everything a person receives in an exchange (favorable and unfavorable)

• physical good, service, idea

• merits little shopping 
• habbit, routine
• impulse buy
• emergency purchase

will compare several options

• vacations, education, clothing
• spend time looking

will go out of way to get 

• one brand name that we like and we will go out of way to get this item
• ex) people will drive to ATL to get a porche from Athens

unaware or unwanted

• ex) root canal

brand

band name

brand mark 

identification of the seller's product

the part that can be spoke

the part that cannot be spoken (nike swoosh, yellow M)

-shortcut in buying

-a promise about performance and quality

1. company

2. other customers

Brand love 

what is it called when your company reaches this?

loyalty beyond reason

"lovemark"

-apple, disney, nike

value of company or brandname 

-what extra value does the brand name bring?

Act used to protect a brand to make sure no one else is using it; name has to be original (not "chair")

ex) microsoft and internet explorer

-easy to say

-memorable

-suggest product use

-can be easily translated

-unique enough so that it cannot be confused

-evokes correct emotion 

-brand vs. no brand (generic)

-manufacturer (by producer)

-private (by retailer): ex: publix toasted oats cereal - in many cases this item is identical 

all  products have the same brand name 

• advantage: stimulus generalization and brand equity
• disadvantage: name does not skip product
• ex) honda - cars, generators, motorcyles: ALL called Honda

each product has its own brand

• advantage: product name fits better
• disadvantage: loose brand equity
• ex) proctor & gamble: crest, dawn, etc.

2 indv brands from different companies are shown on one package

• ex) betty crocker hersheys brownie mix
• advantage: "I don't buy brownies, but I really like Herseys" - more inclined to get Hersheys
• disadvantage: one gets a bad rap

-contain and protect: keep it safe!

ex) tylenol used to not be protected and people tampered with it

-promote: last 5 seconds

-create image: trying to convey brand promise with colors and visuals

-add value beyond contents: not based on what is in package, but the value of the package design

ex) ketchup: design makes it easy to use and squeeze

stock keeping units: because each of its items has its own number

ex) shampoo for oil, dry, tangly, travel size

MANY different SKUs

product line

depth and width 

group of related items where everything in that group is in the same product category 

depth: how many items in the product line

width: all of the different product lines - ex) soups, sauces, frozen entrees, beverages, biscuits

3 variations of "new"

1. New to world

2. New modification

3. New to firm

1. never been offered before

2. ...

3. ONLY 6 months - after this it is not new anymore - some companies make a change every 6 months so they can call it new

1. New product strategy
2. Idea generation
3. Idea screening
4. Business analysis
5. Test development
6. Test marketing
7. Commercialization 

1. New product strategy

(2 kinds)

Goal or strategy of how new products will fit into overall success

1. innovative strategy: want to be the first oes out with new products (1st in mkt place, but risky)

2. follower strategy: less risky, but you give up being first in the market 

-customers

-employers

-distributors

-competitors

-vendors

-R&D

-consultants

* DONT eliminate any ideas; no negative comments or second guessing

narrowing down and eliminating bad ideas

-legal and safety issues

-what could go wrong with this idea?

-includes concept testing: this is what we are thinking of, do you think its a good idea? How would you use it?

Will the numbers work?

DEMAND

COST

SALES PROFITABILITY

*no development so cost is not very significant

• creation of prototype
• packaging, branding, labeling
• final gov approvals if needed
• detailed marketing strategy
• **significant cost commitment

• give a limited group of consumers the product - advice?
• food item: certain stores
• electronic: certain parts of country 
• sometimes done in scanner pannel - group of      consumers you have recruited to track behavior 
• sometimes done in lab setting

*lauched nationally

• production
• inventory buildup
• distribution
• advertising (consumer and trade)

-NO guarantee in the new product development process

-#1 reason: No discernable benefits or differences; consumers and companies mental biases 

-2. Product quality problems

-3.Poor execution of other marketing mix elements 

Diffusion 

when does it occur fastest?

The process by which the adoption of a new product spreads

Occurs faster when:

PRICE is NOT a factor, but it can effect trialability 

1. complexity is lower
2. compatibility is higher
3. relative advantage is higher
4. observability is higher
5. transability is higher: samples?

model you can use to track sales growth over time

*not predictive, but you can see that your product has moved

*length of time varies, but basic shape remains the same

*best used for product categories and not specific brands - ex) hybrid automobile 

1. intro stage

2. growth stage 

3. maturity stage

4. decline stage 

• new product (new to world)
• high cost to the market
• profit - none or negative
• generally no competitors
• innovators buy (about 2.5% - younger, highly educated, not opinionated)

-primary demand for the product

-offer basic product NOT a lot of bells and whistles

-advertising should educate and inform or create buzz

-sampling and giveaways

-ex) peeble watch: syncs to phone

-rapidly rising sales

-profits increase and often peak (b/c of no competition)

-some repeat buyers

-competition begins to enter

-early adopters buy (13.5%)

-must create secondary (specific) demand because of more competition

-LOWER prices to gain market penetration

-expand distribution and advertising

ex) e-readers, tablets, smartphones

-sales reach a HIGH level, but growth SLOWS

-many competitors 

-market saturation

-profits are high as stage starts and then decline to to price pressures

-middle majority buys (68%) 

34% early middle majority: deliberate and take time learning about products

34% late majority: skeptical, want to make sure its going to stay around 

-look for new product innovations and modifications

-heavily promote brand with reminder advertising

-offer incentives: "buy one get one free"

-ex) restaurants: fast food: high sales, but growth rate is flat

-sales drop off

-profits drop

-laggards buy (10%): fearful of new things, resistant of market to change 

-reduce promotion 

-consolidate inventory to a few locations

-consider modifying or dropping product

ex) desk tops

1. increase frequency of use: by same consumers - "now is the time!"
2. increase number of users: expand into different target market with the same product
3. find new uses: identify new applications of the product

mfg -> end user

best used when/for: complex, expensive, customized items

ex) cut-co knife: not sold in stores; customized

-many b2b products

-manufacturer wants control 

mfg -> dist -> retailer -> end user 

mfg -> retailer -> end user

best used for low cost, std items (MOST consumer products)

retailer 

merchant wholesaler

agent/broker

sells mainly to final customers

buys and takes title to goods from mfg; stores, ships, and sells to other businesses

tries to find customers and wholesalers, and connect them, does not legally take title 

1. develop skills in selling: customer knowledge, efficiency in handling large volumes

2. overcome discrepancies

3. provide contact efficiency: no intermediary = 5 x 5; with intermediary 5 + 5

2. intermediaries overcome discrepancies 

-quantity

-assortment

-temporal

-spatial 

discrepancy of quantity: manufacturer produces in large volume, consumers buy in small volume

discrepancy of assortment: manufactures produce many of one item, consumers buy one of many items

temporal discrepancy: diff in when something is produced and when it is purchased

spatial discrepancy: difference between where something is produced and where it is purchased 

Transactional

Logistical 

Facilitating 

promotional: communicating about what's available

negotiation: price for textbook

risk taking 

distribution

sorting 

sorting

researching

financing: what form of payment?

-functions must always be performed

-if no intermediaries, then must be performed by the manufacturer or consumer

-for std. low cost items, intermediaries reduce the cost to the final consumer 

1. Disintermediation: elimination or reduction in # of levels
2. increased use of electronic channels: any product that can be put in virtual form is now being used  ex) DVD players

to give the customer (channel member or consumer) the needed level of customer service at the lowest cost

(NOT highest absolute service, its the level the customer wants)

retailer: shorter order cycle time because you never have to have > than days worth of inventory

manufacturer: wants longer order cycle time 

the more SKUs, the harder it is to get product availability 

• some industries this is critical, such as hospitals 

measurement: flexibility 

obtain needed supplies at the right quality at the lowest cost

-develop long term relationship with vendors 

determining the method and timing of the manufactured mix of products 

build to stock: nothing built until actually ordered; less risk, but impatient customers

build to order: always there when customer needs it, but it will not sell if customer does not want it

Logistical components of the supply chain: order processing

EDI

Vendor managed inventory 

a system for easily receiving orders and accurately and quickly filling them

EDI: electronic data interchange - way to communicate with vendors - ordering products online

VMI: share info with vendor and let vendor decide when you need a new shipment 

-ex) share sales data w/ vendor to ensure amt of stock 

Logistical components of the supply chain: inventory control 

postponement

maintaining the correct amount of inventory 

goal: meet product availability standards while keeping costs low

postponement: keep inventory as generic as possible for as long as possible 

ex) corn and paint don't put labels until ordered 

MRP 

DRP

material resource planning (supply side)

distribution resource planning (business/ordering side)

Transportation 

railroads

motor

pipelines

water

airways 

railroads: highest % of intercity freight movement in U.S.

motor: 2nd most % intercity 

pipelines: petroleum

water: moving comodoties such as grain or coal; consumer products from China

airways: high cost, low weight items such as jewlery and electronics 

-no line of sight (like a barcode), just have to be close

-common way of tracking products to know where they are

1. Framework for ethical decision making

4 sets of norms

decision is based on

1. societal norms

2. company norms

3. general business norms

4. personal values and norms 

Societal and cultural norms

AJC test

basic set of values for society

if you made news on front page, would you do this or not?

How would you explain this to your mom?

how you feel about your decision 

first, do no harm

foster trust and sonsumer confidence in marketing system

values of honesty, responsibility, fairness, respect, openness and citizenship 

Moral idealism means that if any bad occurs, then the action is unethical

-airbag example 

utilitarianism means you balance the good vs the bad

most people are somewhere in the middle 

Levels of responsibility model

(corporate)

investors

stakeholders 

society 

-companies are responsible only to stockholders and investors

-companies have just one duty: maximize profits within law

-probably no free samples, get best deals from vendors 

-compaies are responsible to owners and stakeholders and to: 

society in general: cultural diversity, env stewardship, cause related marketing- supporting a non-profit or charitable organization 

"give a dollar to help.."

planned obsolesence (designing product with short useful life)

-products that are unhealthy

-obligation to serve unsatisfied segments even if limited profit?

-what is a reasonable profit?

-how much "puffery" is okay? - teasing rather than being deceptive

Book ch 10

consumer product vs business product 

Book ch 10

for shopping items: homogenerous and heterogeneous

homogeneous goods usually go for lowest price - washer, dryers, fridge

heterogeneous goods price, features, and quality vary a lot

What is a product line?

And what are the benefits of a product line?

A product line is the DEPTH (vertical)

-advertising economies

-package uniformity

-standard components

-efficient sales and dist

-equivalent quality 

Product line extension

overextension 

contraction 

add to product line

can be overextended when products to not contribute to sales, slow moving products from short resources, obsolete because of new product entries in line or new products offered by competitors 

manufacutures brand

private brand

captive brand

ex) Kodak, fruit of the loom

Ex) kroger brand

ex) "greenwise" - w/o evidence of retailer affiliation