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45 terms

Business in Action Ch 14 BUSN100 Product and Pricing Strategies

After studying this chapter, you will be able to 1. Identify the main types of consumer and organizational products and describe the four stages in the life cycle of a product 2. Describe six stages in the product development process 3. Define brand and explain the concepts of brand equity and brand loyalty 4. Identify four ways of expanding a product line and discuss two risks that product-line extensions pose 5. List the factors that influence pricing decisions and explain break- even analysis…
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Products contain both tangible and intangible components; predomi-nantly tangible products are categorized as goods, whereas predominantly intangible products are categorized as services.
The Product Continuum
Product decisions also involve how much or how little to augment the core product with additional goods and services.
Augmenting the Basic Product
Everyday goods and services that people buy frequently, usually without much conscious planning
Convenience Products
Fairly important goods and services that people buy less frequently with more planning and comparison
Shopping Products
Particular brands that the buyer especially wants and will seek out, regardless of location or price
Specialty Products
Inexpensive products that organizations generally use within a year of purchase
Expense Items
More expensive organizational products with a longer useful life, ranging from office and plant equipment to entire factories
Capital Items
Four stages through which a product progresses: introduction, growth, maturity, and decline
Product Life Cycle
Most products and product cate-gories move through a life cycle similar to the one represented by the curve in this diagram. However, the duration of each stage varies widely from product to product. Automobiles have been in the maturity stage for decades, but faxing services barely made it into the introduction stage before being knocked out of the market by low-cost fax machines that every busi-ness and home office could afford.
Product Life Cycle
A formal process of generating, selecting, developing, and commercializing product ideas
Product Development Process
The product development process is designed to identify the product ideas most likely to succeed in the marketplace.
The Product Development Process
Preproduction samples of products used for testing and evaluation
Prototypes
Product development stage in which a product is sold on a limited basis to gauge its market appeal
Test Marketing
Large- scale production and distribution of a product
Commercialization
A name, term, sign, symbol, design, or combination of those used to identify the products of a firm and to differentiate them from competing products
Brand
The value that a company has built up in a brand
Brand Equity
The degree to which customers continue to purchase a specific brand
Brand Loyalty
Portion of a brand that can be expressed orally, including letters, words, or numbers
Brand Names
Portion of a brand that cannot be expressed verbally
Brand Mark
A concise graphical and/ or textual representation of a brand name
Logo
Brands that have been given legal protection so that their owners have exclusive rights to their use
Trademarks
Brands owned by the manufacturers and distributed nationally
National Brands
Brands that carry the label of a retailer or a wholesaler rather than a manufacturer
Private Brands
Products characterized by a plain label, with no advertising and no brand name
Generic Products
Partnership between two or more companies to closely link their brand names together for a single product
Co-Branding
Agreement to produce and market another company's product in exchange for a royalty or fee
License
Managers who develop and implement the marketing strategies and programs for a specific product or brand
Brand Managers
A series of related products offered by a firm
Product Line
Complete list of all products that a company offers for sale
Product Mix
Using a brand name on a variety of related products
Family Branding
Applying a successful brand name to a new product category
Brand Extension
A measure of the sensitivity of demand to changes in price
Price Elasticity
Business costs that remain constant regardless of the number of units produced
Fixed Costs
Business costs that increase with the number of units produced
Variable Costs
Method of calculating the minimum volume of sales needed at a given price to cover all costs
Break-Even Analysis
Sales volume at a given price that will cover all of a company's costs
Break-Even Pint
Method of setting prices based on production and marketing costs, rather than conditions in the marketplace
Cost-Based Pricing
Method of setting prices based on customer perceptions of value
Value-Based Prcing
Computer- based pricing method that creates a demand curve for every product to help managers select a price that meets specific marketing objectives
Optimal Pricing
Charging a high price for a new product during the introductory stage and lowering the price later
Skim Pricing
Selling one product at a loss as a way to entice customers to consider other products
Loss-leader Pricing
Allowing customers to pay the amount they think a product is worth
Participative Pricing
Temporary price reductions to stimulate sales or lower prices to encourage certain behaviors such as paying with cash
Discounts
Offering several products for a single price that is presumably lower than the total of the products' individual prices
Bundling
Continually adjusting prices to reflect changes in supply and demand
Dynamic Pricing