Chapter 12

Question 1

What are the seven stages of the product lifestyle

Answer 1

Idea generation
Product screening
Concept testing
Business analysis
Product development
Testing marketing
Commercialization

Question 2

What are the three types of products - describe each

Answer 2

Convenience products- things you buy on a daily basis like milk, newspaper, bread

Shopping products- shop around and consumers may try to find the best deal
(Clothes etc.)

Specialty products- hard to find, consumers know exactly what they want and are willing to pay whatever the price to get it (specific car etc.)

Question 3

Four steps to calculating the value of a product

Answer 3

Identify the value of the product
Identify the customers best alternative
Determine the difference (if your product has more or less to offer than a competitor)
Calculate the value of the product based on this difference

Question 4

What are pricing objectives and what factors are they influenced by

Answer 4

The specific role of a price in a company’s marketing mix

Influenced by finance, accounting, production

Question 5

Name the for common pricing objectives

Answer 5

Maximizing profits and sales
Boost market share
Maintain status quo
Survival

Question 6

Define price strategy

Answer 6

Providing a way (guidelines) to sticking to and achieving a company’s pricing objectives and marketing

Question 7

List the three ways to achieve an acceptable pricing strategy

Answer 7

1. Pricing new products
2. Psychological pricing
3. Price discounting

Question 8

Explain each of the three tactics of pricing strategy

Answer 8

1. Pricing new products
   
   • price skimming: charging the most that buyers are willing to pay (luxury items) to generate lots of revenue
   • penetration price: charging a low amount to generate interest in the product and value but takes a while to generate revenue
2. Psychological Pricing: appealing to customers emotions ex- selling prices higher so they seem like better quality (perfume & cosmetics) and selling at uneven prices ($9.99)
3. Discounting: a temporary discount to boost needed sales and profits

Question 9

What is physical distribution

Answer 9

How to get the product from the producer to customer in the cheapest way possible

Question 10

Describe the three steps of physical distribution

Answer 10

Transportation: shipping the products where they need to be

Warehousing: where are you going to keep your products (public and private warehousing)

Materials handling: the physical handling of the product during warehousing and transportation

Question 11

Describe the push strategy

Answer 11

How a company tries to motivate their retailers and wholesalers to push their product to become available to customers

Producer pushes the wholesaler who pushes the retailer who pushes the consumer

Question 12

Describe the pull strategy

Answer 12

Promoting a product to stimulate a customer demand for the product to make it becoming available (ex: encouraging customers to take part in a sweepstake where you must do something involving the business to be entered)

Producer is pulled by wholesalers pulled by the retailer pulled by the customer (pulled through the flow of communications)

Question 13

Describe the three objectives of promotion

Answer 13

Stimulating demand (pull strategy)
Stabilizing sales (maintaining & creating a status quo)
Informing, reminding, and enforcing customers (info on features, price, availability)