Marketing Midterm #2

Unique Selling Proposition

1) Each advertisement must make a proposition to the customer. Not just words, not just product puffery, not just show-window advertising. Each advertisement must say to the reader, "Buy this product, and you will get this specific benefit." 2) The proposition must be one that the competition either cannot, or does not, offer. It must be unique -- either a uniqueness of the brand or claim not otherwise made in that field of advertising. 3) The proposition must be so strong that it can move the masses, that is, pull new customers over to the product. When writing this, try filling in the blanks with the following sentences. [Product name] competes in [product category] and provides [biggest benefits] to [customer identity] when they are [buying situation]. [Product name] unlike [main competitors] is unique because it provides [element of differentness].

Branding

A brand is the "name, term, design, symbol, or any other feature that identifies one seller's goods or service as distinct from those of other sellers" (American Marketing Association). So the key advantage for sellers is that branding allows them to distinguish their products from all others. For buyers, branding helps them identify products they wish to buy again and avoid those they do not. Branding changes and elevates the focus of many marketers. Brands say "join me," where in the past, many marketing campaigns have simply said "buy me."

Experiential Brand

A unique, engaging experience Product and place (delivery and service) Consumer Needs: Self-actualization needs, moderate to high involvement

Demographic Segmentation

Age, gender, family size and life cycle, race, occupation, income

Idea Generation

All great products are solutions to problems. So marketers begin the new product development process by considering the problems customers are trying to solve. Where is the pain in the market? The pain is found by observing customer frustration, either firsthand, or by others. Marketers seek to generate new product ideas, that is, solutions to problems, from a variety of sources including internal and external sources. Within the company, marketers turn to the research and development (R&D) department, company databases, and employees--from sales people to engineers to manufacturing personnel--to help generate ideas. Outside the company, marketers observe customer pain firsthand or learn about customer pain from distributors, suppliers, and even competitors.

Idea Screening

Although ideas can be eliminated during any stage of the process, the idea screening stage provides a formalized process for qualifying ideas. Companies may receive hundreds or thousands of ideas each year through the idea generation stage. Prior to testing ideas with customers, however, the company screens all ideas to ensure that they fit with the organization's objectives and resources. A key objective in this stage is to minimize decision error. Marketers do not want to "miss the boat" (reject a good idea, Type I error in statistics), yet at the same time, they do not want to "sink the ship" (accept a bad idea, Type II error in statistics).

Substitutes

Because substitute products may provide similar benefits, consumers consider product prices in light of substitutes. For example, consumers consider the price of butter in comparison with the price of margarine. Southwest Airlines even made a business out of substitute comparison. The airline offers cheap flights with fewer accommodations than what other airlines offer in order to encourage customers to consider flying Southwest as a substitute to driving.

Developing Brand

Brand Awareness Brand Image Brand Loyalty Brand Equity

Competitors

Certainly, prices of competing products affect consumers' perceived value. Few companies are immune to competition. Consumers assess a product's value in comparison to that of competing products. Companies must stay within a certain price range of their competitors.

Marketing Efforts

Consumers' perceptions of value can be influenced by the seller's marketing efforts. Marketers seek to increase perceived value by understanding the benefits desired by particular consumers, and then creating a customized marketing mix—product, place, price, and promotion—for that set of consumers. For example, product quality, brand name, channels of distribution, and service levels can influence perceived value.

The Diffusion Process (another form of market segmentation)

Describes how potential customers learn about new products, try them, and adopt or reject them. Rogers (1962) categorized adopters on the basis of relative time to adoption of the innovation based on individual differences. People differ markedly in their readiness to try new products.

Image Brand

Desirable image Marketing Mix Emphasis: Promotion Consumer Needs: Social and esteem needs, moderate to high involvement

Early adopters.

Estimated at 13.5% of the population, early adopters are the first to follow innovators' lead. They are a well-educated group of people, waiting for a green light from innovators before pulling the purchase trigger.

Laggards.

Estimated at 16% of the population, laggards are highly skeptical of innovations. They resist change. Laggards buy new products only when all of their favorite, old alternatives are no longer available.

Innovators

Estimated at 2.5% of the population, these people are the first to try new ideas. They usually have more money and education than the general population, as well as a higher-than-average tolerance for risk.

Early majority.

Estimated at 34% of the population, early majority people buy products that have proven to be successful. The product must complement their way of life rather than redefine their way of life. First-hand sampling is important to the early majority as is observing others using the product.

Late Majority

Estimated at 34% of the population, late majority people are more risk averse than average consumers. They are skeptical of innovations and buy new products when they are the only reasonable alternative due to low price or easy availability.

Naming a Brand

Experience shows that a great brand name can be a significant awareness builder when launching successful products. Marketers have also observed that not all brand names are created equal, and they have developed their own unique way of sorting out winners and losers. Backed with the clout of enough money, any brand name can be made memorable. But true winners stick with consumers and generate word of mouth without having to be pounded into consumers' minds with millions of advertising dollars. The quality of a brand name depends on multiple factors. Great brand names like Häagen-Dazs are invented, not borrowed. In addition, such brand names evoke strong emotion and spark personal connections that endure year in and year out. Häagen-Dazs is an invented word, yet it has a rich and sophisticated European ring to it. Because it is invented, there are no conflicts with existing trademarks or brand names. Because it is invented, the brand name does not carry any negative baggage; it conveys only the positive emotional meaning marketers have created. Good brand names like STAINMASTER are engineered from existing words. The name is not invented, but it cannot be found in the dictionary either. These brand names might not create as strong of an emotional connection as invented names like Häagen-Dazs, but they are very clear on what the functional benefits of the brand are. When we see the name STAINMASTER Carpet, we recognize that this product is carpeting that masters stains. Similarly, brands such as Energizer, Pizza Hut, Dunkin' Donuts, and Rice Krispies have well-engineered brand names made from existing words. Brand names that are acronyms such as IBM, UPS, and AT&T as well as brand names that are personal names such as Honda, Howard Miller, and Pulte are challenging, because on their own, the brand names do not convey any particular meaning. But with enough energy, money, and good marketing, they certainly can become good brand names. The worst brand names have a dark magic of their own; they evoke negative thoughts and can result in failed products. For example, the brand name iSmell, an unsuccessful personal scent synthesizer for internet odors evokes thoughts of personal body odor. Arch Deluxe, an unsuccessful grown-up hamburger from McDonald's evokes thoughts of something sinister. Ben-Gay Aspirin, an unsuccessful analgesic pill evokes thoughts of swallowing smelly Ben-Gay cream rub. The list of bad brand names goes on: Cocaine Energy Drink, Colgate Kitchen Entrees, Frito-Lay Lemonade, and Harley-Davidson Perfume are also in the stinker-brand-name hall of fame.

Fox

Fox service providers excel on the productivity dimension but perform poorly on service quality.

Types of Brands

Functional Image Experiential

Ways to Segment:

Geographic Demographic Psychographic Behavioral

Percent Margin

HP sells its brand new laptop to Costco for $550 and Costco resells the laptop at $1,000. What is the percent margin on the laptop for Costco? a) 45% (1000-500)/1000 = 45% Percent Margin = Price - Unit Variable Cost / Price

Ways to Position

How are you just as good as the competition How you beat all the competition How you are loved by popular people How you fit consumers' lifestyles How you deliver what is most valued The seller must value-position the brand.

Concept Testing

Ideas that pass the screening stage receive additional attention so that the idea becomes a concept customers can understand. This is the most critical stage in the process because this is the first time the idea is tested with customers. Marketers present the concept to a sample of potential customers and observe their reactions. Marketers then ask customers, "What do you like about the concept?" "What do you not like about the concept?" "How can it be made better?" "If this product was made available at an appropriate price, would you buy it?" Marketers receive a lot of important information during concept testing.

Marketing Strategy

If a product appears to have potential after going through the concept testing stage, the next step is to design an initial marketing strategy for the product. Marketing strategy consists of two parts: (1) the target market and (2) the marketing mix. The target market includes a profile of potential customers along with the various usage situations for the proposed product. The marketing mix represents a detailed description of the appropriate product, price, promotion, and distribution, customized for the identified target market.

Business Analysis

In this stage, marketers attempt to make the business case for the concept. Profit projections, including sales forecast and costs estimates, provide useful information for evaluating the product's future potential. This information is compared to company objectives to determine whether the new product idea should move to the next stage. Legal issues, such as patents and copyrights, are considered for protecting the company's intellectual property.

Decline Stage of Product Life Cycle

In this stage, marketing managers must make a decision regarding whether to rejuvenate a product or let it die. Honda rejuvenated the declining motorcycle product category in the United States when it introduced the Honda Super Cub. Sales of Honda's small, rider-friendly motorcycle quickly eclipsed sales of all other motorcycles of the day because it expanded the market to a completely different, and much bigger, group of consumers. Conversely, US vacuum tube manufacturers like RCA and Tung-Sol shut down manufacturing facilities and decided to let their vacuum tube products die when transistors were introduced. These manufacturers reasoned that vacuum tubes would not be purchased once the superior technology of the transistor was adopted.

Maturity Stage of Product Life Cycle

In this stage, marketing managers seek to maximize profit by harvesting product loyalty. Prices may be increased on low-involvement, high-loyalty products. Marketing budgets will decline as less and less is spent on marketing promotion.

Introduction Stage of Product Life Cycle

In this stage, the product is introduced to the market. Sales are typically low and profits are negative, zero, or low because of the firm's investment in product introduction. The objective in this stage is to build product awareness and consumer experience with the product. Advertising, social media campaigns, product sampling, and product demonstration tours are tools helpful at the introduction stage.

Measurable

Individuals can be assigned to a segment and counted

Accessible

Individuals in the segment can be reached through the company's promotion and distribution channels.

Reference Prices

Internal and external reference prices influence consumers' perceived value of products.External reference price is what everyone else is paying for the product. Consumers look around and notice what others are paying for particular products and services. Internal reference price is what consumers think they should pay for the product, given their past experience and the buying situation. Bob Barker, the long-time host of Price is Right game show, reflected on the success of the show: "Everyone identifies with prices. When we bring out something and offer it for bids, you think, 'That bid's too high,' or 'that's a good bid.' Whatever you think, you're involved. That is one of the reasons we've been able to survive for so many years."

Kitten

Kittens lag far behind on both dimensions.

Psychographic Segmentation

Lifestyle, personality, attitudes, values

Chapter 8

Market Segmentation, Targeting, and Positioning

Brand Valuation Approaches

Market-based - Valuation is based on an estimation of the amount for which a brand can be sold. Income-based - Valuation is based on the future net revenues directly attributable to the brand, discounted to the present value using an appropriate discount rate. Formulary - Valuation is based on multiple criteria such as: Profitability Leadership Stability Market Internationality Trend Support Protection

Levels of a Product

Marketers consider products on three levels: the core product, the actual product, and the augmented product (Figure 9-1). The core product is the benefit that makes the product valuable to the buyer. How does the product help the consumer solve a problem or capitalize on an opportunity? The actual product is the tangible part of the product—the bundle of tangible characteristics and features that define the product and set it apart from competitors. The augmented product represents the services that complement the actual product and core product; that is, complementary products like warranties, service contracts, and product assistance.

Inseparability

Marketing Problem: Consumer and provider are part of the service Marketing Solution: - People - Care and quality - Personal attention

Perishability

Marketing Problem: Services cannot be stored Marketing Solution - Predict demand fluctuation - Balance supply and demand

Variability

Marketing Problem: Services depend on who provides them and when and where they are provided Marketing Solution: - Process - Standardization - Training

Intangibility

Marketing Problem: Services cannot easily be displayed or communicated Marketing Solution: - Tangible cues - Physical Environment

Profit equation and its components

Marketing's role within a firm is to create and deliver value to a firm's chosen customers. Creating and delivering value enables a firm to attract and keep customers. Attracting and keeping customers drives profitability for the firm. Profit equals total revenue minus total costs. Total revenue is the price of the product multiplied by the quantity sold. In the previous section we learned that total cost is fixed cost plus unit variable cost multiplied by quantity. The impact of price on profit is depicted in the profit equation: Profit = Total Revenue - Total Cost Total Revenue = Price × Quantity Total Cost = Fixed Cost + Variable Cost × Quantity Profit = (Price × Quantity) - (Fixed Cost + Unit Variable Cost × Quantity) From the equation, we see three profit drivers: price, quantity, and costs.

Criteria for Effective Segmentation

Measurable Accessible Durable Substantial Unique Needs

Unique Needs

Needs are homogeneous within segments and heterogeneous across segments.

Positioning Methods:

Perceptual Mapping, Gap Analysis, Hierarchical Values

New Product Development Process

Peter Drucker, the father of modern management, noted, "Business has only two basic functions—marketing and innovation. Everything else is detail." Marketers recognize that innovation is the lifeblood of the business. New products and services are a key source of growth. Accordingly, marketers continually seek to identify and develop new product ideas. A systematic approach for new product development provides a structure for this important process, with the following stages: (1) idea generation, (2) idea screening, (3) concept testing, (4) marketing strategy, (5) business analysis, (6) product development, and (7) test marketing (Figure 9-4). Each stage in the process represents a gate. Product ideas must reach a certain hurdle point to continue in the process. A funnel represents the process because many ideas enter the wide mouth of the funnel, yet few reach commercialization.

Chapter 11

Pricing Strategy

Test Marketing

Prior to commercialization, the product is tested in realistic markets (test markets) to estimate the extent to which potential customers will purchase the product. Selected test markets should be microcosms of the population of interest so results can be projected to the larger market. All elements of the marketing mix can be tested. For consumer products, the test should be long enough to observe repeat-purchase rates, yet short enough if competitors are rushing to market. Alternatives for test marketing business products include alpha testing (testing within the company), beta testing (testing with a select group of customers), trade shows, distributors, and dealers.

Chapter 9

Product Strategy and Branding

Product Life Cycle and Profits

Products, and sometimes entire product categories, travel through a life cycle--the course a product's sales and profits take over its lifetime. The product life cycle is based on four premises: (1) products have limited life, (2) products and sales pass through distinct stages, each with different marketing implications, (3) sales and profits from a product vary at different stages in the life cycle, and (4) products require different strategies at different life-cycle stages. Hence, the product life cycle starts with product introduction and growth, then finishes with product maturity and decline. Marketing managers emphasize different elements of the marketing mix depending on the stage of the product life cycle.

Four points to consider when comparing perceived value to price

Reference Prices, Competitors, Substitutes, Marketing Efforts.

Geographic Segmentation

Region, city or metro size, density, climate

Five determinants of service quality

Reliability (1) (strongest influence) Responsiveness (2) Assurance (3) Empathy (4) Tangibles (5) (weakest influence)

Growth Stage of Product Life Cycle

Sales and profits accelerate during this stage. Marketing managers build market share by emphasizing product distinctions. Feature-heavy products may be simplified to create economical low-cost alternatives. Feature-light products may be enhanced to create premium high-cost alternatives. Marketing managers may consider additional channels of distribution and additional market segments to grow the business.

Substantial

Segment is large enough to make products profitable

Durable

Segment membership is relatively constant

Target Segmentation

Selecting a segment WHO SHOULD WE EXCHANGE WITH

Love, Swing, and Hate Groups

Sell to the swing group through the eyes of the love group Avoid the "knee-jerk" reaction to get defensive and attack the Hate Group "Play to strength" by helping the Swing Group see the product through the eyes of the Love Group--Brand Champions Even with "boring" products, marketing works best when we connect distinctive product features with the right human emotions

Four types of frontline service employees

Servant's Heart, Tiger, Kitten, Fox

Servant's Heart

Servant's heart service providers excel at service quality but perform poorly on service productivity.

Chapter 10

Services Marketing

Specialty Products

Specialty products are purchased after extensive searching because they are expensive, exclusive, and often unique. Examples include designer clothing, luxury automobiles, fine dining, and renowned artwork. With specialty products, consumers are reluctant to accept substitute products.

Functional Brand

Superior performance or superior economy Marketing Mix Emphasis: Product, price, and/or place Consumer Needs: Physiological and safety needs, relatively low involvement.

7Ps of Service Marketing

The Marketing Mix (Product, Price, Place, Promotion), People, Process, Physical Environment.

Commercialization

The final stage in the process is deciding whether or not to launch the product. Results from the test markets provide marketing managers with the information they need to make this decision. One of four general outcomes results from the test market: 1) High product trial and high repeat purchase in the test market generally signal a "go" decision, meaning the product is ready for commercialization. 2) High trial and low repeat purchase suggests that consumers were willing to try the product, but they did not see the value after using or consuming the product, so they did not buy it again. 3) Low trial and high repeat purchase suggests that once consumers learned about and tried the product, they were satisfied enough to buy it again. In this case, emphasis should be placed on product awareness and trial. 4) Low trial and low repeat purchase means it is time to go back to the drawing board. Few consumers elected to try the product. Those who did try the product did not see the value. The success of the new product hinges on the severity of the problem it addresses and the quality of the solution it provides compared to the competition.

Position Segmentation

The heart of the marketing strategy. It is the act of designing the company's product offering so that it occupies a distinct and valued place in the target customers' minds. Strong positioning helps clarify the brand's essence, what the brand helps the customer achieve, and how it is unique in doing so. How do we want consumers to think and feel about our brand? How do we position the product in the customer's mind?

Market Segmentation

The process of grouping customers into relatively homogeneous sets or groups such that customers within a segment are similar to one another in the way they respond to the marketing effort directed toward them. WHO COULD WE EXCHANGE WITH - Effective means for reaching customer groups - Helps in allocating marketing resources - Uncovers market opportunities - Identifies segments that drive profitability Understand what makes your best customers profitable, then identify segments that share at least some of those characteristics.

Unsought Products

These are not actively pursued by consumers. Indeed, consumers may ignore these products until forced to do so as needs arise. Examples include life insurance, blood donations to the local hospital, preplanned funeral services, and cemetery plots.

Capital Items

These are products that aid in the production or operations process. For example, Yoplait purchases large vats, dispensing and filling equipment, and labeling machines for the yogurt production process.

Materials and Parts

These are products that are used in the manufacturing process, such as raw materials and component parts that become part of the final product. For example, Yoplait uses materials such as milk, fruit, and bacteria culture in the production of yogurt.

Types of Consumer Products

These are purchased for personal use or consumption, not for business use. Marketers classify consumer products into four types based on shopping effort, product attributes, and frequency of purchase: convenience products, shopping products, specialty products, and unsought products.

Types of Business Products

These are purchased for specific uses in the business—to make other products or to conduct business. Marketers classify business products into three types: materials and parts, capital items, and supplies and services.

Convenience Products

These are purchased without much thought because they are inexpensive and purchased frequently. Examples include, ready-to-eat breakfast cereal, canned vegetables, candy bars, and soft drinks.

Supplies and Services

These include operating supplies, maintenance items, and services. For example, Yoplait purchases lubricants for the machinery, cleaning supplies to maintain the facility, and accounting services to audit the business.

Shopping Products

These require careful consideration because they are expensive or will last a long time. Examples include smart phones, televisions, computers, home appliances (e.g., washer, dryer), and cell phone providers.

Competitive Angle

This is defined as an "element of differentness," such as "smaller, bigger, lighter, heavier, cheaper or more expensive," and is noted that profitable products must have one. Over the years, marketers have added specificity to the definition of this. They define this as an element of differentness that solves a problem and sparks a personal connection.

Perceptual Mapping

This positioning method is a simple method for getting a feel for how customers perceive brands. This research method allows researchers to view consumers' perceptions of brands on one or a series of spatial maps such that relationships between brands can be easily seen. These also provide insight about differentiating benefits and opportunities for new products. To make this, customers evaluate brands with respect to a set of relevant product features and benefits. Usually, each brand will be rated on a 0-to-10 scale where 0 means the attribute does not describe the brand at all and 10 means the attribute perfectly describes the brand. These are usually drawn with a vertical and horizontal dimension. Brands located near each other on the map are believed to be similar by customers and, thus, in direct competition. Ideal brands can also be placed on the map as can differentiating features and benefits. The hypothetical perceptual map of the soft-drink market, in Figure 8-4, illustrates this technique. Coca-Cola and Pepsi are perceived as similar, compared to other soft drinks. The two brands compete directly and in the largest market as depicted by the largest ideal point on the map.

Hierarchical Values

This positioning method is another way to gain insight into product positioning. It is a three-step research process that consists of (1) eliciting distinctions, (2) pyramiding down, and (3) laddering up. Although it is straight forward, it does require some patience and a researcher's keen interest in understanding customer pain-points, the product category, and the emotional touch points that bind product to person. Picking an example many people can relate to, let's ladder and pyramid the world's number one soda drink Coca-Cola using a hypothetical respondent, Martin. The first step is to elicit product distinctions by listing several popular brands of soft drinks, including Coca-Cola, and then asking Martin to put the brands in ranking order from the one consumed most often to the one consumed least often. This exercise can be made even more interesting by referencing a particular situation, such as "when spending time with friends." Let's say that the result of the ordering exercise is shown below. Coca-Cola is consumed by Martin most often when spending time with friends.

Gap Analysis

This positioning method is based on the importance and performance of their differentiating features and benefits. Whereas perceptual mapping only asks customers to make judgments regarding the performance of a brand's features and benefits, gap analysis also asks customers to make judgments regarding the importance of a brand's features and benefits to the buying decision. This is displayed in a two-by-two format in which the bottom left quadrant is low importance and low performance; the bottom right quadrant is high importance and low performance; the top left quadrant is low importance and high performance; and the top right quadrant is high importance and high performance. This shows how customers perceive each of the brand's features and benefits as they are spread across the four quadrants. Comparisons can be made feature versus feature, brand versus brand, and segment versus segment. The grocery store example in Figure 8-5 shows consumers' ratings of importance and performance of store features. The store performs well on produce, a feature rated high in importance by consumers. Bakery and Deli deserve some consideration, as consumers' rate these high, yet the store performs low on these sections.

Tiger

Tiger service providers perform at high levels on both dimensions.

Product Development

Up until this point in the process, the new product idea has been only a concept—a description, a drawing, a model, or a prototype. Once the idea passes the business analysis phase, product development begins in earnest. The marketing strategy guides the process to create a customized product for the target customers. Significant resources are invested. The engineering department, R & D, and other areas of the company come together to create a product ready for the market test.

Behavioral Segmentation

Usage situations, benefits

Price Penetration

With price penetration, marketers set a relatively low entry price to capture market share quickly. Lower prices discourage the entry of competitors. Increased market share can lead to cost reduction per unit. The disadvantage of price penetration is that it does not capture consumer surplus. For example, to capture a portion of the US auto market, Hyundai used a price penetration strategy—setting prices well below competitors Honda and Toyota.

Price Skimming

With price skimming, marketers set a relatively high price to obtain high margins at the expense of sales quantity. Generally, high prices limit the number of potential buyers, and thus, demand is low. The objectives of price skimming are to (1) establish a premium brand and (2) capture consumer surplus from the market, that is, those customers willing to pay the relatively high price. As demand for the first group of customers is satisfied, price is lowered to capture consumer surplus from the next group of customers, and so on until the last group of thriftier customers are reached with a price they are willing to pay. For example, many consumer electronics companies use price skimming. Samsung may launch a new state-of-the-art television with an initial high price, capitalizing on those customers willing to pay a premium for new technology. Then, the company progressively lowers the price, skimming each layer of the market.

Responsiveness

helping customers promptly. Returning phone calls quickly, replying to emails promptly, keeping customers informed, and delivering the service on time demonstrate responsiveness.

Tangibles

include appearance of physical facilities, equipment, and personnel. Cleanliness, design, and decor of the premises, appearance of the staff, and appropriate equipment demonstrate tangibles.

Empathy

includes access, communication, and understanding. Listening to customers and seeking to understand customer needs demonstrate empathy.

Product Mixes

includes all products offered by the company.

Product Lines

includes closely related product items, competing in the same general product category. Honda's product line of automobiles and trucks currently includes the Accord, Civic, Crosstour, CR-V, CR-Z, FCX Clarity, Fit, Insight, Odyssey, Pilot, and Ridgeline. Honda also manufactures many different product lines, each including multiple items such as automobiles and trucks, all-terrain vehicles, motorcycles, generators, lawn mowers, tillers, trimmers, outboard motors, pumps, scooters, and snow blowers.

Assurance

includes competence, courtesy, credibility, and security. Treating customers with respect, providing knowledgeable information and assistance, and creating a relationship of trust with customers demonstrate assurance.

Four Characteristics of Service Marketing

intangibility, inseparability, variability, perishability

Product Items

is a specific version of a product, like a Honda Civic.

Target Attractive Segments

market size - Is the market large enough to deliver expected profits? expected growth - Is the market growing? competitive position - What is the level of competitive rivalry? Is the differentiated product offering valued by customers? cost to reach - Is the market economically accessible?

Break Even Analysis

provides a useful method for examining the relationships between price, cost, revenue, and profit at various levels of sales. The analysis answers the question, "How many units does the company need to sell before it breaks even?" At this break-even point, total revenue equals total cost—no profits, no losses. This is called break-even volume (BEV). Above the break-even point, the company makes a profit. Below the break-even point, the company loses money.

Reliability

the ability to perform the promised service dependably and accurately. Delivering and performing the right service the first time demonstrates reliability.