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UM / Marketing / MKT 201 / What is the meaning of product complexity?

What is the meaning of product complexity?

What is the meaning of product complexity?


School: University of Miami
Department: Marketing
Course: Foundations of Marketing
Professor: Smita kulkarni
Term: Fall 2015
Cost: 50
Description: These notes cover what will be on our next exam.
Uploaded: 03/26/2017
8 Pages 31 Views 5 Unlocks

MKT 201

What is the meaning of product complexity?


CHAPTER 11: Product, Branding, and Packaging Decisions

I. Product Complexity

a. At center is core customer value: defines basic problem solving benefits that consumers are seeking

b. Marketers convert this into an actual product

i. Brand name, features/design, packaging, etc.

c. Associated services/augmented product

i. Non-physical aspects of the product; product warranties,  financing, product support, and after-sale service

II. Categories of products and services: CONSUMERS or BUSINESS a. Consumer products are products and services used by people for their personal use

What is the meaning of core customer value?

b. Specialty products/services: customers express such strong  preference that they will spend considerable effort to search for  best

c. Shopping products/services: consumers spend fair amount of  time comparing alternatives (furniture, fragrances, apparel) d. Convenience products/services: not willing to expend any effort  (drink, soap)

e. Unsought products/services: consumers either don’t normally  think of buying or don’t know about

i. Require lots of marketing; when new to the world products  are first introduced they are unsought products

III. Product Mix: complete set of all products/services offered by a firm a. Consists of various product lines, which are groups of  associated items that consumers use together or think of as part  of a group

What is the meaning of specialty products/services?

Don't forget about the age old question of What are the names and acronyms of four protocols of the world trade organization?

b. Reflects breadth and depth of company’s product lines

i. Breadth: count of number of product lines offered

1. Too much: costly to maintain and weaken firm’s rep.

ii. Depth: number of products within a product line

c. Increase depth: address changing consumer preferences or  preempt competitors while boosting sales

d. Decrease depth: delete products to realign firm’s resources;  eliminate unprofitable or low margin items and focus on more  profitable items

e. Decrease breadth: delete entire product lines to address  changing market conditions or meet internal strategic priorities f. Increase breadth: add new product lines to capture new or  evolving markets and increase sales

IV. Brands add value to products for both consumer and sellerIf you want to learn more check out What is the depreciation choices?

a. Facilitate purchases

i. Help consumers make quick decisions when they are  

familiar with a brand We also discuss several other topics like Are weather and climate are the same?

b. Establish loyalty

c. Protect from competition and price competition  

i. Strong brands are more established in the market and have more loyal customer base; competition isn’t threatening to  them

d. Are assets

i. Can be legally protected through trademarks and  


e. Affect market value

i. Value of a brand= earning potential of that brand over the  next 12 months

V. Brand equity for owner

a. The set of assets and liabilities linked to a brand that add to or  subtract from the value provided by product/service

b. How to determine equity:

c. Brand Awareness: how many consumers in a market are  familiar with the brand and what it stands for and have an  opinion of it

i. Ex: Google it, band-aid adhesive bandages, Kleenex tissues d. Perceived Value: relationship between product’s benefits and  costs

e. Brand Associations: mental and emotional links consumers  make between a brand and its key attributes (logo, color, slogan) i. Ex: toyota’s prius is known as economical, good value and  environment

ii. State Farm Insurance jingle Don't forget about the age old question of What is expected if dna replication was semiconservative?

f. Brand Loyalty

i. Airlines, for example, reward loyal customers with CRM  programs

ii. Hard relationships to build

VI. Brand Ownership Strategies If you want to learn more check out What is the control of gene expression in eukaryotes?
We also discuss several other topics like What is the history of poverty in america?

a. Manufacturer/National Brands

i. Owned and managed by manufacturer; Nike, Kitchen Aid,  Sony

ii. Majority of brands marketed in US are these

iii. Manufacturers have more control over their marketing  strategy, are able to chose market segments and  

positioning and can build brand

b. Retailer/Store Brands or Private-Label Brands

i. Products developed by retailers; Trader Joe’s

c. Family Brands

i. Firm uses its own corporate name to brand ALL its product  lines and products (ex: Kellogg’s rice krispies)

ii. Individual brands benefit from overall brand awareness  associated with family name

d. Individual brands

i. Individual identities not readily seen under Kellogg’s  


ii. Pop-tart, Cheez-it, Famous Amos cookies all under Kellogg e. Brand Extension

i. Increase in product’s breadth; same brand name in diff.  product line

ii. Crest and Colgate now making toothbrushes and other  dental products

iii. Brand name already est.; less marketing dollars

iv. Most are successful, but some can cause brand dilution (Cheeto lip balm)

v. Does it make sense and fit? Seek out similar consumer  attributes!

f. Line Extension

i. Increase in depth; use of same brand name within same  product line

g. Co-Branding

i. Dunkin and Baskin Robbins; Taco Bell and Pizza Hut  

ii. Designed to appeal to diverse market segments

iii. Creates risks when both segments turn out to be different h. Brand Licensing: licensor, licensee; attracting visibility for  brand, but risk of having it diluted by overexposure (ex: NHL  bobble heads, Disney Frozen)

i. Brand Repositioning/Rebranding: change brand’s focus to  target new markets or realign brand’s emphasis to keep up with  changing market preferences

VII. Sustainable Packaging: more environmentally friendly a. Need customers to still like it (noisy sun chips bag)


I. Market Saturation

a. The longer a product is in a market, the more likely it is to  become saturated

b. Without new products, value of firm will eventually decline II. Risk Management through Diversity

a. Firms create broad portfolio of products so that if some products  don’t make profit, they have others to make up for it

III. New products aren’t adopted by everyone simultaneously, but they  diffuse/spread through a population in a process called diffusion of  innovation

a. Helps marketers understand the rate at which consumers are  likely to adopt new product

b. New products (pioneers or breakthroughs) establish completely  new market/change rules of competition and consumer  

preferences in a market

i. Apple iPod

ii. Are first movers; have advantage of being first to create  market/category

Diffusion of Innovation Curve

I. Innovators  

a. First buyers; stood in line overnight for first showing of movie;  crucial to success of any new product because help product gain  market acceptance  

II. Early Adopters

a. Regarded as opinion leaders for particular product categories b. Not as risky as innovators, but waits to review carefully III. Early Majority

a. Few products are profitable until this group comes in

b. Rent Hunger Games; less risk because bugs are worked out and  low cost b/c renting

c. Usually when they come in, # of competitors has also peaked IV. Late Majority

a. At this time, product has reached full market potential; Netflix b. Sales tend to level off or be in decline

V. Laggards

a. Avoid change/rely on tradition; movie shows up on regular T.V. VI. Using the model

a. If product has relative advantage diffusion will be quicker b. Is the product compatible with people’s needs?

c. Observability: do people easily communicate benefits/use to  others?

d. Less complex and easy trialability (ex: in store sample) Product Development Process

I. Idea Generation

a. Internal R&D

b. R&D Consortia (groups of other firms and institutions)

c. Licensing (saves high costs of in-house R&D)

d. Brainstorming  

e. Outsourcing

i. Turn to outside firms to help them generate new ideas

f. Competitor’s Products (copycat consumer goods)

i. Reverse Engineering: take apart a product, analyze it, and  create an improved product that doesn’t infringe on the  

competitor’s patents (if they exist)

g. Customer Input

i. Analyze lead users, innovative product users who modify  existing products to suit their own needs

II. Concept Testing

a. Process in which a concept statement is presented to potential  buyers or users to obtain their reactions

b. If concept fails to meet customer expectations, not likely to  succeed if produced

III. Product Development/Design

a. Develop a product’s form and features; engineering team  develops prototype

i. First physical form of new product; tested through alpha  and beta testing

ii. Alpha: firm attempts to determine if it will perform  

according to its design and whether it satisfies its intended  need (occurs in R&D dept.)

iii. Beta: uses potential customers; YourEye webcam info

IV. Market Testing

a. Premarket Tests: before bringing product to market

i. Nielsan BASES; customers exposed to product and after  some time surveyed whether they would buy/use it again

b. Test Marketing: introduces offering to limited geographical area  prior to national launch

i. Uses all 4 P’s; strong predictor of product success/not  


V. Product Launch

a. Promotion

i. Trade promotions are for wholesalers or retailers to get  them to purchase the new products

ii. Introductory Price Promotions are limited duration, lower  than normal prices to provide retailers with incentive to try  products

iii. Trade Show: temporary concentration of manufacturers  that provides retailers opportunity to view what’s new and  available in marketplace

iv. Personal selling may be most efficient way to persuade  retailers

b. Place

i. Ensure that product is available for sale when customer  wants it, at store customer is expecting to find it, and in  

sufficient quantities to meet demand

c. Price

i. Manufacturers encourage retailers to sell at  

manufacturer’s suggested retail price (MSRP)

1. Most retailers don’t abide but man. Can withhold  


ii. Retailers need to make profit on each sale, but may also  receive slotting allowance from manufacturer (fee paid  to get new products into store or to gain more/better shelf  space for their products)

d. Timing

VI. Ways to measure success of product

a. Satisfaction of technical requirements

b. Customer acceptance

c. Satisfaction of firm’s financial requirements

The Product Life Cycle

I. Defines the stages that products move through as they enter, get  established in, and leave the marketplace  

II. When product is first launched into introduction stage  product  gains acceptance, demand and sales increase and more competitors  emerge in the growth stage  industry sales reach peak, so firms  rejuvenate products in maturity stage  if successful, reaches new  life, if not decline and leaves market


I Customer Service: human or mechanical activities firms undertake to  help satisfy their customers’ needs and wants

II It is cheaper to firms to manufacture goods in less developed  countries, so the ratio of service production to good production in US  has increased

a Household maintenance activities have become popular and  quite specialized

III Services are:

a Intangible  

i Cannot be touched; difficult to promote; must reinforce  benefit and value of service

b Inseparable Production and Consumption

i Happens at the same time; getting a haircut

ii Can’t try service before usually and can’t return it after

c Heterogeneous  

i Variability in service’s quality

ii Giving bad haircut in morning and better one later

iii Can use to advantage and customize service to customers  needs

iv Kiosks to order merch not available in the store

d Perishable  

i Can’t be stored for future use

ii No problem as long as demand for and supply of service  matches


I When delivery of service fails to meet customer’s expectations: service gap

II 4 service gaps

a Knowledge Gap: difference between customer’s expectations  and firm’s perception of those expectations

i can close this gap by doing research to see what  

customers want

ii however, service quality is intangible and hard for  

customers to evaluate

1 reliability, responsiveness, assurance, empathy,  


iii voice-of-customer program collects customer inputs and  integrates them into managerial decisions

iv zone of tolerance assesses how well they’re doing on 5  service quality dimensions; ask a series of questions to see the difference between what the customer expects and  

what they’ll accept before going elsewhere

b Standards Gap: difference between firm’s perceptions of  customers’ expectations and service standard it sets

i Close this by training employees to exceed standards and  measure service performance

c Delivery Gap: difference between firms service standards and  actual service it provides

i Close this by get employees to exceed service standards  when service is being delivered by providing support and  

incentives to service providers



iii Empowerment: allowing employees to make decisions  about how service should be provided (Nordstrom’s shoe  


iv Managers must provide emotional and instrumental  support to employees

v Technology can help close delivery gap; expanding

d Communication Gap: difference between actual service  provided and service promised through promotion programs i Be realistic about services you can provide

ii Ends with either satisfaction, dissonance (could be quick),  loyalty

III Service Recovery

a Finding Fair Solution:

i Distributive fairness is a customer’s perception of the  benefits they received compared to costs; what is  

adequate compensation?

ii Procedural Fairness is customer’s perceived fairness of  process used to resolve them; if followed too rigidly  

customer gets annoyed

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