MGMT 321-Chapter 9 Flashcards
Tangibility
Item’s capability of being touched, seen, tasted, or felt.
Inseperability
Quality of a service in which the service being done cannot be disconnected from the provider of the service
Herterogeneity
Quality of a service in which each time it is provided it will be slightly different from the previous time
Total product
Entire bundle of products, services, and meanings of your offering; includes extras like service, warranty, or delivery, as well as what the product means to the customer
Augmented Product
Core Product plus features that tend to differentiate it from the competition
Core Product
the very basic description of what a product is
Target Market
The group of people on which a marketer focuses promotion and sales efforts
Me-too products
Products essentially similar to something already on the market
Optimum Price
Highest price that will produce your desired level of sales in your intended market
Markup Pricing
Price-setting method where an amount is added to the cost of a product to set the retail price and provide a profit
Margin
Amount of profit, usually stated as a percentage of the total price
Markup
the amount an entrepreneur adds to costs to provide a profit
Elasticity
From economics, the idea that the market’s demand for a product or service is sensitive to changes in its price
Inelastic Product
Product for which there are a few substitutes and for which a change in price
Elastic Product
Product for which there are any number of substitutes and for which a change in price makes a difference in quantity purchased
Law of supply and demand
Economic theory that describes how the demand for products (or services) and the supply of them affect each other
Price Gouging
charging an unnecessary high price for something
Internal reference price
consumer’s mental image of what a products price should be
External reference price
An estimation of what a price should be based on information external to a consumer, such as advice, advertisements, or comparison shopping
Skimming
Setting a price at the highest level the market will bear, usually because there is no competition at the time
Prestige/Premium pricing
Setting a price above all that of the competition so as to indicate a higher quality or that a product is a status symbol
Odd-even pricing
setting a price that ends in the number 5/7/9
Partitioned Pricing
Setting the price for a base item and then charging extra for each additional component
captive Pricing
setting the price for an item relatively low and then charging much higher prices for the expendables it uses
Price Lining
Practice of setting three price points: good/better/best quality
Periodic/Random Discounting
Sales conducted at either predictable or non predictable intervals
Off-Peak Pricing
Charging lower prices at certain times to encourage customers to come during slack periods
Bundling
Combining two or more products in one unit and pricing it less than if the units were sold separately
multiple/bonus pack
combining more than one unit of the same product and pricing it lower than if each unit were sold separately
referral discount
discount given to a customer who refers a friend to the business
Characteristics of goods & services
- Goods differ from services in tangibility, inseparability, perishability, & heterogeneity
- Few true goods & services exist; most products fall somewhere along a goods/services continuum and have components of each
Define Total Product
- Product is a bundle of services & goods
- -3 basic levels: Core, Augumented, & Total Product
- Understanding total product allows you to concentrate on the features and aspects important to the customer and to coordinate your other mktg activities
Stages of New Product Development
-Stages: Idea generation, idea screening, idea evaluation, product development (prototypes can be developed in order to do additional screening, and test markets or test market simulations can be run), commercialization (involves developing final mktg plan, getting the product into production, and the start of sales)
Why is pricing an important but difficult task for small businesses?
- Owners of small businesses give a great deal of attention to issues of pricing
- Price of product: function of the value placed on the product by the customer
- Price: Directly related to revenue, indirectly related to volume; easiest mktg variable to change; essential part of competitive strategy
What is price influenced by?
Effects of the law of supply and demand, margins set, and value you can show to your customers
What is price setting influenced by?
Costs Customers Company Objectives Mktg strategy Channels of distribution competition legal & regulatory restrictions
Pricing Strategies
- Consumer psychology has impact on pricing as well. Consumers get ideas about what is an acceptable price & what isn’t.
- Skimming, Prestige/Premium Pricing, Odd-Even Pricing, Partitioned pricing, captive pricing, & price lining
