Ch 14 Bus 102
4 categories of consumer goods and services:
1. Convienence goods and services 2. Shopping goods and services 3. Specialty goods and services 4. Unsought goods and services
3 approaches to pricing strategy:
1. Cost-based 2. Demand-based (target costing) 3. Competition-based
6 steps for new product Development Process:
1. Idea generation (based on consumer wants and needs) 2. Product screening 3. Product analysis 4. Development (including building prototypes) 5. Testing 6. Commercialization (bringing the product to the market)
Categories of consumer and industrial goods
1. Installations- consists of major capital equipment such as new factories and heavy machinery. 2. Capital items- expensive products that last a long time. (factory buildings) 3. Accessory equipment- consists of capital items that are not quite as long-lasting or expensive as installations. (computers, copy machines)
4 stages of the product life cycle:
1. Introduction 2. Growth 3. Maturity 4. Decline
4 P's:
1. Pricing (most difficult) 2. Product 3. Place 4. Promotion
A name, symbol, or design that identifies the goods or services of one seller or group of sellers and distinguishes them from the goods and services of competitors.
Brand
How quickly or easily a given brand name comes to mind when a product category is mentioned.
Brand awareness
The value of the brand name and associated symbols.
Brand equity
The degree to which customers are satisfied, like the brand, and are committed to further purchases.
Brand loyalty
A manager who has direct responsibility for one brand or one product line. Called a product manager in some firms
Brand manager
When consumers prefer one brand over another
Brand preference
The linking of a brand to other favorable images.
Brand recognition
The process used to determine profitability at various levels of sales. Formula: Break-even point(BEP)= total fixed costs(FC)/price of one unit(P)-variable costs (VC) of one unit
Break-even analysis
Grouping 2 or more products together and pricing them as a unit.
Bundling
Promoting a product to distributors and retailers to get wide distribution, and developing strong advertising and sales campaigns to generate and maintain interest in the product among distributors and consumers.
Commercialization
A pricing strategy based on what all the other competitors are doing. The price can be set at, above, or below competitor's prices.
Competition-based pricing
Taking a product idea to consumers to test their reactions.
Concept testing
Products the consumer want to purchase frequently and with minimum of effort. Ex: candy, gum, snacks
Convienence goods and services
Products that don't carry the manufacturer's name but carry a distributor or retailer's name instead.
Dealer (private-label) brands
Recognizing that different consumers may be willing to pay different prices, marketers sometimes price on the basis of consumer demand rather than cost or some other calculation.
Demand-oriented pricing
Handing off various parts of your innovation process-often to companies in other countries.
Distributed product development
Setting prices lower than competitors and then not having any special sales.
Everyday low pricing (EDLP)
The name for a whole product category.
Generic brand
Nonbranded products that usually sell at a sizeable discount compared to national or private-label brands.
Generic goods
Setting prices that are higher than EDLP stores, but having many special sales where the prices are lower than competitors.
High-low pricing strategy
Products used in the production of other products. Sometimes called business goods or B2B goods.
Industrial goods
Illegal copies of national brand-name goods.
Knock-off brands
When supermarkets advertise certain products at a below cost to attract people to store.
Loss leaders
The brand names of manufacturers that distribute products nationally.
Manufacturers' brands
Strategy in which a product is priced low to attract many customers and discourage competition.
Penetration strategy
The strategy by which one or more dominant firms set the pricing practices that all competitors in an industry follow.
Price leadership
Making cost estimates and sales forecasts to get a feeling for profitably of new product ideas.
Product analysis
The creation of real or perceived product differences.
Product differentiation
A theoretical model of what happens to sales and profits for a product class over time.
Product life cycle
A group of products that are physically similar or are intended for a similar market
Product line
The combination of product lines offered by a manufacturer.
Product mix
Reduces the number of new-product ideas a firm is working on at any one time so it can focus on the most promising.
Product screening
Pricing goods and services at price points that make the product appear less expensive than it is.
Psychological pricing
Applies criteria to determine whether the products fits well with present products, has good profit potential, and is marketable.
Screening
Products the consumer buys only after comparing value, quality, price, and style from a variety of sellers.
Shopping goods and services
Strategy in which a new product is priced hgih to make optimum profit while there's little competition.
Skimming price strategy
Consumer products with unique characteristics and brand identity. Ex: watches, jewelry, fur coats
Specialty goods and services
Designing a product so that it satisfies customers and meets the profit margins desired by the firm
Target costing
All the expenses that remain the same no matter how many products are made or sold.
Total fixed costs
Everything that consumers evaluate when deciding whether to buy something AKA: value package
Total product offer
A brand that has exclusive legal protection for both its brand name and its design.
Trademark
Products consumers are unaware of, haven't necessarily thought of buying, or suddenly find they need to solve an unexpected problem.
Unsought goods and services
Good quality at a fair price. When consumers calculate the value of a product, they look at the benefits and then subtract the cost to see if the benefits exceed the costs.
Value
Costs that change according to the level of production.
Variable costs