week 6 -12 Flashcards
A product is …
anything that is of value for the consumer and can be offered through a voluntary marketing exchange.
Consumer Products are
goods and services used by people for their personal use.
Product mix
The complete set of all goods and services offered by a firm. All the product lines offered.
3 components of a product
Core product: the needs it satisfies.
Actual product: the physical attributes / design features of the product (e.g., brand name, packaging).
Augmented Product: services or non-physical aspects of the product (e.g., warranty).
4 types of consumer products
Specialty product.
Shopping product.
Convenience product.
Unsought product.
Specialty product
Special purchase efforts. Brand identification. Has unique characteristics. Only few purchase locations. e.g., laptop, car.
Shopping product
Buy less frequently.
Fewer purchase locations.
Gather product information.
e.g., clothing.
Convenience product
Buy frequently and immediately. Low priced. Many purchase locations. Includes Staple, Impulse, and Emergency goods. e.g., deodorant, food.
Unsought product
New innovations.
Products consumers don’t want to think about.
Require much advertising and personal selling.
e.g., insurance, dentist appointments.
Product mix breadth
Number of different product lines. (side).
Product line depth
Total number of items within the line. (down).
Advantages brands provide
Facilitates purchasing Establishes loyalty. Protects from competition. Is an asset. Affect market value.
Brand licensing
Contractual agreement between firms, whereby one firm allows another to use its brand name, logo, symbol, and/or characters in exchange for a negotiated fee
Co-branding
Practice of marketing two or more brands together on the same package or promotion.
It attracts the consumers of one brand to the other.
It can also enhance perceptions of quality through links between brands.
Brand extension
Existing brand names extended to a new product category.
Line extension
Existing brand names extended to new firms, sizes and flavours of an existing product company.
e.g., coke and diet coke.
Rebranding
Improves the brand’s fit with its target segment, and boosts the vitality of old firms.
Also called bran repositioning.
Advantages of changing packaging.
Catch customers’ attention.
To allow for the same product to appeal to different markets with a different sizes and graphs.
Increase exclusivity and hence price.
Smaller packages size may be a hidden price increase.
Objectives of product labels
Labels provide information needed for the purchase and consumption of the product.
e.g., instructions for use, nutritional information, legal warnings, etc.).
Health insurance can be considered to be an …
Unsought product / service.
The complete set of all goods and services offered by Driscoll’s Surf Shop is called …
Product mix.
The term “…” refers to the number of product lines offered by a firm.
Breadth.
If many consumer are aware of the brand, you could say that “…” is high.
Brand awareness.
If Apple decides to sell electric cars under the ‘Apple’ brand name, it is engaging in …
Brand extension.
Toothpaste tubes are an example of a
Primary package.
Why do firms innovate and create new products?
Because consumers needs are always changing.
There is no lock of competing products - prevent decline in sales.
To manage risk through diversity.
To respond to shorter life cycles.
To improve business relationships.
5 groups on the diffusion of innovation curve.
Innovators (2.5%). Early adopters (13.5%). Early majority (34%). Late majority (34%). Laggards (16%).
Function of the diffusion of innovation curve.
The diffusion of innovation curve shows how the number of users of an innovative product or service spreads through the population over a period of time.
What is the shape of the diffusion of innovation curve.
It generally follows a bell-shaped curve.
Factors that enhance the diffusion rate of a good or service.
Compatibility: degree to which the innovation matches the values and experiences of the individual.
Observability: degree to which the benefits of use are observable or describable to others.
Complexity and trialability: degree to which the innovation is easy to use and can be tried on a limited basis.
Relative advantage: degree to which the innovations appears superior to existing products.
Sources of new product ideas.
Internal R&D (research and development): often the source of technological products.
R&D consortia: firms/governments may join forces with educational institutions.
Licensing: small biotech firms frequently license their inventions to larger pharmaceutical firms.
Brainstorming: groups work together to generate ideas.
Outsourcing.
Competitors’ products: reverse engineering, trade shows.
Customer input.
Stages in the Product Life Cycle (PLC).
Introduction.
Growth.
Maturity.
Decline.
Introduction (PLC)
Sales are low, profits are negative or low, typical consumers are innovators, and has one or few competitors.
Growth (PLC)
Sales are rising, profits are rapidly rising, typical consumers are early adopters and early majority, and has few (but increasing) competitors.
Maturity (PLC)
Sales are at its peak to declining typical consumers are late majority, and has a high number of competitors and competitive products.
Decline (PLC)
Sales are declining, profits are declining, typical consumers are laggard, and has low number of competitors and products.
Reasons for decline stage (PLC)
Technological advances, shifts in consumer tastes.
Also increased competition.
During decline stage.
Stop manufacturing the product, reduce the price significantly, stop re-stocking, and stop stocking product on “top-shelf”.
Start promoting it more to get rid of it faster.
To create successful new products, the company must:
Understand its consumers, marketers and competitors.
Develop products that deliver superior value to customers.
The Ansoff Matrix
Tool to analyse and plan strategies for growth.
The Ansoff Matrix strategies
Market Penetration: existing product, existing market.
Product development: new product, existing market.
Market development: existing product, new market.
Diversification: new product, new market.
Steps to develop new products.
Idea generation: development of viable new product ideas.
Concept development: potential ideas are fully describes and connected to customer needs.
Product development: development of prototypes and/or the product.
Market testing: testing the actual products in a few market tests.
Product launch: full-scale commercialisation of the product (promotion, place, price, timing).
Evaluation of results: analysis of the performance of the new product and making appropriate modifications.
Simulated Test Market
Test in simulated shopping environment to a panel of consumers.
(Premarket test).
Controlled Test Market
Full marketing campaign in a small number of representative stores or cities.
(Test marketing).
Prototype
A first or preliminary version of a product. It allows consumer to interact physically with the product.
Alpha testing
The firm attempts to determine whether the product will perform according to its design whether it satisfies the need for which it was intended.
it makes sure it satisfies the intended needs
Beta testing
Uses potential consumers, who examine the product prototype in a ‘real use’ setting to determine its functionality, performance, potential problems, and potential.
Price penetration strategy
Place price 2%-5% cheaper than competition so customers give the product a go.
The first stage of the new product development process is …
Idea generation.
A “…” is the first physical form of a service description of a new product, still in rough or tentative form, that has the same properties but is produced through different manufacturing processes.
Prototype.
The owner of Mary’s Cupcake Shop is attempted to determine if a new cupcake recipe will perform according to its design and whether it will satisfy the need for which it was intended. She is engaging in …
Alpha testing.
In contrast to alpha testing, “…” used potential consumers who examine the product prototype in ‘real use’ settings.
Beta testing.
Introduction, growth, maturity, and decline are part of …
Product Life Cycle (PLC)
The “…” of the product life cycle is the stage where industry sales each their peak.
Maturity stage.
A Service
Any intangible offering that involves a deed, performance or effort that cannot be physically possessed.
Customer service
Specifically refers to human or mechanical activities that firms undertake to help satisfy their customers’ needs and wants.
By providing good customer service, firms add value to their products.
4 marketing elements that distinguish services from products.
Services are intangible, perishable, inseparable, and heterogeneous/variability.
Intangible
Cannot be touched, tasted, or seen (as a product can be).
Perishable
Services cannot be stored for use in the future.
Its is critical that marketers can tackle the task of matching demand and supply.
Inseparable
Production and consumption are simultaneous.
Little opportunity to test service before use.
lower risk offering guarantees or warranties.
Heterogeneous / Variability
The more we depend on humans to provide a service, the more likely there is to be variability in the service’s quality.
Gaps model
The Service Gaps Model enables the systematic examination of all aspects of the service delivery process.
4 service gaps identified by the Gaps Model.
Knowledge gap.
Standards gap.
Delivery gap.
Communication gap.
The Knowledge Gap
customer’s expectations vs firm’s perception of those customer expectations.
Firms need to understand consumer expectations and evaluate service quality.
The Standard Gap
Firm’s perception of customers’ expectations vs the service standards it sets.
Firms must set appropriate service standards, training and monitoring to achieve the standards.
The Delivery Gap
Firm’s service standards vs actual service it provides to customers.
Firms must have employees meet or exceed service standards by providing incentives and support, and by empowering employees.
The Communication Gap
Actual service provided vs level of service that the firm’s promotion program promises.
If firms are more realistic about the services they can provide and manage customer expectations effectively, they can close this gap.
Ways to overcome the 4 service gaps.
Reliability: the ability to perform the service dependably and accurately.
Responsiveness: the willingness to help customers and provide prompt service.
Assurance: the knowledge and courtesy displayed by employees and their ability to inspire trust and confidence.
Empathy: the caring, individualised attention provided to customers.
Tangibles: the appearance of physical facilities, equipments, personnel and communication material.
Why is service recovery so important to companies?
Because it proves a firm’s commitment to customers.
What can companies do to recover from a service failure?
Listen to the customer: this also means involving them in the service recovery.
Resolve problems quickly.
Find a fair solution: the longer it takes to resolve a service failure, the most irritated the customer will become and the more people they are likely to tell.
Distributive fairness
Pertains to the customer’s perception of benefits compared with the inconvenience, loss, costs resulting from a service failure.
Procedural fairness
Pertains to the customer’s perception of the fairness of the process used to resolve complaints about service.
‘Attributes that cannot be touched, tasted, or seen’ is a description of the “…” nature of service.
Intangible.
