Product
A good, service or idea consisting of tangible and intangible attributes that satisfy a customers needs in exchange for money.
7 steps in product development
- new product strategy development - sets the direction or focus for new products or steps to revise existing ones
- idea generation - creative process, generation, development, and communication of new thoughts
- screening and evaluation - rate product ideas, low scored ideas will be dropped
- business analysis - a combination of gaining insight from data and performing tasks to identify the needs of the business, then recommending changes
- development - introducing product to market, product design, etc.
- market testing - explore customer response to a product - limited availability
- commercialization - full distribution of a product
why products fail
- insignificant point of difference
- incomplete market and product protocol
- not satisfying customer needs
- bad timing
- no economical access to buyers
- poor execution of the marketing mix
- too little market attractiveness
- poor product quality
product life cycle
the course of a product’s sales and profits over its lifetime
stages of product life cycle
- introduction - create awareness and trial
- growth - maximize market share
- maturity - maximize profits, product repositioning
- decline - reduce expenditures
downsizing
reducing content in package
removing a marginal amount of volume
Trade Name
the name your business is commonly known as or the name you use when advertising or doing business
harvesting
cut off expenditures of a product to profit from it
ex. cutting marketing but still retaining product
deletion
when a manufacturer permanently stops selling a product
brand extension
using well established company name to introduce new products
Price
the money or other considerations exchanged for ownership or use or a product
only P that produces revenue
price constraints
- demand for the product
- stage in the product life cycle
- cost of producing and marketing the product
- cost of changing prices
- single product versus a product line
- type of competition in the market
- pure competition
- monopolistic competition
- oligopoly - several buyers but few sellers ( sellers make a fixed price and buyers have no where else to go for a better price)
- pure monopoly - several buyers and only one seller
- competitors’ prices and customers’ awareness
- legal and ethical considerations
Slotting Fees
a payment made to a retailer to guarantee your product will be shown on their shelves
demand-oriented pricing approaches
skimming pricing - start at a high price and gradually decrease the price
penetration pricing - start low price and gradually increase price
prestige pricing - start with a high price and keep it high (exclusive product)
Price lining - give different pricing to different levels of qualities of the product
odd even pricing - instead of $20 charge $19.99 giving buyers the illusion that they are getting a bargain
Target pricing - when the manufacturer prices to wholesalers based on the final customers’ acceptable price
yield management pricing - revenue maximization with rate fences (qualify to get the deal price, ie. children pay less) and price bucket
Bundle pricing - complimentary products are put together for one price making consumers belive they are getting a bargain (consumers will buy something they otherwise would not have bought
Cost-oriented pricing approaches
standard markup price - percentage markup from manufacturer price
cost plus pricing - dollar markup from manufacturers’ price
experience curve pricing - unit cost declines by (10%-30%) each time a firm experiences doubles
deceptive pricing
see chart*
Gimics
bait and switch
Price fixing
vertical price fixing - agreement between producers and retailers to maintain the producers’ recommended retail price
horizontal price fixing- occurs when two or more competitors conspire to set prices, price levels, or price-related terms for their goods or services.
Functions intermediaries perform
transactional function - buying selling and risk-taking
logistical function - assorting; soring (breaking bulk); storing (transporting)
facilitating function - financing; grading; supplying; marketing info and research
types of vertical marketing systems
producers, wholesalers, and retailers acting as a unified system for common goals
- corporate - example GAP
- contractual - example franchises
- administered - informal arrangements by size and power of a dominant channel member (Walmart; P&G)
channel conflict
It typically occurs when a brand begins selling its products directly to consumers, disrupting channel partnerships with distributors, retailers, and agents who typically serve as intermediaries.
reverse logistics
a type of supply chain management that moves goods from customers back to the sellers or manufacturers.
types of retailers (classifications)
Levels of service:
Self-service - customers perform functions (gas station)
limited service - provide some services only
full service - provide all services to consumers
merchandise management
sales per square foot
= total sales/selling area in square feet
same-store sales growth
= (store sales in year 2 - store sales in year 1/ store sales in year 1 ) * 100
Integrated marketing communication
to ensure whatever tools of promotion you use give a clear and consistent message
