brand visibility and attract consumers from each property to one another - Disney licenses the use of its marks and characters across multiple consumer good categories to appeal to fans

Answer 30

Brand repositioning, or rebranding → strategy in which markets change a brand’s focus - Can be done to target new marketers, realign to changing market preferences or boost vitality of brands seen as “dated”, irrelevant, or culturally insensitive - Repositioning a high-cost, high-risk strategy not entered lightly Ex: Aunt Jemina → Pearl Milling Company Ex: Weight Watchers rebranding efforts → name change that shorten the form’s official name to WW

Answer 31

Incremental Innovation: represents small improvements to exisitng offerings Breakthrough innovation: significant impact in either altering or creating a market

Answer 32

the process by which firms transform ideas into new products and service offering, and can be used to address the following challenges

Answer 33

Changing Consumer Needs Market Saturaton Diversification of Risk Trend Cycle

Answer 34

Consumer needs, preferences, and habits change over time Ex: bluetooth Consumers grow bored of existing offerings Ex: introduce new item

Answer 35

Market saturation → occurs when a products or service has reached its max potential within in a marketplace - Everyone is gonna buy one has already bought one - At saturation: firm can only grow through new product intro

Answer 36

Broad portfolio of products can help insulate a company from performance risk “Don't have all your eggs in 1 basket” Relevant for product categories that satisfy “wants” more than “needs”

Answer 37

Firms seek to capitalize on trends for incremental sales Certain categories of consumer goods (apparel and entertainment) are more reliant on trend cycles To succeed: trend needs to align w the brand image and firm’s core competencies

Answer 38

1. Idea Generation 2. Concept Testing 3. Product Development 4. Market Testing 5. Product Launch 6. Evaluation of Results

Answer 39

Depending on resources and structure of company; they leverage different sources for idea generation Internal R&D R&D Consortia Licensing Brainstorms Outsourcing Competitior Products Custmoer Input

Answer 40

Large firms maintain their own internal research and development (R&D) department to generate new products that will lead the market These internal units are associated with high development costs → source of breakthrough products Food-beverage focused firms → employ food scientist and chiefs to develop new recipes and modify them to produce at a large scale

Answer 41

R&D consortia brings together manufacturer, researchers, state, and local governments to facilitate idea generation regarding specific topics Lower individual costs and risks while benefits spread to all firms Government agencies will facilitate the creation of innovation ecosystems in high-priority areas deemed to be in the national interest

Answer 42

Firms may purchase licenses to use tech or ideas from other research intensive firms Small biotech firms frequently license their inventions to larger pharmaceutical firms University research center → common source of licenses

Answer 43

Brainstorming → semi-structured, group approach for rapid idea generation, often to solve a problem Meant to be expensive and open, no idea should be immediately accepted or dismissed Best brainstorms → structured and moderated Diverge → Create choices Converge → make choices

Answer 44

Firms can hire outside consultants to help generate ideas and develop new products and services Design firms help clients generate new products and services ideas across a wide variety of industries Firms (IDEO) specialize in design thinking and creative ways to generate ideas

Answer 45

Uncommon for firms to be “fast followers”, copying the innovations of a competitive firm Reverse engineering involves taking apart a product, analyzing it, recreating it with your own resources Products with patents or other proprietary protections cannot be copied, so reverse engineered products must be substantively different from the original

Answer 46

Listening to customer input is essential for ideas generation and throughout product development Another successful input approach is to analyze lead users, users of the product who modify existing products to their own specific needs If lead users customize a firm’s products, other customers might wish to do so as well

Answer 47

Concept → brief written description of the product (had images or models Product concepts are presented to potential buyers or users to gauge their reactions

Answer 48

Product development is a cross-functional effort that balances considerations across supply chain engineering, manufacturing, marketing, and finance. Innovation commercialization teams bring together representatives from each necessary department At this stage, engineering teams develop a product prototype based on consumer feedback from concept testing Product designers ensure that consumer needs and wants align with available materials, manufacturing capabilities, and technology Prototype allows consumers to physcially interact with product concept before production (use of 3-d printing) Alpha Testing → user jouney or expected funtionality is tested Beta Testing → tst of how product performs in real world application

Answer 49

firm determines whether the product will perform according to its design and whether it satisfies the need for which it was intended Internal Team Can take months Structured

Answer 50

potential consumers examines the product prototype in a real-use setting to determine its functionally and performance and identity potential issues specific to its use End Users limited to few weeks Unstructured

Answer 51

In premarket testing, consumers are exposed to the product and surveyed on its various attributes. Based on results, the firm decides if and how to move forward with the product launch.

Answer 52

1. Value rating – How well the product satisfies a need at a fixed price 2. Purchase intent – Probability of a first purchase 3. Purchase frequency – Expected frequency of purchase 4. Purchase volume – Expected number of items per purchase Approximately 50% of new product concepts undergo premarket testing using Nielsen’s BASES test

Answer 53

Pre-market testing → conducted before a product is introduced to nay real market Controlled testing before market entry Test Market Launch → intro the product in a real-world, limited market to analyze consumer behavior and sales performance Limited real- market release

Answer 54

Marketing testing results with positive results → firm is ready to introduce the product to market MOST CRITICAL Requires tremendous financial resources and coordination of marketing mix Confirms its target market(s), positioning, and budget

Answer 55

Firm measures success using sales data: -Satisfaction of technical requirements - Degree of customer acceptance - Satisfaction of firms financial requirements In other words: Is it working as expected? Do consumers like it? Is it profitable?

Answer 56

process by which the use of an innovation spreads throughout a market group over time and across different categories of adopters - bell-shaped curve, where few people buy the product initially, adoption increases over time, and eventually, the product becomes widely accepted. Consumers are divided into five groups based on how quickly they adopt an innovation: Innovators – First to adopt Early adopters – Adopt soon after innovators Early majority – Adopt before the average person Late majority – Adopt after the average person Laggards – Last to adopt

Answer 57

First to adopt a new product 2.5% of Consumers Willing to take risk, young in age, high social standing, Risk tolerance for products that may ultimately fail is high due to financial resources

Answer 58

Second fastest to adopt a product 13.5% of Consumers Opinion leaders and trend setters Younger in age, high social standing, and more financial resources than late adopters

Answer 59

Time of adoption is significantly longer than innovators and early adopters 34% of Consumers Average social status and close contact with early adopters Not considered opinion leaders

Answer 60

Adopt innovation after average member of society 34% of Consumers High degree of skepticism regarding new products and fewer financial resources Social contact with member of early majority Very little opinion leadership

Answer 61

Last to adopt an innovation 16% of Consumers Averse to change and older in age Value tradition and lower levels of social status and limited financial resources Contact with family and friends, little to no opinion leadership

Answer 62

Relative Advantage Compatibility Observability Complexibility & Trialability

Answer 63

Relative advantage → degree to which the new product or service innovation is superior to existing market offerings Greater perceived advantage, faster diffusion will take place

Answer 64

How compatible a product’s feature are with the needs and culture of consumers impact the speed of diffusion Products integrate naturally in our day-to-day lives Ex: Chick-fil-a mobile thur ordering

Answer 65

If benefits of innovative product are easy to observe through effective communication, diffusion will move more quickly Infomercials or tutorials are common promotional techniques used to explain the benefits of new products

Answer 66

Relative or perceived complexity will impact consumer’s willingness to try a new product Showrooms, floor models, and sampling opportunities are all tactics used to reduce the perceived risk associated with complex innovations

Answer 67

defines the stages that products move through as they enter, get established in, and ultimately leave the marketplace Predictable stages of the life cycle can be used as a starting point for strategic planning

Answer 68

Characterized by: Initial losses to the firm due to its high start-up costs Low levels of sales revenue as the product begins to take off Few competitors with whom to battle for market share

Answer 69

Marked by: Increasing number of product adopters Rapid growth in sales Increased in the number of competitors and number of available product versions Considered “tipping point” → point of transition between intro and rapid growth Products with gain market acceptance ot exit the market Majority of new product failure occur at this point

Answer 70

marked by the adoption of the product by the late majority, intense competition for market share, and falling prices due to market saturation Intense competition leads to lower prices and higher marketing costs, which erode profit margins compared to earlier stages. Highly saturated ex: smartphone market

Answer 71

Firms must either position themselves to go after a niche segment of loyal consumers, adopt a strategy of specialization, or completely exit the market The few laggards who have not yet tried the product or service may enter the market at this stage, although trial is uncertain

Answer 72

any intangible offering that involves a deed, performances, or effort that cannot be physically possessed

Answer 73

Customer service specially refers to human or automated activities firms perform to satisfy customer needs

Answer 74

Custmoers derive value primarily from intangible benefits ex: medical care, hotels, dry cleaning

Answer 75

Customers derive value primarily from tangible products ex: Restratuents, specilaity apparel, groceries

Answer 76

Differentiate service from goods: Intangible Inseparable Heterogeneous Perishable

Answer 77

Most fundamental difference → service are intangible Services cannot be touched, tasted, or seen like a pure product can Instead consumers must use cues to judge the quality of a service

Answer 78

Services are produced and consumed at the same time; that is, service and consumption are inseparable After the service has been performed, it can’t be returned Ex: if you don’t like the results of your annual physical, you can’t demand that your health care provider give you (or your insurance company) the payment back Firms can lower this perceived risk by offering guarantees or warranties

Answer 79

Heterogeneity → refers to the inherent variability in service quality due to human involvement in service delivery The more humans are involved in service delivery, the more likely there is to be variability in service quality Inferior service cannot be recalled, and by the time a firm recognizes a problem, the customer experience is already impacted. Solutions to reduce heterogeneity: 1. Use of technology – Standardizes service processes 2. Increased training – Ensures consistency in service quality 3. Automated processing – Reduces human error and variability

Answer 80

Perishability means that services cannot be stored or stockpiled for future use. Once the opportunity to provide the service is lost, it cannot be recovered Perishability presents both challenges and opportunities in balancing demand and supply. Perfect matching is rare, leading to fluctuations in availability and utilization ex: Ski areas, airlines, cruise ships, movie theaters, and restaurants must find ways to deal with this fluctuation of demand relative to perishability

Answer 81

Produce Price Promotion Place Presentation → how they are presented has a significant impact on consumer’s judgements of the service quality Personal → Some services are more reliant on person-to-person interactions than others Process → actions require to get the good or service to the customer

Answer 82

Knowledge Gap Standards Gao Delviery Gap Communication Gap

Answer 83

What the custmoer expects → What custmors recieves

Answer 84

What Customer expects → What management thinks the customoer expects Ex: what management thinks the customers expect? Dishes cleared right away ; What the customers expect? Dishes cleared if everyone is finished To close knowledge gaps, firm should: - Conduct research into consumer expectations (zone of tolerance, marketing research) - Closely track service quality using established metrics

Answer 85

to the area between customers’ expectations regarding their desired service and their min level of acceptable service Using a hotel stay as an ex: You might a king bed but will accept 2 queen beds You might not, however, accept a smoking room

Answer 86

What management thinks the custmoer expects → Delivery policies and standards set by management - Management needs to set standards for quality and develop systems to ensure those standards are met - Training, rewards, and incentives must be in place to support service quality commitment

Answer 87

Delivery policies and standards set by management → What the custmoer actaully recieves Management policies are not supported with proper staffing and training levels, delivery gaps are likely to occur Ways to reduce delivery gaps: Empower service providers Provided support and incentives for employees Use tech and automation EX: Deliveries policies and standards set by management? Quick check-in processes ; What the customers actually receive? Long lines for guest check-in

Answer 88

What the custmoer actually receives → Firm communication regarding service quality If a firm promises more than it can deliver, customer’s expectations won’t be met Can be reduce: Managing customers expectations Promising only what you can deliver Communicating clear expectations and next steps

Answer 89

When failures occur, firm address the issues using the following best practices: - Involve the customer in the service recovery → Listen to customer and help them play an active role in the service recovery - Find a fair solution Distributive fairness: refers to a customer’s perception of the benefits he or she received compared with the costs or loss Procedural fairness: refers to the perceived fitness of the process used to resolve them -Resolve problems quickly → Hostile customer

Answer 90

Distributive fairness: refers to a customer’s perception of the benefits he or she received compared with the costs or loss Procedural fairness: refers to the perceived fitness of the process used to resolve them

Answer 91

Overall sacrifice a consumer is willing to make to acquire a specific product or service (both monetary and nonmonetary) Pricing strategies are built around 5 factors: Company Objectives Custmoers Costs Competition Channel Members

Answer 92

Company’s products and services should be priced to appropriately support the firm or business unit’s overall strategy Profit Orientated → set prices to provide a certain percent profit margin to reach a particular firm goal Sales-oriented → set prices low to generate new sales and take sales away from competitor, even if profits suffer Competitor-orientation → set prices low to discourage more competitors from entering the market Customer orientated → set prices high and target a segment of consumers who highly value a particular benefit

Answer 93

set prices to provide a certain percent profit margin to reach a particular firm goal Implemented through: Target profit pricing → employed when firms have a specific profit target as their overriding objective - Calculation performed to determine # of sales Profit maximizing → firms create models using available data to predict sales and calculate price point at which profits will max Target return pricing → used by firms more concerned with their rate of returns than their target profits Issue → does not take customer's perceived value of product in consideration

Answer 94

set prices low to generate new sales and take sales away from competitor, even if profits suffer Determine pricing more focused on increasing sales and share Premium pricing → firms intentionally set prices above competitors, may be pursued to attract sales from high-income consumers who use price as a cue for quality

Answer 95

set prices low to discourage more competitors from entering the market Common in smaller firms that lack knowledge or experience in settling prices Measure themselves against competitors Competitive parity → firm set prices similar to competitors Status quo pricing → form will change prices to meet competitor’s prices

Answer 96

set prices high and target a segment of consumers who highly value a particular benefit Try to match prices to customer expectations

Answer 97

Firms can predict how customers will respond to changes in pricing based on demand curve Price elasticity of demand → measure changes in price affect quantity of product demanded Demand is elastic → move w changes in price → price sensitive Demand is inelastic → doesn’t move w changes in price → price insensitive

Answer 98

Income effect → income increases, less sensitive to pride changes Shift their demand from low price to higher priced alternatives Substitution effect → consumer’s ability to substitute another brand or product for the focal brand Greater substitutability of a product, more elastic demand for product will be Coca Cola to Sam’s Cola Cross-price elasticity → percent change in the demand for Product A compared w the percent change in demand for product B Product A price increase, demand for product B decrease → complementary Complementary → product that adds value to another good or service when they are consumed together Demand is positively correlated Substitute → product that serves the same purpose as another good/service for consumers Demand is inversely related

Answer 99

Firms need to understand their cost structure: Variable Cost → costs vary based on the volume of goods or services being produced Common variable costs → labor and material Total variable costs = variable cost per unit x Quantity Fixed Costs → costs remain at a consistent level regardless of the volume of goods or services being produced Common fixed costs → rent, utilities, equipment Total costs= fixed costs + total variable costs Break-even analysis → relationship between cost, price, revenue, and profit relative to volume of sales and production Break-even point → point which the number of units sold generates just enough revenue to equal the total costs Breaks even= profit= 0

Answer 100

Monopoly → 1 firm controls the market Monopolistic Competition → many firms sell differntiated products at different prices Oligopolistc Competition → few firms control the market Predatory pricing → occurs when 1 competitor sets prices very low w the intent of running other competitors out of business Ex: Cosos, Target, Walmart Pure Competition → mant firm sell commodities for the same price

Answer 101

Manufacturers, wholesalers, and retailers and they have different objectives when it comes to pricing Manufacturers care about margins and perception of quality

Answer 102

emphasize consistency and continuity of their pricing structures By reducing time and effort consumer will spend seeking out deals, EDLP firm is adding value

Answer 103

relies on sales promotions in which prices are temporarily lowered to encourage purchases Attracts both consumers with a high willingness to pay and consumers who love seeking out deals high/low pricing tactics are reliant on a consumer’s use of a reference price in determining the deal

Answer 104

Setting prices for new products can be difficult, esp for breakthrough or pioneering products that don’t have comparable competitors Most new product pricing strategies follow either: Penetration pricing → firms set the initial price of the new product or service low for the introductory period Helps firms build market share for their new, but consumers must be prices elastics for this strategy to work Price skimming → firms assume that innovators and early adopters are willing to pay a premium price to be among the first to have the new product

MARK 3001 Test 2 Flashcards

(128 cards)