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What are services?
an activity, benefit, or satisfaction offered for sale; it is intangible and does not result in ownership of anything
different levels of product
core customer value (true reason for buying) actual product (features, design, brand) augmented product (delivery, credit, warranty)
different product classifications
consumer products (product bought by final consumers for personal consumption) industrial products (product bought by individuals and organizations for further processing)
Product attributes
quality, features, style and design
Dimensions of Product Quality
level and consistency level is performance quality or the ability of a product to perform its functions consistency is freedom
product design
contributes to a product's usefulness as well as to its looks
brand
a name, term, symbol, design, or combination of these, that identifies the products or services of one seller or group of sellers and differentiates them from those competitors
product line
a group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges
brand equity
the differential effect that knowing the brand name has on customer response to the product or its marketing
characteristics of a service
intangibility, inseparability, variability, perishability
characteristics of a service described
service intangibility- services cannot be seen, tasted, felt, heard, or smelled before bought service inseparability- services are produced and consumed at the same time and cannot be separated from their providers service variability-quality of services may vary greatly depending on who provides them, and when, where, and how they are provided service perishability- services cannot be store for later sale or use
customer equity
fundamental asset underlying brand equity, value of customer relationships that the brand creates
brand extensions
extending an existing brand name to new product categories
New product failure causes
innovation can be expensive and risky, products face tough odds, the idea can be good, but the market size may be overestimated, poorly designed product, launched at the wrong time, priced incorrectly, poorly advertised.
New product development process (8 steps)
Idea generation
Idea screening
Concept development and testing
Marketing strategy development
Business analysis
Product development
Test marketing
Commercialization
Crowd sourcing
inviting broad communities or people - customers, employees, independent scientists, and researchers, and even the public at large - into the new product innovation process
Test marketing
the stage of new product development in which the product and its proposed marketing program are tested in realistic market settings - controlled and simulated
Innovative management systems
used to collect, review, evaluate, and manage new product ideas. two outcomes- oriented company culture, or yield a larger number of new product ideas
Different product lifestyle stages (5 stages)
product development, introduction, growth, maturity, decline
product lifestyle stages explained
product development: company find and developed a new product idea. Sales are zero and company's investment costs mount introduction: period of slow sales growth as product is introduced into market. Profits are nonexistent because of heavy expenses growth: period of rapid market acceptance and increasing profits maturity: period of slowdown in sales growth Profits level off or decline because of increases marketing outlays to defend product against competition decline: period when sales fall off and profits drop
Team based new product development
various company departments work closely together, overlapping the steps in the product development process to save time and increase effectiveness
price
the sum of the values that customers exchange for the benefits of having or using the product or service
Customer value-based pricing
setting price based on buyers' perceptions of value rather than on the seller's cost
Good-value pricing
offering just the right combination of quality and good service at a fair price
EDLP
constant every day low pricing
high/low pricing
involves charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items
Value-added pricing
attaching value-added features and services to differentiate a company's offers and charging higher prices
Impact of lower cost on prices
Low cost suppliers offer lower prices with lower margins but higher sales and profits.
different types of cost
fixed- do not vary with production or sales level variable- costs that vary directly with level of production total- sum of fixed and variable costs
learning curve
The learning curve is a visual representation of how long it takes to acquire new skills or knowledge
demand curves
a graphical representation of the relationship between the price of a good or service and the quantity demanded for a given period of time.
price elasticity of demand
a measure of the sensitivity of demand to changes in price
what are the different types of markets
pure competition, monopolistic competition, oligopolistic competition, pure monopoly
explain the different types of markets
pure comp- the market consists of many buyers and sellers trading in a uniform commodity monopolistic- the market consists of many buyers and sellers who trade over a range of prices rather than a single market price. oligopolistic- the market consists of a few sellers who are highly sensitive to each other's pricing and marketing strategies pure mon.- the market consists of one seller
new product pricing strategies
market skimming pricing market penetration pricing
New Product Pricing Strategies explained
marketing skimming pricing- setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; company makes fewer but more profitable sales marketing penetration pricing- etting a low price for a new product in order to attract a large number of buyers and a large market share
product line pricing
setting the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors' prices
captive product pricing
setting a price for products that must be used along with a main product, such as blades for a razor and games for a video-game console
reference pricing
pricers that buyers carry in their minds and refer to when they look at a given product
different price adjustment strategies
discount and allowance pricing
segmented pricing
psychological pricing
promotional pricing
geographical pricing
dynamic and personalized pricing
International pricing
geographic pricing
setting prices for customers located in different parts of the country or world
dynamic pricing
adjusting prices continually to meet the characteristics and needs of individual customers and situations
international pricing
adjusting prices for international markets
Price cuts occur due to:
Excess capacity, falling demand, weak economy
Price increases occur due to
Cost inflation Increased demand Lack of supply
price fixing
seller must set prices without talking to competitors. Otherwise, price collusion is suspected
predatory pricing
selling a product below cost to drive competitors out of the market
deceptive pricing
price deals that mislead consumers
sense and respond
planning starts by identifying the needs of target customers, to which the company responds by organizing a chain of resources and activities with the goal of creating customer value
value delivery network
a network composed of the company, suppliers, distributors, and, ultimately, customers who partner with each other to improve the performance of the entire system in delivering customer value
marketing channel
a set of interdependent organizations that eases the transfer of ownership as products move from producer to business user or consumer
Role of marketing intermediaries
transform the assortments of products made by producers into the assortments wanted by consumers
Types of Marketing Channels
direct - sells directly to consumers indirect- contains one or more intermediary levels
channel conflict
disagreements among marketing channel members on goals, roles, and rewards - who should do what and for what rewards
multichannel distribution system
a single firm sets up two or more marketing channels to reach one or more customer segments
Disintermediation
the cutting out of marketing channel intermediaries by product or service producers or the displacement of traditional resellers by radical new types of intermediaries
different distribution intensity strategies
intensive, selective,andexclusive
marketing logistics
planning, implementing, and controlling the physical flow of materials, final goods, and related information from points of origin to points of consumption to meet customer requirements at a profit
Supply Chain Management
managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers
shopper marketing
focusing the entire marketing process on turning shoppers into buyers as they approach the point of sale, whether during in-store, online, or mobile shopping
different types of retailers
franchises
are contractual associations between a manufacturer, wholesaler, or service organization (a franchisor) and independent business people (franchisees) who buy the right to own and operate one or more units in the franchise system.
marketing strategy decisions
Segmentation, Targeting, differentiating & Positioning; Price; Product; Place; Promotion
different types of shopping centers
regional: 50-100+ stores community: 15-50 stores neighborhood/stripmall: 5-15 stores
Pop-up centers
new type of retailing form- low margin, low price, and low status operations
convergence
merging of consumer, products, price, and retailers
Mega-retailers
small handful of retailers now control access to enormous numbers of consumers, giving them the upper hand in dealing with manufacturers
Showrooming
practice of examining products in person, then buying it online or searching for a cheaper price online
Wholesailing
all activities involved in selling goods and services to those buying for resale or business use
different types of wholesalers
-Merchant wholesalers -Brokers and agents -Manufacturers' and retailers' branches and offices
