MKTG350StudyGuide2 - Study Guide II Chapter 7 Product...

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Study Guide II Chapter 7 Product Objectives: generally stated in terms of growth or profitability Meet SMART criteria: Specific Measurable Attainable Results-Orientated Time Bound Strategic Alternatives: when pursuing a growth objective Market Penetration: selling current product to current (or past) customers existing customers - increase their usage rate competitors Customers - grow share of wallet can be difficult if switching costs are high can be risky because of retaliation, high advertising and promo costs, & comparative advertising Market Development: selling current product to current non-customers non-users in segment(s) already targeted new markets Product Development: selling new products to existing markets example: Xbox 360 and PS3 Diversification: selling new products to new markets example: sony cosmetics related vs. unrelated Product Markets Current New Current Market Penetration Product Development (least likely) New Market Development Diversification (most likely) Strategic Alternative: when pursuing a profit objective Decreasing Inputs reduce costs (Note: cost reduction can have long-term adverse effects) *improve asset utilization (decrease assets, humans) Increase Outputs:
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increase price and decrease discounts Note: price increase may lead to a drop in unit sales and consequently a decrease in revenue *improve sales mix (80/20 rule) Customer Acquisition obtaining new customers through market penetration and market development Customer Expansion getting customers to purchase more Customer Retention maintaining current customers Customer Deletion dropping customers who are not profitable Positioning: a statement of how the product differs from competitors in the minds of a set of consumers attribute use product user product category competitors Positioning entails: choice of customer targets size and growth of a market potential for competitive advantage resources available choice of competitor targets core strategy cost advantage (similar benefits) differentiation advantage (benefits exceed) Five areas for differentiation: quality status and image convenience and service distribution branding name, term, symbol, design or mark that is intended to identify the goods or services of one seller and to differentiation them from competitors Brand Equity: the added value of a brand based on the extent to which the brand has:
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high brand loyalty brand awareness consumer’s ability to resell and recognize a brand perceived quality strong, positive brand associations anything linked in memory to a brand other assets such as patents trademarks and channel relationships Benefits of strong brands: *increase confidence/reduce risk (benefit from customer) brand awareness and loyalty price/margins more bargaining power with buyers may deter entry
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