Chapter 14 Developing and Pricing Goods and Services

Industrial Goods

(sometimes called business goods or B2B goods) are products used in the production of other products.

The product life cycle is a valuable tool for:

1. Anticipating market developments 2. Planning marketing strategies 3. Adjusting the marketing mix

Companies ususaly offer a product line instead of just one product to:

1. Appeal to simlilar consumers 2. Meet the competition 3. Tailor their offerings more closely to consumer wants

Packaging carries more of the promotional burden today than in the past, when most products were sold through direct sales. The change from using salespersons to using self-service outlets has put more responsibility on packaging for:

1. Promotional Messages 2. Pricing Information

The value of a product is defined as good _______ at a fair __________

1. Quality 2. Price

Total Fixed Costs

All the expense that remain the same no matter how many products are made or sold

Dealer (private-label) brands/Private-label brands

Are products that don't carry the manufacturer's name but carry a distributor or retailer's name instead.

Shopping Goods and Services

Are products the consumer buys only after comparing, value, quality, price, and style from variety of sellers. Examples: Dishwashers and Automobiles

Product Analysis

Comes after product screening, and basicially means making cost estimates and sales forecasts to get a feeling for the profitability of new-product ideas

Out of the following which are industrial goods? 1. Computer Servers 2. Drill Press 3. Cosmetics 4. Insurance policies for long term care

Computer Servers/Drill Press

Taking a product idea to consumers to test their reaction is called:

Concept testing

Variable Costs

Costs that change according to the level of production

Penetration Strategy

Enables the firm to penetrate or capture a large share of the market quickly

Product Life Cycle

Four Stages: 1.) Introduction 2.) Growth 3.) Maturity 4.) Decline

Product Differentiation

Is the creation of real or perceived product differences.

Generic name

Is the name for a whole product category

Psychological Pricing

Means pricing goods and services at price points that make the product appear less expensive than it is.

Skimming Price Strategy

Prices a new product high to recover research and development costs and make as much profit as possible while there's little competition.

The _____________ is an illustration of the theoretical movement in sales and profits for a product class over time

Product Life Cycle

The Combination of product lines offered by a manufacturer is called the

Product Mix

Commercialization

Promoting a product to distributors and retailers to get wide distribution and developing strong advertising and sale campaigns to generate and maintain interest in the product among distributors and consumers

A radio frequency identification chip is a method of tracking products and is more commonly known as a _______

RFID

Everyday low pricing (EDLP)

Setting prices lower than competitors and then not having any special sales

High-Low Pricing strategy

Setting prices that are higher than EDLP stores but having many special sales where the prices are lower than competitors prices

Skimming price strategy

Strategy in which a new product is priced high to make optimum profit while there's little competition

Recognizing what stage of its life cycle a product is in has a direct impact on marketers' decisions about:

The Marketing Mix

Manufacturers' Brands

The brand names of manufacturers that distribute products nationally. Example: Sony, Dell, and Xerox

Target Costing

Unlike cost-based pricing, target costing is demand based. That means we design a product so it not only satisfies customers but also meets the profit margins we've set.

Marketers must continually adapt products to new ________

competition

Total Product Offer

consists of everything consumers evaluate when deciding whether to buy something

Value

good quality at a fair price

Product Line

is a group of products that are physicially similar or intended for a similar market