3.01 Vocabulary
PRODUCT ITEM
Each individual good, service, or idea that a business offers for sale.
Price Discrimination/Differentiation
Exists when sales of identical goods or services are transacted at different prices from the same provider
Variable Expenses
Expenses that change from one month to the next depending on the needs of the business; production costs, raw material, distribution costs, advertising
Bait and Switch Advertising
First, customers are "baited" by advertising for a product or service at a low price; second, the customers discover that the advertised good is not available or the sales person disparages the advertised item and customers are "switched" to a higher priced product.
PRICING OBJECTIVES
Goals a company hopes to accomplish through its pricing strategies.
Price Objectives
Goals a company hopes to achieve through it pricing decisions
PRICE CONTROL(S):
Government restrictions on the minimum and/or maximum prices of certain products
PRODUCT POSITIONING
In a sponsorship agreement, the sponsor's privilege of having its goods or services used at the event.
PLACE (DISTRIBUTION
Marketing element focusing on considerations in getting a selected product in the right place at the right time.
PROMOTION DECISIONS
Marketing element referring to selection of the various types of communications that marketers use to inform, persuade, or remind customers of their products.
PRODUCT DECISIONS
Marketing element referring to what goods, services, or ideas a business will offer its customers.
Sales Income/Revenue
Money coming into the business from the sale of goods or services
Price
Money value of good or service; amount charged to customers in exchange for goods and services; communicates value to customers and profit to business owners
Pricing Variations
Off-peak' pricing, early booking discounts, etc.
Monopoly
One seller who dominates many buyers. The monopolists can use his market power to set a profit-maximizing price.
Predatory Pricing
Practice of selling a product or service at a very low price, intending to drive competitors out of the market
Unit Pricing
Prices are stated in terms of standard unit of measure
Quantity Discounts
Received by buyers for placing large orders
Special Event Pricing
Sales events designed to attract customers & encourage purchases; items are reduced in price for a short period of time; "back to school sale."
Promotional Pricing
Selling a product at a temporarily lower price to attract customers; pricing products at low levels and then heavily advertising them; 2 kinds - loss leaders & special event pricing
Price Lining
Setting a limited number of prices for a line of products; establishing price points between products in a product line; used to communicate differences in quality and/or service to consumers
Prestige Pricing
Setting higher than average prices to suggest status, quality or exclusiveness. Customers equate high price with high quality. This technique sets a higher-than average price for products to communicate quality and status
Psychological Pricing
Techniques that create an illusion for customers or make shopping easier; Used by organizations that believe that customers base their perceptions of products on price & that these perceptions affect buying decisions; to get a customer to respond on an emotional, rather than rational basis
PROMOTING
The act of communicating information about products, services, images, or ideas tocustomers or clients.
Selling Price
The amount a seller charges the purchaser for a good or a service
PRODUCT DECISION
The decision a customer makes on the brand, type, model, etc., to buy.
PRICE DECISION
The decision a customer reaches on the price s/he is willing to pay for a good or service.
PLACE DECISION
The decision to buy from a certain business
PRODUCT DEVELOPMENT
The efforts involved in the creation of a new product. The stage in the creation of a new product in which a working model may be tested, modified, and retested; production costs are estimated and final details of the product are planned, e.g., label, promotion, and distribution.
Profit
The money a business earns after all costs and expenses have been paid
PRODUCT MIX
The particular assortment of goods and services that a business offers to meet the needs of its market(s) and its company goals.
PRODUCT/SERVICE MIX
The particular assortment of products that a business offers in order to meet the needs of its markets and its company goals.
Deceptive Pricing
The pricing of goods and services in such a way as to cause a customer to be misled; an example of deceptive pricing is bait-and-switch.
PRODUCT LIABILITY
The producer's responsibility for any injury that the business's products may cause.
DECLINING STAGE
The product life cycle stage in which sales and profits fall rapidly.
MATURITY STAGE
The product life cycle stage in which sales peak and then increase at a slower rate or start to decline
GROWTH STAGE
The product life cycle stage in which sales rise rapidly
INTRODUCTORY STAGE
The product life cycle stage when the product first appears in the marketplace.
PRODUCT RECALL
The removal from the marketplace of a product that is defective or hazardous to consumers.
PRODUCT ELIMINATION
The removal of a weak product from the market and from the company's product mix, also known as product discontinuation.
PRODUCT LIFE CYCLE
The stages through which goods and services move from the time they are introduced on the market until they are taken off the market.
OBSOLESCENCE
The state of being outmoded or unfashionable. Becoming outdated because of advances in technology. Becoming outdated due to the introduction of new products, processes, and/or technology.
PRODUCT-MIX STRATEGIES
The ways in which businesses handle, or manage, their product mixes.
DEPTH
Under one product how many sub-products company provides or how many varieties company have for that product
Price Competition
Using price as a means to attract customers
Oligopoly
Where are relatively few competitive companies dominate the market while each large firm has the ability to influence market prices the unpredictable reaction from the other giants makes the final industry price in determinate. Cartels are often formed.
Brand symbol
a distinctive symbol that represents the company or product.
Markdown
actual reductions in selling price.
Markup pricing
adding an amount (markup) to the cost of goods to reach a selling price; the simplest pricing method; usually a percentage of cost.
Cost plus pricing
all costs & expenses are added to the desired profit to determine the selling price.
Brand licensing
allows one company to use another's brand name, logo, or character for a fee.
Automated pricing
allows the programmer to set the qualifications and then the system awards the targeted price when the conditions have been met.
National brand
also know as manufacturer's brand - is one that represents the manufacturer has assumed all responsibility of branding.
Private/distributor brand
also known as store brand, is a brand owner by an intermediary or store. Examples, Radio Shack batteries;, Great Value Macaroni & Cheese
Brand strategies
are actions that need to be taken with an established brand to accomplish its goals.
Generic brand
are unbranded products that are plainly packaged, have lower or standard quality, are sold at lower prices than branded products, and receive little or no promotion.
Demand oriented pricing
based on what current consumers are willing to pay for good/service.
Cost oriented pricing
businesses first determine the cost of producing or marketing the product and then add their desired profit; expenses are calculated separately for each individual item.
One price policy
consumers generally do not negotiate pricing; all customers are charged the same price for a product.
Fixed expenses
costs that remain the same from one month to the next; rent, computer leasing, salaries, insurance, phone service.
Flexible price policy
customers are allowed to bargain for merchandise; consumer can negotiate on the final cost; encourages customers to bargain with sellers to obtain the best price; aka "variable pricing policy."
Brand
design, symbol, term, or word that identifies a company or product
Positioning
developing a specific marketing mix to influence potential customers' overall perception of a brand, product line or organization in general.
Geographic pricing
different prices for customers in different parts of the world.
Odd-even pricing
idea that prices ending in odd digit convey a bargain image ($79.99; .99;) and those that end in even digits convey an image of quality ($100; $50).
Penetration pricing
initial price for product is set very low; setting a low price on a new product; Setting a low price to motivate customers to purchase when introducing a product into a competitive market and attempting to gain customer trial.
Individual branding
involves using different brands for products owned by one company.
Product brand
is a name, term symbol or design (or combination of them) that identifies a product and distinguished it from competitors.
Brand extensions
is when a brand name is used for a new or improved product line.
Brand recognition
is when consumers become aware of a brand and know a bit about it.
Cost to produce
materials, labor, research & development, distribution/shipping, packaging, overhead, etc.
Expenses
money which must be paid out in order to operate the business.
Co-branding.
occurs when companies join forces to increase recognition, customer loyalty, and sales of both brands.
Cash discounts
offered to customers to encourage them to pay their bills quickly.
Trade character
personified symbol to represent brand name
Competition oriented pricing
prices are set on the basis of what competitors charge.
Loss leaders
pricing products near or below cost to attract customers; purpose is to increase customer traffic, thus increase sales of profitable items.
Brand name
recognizable brand with high level of brand equity
Discount pricing
reduction from list price.
Competition
rivalry between two or more businesses for scarce consumer dollars.
Fixed pricing
same pricing to all customers no matter how many (quantity) are purchased.
Operating expenses
the costs of running the business.
Net profit
the difference between the selling price and ALL costs/expenses (generally 1% - 5%); income - cost of goods sold - operating costs/expenses = net profit/loss.
Gross profit
the difference between the selling price and the cost of goods sold (also called gross margin).
Break even point
the point at which sales revenue equals the cost and expenses of making a distributing a product; there is no profit here.
Dumping
the practice of is any kind of predatory pricing, especially in the context of international trade. It occurs when manufacturers export a product to another country at a price either below the price charged in its home market, or in quantities that cannot be explained through normal market competition.
Competitive Advantage
the set of unique features of a company and its products that are perceived by the target market as significant and superior to the competition.
Cost of goods sold
the total amount spent to produce or buy the goods sold (largest single factor in establishing retail price of item).
False/ deceptive advertising
the use of false or misleading statements in advertising. As advertising has the potential to persuade people into commercial transactions that they might otherwise avoid. examples of deceptive pricing are Savings claims, price comparisons, "special" sales, "two-for-one" sales, "factory" prices, or "wholesale" prices.
Market position
unique image of a product or service in a consumer's mind relative to similar competitive offerings.
Optional product pricing
used for incremental sales.
Non-price competition
using factors other than price to attract customers - ie CRM.
Brand preference
when consumers prefer to purchase a certain product brand based on their positive experience with the brand.
Brand insistence
when the consumer insist on "their" brand and will not accept substitutes.
Family branding
- involves using the same brand for related products in a product line.
DEEP PRODUCT MIX
: A description of the depth of a business's product mix offering a great many items in the product line.
PRODUCT BRAND
: A name, term, symbol, or design (or combination of them) that identifies a product and distinguishes it from competitors products.
PRODUCT DIFFERENTIATION
: A strategy for making a product appear different from similar products on the market.
PRICE COMPETITION
: A type of rivalry between or among businesses that focuses on the use of price to attract scarce customer dollars.
Perfect Competition
: Many buyers and many sellers all dealing in an identical product. Neither producer nor user has any market power and both must accept the prevailing market price
PLACE
: Marketing element focusing on considerations in getting a selected product in the right place at the right time
PRODUCT-RELATED SERVICES
: Services that are offered with a product such as maintenance, delivery, or repair.
PRODUCT MANAGEMENT
A career that involves monitoring and developing one or more existing products.
PROMOTIONAL MIX
A combination, or blend, of marketing communication channels that a business uses to send its messages to consumers (i.e., advertising, sales promotion, personal selling, and publicity).
PROMOTIONAL PLAN
A framework for the promotional activities of a business.
PRODUCT LINE
A group of related product items.
PRODUCT POLICY
A guideline affecting the kinds of goods and services that businesses offer to customers.
PROMOTIONAL POLICY
A guideline affecting the kinds of special activities, such as contests and prizes, that businesses use to attract customers and to increase sales.
PRICE POLICY
A guideline regulating the range of prices for goods and services that businesses offer to customers.
Monopolistic competition
A large number of suppliers offer similar, but not identical products. The similarities ensure elastic demand whereas the slight differences give some monopolistic power to the supplier.
PROMOTION
A marketing function needed to communicate information about goods, services, images, and/or ideas to achieve a desired outcome. Marketing element referring to the various types of communications that marketers use to inform, persuade, or remind customers of their products.
PRODUCT/SERVICE MANAGEMENT
A marketing function that involves obtaining, developing, maintaining, and improving a product or service mix in response to market opportunities.
PRICING
A marketing function that involves the determining and adjusting of prices to maximize return and meet customers' perceptions of value.
PRICE SKIMMING
A pricing strategy that involves setting prices higher than those of the competition.
WIDTH
A product mix dimension referring to the number of product lines carried by a company.
Skimming Price
A very high price is set on the product initially; Setting a high price to capitalize on demand when introducing a product that has little competition and will appeal to customers who like to be the first to have the latest products
Targeting Pricing
Allows a company to charge different prices to new customers it is trying to entice than to established customers who need no other incentive to by the company's brand
PRODUCT MANAGER
An individual who monitors one or more existing products and develops new Products
Price Fixing
Collaborating with other companies (competitors) to set prices for a company's products; agreement among competitors to raise, fix, or otherwise maintain the price at which their goods or services are sold, price fixing is illegal
PRODUCT STANDARDS
Criteria for determining a product's ability to meet specified guidelines or requirements.
