Business Dynamics - Chapter 14

Generic goods

Nonbranded products that sell at a discount compared to national or private-label brands

Key functions of packaging

Attract buyer's attention, protect goods, easy to open, describe contents, explain benefits, provide warranty information and warnings, indicate price, value, and uses

Manufacturers' brands

Brand names of manufacturers that distribute products nationally

Trademark

Brand with exclusive legal protection for name and design

Product mix

Combination of product lines offered by a manufacturer

Variable costs

Costs that change according to production level

Product differentiation

Creation of real or perceived product differences

Total product offer

Everything consumers evaluate when deciding to buy something

Total fixed costs

Expenses that remain the same regardless of production or sales

Introduction stage

First stage of product life cycle

Decline stage

Fourth stage of product life cycle

Product line

Group of physically similar or market-intended products

Product life cycle

Model of sales and profits for a product class over time

Brands

Name, symbol, or design that identifies goods or services

Knockoff brands

Illegal copies of national brand-name goods

Cost-based pricing

Pricing based on cost of producing a product

Demand-based pricing

Pricing based on satisfying customers and desired profit margins

Psychological pricing

Pricing goods and services to appear less expensive than they are

Skimming price strategy

Pricing new product high for optimum profit with little competition

Penetration strategy

Pricing product low to attract customers and discourage competition

Competition-based pricing

Pricing strategy based on competitors' pricing

Break-even analysis

Process to determine profitability at various sales levels

Dealer (private-label) brands

Products that carry distributor's or retailer's name instead of manufacturer's

Break-even point

Sales level where revenues equal costs

Growth stage

Second stage of product life cycle

High-low pricing strategy

Setting higher prices than EDLP stores but having special sales

Everyday low pricing (EDLP)

Setting prices lower than competitors without special sales

Pricing objectives

Target return on investment or profit, building traffic, achieving market share, creating an image, furthering social objectives

Maturity stage

Third stage of product life cycle

Packaging

Use of packaging to change and improve a basic product