AFM131 Chapter Notes - Chapter 15: Podcast, Category Killer, Fixed Cost
26 Jun 2018
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Chapter 15
Product development and total product offer
Value: good quality at a fair price. When consumers calculate the value of a product, they look
at the benefits and then subtract the costs to see if benefits>costs
Marketers must listen better and constantly adapt to changing market demands in order to
satisfy consumers and compete.
Product development is key activity in any modern business
Creating excitement for new products is as important as products themselves
Total product offer: everything that consumers evaluate when deciding whether to buy
something
Value enhancers include: price, brand name, convenience, package, store
surroundings, service, internet access, buyer’s past experience, guarantee, speed of
delivery, image creasted by advertising, reputation of producer
Basic product is referred as “core product”
Total product offer is “augmented product”
Marketers must think like customers and evaluate total product offer (tangible and
intangible factors)
Product line: a group of products that are physically similar or are intended for a similar market
Face similar competition
May be several competing brands in one product line
Product mix: the combination of product lines offered by an organization
May include both goods and services in mix to meet all of customers’ needs
Diversified mix minimizes risks associated with focusing all of firm’s resources on
one target market
Product differentiation: the creation of real or perceived product differences
Actual product differences sometimes quite small
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find more resources at oneclass.com
Use price, advertising, packaging (value enhancers) to create unique, attractive
image
Packaging can change and improve basic products
Attract buyer’s attention
Protect goods inside, stand up under handling and storage, be tamperproof, detect
theft
Be easy to open and use
Describe and give information about the contents
Explain the benefits of the goods inside
Provide information on warranties, warnings, and other consumer matters
Give some indication of price, value, and uses
Packaging can make product more attractive to retailers
Universal product codes (UPCs) help stores control inventory
Radio frequency identification (RFID) chip used for tracking products
Change product’s visibility, usefulness, or attractiveness
Packaging has acquired more sales responsibility products sold in sell service outlets
Bundling: combining goods and or with services for a single price
Work with customers to develop value enhancers that meet their individual needs
Branding and brand equity
Brand: a name, symbol, or design (or combination thereof) that identifies the goods or servies
of one seller or group of sellers and distringuishes them from the goods and services of
competitors
for buyer: brand name gives products a distinction, assures quality, reduces search
time, and adds prestige to purchases
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find more resources at oneclass.com
for seller: brand name facilitates new-product introductions, helps promotional
efforts, adds to repeat purchases, differentiate products so prices can be set higher
trademark: brand with exlucsive legal protection for brand name and design; must
be protected from other companies that want to trade on trademark holders
reputation and image
brand equity : the value of the brand name and associated symbols
usually cannot know value of the brand until selling it to another company
companies realize value of brand equity, working to measure earning power of
strong brand names
brand loyalty: the degree to which customers are satisfied, enjoy the brand, and are committed to
further purchases
loyal groups of customers represents substantial value to a firm (can be calculated)
manufacturers trying to create more brand loyalty by highlighting carbon footprint of
products
Brand awareness: how quickly or easily a given brand name comes to mind when a product category is
mentioned
Advertising helps build strong brand awareness (event sponsorship)
Brand manager: a manager who has direct responsibility for one brand or one product line; aka product
manager in some firms (B2B)
manages all elements of marketing mix throughout life cycle of each product and service
have greater control over new-product development and product promotion
some companies have brand management teams
The product life cycle
product life cycle: a theoretical model of what happens to sales and profits for a product class over
time; the four states of the cycle are introduction, growth, maturity, and decline
not all products follow this cycle
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find more resources at oneclass.com
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Document Summary
When consumers calculate the value of a product, they look at the benefits and then subtract the costs to see if benefits>costs. Marketers must listen better and constantly adapt to changing market demands in order to satisfy consumers and compete. Product development is key activity in any modern business. Creating excitement for new products is as important as products themselves. Total product offer: everything that consumers evaluate when deciding whether to buy something. Value enhancers include: price, brand name, convenience, package, store surroundings, service, internet access, buyer"s past experience, guarantee, speed of delivery, image creasted by advertising, reputation of producer. Marketers must think like customers and evaluate total product offer (tangible and intangible factors) Product line: a group of products that are physically similar or are intended for a similar market. May be several competing brands in one product line. Product mix: the combination of product lines offered by an organization.
