Understanding Business Chapter 14

Question 1

Value

Answer 1

Good quality at a fair price. When consumers calculate the value of a product. they look at the benefits and then subtract the cost to see if the benefits exceed the costs.

Question 2

Total Product Offer

Answer 2

Everything consumers evaluate when deciding whether to buy something. also called a value package.

Question 3

Product Line

Answer 3

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

Question 4

Product Mix

Answer 4

The combination of product lines offered by a manufacturer.

Question 5

Product Differentiation

Answer 5

The creation of real or perceived product differences.

Question 6

Convenience Goods and Services

Answer 6

Products that the consumer wants to purchase frequently and with a minimum of effort.

Question 7

Shopping Goods and Services

Answer 7

Those products that the consumer buys only after comparing value. quality. price. and style from a variety of sellers.

Question 8

Specialty Goods and Services

Answer 8

Consumer products with unique characteristics and brand identity. Because these products are perceived as having no reasonable substitute. the consumer puts forth a special effort to purchase them.

Question 9

Unsought Goods and Services

Answer 9

Products that consumers are unaware of. haven’t necessarily thought of buying. or find that they need to solve an unexpected problem.

Question 10

Industrial Goods

Answer 10

Products used in the production of other products. Sometimes called business goods or B2B goods.

Question 11

Bundling

Answer 11

Grouping two or more products together and pricing them as a unit.

Question 12

Brand

Answer 12

A name. symbol. or design (or combination thereof) that identifies the goods or services of one seller or group of sellers and distinguishes them from the goods and services of competitors.

Question 13

Trademark

Answer 13

A brand that has exclusive legal protection for both its brand name and design.

Question 14

Manufacturers’ Brand Names

Answer 14

The brand names of manufacturers that distribute products nationally.

Question 15

Dealer (Private-Label) Brands

Answer 15

Products that don’t carry the manufacturer’s name but carry a distributor or retailer’s name instead.

Question 16

Generic Goods

Answer 16

Nonbranded products that usually sell at a sizable discount compared to national or private-label brands.

Question 17

Knockoff Brands

Answer 17

Illegal copies of national brand-name goods.

Question 18

Brand Equity

Answer 18

The value of the brand name and associated symbols.

Question 19

Brand Loyalty

Answer 19

The degree to which customers are satisfied. like the brand. and are committed to further purchases.

Question 20

Brand Awareness

Answer 20

How quickly or easily a given brand name comes to mind when a product category is mentioned.

Question 21

Brand Association

Answer 21

The linking of a brand to other favorable images.

Question 22

Brand Manager

Answer 22

A manager who has direct responsibility for one brand or one product line. called a product manager in some firms.

Question 23

Product Screening

Answer 23

A process designed to reduce the number of new product ideas being worked on at any one time.

Question 24

Product Analysis

Answer 24

Making cost estimates and sales forecasts to get a feeling for profitability of new-product ideas.

Question 25

Concept Testing

Answer 25

Taking a product idea to consumers to test their reactions.

Question 26

Commercialization

Answer 26

Promoting a product to distributors and retailers to get wide distribution. and developing strong advertising and sales campaigns to generate and maintain interest in the product among distributors and consumers.

Question 27

Product Life Cycle

Answer 27

A theoretical model of what happens to sales and profits for a product class over time. the four stages of the cycle are introduction. growth. maturity. and decline.

Question 28

Target Costing

Answer 28

Designing a product so that it satisfies customers and meets the profit margins desired by the firm.

Question 29

Competition-Based Pricing

Answer 29

A pricing strategy based on what all the other competitors are doing. The price can be set at. above. or below competitors’ prices.

Question 30

Price Leadership

Answer 30

The strategy by which one or more dominant firms set the pricing practices that all competitors in an industry follow.

Question 31

Break-Even Analysis

Answer 31

The process used to determine profitability at various levels of sales.

Question 32

Total Fixed Costs

Answer 32

All the expenses that remain the same no matter how many products are made or sold.

Question 33

Variable Costs

Answer 33

Costs that change according to the level of production.

Question 34

Skimming Price Strategy

Answer 34

Strategy in which a new product is priced high to make optimum profit while there’s little competition.

Question 35

Penetration Strategy

Answer 35

Strategy in which a product is priced low to attract many customers and discourage competition.

Question 36

Everyday Low Pricing (EDLP)

Answer 36

Setting prices lower than competitors and then not having any special sales.

Question 37

High-Low Pricing Strategy

Answer 37

Setting prices that are higher than EDLP stores. but having many special sales where the prices are lower than competitors’.

Question 38

Psychological Pricing

Answer 38

Pricing goods and services at price points that make the product appear less expensive than it is.