Business Chapter 12

customary pricing

pricing on the basis of tradition

total revenue

the total amount received from the sales of a product

non-price competition

competition based on factors other than price

1. idea generation 2. screening 3. concept testing 4. business analysis 5. product development 6. test marketing 7. commercialization

7 steps to develop a new product

periodic discounting

temporary reduction of prices on a patterned or systematic basis

random discounting

temporary reduction of prices on an unsystematic basis

Markup

the amount a seller adds to the cost of a product to determine its basic selling price

price

the amount of money a seller is willing to accept in exchange for a product at a given time and under given circumstances

trade name

the complete and legal name of an organization (pizza hut)

product deletion

the elimination of one or more products from a product line

breakeven quantity

the number of units that must be sold for the total revenue (from all units sold) to equal the total cost (of all units sold)

brand name

the part of a brand that can be spoken (Procter & Gamble)

brand mark

the part of a brand that is a symbol or distinctive design (nike "swoosh")

labeling

the presentation of information on a product or its package

Product modification

the process of changing one or more of a product's characteristics

product differentiation

the process of developing and promoting differences between one's product and all similar products

individual branding

the strategy in which a firm uses a different brand for each of its products

family branding

the strategy in which a firm uses the same brand for all most of its products

Price skimming

the strategy of charging the highest possible price for a product during the introduction stage of its life cycle

price lining

the strategy of selling goods only at certain predetermined prices that reflect definite price breaks

penetration pricing

the strategy of setting a low price for a new product

multiple- unit pricing

the strategy of setting a single price for two or more units

odd-number pricing

the strategy of setting prices using odd numbers that are slightly below whole-dollar amounts

total cost

the sum of the fixed costs and the variable costs attributed to a product

brand extension

using an existing brand to brand a new product in a different product category

specialty product

an item that possesses one or more unique characteristics for which a significant group of buyers is willing to expend considerable purchasing effort (sports cars, rare imported beer, original artwork)

express warranty

a written explanation of the producer's responsibilities in the event that a product is found to be defective or otherwise unsatisfactory

special-event pricing

advertised sales or price cutting linked to a holiday, season, or event

packaging

all the activities involved in developing and providing a container with graphics for a product

product mix

all the products a firm offers for sale

price competition

an emphasis on setting a price equal to or lower than competitors' prices to gain sales or market share

business service

an intangible product that an organization uses in its operations (financial and marketing research services)

shopping product

an item for which buyers are willing to expend considerable effort on planning and making the purchase (appliances, furniture, men's suits, bikes, phones)

component part

an item that becomes part of a physical product and is either finished item ready for assembly or a product that needs little processing before assembly ( clocks, tires, computer chips)

supply

an item that facilities production and operations but does not become part of a finished product (paper, pencil, cleaning agents)

line extension

development of a new product that is closely related to one or more products in the existing line but designed specifically to meet somewhat different customer needs

negotiated pricing

establishing a final price through bargaining

product

everything one receives in an exchange, including all tangible and intangible attributes and expected benefits; it may be a good, service or an idea

brand loyalty

extent to which a customer is favorable toward buying a specific brand

brand equity

marketing and financial value associated with a brand's strength in a market

everyday low prices (EDLPs)

setting a low price for products on a consistent basis

comparison discounting

setting a price at a specific level and comparing it with a higher price

secondary-market pricing

setting one price for the primary target market and a different price for another market

accessory equipment

standardized equipment used in a firm's production or office activities (photocopiers, calculators, fractional horsepower motors)

raw material

a basic material that actually becomes part of a physical product; usually comes from mines, forests, oceans, or recycled solid waste

trademark

a brand name or brand mark that is registered with the U.S. Patent and Trademark Office and thus is legally protected from use by anyone except its owner

manufacturer (or Producer) brand

a brand that is owned by a manufacture

store (or private) brand

a brand that is owned by an individual wholesaler or retailer

fixed cost

a cost incurred no matter how many units of a product are produced or sold

variable cost

a cost that depends on the number of units produced

discount

a deduction from the price of an item

product line

a group of similar products that differ only in relatively minor characteristics

process material

a material that is used directly in the production of another product but is not readily identifiable in the finished product (glue, food preservatives)

brand

a name, term, symbol, design, or any combination of these that identifies a seller's products as distinct from those of other sellers

business product

a product bought for resale, for making other products, or for use in a firm's operations

consumer product

a product purchased to satisfy personal and family needs

generic product / brand

a product with no brand at all

convenience product

a relatively inexpensive, frequently purchased item for which buyers want to exert only minimal effort (bread, gas, gum)

product life-cycle

a series of stages in which a product's sales revenue and profit increase, reach a peak, and then decline

major equipment

large tools and machines used for production purposes (lathes, cranes, stamping machines)

bundle pricing

packaging together two or more complementary products and selling them for a single price

transfer pricing

prices charged in sales between an organization's units

reference pricing

pricing a product at a moderate level and positioning it next to a more expensive model or brand

captive pricing

pricing the basic product in a product line low, but pricing related items at a higher level

premium pricing

pricing the highest-quality or most- versatile products higher than other models in the product line

price leaders

products priced below the usual markup, near, cost or below cost