Ch.

10: Product Concepts

Define the term product.

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Product any offering that can satisfy a need or a want; offering from a firm (favorable or unfavorable); it can be anything, even an idea or an experience. Four levels of product: o 1) Basic product with core benefits; 2) Expected product; 3) Augmented product; 4) Potential product.

Classify consumer and business products; provide examples.

Consumer 1) Convenience, 2) Shopping, 3) Specialty, 4) Unsought. o 1) Staples; impulse; emergency; 2) homogeneous, heterogeneous; 3) luxury; 4) new ideas, not wanted but necessary.

Business 1) Raw materials; 2) Manufactured; 3) Capital; 4) Component parts; 5) Accessory equipment; 6) Maintenance; 7) Professional services.

Describe uses and benefits of branding.

Consumers identify the source of the product; reduces the search costs; simplifies decision process; reduces financial, functional, and social risk. Businesses create competitive advantage and raise barriers to entry; drive repeat and steady business; higher shareholder return; brands have equity, which can be bought and sold.

Definition and meaning of a brand.

Brand a name, term, sign, symbol or other feature that identifies one sellers good as distinct from other sellers. A brand promotes a specific image and a set of promises. o Implies trust and a set of expectations and consistency.

Define brand equity, brand awareness, brand image, and positioning.

Brand equity the differential effect that brand knowledge has on consumer response to the marketing of that brand. Brand awareness part of brand knowledge, it promotes recognition of a brand. Brand image part of brand knowledge, it promotes consumers perception of the brand. Positioning building an image; the art and science of fitting the product or service to one or more segments of the broad market in such a way as to set it meaningfully apart from competitors.

Write a positioning statement for a brand. 1) Definition of target market. 2) 3) Manufacturers a store brand, i.e. Planters for the nation. Private (label) a store brand, i.e. Kirkland for Costco. Co-branding merging two brands to form a product, i.e. Doritos and hot sauce; mutually beneficial to both brands. Ingredient Name, logo, slogan, and jingle. Packaging, labeling, and the characters. Makes the product easily recognizable. Creates a certain bond with the product, such as with a mascot.

Examples of manufacturers brands, private (label) brands, co-branding, and ingredient branding.

List the brand elements of any product.

Describe the uses of packaging and labeling.

Ch. 11: Developing and Managing Products 06/05/2012 17:30:00

New products and the 6 categories of new products.

Product development 6 categories of new products: o o o o o o 1) New-to-world, i.e. polio vaccine. 2) New product line, i.e. iPad. 3) Product line additions, i.e. McRib. 4) Improvements or revisions, i.e. Harley Davidson. 5) Repositioned products. 6) Lower-priced products.

Explain the steps in new-product development process.

New product strategy idea generation idea screening business analysis development test marketing commercialization new product. 1) Uncover unmet needs and problems. 2) Develop competitively advantaged product. 3) Shepherd product through firm. Fail people are too comfortable with old products; people resist change.

Identify common reasons for why some products fail and others succeed.

o McMaths 9 reasons not enough marketing, bad timing, poor match, bad research,
bad ROI, etc.

Succeed they meet unmet needs or offer something new and exciting; a socially cool thing to have; popularity, good promotional strategies; company or firm is already established.

Define concept testing, prototyping, and marketing testing.

stage.

Concept testing Prototyping Marketing testing

Explain the diffusion process; describe Everett Rogers adoption categories. Explain the concept of product life cycles; describe how the marketing mix should differ in every

Ch. 13: Marketing Channels

Explain the role of marketing channels.

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Resolves discrepancies between the wishes of producers and the consumers regarding quantities, assortment, time, and place. Divided into 3 channels:

o 1) Transaction or sales channel involved in buying, selling, and transferring title. o 2) Physical distribution channel involved in the transport, storage, sorting, and
assorting of products as they proceed from manufacturers to retailers, wholesalers, etc.

o 3) Facilitating channel getting the product to the consumers.

Describe the functions/activities of channel intermediaries. They advertise, buy, sell, and grade the product according to quality. They handle sorting, assorting, storage, and transportation. They deal with financing and risk taking too. Consumer (B2C):

Describe consumer and industrial products channel intermediaries.

o 1) Retailers resellers involved in the sale or products to final consumers. o 2) Wholesalers resellers involved in the sale of products to retailers, other
merchants, and/or to industrial, institutional, and commercial users, but who do not sell in large amounts to final consumers.

o 3) Agents resellers involved in selling and marketing to the consumers. They do

not take physical possession or title and seldom finance the transactions. They use an agent or broker. Industrial (B2B): o 1) Merchant wholesalers or industrial distributors:

Full-functioned general wholesalers, single-line wholesalers; specialty wholesalers. Limited-function Truck jobbers, rack jobbers, drop shippers, mail order, cash and carry.

2) Manufacturers representatives or agents. and mange price negotiations.

o 3) Brokers May operate on behalf of both buyers and sellers to create a market

o 4) Value added resellers (VAR) they take created software and build something
with it, then sell what they built to ensure the quality/value of the software. Describe channel structures for consumer and business products.

Exclusive (one reseller per trade area i.e. Rolex) more control over prices and service. Selective (a few authorized resellers i.e. Nike) lower cost, less unwanted partners. Intensive (any possible outlet i.e. Coca Cola) maximum reach. Market variables location, number of customers, buying patterns. Product variables weight, value, perishability, complexity. Company variables. Intermediary variables costs, availability, service, power. Direct distribution channel (manufacturer end-user):

Discuss factors affecting the choice of channel strategy.

Provide examples of channels with different levels of distribution intensity.

o Pros better communication, better relationships; more control over brand; gain
economies of scale.

o Cons
Indirect distribution channel (manufacturer retailer end-user).

Ch. 15: Retailing

Discuss importance of retailing in USA.

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Accounts for a large percentage of working Americans. Large part of the US economy. Form of ownership. Level of service. Merchandise line. Number of outlets. Price, gross margin, inventory turnover. Location. Image. Depth vs. assortment. Department Stores large-scale operations containing a broad brand product mix consisting of many product lines with above average depth in each of them (i.e. Nordstrom, Dillards, Mervyns).

Explain dimensions by which retailers can be classified.

Describe major types of retail operations (with dimensions) and examples.

Discount Department Stores department stores offering lower prices through less customer service, cheaper facilities, and self-service (i.e. Target, Wal-Mart). Specialty Stores relatively small-scale stores offering a great deal of depth in a narrow range of product lines (i.e. The Gap, J. Crew). Supermarkets Retailers selling mainly groceries and some general merchandise through large scale physical facilities using self-selection displays (i.e. Tom Thumb, Fiesta, Kroger). Supercenters giant combination of supermarkets and discount department stores (i.e. Walmart Supercenter). Category Killers stores carrying large amount of merchandise in a single category (i.e. Barnes & Noble, Best Buy); large depth of products, but low assortment. Convenience Stores small retailers which stocking frequently purchased products such as gasoline, bread, and milk that tend to be consumed within 30 minutes of purchase (i.e. 7-11, PDK).

Warehouse Clubs large retailers offering many shopping goods to members only (i.e. Costco); low depth, high assortment.

Outlet Stores high assortment, high depth.

Describe and provide examples of non-store retail operations. Define franchising and describe its two basic forms.

Franchising when one company allows for individuals to sell or promote blah blah I know what it is!

List and discuss the major tasks involved in developing a retail marketing strategy (the 6 Ps!)

Ch. 17: Advertising and Public Relations 06/05/2012 17:30:00

Describe the development of an advertisement campaign. 1. Identify, understand and value the target market. 2. Set promotional and behavioral objectives. 3. Design promotional message. 4. Establish budget. 5. Selecting promotional tools; determine roles for each medium. 6. Design the promotion. 7. Schedule and implement promotion. The objective should be designed for a well-defined target audience; measurable; and cover a specified time period. Content, structure, format, and tone very important in conveying message. A good message o o o o o Portrays your product as an antidote to a problem. Highlights the strengths within the products weakness. Attacks the weakness with your leading competitors strength. Consists of a maximum of three key points. Does not offer everything to everybody. Push vs. Pull Advertising.

Describe considerations for media selection.

Identify major media choices and their pros and cons. Any form of non-personal communication about a product or service, i.e. newspapers, magazines, telephone directories, TV, internet, outdoor billboards, etc.

Advantages large audience; low CPM (cost per thousand); print media allows for prolonged impression; vast choices of media allows for some targeted promotion. Disadvantages expensive; standardized message; long lead time for the creation and placement of advertising; limited place for the message; increasingly fragmented media.

Define commonly used media terms.

Medium the general category of available media options. Medium vehicle the specific carrier of the medium. A management function that evaluates public attitude, identifies the policies and procedures of an individual or organization with the public interest. Executes a program to earn public understanding and acceptance. Who are the targets of PR employees, stockholders and investors (investor relations), financial groups, community members (community relations), suppliers and customers, media (media relations), educators, government (lobbying), civic organizations.

Discuss the role of public relations in the promotional mix.

Describe the functions of the public relations department.

Continuous public relations activities local community and industry involvement, newsletters, Blogs, employee relations, media relations, media kits, etc. Pre-planned, short-term activities news or press releases or press conferences, ceremonies, openings and events, announcements, feature stories, etc. Unpredictable, short-term activities handling negative publicity, media interviews. Publicity The printing or broadcasting of news and information about a company outside of the companys control. o Mention in the media. BIGGEST DIFFERENCE publicity CANNOT be controlled by the company!

Make a clear distinction between public relations and publicity.

Ch. 18: Sales Promotion and Personal Selling 06/05/2012 17:30:00

Define sales promotion. The Action A in the AIDA model. Advantages may quickly increase revenue, segmentation through price discrimination, affects consumer behavior, flashy and fun, customer may feel like theyre receiving something of value.

Disadvantages increases customers price sensitivity, difficult to end, limited to the shortterm, offered to customers willing to pay more, can be costly, may hurt company image, may attract cherry pickers and freebie-vultures

Identify and provide examples of the most common forms of consumer sales promotion. Rebates, samples, gifts, demonstrations, premiums, loyalty programs, special events, etc. Trade shows: List the most common forms of trade sales promotion.

o Advantages allows for personal interaction, may have a direct impact on revenue,
trade shows can be fun, may save traveling expense, customer may receive something of value, targeted audience.

o Disadvantages must have something to show, very specified, need a good

location, can be expensive to travel to various trade shows. Describe the common activities of sales people. Any personal communication about an organization, product, service, or idea by an identified source person-to-person.

o Advantages very targeted approach allows for more customization, personal

appearance builds relationships, predominant in business-to-business markets.

o Disadvantages limited, costly, time consuming.

Describe relationship selling and discuss reasons for its recent popularity. Relationship selling is person-to-person and relies on forming a lasting relationship between a seller and consumer so trust is formed. Popular because there is a personal assessment constantly happening. 1. Awareness lead generation. 2. Exploration present product, process, monitor. 3. Expansion create offers, follow-up. List the steps in the selling process.

4. Commitment contracts.

Describe sales management. Discuss pros/cons of various bases for sales force organizations.

Sales force compensation.

Ch. 19: Pricing Concepts

Define the role of prices in marketing. List a variety of pricing objectives.

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Describe various determinants of pricing. Calculate a return on investment. Calculate the elasticity of demand. Equation % change Q demanded / % change in price. o To get the change in %, divide the change by the middlerange. Propose a suitable strategy for different levels of elasticity. Identify and draw the most common types of costs. Calculate break-even quantity, sales and pricing. You know how to do this. Calculate the necessary volume to obtain a desired profit margin. Markup vs. margin Margin = Profit / Price Markup = Profit / Cost Understand concept of yield management systems.

Ch. 20: Setting the Right Price 06/05/2012 17:30:00

Steps followed when setting a product price.

1) Identify objectives and constraints. 2) Estimate demand, revenue, and elasticity. 3) Determine costs, volume, profit, and breakeven point. 4) Select strategies, tactics, and price levels. 5) Select list price, quoted price, etc. 6) Implement price. Cost-based pricing target profit pricing using breakeven analysis.

Pros/Cons of the most common pricing strategies.

o Advantages Pricing accounts for variable and fixed costs; promotes fair return;
widely accepted.

o Disadvantages ignores demand; fails to account for competition.

Competitive Pricing Pricing product above, at, or below prevailing market prices.

o Prestige pricing jewelry and luxury goods. o Value pricing clothing (based on time value too).
Value-Based Pricing Pricing according to the perception and demand of customers. Target Pricing Adjust cost and quality of the component parts to reach estimates of what consumers are willing to pay. Price skimming and penetration pricing.

Price Skimming setting a high initial price to cover new product costs and generate a profit. o It is sensible when demand is inelastic, quality and image support a high price, technological breakthrough product, etc.

Penetration Pricing setting a low initial price to establish a new product in the market. o It is sensible when demand is elastic, economies of scale will lower cost, competition is soon to follow, upgrades are soon to follow, etc.

Identify legal and ethical constraints on pricing decisions. List and describe the various types of pricing tactics used to fine-tune the base price.

Price lining setting the price of a line of products at a number of different specific pricing points (i.e. cereal and milk). Psychological (odd-even) pricing (i.e. 2.99 or 99.99). Discounting (50% off). Promotional pricing (e.g. special offers, like at Thanksgiving). Product-mix pricing (e.g. options, bundling). Loss-leader pricing (e.g. teeny-beanie babies at McDonalds). Bait pricing limited special offers (e.g. Nordstrom Anniversary).