MKTG 341 Chapter 1-4, 6-10 Notes
MKTG 341 Chapter 1-4, 6-10 Notes MKTG 341
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m Key Terms Marketing The activity for creating and delivering offerings that benefit the organization its stakeholders and society Exchange The trade of things of value between a buyer and a seller so that each is better off Market People with both the desire and the ability to buy a specific offering Target Market one or more specific groups of potential consumers toward which an organization directs its marketing program Marketing Mix the controllable factors product price promotion place that the marketing manager can use to solve a marketing problem Customer Value Proposition a cluster of benefits that an organization promises customers to satisfy their needs Environmental Forces the uncontrollable social economic technological competitive and regulatory forces that affect the results of a marketing decision Customer Value buyers benefits including quality convenience ontime delivery and before and aftersale service at a specific price Relationship Marketing Linking the organization to its individual customers employees suppliers and other partners for their mutual long term benefit Marketing Program a plan that integrates the marketing mix to provide a good service or idea to a prospective buyer Marketing Concept the idea that an organization should strive to satisfy the needs of consumers while also trying to achieve the organizations goals Market Orientation focusing organizational efforts to collect and use information about customers needs to create customer value Marketing affects all individuals all organizations all industries and all countries Marketing seeks to 1 discover the needs and wants of prospective customers 2 satisfy them The marketing department is responsible for faceliftings relationships partnerships and alliances with the organizations customers its shareholders its suppliers and other organizations Environmental forces involving social economic technological competitive and regulatory considerations also shape an organizations marketing activities Marketing decisions are affected by and in turn often have an important impact on society as a whole For marketing to occur 4 factors are required 1 Two or more parties with unsatisfied needs 2 Desire and ability to satisfy these needs 3 A way for the parties to communicate 4 Something to exchange In order not to fail do not produce what a consumer does not need Someone in the marketing department usually marketing manager must complete a marketing program to reach consumers by using quotthe Four P squot The Four P s Product a good service or idea 0 satisfy the consumers needs Price what is exchanged for the product Promotion a means of communication between the seller and buyer Place a means of getting the product to the consumer An organization that has market orientation focuses its efforts on continuously collecting information about customers needs sharing this information across departments and using it to create customer value The result is todays customer relationship era in which firms seek to continuously satisfy the high expectations of consumers Customer relationship management CRM the process of identifying prospective buyers understanding them intimately and developing favorable longterm perceptions of the organization and its offerings to that buyers will choose them in the market place Customer experience is the foundation of customer relationships management It is the internal response that customers have to all aspects of an organization and its offerings This internal response includes both the direct and indirects contacts to he customers with the company direct contacts include the customers contacts with the seller through being using and obtaining service Indirect contacts most often involve unplanned touches with the company through wordofmouth comments from other customer reviews and news reports Marketing Orientation Production Era up till 1920 s goods were scarce and buyers were willing to accept virtually any goods that were available and make do with them Sales Era 19201960 manufacturers found they could produce more goods than buyers could consume Marketing Concept Era Marketing Orientation Era M Key Terms Organization a legal entity that consists of people who share a common mission Business firm privately owned organization NonProfit organization nongovernmental organization that serves its customers but does not have profit as an organizational goal Profit the reward to a business firm for the risk it undertakes in marketing its offerings Strategy an organizations longerterm course of action that delivers a unique customer experience while achieving its goals Core Values the fundamental passionate and enduring principles that guide an organization Mission a statement or vision of an organizations function in society Organizational culture the set of values ideas attitudes and behavioral norms that is learned and shared among the members of an organization Business the underlying industry or market sector of an organizations offerings Goals objectives targets of performance to be achieved often by a specific time Market share ratio of a firms sales to the total sales of all firms in the industry Marketing Dashboard the visual computer display of essential marketing information Marketing Metric a measure of the value or trend of a marketing activity or result Marketing Plan a road map for the marketing activities of an organization for a specified future time period Business portfolio analysis a technique that mangers use to quantify performance measures and growth targets of their firms strategic business units Diversification Analysis a technique a from uses to search for growth opportunities from among current and new products and markets Strategic Marketing Process approach whereby an organization allocates its marketing mix resources to reach its target markets Situational Analysis taking stock of where a firm or product has been recently where it is now and where it is headed SWOT Analysis acronym describing an organization appraisal of its internal strengths and weaknesses and its external opportunities and threats Market segmentation the sorting of potential buyers into groups that have common needs and will respond similarly to a marketing action Points of Difference those characteristics of a product that make it superior to competitive substitutes Marketing strategy the means by which a marketing goal is to be achieved Marketing Tactics detailed day to day operational decisions essential to the overall success of marketing strategies Organizations Structure Board of Directors Corporate Level where top management directs overall strategy for the entire organization Strategic Business Level a subsidiary division or unit of an organization that markets a set of related offerings to a clearly defined group of customers Func onalLevel groups of specialist actually create value for the organization Strateav in Visionarv Organizations Organizational Foundation Why does it exist core values mission vision organizational culture Organizational direction What will it do Business Goals objectives Business firms can pursue several different types of goals profit slaes market share quality customer satisfaction employee welfare social responsibility Organizational strategies By Level corporate SBU Func onal By Offering Product Service ldea Settinq Strategic Directions Growth Share Matrix vertical axis is market growth rate annual rate of growth of SBU39S industry horizontal axis is relative market share sales of SBU sales of largest firm in industry Diversification Analysis is a technique that helps a firm search for growth opportunities from among current and new markets and well as current and new products Market penetration increase sales of current products in current markets Market development sell current products to new markets Product developmentselling new products to current markets Diversification developing new products and selling them in new markets The Strategic Marketing Process The planning phase 1 Situation SWOT Analysis 2 Marketproduct focus and goal setting 3 The marketing program There are 4 components of the implementation phase of the strategic marketing process 1 obtaining resources designing the marketing organization 2 3 defining precise tasks responsibilities and deadlines 4 executing the marketing program designed in the planning phase Chapter 3 Key Terms Environmental Scanning the process of acquiring information on events outside the organization to identify and interpret potential trends Social Forces the demographic characteristics and the culture of the population Demographics descriptions of a population according to characteristics such as age gender ethnicity and occupations Baby Boomers the generation of children born between 1946 and 1964 Generation X members of the US population between 1965 and 1976 Generation Y the 72 million americans born between 1977 and 1994 Multicultural marketing marketing programs that reflect unique aspects of different races Culture the set of values ideas and attitudes that is learned and shared among the members of a group Economy pertains to the income and resources that affect the cost of running a business or household Technology inventions from applied science or engineering research Marketspace an information and communication based electronic exchange environment occupied by digitized offerings Competition alternative firms that could provide a product to satisfy a specific markets needs Regulation restrictions that state and federal laws pace on business Consumerism a movement started to increase the influence power and rights of consumers in dealing with institutions Selfregulation an alternative to government control whereby an industry attempts to police itself Ethics the moral principles and values that govern the actions and decision of an individual or a group Consumer Bill of Rights codified the ethics of exchange between buyers and sellers including rights to safety to be informed to choose and to be heard Code of Ethics a formal statement of ethical principles and rules of conduct Moral Idealism a personal moral philosophy that considers certain individual rights or duties as universal regardless of the outcomes Utilitarianism a personal moral philosophy that focuses on the quotgreatest good for the greatest numberquot Social Responsibility the idea that organizations are part of a larger society and are accountable to that society for their actions Green Marketing marketing efforts to produce promote and reclaim environmentally sensitive products Cause Marketing tying the charitable contributions of a firm directly to sales produced through the promotion of one of its products Environmental Scannina Social Forces Economic Forces Technological Forces Competitive Forces Regulatory Forces Social Forces Demographics Generational Cohorts Racial ethnic and diversity Culture Economics Forces Macroeconomic Conditions Consumer Income Gross income total amount of money made in one year by a person household or family Disposable lncome money a consumer has left after paying taxes to use for necessities such as food housing clothing and transportation Discretionary income the money that remains after paying for taxes and necessities Technolooical Forces Competitive Forces pure competition monopolistic competition oligopoly Reoulatorv Forces protecting competition protection consumers and producers Control through self regulation Three concepts of social resnonsibilitv 1 profit responsibility companies have a simple responsibility to maximize profits for their owners or stockholders 2 stakeholder responsibility the obligations of an organization has to those who can affect achievements of its objective consumers employees suppliers and distributors 3 societal responsibility obligations that organization have to the preservation of the ecological environment and to the general public The Sherman AntiTrust act and Clayton Act forbid monopolies or other actions that cause restraint in trade Chapter 4 Key Terms Consumer behavior the actions a person takes in purchasing and using products and services Purchase decision process the stages a buyer passes through in making choices about which products or services to buy Involvement The personal social and economic significance of a purchase to the consumer Motivation the energizing force that stimulates behavior to satisfy a need Personality a persons consistent behavior or responses to recurring situations Perception the process by which a person selects organizes and interprets information to create a meaningful picture of the world Perceived Risk the anxiety felt when a consumer cannot anticipate possible negative outcomes of a purchase Brand Loyalty A favorable attitude toward and consistent purchase of a single brand over time Attitude a tendency to respond to something in a consistently favorable or unfavorable way Beliefs a consumers perception of how a product or brand performs Opinion Leaders Individuals who have social influence over others Word of Mouth people influencing each other in personal conversations Reference Groups people to whom an individual looks as a basis for selfappraisal or as a source of personal standards Family Life Cycle a family progression from formation to retirement each phase bringing with it distinct purchasing behavior Purchase Decision Process 1 Problem recognition Perceiving a need perceiving a difference between a persons ideal and actual situations big enough to trigger a decision 2 Information search Seeking value Internal search scan memory for previous experience with products or brands External search personal sources public sources marketerdominated sources 3 Alternative evaluation Assessing Value clarifies the problem for the consumer by suggesting criteria to use for the purchase yielding brand names that might meet the criteria and developing consumer value perceptions Evaluative criteria all the factors you consider when making a purchase Consideration set the group of brands of which you are aware in the product class 4 Purchase decision Buying Value Decision of from who to buy and when to buy 5 Postpurchase behavior Value in Consumption or Use After buying a consumer compares it whit his or her expectations Cognitive dissonance Felling of postpurchase psychological tension or anxiety Consumer Involvement Three Characteristics of highinvolvement 1 It is expensive 2 It can have serious personal consequences 3 It could reflect on ones social image Situational Influences the purchase task the reason for engaging in the decision social surroundings the other people present when a purchase decision is made physical surroundings decor music and crowding temporal effects time of day or the amount of time available antecedent states the consumers mood or amount of cash on hand Learning Behavioral Learning process of developing automatic responses to a situation built up through repeated exposure to it Drive need that moves individual to action Cue stimulus or symbol Response action taken by a consumer to satisfy the drive Reinforcement reward Cognitive learning Making connection between two or more ideas or simply observing the outcomes of others behaviors and adjusting your own accordingly Brand Loyalty A favorable attitude toward and consistent purchase of a single brand over time Attitude Change Marketers use three approaches to try to change consumer attitudes toward products and brands 1 Changing beliefs about the extent to which a brand has certain attributes 2 Changing the perceived importance of attributes 3 Adding new attributes to the product Familv Influence Family influence on consumer behavior result from Consumer socialization The process by which people acquire the skills knowledge and attitudes necessary to func on Children learn by interacting with adults in purchase situations and through their own purchasing and product usage experience The family life cycle The distinct phases that a family progresses through from formation to retirement each phase bringing with it identifiable purchasing behaviors Family decision making Joint decision making most decisions are made by both husband and wife Spouse dominant decision making either the husband or wife is mostly responsible Roles of individual family members are another element of family decision making information gatherer influencer decision maker purchaser user Chapter 6 Key Terms Protectionism The practice of shielding one or more industries within a country s economy from foreign competition through the use of tariffs or quotas Tariff a government tax on goods or services entering a country primarily serving to raise prices on imports Quota A restriction placed on the amount of a product allowed to enter or leave a country World Trade Organization Institution that sets rules governing trade between its members through panel of trade experts Global Competition Exists when firms originate produce and market their products and services worldwide Multidomestic Marketing Strategy a multinational firms strategy of offering as many different product variations brand names and advertising programs as countries in which it does business Global Marketing Strategy The practice of standardizing marketing activities when there are cultural similarities and adapting them when cultures differ Global Brand A brand marketed under the same name in multiple counties with similar and centrally coordinated marketing programs Global Consumers Consumer groups living around the world who have similar needs or seek similar benefits from products or services Crosscultural Analysis The study of similarities and differences among consumers in two or more nations or societies Values A societies personally or socially preferable modes of conduct or states of existence that tend to persist over time Customs Norms and expectations about the way people do things in a specific country Foreign Corrupt Practices Act 1977 A law that makes it a crime for US corporations to bribe an official of a foreign government or political party to obtain or retain business Cultural Symbols Things that represent ideas or concepts in a specific culture Back Translation Retranslating a word or phrase back into the original language using a different interpreter to catch errors Microfinance The practice of offering small collateralfree loans to individuals who otherwise would not have access to the capital necessary to begin small businesses or other income generating activities Currency Exchange Rate The price of one country s currency expressed in terms of another country s currency Exporting producing goods in one county and selling them in another country Joint Venture when a foreign company and a local firm invest together to create a local business sharing ownership control and the profits of the new company Four trends have significantly affected world trade and global marketing Decline of economic protectionism by individual countries Rise of economic integration and free trade among nations Global competition among global companies for global consumers Emergence of a networked global market space Decline of Economic Protectionism Economic argue for protectionism is that it preserves jobs protects a nations political security discourages economic dependency on other countries and encourages the development of domestic industries Tariffs give price advantages to domestic products Quotas help domestic industries retain a certain percentage of the domestic market North American Free Trade Agreement NAFTA lifted many trade barriers between Mexico Canada and the US Three tvoes of companies bObulate and compete in the global marketplace International firms Engages in trade and marketing in different countries as an extension of the marketing strategy in its home county Multinational firms Views the world as consisting of unique parts and markets to each part differently Multidomestic marketing strategy Transnational firms Views the world as one market and emphasizes cultural similarities across countries or universal consumer needs and wants more than differences Global marketing strategy A Global Environmental Scan Three types of uncontrollable environmental variables Cultural Values Customs Cultural Symbols Language Economic Assessment of the economic infrastructure A COUWY s communications transportation financial and distribution systems Measurement of consumer income Per Capital or household income Recognition of a country currency exchange rates Exchange rates fluctuate Politicalregulatory Political Stability Trade Regulations Comparing Global MarketEntrv Strategies Four general options exist Exporting Allows a company to make the least number of changes in terms of its product organization corporate goals Indirect exporting when a firm sells its domestically produced goods in a foreign country through and intermediary Direct exporting when a firm sells its domestically produced goods in a foreign country without intermediaries Licensing A company offers the right to a trademark patent trade secret or other similarly valued item of intellectual property in return for a royalty or a fee Joint Venture Share ownership control and profits of the new company Direct Investment a domestic firm actually investing in and owning a foreign subsidiary or division Crafting A Worldwide Marketing Program A product mav be sold oloballv in one of three wavs Product Extension Selling virtually the same product in other countries Product Adaptation Changing a product in some way to make it more appropriate for a country s Cimate or consumer preference Product Invention Invent totally new products designed to satisfy common needs across countries Distribution Strateov the seller headquarters is the starting point and is responsible for the successful distribution to the ultimate consumer Channel between two nations moving the product form one country to another Pricing Strateov Pricing too low or too high can have dire consequences Dumping when a firm sells a product in a foreign country below its domestic price or its actual cost Gray Market parallel importing situation where products are sold through unauthorized channels of distribution Cha ter 7 Key Terms Marketing Research The process of collecting and analyzing information in order to recommend actions Measures of Success Criteria or standards used in evaluating proposed solutions to a problem Constraints Restrictions placed on potential Data The facts and figures related to a problem Secondary data facts and figures that have already been recorded prior to the project at hand Primary data facts and figures that are newly collected for a project Observational Data Facts and figures obtained by watching either mechanically or in person how people behave Questionnaire Data Facts and Figures obtained by asking people about their attitudes awareness intentions and behaviors Information Technology involves operating computer networks that can store and process data Sales Forecast the total sales of a product that a firm expects to sell during a specified time period under specified conditions Five Step Marketing Research Approach 1 Define the Problem Set the research objectives Research objectives are specific measurable goals the decision maker seeks to achieve in conducting the marketing research Identify possible marketing actions 2 Develop the Research Plan Specify Constraints Identify Data Needed for Marketing Actions Determine How to Collect Data Concepts ideas about products or services New Product concept a picture or verbal description of a product or service Methods the approaches that can be used to collect data to solve all or part of a problem Sampling Statistical Inference 3 Collect Relevant Information Secondary Data Internal Marketing Inputs Marketing Outcomes External Primary Data Watching People Mechanical method Personal Methods Neuromarketing Methods Asking People Idea generation depth interview individual interview focus groups ldea evaluation Openended questions ClosedEnd questions or fixed alternative Dichotomous questions Other Sources Social media panels and experiments information technology data mining 4 Develop Findings Analyze the data Present the findings Take Marketing Actions Make Action recommendations Implement the action recommendations Evaluate the results Evaluating the decision it self Evaluating the decision process used 9quot Sales Forecastinq Techniques Judgments of the decision maker direct forecast estimating the value to be forecast without any intervening steps Losthorse forecast starting with the last known value of the time being forecast listening the factors that could affect the forecast assessing whether they have positive or negative impacts ad making the final forecast Surveys of knowledgeable groups Survey of buyers asking prospective customers if they are like to buy the products during some future time period Salesforce survey asking the firms salespeople to estimate sales during a coming period Statistical Methods Trend extrapolation extending a pattern observed in past data into the future Chapter 8 Key Terms Market Segmentation involves aggregating prospective buyers into groups that have common needs and will respond similarly to a marketing action Market Segments the relatively homogeneous groups of prospective buyers that result from the market segmentation process Product Differentiation a firm using different marketing mix activities such as product features and advertising to help consumers perceive the product as being different and better than competing products Market Product Grid a framework to relate the market segments of potential buyers to products offered or potential marketing actions Usage Rate quantity consumed or the number os store visits during a specific period 8020 Rule suggest 80 percent of a firms sales are obtained from 20 percent of its customer Product Positioning the place a product occupies in consumers minds based on important features relative to competitive products Product Repositioning Changing the place a product occupies consumers minds relative to competitive products Perceptual Map a means of displaying the position of products or brands in consumer minds A Business firm segments markets so it can respond more effectively to the wants of groups of potential buyers and thus increase its sales and profits Product differentiation can be physical features or non physical features Three Segmentation Strategies 1 One product and multiple market segments Produces only a single product or service and attempts to sell it to two or more market segments It avoids the extra of developing and producing additional versions of the product Multiple products and multiple market segments Different products each targeted at a different type of customer Segments of one or mass customization I N I 00 Organizational synergy is the increased customer value achieved through performing organizational functions such as marketing or manufacturing more efficiently Cannibalization is new products or new chain stealing customer and sales from the older ones TiffanyWalmart strategy selling highend and lowend merchandise under different names Steps in Segmenting and Targeting Markets Group potential buyers into segments Group products to be sold into categories Develop a marketproduct grid and estimate size of markets Select target markets L PWN 5 Take marketing actions to reach target markets A marketing manager should develop market segments that meet five criteria simplicty and cost effectiveness of assigning potential buyers to segments potential for increased profit similarity of needs of potential buyers within a segment difference of needs of buyers among segments potential of a marketing action to reach a segment Four bases of segmentation geographical based on where prospective customer live or work demographic based on some objective physical measurable or other classification attribute psychographic some subjective mental or emotional attributes aspirations or needs behavioral some observable actions or attitudes b prospective customers A marketproduct grid is a framework to relate market segments of potential buyers to products offered or potential marketing actions by an organization Criteria to Use in Selecting the Target Segments Market size Expected growth Competitive postion Cost of reaching the segment Compatibility with the organization Chapter 9 Key Terms Product a good service or idea consisting of tangible and intangible features that satisfies consumers needs and is received in exchange for money or something else of value Services Intangible activities or benefits that an organization provides to satisfy consumers needs in exchange for money or something else of value Consumer products products purchased by the ultimate consumer Business products products organizations buy that assist direct or indirectly in providing other products for resale Idle production capacity when the service pride is available but their is no demand for the service Four I s of services the four unique element that distinguish services from goods intangibility inconsistency inseparability and inventory Product Item a specific product that has a unique brand size or price Product Line a group of products that are closely related because they are similar in terms of consumer needs and uses market segments sales outlets or prices Product Mix all the product lines offered by a company New Product Process the seven stages an organization goes thought to identify business opportunities and convert them into salable product or services Customer Experience Management CEM the process of managing the enter coster experience within the company Good and Services non durable god is an item confused in one or a few uses such as food products and fuel durable good is one that usually lasts over many uses such as appliances cars cellphones idea is a thought that leads to a product or action such as a concept for a new invention or getting people out to vote product generally includes not only physical goods but services and ideas as well Classifvino Products Consumer Products 4 types CONVENIENCE products are items that the consumer purchases frequently conveniently and with a minimum of shopping effort Shopping product are items for which the consumer compares several alternatives n criteria such as price quality or style SPECia39ty products are items that the consumer makes a special effort to search out and buy Unsought products are items that the comer does not know about or knows about but does not initially want They differ in terms of the effort the consumer spends on the decision the attributes used in making the purchase decision and the frequency of purchase Business Products their sales are Often the resu 0 derived demand sales of business products frequently result from the sale of consumer products Components are items that becomes part of the final product Support PrOdUCtS are items used to assist in producing tother products and services such as installations accessory equipment supplies industrial services Classifvind Services Delivered by People or Equipment EqUiPment39basedi automated self service operated by relatively unskilled operators operated by skilled operators Peoplebased unskilled labor skilled labor professionals Delivered by Business Firms or NonProfit Organizations use marketing to improve their communications and better serve those in need Delivered by Government Agencies provide a range of services have adopted many marketing practices used business firms The Uniqueness of Services lntangibility cant be touched or seen before purchase performance rather than object marketers try to make them tangible or show the benefits of using the service to help consumers assess and compare services Inconsistency services depend on the people who provide them so quality varies organizations attempt to reduce inconsistency through standardization and training lnseparability cannot distinguish the service prover from the service itself Inventory many products have inventory handling costs that relate to their strange perishability and movement idle PrOdUCtion caPaCity which is when the service pride is available but their is no demand for the service for a service inventory cost involves paying the service prover along with any needed equipment core product a good or service and supplementary services Assessing Service Qualitv evaluated by comparing expectations about a service offering to the actual experience a consumer has with the service Gap analysis identifies the difference between the consumers expectations and his or her actual experiences It asks consumers to assess their expectations and experiences on dimension of service quality Product Items Product Lines Product Mixes stock keeping unit is a unique identification number that defines an item for ordering or inventory purposes Product Item a specific product that has a unique brand size or price Product Line a group of products that are closely related because they are similar in terms of consumer needs and uses market segments sales outlets or prices Product Mix all the product lines offered by a company What is a New Product Newness compared with existing products if a product is functionally different from existing products it can be defined as new feature bloat proliferation of extra features Newness from the consumers perspective a second way to define new products is in terms of their effects on consumption this approach classifies new products according to the degree of learning required feature bloat proliferation of extra features Continuous innovation39 consumers dont need to learn new behaviors Dynamically COHtinUOUS innovation only minor changes in behavior are required DiscontinUOUS innovation39 making the consumer learn entirely new consumption patters to use the product Newness in Legal Terms FTC advises that the term new be limited to use with a product unto six months after in enters regular distribution Newness from the Organizations Perspective Organizations view newness and innovation in their products at three levels Product line extension Involves least risk Incremental improvement of and existing product line A significant jump in innovation or technology and a brand extension brand extension involving putting an established brand name on a new product in an unfamiliar market A radical invention a truly revolutionary new product Whv Products and Services Succeed or Fail precise protocol a statement that before product development begins identifies a well defined target market specific customers needs wants and preferences what the product will be and do to satisfy consumers Marketing Reasons for NewProduct Failures Insignificant point of difference having superior characteristics that deliver unique benefits to the user No economical access to buyers cost too much to get it on the shelves Incomplete market and precept protocol designing a vague product for a phantom market Not satisfying customers needs on critical factors problems on one or two critical factors can kill the product even if quality is high Bad timing product introduced too soon too late or when consumer taste are shifting dramatically Poor product quality when a product is not thoroughly tested Too little market attractiveness target market is too small or competitive to warrant the huge expenses necessary to reach it Poor execution of the marketing mix brand name package price promotion distribution somewhere in the marketing mix there can b e a showstopper that kills the product Organizational Problems in New Product Failures not really listening to the voice of the consumer skipping stages in the new product process pushing a poorly conceived product into the market to generate quick revenue encountering groupthink in task force and commit meetings not learning critical takeaway lesson from past failures avoiding the NIH problem The NewProduct Process Stage 1 New Product Strategy Development the stage of the new product process that defines the role for a new product in terms of the firm s overall objectives firm uses SWOT analysis and environmental scanning to assess its strengths and weaknesses ratline to the trends it identifies as opportunities or threats OUtCOFneS identifies the Vital protocol for each new product idea but also identifies the strategic role it might serve in the firms business portfolio Stage 2 Idea Generation involves developing a pool of concepts to serve as candidates for new products building upon the previous stages results open innovation an organization finds and executes create new product ideas by developing strategic relationships with outside individuals and organizations Employee and CoWorker Suggestions Customer and Supplier Suggestion Crowdsourcing involves generating insights leading to actions based on massive number of peoples ideas Research and Development Laboratories Competitive Products Smaller Firms Universities and Inventors Stage 3 Screen and Evaluation stage to that internally and externally evaluates new product ideas to eliminate those that warrant no further effort Internal Approach employees evaluate the technical feasibility External Approach concept test which are external evaluations with somers that consist of preliminary testing of a new product idea rather than an actual product Stage 4 Business Analysis specifies the features of the product and the marketing strategy needed to bring it to market and make financial projections The last checkpoint before significant resources are invested to create a prototype Stage 5 Development stage that turns the idea on paper into a prototype results in a demonstrable producible product that involves not only manufacturing the product efficiently but also performing laboratory and consumer tests to ensure it meets the standards establish for it in the protocol Stage 6 Market Testing stage that involves exposing actual products to prospective consumer under realistic purchase conditions to see if they will buy test marketing involves offering a product for false on a limited basis Standard test markets a company develops a product and then attempt to sell it through a normal distribution channel in a number of test market cities The producer sells the product to distributors wholesalers and retailers Controued Test Markets involves contracting the entire test program to an outsider service Simu39ated Test Markets a technique that somewhat replicates a full scale test market Saves time and money Usually run at a mall to find comer who use the product class being test qualified participants are shown the product or product concept and are asked about usage reasons for purchase and important product attributes They see the company and competitor add They are given money to decide to buy or not Stage 7 Commercialization the stage that positions and launches a new product in full scale production an sales most expensive stage regional rollouts introducing the product sequentially into geographical ares to allow production levels and marketing activities to build up gradually to minimize the risk of new product failure slotting fee a payment a manufacturer makes to place a new items on a retailers shelf failure fee a penalty payment a manufacturer makes to compensate a retailer fore devoting valuable shelf space to a product that failed to sell time to market speed parallel development cross functional team members who conduct the simultaneous development of both the product and the production process stay with the product from conception to production fast prototyping do it try it fix it encouraging continuing improvement even after the initial design Chapter 10 Key Terms Product Life Cycle the stages a new product goes through in the market place introduction growth maturity and decline Branding an organization s use of a name phrase design symbol or combination of these to identify and distinguish its product Brand Name any word device design shape sound color or combination of the used to distinguish a seller s goods or services Brand Personality a set of human characteristics associated with a brand name Brand Equity the added value a brand name gives to a product beyond the functional benefits provided Multiproduct branding a branding strategy in which a company uses one name for all its products in a product class multibranding a branding strategy that involves giving each product a distinct name Seven P s of Services Marketing expanding the four Ps framework to include peoeple physical environment and process Off peak pricing charging different prices during different times of the day or days of the week to reflect variation in demand for the service Capacity Management integrating the service component of the marketing mix with efforts to influence consumer demand Introduction Stage Product is introduced to its target Market Sales grow slowly and profit is minimal Small profit is often from large investment most is product development Primary demand the desire for the product class rather than for a specific brands since there are few competitors with the same product Selective demand the preference for a specific brand Pricing can be either high or low Skimmin9 hight initial price to help the company recover the cost of development as well as capitalize on the price insensitivity to early buyers Penetration pricing price low helps build unit volume but a company must closely monitor costs Growth Stage characterized by rapid increase in sales competitors appear profit usually beaks product sales grow at an increasing rate because of new people trying or using the product and a growing population of repeat purchasers repeat purchasers people who tried the product were satisfied and bought again for successful products the ratio of repeat to trial purchases grows as the product moves through the life cycle Changes appear try to differentiate from competitors It is important to broaden distribution for the product Maturitv Stage characterized by a slowing of total industry sales or product class revenue marginal competition begins to leave the market sales increase at a decreasing rate as few new buyers enter market profit decrease due to fierce price competition among sellers holding market share is important do it through more differentiation and finding new buyers controlling overall marketing cost by improving promotional and distribution efficiency Decline Stage Sales drop consume a disproportionate share of management and financial resources relative to their future worth a company will follow one of two strategies to handle a declining product PrOdUCt deletion dropping product from company s product line Harvesting when a company retains the product but reduces marketing costs Three Aspect of the Product Life Cycle Length of Product Cvcle No set time it takes a product to move through cycle consumer products life is shorter than business products mass communication informs consumers quickly and technology shortens it Shape of the Product Life Cvcle High learning product is one for which significant customer education is required and there is an extended introductory period Low learning products sales begin immediately because little learning is required and the benefits of the purchase are readily understood product can be easily imitated by competitors so the marketing strategy is to broaden distribution quickly Fashion product are introduced decline and then seem to return Fad experiences rapid sales on introduction and then and equally rapid decline The Product Life Cvcle and Consumer a product diffuses or spreads through the population a concept the diffusion of innovation for a product to be successful it must be purchased by innovators and early adopters several factors affect whether a consumer will adopt a new product Reasons for resisting a product in the introduction stage usage barriers the product is not compatible with existing habits value barriers the product provides no incentive to change risk barriers physical economic or social PSVChOIOQicaI barriers cultural differences or image companies try to overcome these barriers by warranties moneyback guarantee extensive usage instructions demonstrations and free sample Managing the Product Life Cycle Role of product manager product manger or brand manager manages the marketing efforts for a closeknit family of products or brands responsible for managing existing products through the stages of the life cycle also developing new products marketing responsibilities include developing and exciting a marketing program for the product line described in a an annual marketing plan and approving ad copy media selection and package design engage in extensive data analysis related to their products and brands sales marketshare and profit trends are closely monitored managers often supplement the data with two measure a category development index and a brand development index they help identify strong and weak market segments for specific consumer products and brands and provide direction for marketing efforts Modifvino the product product modification involves altering one or more of a products characteristics such as its quality performance or appearance to increase its value to customer to increase sales new features packages or scents can be used to change a products characteristics and give the sense of a revised product Modifvino the Market market modification strategies a company tries to Finding new customers Increasing a products use creating anew use situation Repositioning the product product repositioning changes the place a product occupies in a consumers mind relative to competitive products Reacting to a competitor s position Reaching a new market Catching a Rising Trend Changing the Value offered trading up adding value to product through additional features or higher quality materials trading downL reducing the number of features quality or price Creating Brand Eduitv develop positive brand awareness and association of the brand in consumers minds with a product class or need to give the brand an identity establish a brands meaning in the minds of consumers elicit the proper consumer responses to a brands identity and meaning create a consumer brand connection evident in an intense active loyalty relationship between consumers and the brand Multiproduct brandino also called family branding or corporate branding advantages include capitalizing on brand equity consumers who have good experience with the product will transfer the favorable attitude to other items in the product class with the same name product line extension are made possible line extensions work best when they provide incremental company revenue by taking sales away from competing brands or attracting new buyers subbranding combines a corporate or family brand with a new brand to distinguish part of its product lines from others strong brand equity allows for brand extension using a current brand name to enter a different product class too many uses for one brand name can dilute the meaning of a brand for consuemrs Multibrandino strateov useful when each brand is intended for a different market segment some companies array their brands on the basis of pricequality segments fighting brands purpose is to confront competitor brands advertising and promotion cost is higher Private Branding Strateov manufactures products but sells them under the brand name of a wholesaler or retailer produces high profits for manufacturers and resellers Mixed Branding Strateov a firm markets products under its own manes and that of a reseller because the segment attracted to the reseller is different from its own market Packaging and Labeling Products packaging component of a product refers to any container in which it is offered for sale and on which label information is conveyed label is an integral part of the package and typically identifies the product or brand who made it where and when it was made how it is to be used and package contents and ingredients Communication Benefits a major benefit of packaging is the label information on it conveyed to the consumer Functional Benefits storage convenience protection or product quality convenience dimension of packaging is increasingly important consumer protection is another important function of packaging including the development of tamper resistant containers functional features of packaging also can affect product quality Perceptual Benefits perception created in the consumer mind package and label shape color and paretics distinguish one brand from another convey a brands posting and build brand equity changes in brand packaging can update and uphold a brands image in the customers mind country of origin or manufacture Packaging and Labeling Challenges and Resoonses Connecting with Customers Environmental Concerns Health Safety and Security Issues Cost Reduction Managing the Marketing of Services Product Service two aspects of the productservice that warrant special attention exclusivity and brand name services cant be patented brand name are everything Price referred to in several ways charges fees fares rates place to essential roles to affect consumers perceptions and to be used in capacity management Place Distribution major factor in developing a service marketing strategy because of the inseparability of services from the producers as competition grows the value of convenient distribution is being recognized Promotion purpose is to show the benefits of using the service it is valuable to stress availany location consistent quality and effect courteous service publicity plays a major role in the promotional strategy of non profit services and some professional organization PSAs People quality of service is judged by the performance of the people providing the service customer experience management which is the process of managing the entire customer experience with the firm CEM experts suggest that the process should be intentional planned and consistent so that every experience is similar thsical Environment the appearance of the environment in which the series is believed and where the firm and customer interact can influence the customer perception of the survey physical evidence of the service include all tangibles surrounding the service the buildings landscaping vehicles furniture signage brochure and equipment physical evidence needs to be managed called impression or evidence management Process actual procedures mechanisms and flow of activities by which the service is created and delivered the creation and delivery steps that the customers experience is what they judge the service on Service organization must manage the availability of the offering so that demand matches capacity over the duration of the demand cycle and the organizations assets are used in ways that will maximized to return on investment
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