product
Anything that is of value to a consumer and can be offered through a marketing exchange.
innovation
The process by which ideas are transformed into new products and services that will help firms grow.
reverse engineering
Involves taking apart a competitor’s product, analyzing it, and creating an improved product that does not infringe on the competitor’s patents, if any exist.
product development
Entails a process of balancing various engineering, manufacturing, marketing, and economic considerations to develop a product.
alpha testing
An attempt by the firm to determine whether a product will perform according to its design and whether it satisfies the need for which it was intended; occurs in the firm’s R&D department
beta testing
Having potential consumers examine a product prototype in a real-use setting to determine its functionality, performance, potential problems, and other issues specific to its use.
premarket test
Conducted before a product or service is brought to market to determine how many customers will try and then continue to use it.
test marketing
Introduces a new product or service to a limited geographical area (usually a few cities) prior to a national launch.
product life cycle
Defines the stages that new products move through as they enter,
get established in, and ultimately leave the marketplace and thereby offers marketers a starting point for their strategy planning
introduction stage
Stage of the product life cycle when innovators start buying the product.
growth stage
Stage of the product life cycle when the product gains acceptance, demand and sales increase, and competitors emerge in the product category.
maturity stage
Stage of the product life cycle when industry sales reach their peak, so firms try to rejuvenate their products by adding new features or repositioning them.
decline stage
Stage of the product life cycle when sales decline and the product eventually exits the market.
core consumer value
the basic problem solving benefits that consumers are seeking
associated services (or augmented product)
The nonphysical attributes of the product, including product warranties, financing, product support, and after-sale service.
consumer products
products and services used by people for their personal use
specialty goods/services
Products or services toward which the customer shows a strong preference and for which he or she will expend considerable effort to search for the best suppliers.
shopping goods/services
Products or services, such as apparel, fragrances, and appliances, for which consumers will spend time comparing alternatives.
convenience goods/ services
Products or services for which the consumer is not willing to spend any effort to evaluate prior to purchase
product mix
The complete set of all products offered by a firm.
product lines
Groups of associated items, such as those that consumers use together or think of as part of a group of similar products.
product category
An assortment of items that the customer sees as reasonable substitutes for one another.
product mix breadth
The number of product lines, or variety, offered by the firm.
product line depth
The number of products within a product line.
brand equity
The set of assets and liabiliies linked to a brand that add to or subtract from the value provided by the product or service
brand awareness
Measures how many consumers in a market are familiar with the brand and what it stands for; created through repeated expo- sures of the various brand elements (brand name, logo, symbol, character, packaging, or slogan) in the firm’s communications to consumers.
perceived value
The relationship between a product or service’s benefits and its cost.
brand associations
The mental links that consumers make between a brand and its key product attributes; can involve a logo, slogan, or famous personality.
brand personality
Refers to a set of human characteristics associated with a brand, which has symbolic or self-expressive meanings for consumers.
brand loyalty
Occurs when a consumer buys the same brand’s product or service repeatedly over time rather than buying from multiple suppliers within the same category.
manufacturer brands
Brands owned and man- aged by the manufacturer.
private-label brands
(store brands) Brands developed and marketed by a retailer and available only from that retailer.
generic
A product sold without a brand name, typically in commodities markets.
corporate brand
The use of a firm’s own corporate name to brand all of its product lines and products.
family brand
The use of a combination of the company brand name and individual brand name to distinguish a firm’s products.
individual brand
The use of individual brand names for each of a firm’s products.
brand extension
The use of the same brand name for new products being introduced to the same or new markets.
brand dilution
Occurs when a brand extension adversely affects consumer perceptions about the attributes the core brand its believed to hold
cobranding
The practice of marketing two or more brands together, on the same package or promotion.
brand licensing
A contractual arrangement between firms, whereby one firm allows another to use its brand name, logo, symbols, or characters
in exchange for a negotiated fee.
intangible
A characteristic of a service; it cannot be touched, tasted, or seen like a pure product can.
inseparable
A characteristic of a service: it is produced and consumed at the same time—that is, service and consumption are inseparable
inconsistent
A characteristic of a service: its quality may vary because it is provided by humans.
inventory
A characteristic of a service: it is perishable and cannot be stored for future use.
service gap
Results when a service fails to meet the expectations that customers have about how it should be delivered.
knowledge gap
Reflects the difference between customers’ expectations and the firm’s perception of those expectations.
standards gap
Pertains to the difference between the firm’s perceptions of customers’ expectations and the service standards it sets.
delivery gap
The difference between the firm’s service standards and the actual service it provides to customers.
communication gap
Refers to the difference between the actual service provided to customers and the service that the firm’s promotion program promises.
service quality
Customers’ perceptions of how well a service meets or exceeds
their expectations.
Zone of tolerance
The area between customers’ expectations regarding their desired service and the minimum level of acceptable service— that is, the difference between what the customer really wants and what he or she will accept before going elsewhere.
distributive fairness
Pertains to a customer’s perception of the benefits he or she received compared with the costs (inconvenience or loss) that resulted from a service failure.
procedural fairness
Refers to the customer’s perception of the fairness of the process used to resolve complaints about service
profit orientation
A company objective that can be implemented by focusing on target profit pricing, maximizing profits, or target return pricing.
target profit pricing
A pricing strategy implemented by firms when they have a particular profit goal as their overriding concern; uses price to stimulate a certain level of sales at a certain profit per unit.
maximizing profits strategy
A mathematical model that captures all the factors required to explain and predict sales and profits, which should be able to identify the price at which its profits
are maximized.
target return pricing
A pricing strategy implemented by firms less concerned with the absolute level of profits and more interested in the rate at which their profits are generated relative to their investments; designed to produce a specific return on investment, usually expressed as a percentage of sales.
sales orientation
A company objective based on the belief that increasing sales will help the firm more than will increasing profits.
competitor orientation
A company objective based on the premise that the firm should measure itself primarily against its competition.
customer orientation
Pricing orientation that explicitly invokes the concept of customer value and setting prices to match consumer expectations.
oligopolistic competition
Occurs when only a few firms dominate a market.
monopolistic competition
Occurs when many
firms sell closely related but not homogeneous products; these products may be viewed as substitutes but are not perfect substitutes.
pure competition
Occurs when different companies sell commodity products that consumers perceive as substitutable; price usually is set according to the laws of supply and demand.
cost-based pricing method
Determines the final price to charge by starting with the cost, without recognizing the role that consumers or competitors’ prices play in the marketplace.
competitor-based pricing method
An approach that attempts to reflect how the firm wants consumers to interpret its products relative to the competitors’ offerings.
value-based pricing method
Focuses on the overall value of the product offering as perceived by consumers, who deter- mine value by comparing the benefits they expect the product to deliver with the sacrifice they will need to make to acquire the product.
price skimming
A strategy of selling a new product or service at a high price that innovators and early adopters are willing to pay to obtain
it; after the high-price market segment becomes saturated and sales begin to slow down, the firm generally lowers the price to capture (or skim) the next most price- sensitive segment.
market penetration pricing
A pricing strategy of setting the initial price low for the introduction of the new product
or service, with the objective of building sales, market share, and profits quickly.
reference price
The price against which buyers compare the actual selling price
of the product and
that facilitates their evaluation process.
odd prices
prices that end in odd numbers, usually 9
everyday low pricing (EDLP)
A strategy companies use to emphasize the continuity of their
retail prices at a level somewhere between the regular, nonsale price and the deep-discount sale prices their competitors may offer.
high/low pricing
A pricing strategy that relies on the promotion of sales, during which prices are temporarily reduced to encourage purchases.
price lining
Consumer market pricing tactic of establishing a price floor and a price ceiling for an entire line of similar products and then setting a few other price points in between to represent distinct differences in quality.
price bundling
Consumer pricing tactic of selling more than one product for a single, lower price than the items would cost sold separately; can be used to sell slow-moving items, to encourage customers to stock up so they won’t purchase competing brands, to encourage trial of a new product, or to provide an incentive to purchase a less desirable product or service to obtain a more desirable one in the same bundle.
predatory pricing
A firm’s practice of setting a very low price for one or more of its products with the intent of driving its competition out of business; illegal under the Competition Act.
price discrimination
The practice of selling the same product to different resellers (wholesalers, distributors, or retailers) or to the ultimate consumer at different prices; some, but not all, forms of price discrimination are illegal.
horizontal price fixing
Occurs when competitors that produce and sell competing products collude, or work together, to control prices, effectively taking price out of the decision process for consumers.
Push marketing strategy
Designed to increase demand by focusing on wholesalers, distributors, or salespeople, who push the product to consumers via distribution channels.
pull marketing strategy
Designed to get consumers to pull the product into the supply chain by demanding retailers carry it.
vertical marketing system
A supply chain in which the members act as a unified system; there are three types: administrated, contractual, and corporate.
administered vertical marketing system
A supply chain system in which there is no common ownership and no contractual relationships, but the dominant channel member controls the channel relationship.
contractual vertical marketing system
A system in which independent firms at different levels of the supply chain join together through contracts to obtain economies of scale and co-ordination and to reduce conflict
corporate vertical marketing system
A system in which the parent company has complete control and can dictate the priorities and objectives of the supply chain; it may own facilities such as manufacturing plants, warehouse facilities, retail outlets, and design studios.
category specialist
Offers a narrow variety but a deep assortment of merchandise.
category killer
Offers an extensive assortment in a particular category, so overwhelm- ing the category that other retailers have difficulty competing.
omnichannel
An omnichannel strategy creates a consistent experience for consumers across all distribution channels.
integrated marketing communications (IMC)
Represents the promotion dimension of the four Ps; encompasses a variety
of communication disciplines— general advertising, personal selling, sales promotion, public relations, direct marketing, and digital media—in combination to provide clarity, consistency, and maximum communicative impact.
Deceptive advertising
A representation, omission, act, or practice in an advertisement that is likely to mislead consumers acting reasonably under the circumstances
multichannel strategy
Selling in more than one
channel (e.g., store, catalogue,
kiosk, and Internet).
conventional
supermarket
Offers groceries, meat, and produce with limited sales of nonfood items, such as health and beauty aids and general merchandise, in a self-service format.
big-box food retailers
Come in three types: supercentre, hypermarket, and warehouse club; larger than a conventional supermarket; carries both food and nonfood items.
general merchandise
retailers
May be discount stores, specialty stores, category specialists, department stores, drugstores, off-price retailers, or extreme-value retailers; may sell through multiple channels, such as the Internet and catalogues.
discount store
Offers a broad variety
of merchandise, limited
service, and low prices.
category specialist
Offers a narrow variety
but a deep assortment of
merchandise.
category killer
Offers an extensive assortment in a particular category, so overwhelming the category that other retailers have difficulty competing.
drugstore
A specialty store that concentrates on health and personal grooming merchandise, though pharmaceuticals may represent more than 60 percent of its sales.
off-price retailer
A type of retailer that offers an inconsistent assortment of merchandise at relatively low prices.
extreme-value retailer
A general merchandise
discount store found in
lower-income urban or
rural areas.
services retailers
Firms that primarily
sell services rather
than merchandise.
retail mix
Product (merchandise assortment), pricing, promotion, place, personnel, and presentation (store design and display) strategies to reach and serve consumers.
co-operative (co-op)
advertising An agreement between a manufacturer and retailer in which the manufacturer agrees to defray some advertising costs.
share of wallet
The percentage of
the customer’s
purchases made from
a particular retailer.
omnichannel
An omnichannel strategy creates a consistent experience for consumers across all distribution channels.
sender
The firm from which an IMC message originates; the sender must be clearly identified to the intended audience.
deceptive advertising
A representation, omission, act, or practice in an advertisement that is likely to mislead consumers acting reasonably under the circumstances.
transmitter
An agent or intermediary with which the sender works to develop the marketing communications; for example, a firm’s creative department or an advertising agency.
encoding
The process of converting
the sender’s ideas into a
message, which could be
verbal, visual, or both.
communication channel
The medium—print, broadcast,
the Internet—that
carries the message.
receiver
The person who reads, hears, or sees and processes the information contained in the message or advertisement.
decoding
The process by which the
receiver interprets the
sender’s message.
noise
Any interference that stems from competing messages, a lack of clarity in the message, or a flaw in the medium; a problem for all communication channels.
feedback loop
Allows the receiver to communicate with the sender and thereby informs the sender whether the message was received and decoded properly.
objective-and-task
method
An IMC budgeting method that determines the cost required to undertake specific tasks to accomplish communication objectives; process entails setting objectives, choosing media, and determining costs
competitive parity
method
A method of determining a communications budget in which the firm’s share of the communication expenses is in line with its market share.
percentage-of-sales
method
A method of determining a communications budget that is based on a fixed percentage of forecasted sales.
affordable method
A method of determining a communications budget based on what is left over after other operating costs have been covered.
unique selling
proposition (USP)
A strategy of differentiating a product by communicating its unique attributes; often becomes the common theme or slogan in the entire advertising campaign.
rational appeal
Helps consumers make purchase decisions by offering factual information and strong arguments built around relevant issues that encourage consumers to evaluate the brand favourably on the basis of the key benefits it provides.
emotional appeal
Aims to satisfy consumers’
emotional desires rather
than their utilitarian needs.
media planning
The process of evaluating and selecting the media mix that will deliver a clear, consistent, compelling message to the intended audience.
media mix
The combination of the
media used and the
frequency of advertising
in each medium.
media buy
The purchase of airtime or
print pages.
mass media
Channels, such as national newspapers, magazines, radio, and television, that are ideal for reaching large numbers of anonymous audience members.
niche media
Channels that are focused and generally used to reach narrow segments, often with unique demographic characteristics or interests.
advertising schedule
Specifies the timing and
duration of advertising.
continuous advertising
schedule
Runs steadily throughout the year and therefore is suited to products and services that are consumed continually at relatively steady rates and that require a steady level of persuasive or reminder advertising.
flighting advertising
schedule
Implemented in spurts,
with periods of heavy
advertising followed by
periods of no advertising.
pulsing advertising
schedule
Combines the continuous and flighting schedules by maintaining a base level of advertising but increasing advertising intensity during certain periods.
pretesting
Assessments performed before an ad campaign is implemented to ensure that the various elements are working in an integrated fashion and doing what they are intended to do.
tracking
Includes monitoring key indicators, such as daily or weekly sales volume, while the advertisement is running to shed light on any problems with the message or the medium.
post-testing
The evaluation of an IMC
campaign’s impact after it
has been implemented.
frequency
Measure of how often the target audience is exposed to a communication within a specified period of time.
reach
Measure of consumers’ exposure to marketing communications; the percentage of the target population exposed to a specific marketing communication, such as an advertisement, at least once.
gross rating points
GRP
Measure used for various
media advertising—print,
radio, or television;
GRP = reach × frequency.
click-through tracking
Measures how many times
users click on banner
advertising on websites.
search engine
marketing (SEM)
Uses tools such as Google
AdWords to increase the
visibility of websites in
search engine results.
impressions
The number of times an
ad appears to a user.
click-through rate
CTR
The number of times
a user clicks on an ad
divided by the number of
impressions.
return on investment
ROI
Used to measure the benefit of an investment, ROI is calculated by dividing the gain of an investment by its cost.
advertising
A paid form of communication from an identifiable source, delivered through a communication channel, and designed to persuade the receiver to take some action, now or in the future.
personal selling
The two-way flow of communication between a buyer and a seller that is designed to influence the buyer’s purchase decision.
sales promotions
Special incentives or excitement-building programs that encourage the purchase of a product or service, such as coupons, rebates, contests, free samples, and point-ofpurchase displays.
direct marketing
Marketing that communicates
directly with target
customers to generate a
response or transaction.
direct mail/email
A targeted form of communication
distributed to
a prospective customer’s
mailbox or inbox.
direct response TV
DRTV
TV commercials or infomercials
with a strong call
to action.
public relations (PR)
The organizational function that manages the firm’s communications to achieve a variety of objectives, including building and maintaining a positive image, handling or heading off unfavourable stories or events, and maintaining positive relationships with the media.
cause-related
marketing
Commercial activity in which businesses and charities form a partnership to market an image, product, or service for their mutual benefit; a type of promotional campaign.
event sponsorship
A popular PR tool; occurs when corporations support various activities (financially or otherwise), usually in the cultural or sports and entertainment sectors.
digital media
Tools ranging from simple website content to far more interactive features such as corporate blogs, online games, text messaging, social media, and mobile apps.
blog (weblog or
web log)
A web page that contains
periodic posts; corporate
blogs are a new form of
marketing communications.
AIDA Model
A common model of the series of mental stages through which consumers move as a result of marketing communications: Attention leads to Interest, which leads to Desire, which leads to Action.
aided recall
Occurs when consumers
recognize the brand when
its name is presented
to them.
top-of-mind awareness
A prominent place in people’s memories that triggers a response without them having to put any thought into it.
lagged effect
A delayed response to a
marketing communication
campaign.
informative advertising
Communication used to create and build brand awareness, with the ultimate goal of moving the consumer through the buying cycle to a purchase.
persuasive advertising
Communication used to
motivate consumers to
take action.
reminder advertising
stage of their life cycle.
Communication used to remind consumers of a product or to prompt repurchases, especially for products that have gained market acceptance and are in the maturity stage of their life cycle.
product-focused
advertisements
Used to inform, persuade,
or remind consumers
about a specific product
or service.
institutional
advertisements
Used to inform, persuade,
or remind consumers
about a specific product
or service.
product placement
Inclusion of a product in
nontraditional situations,
such as in a scene in a
movie or TV program.
public service
announcement (PSA)
Advertising that focuses on public welfare and generally is sponsored by nonprofit institutions, civic groups, religious organizations, trade associations, or political groups; a form of social marketing.
social marketing
The application of marketing principles to a social issue to bring about attitudinal and behavioural change among the general public or a specific population segment.
puffery
The legal exaggeration of
praise, stopping just short
of deception, lavished on
a product.
deal
A type of short-term price reduction that can take several forms, such as a “featured price,” a price lower than the regular price; a “buy one, get one free” offer; or a certain percentage “more free” offer contained in larger packaging.
premium
An item offered for free or at a bargain price to reward some type of behaviour, such as buying, sampling, or testing
contest
A brand-sponsored
competition that requires
some form of skill
or effort.
sweepstakes
A form of sales promotion
that offers prizes based
on a chance drawing of
entrants’ names.
sampling
Offers potential customers the opportunity to try a product or service before they make a buying decision.
loyalty program
Specifically designed to retain customers by offering premiums or other incentives to customers who make multiple purchases over time.
point-of-purchase
(POP) display
A merchandise display located at the point of purchase, such as at the checkout counter in a grocery store.
pop-up stores
Temporary storefronts that exist for only a limited time and generally focus on a new product or a limited group of products offered by a retailer, manufacturer, or service provider; they give consumers a chance to interact with the brand and build brand awareness.
cross-promoting
Efforts of two or more
firms joining together to
reach a specific target
market.
relationship selling
A sales philosophy and process that emphasizes a commitment to maintaining the relationship over the long term and investing in opportunities that are mutually beneficial to all parties.
leads
A list of potential
customers.
qualify
The process of assessing
the potential of sales leads.
trade shows
Major events attended by buyers who choose to be exposed to products and services offered by potential suppliers in an industry.
cold calls
A method of prospecting in which salespeople telephone or go to see potential customers without appointments.
telemarketing A method of prospecting in which salespeople telephone potential customers.
A method of prospecting
in which salespeople
telephone potential
customers.
preapproach
In the personal selling process, occurs prior to meeting the customer for the first time and extends the qualification of leads procedure; in this step, the salesperson conducts additional research and develops plans for meeting with the customer.
closing the sale
Obtaining a commitment
from the customer to
make a purchase.