MARKETING MID TERM EXAM

MARKETING MID TERM EXAM - Chapter 9 TYPES OF CONSUMER...

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Unformatted text preview: Chapter 9 TYPES OF CONSUMER PRODUCTS There are 2 types of consumer products 22/04/2008 09:36:00 1.) Business (industrial) Products intended use: business purpose business product is used to manufacture other goods or services to facilitate on organizations operations or to resell to other customers. o 7 Categories of Business major equipment accessory equipment component parts processed materials raw materials supplies services Light bulbs, pencils and paper and computers can be classified as both business and consumer products. 2.) Consumer Products is a product bought to satisfy an individuals' personal wants. Convenience Products are relatively inexpensive items that merits little shopping effort. A consumer is unwilling to shop extensively for such an item. i.e. candy, soft drinks, asprin, small hardware items, dry cleaning, and car washes are all convenience products. Shopping Products are usually more expensive than a convenience product and is found in fewer stores. Consumers usually buy a shopping product only after comparing several brands or stores on style, practicality, price, lifestyle, and compatibility. Consumers are willing to invest some effort into this process to get the desired benefits. There are 2 types of shopping products. 1.) homogeneous shopping products consumers perceive homogeneous shopping products as basically similar. i.e. washers and dryers, refrigerators and televisions. With homogeneous shopping products, consumers typically look for the lowest priced brand that has desired features. o i.e. they might compare Kenmore, Whirlpool, and General Electric refrigerators. 2.) heterogeneous shopping products as essentially different. i.e. furniture, clothing, housing, and universities. Consumers often have trouble comparing heterogeneous shopping products because the prices, quality and features vary so much. The benefit of comparing heterogeneous shopping products is that because you have to find the best products or brand for yourself, the decision is often highly individual. o i.e. it would be difficult to compare a small, private university with a large, public university. Specialty Product is a particular item that consumers search extensively for and are very reluctant to accept substitutes. i.e. Omega watches, Rolls Royce automobiles, Bose speakers, Ruth's Chris Steak House, and highly specialized forms f medical care are generally considered specialized products. Distribution is often limited to one or a very few outlets in a geographic area. Brand names and quality of service are often very important. Unsought Products are products unknown to the potential buyer or a known product that the buyer does not actively seek. New products fall into this category until advertising and distribution increase consumer awareness of them. Some goods are always marketed as unsought items especially needed products that we do not like to think about or care to spend money on. i.e. insurance, burial plots, encyclopedias, and similar items require aggressive personal selling and highly persuasive advertising. Consumer usually do not seek out this type of product, the company must go directly to them through a salesperson, direct mail or directresponse advertising. BRANDING The success of any business or consumer product depends in part on the target market's ability to distinguish one product from another. Branding is the MAIN TOOL marketers use to distinguish their products form the competition's. A brand is a name, term, symbol, design or combination thereof that identifies a seller's products and differentiates them from competitor's products. A brand name is that part of a brand that can be spoken, including letters (GM, YMCA) words (Chevrolet) and numbers (WD40, 7Eleven). Brand mark is the elements of the brand that cannot be spoken. i.e. the MercedesBenz and Delta Air Lines symbols. Benefits of Branding Branding has three main purposes: 1.) Product Identifications 2.) Repeat Sales 3.) New Product Sales The most important purpose is product identification. Many brand names are familiar to consumers and indicate quality. The term brand equity refers to the value of company and brand names. A brand that has high awareness, perceived quality, and brand loyalty among customers has high brand equity. i.e. Starbucks, Volvo, and Dell are companies with high brand equity. A brand with strong brand equity is a valuable asset. The term global brand has been used to refer to brands where at least 20 percent of the product is sold outside the home country or region. Yum! Brands which owns Pizza Hut, KFC and Taco Bell is a good example of a company that has developed strong global brands In northern England, KFC focuses on gravy and potatoes and in Thailand it offers rice with soy or sweet chili sauce. The best generator of repeat sales is satisfied customers. Branding helps consumers identify products they wish to buy again and avoid those they do not. Branding loyalty is a consistent preference for one brand over all others, is quite high in some product categories. The third main purpose f branding is facilitate newproduct sales. Having a wellknown and respected company and brand name is extremely useful when introducing new products. Branding Strategies Generic products are unbranded products. o Some firms use the lack of brand name as a selling point. o Firms that decide t brand their products may chose to follow a policy of using manufacturers' brands, private (distributor) brands, or both. Generic Products Versus Branded Products A generic product is typically a nofrills, nobrandname, lowcost product that is simply identified by its product category. o i.e. cellophane. o The main appeal of generics is their low price. o Generic groceries products are usually 30 40 percent less expensive than manufacturers' brands in the same product category and 20 50 percent less expensive than retailerowned brands. Manufacturer's Brands Versus Private Brands A manufacturer's brand is like Kodak, LaZBoy and Fruit of the Loom. Sometimes "national brand" is used as a synonym for "manufacturer's brand". o This term is not always accurate, however, because many manufactures serve only regional markets. o Using "manufacturer's brand" more precisely defines the brand's owner. A private brand, also known as private label or store brand, is a brand name owned by a wholesaler or a retailer. Privatelabel products made exclusively by retailers accounted for one of every five items sold in the United States, representing more than $50 billion on sales. Individual Brands Versus Family Brands Many companies use different brand names for different products, a practice referred to as individual branding. o Companies use individual brands when their products vary greatly in use or performance. i.e. it would not make sense to use the same brand name for a pair of dress socks and a baseball bat. A company that markets several different products under the same brand name is using a family brand. o Sony's family brand includes radios, television sets, and other electronic products. Cobranding entails placing two or more brand names on a product or its package. Three common types of corbranding are ingredient branding, cooperative branding and complementary branding. o Ingredient branding identifies the brand of a part that makes up the product. i.e. Intel microprocessor in a personal computer like Dell or Apple. o Cooperative branding occurs when two brands receiving equal treatment (in the content of an advertisement) borrow on each other's brand equity. Cobranding is a useful strategy when a combination of brand names enhances the prestige or perceived value of a product or when it benefits brand owners and users. Cobranding may be used to increase a company's presence in markets where it has little pr no market share. Trademarks is the exclusive right to use a brand or part of a brand. Others are prohibited from using the brand without permission. A service mark performs the same function for services, such as H&R Block and Weight Watchers. Trademark protection typically lasts for ten years. To renew the trademark, the company must prove it is using the mark. Rights to a trademark last as long as the mark is used. Normally, if the firm does not use it for two years, the trademark is considered abandoned, and a new user can claim exclusive ownership of the mark. Companies that fail to protect their trademarks face the possibility that their product names will become generic. A generic product name identifies a product by class or type and cannot be trademarked. o Former brand names that were not protected by their owners and were subsequently declared to be generic product names by U.S. courts include... Asprin Cellophane Linoleum Thermos Kerosene Monopoly Cola Shredded wheat o Companies like Rolls Royce, Cross, Xerox, Levi Strauss, Frigidaire, and McDonald's aggressively enforces their trademarks. CHAPTER 10 Categories of New Products 22/04/2008 09:36:00 A new product is somewhat confusing because it's meaning varies widely. A new product is product new to the world, the market, the producer, the seller or some combination of these. Newtotheworld products (also called discontinuous innovations): these products create an entirely new market. Newtotheworld products represent the smallest category of new products. New product lines: these products, which the firm has not previously offered, allow it to enter an established market. Additions to existing product lines: This category includes new products that supplement a firm's established line. o Huggies PullUps o Pampers Kandoo baby wipes and other personal care products for kids Improvements or revisions of existing products: The "new and improved" product may be significantly or slightly changed. o Gillette's Fusion and Gillette's Power razors o Heinz EZ Squirt Ketchup bottle Repositioned Products: These are existing products targeted at new markets or market segments. o For example, General Motors successfully repositioned its tired, defeated Cadillac luxury and Lexus. o It's Cadillac Escalade SportUtility vehicles and CTS sedans are showing up in Miami's trendy South Beach district and similar locations, and many new models are all aimed at a younger, "hipper" target market. LowerPriced Products: This category refers to products that provide performance similar to competing brands at a lower price. o HewlettPackard Laser Jet 3100 is a scanner, copier, printer and fax machine combined. This new product is priced lower than many conventional color copiers and much lower than the combined price of the four items purchased separately. The NewProduct Development Process Make the longterm commitment needed to support innovation and new product development. Use a companyspecific approach, driven by corporate objectives and strategies, with a welldefined newproduct strategy at its core. Capitalize on experience to achieve and maintain competitive advantage Establish an environment a management style, organizational structure and degree of topmanagement support conducive to achieving companyspecific newproduct and corporate objectives. NewProduct Strategyare links the newproduct development process with the objectives of the marketing department, the business unit, and the corporation. A newproduct strategy is part of the organization's overall marketing strategy. Idea Generation Newproduct ideas come from many sources, including customers, employees, distributors, competitors, vendors, research and development (R&D), and consultants. o Customers: The marketing concept suggests that customers' wants and needs should be the springboard for developing new products. o Employees: Marketing personneladvertising and marketing research employees, as well as salespeopleoften create newproduct ideas because they analyze and are involved in the marketplace. o Distributors: A welltrained sales force routinely asks distributors about needs that are not being met. o Because they are closer to end users, distributors are often more aware of customer needs than are manufacturers. o Competitors: No firms rely solely on internally generated ideas for new products. A big part of any organization's marketing intelligence system should be monitoring the performance of competitor's products. o Vendors: 7Eleven regularly forges partnerships with vendors to create proprietary products such as Candy Culp (a plastic cup filled with gummies) and Blue Vanilla Laffy Taffy Rope candy developed by Nestl's Wonka division exclusively for 7Eleven. o Research And Development: R&D is carried out in four distinct ways. Product Development goes beyond applied research by converting applications into marketable products. Product modification makes cosmetic or functional changes in existing products. o Consultants: Outside consultants are always available to examine a business and recommend product ideas. Examples include Weston Group; Booz Allen, & Hamilton; and Management Decisions. o Brain storming: is to get a group to think of unlimited ways to vary a product or solve a problem. o 22/04/2008 09:36:00 ...
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