Define:

Product

- something received in an exchange

- it can be tangible(a good), or intangible (a service or an idea) or a combination of both

** it can include: functional, social, and psychological benefits

- to get the benefits and satisfaction that they think the product will provide

- symbols and cues provided by marketing help consumers make judgments about products

Define:

Basic Benefits

- the outcome provided for customers

ex. a 1/2" drill bit provides:

**a 1/2" hole

Define:

Actual Product

- physical good or delivered service that supplies the desired product

- actual product includes unique features of the product (appearance, styling, packaging, brand)

ex. washing machine

Define:

Augmented Product

- actual product + other supporting features

* the other supporting features differentiate you from competition

** ex. warranty, credit, delivery, installation, repair service after the sale

Define:

Core Service

Define:

Augmented Service

- additional offerings that differentiate the firm

Define:

Durability

Define:

Nondurable Product

- product does not last long

ex. a tube of toothpaste

- a low involvement purchase

Define:

Convenience Products

- good or service purchased frequently, minimum of comparison and effort, usually low priced and widely available

- marketers must focus on distribution

- staples, toothpaste, cereal, and milk

** frequently purchased basic or necessity items... branding is important

Define:

Emergency Products

- purchase made with time pressure when a need is great

- sometimes price and/or quality may be irrelevant

Define:

Fast-Moving Consumer Goods

(FMCG)

Define:

Shopping Products

- good or service for which consumers will spend time and effort gathering information on price, product, attributes, and product quality

* comparison shopping

- Heterogeneous

Homogeneous

- customers perceive differences among alternatives, search for the right product (product must be right)

- marketers must highlight the product advantages/attributes

- customers see little difference among alternatives, seek lowest price

(price must be right)

Define:

Specialty Products

- goods or services bought with much consumer effort in a limited or extended problem-solving situation

**consumers insist upon a particular item or brand and will not accept substitutes

Define:

Unsought Products

- goods or services for which a consumers has little awareness or interest until a need arises

* require a good deal of advertising or personal selling to interest people

ex. insurance; burial plot

Characteristics of Services:

Intangibility

- services are actions that have no permanent physical qualities as opposed to good which can be touched and possessed over time.  This makes it difficult for customers to evaluate them.

**marketers must provide tangible(symbolic) cues or images

Characteristics of Services:

Inseparability of Production and Consumption

- the production of a service cannot be separated from its consumption by the customer

** services are produced, sold and consumed-- at the same time customers must participate in the product

ex. surgery

** marketers cannot mass-produce services

 **other consumers affect service outcomes

Characteristics of Services:

Perishability

- services cannot be produced ahead of time and stored until needed

- demand may be very time sensitive

- unused capacity is lost forever

- very difficult to balance supply and demand

* requires demand/capacity management strategies

**ex. Hotels- Increased demand during week, low rates on weekends

Movies- matinees during the day to encourage consumption -- steady flow of people in evening

Characteristics of Services:

Heterogeneity

- variation in the quality of services delivered by individuals and organizations

*service quality is difficult to control

*difficult to standardize service delivery

- Continuous

- Dynamically Continuous

- Discontinuous

New Product Development Steps:

7 steps

- idea generation

- product concept

- marketing strategy development

- business analysis

- technical development

- market testing

- commercialization

- Sources

ex. customers, salespeople, other employees, callaborators, suppliers, service providers, anyone with direct customer contact

- expanding ideas into more complete product concepts

- describing features the product should have and benefits those features will provide

- evaluating chance of success

- develops a marketing strategy that can be used to introduce the product to the marketplace by:

* identifying the target market

* estimating the target market size

* determining how the product can be positioned

* plan pricing, distribution, and promotion expenditures necessary for roll-out

- assesses how the new product will fit into the firm's total product mix

- evaluates whether the product can be a profitable contribution for the organization's product mix

Define:

Cannibalization

- it works with engineers to refine the design and production process

- develops one or more prototypes

- evaluates prototypes with prospective customers

- if applicable, applies for patent

Define:

Traditional Test Marketing

Define:

Simulated Test Markets

- eliminate competition viewing and costs less

(controlled conditions)

- launches the product either by full scale or roll out

- full scale- every store gets product and begins selling

- roll out- starts at a specific store(place) and if successful continue to place product in other markets... if still successful, the product will end up at every store

Define:

Adoption Process

Define:

Diffusion Process

- confirmation

- adoption

- trial

- evaluation

- interest

- awareness

- the broader issue of how an innovation is communicated and adopted throughout the marketplace

- the process of spreading the product throughout the market place

Distribution of Product Adopter Categories:

Innovators

- 2.5%, the first to accept a new idea or product

*venturesome and willing to take risks

- rely heavily on impersonal information sources

Define:

Cosmopolites

- 13.5%, the second to adopt an innovation

- heavy media users

- tend to be concerned with social acceptance

- opinion leaders primarily come from the early adopter group

- 34% adopt the product prior to the mean time of adoption

- deliberate and cautious

- spend more time in the innovation decision process

- slightly above average in education and social status

- 34% follow the average adoption time

- older, more conservative, skeptical

- peers are the primary source of new ideas

- below average in education, income, and social status

- wait to purchase until product has become a necessity or peers pressure to adopt

- 16% - last to adopt an innovation

- lower in social class than other categories

- bound by tradition

- product may have already been replaced by another innovation

- distrust new products

- Relative Advantage

- Compatibility

- Complexity

- Observability

- Trialability

Define:

Relative Advantage

- new product is perceived as significantly better than existing alternatives

- positively correlated with an innovation's adoption rate

- exist when a new product offers: better performance, increased comfort, saving in time and effort, or immediacy of reward

Define:

Compatibility

- an innovation is perceived to fit into a person's way of doing things

- positively correlated with an innovation's adoption rate

- overcome perception of incompatibility through heavy advertising to persuade consumers

Define:

Complexity

- the more complex the product, the more slowly a product's rate of adoption

- overcome perception of complexity with demonstrations, personal selling, and emphasis on ease of use

Define:

Trialability

- an innovation can be used on a limited basis prior to making a full-blown commitment

- the trial experience serves to reduce the risk of a consumer's being dissatisfied with a product after having permanently committed to it through outright purchase

Define:

Observability

- the product user or other people can observe the positive effects of new product usage

- the higher the visibility, the more rapid the adoption rate

** if consumers see people using the product, it makes it easier to adopt

Define:

Business to Business Factors (B2B)

- increase in gross margin and profits

- consistency with firm's way of doing business

- benefit relative to required investment

- Introduction

- Growth

- Maturity

- Decline

Product Life Cycle:

Introduction Stage

- the initial stage of a product's life cycle - its first appearance in the marketplace

* sales start at 0 and profits are negative

- the stage of a product's life cycle when sales rise rapidly and profits reach a peak and then start to decline

* more competitors enter market

* product pricing is aggressive

* brand loyalty becomes important

* gaps in market coverage are filled

* promotion expenditures moderate

* production efficiences lower costs

- the stage of a product's life cycle when the sales curve peaks and starts to decline and profits continue to fall

* intense competition

* emphasis on improvements and differences in competitor's product

* weaker competitors lose interest and exit the market

* advertising and dealer-oriented promotions perdominate

* distribution sometimes expands to the global market

- generate cash flow

- maintain market share

- increase share of customer

- the stage of a product's life cycle when sales fall rapidly

* pruning items from the product line

* cutting promotion expenditures

* eliminating marginal distributors

* planning to phase out the product

Define:

Brand

- an identifying name, term, design, or symbol

- one item, family of items, or all items of a seller

Define:

Brand Name

- the part of a brand that can be spoken

- words, letters, numbers

Define:

Brand Mark

- the part of a brand not made up of words

- symbols or designs

Define:

Value of Branding for Consumers

- helps speed consumer purchases by identifying specific preferred products

- provides a form of self-expression and status

- evaluates product quality to reduce the risk of purchase

Define:

Value of Branding for Marketers

- identifies and differentiates a firm's product from competing products

- helps in the introduction of new products

- facilitates the promotion of all same-brand products

- fosters the development of brand loyalty

Define:

Brand Equity

- brands initiated and owned by resellers

* dealer brands, private brands, store brands

- be easy to say, spell and recall

- indicate the product's major benefits

- suggest the product's major uses and special characteristics

- be distinctive, setting it apart from competing brands

- be compatible with all products in line

- be designed for use and recognition in all types of media

Branding Policies:

Individual Branding

- a policy of naming each product differently

- avoids stigmatizing all products due to a failed product

Branding Policies:

Family Branding

- branding all of a firm's products with the same name

- promotion of one item also promotes all other products

Branding Policies:

Co-Branding

- using wo or more brands on one product to capatilize on the brand equity (customer confidence and trust) of multiple brands

- brands involved must represent a complementary fit in the minds of consumers

Define:

Packaging

- protect the product from damage

- offer convenience to consumers

- prevent waste and make storage easier

- promote the product by communicating its features, uses, benefits, and image

Define:

Labeling

- help identify the product

- support promotional efforts for the product

- provide legally required labeling information

- provide information on product origin

Define:

Product Item

- a particular product within a product line

- a "stock keeping unit" (SKU)

Define:

Product Line

- set of individual products that are closely related

- depth and breadth

Define:

Breadth

- implies number of products

** Trauth Dairy - 

* milk

* cheese

* ice cream

Define:

Depth

- concerns choice within product line

- Trauth Dairy -

* milk

* whole

*skim

* 1%

* 2%

- the assortments of milk

Define:

The Product Mix