Product Marketing Terms

Advertising - A paid form of communication and promotion involving a product and its attributes.

• Advertising campaign - A marketing message(s) focused on a target audience over an extended period.
• Advertising platform - The product attributes and issues conveyed in an advertising message to the target audience.
• Advertising target market - The specific group of individuals identified as willing and able buyers at which an advertising message is aimed. 
• Advertising theme - The central message of an advertising campaign that is repeated throughout the campaign.
• Cooperative advertising - Advertising (usually in-store) that is designed and paid for cooperatively by both the marketer and retailer.
• Selective demand advertising - Advertising in which the marketer attempts to create awareness of, and provide information about, a specific brand.
• Slice-of-life advertising - An advertising message that portrays consumers in situations similar to their perceptions of their own lifestyles.
• Testimonial - An advertising message that is presented by someone who is viewed as an expert or user of the product.
• Vertical cooperative advertising - Advertising by marketers at different stages of the distribution system who advertise jointly.

Agent - An intermediary who does not take title to merchandise but facilitates exchanges by bringing buyers and sellers together.

• Commission merchant - An agent that sells for manufacturers.
• Manufacturer’s agent - An independent sales representative who works for several manufacturers of related but non-competing product lines.
• Selling agent - An individual who is responsible for all of the marketing activities for a manufacturer.

Brand - An identification (name, symbol, etc.) of a product that is unique and distinguishable from competitor’s products.

• Brand leveraging - Using the power of an existing brand name to support a company’s entry into a new, but related, product category.
• Brand line extension - Using an established product’s brand name to launch a new, slightly different item in the same product category.
• Brand mark - The symbol or design associated with a brand.
• Brand name - The words or numbers associated with a brand.
• Dealer brand - A brand that is created and owned by an intermediary.
• Flanker brand - A new brand introduced into the market by a company that already has an established brand in the same product category. It is designed to compete in the same category but target a different consumer group.
• Generic name - A brand name associated with the type of a product rather than with a specific product.
• Manufacturer’s brand - A brand that is owned and marketed by the manufacturer that produces the branded product.
• Trademark - Legal production against copycats of a brand.

Channel of distribution - A product’s trip from producer or manufacturer to the buyer.

• Consumer - The ultimate user of a product.   
• Buyer’s remorse - The anxiety associated with a buyer’s perception that they made a poor purchase decision.  
• Consumer market - A market dominated as consumers as buyers.
• Early buyers - Consumers who look for new products or product attributes and often buy a product early in its life cycle.
• Early majority - Consumers who watch early buyer’s response to new products before buying. 
• Laggards - Consumers who are strongly oriented toward existing products and are the last buyers of a new product.

Coupon - A certificate that entitles a consumer to a price reduction or a cash refund.

Demand - A schedule of the amount of a product that will be purchased at various prices.

• Derived demand - A demand that is predicated on another demand. For example, the demand for cattle by meat packers is derived from the demand for beef by consumers.
• Effective demand - The combination of the desire to buy a product and the financial ability to buy the product.
• Elastic demand - When a percentage change in price results in a greater percentage change in quantity demanded.
• Inelastic demand - When a percentage change in price results in a smaller percentage change in quantity demanded.
• Joint demand - When the demand for two different products are complementary.
• Selective demand - Demand for a particular product brand.
• Unitary demand - When a percentage change in price results in the same percentage change in quantity demanded.

Discount - A deduction from the list price in the form of cash or something else of value.

• Cash discount - A discount offered to buyers who pay for the product within a stated period.
• Seasonal discount - A discount offered to customers who purchase a product during a season of the year when demand for the product is low.
• Quantity discount - A discount offered to buyers who purchase larger than normal quantities of the product.

Forecasting - To predict the quantity of a product that will be sold at various times in the future.

• Barometric techniques - Using the analyses of past trends to predict the future.
• Delphi technique - A panel of experts is asked to assign rankings and probabilities to various factors that may influence future events.
• Market breakdown technique - The sales forecast for a large unit is divided into forecasts for smaller units
• Market buildup technique - Forecast information on market segments is aggregated to arrive at a total sales forecast.
• Market share analysis - The sales forecast for the firm is based on the forecast for the industry (based on assumption of market share).
• Scenario analysis - A description of future outcomes is developed based on probabilities of occurrence and cause-and-effect relationships.
• Simple trend analysis - Historical data is used to project future trends.

Income - Money received in return for labor or services provided, sale of assets and return on investments.

• Discretionary income - The amount of disposable income a consumer has remaining after essentials such as food, shelter and clothing are purchased.
• Disposable income - The amount of after-tax income a consumer has available for spending.

Intermediary - An independent or corporate-owned business that helps move products from the producer to the ultimate consumer.

• Intermediate market - A set of wholesalers and retailers that buy goods from others and re-sells them.
• Merchant middleman - An intermediary that takes title to the products it distributes.

Label - A tag or part of a package that provides information about a product.

• Grade label - Product quality is identified by a number, word or letter.
• Descriptive label - Describes the important attributes of a product.
• Informative label - Explains the use or preparation of a product.
• Open dating - Provides the expected shelf life of a product.
• Nutritional labeling - Describes the ingredients of a food product (i.e., amounts of protein, fat, carbohydrates, calories, etc.).

Market - A group of individuals with unsatisfied wants and needs who are willing and able buyers. It can be defined as narrowly as a specific place where buying and selling takes place or as broadly as the demand for a product.

• Contestable markets - Rivalry among competitors keeps profits to a competitive level.
• Horizontal market - Includes a broad spectrum of industries.
• Industrial market - Consists of firms that engage in the manufacture of products.
• Institutional market - Not-for-profit organizations that buy products for use in achieving a particular goal or mission.
• Market segment - A portion of a large market group of customers within a broader market who possess a common set of characteristics. A group of buyers within a market who have similar wants and needs.
• Market share - The number of units of a product (or their dollar value) expressed as a percentage of the total number of units sold by all competitors in a given market. The percentage of the total amount of product sold in a market that is sold by an individual company.
• Market structure - The number and size distribution of firms in a market.
• Marketing audit - A systematic and periodic examination of an organization’s marketing environment, including its goals, strategies and activities.
• Marketing information system - A set of procedures and methods for the regular planned collection, analysis, and presentation of marketing information.
• Marketing intelligence system - Activities for monitoring the external environment for emerging trends.
• Marketing mix - Focusing on product, price, place and promotion to create a successful marketing program (the four Ps of marketing).

Marketing research - A systematic and objective approach to developing and providing information for decision making regarding a specific marketing problem.

• Causal studies - Research where cause-and-effect relationships are explored.
• Consumer panel - A group of consumers who provide information about a product and its attributes.
• Demographics - Statistics about population (gender, age, marital status, birthrate, mortality rate, education, income and occupation).
• Observational approach - Observing people’s behavior and recording these observations.
• Secondary source - Published data that has been collected by a public or private sector organization and provided (published) to users.
• Test-marketing - Introducing a small amount of a new product into a market to identify consumer acceptance.
• Primary data - Data collected from the actual market (surveys, panels, interviews, etc.).

Marketing strategy - Marketing approach or method used to achieve a marketing goal.

• Differentiated marketing - Where a broad market is segmented and a separate marketing program is designed for each market segment.
• Industrial marketing - Designing a product and its attributes for industrial customers.
• Market aggregation - A single marketing program focuses on all potential consumers.
• Market atomization - Treating each individual consumer as a unique market segment.
• Positioning - Communicating a distinct place for a product or a brand in the minds of consumers.
• Product differentiation - Using promotion and other marketing activities to convince consumers that the product is different from, or better than, those of competitors.
• Social media marketing – The use of social media or social networks to market a product.
• Target marketing - A market segment is identified and marketing activities are focused on the segment.
• Trading down - When a company known for selling high-priced products offers lower-priced products for sale.
• Trading up - When a company known for selling low-priced products offers higher-priced products for sale.

Packaging - Designing and producing the container or wrapper for a product.

Personal selling - Person-to-person communication in which the receiver provides immediate feedback on the source’s message.

Purchasing - To obtain a product in exchange for money or its equivalent.

• Just-in-time purchasing - Parts or ingredients are provided just before production in order to reduce inventory costs.

Price - The amount of money asked in exchange for something else (e.g. product).

• Even pricing - A form of psychological pricing in which the price is an even number.
• Limit pricing - The practice where a firm can discourage entry into the industry by charging a low price.
• List price - The initial price of a product. Also termed the base price.
• Transfer price - The price at which a good or resource is transferred from one enterprise (strategic business unit) to another within the firm. Market price is usually used as the basis for determining transfer price.

Price fixing - When several firms in an industry collectively establish the price for a product.

• Horizontal price fixing - Marketers of the same or similar products collectively decide to set their price at the same level.
• Vertical price fixing - Marketers at different levels of the distribution system collectively set the retail price.

Pricing strategies (market based) -- Approaches to setting prices based on the willingness of the buyer to purchase the product.

• Bait-and-switch pricing - A product is priced low to lure customers into the store. Then an attempt is made to persuade them to buy a more expensive product.
• Customary pricing - A traditional price level is used.
• Flexible price policy - The product is sold to different customers at different prices.
• Loss leader - A product that is priced below its normal price in order to attract customers to a store.
• Penetration pricing - The price is set low in order to generate the greatest possible penetration of the market (largest market share).
• Predatory pricing - Aggressive pricing against a rival with the intent of driving them out of business.
• Price lining - Prices are set at various levels so that products are sorted into different categories or product lines based on product attributes.
• Price-off - A price reduction used to entice customers to try a product or expand usage of it. 
• Psychological pricing - A product is priced to psychologically appeal to consumers.
• Skimming - The price is set high to skim off those buyers in the market who are willing to pay a high price for the product.

Pricing strategies (cost based) - Approaches to setting prices based on the cost of producing the product.

• Break-even pricing - Setting the price of a product based on the cost of producing the product so that the seller will break-even.
• Cost-plus pricing - An extension of break-even pricing where the price is based on the cost of producing the product plus a profit margin.
• One-price policy - The same price is charged to all customers who purchase the same quantity of the product under the same conditions.
• Target return pricing - The price is based on a specific rate of return on the capital used in producing and marketing the product.
• Unit pricing - Pricing that is based on a standard measure of quantity.

Pricing strategies (geography based) - Approaches to setting price based on the location and transportation costs associated with delivering the product to the buyer.

• Basing-point pricing - One or more geographic locations are established from which the rate that a buyer is charged is calculated.
• Freight absorption - The price includes the same freight rate as the freight rate of the competitor that is located nearest to the buyer.
• Uniform delivered pricing - The same price level is quoted to all buyers regardless of their location.
• Uniform FOB (free on board) pricing - A price based on pickup at the sellers loading dock. The buyer absorbs any freight charges.
• Zone pricing - The geographic market area is divided into zones. Every buyer in a zone is charged the base price plus the standard freight rate for that zone.

Product - Something produced that is sold to willing buyers.

• Convenience products - Inexpensive and frequently purchased products that consumers want to buy with the least possible effort.
• Product life cycle - A series of stages in the life of a product that begins with commercialization and ends with removal from the market.
• Product line - A group of products that are similar in attributes.
• Product mix - The range of products that a company offers to its customers.
• Product portfolio - A strategic view of a company from the perspective of its range of products and the stage of each product in its life cycle.
• Product re-launch - Finding new markets and new product uses to reinvigorate product sales.
• Rollout - Launching a new product in a series of geographic areas over an extended period of time.
• Specialty products - Products designed for unique markets.

Product distribution - The process of providing a product when and where it is desired by the consumer.

• Exclusive distribution - Where the number of intermediaries is limited to one for each geographic territory.
• Extensive distribution - A distribution program that seeks the widest possible geographic coverage.
• Industrial distributor - An independently owned operation that buys, stocks and sells industrial products.
• Selective distribution - Where there are a limited set of outlets in a given territory.
• Physical distribution - All the activities of distribution from the point of procurement to the ultimate consumer.
• Tying agreement - When the producer forces the dealer to buy additional products in order to secure one highly desired product.

Promotion - Providing and communicating favorable information about a product to potential buyers.

• Advertising - A paid form of communication and promotion involving a product and its attributes. 
• Point-of-purchase promotion - Locating attention-getting information at the place of purchase.
• Promotional discount - A discount is offered to intermediaries for carrying out promotional activities.
• Sales promotion - Techniques used to stimulate current sales.
• Publicity - Product information is communicated through mass media but not paid for.
• Public relations - Activities to communicate a favorable image of a company or its product to promote goodwill.
• Pull strategy - A promotional strategy intended to stimulate demand which will pull products through the distribution system.
• Pulsing strategy - An on-going marketing campaign that is combined with short bursts of heavy advertising.
• Push strategy - A promotional strategy intended to push products through the distribution system and present them to consumers.

Quality control - The traditional approach to quality in which problems are detected after manufacturing and an effort is made to remove sub-standard products before shipping to customers.

Retailing - All activities used to sell products to ultimate consumers.

• Specialty-line retailer - A limited-line retailer that carries only one or two product lines, but offers substantial depth and expertise in those lines.

Selling - Assisting or persuading a prospective customer to buy a product.

• Prospecting - Seeking and identifying potential buyers.

Transaction - An exchange between two or more parties.

Value proposition - How a product will provide value to its customers. Why a product will provide sufficient value to its customers to be worth its price.

Wholesaling - All of the activities involved in selling products to retailers: to industrial, institutional, farm and professional businesses; or to other types of wholesaling intermediaries.

• Broker - A wholesaler whose primary purpose is to supply market information and establish contacts to facilitate sales for clients.
• Full-service wholesaler - A wholesaler who performs a full range of services for its customers.
• Limited-service wholesaler - A wholesaler who performs a limited number of services for its customers.
• Mail-order wholesaler - A limited-service wholesaler that sells by means of catalogs.
• Single-line wholesaler - A full-service wholesaler that carries only one or two product lines.
• Specialty-line wholesaler - A full-service wholesaler that carries a limited number of products for customers with specialized needs.
• Manufacturer’s sales branch - A wholesaling establishment that is owned and operated by a manufacturer separately from its factories.
• Merchant wholesaler - A wholesaling business that is independently owned and takes title to the products it sells.
• Truck wholesaler - A limited-service wholesaler that specializes in selling and delivery services.
• Wholesaler - An intermediary that distributes products primarily to commercial or professional users

 

Don Hofstrand, retired extension value added agriculture specialist, agdm@iastate.edu

Don Hofstrand

retired extension value added agriculture specialist
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