Exam 2 Flashcards
Product
A good, service or idea consisting of tangible and intangible attributes that satisfy a customers needs in exchange for money.
7 steps in product development
- new product strategy development - sets the direction or focus for new products or steps to revise existing ones
- idea generation - creative process, generation, development, and communication of new thoughts
- screening and evaluation - rate product ideas, low scored ideas will be dropped
- business analysis - a combination of gaining insight from data and performing tasks to identify the needs of the business, then recommending changes
- development - introducing product to market, product design, etc.
- market testing - explore customer response to a product - limited availability
- commercialization - full distribution of a product
why products fail
- insignificant point of difference
- incomplete market and product protocol
- not satisfying customer needs
- bad timing
- no economical access to buyers
- poor execution of the marketing mix
- too little market attractiveness
- poor product quality
product life cycle
the course of a product’s sales and profits over its lifetime
stages of product life cycle
- introduction - create awareness and trial
- growth - maximize market share
- maturity - maximize profits, product repositioning
- decline - reduce expenditures
downsizing
reducing content in package
removing a marginal amount of volume
Trade Name
the name your business is commonly known as or the name you use when advertising or doing business
harvesting
cut off expenditures of a product to profit from it
ex. cutting marketing but still retaining product
deletion
when a manufacturer permanently stops selling a product
brand extension
using well established company name to introduce new products
Price
the money or other considerations exchanged for ownership or use or a product
only P that produces revenue
price constraints
- demand for the product
- stage in the product life cycle
- cost of producing and marketing the product
- cost of changing prices
- single product versus a product line
- type of competition in the market
- pure competition
- monopolistic competition
- oligopoly - several buyers but few sellers ( sellers make a fixed price and buyers have no where else to go for a better price)
- pure monopoly - several buyers and only one seller
- competitors’ prices and customers’ awareness
- legal and ethical considerations
Slotting Fees
a payment made to a retailer to guarantee your product will be shown on their shelves
demand-oriented pricing approaches
skimming pricing - start at a high price and gradually decrease the price
penetration pricing - start low price and gradually increase price
prestige pricing - start with a high price and keep it high (exclusive product)
Price lining - give different pricing to different levels of qualities of the product
odd even pricing - instead of $20 charge $19.99 giving buyers the illusion that they are getting a bargain
Target pricing - when the manufacturer prices to wholesalers based on the final customers’ acceptable price
yield management pricing - revenue maximization with rate fences (qualify to get the deal price, ie. children pay less) and price bucket
Bundle pricing - complimentary products are put together for one price making consumers belive they are getting a bargain (consumers will buy something they otherwise would not have bought
Cost-oriented pricing approaches
standard markup price - percentage markup from manufacturer price
cost plus pricing - dollar markup from manufacturers’ price
experience curve pricing - unit cost declines by (10%-30%) each time a firm experiences doubles
