Exam 3 Review Dr Mike Brady MAR 3023 General Overview of the Exam 3 Content Product Concepts o Products broadly defined as a good service idea or a combination of these o Be able to explain the difference between a good service and idea and recognize an example of each 1 Good A tangible physical entity 2 Service An intangible result of application of human and mechanical efforts to people or objects hybrids Idea Concept philosophy image or issue 3 o Be able to distinguish between consumer products and business product 1 Consumer Product Purchased to satisfy personal and family needs and are classified according to how buyers generally behave when purchasing them Ex convenience products specialty products shopping products and unsought products 2 Business Product Purchased to use for operations to resell or to use in manufacture of other products Business selling to other business o Be able to explain the product hierarchy o Product Hierarchy Understand the hierarchy from core products to branded products to augmented products what each of these are and examples of each 1 Core Products The physical or intangible service that the customer receives Ex slide clicker moves the slides forward or Publix O s based off cheerios 2 Branded Products The core products plus the characteristics that allow the consumer to alienate it from other similar products Ex Company associated with product Cheerios 3 Augmented Products Have characteristics that enhance value beyond that of the core or branded product Ex Warranty or repair o Be able to explain product management including product mix product line product line breadth and product line depth examples in the slides 1 Product Mix All the products a company sells 2 Product Line Depth breadth Product Line Breadth horizontally The number of different lines that a company markets Product Line Depth The number of items in a product line o Be familiar with the product life cycle including the phases and the different types of product life cycles Product Life Cycle PLC 1 Introductory Phase Efforts to enter market High failure rates little competition and frequent product modifications 2 Growth Phase Product becomes more or less successful Increased rate of sales entrance of competitors and prices normally fall 3 Maturity Not much change Sales increase at a decreasing rate lengthened product lines heavy promotions and prices profits fall 4 Decline Market share goes down Long run drop in sales and large inventories of unsold items o Be able to explain how companies extend the PLC 1 Selling to new segments ex Harley Davidson now selling to women 2 More frequent use ex travel toothbrush 3 Encourage more use per occasion Ex McDonalds food more for less 4 Promoting more varied use ex Dryer sheets with gnat repellant o Be familiar with repositioning and improvements Ex Arm and hammer baking soda used now for cleaners and to remove odors from fridges instead of just baking Modifications to product formulas or service processes o Understand the less risky alternatives to NPD what they are and why they are less risky New product development NPD is risky Less Risky 1 Line extensions Product developed is closely related to one or more successful products in existing product line but specifically designed to meet a different need ex Down market extension Mercedes started making to B Class cars Up market extensions Upgrading liquor bottles 2 Brand extensions Product developed is not closely related to one or more products in the existing product line ex Starbucks now sells ice cream and gum 3 Product Modifications Changing 1 or more of the product s characteristics old version usually doesn t stay in the line ex old ipod versions 4 Cost Reduction quality modification Selling products at a lower price or selling them at same price with lower manufacturing costs 5 Function Modification For ease of use ex Soup at hand Lipton tea packets to go New Product Development o Understand the difficulty in developing new products and why they are so likely to fail and what percentage of new products fail 80 of new products fail Schema what people think things should look like ex clear soda was a bad idea because people typically think of soda as dark o 2 goals for NPD understanding NPD from 1 The firm s perspective What can the firm produce that matches its competitive advantage 2 The customer s perspective How will the customers react to the product o Know the 5 steps of developing a new product and their order 1 Idea Generation Idea Screening 2 3 Concept Analysis 4 Beta Market testing 5 Product Launch o Understand what each phase of the NPD process consists of o Know the 5 steps and order of the product adoption process 1 2 Idea Generation Generating new ideas ex Neurofocus found that cheetos lovers actually like the orange mess on their fingers Idea Screening Get rid of the ideas that don t work Ex Doggie car air conditioner 3 Concept Analysis Analyze in specific way Who is the target market How much will it cost to produce How much will consumer pay for it do focus groups 4 Beta Test Markets Ex Hardees is testing out a foot long burger and Wendys is testing hotdogs 5 Product Launch Ex Sun Chips came out with a compost bag to go green but people hated it because it was so loud so they went back to the original bag o Know and understand the 5 different types of product adopters and which ones a company would like to have as their customers Innovators 1st to adapt to new product 2 5 1 2 Early Adopters Choose new products carefully help spread word of mouth 13 5 3 Early Majority Adopt just prior to average person 34 4 Late Majority Skeptics who adopt new products when they feel it is necessary after they see the benefits 34 5 Laggards Last to adapt to new product 16 Branding and Packaging o Brand a name term design symbol or other feature that identifies the marketer s product as distinct from other marketer s products o Understand overall why branding and packaging is so important remember Ralph Lifshitz Ralph Lauren had to change his name because Lifshitz isn t marketable o Understand what a Brand Mark is what a trademark is and the difference 1 Brand Mark The part of a brand that is not made up of words such as a symbol or a design Ex Seminole head 2 Trademark A legal designation of exclusive use of a brand R with a circle around it o Know the different levels of brand loyalty and think of an example of each for brands you purchase 1 Recognition Buyer is aware that a brand
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