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PRODUCT: Adoption rate: 1. Awareness: individuals first learn of new product, but lack info 2.

Interest: Potential buyers begin to seek info 3. Evaluation: consider the likely benefits of product 4. Trial: make trial purchases to determine usefulness 5. Adoption/rejection: if trial is a success then they will decide to use it regularly. Relative advantage: innovation that appears superior to previous idea lower price, physical improvements, or ease of use Compatibility: innovation consistent with values and experiences of potential adopters attract new buyers at rapid rate. IE comfort with miniaturization of comm. Tech will be attracted to smart phones Complexity: difficulty of understanding innovation influences speed of acceptance. Consumers move slow in adopting new products that they find difficult to understand Possibility of trial use: trials can help reduce financial risk to adopters as they try out the product. IE. Dishwasher soap or cereal in the mail Observability: if potential buyer can observe the innovations superiority in a tangible form the rate increases. In store demos or ads that focus on superiority can increase adoption rate ie: info promo message about new drug helps consumers overcome hesitation, product design can emphasize advantage over competition, trial soap in mail or free trials online for games, etc Brand Name: easy to pronounce, recognize, and remember IE Nike, also, give correct connotation of product image, qualify for legal protection Step 1) idea generation 2) screening 3) business analysis 4) development 5) test marketing 6) commercialization

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Ideas from many sources; customer suggestions, sales force, research and development specialist, suppliers, retailers, competing products, inventors. Google encourages creative employees to make constant flow of new ideas Seperates commercial potential ideas from ideas that do not meet objectives. Some comps. Have development standard checklists that see if a project should be abandoned or not. Checklist: product uniqueness, availability of raw materials, products compatibility with current product offerings, existing facilities, present capabilities. Allows for open discussion among different parts of organization Assessing: potential market, growth rate, likely competitive strengths. Evaluate compatibility with organizational resources. Concept testing subjects product idea to more study prior to development. Focus groups and instore polling contributes to concept testing. Wrigley Science Institute was made to test emerging research that suggests chewing gum is good for you. They study the benefits of different types of gums. Screening&business anaylsis is good 1) define the products target market and customers needs and wants 2) determine products financial and technical requirements. FIRMS THAT INVEST MONEY AND TIME DURING THESE STAGES TEND TO BE MORE SUCCESFUL AT GENERATING IDEAS AND PRODUCTS Substantial increase in financial outlays as firm converts idea into product. Joint responsibility of engineers that create the product and marketers who provide feedback on consumer reactions to the product design, package, colour, and etc. Computer aided design systems to streamline the development stage, and prototypes may go through numerous changes before the original mock-up becomes a final product Companies may place prototype in test market in order to see consumer reactions under competitive conditions. It is to verify that the final product will do well in a real life environment. If it does well then they send it out, flops then they may tweak it or pull it. Snack foods and film industry rely on test markets. May take a while to catch on with general market Ready for full scale marketing. Can expose firm to substantial expenses. Establish: Marketing strategies, fund outlays for production facilities, and acquaint the sales force, marketing intermediaries, and potential customers with new product. Aerosal products deciding on which competitive advantage to promote.

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PRICE: DETERMENING FACTORS: 1)perceived value 2) cost of the product 3) demand 4) legal 5)strategy & objectives 6) market structure 7) marketing environment 8) competition 1)pure competition: company has to take the price determined by the market 2) monopolistic competition: many firms selling closely related products, set different prices for different segments through differentiation 3) oligopolistic competition: consist of few sellers who are highly sensitive to each others pricing and marketing strategies 4) pure monopoly: depending on the nature of ownership and regulations, may pursue different pricing strats Skimming: use of an initial high price relative to competitive offerings. Price is dropped in incremental steps as supply begins to exceed demand, or when competition catches up. HDTVS started at 20,000 in 99 but dropped to todays standards. Penetration: use of relatively low entry price compared with competitive offerings, based on the theory that this initial low price will help secure market acceptance. Crocs sell for $30 - $60, however, competitors sell cheaper versions for $5. Competitive: designed to de-emphasize prices as a competitive variable by pricing a good or service at the general level of comparable offerings PLACE/DISTRIBUTION: Intensive distribution: distribution of a product through all available channels. Usually items with wide appeal (broad group of consumers) IE Campbells microwavable soup. Selective distribution: distribution of a product through a limited number of channels. IE Versace sell merchandise only through select retailers worldwide. By limiting number of retailers marketers can reduce total marketing costs while developing strong relationship with channel. Cooperative advertising ; manufacture pays a % of retailers ad expenses and retailer displays firms products. Mutual benefit and marginal retailers can be avoided. If service important manufacture provides training and assistance to dealers Exclusive distribution: distribution of product through single retailer in a specific region. IE automobile industry may place only 1 dealer per city, urban outfitters one per city. Sacrifice some market coverage by doing this. Often develop image of quality and prestige. Producers and retailers cooperate closely in decisions concerning advertising and promotion, inventory and prices. Exclusive dealing agreement: prohibits marketing intermediary from handling competing products Closed sale territories: restrict distributors to certain geographic regions Tying agreement: allow channel members to become exclusive dealers if they also carry products other than those they want to sell Internet Marketing: advertise of websites that offer food, or activities that a snack would be a good compliment (IE Cineplex), Be able to place chocolate orders for retail store pick up (similar to futureshops system) Effective logistics requires proper supply-chain management. The supply chain begins with raw materials, proceeds through production, and continues with finished product through the marketing channel to customers. Supply chain management takes place in two directions: Upstream management: managing raw materials, inbound logistics, warehouse and storage facilities Downstream management: finished product storage, outbound logistics, marketing, sales, and customer service. Tools used to manage logistics are radio frequency identification (RFID)(can be used in pharmacies or employee cards), enterprise resource planning (ERP) system(helps with sequencing and scheduling), and logistical cost control (cut costs) Direct Channel: moves goods directly from producer to business purchaser or ultimate user. Important for goods that need demonstrations. IE Dell phone order computers. B2B: Xerox market items to other business Consumer goods: Tupperware, developing network of independent reps, girl scouts Internet: avoid full price, arrives in 3 business days Producer to wholesaler to retailer to consumer: firm will focus on wholesaler then market towards retailers, may use wholesalers distribution skills, field reps are hired to service retail accounts Producer to Wholesaler to Business User: Producer to Agent to Wholesaler to Retailer to Consumer: many small company markets has an agent bring buyer and seller together. May or may not take possession of goods, but not title. Agent reps a producer by seeking a market for its products or a wholesaler by locating supply source Producer to Agent to Wholesaler to Business User: Similar to prior agent. Serve market when

small producers attempt to market their offerings to large wholesalers. Manufacture rep provides an independent sales force to contact wholesale buyers. IE Kitchen manufacture Producer to agent to business user: products sold in small units only merchant wholesalers can cover markets. A MW is an independently owned wholesaler that takes title to the goods. By maintain regional inventories, achieves transportation economies, stockpiling goods, and making small shipments over short distances. Producer agent channel employed for large unit sales. Agent becomes producers sale force but bulk shipments reduce intermediarys inventory management Dual distribution: network that moves products to a firms target market through more than one marketing channel. IE Sears stores, catalogue, internet Reverse channels: designed to send goods back to producer. On the rise due to demand of raw material, recycling facilities, and antipollution laws. Market Factors: Business purchasers deal with manufacturers, but consumers deal with retailers. Marketers sell products that serve business users and consumers through multiple channels. Other factors: Channel choice, market needs, geographic location, average order size. Product factors: Perishable goods move through short channels, also seasonal fashion. Vending machines also use short channels in japan cause beer and underwear. Non perishable items are passed through long channels same with low unit costs. Organizational factors: Manufacture has adequate resources to perform channel functions, broad product lien, channel control important ALL SHORT CHANNEL! Long channel; lacks adequate resources to perform channel functions, limited product line, channel control not important. Competitive factors: short: feel satisfied with marketing intermediaries performance in promoting products long: feels dissatisfied with promos Sales Low sales Rising sales Peak sales Declining sales Profits Negative or low profits Rapidly rising profits Peak to declining profits Declining profits Typical Consumer Innovators Early adopters and early majority Late majority Laggards Competitors (number of firms and products) One or few competitors Few but increasing competitors High number of competitors and competitive products Low number of competitors and competitive products

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Product Basic product features/benefits New product features and variations introduced Diversify brands and models into a full product line Phase out weak products/items Price High price Prices drop significantly Full complement of price points in product line Cut price Place Selective distribution Build distribution outlets, add dealers to reach new markets Build broader distribution to reach more markets Selective, phase out unprofitable outlets Promotion Promote to build awareness, & word of mouth among early adopters Promote to build awareness in broader market & media channels Communication stresses brand differences and benefits Reduce promotion to minimum level Advertising: commercials, billboards, newspapers, raido Product Placement: tv shows, movies, video games, PS3 papa johns Guerrilla marketing: creating a buzz among friends Public relations and publicity: philanthropy, TOMS Direct marketing: communicating with consumer in order to get a request, telemarketing Sales promotion: for a limited time only, promotional partners Sponsorships: sports teams, community events Pull: promotional effort by seller to stimulate final-user demand, which then exerts pressure on the distribution channel. Intermediary may have competitive products in stock, pull strategy to motivate them to handle your product. Ads and sales promotions. Push: directed to the members of the marketing channel rather than final users. Personal selling. Promote retailers and wholesalers to spend extra time promoting their product. Personal selling by trades people. IMC Intergrated Marketing Communications: coordination of all promotional activities to produce a unified, customer-focused promotional message. You are the marketing manager for Nancys Nutritious Nutbars (NNN). As part of the marketing team you have been asked to evaluate two scenarios for promoting and pricing your nutbars. Scenario A has you matching your main competitors selling price of $5.00 as well as their advertising and promotional spend of $1.50 per nutbar. Scenario B proposes outspending your competitors in advertising and promotion ($1.75 per bar) to create a more prestigious image and selling the bars at $5.50 each. Which scenario would you recommend? Why? Depends profit max or sales max Assume NNN has determined that their base cost per nutbar is $5.00. If they decide to set a selling price of $5.49 calculate their markup dollars per nutbar. Selling price cost = markup 5.49-5 = .49 Given the information in question 3, calculate the markup on cost % generated from each nutbar. round to one decimal place markup on cost =markup/cost .49/5 = 9.8% Given the information in question 3, calculate the markup on price % generated from each nutbar. round to one decimal place markup on price =markup/price .49/5.49 = 8.9% Given the information in question 3, calculate the gross margin % generated from each nutbar. round to one decimal place same as last one NNN has a target markup on sales % (or gross margin %) of 15.0%. Based on competitive pressures they set a selling price of $5.49. What cost do they need to achieve in order to deliver this markup on sales %. Cost = price (1 margin %) cost =5.49(1-15%)= 5.49(85%) = 4.67 If NNN can achieve a cost of $4.60 per nutbar, what price would they need to charge for each nutbar in order to achieve a gross margin of 20%? Price= cost/1grossmargin% = 4.60/1-20% = 4.6/80% = 5.75 NNN has a target markup on cost of 20%. Based on competitive pressures they set a selling price of $5.49. What cost do they need to achieve in order to deliver this markup on sales %. Cost = price/1+markup on cost% =5.49/1+20% = 5.49/120% = 4.58 If NNN achieves a cost of $4.79 per nutbar, what price would they need to charge for each nutbar in order to achieve a markup on cost of 20%? Price=cost(1+markuponcost%) = 4.79(1+20%)= 4.79(%120) =5.75 Selective distribution: distribution of a product through a limited number of channels. IE Versace sell merchandise only through select retailers worldwide. By limiting number of retailers marketers can reduce total marketing costs while developing strong relationship with channel. Cooperative advertising ; manufacture pays a % of retailers ad expenses and retailer displays firms products. Mutual benefit and marginal retailers can be avoided. If service important manufacture provides training and assistance to dealers Exclusive distribution: distribution of product through single retailer in a specific region. IE automobile industry may place only 1 dealer per city, urban outfitters one per city. Sacrifice some market coverage by doing this. Often develop image of quality and prestige. Producers and retailers cooperate closely in decisions concerning advertising and promotion, inventory and prices. Exclusive dealing agreement: prohibits marketing intermediary from handling competing products Closed sale territories: restrict distributors to certain geographic regions Tying agreement: allow channel members to become exclusive dealers if they also carry products other than those they want to sell Internet Marketing: advertise of websites that offer food, or activities that a snack would be a good compliment (IE Cineplex), Be able to place chocolate orders for retail store pick up (similar to futureshops system)