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Glossary of 346 Homie

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Product assortment
set of all products offered by a firm; consists of various product lines.
product line
Groups of associated items; Each product line has multiple product categories.
Product category
Assortment of items the customer sees as reasonable substitutes
Brand
Name, term, design, symbol, or any other features that distinguish a seller’s good or service from those of other sellers.
value of branding
Brands impact market value, facilitate purchasing, establish loyalty, protect from competition, reduce marketing costs, and are assets.
(Exhibit 9.3)
Look at it
Product line breadth
number of product lines offered by the firm
Product line depth
number of categories within a product line
Stock keeping units (SKU)
smallest unit available for inventory control
Brand name strategies
1) Corporate or family brand
2) Corporate and product line brand
3) Individual

Corporate or family brand
individual brands benfit from overall brand awareness
Corporate and product line brands
uses combinations of corporate and product line brands to distinguish its products
Individual brands
individual brand names for each of its products
Brand extension
use of the same brand name for new products being introduced to the same or new markets
Brand dilution
occurs when brand extension adversely affects consumer perceptions about the attributes the core brand is believed to hold
Cobranding
practice of marketing two or more brands together
Brand licensing
contractual agreement between firms that allows another to use its brand name, logo, symbols, and/or characters
(Exhibit 9.7)
Look at it
Primary package
one the consumer uses (i.e. toothpaste tube)
Secondary package
wrapper or exterior carton that contains the primary package
How Firms develop new products
1) Idea Generation
2) Concept testing
3) Product development
4) Market testing
5) Product launch
6) Evaluation of results




reverse engineering
taking apart a product, analyzung it, and creating an improved product
lead users
innovative product users who modify existing products according to their own ideas
Concepts
brief written descriptions of the product
Concept testing
process in which a concept statement is presented to potential buyers or users to obtain their reactions
prototype
first physical form of new product
alpha testing
firm attempts to determine whether the product will perform according to design and satisfies needs
beta testing
uses potential customers to determine performance, functionality, and potential problems
Market testing (2)
1) Premarket tests
2)
Premarket tests
conducted before product is brought to market
Test marketing
introduces offering to a limited geographical area prior to a national launch
Product Launch (4)
1) Promotion
2) Place
3) Price
4) Timing


Diffusion of Innovation Cycle (5)
1) Innovators- 2.5%
Innovators
buyers who want to be the first on the block to have a new product
Early Majority
tend to wait until the "bugs" are worked out
Late majority
last group of buyers to enter a new product market
Laggards
avoid change and rely on traditional products
Factors affecting product diffusion (4)
1) Relative advantage
2) Compatibility
3) Observability
4) Complexity and trialability


Diffusion of innovation
process by which the use of an innovation spreads throughout a market group
Exhibit 10.6
Look at it
Product Life Cycle (4)
1) Introduction stage
2) Growth stage
3) Maturity stage
4) Decline stage


Introduction stage (4)
1) Low sales
2) Negative or low profits
Growth Stage (4)
1) Rising sales
2) Rapidly rising profits
3) Early adopters and early majority
4) Few but increasing competitors


Maturity stage (4)
1) Peak sales
2) Peak to declining profits
Decline stage (4)
1) Declining sales
2) Declining profits
3) Laggards
4) Low number of competitors and products


Price
overall sacrifice a consumer is willing to make to acquire a specific product
Company Objectives (6)
1) Profit orientation
2) Sales orientation
3) Competitor orientation
4) Customer orientation
5) Price skimming
6) Market penetration pricing




Profit orientation (3)
focuses on target profit pricing, maximizing profits, or target return pricing
target profit pricing
firm has particular profit goal in mind
maximizing profits
firm accurately specifies model that produces the maximum profit
target return pricing
designed to produce a specific return on investment
Sales orientation
used by firms who believe increasing sales will help more than increasing profits
Competitor orientation
firm measures themselves primarily against their competition
competitive parity
firm sets prices similar to those of major competitor
premium pricing
set price higher than competitor to capture customers who want the best
status quo pricing
changes prices only to meet those of competition
Customer orientation
implicitly invokes the concept of value to consumers
Price skimming
for new and innovative products, innovators and early adopters are willing to pay a higher price for the new product
Market penetration pricing
set initial price low in order to build sales, market share, and profits quickly
experience curve effect
many firms expect the unit cost to drop significantly as volume sold increases
Customers influence pricing decisions (3)
1) Expected price range
2) Acceptable price range
3) Expected future price range

Costs (3)
1) Variable costs
2) Fixed costs
3) Total costs

Variable costs
vary with production volume
Fixed costs
costs that remain at same level no matter what is produced
Total costs
sum of variable and fixed costs
Oligopolisitic competition
a few firms dominate market
price war
when two or more firms compete primarily by lowering their prices
price fixing
when competitors collude to control prices
monopolistic competition
many firms compete for customers in a given market but prodcuts are differentiated
pure competition
different companies that sell nearly identical products
gray market
legally circumvents authorized channels of distribution to sell goods at prices lower than those intended by manufacturer
exclusive distribution
products are placed in only a select few stores in a certain area
selective distribution
uses few selected customers in a territory
Supply chains add value (2)
1) streamlines distribution
2) affects marketing
distribution center
facility for receipt, storage, and redistribution of goods
The AIDA Model (4)
1) Awareness
Elements of an integrated marketing communication strategy (6)
1) Advertising
2) Personal selling
3) Sales promotions
4) Direct marketing
5) Public relations
6) Electonic media




Advertising
paid form of communication from an identifiable source, delivered thru a communication channel, and designed to persuade the reciever to take some action
Sales promotion
special incentives or excitement building programs that encourage the purchase of a product
Direct marketing
sales and promotional techniques that deliver promotional materials individually to potential customers
cause related marketing
commercial activity in which businesses and charities form a partnership to market an image, product, or service for their mutual benefit
event sponsership
when corporations support various activities; usually in cultural or sports and entertainment sectors
Electronic media (3)
1) corporate blogs
2) online games
3) text messaging

blog
contains periodic posts on a common web page
Advertising objectives (4)
1) Informative advertising
2) Persuasive advertising
3) Reminder advertising
4) Focus of advertisements


pull strategy
goal is to get customers to pull the product into the supply chain by demanding it
push strategy
designed to increase demand by focusing on wholesalers, distributors, or salespeople
Informative advertising
communicates to create and build brand awareness
Persuasive advertising
goal is to motivate consumers to take action
Reminder advertising
communication used to remind or prompt to repurchase; used especially when product is in mature stage in life cycle
Focus of advertisements (6)
1) Product-focused advertisements
2) Institutiona-focused advertisements
3) Primary demand
4) Selective demand
5) Public service advertising
6) Social marketing




Product-focused advertisements
focus on informing, persuading, or reminding customers about a specific product
Institutional advertisements
inform, persuade, and remind consumers about issues related to places, politics, an industry, or a particular corporation
Primary demand
demand for the product category or an entire industry
Selective demand
demand for a specific brand, firm, or item
Public service advertising
focuses on public welfare and generally is sponsered by nonprofits, civil groups, religious organizations, or political groups
Social marketing
application of marketing principles to a social issue to bring about attitudinal and behavioral change among general public
Advertising appeals (2)
1) Informational appeals
2) Emotional appeals
Informational appeals
help consumers make purchase decisions by offering factual info and strong arguments
Determining which media to use (3)
1) Mass and Niche Media
2) Choosing the right medium
3) Determing advertising schedule

Media planning
refers to the process of evaluating and selecting the media mix
media mix
combination of media used and the frequency of advertising in each medium
media buy
actual purchase of airtime or print pages
Mass media
channels include national newspapers, magazines, radio, and TV; ideal for reaching large numbers of anonymous audience members
niche media
more focused and are generally used to reach narrower segments
Advertising schedule
specifies timing and duration of advertising
Continuous schedule
runs steadily throughout the year
Flighting
advertising schedule implemented in spurts
Pulsing
combines continuous and flighting schedules by maintaining a base level of advertising but increasing intensity during certain periods
TV
Good: wide reach; incorporates sound and video

Bad: high cost; cluttered airways; more potential spillover

Radio
Good: relatively inexpensive; can be selectively targeted; wide reach

Bad: no video limits presentation; less focused attention than TV; exposure periods are short

Magazines
Good: very targeted; subscribers pass along to other

Bad: relatively inflexible; long lead times

Newspaper
Good: flexible; timely; can localize

Bad: can be expensive; involve potential loss of control over placement; short life span

Internet
Good: can be linked directly to content; highly flexible and interactive; allows for specific targeting

Bad: costs are not easily comparable to other media; becoming cluttered; blocking software prohibits delivery

Outdoors
Good: relatively inexpensive; offers opportunity to repeat exposure; flexible

Bad: not easily targeted; placement problems in some markets; exposure time is very short

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