MKT 250 Study Summary PDF

Final CH11 (Product Concepts, Branding, and Packaging): Product: A good, a service, or an idea received in an exchange. Good – A tangible, physical entity Service – The intangible result of the application of human and mechanical efforts to people or objects Idea – A concept, philosophy, image, o...

Final CH11 (Product Concepts, Branding, and Packaging): Product: A good, a service, or an idea received in an exchange. Good – A tangible, physical entity Service – The intangible result of the application of human and mechanical efforts to people or objects Idea – A concept, philosophy, image, or issue Supplemental Features: the added value or attributes in addition to a product’s core utility. It also Help differentiate the product brand from another such as: Installation Delivery Training Financing Products Classification Consumer Products: Products purchased to satisfy personal and family wants and needs o Convenience Products: Relatively inexpensive, frequently purchased items for which buyers exert minimal purchasing effort. E.g. soft drinks, chewing gum o Shopping Products: Items for which buyers are willing to expend considerable effort in planning and making purchases. E.g. shoes, furniture, camera o Specialty Products: Items with unique characteristics that buyers are willing to expend considerable effort to obtain. E.g. Bentley, Hermes specialty bag (don’t find it wont buy) o Unsought Products: Products purchased to solve a sudden problem, products of which the customers are unaware, and products that people do not necessarily think about buying. E.g. auto repair facility  Business Products: Purchased to satisfy the goals of the organization o Installations: Facilities and nonportable equipment o Accessory equipment: Equipment that does not become part of the final physical product but is used in production or office activities o Raw materials: Basic natural materials that become part of a physical product o Component parts: Items that become part of the physical product and are either finished items ready for assembly or items that need little processing before assembly o Process materials: Materials that are used directly in the production of other products but are not readily identifiable o MRO supplies: Maintenance, repair, and operating items that facilitate production and operations but do not become part of the finished product o Business services: Intangible products that many organizations use in their operations Product Item: A specific version of a product that can be designated as a distinct offering among a firm’s products Product Line: A group of closely related product items viewed as a unit because of marketing, technical, or end-use considerations Product Mix: The composite, or total, group of products that an organization makes available to customers Width of Product Mix: The number of product lines a company offers Depth of Product Mix: The average number of different products in each product line The progression of a product through four stages: Introduction: Its first appearance in the marketplace when sales start at zero and profits are negative, High risk of failure, Less than 10% of new products succeed in the marketplace Growth: when sales rise rapidly, profits reach a peak, and then they start to decline. Maturity: when the sales curve peaks and starts to decline, and profits continue to fall Decline: when sales fall rapidly Awareness – The buyer becomes aware of the product Interest – The buyer seeks information and is receptive to learning about the product Evaluation – The buyer considers the product’s benefits and decides whether to try it, considering its value versus the competition Trial – The buyer examines, tests, or tries the product to determine if it meets his or her needs Adoption – The buyer purchases the product and can be expected to use it again whenever the need for this product arises brand is a name, term, design, symbol or other feature that identifies one seller’s product as distinct from those of other sellers. trademark is a legal designation of exclusive use of a brand. Three degrees of brand loyalty: Brand recognition – the degree of brand loyalty in which a customer is aware that a brand exists and views the brand as an alternative purchase if their preferred brand is unavailable Brand preference – the degree of brand loyalty in which a customer prefers one brand over competitive offerings Brand insistence – the degree of brand loyalty in which a customer strongly prefers a specific brand and will accept no substitute Brand equity is the marketing and financial value associated with a brand’s strength in a market Types of Brands: 1. Manufacturer brands are initiated by producers to ensure that producers are identified with their products at the point of purchase 2. Private distributor brands are initiated and owned by a reseller, Also called private brands, store brands, or dealer brands 3. Generic brands are brands indicating only the product category Surnames and descriptive, geographic or functional brand names are difficult to protect branding strategies: 1. Individual branding is a branding strategy in which each product is given a different name 2. Family branding is branding all of a firm’s products with the same name or part of a name 3. A brand extension is when an organization uses one of its existing brands to brand a new product in a different product category Co-branding is using two or more brands on one product Benefits: Capitalizes on the trust and confidence that customers have in the individual brands. Represents a complementary fit in consumers minds. Brand licensing is an agreement whereby a company permits another organization to use its brand on other products for a licensing fee, Royalties range from 2% of wholesale revenues to 10% or higher, The licensee is responsible for all manufacturing, selling and advertising. Four functions of packaging: 1. Protects and preserves the product 2. Offers convenience to the customer 3. promote the product 4. evoke an emotional response In developing packages, marketers must take many factors into account: Cost Regulations Consistency: “Family packaging is using similar packaging for all of a firm’s products or packaging that has one common design elements” Factors affecting packaging decisions: Promotional role Packaging must meet the needs of resellers Environmentally responsible packaging Packaging Strategies Secondary-Use Packaging: Customers see added value in a package that can be reused Category-Consistent Packaging: A product is packaged in line with the packaging practices for that product category, such as peanut butter Innovative Packaging: Unusual or unique packaging makes the product stand out from competitors Multiple Packaging: Offering products in twin packs, tri-packs, six-packs or other forms is useful for some products as it may increase consumption but does not work for all products Handling-Improved Packaging: Making a package easier to handle in the distribution channel Labeling is providing identifying, promotional or other information on package labels CH12 (Developing and Managing Products): We can improve the product mix through: Line Extensions: the development of a product closely related to existing products in the line but designed specifically to meet different customer needs. Product Modifications: changing one or more characteristics of a product: 1. Quality modifications are changes to a product’s dependability and durability 2. Functional modifications: changes that affect a product’s versatility, effectiveness, convenience or safety 3. Aesthetic modifications are changes to the sensory appeal of a product new product can be: A new product can be an innovative product that has never been sold by any organization A new product can be a modified product that existed previously A new product may be a product a specific company has not marketed previously but similar products have been available from other companies A product can be viewed as new when it is brought to one or more markets from another market New-product development process: 1. Idea generation: the activity of seeking product ideas to achieve organizational objectives 2. Screening: selecting the ideas with the greatest potential for further review 3. Concept testing: seeking a sample of potential buyers’ responses to a product idea 4. Business analysis: evaluating the potential impact of a product idea on the firm’s sales, costs and profits 5. Product development: determining if producing a product is technically feasible and cost effective 6. Test marketing: a limited introduction of a product in geographic areas chosen to represent the intended market 7. Commercialization: refining and finalizing plans and budgets for full-scale manufacturing and marketing of a product Product Differentiation: Creating and designing products so that customers perceive them as different from competing products Three aspects of product differentiation must be considered: 1. Product Quality: The overall characteristics of a product that allow it to perform as expected in satisfying customer needs 2. Product Design and Features: how a product is conceived, planned and produced & specific design characteristics that allow a product to perform certain tasks 3. Product Support Services: human or mechanical efforts or activities that add value to a product Product deletion: eliminating a product from the product mix when it no longer satisfies a sufficient number of customers Three ways to delete a product: 1. Phase-out – allows a product to decline without a change in marketing strategy 2. Run-out – exploits any strengths left in the product 3. Immediate drop – used when losses are too great Product Manager – the person within an organization who is responsible for a product, a product line or several distinct products that make up a group Brand Manager – the person responsible for a single brand Market Manager – the person responsible for managing the marketing activities that serve a particular group of customers Venture team – a cross-functional group that creates entirely new products that may be aimed at new markets CH13 (Service Marketing): Service: An intangible product that involves a deed, a performance, or an effort that cannot be physically possessed, A service is not the same as customer service. Characteristics of Services: Intangibility: A service is not physical and cannot be perceived by the senses and cannot be physically possessed. Inseparability of Production and Consumption: Production of a service cannot be separated from its consumption by customers so they must be present at the consumption of the service and cannot take the service home. Perishability: Unused service capacity from one time period cannot be stored for future use Heterogeneity: allows for customization, which creates a competitive advantage Client-Based Relationships: Interactions that result in satisfied customers who use a service repeatedly over time. Customer Contact: The level of interaction between provider and customer needed to deliver the service Services generally come in a bundle: 1. Core Service – The basic service experience a customer expects to receive 2. Supplementary Services – One or more supportive services used to differentiate the service bundle from competitors’ Service marketers are likely to promote: Price Guarantees Performance documentation Availability Training/certification of personnel Customer Evaluation of Service Quality Search Qualities: Tangible attributes (of a product) such as color, style, size, feel, or fit that can be judged before the purchase of a product  Experience Qualities: Attributes, such as taste, satisfaction, or pleasure, that can be assessed only during purchase and consumption of a service Credence Qualities: Attributes that customers may be unable to evaluate even after purchasing and consuming a service The intangible nature of services is the largest obstacle to evaluating service quality Service quality is sometimes the only reason a customer chooses one service over another Four factors that affect service quality: 1. Analysis of customer expectations 2. Service quality specifications 3. Employee performance 4. Management of service expectations Customers have two levels of expectations: 1. Desired – What the customer really wants 2. Acceptable – The level of service that is adequate Zone of tolerance – The difference between the two levels Marketing activities conducted to achieve some goal other than ordinary business goals such as profit, market share, or return on investment Divided into two categories: 1. Nonprofit-organization marketing 2. Social marketing Nonprofit Marketing Target markets: 1. Target Public: A collective of individuals who have an interest in or concern about an organization, product, or social cause  2. Client Publics: Direct consumers of a product of a nonprofit organization 3. General Publics: Indirect consumers of a product of a nonprofit organization CH14 (Marketing Channels and Supply-Chain Management): Supply Chain: All the activities associated with the flow and transformation of product from raw materials through to the end consumer Foundations of the Supply Chain: O Logistics Management: Planning, implementing and controlling the efficient and effective flow and storage of products and information from the point of origin to consumption to meet customers’ needs and wants O Supply Management: The processes that enable the progress of value from raw materials to final customer and back to redesign and final disposition Channel decisions determine: O A product’s market presence O Buyer’s accessibility to the product Marketing Channels Create Utility O Time Utility – Having products available when the customer wants them O Place Utility – Making products available in locations where customers wish to purchase them O Possession Utility – Customers have access to the product to use now or store for future use O Form Utility – Formed by assembling, preparing, or otherwise refining the product to suit customer needs A long channel may be the most efficient distribution channel for some consumer goods Industrial Distributor: An independent business organization that takes title to industrial products and carries inventories Manufacturers’ Agent: An independent businessperson who sells complementary products and is compensated by commissions Dual Distribution: The use of two or more marketing channels to distribute the same products to the same target market Strategic Channel Alliance: An agreement whereby the products of one organization are distributed through the marketing channels of another Selecting Marketing Channels 1. Customer Characteristics 2. Product Attributes 3. Type of Organization 4. Competition 5. Environmental Forces 6. Characteristics of Intermediaries Strategic Issues in Marketing Channels Channel conflict occurs when: O Self-interest creates misunderstanding about role expectations of channel members O Communication is poor between channel members O There is increased use of multiple channels has increased the chance for miscommunication and conflict Channel Integration O Vertical channel integration: Combines two or more stages of the marketing channel under one manasgement O Vertical marketing systems (VMSs): A single channel member coordinates or manages channel activities to achieve low-cost distribution aimed at satisfying target market customers O Horizontal channel integration: Combining organizations at the same level of operation under one management Stockouts – Shortages of products that can result in loss of customers Reorder point – The inventory level that signals the need to place a new order Reorder point = (order lead time x usage rate) + safety stock Order lead time – The average time lapse between placing the order and receiving Usage rate – The rate at which inventory is used/sold Safety stock – The extra inventory a firm keeps Electronic Data Interchange (EDI): A computerized means of integrating order processing with production, inventory, accounting, and transportation Just-in-Time (JIT): An inventory-management approach in which supplies arrive just when needed for production or resale Radio frequency identification (RFID) – Radio waves are used to track materials using scanners Types of Warehouses O Private Warehouses: Company-operated facilities for storing and shipping products O Public Warehouses: Storage space and related physical distribution facilities that can be leased by companies O Distribution Centers: Large, centralized warehouses that focus on moving rather than storing goods Coordinating Transportation O Intermodal Transportation: Two or more transportation modes are used in combination O Freight Forwarders: Organizations that consolidate shipments from several firms into efficient lot sizes O Megacarriers: Freight transportation firms that provide several modes of shipment Legal Issues in Channel Management 1. Dual Distribution: Runs the risk of being viewed as anti-competitive 2. Restricted Sales Territories: Courts have conflicting opinions on restricting intermediaries to certain sales territories 3. Tying Agreement: A supplier may require channel members to purchase additional products, but courts only permit this if the supplier uniquely provides certain quality goods and competing products are also allowed. 4. Exclusive Dealing: A manufacturer can prohibit intermediaries from selling competing products only if the agreement impacts less than 15% of the market, involves small sales volumes, and the producer is smaller than the retailer. 5. Refusal to Deal: Producers can select channel members but cannot refuse to work with wholesalers or dealers solely for resisting anticompetitive or trade-restraining policies. CH16 (Integrated Marketing Communications): Integrated marketing communication forms: O Consistent message to customers O Coordinate/manage promotional efforts O Synchronization of promotional elements O Use more precisely targeted promotional tools O Use of database marketing O Protect consumer privacy Coding Process (Encoding) – Converting meaning into a series of signs or symbols Decoding Process – Converting signs or symbols into concepts and ideas Feedback – The receiver’s response to a decoded message Channel Capacity – The limit on the volume of information a communication channel can handle effectively Primary Demand: Demand for a product category rather than a specific brand Pioneer Promotion: A way to stimulate primary demand, Promotion that informs consumers about a new product Selective Demand: Demand for a specific brand Trial Techniques: O Free samples O Coupons O Test drives O Limited free-use offers O Contests O Games Retention techniques include: O Frequent-user programs O Special offers for existing customers O Listening to the customer O Loyalty programs to reward most-valued customers O e-Communications – e-newsletters, e-cards, or e-alerts O Interactive promotions – Sweepstakes and contests O Events – Seminars, workshops, etc. O Client appreciation programs – Invitations to special events, etc. Public Relations Tools: O Publicity O Annual reports O Brochures O Event sponsorships O Sponsorship of socially responsible programs O Press releases/Conferences/Feature articles Push Policy: Promoting a product only to the next institution down the marketing channel Pull Policy: Promoting a product directly to consumers to develop strong consumer demand that pulls products through the marketing channel Organizations may use both push and pull policies at the same time Most Powerful Promotion is word of mouth Buzz Marketing: An attempt to incite publicity and public excitement surrounding a product though a creative event Viral Marketing: A strategy to get consumers to share a marketer’s message, often through email or online video, in a way that spreads dramatically and quickly Business products concentrate on: O Personal selling O Sales promotion Consumer products concentrate on: O Convenience goods = advertising O Durables and expensive products = personal selling O Both = public relations Distribution Intensity of the Product: 1. Intensive Distribution O Advertising, sales promotion 2. Selective Distribution O Promotion mixes vary 3. Exclusive Distribution O Personal selling Costs and Availability of Promotional Methods: O National Advertising / Sales Promotion: Have higher expense but low cost per individual O International Promotion: Can be difficult because of lack of promotional channels O Personal selling: Is dependent on recruiting and hiring qualified sales people Types of Interpretation Communication: 1. Kinesic Communication: Body language; communicating through the movement of head, eyes, arms, hands, legs, or torso 2. Proxemic Communication: communicating by varying the physical distance between two parties in face-to-face interactions 3. Tactile Communication: Communication through touching Is promotion deceptive? Some are, but not all promotion should be condemned Does promotion create needs? Marketing does not create needs CH19-20 (Pricing Decision): Barter – The trading of products, the oldest form of exchange Nonprice competition – Emphasizing factors other than price to distinguish a product from competing brands Demand curve – A graph of the quantity of products expected to be sold at various prices if other factors remain constant – D1 An improvement in any of these factors may cause a shift to demand curve D2 Profit = Total Revenue – Total Costs Total Revenue = (Price x Quantity Sold) Pricing high – emphasizes quality Pricing low – emphasizes a bargain Factors that can influence demand O Changes in buyers’ needs O Variations in the effectiveness of other marketing mix variables O The presence of substitutes O Dynamic environment Price elasticity of demand – A measure of the sensitivity of demand to changes in price Price elasticity of demand = % change in quantity demanded %change in price Fixed costs – costs that do not vary with changes in the number of units produced or sold Average fixed cost – the fixed cost per unit produced Variable cost – costs that vary directly with changes in the number of units produced or sold Average variable cost – the variable cost per unit produced Total cost – the sum of average fixed and average variable costs times the quantity produced Average total cost – the sum of the average fixed cost and the average variable cost Marginal cost (MC) – the extra cost incurred by producing one more unit of a product Marginal revenue (MR) – the change in total revenue resulting from the sale of an additional unit of product Any unit for which MC exceeds MR subtracts from profits, and the opposite is true Break-Even Analysis: This approach assumes the quantity demanded is basically fixed and the major task is to set prices to recover costs Factors Affecting Pricing Decisions: O Organizational and Marketing Objectives O Pricing Objectives O Costs O Other Marketing Mix Variables O Channel Member Expectations O Customers’ Interpretation and Response O Customers prices comparison O Competition O Legal and Regulatory Issues consumers can be characterized according their degree of 1. Value consciousness – concerned about price and quality of a product 2. Price consciousness – striving to pay low prices 3. Prestige sensitivity – drawn to products that signify prominence and status There are several issues unique to pricing business products: O Discounts O Geographic pricing: reductions for transportation and other costs related to the physical distance between buyer and seller O Transfer pricing: Prices charged in sales between an organization’s units Price Discounting: 1. Trade (functional) discounts – a reduction off the list price a producer gives to an intermediary for performing certain functions 2. Quantity discounts – Deductions from the list price for purchasing in large quantities O Cumulative discounts which are quantity discounts aggregated over a stated time period  O Noncumulative discounts which are one-time price reductions based on the number of units purchased, the dollar value of the order, or the product mix purchased 3. Cash discounts – price reduction given to buyers for prompt payment or cash payment 4. Seasonal discounts – price reduction given to buyers for purchasing goods or services out of season 5. Allowances – concession in price to achieve a desired goal F.O.B. factory – is the price of merchandise at the factory before shipment F.O.B. destination – is a price indicating the producer is absorbing shipping costs Uniform geographic pricing – is charging all customers the same price, regardless of geographic location Zone pricing – is pricing based on transportation costs within major geographic zones Base-point pricing – is geographic pricing that combines factory price and freight charges from the base point nearest the buyer Freight absorption pricing – is absorption of all or part of actual freight costs by the seller Four methods to determine price: 1. Actual full cost is calculated by dividing all fixed and variable expenses for a period into the number of units produced 2. Standard full cost is calculated based on what it would cost to produce the goods at full plant capacity 3. Cost plus investment is calculated as full cost plus the cost of a portion of the selling units’ assets used for internal needs 4. Market-based cost is calculated at the market price less a small discount to reflect the lack of sales effort and other expenses CH4 (Social Responsibility and Ethics in Marketing): Social Responsibility: Is an organization’s obligation to maximize its positive impact and minimize its negative impact on society Social Responsibility Issues: Sustainability Consumerism Community relations Codes of conduct (also called codes of ethics) consist of formalized rules and standards that describe what the company expects of its employees Ethics relates to individual and group decisions, judgments about right and wrong, in a particular decision-making situation Social Responsibility relates to the total effect of marketing decisions on society Marketing citizenship: The adoption of a strategic focus for fulfilling the economic, legal, ethical and philanthropic social responsibilities expected by stakeholders Philanthropic responsibilities are not required of a company, but they promote human welfare or goodwill. Sustainability is the potential for the long-term well-being of the natural environment, including all biological entities, as well as the interaction among nature and individuals, organizations and business strategies. Consumerism is the efforts of independent individuals, groups, and organizations to protect the rights of consumers. Managing supply chains responsibly is one of the greatest difficulties of marketing ethics CH? (Digital Marketing): Digital Marketing: Achieving marketing objectives through applying digital technologies’ Web Design & User Experience 1. Navigation 2. Responsiveness 3. Loading Speed 4. Readability and Typography 5. Consistency 6. Visual Hierarchy 7. Forms and Interactivity 8. Error Handling 9. Mobile-Friendly Design 10. Feedback and Confirmation 11. Search Functionality 12. Accessibility SEO: All techniques that improve a website’s organic visibility on search engines and improve its ranking on search engine results pages (SERP) SEM: All marketing practices that promote the company website through paid advertisements that appear on search engine results pages (SERP) Web analytics is the measurement, collection, analysis, and reporting of Internet data for the purposes of understanding and optimizing Web usage. Pageviews: A pageview occurs any time a user accesses a page on a website. Sessions: Any time a user enters a website, he has created a session. A session may consist of one or more pageviews. Average Time on Page: The amount of time the user spent on a page before navigating to a different page. Page Bounce Rate: The percentage of sessions that begin on that page that consist of only one pageview. Conversion Rate: This metric tracks the percentage of sessions that result in the intended action. Retail: the percentage of sessions that result in a purchase. Retargeting (or remarketing) is a form of paid ads that involves putting your website’s ads in front of those who have previously visited your website.