MBA 645 Quiz 4 A Grade

product - uis anything that can be offered to a market to satisfy a want or need, including physical goods, services, experiences, events, persons, places, properties, organizations, information, and ideas. u5 Product Levels of Customer Value Hierarchy - ucore benefit basic product expected product augmented product potential product ucore benefit - uthe service or benefit the customer is really buying ubasic product - uthe simplest form of a product uexpected product - ueverything that represents the customer's minimal expectations uaugmented product - uthe actual product plus other supporting features such as a warranty, credit, delivery, installation, and repair service after the sale upotential product - urefers to what may remain to be done, that is, what is possible uDurability and Tangibility - unondurable goods tangible and normally consumed in a one or a few uses Durable goods are tangible and survive many uses. Services are intangible, inseparable, variable, and perishable products (such as haircuts) that normally require more quality control, supplier credibility, and adaptability. uconsumer-goods classification - uClassified on the basis of shopping habits uconvenience goods - uthat are purchased frequently, immediately, and with minimal effort ushopping goods - u(such as furniture) that consumers compare on such bases as suitability, quality, price, and style; uspecialty goods - u(such as cars) with unique characteristics or brand identification for which enough buyers are willing to make a special purchasing effort uunsought goods - u(such as smoke detectors) that the consumer does not know about or normally think of buying. uIndustrial-Goods Classification - umaterials and parts, capital items, supplies and business services ucapital items - uare long-lasting goods that facilitate developing or managing the finished product, including installations (factories) and equipment (tools). Supplies and business services are short-term goods and services that facilitate developing or managing the finished product. uMeans of Differentiation - uform, features, performance quality, conformance quality, durability, reliability, repairability, style, and customization uForm - urefers to the size, shape, or physical structure of a product. For example, aspirin can be differentiated by dosage size, shape, color, coating, or action time. uFeatures - uMost products can be offered with varying features that supplement their basic function. A company can identify and select new features by surveying recent buyers and then calculating customer value versus company cost for each potential feature. uPerformance Quality - uis the level at which the product's primary characteristics operate. Firms should design a performance level appropriate to the target market and competition (not necessarily the highest level possible) and manage performance quality through time. uConformance quality - uthe degree to which all produced units are identical and meet promised specifications. A product with low conformance quality will disappoint some buyers. uDurability - ua measure of the product's expected operating life under natural or stressful conditions, is a valued attribute for durable goods. The extra price for durability must not be excessive, and the product must not be subject to rapid technological obsolescence. uReliability - ua measure of the probability that a product will not malfunction or fail within a specified period. uRepairability - umeasures the ease of fixing a product when it malfunctions or fails. Ideal repairability would exist if users could fix the product themselves with little cost in money or time. ustyle - udescribes the product's look and feel to the buyer and creates distinctiveness that is hard to copy, although strong style does not always mean high performance. Style plays a key role in the marketing of many brands, such as Apple's tablets. ucustomization - uallow firms to be highly relevant and differentiating by finding out exactly what a person wants and delivering on that. Customized products include M&M's with specialized messages and Burberry coats with customer-selected fabric and accessories.7 u6 types of service differentiation - u1. Ordering ease. How easy is it for the customer to place an order with the company? 2. Delivery. How well is the product or service brought to the customer, including speed, accuracy, and care throughout the process? 3. Installation. How is the product made operational in its planned location? This is a true selling point for buyers of complex products like heavy equipment. 4. Customer training. How does the supplier teach a customer's employees to use new equipment properly and efficiently? 5. Customer consulting. What data, information systems, and advice services can companies sell to buyers? 6. Maintenance and repair. How can companies help customers keep purchased products in good working order? These services are critical in business-to-business settings and with luxury products. uproduct system - uis a group of diverse but related items that function in a compatible manner. uproduct mix (also called product assortment) - uis the set of all products and items a particular firm offers for sale. uline filling - ua firm lengthens its product line by adding more items within the present range. uline stretching - ua company lengthens its product line beyond its current range uproduct mix pricing - uthe firm searches for a set of prices that maximizes profits on the total mix. u6 product mix pricing situations - u1. Product line pricing. The seller introduces price steps within a product line and strives to establish perceived quality differences that justify the price differences. 2. Optional-feature pricing. The seller offers optional products, features, and services with the main product, the way automakers offer different trim levels. The challenge is which options to include in the standard price and which to offer separately. 3. Captive-product pricing. Some products require the use of ancillary or captive products. Manufacturers of razors often price them low and set high markups on razor blades, the captive product. If the captive product is priced too high, however, counterfeiting and substitutions can erode sales. 4. Two-part pricing. Many service firms charge a fixed fee plus a variable usage fee.