Exam 3

1. How would a marketer define the term product? Everything, both favorable and unfavorable, that a person receives in an exchange. Products can be classified as either business (industrial) or consumer, depending on the buyer's intentions. The key distinction between the two types of products is their intended use. If the intended use is a business purpose, the product is classified as a business or industrial product. As explained in Chapter 7, a business product is used to manufacture other goods or services, to facilitate an organization's operations, or to resell to other customers. A consumer product is bought to satisfy an individual's personal wants or needs. Sometimes the same item can be classified as either a business or a consumer product, depending on its intended use. 2. Describe the concepts of product item, product line, and product mix. A product item is a specific version of a product that can be designated as a distinct offering among an organization's products. Coca-Cola's Sprite and Kellogg's Corn Flakes are examples of product items. A group of closely related product items is called a product line. These products are all marketed under a single brand name that is sold by the same company. Examples include personal care products as the product line, and brands of soap/shampoo/toothpaste serve as the actual product item. Different container sizes and shapes also distinguish items in a product line. With a product line, companies are able to target a wider range of customers to get more exposure. An organization's product mix includes all the products it sells. All Coca-Cola's products—soft drinks, juices, waters, sports drinks, teas, and more—constitute its product mix. Each product item in the product mix may require a separate marketing strategy. Product mixes offer a range of differentiated products that are each designed to meet specific needs or preferences in the marketplace. 3. What is the difference between a convenience product and a shopping product? A convenience product is a relatively inexpensive item that merits little shopping effort—that is, a consumer is unwilling to shop extensively for such an item. Candy, soft drinks, aspirin, small hardware items, dry cleaning, and car washes fall into the convenience product category. Consumers buy convenience products regularly, usually without much planning. Nevertheless, consumers do know the brand names of popular convenience products, such as Coca-Cola, Bayer aspirin, and Old Spice deodorant. Convenience products normally require wide distribution in order to sell sufficient quantities to meet profit goals. A shopping product is usually more expensive than a convenience product and is found in fewer stores. Consumers usually buy a shopping product only after comparing several brands or stores on style, practicality, price, and lifestyle compatibility. They are willing to invest some effort into this process to get the desired benefits. Convenience products are low-cost items purchased frequently with minimal consumer involvement, while shopping products involve more research, evaluation, and comparison before making a purchase decision. The distinction lies in the level of effort and time consumers devote to the purchasing process, as well as the frequency and nature of the products themselves. 4. Describe the four unique characteristics that distinguish services from goods.
Services have four unique characteristics that distinguish them from goods. Services are intangible, inseparable, heterogeneous, and perishable. The basic difference between services and goods is that services are intangible performances. Because of their intangibility, they cannot be touched, seen, tasted, heard, or felt in the same manner that goods can be sensed. Evaluating the quality of services before or even after making a purchase is harder than evaluating the quality of goods because, compared to goods, services tend to exhibit fewer search qualities. Goods are produced, sold, and then consumed. In contrast, services are often sold, produced, and consumed at the same time. In other words, their production and consumption are inseparable activities. This inseparability means that, because consumers must be present during the production of services like haircuts or surgery, they are actually involved in the production of the services they buy. That type of consumer involvement is rare in goods manufacturing. Because services have greater heterogeneity, or variability of inputs and outputs, they tend to be less standardized and uniform than goods. Because services tend to be labor intensive and production and consumption are inseparable, consistency and quality control can be hard to achieve. Perishability refers to the inability of services to be stored, warehoused, or inventoried. Services must be utilized at the time they are rendered, as opposed to tangible items, which can be manufactured and kept for later use. Time or service capacity is lost if not used. 5. List the three types of product modifications and give examples. Quality modification: a change in a product's dependability or durability. Reducing a product's quality may let the manufacturer lower the price and appeal to target markets unable to afford the original product. Conversely, increasing quality can help the firm compete with rival firms. Examples include clothing companies using higher-quality ink or fabric for better quality products that last longer. Or a furniture manufacturer using a higher-quality wood for building their products to increase durability and longevity. Functional modification: a change in a product's versatility, effectiveness, convenience, or safety. Examples include a vehicle manufacturer using a higher quality steel for the roll cages in their products to increase safety precautions. Or a computer company introducing new software for their product that introduces faster processing speeds. Style modification: an aesthetic (how the product looks) product change rather than a quality or functional change. Examples include a vehicle manufacturer changing the style of a vehicle to create a broader appeal to a new market. Or a clothing company adding different color schemes to their line of clothing. 6. List and briefly describe the four major functions of packaging. The three most important functions of packaging are to contain and protect products; promote products; and facilitate the storage, use, and convenience of products. A fourth function of packaging that is becoming increasingly important is to facilitate recycling and reduce environmental damage. The most obvious function of packaging is to contain products that are liquid, granular, or otherwise divisible. Packaging also enables manufacturers, wholesalers, and retailers to market products in specific quantities, such as ounces. Physical protection is another obvious function of packaging. Most products
are handled several times between the time they are manufactured, harvested, or otherwise produced and the time they are consumed or used. Many products are also shipped, stored, and inspected several times between production and consumption. Packaging does more than identify the brand, list the ingredients, specify features, and give directions. A package differentiates a product from competing products and may associate a new product with a family of other products from the same manufacturer. Packages use designs, colors, shapes, and materials to try to influence consumers' perceptions and buying behavior. Wholesalers and retailers prefer packages that are easy to ship, store, and stock on shelves. They also like packages that protect products, prevent spoilage or breakage, and extend the product's shelf life. Consumers are constantly seeking items that are easy to handle, open, and reclose, although some consumers want packages that are tamperproof or childproof. One of the most important packaging issues today is eco-consciousness, a trend that has recently been in and out of consumer and media attention. Companies have responded by looking for alternative packaging materials that are more ecologically friendly. 7. List and describe the Product Characteristics that influence the rate of adoption. Five product characteristics can be used to predict and explain the rate of acceptance and diffusion of a new product: Complexity: the degree of difficulty involved in understanding and using a new product. The more com- plex the product, the slower is its diffusion. Compatibility: the degree to which the new product is consistent with existing values and product knowledge, past experiences, and current needs. Incompatible products diffuse more slowly than compatible products. Relative advantage: the degree to which a product is perceived as superior to existing substitutes. Because it can store and play back thousands of songs, the iPod and its many variants have a clear relative advantage over the portable CD player. Observability: the degree to which the benefits or other results of using the product can be observed by others and communicated to target customers. For instance, fashion items and automobiles are highly visible and more observable than personal-care items. "Trialability": the degree to which a product can be tried on a limited basis. It is much easier to try a new toothpaste or breakfast cereal, for example, than a new personal computer. These product characteristics influence consumers' perceptions and decision-making processes, affecting the rate at which new products are adopted. By understanding and strategically managing these characteristics, businesses can facilitate faster adoption and drive the successful introduction of their innovations in the market. 8. Describe the benefits of branding. Branding has three main purposes: product identification, repeat sales, and new-product sales. The most important purpose is product identification. Branding allows marketers to distinguish their products from all others. Many brand names are familiar to consumers and indicate quality.
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