question

Explain what a product is and how products are classified.

answer

A product is everything one receives in an exchange, including all attributes and expected benefits. The product may be a manufactured item, a service, an idea, or a combination. Products are classified according to their ultimate use. Classification affects a product's distribution, promotion, and pricing. Consumer goods, which include convenience, shopping, and specialty products, are purchased to satisfy personal and family needs. Business products are purchased for resale, in making other products, or for use in a firm's operations. Business products can be classified as raw materials, major equipment, accessory equipment, component parts, process materials, supplies, and services.

question

Discuss the product life-cycle and how it leads to new-product development.

answer

Every product moves through a series of four stages—introduction, growth, maturity, and decline—which together form the product life-cycle. As the product progresses through these stages, its sales and profitability increase, peak, and decline. Marketers keep track of the life-cycle stage of products in order to estimate when a new product should be introduced to replace a declining one.

question

Define product line and product mix and distinguish between the two.

answer

A product line is a group of similar products marketed by a firm. They are related to each other in the way they are produced, marketed, and consumed. The firm's product mix includes all the products it offers for sale. The width of a mix is the number of product lines it contains. The depth of the mix is the average number of individual products within each line.

question

Identify the methods available for changing a product mix.

answer

Customer satisfaction and organizational objectives require marketers to develop, adjust, and maintain an effective product mix. Marketers may improve a product mix by changing existing products, deleting products, and developing new products. New products are developed through a series of seven steps. The first step, idea generation, involves developing a pool of product ideas. Screening, the second step, removes from consideration those product ideas that do not match organizational goals or resources. Concept testing, the third step, is a phase in which a sample of potential buyers is exposed to a proposed product through a written or oral description in order to determine their initial reactions and buying intentions. The fourth step, business analysis, generates information about potential sales, costs, and profits. During the development step, the product idea is transformed into mock-ups and prototypes to determine if product production is technically feasible and can be produced at reasonable costs. Test marketing is an actual launch of the product in selected cities chosen for their representative-ness of target markets. Finally, during commercialization, plans for full-scale production and marketing are refined and implemented. Most product failures result from inadequate product planning and development.

question

Explain the uses and importance of branding, packaging, and labeling.

answer

A brand is a name, term, symbol, design, or any combination of these that identifies a seller's products as distinct from those of other sellers. Brands can be classified as manufacturer brands, store brands, or generic brands. A firm can choose between two branding strategies—individual or family branding, which are used to associate (or not associate) particular products with existing products, producers, or intermediaries. Packaging protects goods, increases consumer convenience, and enhances marketing efforts by communicating product features, uses, benefits, and image. Labeling provides customers with product information, some of which is required by law.

question

Describe the economic basis of pricing and the means by which sellers can control prices and buyers' perceptions of prices.

answer

A product is a set of attributes and benefits that has been designed to satisfy its market while earning a profit for its seller. Each product has at price at which it balances consumers desires and expectations with a firm's need to make a profit. The price of a product is the amount of money a seller is willing to accept in exchange for the product at a given time and under given circumstances. Price thus serves the function of allocator. It allocates goods and services among those who are willing and able to buy them. It allocates financial resources among producers according to how well they satisfy customers' needs. Price also helps customers to allocate their own financial resources among products. Price competition occurs when a seller emphasizes a product's low price and sets a price that equals or beats competitors' prices. To use this approach most effectively, a seller must have the flexibility to change prices often. Price competition allows a marketer to set prices based on demand. The Internet has made it more difficult than ever for sellers to compete on price. Non-price competition is based on factors other than price. It is used most effectively when a seller can make its product stand out from the competition by differentiating product quality, customer service, promotion, packaging, or other features. Buyers must be able to perceive these distinguishing characteristics and consider them desirable. Buyers' perceptions of prices are affected by the importance of the product to them, the range of prices they consider acceptable, their perceptions of competing products, and their association of quality with price.

question

Identify the major pricing objectives used by businesses.

answer

Objectives of pricing include survival, profit maximization, target return on investment, achieving market goals, and maintaining the status quo. Firms sometimes have to price products to survive, which usually requires cutting prices to attract customers. The return on investment (ROI) is the amount earned as a result of the investment in developing and marketing the product. Some firms set an annual percentage ROI as the pricing goal. Other firms use pricing to maintain or increase their market share. In industries in which price stability is important, firms often price their products by charging about the same as competitors.

question

Examine the three major pricing methods that firms employ.

answer

The three major pricing methods are cost-based pricing, demand-based pricing, and competition-based pricing. When cost-based pricing is employed, a proportion of the cost is added to the total cost to determine the selling price. When demand-based pricing is used, the price will be higher when demand is higher, and the price will be lower when demand is lower. A firm that uses competition-based pricing may choose to price below competitors' prices, at the same level as competitors' prices, or slightly above competitors' prices.

question

Explain the different strategies available to companies for setting prices.

answer

Pricing strategies fall into five categories: new-product pricing, differential pricing, psychological pricing, product-line pricing, and promotional pricing. Price skimming and penetration pricing are two strategies used for pricing new products. Differential pricing can be accomplished through negotiated pricing, secondary-market pricing, periodic discounting, and random discounting. Types of psychological pricing strategies are odd-number pricing, multiple-unit pricing, reference pricing, bundle pricing, everyday low prices, and customary pricing. Product-line pricing can be achieved through captive pricing, premium pricing, and price lining. The major types of promotional pricing are price-leader pricing, special-event pricing, and comparison discounting.

question

Describe three major types of pricing associated with business products.

answer

Setting prices for business products is different from setting prices for consumer products because of several factors, including the size of purchases, transportation considerations, and geographic issues. The three types of pricing associated with business products are geographic pricing, transfer pricing, and discounting.

question

product

answer

everything one receives in an exchange, including all tangible and intangible attributes and expected benefits; it may be a good, a service, or an idea

question

consumer product

answer

a product purchased to satisfy personal and family needs

question

business product

answer

a product bought for resale, for making other products, or for use in a firm's operations

question

convenience product

answer

a relatively inexpensive, frequently purchased item for which buyers want to exert only minimal effort

question

shopping product

answer

an item for which buyers are willing to expend considerable effort on planning and making the purchase

question

specialty product

answer

an item that possesses one or more unique characteristics for which a significant group of buyers is willing to expend considerable purchasing effort

question

raw material

answer

a basic material that actually becomes part of a physical product; usually comes from mines, forests, oceans, or recycled solid wastes

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major equipment

answer

large tools and machines used for production purposes

question

accessory equipment

answer

standardized equipment used in a firm's production or office activities

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component part

answer

an item that becomes part of a physical product and is either a finished item ready for assembly or a product that needs little processing before assembly

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process material

answer

a material that is used directly in the production of another product but is not readily identifiable in the finished product

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supply

answer

an item that facilitates production and operations but does not become part of a finished product

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business service

answer

an intangible product that an organization uses in its operations

question

product life-cycle

answer

a series of stages in which a product's sales revenue and profit increase, reach a peak, and then decline

question

product line

answer

a group of similar products that differ only in relatively minor characteristics

question

product mix

answer

all the products a firm offers for sale

question

product modification

answer

the process of changing one or more of a product's characteristics

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line extension

answer

development of a new product that is closely related to one or more products in the existing product line but designed specifically to meet somewhat different customer needs

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product deletion

answer

the elimination of one or more products from a product line

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brand

answer

a name, term, symbol, design, or any combination of these that identifies a seller's products as distinct from those of other sellers

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brand name

answer

the part of a brand that can be spoken

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brand marK

answer

the part of a brand that is a symbol or distinctive design

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trademark

answer

a brand name or brand mark that is registered with the U.S. Patent and Trademark Office and thus is legally protected from use by anyone except its owner

question

trade name

answer

the complete and legal name of an organization

question

manufacturer (or producer) brand

answer

a brand that is owned by a manufacturer

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store (or private) brand

answer

a brand that is owned by an individual wholesaler or retailer

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generic product (or brand)

answer

a product with no brand at all

question

brand loyalty

answer

extent to which a customer is favorable toward buying a specific brand

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brand equity

answer

marketing and financial value associated with a brand's strength in a market

question

individual branding

answer

the strategy in which a firm uses a different brand for each of its products

question

family branding

answer

the strategy in which a firm uses the same brand for all or most of its products

question

brand extension

answer

using an existing brand to brand a new product in a different product category

question

packaging

answer

all the activities involved in developing and providing a container with graphics for a product

question

labeling

answer

the presentation of information on a product or its package

question

express warranty

answer

a written explanation of the producer's responsibilities in the event that a product is found to be defective or otherwise unsatisfactory

question

price

answer

the amount of money a seller is willing to accept in exchange for a product at a given time and under given circumstances

question

price competition

answer

an emphasis on setting a price equal to or lower than competitors' prices to gain sales or market share

question

non-price competition

answer

competition based on factors other than price

question

product differentiation

answer

the process of developing and promoting differences between one's product and all similar products

question

markup

answer

the amount a seller adds to the cost of a product to determine its basic selling price

question

breakeven quantity

answer

the number of units that must be sold for the total revenue (from all units sold) to equal the total cost (of all units sold)

question

total revenue

answer

the total amount received from the sales of a product

question

fixed cost

answer

a cost incurred no matter how many units of a product are produced or sold

question

variable cost

answer

a cost that depends on the number of units produced

question

total cost

answer

the sum of the fixed costs and the variable costs attributed to a product

question

price skimming

answer

the strategy of charging the highest possible price for a product during the introduction stage of its life-cycle

question

penetration pricing

answer

the strategy of setting a low price for a new product

question

negotiated pricing

answer

establishing a final price through bargaining

question

secondary-market pricing

answer

setting one price for the primary target market and a different price for another market

question

periodic discounting

answer

temporary reduction of prices on a patterned or systematic basis

question

random discounting

answer

temporary reduction of prices on an unsystematic basis

question

odd-number pricing

answer

the strategy of setting prices using odd numbers that are slightly below whole-dollar amounts

question

multiple-unit pricing

answer

the strategy of setting a single price for two or more units

question

reference pricing

answer

pricing a product at a moderate level and positioning it next to a more expensive model or brand

question

bundle pricing

answer

packaging together two or more complementary products and selling them for a single price

question

everyday low prices (EDLPs)

answer

setting a low price for products on a consistent basis

question

customary pricing

answer

pricing on the basis of tradition

question

captive pricing

answer

pricing the basic product in a product line low, but pricing related items at a higher level

question

premium pricing

answer

pricing the highest-quality or most-versatile products higher than other models in the product line

question

price lining

answer

the strategy of selling goods only at certain predetermined prices that reflect definite price breaks

question

price leaders

answer

products priced below the usual markup, near cost, or below cost

question

special-event pricing

answer

advertised sales or price cutting linked to a holiday, season, or event

question

comparison discounting

answer

setting a price at a specific level and comparing it with a higher price

question

transfer pricing

answer

prices charged in sales between an organization's units

question

discount

answer

a deduction from the price of an item

question

Taken together, tobacco products, alcoholic beverages, and Del Monte brand fruits are considered a product line. True False

answer

False

question

Once established, the same product mix remains effective for as long as the firm chooses to use it. True False

answer

False

question

Screening is the first step in new product development. True False

answer

False

question

Commercialization is the final stage in the development of a new product development. True False

answer

True

question

"Peanut Butter" written on a plain white label is an example of a generic product. True False

answer

True

question

Packaging has little influence on buying decisions. True False

answer

False

question

Labels may carry details of written, or express, warranties. True False

answer

True

question

Product differentiation can make a product more competitive with similar products. True False

answer

True

question

Total revenue is the selling price times the number of units sold. True False

answer

True

question

The break-even quantity includes the desired profit level. True False

answer

False

question

Western Day was a special day at the office. Janice wanted to dress in the latest western fashion, but she had limited funds. She visited several shops before finding the right outfit. For Janice, what type of product is the clothing? Specialty product Major equipment Industrial product Shopping product Convenience product

answer

Shopping product

question

Sales increase gradually as a result of promotion and distribution activities, but initially, high development and marketing costs result in low profit, or even in a loss. This best describes which stage of the product life-cycle? Maturity Introduction Decline Growth Steady

answer

Introduction

question

Product modification makes changes to existing products in three primary ways. They are screening, testing, and changing. growth, maturity, and decline. quality, function, and aesthetics. quantity, description, and appearance. product, price, and service.

answer

quality, function, and aesthetics.

question

The largest number of new product ideas is rejected during this phase. Concept testing Screening Test marketing Idea generation Business analysis

answer

Screening

question

The manager of a local restaurant wants to add new desserts to the menu. Customers were asked to complete a survey about what they like to eat. The restaurant is in which stage of the new-product development process? Test marketing Product development Idea generation Screening Business analysis

answer

Idea generation

question

A customer who consistently buys Sony televisions whenever he or she needs to replace his or her TV set demonstrates the importance of trademarks. the importance of trade names. the importance of brand awareness. brand loyalty. brand equity.

answer

brand loyalty.

question

Dell, IBM, and Xerox use a strategy that helps promote all their products. This strategy is called family branding. generic brands. store brands. individual branding. none of the above.

answer

family branding.

question

Plastic water bottles, while convenient for customers, are a clear example that manufacturers are not considering when designing packaging. the needs of intermediaries the needs of retailers environmental consciousness family needs cost-effectiveness

answer

environmental consciousness

question

When there is a shortage of citrus fruit, the economic forces of supply and demand would suggest that price will stay constant. price will decrease. price will increase. price, all things remaining equal, will increase. it will take a long time before the shortage is felt in the market.

answer

price, all things remaining equal, will increase.

question

Like many other food establishments, Denny's offers a senior citizen's discount. This is an example of periodic discounting. random discounting. differential pricing. negotiated pricing. senior market pricing

answer

differential pricing.

question

Classification of Products

answer

Product • Everything one receives in an exchange, including all tangible and intangible attributes and expected benefits • A good, service, or idea Consumer product A product purchased to satisfy personal and family needs Business (industrial) product A product bought for resale, for making other products, or for use in a firm's operations

question

Consumer Product Classifications

answer

Convenience product A relatively inexpensive, frequently purchased item for which buyers want to exert only minimum effort Shopping product An item for which buyers are willing to expend considerable effort on planning and making the purchase Specialty product An items that possesses one or more unique characteristics for which a significant group of buyers is willing to expend considerable purchasing effort

question

Business Product Classifications

answer

Raw material A basic material that becomes part of a physical product; usually comes from mines, forests, oceans, or recycled solid wastes Major equipment Large tools and machines used for production purposes Accessory equipment Standardized equipment used in a firm's production or office activities Component part An item that becomes a part of a physical product and is either a finished item ready for assembly or a product that needs little processing before assembly Process material A material that is used directly in the production of another product but is not readily identifiable in the finished product Supply An item that facilitates production and operations but does not become part of the finished product Business service An intangible product that an organization uses in its operations

question

The Product Life Cycle

answer

A series of stages in which a product's sales revenue and profit increase, reach a peak, then decline 1- Introduction Customer awareness and acceptance are low 2- Growth Sales increase rapidly as the product becomes well known 3- Maturity Sales are still increasing but at a slower rate; later in this stage, sales and profits begin to slowly decline 4- Decline stage Sales volume decreases sharply and profits continue to fall

question

Using the Product Life Cycle

answer

Marketers should be aware of the life-cycle stage of each product for which they are responsible and should try to estimate how long the product is expected to remain in that stage Both must be taken into account in making decisions about the marketing strategy for a product

question

Product Line and Product Mix

answer

1- Product line A group of similar products that differs only in relatively minor characteristics 2- Product mix • All of the products that a firm offers for sale • Width of the mix - The number of product lines the mix contains • Depth of the mix - The average number of individual products within each line

question

Managing the Product Mix

answer

1- Managing existing products • Product modification: the process of changing one or more of a product's characteristics such as quality, function, aesthetics • Line extensions: development of a product closely related to one or more products in the existing product line but designed specifically to meet somewhat different customer needs 2- Deleting products 3- Developing new products • Imitations, adaptations, or innovations • Consists of seven phases

question

Phases of New Product Development

answer

1. Idea Generation 2. Screening 3. Concept Testing 4. Business Analysis 5. Product Development 6. Testing Marketing 7. Commercialization

question

Why Do Products Fail?

answer

1- The product and its marketing program are not planned and tested as completely as they should be • For example, a firm tries to save product development costs and only market-tests a product and not its entire marketing mix 2- The firm markets a new product before all the "bugs" are worked out 3- When problems show up in testing, a firm tries to recover its costs by pushing ahead anyway 4- A firm tries to market a product with inadequate financing

question

Branding: What is a Brand?

answer

Brand A name, term, symbol, design, or any combination of these that identifies a seller's products as distinct from those of other sellers Brand name The part of a brand that can be spoken Brand mark The part of a brand that is a symbol or distinctive design Trademark A brand name or brand mark that is registered with the U.S. Patent and Trademark Office and is legally protected from use by anyone else Trade name The complete and legal name of an organization

question

Branding: Types of Brands

answer

1- Manufacturer (producer) brand A brand that is owned by a manufacturer 2- Store (private) brand A brand that is owned by an individual wholesaler or retailer 3- Generic brand A product with no brand at all

question

Branding: Benefits

answer

Because brands are easily recognizable, they reduce the amount of time buyers must spend shopping Brands help consumers judge quality Branding helps a firm introduce a new product with the same brand name Branding aids in promotional efforts because promotion of each branded product indirectly promotes others with the same brand Brand loyalty The extent to which a customer is favorable toward buying a specific brand Recognition, preference, and insistence Brand equity The marketing and financial value associated with a brand's strength in a market Brand-name awareness, brand association, perceived quality, and brand loyalty

question

Branding: Choosing a Brand

answer

It should be easy to say, spell, and recall It should suggest, in a positive way, the product's uses, special characteristics, and major benefits It should be distinctive enough to set it apart from competing brands

question

Branding: Protecting a brand

answer

Should be protected through registration Guard against a brand name's becoming a generic term

question

Branding: Branding strategies

answer

1- Individual branding A firm uses a different brand for each of its products For example, Procter & Gamble uses Ivory, Camay, Zest, Safeguard, etc., for its line of bar soaps A problem with one product will not affect another product Different brands can be directed at different market segments 2- Family branding A firm uses the same brand for all or most of its products For example, Xerox uses family branding for all its product mixes The promotion of any one item helps all other products A new product has a head-start when its brand name is already known and accepted by customers 3- Brand extensions - A firm uses an existing brand to brand a new product in a different product category - For example, Procter & Gamble named a new product Ivory Body Wash - Caution must be taken in extending a brand too many times or too far outside the original product category - For example, Kellogg's extended its brand name to a line of hip-hop street clothing that was a failure

question

Packaging

answer

All of the activities involved in developing and providing a container with graphics for a product

question

Packaging - Functions of packaging

answer

• Protect the product and maintain its functional form • Offer consumer convenience • Promote the product by communicating its features, uses, benefits, and image

question

Packaging - Design considerations

answer

• Cost • Single or multiple units • Consistency among package designs (family packaging) • Promotional role • Needs of intermediaries • Environmental responsibility

question

Labeling

answer

The presentation of information on a product or its package MAY INCLUDE • Brand name and mark • Trademark symbol • Package size and contents • Product claims • Directions • Safety precautions • Ingredients • Name and address of manufacturer • Universal Product Code (UPC) symbol for automated checkout and inventory control MUST INCLUDE • For garments, name of manufacturer, country of manufacture, fabric content, cleaning instructions • Nutrition labeling in standard format for any food product for which a nutritional claim is made • For food, ingredients in common terms, number of servings, serving size, calories per serving, calories derived from fat, and amounts of specific nutrients • For non-edible items such as shampoo and detergent, safety precautions and instructions Express warranty A written explanation of the producer responsibilities if the product is found to be defective or otherwise unsatisfactory

question

Pricing Products - Meaning and use of price

answer

The amount of money a seller is willing to accept in exchange for a product at a given time and under certain circumstances Price allocates goods and services among those who are willing and able to buy them Price allocates financial resources (sales revenue) among producers according to how well they satisfy customers' needs Price helps customers allocate their own financial resources among various want-satisfying products

question

Pricing Products - Supply and demand affects prices

answer

1- Supply The quantity of a product that producers are willing to sell at each of various prices Quantity supplied by producers increases as the price increases 2- Demand The quantity of a product that buyers are willing to purchase at each of various prices Quantity demanded increases as the price decreases 3- Equilibrium Where the supply and demand curves intersect and quantity and price for buyers and sellers are equal

question

Supply and Demand Curves

answer

SUPPLY CURVE The upward slope means that producers will supply more jeans at higher prices. DEMAND CURVE The downward slope means that buyers will purchase fewer jeans at higher prices. SUPPLY/DEMAND CURVES TOGETHER Indicate Equilibrium (where both curves meet) in quantity and price for both sellers and buyers.

question

Pricing Products - Price and non-price competition

answer

Price competition An emphasis on setting a price equal to or lower than competitors' prices to gain sales or market share Non-price competition Competition based on factors other than price (such as quality, customer service, packaging)

question

Pricing Products - Buyers' perceptions of price

answer

Buyers will accept different ranges of prices for different products A premium price may be appropriate if a product is considered superior or has inspired strong brand loyalty

question

Pricing Objectives

answer

Survival Pricing the firm's products (perhaps at a loss) in order to attract customers to establish the firm in a market Profit maximization Pricing with the intent to reap profits as large as possible from a market—usually an unattainable goal Target return on investment (ROI) Pricing that allows the firm to attain its profit goal, which is a percentage of the investment the firm has made Market-share goals Pricing that will increase a firm's proportion of total industry sales Status quo pricing Pricing the firm's products so as not to disturb the stability of prices in the industry

question

Pricing Methods - Cost Based Pricing

answer

The seller determines the total cost of producing one unit of the product then adds an amount to cover additional costs and profit (markup) Markup may be calculated as a percentage of total costs Flaws ---Difficulty of determining an effective markup percentage; price may be too high, resulting in lost sales, or price may be too low, resulting in lost profit ---Separates pricing from other business functions that impact marketing decisions

question

Pricing Methods - Breakeven analysis

answer

Break-even quantity The number of units that must be sold for total revenue (from all units sold) to equal the total cost (of all units sold) Total revenue The total amount received from sales of a product Fixed cost A cost incurred no matter how many units are produced or sold Variable cost A cost that depends on the number of units produced Total cost The sum of the fixed costs and the variable costs attributed to a product

question

What is the lowest level of production and sales at which a company can break even on a particular product?

answer

Cost-volume-profit (CVP) formula: px = vx + FC + Profit p is the price per unit, x is the number of units, v is variable cost per unit and FC is total fixed cost.

question

Pricing Methods - Demand-based pricing

answer

Based on the level of customer demand for the product Product prices are high when demand is high and low when demand is weak Price differentiation Setting different prices in segmented markets based on segment characteristics (e.g., time of purchase, type of customer, or distribution channel)

question

Pricing Methods - Competition-based pricing

answer

Based on meeting the challenge of competitors' prices in markets where products are quite similar or price is an important customer consideration

question

Types of Pricing Strategies

answer

Companies have a variety of pricing strategies available to them. NEW-PRODUCT PRICING -- Price Skimming -- Penetration pricing DIFFERENTIAL PRICING -- Negotiated pricing -- Secondary-market pricing -- Periodic discounting -- Random discounting PSYCHOLOGICAL PRICING --Odd-Number Pricing --Multiple Unit Pricing --Reference Pricing --Bundle Pricing --Everyday low Prices --Customary Pricing PRODUCT-LINE PRICING -- Captive Pricing -- Premium Pricing -- Price Lining PROMOTIONAL PRICING -- Price Leaders -- Special Event Pricing -- Comparison Discounting

question

Types of Pricing Strategies: New Product Pricing

answer

Price skimming Charging the highest possible price for a product during the introduction stage of its life cycle Penetration pricing Setting a low price for a new product to quickly build market share and discourage competitors

question

Types of Pricing Strategies: Differential pricing

answer

Charging different prices to different buyers for the same quality and quantity of product The market must consist of multiple segments with different price sensitivities Negotiated pricing Establishing a final price through bargaining Secondary-market pricing Setting one price for the primary target market and a different price for another market Periodic discounting Temporary reduction of prices on a patterned or systematic basis Random discounting Temporary reduction of prices on an unsystematic basis

question

Types of Pricing Strategies: Psychological pricing

answer

Odd-number pricing Setting prices using odd numbers that are slightly below whole-dollar amounts Multiple-unit pricing Setting a single price for two or more units Reference pricing Pricing a product at a moderate level and positioning it next to a more expensive model or brand Bundle pricing Packaging two or more complementary products and selling them for a single price Everyday low prices (EDLPs) Setting a low price for products on a consistent basis Customary pricing Pricing on the basis of tradition

question

Types of Pricing Strategies: Product-line pricing

answer

Establishing and adjusting the prices of multiple products within a product line Captive pricing Pricing the basic product in a product line low, but pricing related items at a higher level Premium pricing Pricing the highest-quality or most-versatile products higher than other models in the product line Price lining Selling goods only at certain predetermined prices that reflect definite price breaks

question

Types of Pricing Strategies: Promotional pricing

answer

Price leaders Products priced below the usual markup, near cost, or below cost Special-event pricing Advertised sales or price cutting linked to a holiday, season, or event Comparison discounting Setting a price at a specific level and comparing it with a higher price

question

Pricing Business Products

answer

1- Geographic pricing Deals with delivery costs • FOB (free-on-board) origin pricing --The seller's pricing is exclusive of delivery costs; the buyer pays the transportation costs • FOB destination pricing --The seller includes transportation costs in the product pricing 2- Transfer pricing Prices charged in sales between an organization's units 3- Discounting A discount is a deduction from the price of an item

question

One product can be classified as only a consumer product or a business product, not both. a. True b. False

answer

b. False

question

Accessory items are often more expensive and require more negotiation than major equipment. a. True b. False

answer

b. False

question

Product sales are starting to decline in the maturity stage of the product life cycle. a. True b. False

answer

a. True

question

Sales volume decreases rapidly in the decline stage of the product life cycle. a. True b. False

answer

a. True

question

New products of a company are much more common than line extensions due to the lower cost of new products. a. True b. False

answer

b. False

question

Packaging for a firm's various products do not necessarily have to be related and similar. a. True b. False

answer

a. True

question

The price of a product is the amount of money a seller is willing to accept in exchange for the product or service at a specific time. a. True b. False

answer

a. True

question

The quantity demanded by consumers increases as the price of a product decreases. a. True b. False

answer

a. True

question

Businesses use random discounting to appeal to long-time, loyal customers. a. True b. False

answer

b. False

question

Walmart employs EDLP. a. True b. False

answer

a. True

question

A good or service purchased to satisfy personal and family needs is a(n) ________ product. a. convenience b. consumer c. industrial d. specialty e. shopping

answer

b. consumer

question

Based on their characteristics and use, business products can be classified into all of the following categories except a. raw materials. b. component parts. c. major equipment. d. specialty services. e. process materials.

answer

d. specialty services.

question

For a computer manufacturer like Dell or Gateway, CPU chips, bus wires, and motherboards are a. process materials. b. supplies. c. component parts. d. raw materials. e. accessory equipment.

answer

c. component parts.

question

Which of the following is not a stage in the product life cycle? a. Growth b. Maturity c. Introduction d. Decline e. Death

answer

e. Death

question

A ________ is a group of similar products that differ in only small ways. a. store brand b. consumer product c. product line d. line extension e. product mix

answer

c. product line

question

Product ________ refers to changing one or more of a product's characteristics. a. screening b. modification c. idea generation d. commercialization e. branding

answer

b. modification

question

Which of the following products is not included in the Top Ten New Products of the Decade based on Advertising Age magazine of 2009? a. Wii b. Activia c. Mini Cooper d. BlackBerry e. iPod

answer

d. BlackBerry

question

A brand mark is a. is always registered with the U.S. Patent and Trademark Office. b. owned by an individual wholesaler or retailer. c. a brand that is owned by a manufacturer. d. the part of a brand that can be spoken. e. the part of a brand that is a symbol or distinctive design.

answer

e. the part of a brand that is a symbol or distinctive design.

question

A major benefit of branding is brand loyalty. a. True b. False

answer

a. True

question

Which of the following is least likely to be a packaging function? a. Discourage shoplifting b. Lessen the weight of the product c. Prevent tampering d. Prevent damage e. Maintain the functional form

answer

b. Lessen the weight of the product

question

When one unit in an organization sells a product to another unit, transfer pricing occurs. a. True b. False

answer

a. True

question

The groupings of consumer product categories is primarily divided based on a. consumers' ability to buy. b. buyers' need for the item or service. c. characteristics of business' purchasing behavior. (incorrect) d. characteristics of buyers' purchasing behavior. e. the time buyers' spend in purchasing the service or product.

answer

d. characteristics of buyers' purchasing behavior.

question

Which of the following is considered a psychological pricing strategy? a. Odd-number pricing b. Periodic discounting c. Secondary-market pricing d. Negotiated pricing e. Random discounting

answer

a. Odd-number pricing

question

Kenmore is an example of a a. trademark. b. manufacturer brand. c. brand name (incorrect) d. brand mark. e. private brand.

answer

e. private brand.

question

The FTC has established guidelines for price leader strategies that companies must abide by. a. True b. False

answer

b. False

question

A product can include intangible benefits along with the tangible benefits of the physical product. a. True b. False

answer

a. True

question

A business service is a tangible product. a. True b. False

answer

b. False

question

The amount added to a product, above the total cost of the product, is called the markup. a. True b. False

answer

a. True

question

A product can actually be just an idea. a. True b. False

answer

a. True

question

In the ________ stage of the product life cycle, customer awareness and acceptance is low. a. maturity b. decline c. introduction d. growth e. development

answer

c. introduction

question

For many U.S. families, soft drinks, bread, and gasoline are ________ products. a. business b. convenience c. shopping d. industrial e. specialty

answer

b. convenience

question

In secondary-market pricing the price charged in the secondary market is often higher. a. True b. False

answer

b. False

question

________ pricing is a primary type of new product pricing strategy. a. Periodic discounting b. Negotiated c. Secondary-market d. Penetration e. Differential

answer

d. Penetration

question

Demand-based pricing results in a high price for the product when demand is high. a. True b. False

answer

a. True

question

A discount is the difference between the price of an item and the cost to produce the item. a. True b. False

answer

b. False

question

The ________ stage of the product life cycle is when industry profits decline and price competition increases. a. decline b. growth c. development d. maturity e. introduction

answer

d. maturity

GEB1101:M4-C12: Creating and Pricing Products That Satisfy Customers – Flashcards

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