mkt 3000 final study guide

8/13/2019 MKT 3000 Final Study Guide

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CHAPTER 1011: PRODUCT STRATEGY

1. Complexity of products and types of productsa. Complexity of Products

- Core customer valuethe basic problem-solving benefits that consumers are seekingconvert it into an actual product- Attributesare considered through the importance of these attributes varies depending on

the product

- Associated Services(Augmented Product)b. Types of Products- Specialty Products/ Servicesproducts or services toward which customers show a

such strong preference that they will expend considerable effort to search for best

suppliers (i.e. luxury car, legal or medical professionals, or designer apparel)

- Shopping Products/ Servicesproducts or services for which consumers will spend afair amount of time comparing alternatives such as furniture, apparel, fragrances,

appliances, and travel alternatives.

- Convenience Products/ Services- products or services for which the consumer is notwilling to spend any effort to evaluate prior to purchase (i.e. commodity item such as

common beverages, bread, or soap)

- Unsought Products/ Servicesproducts consumers either do not normally think ofbuying or do not know aboutrequire lots of marketing, effort and various forms of

promotion

2. Product Mix and Product Line Decisions


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- Product mixthe complete set of all products offered by a firm- The product mix typically consists of various product lines- Product mix breadthrepresents a count of the number of product lines offered by the

firm

- Product line depthequals the number of products within a product linesa. Change Product Mix Breadth- Increase Breadthadd new product line to capture new or evolving markets and

increase sales

- Decrease Breadthdelete entire product lines to address changing market conditions ormeet internal strategic priorities

b. Change a Product Lines Depth- Increase Depthadd items to address changing consumer preference or preempt

competitors while boosting sales

- Decrease Depthdelete products within a product line to realign the firm resourcesc. Product Line Decisions for Services

3. Why do Firms create new products?a. Changing Customer Needscreate and deliver value more effectively by satisfying

changing needs of their current and new customers or simply by keeping customers from

getting bored with the current product or service offering

b. Market Saturationthe longer a product exists in the marketplace, the more likely it isthat the market will become saturated. Without new products or services, the value of the

firm will ultimately decline

c. Managing Risk through Diversitycreate a broader portfolio of products, which helpthem diversify their risk and enhance firm value better than a single product can

d. Fashion Cyclesin industries that rely on fashion trends and experience short productlife cyclesmost sales come from new products


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e. Improving Business Relationshipnew products sometimes function to improverelationships with suppliers

4. Diffusion of Innovation

- Innovatorsthose buyers who want to be the first on the block to have the new productor servicesenjoy taking risks and are regarded as highly knowledgeable

- Early Adoptersbegins to use a product or services innovationdont like to take asmuch risk as innovators do but instead wait and purchase the product after careful review

- Early Majorityfew new products and services can be profitable until this large groupbuys themdont like to take as much risk and therefore tend to wait until the bug are

worked out of a particular product and service

- Late Majoritythe last group of buyers to enter marketthe product has achieved itsfull market potential

- Laggardslike to avoid change and rely on traditional products until they are no longeravailable

- Using the Diffusion of Innovation Theory: The speed with which products or servicediffuse depends on several characteristics

+ Relative Advantageif a product or service is perceived to be better than substitutes

+ Compatibilitydepend on various consumer features, including international cultural

differences

+ Observabilitywhen products are easily observed, their benefits or uses are easily

communicated to others, which enhances the diffusion process

+ Complexity and Trialabilityproducts that are relatively less complex are also

relatively easy to trydiffuse more quickly

5. How Firms Develop New Productsa. Idea Generation- Internal Research and Developmenthave their own R&D departments, in whichscientist work to solve complex problems and develop new ideas

- R&D Consortiafirms have been joining consortia, or groups of other firms andinstitutions, to explore new ideas or obtain solution for developing new products

- Licensingfirms buy the right to use the technology or ideas from other researchintensive firms through a licensing agreementsaves the high cost of in-house R&D

- Brainstormingengage in brainstorming sessions during which a group works togetherto generate ideas


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- Outsourcingturn to outside firms like IDEO, a design firm based in Palo Alto, CA- Competitors Productsa new product entry by a competitor my trigger a market

opportunity for a firm , which can use reverse engineering to understand the competitors

product and then bring an improved version to market (Reverse engineering)

- Customer Inputlisting to the customers in both B2B and B2C markets 6. Concept Testing

- Concept testingrefers to the process in which a concept statement is presented topotential buyers or users to obtain their reactionsenable the developer to estimate the

sales value of the product or service concept, possibly make changes to enhance its sales

value, and determine whether the idea worth further development.

7. Product Development- Product development or product designentails a process of balancing various

engineering, manufacturing, marketing, and economic considerations to develop a

products form and features or a services features

- Prototypethe first physical form or service description of a new product, still on roughor tentative form, that has the same properties as a new product but is produced through

different manufacturing processes

- Alpha testingdetermine whether the product will perform according to its design andwhether it satisfies the need for which it was intendedoccur in the firms R&D

department

- Beta testinguses potential consumers, who examine the product prototype in a realuse setting to determine its functionality, performance, potential problems, and other

issues specific to its use.

8. Market Testinga. Premarket Testingdetermine how many customers will try and then continue to use the

product or service according to a small group of potential consumers

b. Test Marketingdetermine the success potential of a new productintroduces theoffering to a limited geographical area (usually a few cities) prior to a national launch

9. Product Launcha. Promotion

- Trade promotionswhich are promotions to wholesalers or retailers to get them topurchase the new products, often combine introductory price promotion, special events,

and personal selling

- Introductory price promotionslimited duration, lower-than-normal prices designed toprovide retailers with an incentive to try the products

- Trade showwhich is a temporary concentration of manufacturers that provide retailersthe opportunity to view what is available and new in the marketplace

b. Price- Manufacturers suggested retail price (MSRP)- Slotting allowance

c. Timing


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10.Evaluation of Resultsa. Satisfaction of technical requirement

b. Customer acceptancec. Satisfaction of the firms financial requirements

11.Product Life Cycle

12.Brandinga. Overview- A brand can use: name, logo symbols, characters, slogans,jinglesand even distinctive

packages.

- Value of Branding for the Customer and the Marketer+ Brands Facilitate Purchaseshelp consumers make quick decisions because brands

are often easily recognized by consumers and they signify a certain quality level and

contain familiar attributes

+ Brands Establish Loyaltyconsumers learn to trust certain brand overtime

+ Brands Protect from Competition and Price CompetitionStrong brands are more

established in the market and have a more loyal customer base

+ Brands Can Reduce Marketing Costs

+ Brands Are Assets

+ Brands Impact Market Valuerefers to the earning potential of the brand over next

12 months

b. Brand Equity- Brand equity is the incremental utility or value added to a product by its brand name.- Brand Awarenessmeasures how many consumers in a market are familiar with the

brand and what it stands for and have an opinion about that brand

- Perceived Valuethe relationship between a product or services benefits and its cost. - Brand Associationreflects the mental links that consumers make between a brand and

its key product attributes, such as logo, slogan, or famous personality

- Brand Loyaltyoccurs when a consumer buys the same brands product or servicerepeatedly over time rather than buy from multiple suppliers within the same categories

13.Branding Strategiesa. Brand Ownership


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- Manufacturer Brandsalso known as national brands, are owned and managed by themanufacturer

- Private-label Brandscalled store brands, house brands, or own brands, are productsdeveloped by retailers

Four categories: premium, generic, copycat, and exclusive co-brands+ Premium brandsoffer the consumer a private label that is comparable to, oreven superior to, a manufacturers brand equity. Sometimes with modest price

savings

+ Generic brandstarget a price-sensitive segment by offering a no-frills product at

a discount price

+ Copycat brandsimitate the manufacturers brand in appearance and packaging,

generally are perceived as lower quality, and are offered at lower prices

+ Exclusive co-brandsis developed by a national brand manufacture, often in

conjunction with a retailer, and is sold exclusively by the retailer

b. Naming brands and Product Lines- Family branduse its own corporate name to brand all its product lines and products- Individual branduse individual brand names for each of its productsc. Brand and Line Extensions- Brand extensionrefers to the use of the same brand name in a different product line

increase product mixs breadth

- Line extensionthe use of the same brand name within the same product line, andrepresents an increase in a product lines depth (p.314)

- Brand Illusionoccurs when the brand extension adversely affects consumer perceptionsabout the attributes the core brand is believed to hold

d. Co-Branding- Co-brandingthe practice of marketing two or more brands together, in the same

package, promotion, or store.e. Brand Licensing- Brand licensinga contractual arrangement between firms, whereby one firm allows

another to use its brand name, logo, symbol, and/or characters in exchange for a

negotiated fee

f. Brand Repositioning- Brand repositioningrebrandingrefers to a strategy in which marketers change a

brands focus to target new markets or realign the brands core emphasis with changing

market preferences

14.Packaginga. Primary packagethe one the consumer uses, such as the toothpaste tubeseek

convenience in terms of storage, use, and consumption

b. Secondary packagethe wrapper or exterior carton that contains the primary packageand provides the UPC label used by retailer scanners

c. Product labelingidentify the product and brand, and also an important element ofbranding and can be used for promotion


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CHAPTER 13: PRICING CONCEPTS FOR ESTABLISHING VALUE

1. The Five Cs of Pricinga. Company Objectives

- Profit Orientationfocusing on target profit pricing, maximizing profits, or targetreturn pricing

+ Target profit pricingwhen having a particular profit goaluse price to stimulate a

certain level of sales at a certain profit per unit

+ Maximizing profitsrelies primarily on economic theory

- Sale Orientationfirms believe that increasing sales will help the firm more than willincreasing profits

- Competitor Orientationmeasure themselves primarily against their competition- Customer Orientationincrease value by focusing on customer satisfaction and setting

prices to match consumer expectation

b. Customers- Demand curves and pricing- Price elasticity of demand:

+ Elastic demand: price elasticity greater than one+ Inelastic demand: price elasticity smaller than one

+ The less elastic the demand, the more it pays for the seller to raise the

price

+ What happens when elasticity equals one? (unitary demand)

+ Total revenue stays the same: sellers sell fewer items but at a higher

Price

- Factors influencing price elasticity of demand+ Income effectrefers to the change in the quantity of a product demanded by

consumers due to a change in their income

+ Substitution effectrefers to consumers ability to substitute other products for focal

brandthe greater the availability of substitute products, the higher the price elasticity

of demand for any given product will be

+ Cross-Price elasticitythe percentage change in the quantity of product A demanded

compared with the percentage change in the price in product B

(Chapter 13, p.7)

c. CostsTotal Cost = Variable Costs + Fixed Costsd. Break-Even Analysis and Decision Making


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e. Competition

f. Channel Members2. Macro Influences On Pricing

1. The Internet- Increased price sensitivity- Growth of online auctions2. Economic Factors- Local economic conditions- Increasing disposable income- Cross-shopping- Increasing status consciousness- Increasing globalization


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CHAPTER 14: STRATEGIC PRICING METHODS

1. Considerations for Setting Price Strategiesa. Cost-Based methodsdetermine the final price to charge by starting with the cost

b. Competitor-Based methodsset their prices to reflect the way they want consumers to

interpret their own prices relative to the competitors offering

c. Value-Based methodssetting prices that focus on the overall value of the product

offering as perceived by the consumer

- Improvement Value Methodrepresents an estimate of how much more (or less)consumers are willing to pay for a product relative to other comparable products

- Cost of Ownership Methoddetermines the total cost of owning the product over itsuseful life

- Implementing Value-Based Pricing Methodmust know how consumers in differentmarket segment will attach value to the benefits delivered by their products

2. Pricing Strategiesa. Everyday Low Pricing (EDLP)stress the continuity of their retail process at a level

somewhere between regular, nonsale price and the deep-discount sale prices theircompetitors may offer

b. High/Low Pricingrelies on the promotion of sales, during which prices are

temporarily reduced to encourage purchases

- Reference priceis the price against which buyers compare the actual selling price of theproduct and that facilitates their evaluation process (Internal reference price and External

reference price)

- Most inexperienced consumers use price as an indicator of quality- Price becomes crucial when consumers have little knowledge about certain

products/brands

3. New Product Pricing Strategiesa. Market Penetration Pricingset the initial price low for the introduction of the new

product or service

b. Price Skimmingappeals to these segments of consumers who are willing to pay thepremium price to have the innovation first

4. Pricing Tacticsa. Pricing Tactics Aimed at Consumers- Markdownsthe reductions retailers take on the initial selling price of the product or

serviceenable retailers to get rid of slow-moving or obsolete merchandising, sell

seasonal items after the appropriate season, and match competitors prices on specificmerchandise

- Quantity Discounted for Consumersencourage consumers to purchase largerquantities each time they buy

- Seasonal Discountsprice reductions offered on products and services to stimulatedemand during off-peaks seasons

- Couponsoffer a discount on the price of specific items when theyve purchased


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- Rebatesprovide another form of discounts for consumers off the final selling price- Leasingconsumers pay a fee to purchase the right to use a product for a specific

amount of time

- Price Bundlingpractice of selling more than one product for a single, lower price- Leader Pricingtactic that attempts to build store traffic by aggressively pricing and

advertising a regularly purchased item, often priced at or just above the stores cost

b. Business Pricing Tactics and Discounts

- Seasonal Discountsadditional reduction offered as an incentive to retailers to ordermerchandise in advance of the normal buying season

- Cash Discountsreduces the invoice cost if the buyer pays the invoice prior to the endof discount period

- Vendor Allowanceslowers the final cost to channel members+ Advertising allowanceoffers a price reduction to channel members if they agree to

feature the manufacturers product in their advertising and promotional efforts

+ Slotting allowancefees paid to retailers simply to get new products into stores or togain more or better shelf space for their products

- Quantity Discountsprovides a reduced price according to the amount purchased+ Cumulative quantity discountuses the amount purchased over a specified time period

and usually involves several transactions

+ Non-cumulative quantity discountbased only on the amount purchased in a single

order

- Uniform Delivered versus Zone Pricing+ Uniform deliveredthe shipper charges one rate, no matter where the buyer is located

+ Zone pricingsets different prices depending on a geographical division of the

delivery areas

5. Legal and Ethical Aspects of Pricing

CHAPTER 15: SUPPLY CHAIN AND CHANNEL MANAGEMENT

1. Supply Chain, Marketing Channels, and Logistics are relateda. Marketing Channelthe set of institutions that transfer the ownership of and move

goods from the point of production to the point of consumption; as such, it consists of all

the institutions and marketing activities in the marketing processmarketing channel =

supply chain

b. Logistics managementdescribes the integration of two or more activities for thepurpose of planning, implementing, and controlling the efficient flow of raw materials,in-process inventory, and finished goods from the point of origin to the point of

consumptionelement of supply chain management that concentrated on the movement

and control of physical productssupply chain management as a whole also includes an

awareness of the relationships among members of the supply chain or channel and the

need to coordinate efforts to provide customers with the best value

2. Supply Chains add value


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a. Supply Chain Management Streamlines Distribution- Reduce number of transactions- Increase value for consumers- More efficient and effective

b. Supply Chain Management Affects Marketing- Fulfilling delivery promises- Meeting customer expectations- Reliant on an efficient supply chain

3. Making Information Flow- Flow 1 (Customer to Store)- Flow 2 (Store to Buyer)- Flow 3 (Buyer to Manufacturers)- Flow 4 (Store to Manufacturers)- Flow 5 (Store to Distribution Center)- Flow 6 (Manufacturer to Distribution Center and Buyer)

a. Data Warehouseb. Electronic Data Interchangecomputer-to-computer exchange of business documents

from a retailer to a vendor and back

c. Vendor-Managed Inventoryan approach for improving supply chain efficiency inwhich the manufacturer is responsible for maintaining the retailers inventory levels in

each of its stores.

d. Collaborative Planning, Forecasting, and Replenishment (CPFR)the sharing offorecast and related business information and collaborative planning between retailers

and vendors to improve supply chain efficiency and product replenishment

e. Pull and Push Supply Chains- Pull Supply Chaina supply chain in which orders for merchandise are generated at

the store level on the basis of sales data captured by POS terminal

- Push Supply Chainmerchandise is allocated to stores on the basis of forecasteddemand

4. Making Merchandise Flowa. Distribution Center versus Direct Store Delivery

Several advantages to using a distribution center

- More accurate sale forecasts- Lower inventory investment for retailers- Easier to avoid running out of stock or having too much stock in any particular store- Cost-effective

b. The Distribution Center- Management of Inbound Transportation- Receiving and Checking Using UPC and Radio Frequency Identification (RFID)

Device

- Storing and Cross-Docking- Getting Merchandise Floor Ready


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- Preparing to Ship Merchandise to Store5. Managing the Marketing Channel and Supply Chain

a. Managing the Marketing Channel and Supply Chain through Vertical MarketingSystems

- Vertical Channel Conflict (Vertical Supply Chain Conflict)the supply chainmembers are not in agreement about their goals, roles, or rewards

- Horizontal Channel Conflict (Horizontal Supply Chain Conflict)there isdisagreement or discord among members at the same level of marketing channel,

such as two competing retailers or two competing manufacturers

CHAPTER 16: RETAILING AND MULTICHANNEL MARKETING

Retailingthe set of nosiness activities that add value to products and services sold to consumers for

their personal or family use.

1. Choosing Retailing Partnersa. Channel Structurethe level of difficulty pa manufacturer experiences in getting retailers to

purchase its products

- Degree of vertical integration- Manufacturers brand- Power of manufacturer and retailer

b. Customer Expectationsc. Channel Member Characteristicsd. Distribution Intensitythe number of channel members to sue at each level of the marketing

channel

- Intensive Distributionplace products in as many outlets as possible- Exclusive Distributiongranting exclusive geographic territories to one or very few

retail customers so no other retailers in the territory can sell a particular brand

- Selective Distributionrelies on a few selected retail customers in a territory to sellproducts

2. Identify Types of Retailersa. Food Retailers

- Supermarket- Supercenter- Convenience- Warehouse Club

b. General Merchandise- Full line Discount- Category Specialist- Drug- Specialty- Department- Off-price- Extreme Value


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c. Services- Auto Rental- Health Spa- Vision Center- Bank

3. Developing A Retail Strategy Using the Four Psa. Productproviding the right mix of merchandise and services

b. Pricehelps define the value of both the merchandise and the service, and the general pricerange of a particular store helps define its image

c. Promotionretailers use a wide variety of promotions, both within their retail environmentand through mass media

d. PlaceConvenience can often be a key ingredient to success4. Benefits of Stores for Consumers

- Browsing- Touching and Feeling Products- Personal Service- Cash and Credit Payment

5. Benefits of the Internet and Multichannel Retailing- Deeper and Broader Selection- Personalization- Gain Insights into Consumer Shopping Behavior- Increase Customer Satisfaction and Loyalty- Expand Market Presence

6. Effective Multichannel Retailing- Integrated CRMcentralized customer data warehouse that houses a complete

history of each customers interaction with the retailer, regardless of whether the sale

occurred in a store, on the Internet, or on the phone- Brand Imageretailers need to provide a consistent brand image across all channels- Pricing- Supply Chain

CHAPTER 17: INTEGRATED MARKETING COMMUNICATIONS

1. Communicating With Consumera. The Communication Process


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- Noiseany interference that stems from competing messages, a lack of clarity in themessages, or a flaw in the medium, and it poses a problem for all communication

channels

- Feedback Loopallows the receiver to communicate with the sender and therebyinforms the sender whether the message was received and decoded properly

b. How Consumers Perceive Communication- Receivers Decode Message Differently- Senders Adjust Messages According to the Medium and Receivers Traits

c. The AIDA Model

- Awarenessgain attention- Interestcustomer must be persuaded- DesireI like itI want it- Actionsearching for the product or making a purchase- The lagged effecta delayed response to a marketing communication campaign

2. Element s of An Integrated Marketing Communication Strategy

a. Advertisingb. Public Relations (PR)the organizational function that manages the firms communications

to achieve a variety of objectives, including building and maintaining a positive image,

handling or heading off unfavorable stories or events, and maintaining positive relationship

with the media

c. Sales Promotionsd. Personal Sellinge. Direct Marketingmarketing that communicates directly with target customers to generate

response or transaction

f. Online Marketing3. Planning For And Measuring IMC Success

a. Goalb. Setting and Allocating the IMC Budget

- Objective-and task methodsdetermines the budget required to undertake specifictasks to accomplish communication objectives


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- Rule-of-Thumb methodsdetermine the present communication budget

c. Measuring Success Using Marketing Metrics- Frequency- Reach- Gross rating points (GRP = reach x frequency)- Web Tracking

d. Planning, Implementing, and Evaluating IMC ProgramsAn Illustration of GoogleAdvertising

- Search Engine Marketing: Clicks, Impressions, Click through rate, Return oninvestment (ROI = (Sale revenueAdvertising cost)/Advertising cost)

CHAPTER 18: ADVERTISING, PUBLIC RELATIONS, AND SALE PROMOTIONS

1. Identify Target Audience2. Set Advertising Objectives

a. Pull Strategyget consumers to pull the product into the supply change by demanding itb. Push Strategyincrease demand by focusing on wholesalers, retailers, or salepeoplec. Informcommunicate to create and build brand awarenessd. Persuadeused to motivate consumer to take action or to reposition an established brand inthe later stage of PLCe. Remindused to remind or prompt repurchasesf. Focus of Advertisements

- Institutional advertisementinform, persuade, or remind consumers about issuesrelated to places, politics, or an industry

- Product-focused advertisementinform, persuade, or remind consumers about aspecific product or service

- Public Service Advertising (PSA)focus on public welfare3. Determine The Advertising Budget4. Convey The Message

a. The Messageb. The Appeal

- Informational Appealshelp consumers make purchase decisions by offering factualinformation that encourages consumers to evaluate the brand favorably on the basis

of the key benefits it provides

- Emotional Appealssatisfy consumers emotional desires rather their utilitarianneeds


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5. Evaluate and Select Media- Media Planningrefers to the process of evaluating and selecting the media mix- Media Mixcombination of the media used and the frequency of advertising in each

medium

- Media Buy- Mass Mediareach large anonymous audience- Niche Mediareach a smaller more targeted audience- Three Scheduling Methodscontinuity, flighting, pulsing

6. Create Advertisements7. Assess Impact Using Marketing Metrics

- Pretestingrefers to assessments performed before an ad campaign is implementedto ensure that the various elements are working in an integrated fashion and doing

what they are intended to do

- Trackingincludes monitoring key indicators, such as daily or weekly sales volume,while the advertisement is running to shed light on any problems with the message or

the medium

- Protestingthe evaluation of the campaigns impact after it has been implemented8. Sales Promotions: coupon, deals, premium, contests, sweepstakes, samples, samples, loyalty

programs, POP displays, rebates, product placement

9. Using Sales Promotion Tools- Cross-promotingtwo or more firms join together to reach a specific target market

10.Evaluating Sales Promotions Using Marketing Metricsa. Realized margin

b. Cost of additional inventoryc. Potential increase in salesd. Long-term impacte. Potential loss from switches from more profitable itemsf. Additional sales by customers

CHAPTER 19: PERSONAL SELLING AND SALES MANAGEMENT

1. The Scope and Nature of Personal Selling2. The Personal Selling Process

mkt 3000 final study guide

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