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LO1 Chapter DEFINE THE TERM PRODUCT
o Product everything, both favorable and unfavorable that a person
receives in an exchange
Can be tangible and intangibles
LO2 CLASSIFY CONSUMER PRODUCTS
o Depends on buyers intentions
o Business product used to maufacture other goods or services
o Consumer satisfy an individual personal wants
Convenience products inexpensive item that merits little
shopping effort, buy regularly, usually without much planning
Shopping products more expensive, fewer stores,
Only buy after comparing several brands or stores on
styles, practicality price and lifestyle compatibility
Homogeneous and heterogeneous
o Homo look for lowest price
Heter hard to compare
Specialty products
Very specific items, very reluctant to accet subs
Unsought products new products, did not know about until
advertising do not like to spend money on these
Require aggressive techniques to sell
LO3 DEFINE THE TERMS PRODUCT ITEM, PRODUCT LINE, AND
PRODUCT MIX
o Product item specific version of a product that can be designated as
a distinct offering among an organizations products
o Product line a group of closely related product , soup in cambells
o Product mix includes all the products it sells
o Product width refers to how many product lines your have, diversify
risk, much like hedge fund
o Product depth how deep the product line is , attract buyers with
different preferences,
o Product modification changes one or more of its qualities
Quality Modification dependability or durability
Functional modification change in a products versatility ,
effectiveness
Style Modification aesthetic product change rather than a
quality or function
o Planned obsolescence modifying products so ones sold before it
become obsolete
o Repositioning changes consumers perceptions of a brand, or re make
the image to sell
o Product line extensions adding more products to a product line in
order to compete more broadly, can add too many tho, or not enough
Some do not contribute to money
Things allocated in disproportionate amounts
Some items obsolete
o Product line contracting
Resources become concentrated
managers no longer waste resource trying to improve the sales
of poorly performing products
new product items have a greater change of being successful
because more financial and human resources are available to
manage them
LO4 DESCRIBE THE MARKETING USES OF BRANDING
o Brand a name, term, symbol, design, or compbination there of that
identifies things PRODUCT IDENTIFICATION, repeat sales, facilitate
new product sales
Brand name
Brand mark
Brand equity THE VALUE OF COMPANY AND BRAND
NAMES
Global brand 1/3 of sales occur outside country
Brand loyalty consisten preference for one brand over all
others
o Manufacturer brand national brand
o Private brand store brand10% higher margins
o Captive brands a brand manufacturer by a third party for an
exclusive retailer, without evidence of that retailers affiliation
o Individual brand specific product
o Family brand marketing several different products under same
brand name
o Co-branding two or more brands
Ingredient branding breaking product down by different
brands
Cooperative branding brand receive equal treatment and
borrow from each others brand equity
Complementary branding two separate brands marketed
together suggesting usage together
o Trademarks exclusive right to use a brand or part of a brand
o Service mark same thing but with services
Lasts up to ten years, can renew permanently if show use of the
brand name itself
o Generic product name former brand names that were not renewed,
cannot be re trade marked
LO5 DESCRIBE MARKETING USES OF PACKAGING AND LABELING
o Contains and protect product
o Promotes product
o Facilitating storage, use and convenience
Refer easy to ship and store
Size and shape effect the buyers decision
o Facilitating recycling and reducing environmental damage
Can use it to target markets BPI
o Labeling
Persuasive labeling persuades customer to buy product
Informational tells facts, aka nutrimental shit and stuff
o Green washing shows product is environmentally friendly
o UPC universal product codesbarcodes
LO6 DISCUSS GLOBAL ISSUES IN BRANDING AND PACKAGING
o One brand name everywhere
o Adaptations and modifications change with language barrier
o Different brand names altogether
o Labelings
Ingredient, promotional and instructional information on label
LO7 DESCRIBE HOW AND WHY PRODUCT WARRANTIES ARE
IMPORTANT MARKETING
o Express warranty written
o Implied warranty unwritten that good or service is fit for the
purpose it was sold for
Magnuson-Moss warranty federal trade commission
improvement act in 1975
Chapter 11
LO1 EXPLAIN THE IMPORTANCE OF DEVELOPING NEW PRODUCTS
AND DESCRIBE THE SIX CATEGORIES OF NEW PRODUCTS
o New products sustain growth, increase revenues and profits, and replace
obsolete items
o New product a product new to the world, the market, the producer, the
seller, or some combination of these
o New to world=discontinuous innovations
o New Product Lines
o Additions to existing product lines supplement established line
o Improvements or revisions of existing products
o Repositioned products are existing products targeted at new
markets or market segments, or ones repositioned to change the
current markets perception of the product
o Lower priced products
LO2 EXPLAIN THE STEPS IN THE NEW PRODUCT DEVELOPMENT
PROCESS
o Make long term commitment, company specific approach, capitalize on
experience, establish an environment
o New product strategy links new product development process with
the objectives of the marketing department, the business unit and
coporation
Sharpens focus
o Idea generation
Customers wants and needs should be springboard
Employees ask other employees example competition
Distributors ask the sellers, whats selling, when all that stuff
Vendors partners with coke for specific flavor slushy
Competitors looks at them to see their products
Research and development
Product development a marketing strategy that
entails the creation of marketable new products, the
process of converting applications for new technologies
into marketable products
Modification makes function or cosmetic changes
Consultants outside people
Two ways are brain storming and focus group exercises
o Idea screening eliminates ideas that are inconsistent with
organizations new-product strategy
Concept test consumer reactions to descriptions and visual
representations of a proposed product GOOD FOR LINE
EXTENTIONS
o Business analysis preliminary figures for demand, cost, sales, and
profitability are calculated, costs and revenues are estimated and
compared
Uncertain and risky economy means putting off big purchases
o Development the stage in the product development process in
which a prototype is developed and a marketing strategy is outline
When all departments work together called simultaneous
product development
Shortens development and cuts costs
Internet is good for this
Lab tests, online meetings and such
o Test marketing
High costs of test marketing very expensive, and exposes
product to competitors before product lunch
o Alternatives for test marketing simulated laboratory market testing,
scanner test costs,
SLMT PEOPLE ARE shown advertising , then taken to market
to see which they pick
Internet tests
o Commercialization decision to market a product,
Essential is product matches market needs
LO3 DISCUSS GLOBAL ISSUES IN NEW PRODUCT DEVELOPMENT
o Increasing globalization of markets and competition provides a reason for
multination firms to consider new product development from a worldwide
perspective
LO4 EXPLAIN THE DIFFUSION PROCESS THROUGH WHICH NEW
PRODUCTS ARE ADOPTED
o Innovation a product perceive as new by a potential adopter
o Diffusion the process by which the adoption of an innovation
spreads
INNOVATORS FIRST 2.5, EAGER to try new ideas, higher
incomes, more worldly, more self confident
Early adopters 13.5 percent, rely much more on group
norms and values, local community, opinion leaders, new
product best friend
Early majority 34 percent, weighs pros and cons before
adopting a new product , evaluate a lot more, rely on group but
not opinion leaders
Late majority 34, adopt cause most friends already have it ,
pressured to conform
Laggards 16 percent, do not rely on group norms, rely
heavily on past, low socioeconomic status, suspicious of new
stuff , tradition
o Five qualities to predict rate of adoption
Complexity
Compatibility degree to which the new product is consistent
with existing values
Relative advantage superior to existing substitutes
Observability benefits can be observed by others
Trialability ability to be tried easily
o Word of mouth and communication direct from manufacture
LO5 EXPLAIN THE CONCEPT OF PRODUCT LIFE CYCLES
o Product category includes all brands that satisfy a particular type
of need
o Introductoryfull scale lunch of new product, marketing costs are very
high, need to advertise a lot to get name out, incentives for people to try it,
and production costs , sales increase slowly, profits are negative
Advantage of subs, educational effort, and management
commitment of resources to new item determine length of stage
Develops product awareness and informs potential benefits
o Growth sales grow at increasing rate, many enter market, large
companies buy smaller, profits rise rapidly, distribution is major key to
success
o Maturity sales increase at decreasing rate, new users cannot be added
indefinitely, soon or later approaches saturation, longest stage, annual
models appear in this stage, product lines lengthened, price wars,
o Decline how consumers tastes change, fad are very high fade,
organized abandonment
o Implications marketing for management take initiative instead reacting
CHAPTER 12
LO1 discuss the importance of services to the economy
o Service is the result of applying human or mechanical efforts to
people or objects
o Majority of American economy is service, nearly 80% of people will
be there
LO2 discuss the differences between services and goods
o Services have four unique characteristics that distinguish them from good,
intangible, inseparable, heterogeneous and perishable
o Intangibility the inability of services to be touched, seen, tasted,
heard, or felt in the same manner that good can be sensed
Because of this hard to rate quality of service, experience fewer
search qualities , but more credence and experience qualities
Search qualities a characteristic that can be easily assessed
before purchase
Experience quality characteristic that an be asses only after
use, such as quality of meal at restaurant
Credence quality is a characteristic that consumers may
have difficulty assessing even after purchase because they do
not have the necessary knowledge or experience. This is a
quality held by man high end fields
Harder to market benefits of intangible services thus they must
rely on tangible cues to help out
Tangible items play important role in service industry still, must
convey the dcor the company is aiming for, think of the things
o Inseparability sold produced and consumed at the same time,
production and consumption are inseparable activities, must be
present during production( think hair cuts)
o Heterogeneity the variability of the inputs and outputs of services,
which causes services to tend to be less standardized and uniform
than goods
Barber shop, the barbers differ in skill communication, and
other things just within the same shop
Standardization and training reduce this
o Pershability cannot be stored warehoused, or inventoried
Synchronize supply and demand
LO3 DESCRIBE THE COMPONENTS OF SERVICE QULAITY AND THE
GAP MODEL OF SERVICE QUALITY
o Because of the four unique characteristics of services, service quality is
more difficult to define and measure than is the quality of tangible goods
o Customers Evaluate Service Quality on five major things
Reliability the ability to perform the service dependably,
accurately, and consistently, performing right the first time
Responsiveness ability to provide prompt service,
Assurance the knowledge and courtesy of employees and
their ability to convey trust, treat with respect
Empathy caring, individualized attention to customers
Tangibles the physical evidence of the service
o Gap model model that identifies five gaps that can cause problems
in service delivery and influence customer evaluations
Gap 1 the gap between what customers want and what
managers thinks customers want, no customer satisfaction
research
Gap 2 the gap between what management thinks customers
want and the quality specifications that management develops
to provide the service, the inability of managers to transfer
what customers want on paper to real life
Gap 3 the gap between the service quality specifications and
the service that is actually provided, the inability of the
employees to actually carry out the plan provided for them
Gap 4 the gap between what the company provides and
what the customer is told it provides
Gap 5 the gap between the service that customers receive
and the service they want, can be positive or negative, for
example if expected long wait, but wait only took 10 mins good
gap
LO4 DEVELOP MARKETING MIXES FOR SERVICES
o Services unique characteristicsintangibility, inseparability of production
and consumption, heterogeneity, and perish ability-make marketing more
challenging
o Product (Service Strategy)
Service as a process
Two things get processed in service, people and objects
People processing takes place when the service is directed
at a customer
Possession processing occurs when the service is directed
at customers physical possessions
Mental stimulusdirected at minds(movies)
Information processing use technology or brain power
directed at a customers assets
Marketing strategies differ with each type of service
Core and supplementary service products
Core service most basic benefit the consumer is buying
Supplementary service a group of services that support
or enhance core service
Customization/ standardization
Customize more flexible and respond to individual
customer needs
Standardize more efficient cost less
Mass customization uses technology to deliver
customized services on a mass basis, gives each person
what they want on mass level
o Think about facebook and Pandora
The service mix many things
o Place ( Distribution) Strategy
Convenience
Number of outlets
Direct vs. indirect distribution
Newest form of direct is the internet
Indirect having a bank of America teller in a grocery
store
Location
Scheduling
o Promotion strategy
Stressing Tangible cues stress the physical objects to give
more warm feelings
Using personal information sources someone consumers
are familiar with like celebrities, someone they can relate to
with thing , use real customers for word of mouth
Creating a strong organizational image branding, branding
marks
Engaging in post purchase communication follow up on
customer service to know where to improve
o Price Strategy two challenges
In order to price a service, must define unit of service consumed,
like the quality of service or how fast it takes to do service
For services that are composed of multiple elements, the issue is
whether pricing should be based on a bundle or each should be
priced seperaretly
Revenue oriented pricing focuses maximizing surplus of
income over costs
Operations oriented seeks to match supply and demand by
varying prices, like when hotels jack prices in peak, and lower
in off season
Patronage tries to maximize the number of customer using
the service, prices vary with different market segments ability
to pay
LO5 DISCUSS RELATIONSHIP MARKETING IN SERVICES
o Many services involve ongoing interaction between the service
organization and customer
o Benefit from relationship marketing, attracting, developing, and retaining
customer relationships, create strong loyalty
o More cost efficient to hold customers than reducing costs
o Membership servicesones continually, easier to regain customers this
way
Discrete transactions turned into relationship by selling in bulk,
or special benefits or register with firm
o Practiced at three levels
Level 1 use pricing incentives to encourage customers to
continue doing business with it, frequent flyer miles
Level 2 uses incentives, but also looks to build social bonds
customers, stays in touch, learns about their needs
Level 3uses social and financial bonds, but adds structure to
formula, interactive the more you watch play the games, can get
credit to buy stuff at their store, gives insight to what they like the
most so the company can cater to you more
LO6 EXPLAIN INTERNAL MARKETING IN SERVICES
o Services are performances so the quality of a firms employees is an
important part of building long term relationships with customers
Companies that have happier employees are going to perform their
jobs better, leading to customers liking the company more
o Internal marketing treating employees as customers and developing
systems and benefits that satisfy their needs
LO7 DISCUSS GLOBAL ISSUES IN SERVICES MARKETING
o The international marketing of services is a major part of global business,
and the united states has become the worlds largest exporter
o In order to succeed, most know core product, and then marketing mix
elements should be designed to take into account every country
LO8 DESCRIBE NONPROFIT ORGANIZATION MARKETING
o A nonprofit organization that exists to achieve some goal other than the
usual business goals of profit, market share, or return on investment
Still markets intangible goods, account for 20% of economic
activity in US
Taxes amount for more than a third of our GDP
o Non profit organization marketing the effort by the non profit
organizations to bring about mutually satisfying exchanges with
target markets
Identify the customers they wish to serve or attract
Explicitly or implicitly specify objectives
Develop, manage and eliminate programs and services
Decide on prices to charge
Schedule events or programs,
Communicate their availability through brochures and such
o Unique aspects of non profit organizational marketing
o Objectives define what they want to do with their organization
o Target markets
Apathetic or strongly opposed targets target those strongly
opposed to their message
Pressure to adopt undifferentiated segmentation strategies
advantages of targeting or often overlooked
Complementary main purpose to provide services with
available resources, to those who are not served by private
sector people, thus must fine underserved market segments
and target them, not most profitable
o Product decisions how they differ
Benefit complexity often market complex behaviors or ideas
Benefit strength how strong the benefit of doing business
with them is, for example business can money in return for
something
Involvement wide range of involvement compared to narrow
of business
o Place ( distribution)
o Promotion
Professional volunteers
Sales promotion activities make use of existing services, or pair
up with company
Public Service anouncment
o Pricing
Pricing objectives main to break even, and redistribute income
Nonfinancial prices not charged monetary price, but instead
absorb nonmonetary costs, aka embarrassment, time, effort
Indirect payment taxes
Separation between payers and users relative poor supported by
relative rich
Below cost pricing tuition