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Everything a person receives in an exchange, favorable or unfavorable. Can be a tangible good or an intangible service.
Types of products
Product item, Product line vs. Product mix
is a specific version of a product, distinct from all other things a company offers.
- a drop of closely related products. Ex - Different flavors of Cambell's soups
- includes all the types of products a company sells. Ex. - Cambell's soups, frozen dinners, beverages, etc.
Adjustments to products
- change in quality, function or style
(usu. through modifying product's style)
- ex: redesigning classic lit. book covers to mimic cool teen novels
Product Line Extensions
- adding products to better compete in market
Product Line Contraction
- a way to deal with overextension when they get carried away. streamline products to lessen confusion.
Branding, brand equity
- name, term, symbol, design (or combination of these) that identifies a seller's products and differentiates them from competitors.
- value of company and brand names. Higher equity = higher awareness, perceived quality and loyalty
Trademark, service mark
- exclusive right to use a brand or part of a brand.
- exclusive right applied to services, ex: weight watchers
Things that can be trademarked:
Sounds - (
MGM lion roar)
(coke glass bottle)
Ornamental color or design
Abbreviations - (
- focuses on a promotional theme or logo, consumer info. is secondary.
- designed to help consumers make proper selections, lower their cognitive dissonance. Ex: nutritional information
- protects the buyer and confirms quality or performance of a good.
- written guarantee (even simple statements like "100% cotton")
- unwritten guarantee that the product is fit for its purpose. All products have this under the Uniform Commercial Code.
New product, categories
New product lines -
something that exists but company hasn't done before
Additions to existing product lines -
new products to enhance est. line
Improvements of existing products -
new version of existing product
New Product Development process
New Product strategy
Diffusion of innovation, 5 categories of adopters
as new by adopters
-first 2.5%, higher income, well-educated, confident & worldly
- next 13.5%, rely on group norms, more likely to be opinion leader b/c of ties w/ local community,
- next 34%, value opinion leaders, but also do deliberate research and evaluation.
- next 34%, skeptical, mainly buy to conform w/ others
- final 16%, rely on tradition rather than group norms
Product life cycle stages
Product characteristics/rate of adoption
- complex products = slow diffusion
- incompatible products = slow diffusion
- degree a product is perceived as superior to existing substitutes. Ex: ipod > CDs
- degree that benefits of use are visible to others. Fashion trends have high observability
- Easier to try out a new toothpaste than a new computer
Reasons new products succeed/fail
Most important factor - good match btwn product and market needs.
Delivers meaningful benefit to sizable # of people, different from substitutes
Services, 4 characteristics that make distinct
- result of applying human or mechanical efforts to people or objects
- cant separate production and consumption b/c consumers must be present, ex: haircut, surgery
- variability of inputs/outputs, less standardized and uniform
- can't be stored or inventoried, empty hotel room = no revenue
Evaluations of service quality
search quality - characteristic that can be easily assessed before purchase. Ex: color
experience quality - can only be assessed after use. Ex: quality of meal in restaurant
credence quality - hard to assess even after purchase b/c consumers lack knowledge. Ex: medical services
5 Service quality dimensions
- performing service correctly the 1st time
Responsive - prompt service 24/7
Assurance - knowledgeable, trustworthy employees
Empathy - individualized attention to customers
Tangibles - physical appearance of building, employees, equipment, etc
Gap model of Service quality
- management has incorrect view of what customers want
- management fails to translate customers needs into delivery plan
- service plan differs from service actually provided, managemt/employees dont follow through
- company's services do not meet customer expectations about what the firm provides
- difference between what customer expects and what they receive, can be (+) or (--)
Core and supplementary services
- most basic benefit customer is buying (bedroom rental @ hotel)
- supports or enhances the core service (room service, reservations, etc)
Firms usu. emphasize supp. services to create comp. advantage (Or could strip down and mkt themselves as "value")
Promotion strategies for services
Stressing tangible cues
Using personal information sources (using celebs or real people in ads)
Strong organizational image (branding, appearance of employees, etc)
treating employees as customers, developing systems and benefits to meet their needs. Happier employees = better customer service.
Nonprofit organization, marketing
- Generate enough income to cover expenses, rather than profit. Sometimes indirect payment through taxes.
- Benefits it offers often complex or indirect, very low / very high involvement
- business professional volunteers, public service announcements
Must focus on apathetic / strongly-opposed target mkts. Often doesnt break into diff. segments.
4 Types of service processes
- service directed @ customer. (health care)
- directed @ customer's possessions. (dry-cleaning)
Mental stimulus - directed @ people's minds. (theater performance)
Info. processing - technology or brainpower directed @ customer's assets. (consulting)
incentives to encourage customer loyalty. (frequent flyer program)
- pricing +
bonds. Firm stays in touch w/ customers, learns needs, designs services
- financial + social +
bonds. Value-added services not available anywhere else. (exclusive games online)
Relatively inexpensive, little shopping effort. Consumers not willing to shop around. Ex - soda, car wash
More expensive than convenience, fewer avail. stores. Consumer will compare several brands before buying.
Heterogeneous - hard to compare because not the same. ex - universities, clothing.
Homogenous - similar products differentiated by lower price
Customers search extensively for a specific product and are very reluctant to accept substitutes. Ex - Rolls Royce cars, Ruth's Chris Steakhouse
Product unknown to the potential buyer, or product that the buyer doesn't actively seek out.
Ex - new products (before advertising), unpopular things such as insurance, burial plots
Product width vs. product depth
- refers to the number of different product lines a company offers
- number of specific product items are in a product line
Brand name vs. Brand mark
- part of a brand that can be spoken, including letters/words/numbers
- elements of a brand that can't be spoken. ex: mercedes benz car logo
Manufactuers vs. Private brands
are what we normally think of, the brand is the name of the company that makes that product. Ex: Crest toothpaste
are owned by a wholesaler or retailer, cheaper b/c no marketing costs, higher profit margin for firm. Ex: Great Value at Walmart
have no visible affiliation with the store, manufactured by someone else, but have an agreement to sell exclusively at their store
Individual vs Family brands
- used when a company has widely varying products. Ex: Proctor and Gamble targets diff. market segments w/ different types of laundry detergent.
- a company that markets different products under same brand name. Ex - Jack Daniel's whiskey, coffee, playing cards, etc.
Co-branding (and types)
- ex: Tide detergent with added Febreeze scent
- brands get equal treatment. Embassy Suites partnering with SouthWest Airlines for a promotion
- marketed together to suggest usage. Ex: Jiff Peanut butter and Smucker's jelly
Generic product name
Identifies a product by class or type, can't be trademarked.
Can be a result of a company not protecting a trademark. Ex - aspirin, kleenex. Companies like Coca-Cola and Sharpie must fight aggressively to enforce their trademark.
Introductory Stage (PLC)
Full-scale launch of new product into market.
Little competition, frequent product modification, limited distribution.
High marketing costs, sales increase slowly, profits usu. negative.
Promotion strategy - develop awareness of your product and inform consumers
Growth Stage (PLC)
Sales grow at increasing rate, competitors enter market, profits rise and then peak
Focus switches to brand advertising, showing differences between brand names
Distribution becomes key, manufacturers try to build long term deals w/ distributors.
Maturity Stage (PLC)
Sales increase at decreasing rate, market approaches saturation
Product lines diversify to meet diff. market segments, style changes over functional ones, service and repair becomes important
Some competitors drop out, profit margins shrink, distribution harder
Long run drop in sales, firms must re-develop their strategy to gradually withdraw product from market. "Organized abandonment"
Idea Generation (NPD)
New-product ideas come from many sources:
- they analyze the marketplace
- aware of customer needs, closer to end users
- Ex: 7-Eleven making deals w/ Coke and Nestle to have products just for them
R & D
Most ideas eliminated during this stage.
to get consumer reactions before prototypes are created.
Good indicator of success for new products that don't fit in existing categories, but don't require major changes in consumer behavior.
Not good predictors when it requires new consumption patterns (computers, microwaves, etc)
Preliminary figures for demand, cost, sales and profit are calculated.
Difficulty depends on newness of the product, size of market, etc. Established markets are easier to estimate b/c more info avail.
R & D develops a prototype, firm starts planning marketing strategy (including the 4 P's, and branding/labeling), lab tests done.
Simultaneous product development - when ALL relevant areas (R & D, mktg, engineering, production) and outside suppliers participate in ALL stages of development
Limited introduction of a product and marketing program to determine customer reactions.
Test run for the marketing mix, can evaluate alternative strategies.
Very expensive, but better than failing on a nat'l level
One alternative is simulated (lab) market testing
Decision to market a product
Ordering production materials/equip, building up inventories, shipping to distributors, advertising to customers
Price strategy for service
- focuses on income > costs, but costs can be diff. to determine
- varies prices to match supply to demand. (hotel rooms cheaper in the off-season)
- tries to maximize # of customers. Prices depend on each mkt segment's ability to pay
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