Ch. 14 Developing and Pricing Goods and Services

Ace your homework & exams now with Quizwiz!

Since different stages of the product life cycle experience differing levels of sales and profits , what are marketers able to do?

- alter the marketing mix - anticipate future market developments - alter marketing strategies

Factors that influence quality perception

- appearance - reputation - price

specialty goods and services

- consumer products with unique characteristics and brand identity - no substitutes - rely on advertising to reach special market segments - best way to promote: advertise in specialized magazines or sponsor events

variable costs

- costs that change according to level of production - includes expenses of materials used and direct costs of labor

Products that don't carry manufacturer's name but do carry the distributor or retailer name

- dealer brands - private-label brands

target costing

- demand-based - designing product so it satisfies customers and meets profit margins desired by firms

service providers

- do not offer tangible products - can still have product lines and product mixes

product value

- good quality at a fair price - benefits - costs to determine whether benefits exceed costs

industrial goods

- goods sold from B2B - e.g. drill press, computer servers

Marketing Mix

- helps to understand product life cycle

How must marketers satisfy customers?

- listen better - adapt

radio frequency identification (RFID) chip

- method of tracking products - can be read at a distance

generic name/goods

- name for an entire product category - non-branded

dealer brand

- other names: private label, house brand, distributor brand - don't carry manufacturer name, but carry distributor or retailer name

What is a brand manager in a B2B company responsible for?

- product - price - promotion

unsought goods and services

- products consumers are unaware of or haven't thought of purchasing - best way to promote: personal selling

shopping goods and services

- products the consumer buys only after comparing value, quality, price, and style from a variety of sellers (e.g. dishwashers, automobiles) - best way to promote: combine price, quality, and service to create value - comparison to substitutes - best way to raise appeal: price and quality

convenience goods and services

- products the consumer wants to purchase frequently with minimum effort - best way to promote: make readily available - little thought goes into purchasing

New functions of packaging

- promotional messages - pricing information

Functions of Product Packaging

- protection - info about product - attract buyers

Product Life Cycle

- theoretical model - describes sales & profits of a product class over time - used to recognize how to invest in the product to meet company objectives and change a product's marketing mix as it moves through the stages

brand equity

- value of brand name and associated symbols - core: brand loyalty

New Product Development Process

1. Idea Generation 2. Product Screening 3 Product Analysis 4. Development 5. Testing 6. Commercialization

`4 Stages of the product life cycle

1. Introduction 2. Growth 3. Maturity 4. Decline

Achieve Greater Market Share

Offering lower prices and lower financing rates, low lease rates, or rebates

Create an Image

Price high to create perception of exclusivity

_______ have a direct impact on pricing strategy and should therefore be clearly formulated in the context of the strategic marketing plan and the rest of the marketing mix

Pricing objectives

Further Social Objective

Pricing products low, so people with little money can afford them

In the long run, what is price determined by?

The market

competition-based pricing

a pricing strategy of setting price at, above, or below competitors based on what they are doing

Building Traffic

advertising certain products at or below cost to attract people to the store

product mix

all product lines offered by a manufacturer

fixed cost

amount paid to own or rent a factory or warehouse and the amount paid for business insurance

packaging

can be used to make changes/improvements to a product

How do consumers calculate the value of a product?

considering whether all benefits > all costs

product differentiation

creation of real or perceived product differences

cost-based pricing strategy

determine price by costs of production plus a profit margin

product screening

determine whether product fits well with existing products, has good profit potential, and is marketable; narrows down to single, most promising product idea

nonprice competition

differentiating product by promoting nonprice related attributes

product value enhancer

e.g.: - price, store surroundings, guarantee - brand name, service, delivery speed - convenience, internet access, image created by advertising - package, buyer's past experience, producer reputation

demand-based pricing strategy

estimate price people are willing to pay and design product that will satisfy customers and meet profit margins

total product offer

everything consumers evaluate when deciding whether to buy something including look & feel, features, and company/brand reputation

total fixed costs

expenses that are consistent no matter how many products are made/sold

brand loyalty

extent to which consumers are satisfied, like the brand, and are committed to further purchases

concept testing

gauge customer reactions to product idea(s)

product line

group of products that are physically similar or intended for a similar market

bundling

grouping multiple products together and pricing as a unit

knock offs

illegal copies of national brand name goods

What are two recommended ways to generate brand equity?

increase brand loyalty and brand awareness

distributed product development

increase in outsourcing and alliance building that often includes coordinating with companies in other countries

penetration price strategy

low initial entry price to attract many customers and discourage competition

Target Return on Investment or Profit

making a profit by providing goods and services to others

product analysis

making cost estimates and sales forecasts to get a feeling for the profitability of a new product idea

commercialization

marketing process of promoting a product to distributors and retailers and developing strong advertising and sales campaigns to generate and maintain interest in the product among distributors and consumers

manufacturers' brand (names)

name of brands that manufacturers distribute nationally

brand

name, symbol, or design that represent goods/services of one seller/group of sellers

What must marketer's continually adapt product to?

new competition, new markets

brand insistence

not accepting any substitutes for a specific product

new-product failure

not delivering what's promised

generating new product ideas

part of new product development process that requires listening to employees, customers, and suppliers

brand manager

person in charge of a product line

brand preference

prefer one brand over another

competition-based pricing strategy

price product at, above, or below that of competition

Due to competition and demand in the marketplace, ________ and ________ aren't always related

price; cost

skimming price strategy

pricing new product high to recover research and development costs and maximize products while there's minimal competition

demand-oriented pricing

pricing on the basis of consumer demand

break-even analysis

process of determining profitability at various levels of sales

tangible total product offering

product & package

intangible total product offering

product image & company reputation

loss leaders

product sold at a loss to attract customers

Fair Packaging and Labeling Act

provide more info on product quantity and content

marketing

set of processes for creating, communicating, and delivering value to customers, according to the American Marketing Association

high-low pricing

set prices higher than everyday low price stores then have sales that set prices lower than competitors

Everyday low pricing (EDLP)

setting price lower than competitors without special sales

psychological pricing

trying to make product appear less expensive than it really is by the price points they set

trademark

type of brand with exclusive legal protection of name and design

marketing tasks

vary with product category

brand association

when brand is linked to other favorable images

price leadership

when one or more dominant firms set pricing practices that all competitors in an industry follow

break-even point

when sale revenues equal all costs

brand awareness

when specific brand name comes to mind when hear about a product category


Related study sets

Pack 1, Lesson 2: Practice Exercise 2-1

View Set

Ricci Chapter 3: Anatomy and Physiology of the Reproductive System

View Set

Manufacturing Processes Chapter 5

View Set

Human Anatomy Chapter 11 The Muscular System

View Set