Principles of Marketing - Test 2

idea generation

John's fascination for his grandmother's sherbet recipes inspired him to come up with a recipe for SherBetter, a gourmet sherbet for the American market. Which stage of the new product development process does this exemplify?

125,000 = fixed/(price - variable costs)

Mansfield Pharmaceuticals markets Zipro, an antibiotic. The firm has fixed costs of $1,000,000 and variable costs of $2 per bottle of 50 tablets priced at $10 per bottle. What is the break-even volume?

idea generation

New product development starts with _____

everyday low

Retailers such as Costco and Walmart charge at a constant, daily low price with few or no temporary price discounts. This is an example of _____ pricing

product

When Heinz introduced EZ Squirt packaging and new colors such as Blastin Green and Awesome Orange to revitalize consumer buying, the company was modifying the _________

harvest

When Kraft focused on cost cutting with its older, established brands, leaving them to wither without much investment or modification, Kraft decided to ____ the older products

good-value

When McDonald's and other fast food restaurants offer "value menu" items at surprisingly low prices, they are most likely using _____ pricing

modifying the product, market, or marketing mix

When a product is in the maturity stage, the company should most likely consider ____

introduction

Which of the following stages of the PLC is characterized with high promotional expenditures that result from an effort to create consumer awareness?

overcapacity

Which of the following would lead to greater competition in the maturity stage of the PLC?

maturity

Which stage in the PLC normally lasts longest and poses strong challenges to marketing managers?

growth

Which stage of the product life cycle is characterized by rapid market acceptance and increasing profits?

price

______ is the only element in the marketing mix that produces revenue

price elasticity

______ refers to a measure of the sensitvitiy of demand to changes in price

style

a basic and distinctive mode of expression

fashion

a currently accepted or popular style in a given field

demand curve

a curve that shows the number of units the market will buy in a given time period, at different prices that might be charged

product concept

a detailed version of the new product idea stated in meaningful consumer terms

FOB(free on board)-origin pricing

a geographical pricing strategy in which goods are placed free on board a carrier; the customer pays the freight from the factory to the destination

uniform-delivered pricing

a geographical pricing strategy in which the company charges the same price plus freight to all customers, regardless of their location

zone pricing

a geographical pricing strategy in which the company sets up two or more zones; all customers within a zone pay the same total price; the more distant the zone, the higher the price

freight-absorption pricing

a geographical pricing strategy in which the seller absorbs all or part of the freight charges in order to get the desired business

basing-point pricing

a geographical pricing strategy in which the seller designates some city as a basing point and charges all customers the freight cost from that city to the customer

price elasticity

a measure of the sensitivity of demand to changes in price

business analysis

a review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the company's objectives

discount

a straight reduction in price on purchases during a stated period of time or of larger quantities

fad

a temporary period of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity

cost-plus pricing (markup pricing)

adding a standard markup to the cost of the product

dynamic pricing

adjusting prices continually to meet the characteristics and needs of individual customers and situations

marketing strategy development

designing an initial marketing strategy for a new product based on the product concept

product development

developing the product concept into a physical product to ensure that the product idea can be turned into a workable market offering

target costing

pricing that starts with an ideal selling price, then targets costs that will ensure that the price is met

customer value-based pricing

setting price based on buyers' perceptions of value rather than on the seller's cost

break-even pricing (target return pricing)

setting price to break even on the costs of making and marketing a product, or setting price to make a target return

competition-based pricing

setting prices based on competitors' strategies, prices, costs, and market offerings

cost-based pricing

setting prices based on the costs of producing, distributing, and selling the product plus a fair rate of return for effort and risk

geographical pricing

setting prices for customers located in different parts of the country or world

product line pricing

setting the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors' prices

external sources

sources outside the company such as customers, competitors, distributors, suppliers, and outside design firms

promotional pricing

temporarily pricing products below the list price, and sometimes even below cost, to increase short-run sales

concept testing

testing new product concepts with a group of target consumers to find out if the concepts have strong consumer appeal

price

the amount of money charged for a product or service, or the sum of the values that customers exchange for the benefits of having or using the product or service

acquisition

the buying of a whole company, a patent, or a license to product someone else's product

internal sources

the company's own formal research and development, management and staff, and intrapreneurial programs

product life cycle (PLC)

the course of a product's sales and profits over its lifetime

new product development

the development of original products, product improvements, product modifications, and new brands through the firm's own product development efforts

experience curve (learning curve)

the drop in the average per-unit production cost that comes with accumulated production experience

optional-product pricing

the pricing of optional or accessory products along with a main product

introduction stage

the product life cycle (PLC) stage in which a new product is first distributed and made available for purchase

decline stage

the product life cycle (PLC) stage in which a product's sales fade away

maturity stage

the product life cycle (PLC) stage in which a product's sales growth slows or levels off

growth stage

the product life cycle (PLC) stage in which a product's sales start climbing quickly

test marketing

the stage of new product development in which the product and its proposed marketing program are tested in realistic market settings

total costs

the sum of the fixed and variable costs for any given level of production

idea generation

the systematic search for new product ideas

product image

the way consumers perceive an actual or potential product

value-based pricing

uses the buyers' perceptions of value rather than the seller's cost

elastic demand

when demand changes greatly with a small change in price

inelastic demand

when demand hardly changes with a small change in price

Sellers spend little time on marketing strategy

What is true of a pure competitive market?

facility rental payments

What is likely a fixed cost?

attach value-added features and services to differentiate their offers and justify their prices

Companies that adopt value-added pricing ______

customer-oriented

Effective _____ pricing involves understanding how much value consumers place on the benefits they receive from the product and setting a price that captures that value

acquisition

Electron Corp. purchased Proton Corp. by buying all of its assets and ownership equity. This is an example of ____

elastic

If demand changes greatly with a small change in price, the demand is _______

$300 = (270/x = 90/100)

Samsung Mobile plans to launch a new phone with a unit cost of $270 and wants to earn a 10 percent markup on its sales. Samsung's markup price is ________

repositioning

Some products that have entered the decline stage have been cycled back to the growth stage through ____

products and markets work

The PLC concept can be applied by marketers as a useful framework for describing how ______

260,000 = (40+12)*5000

The fixed cost in manufacturing a single LED monitor is $40 and the variable cost is $12. If the company expects to manufacture 5,000 monitors, the total costs would be _______

cost-plus

The simplest pricing method is ________ pricing

target consumers

What group do marketers involve for the process of concept testing new products?

good-value pricing

What involves introducing less-expensive versions of established, brand-name products

new product development

What is a significant challenge presented by the product life cycle?

product idea

an idea for a possible product that the company can see itself offering to the market

RWW screening framework

an idea screening process in which the company asks three questions: is it real, can we win, and is it worth doing

value-added pricing

attaching value-added features and services to differentiate a company's offers and charging higher prices

everyday low pricing (EDLP)

charging a constant everyday low price with few or no temporary price discounts

high-low pricing

charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items

product bundle pricing

combining several products and offering the bundle at a reduced price

marketing strategy statement

consists of target market description, value proposition planned, and the sales, market-share, and marketing mix

fixed costs (overhead)

costs that do not vary with production or sales level

variable costs

costs that vary directly with the level of production

commercialization

introducing a new product into the market

crowdsourcing

inviting broad communities of people (customers, employees, independent scientists and researchers, and even the public at large) into the new product innovation process

predatory pricing

legislation that prohibits selling below cost with the intention of punishing a competitor or gaining higher long-term profits by putting competitors out of business

price fixing

legislation that requires sellers to set prices without talking to competitors

team-based new product development

new product development in which various company departments work closely together, overlapping the steps in the product development process to save time and increase effectiveness

customer-centered new product development

new product development that focuses on finding new ways to solve customer problems and create more customer satisfying experiences

good-value pricing

offering just the right combination of quality and good service at a fair price

Robinson-Patman Act

prevents unfair price discrimination by ensuring that the seller offers the same price terms to customers at a given level of trade

reference prices

prices that buyers carry in their minds and refer to when they look at a given product

psychological pricing

pricing that considers the psychology of prices and not simply the economics; the price is used to say something about the product

allowance

promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer's products in some way

idea screening

screening new product ideas to spot good ones and drop poor ones as soon as possible

segmented pricing

selling a product or service at two or more prices, where the difference in prices is not based on differences in costs

international pricing

sets prices in a specific country based on many factors

market-skimming pricing (price skimming)

setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales

market-penetration pricing

setting a low price for a new product in order to attract a large number of buyers and a large market share

by-product pricing

setting a price for by-products in order to make the main product's price more competitive

captive-product pricing

setting a price for products that must be used along with a main product, such as blades for a razor or games for a video-game console