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
