Marketing Unit 3

Product Life Cycle

Describes stages a new product goes through in the marketplace. (Introduction, growth, maturity, decline)

Skimming

Pricing high.

Penetration

Pricing low so people will try it.

Deletion

Getting rid of product from product line.

Fashion

Sign of times

FAD

Short life cycle

Product Class

Refers to the entire product category or industry.

Product Form

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Product Modification

Altering one or more of a product’s characteristics, such as quantity, performance, or appearance, to increase value to customers and increase sales.

Market Modification

Strategies by which a company tries to find new customers, increase a product’s use among existing customers, or create new use situations.

Trading Up

Adding value to product rhough additonal features or higher-quality materials. Ex: Cleaning mats at carwash is an added service

Trading Down

Reducing a product’s number or features quality or price. Ex: Airlines used to provide free bag check (it costs now).

Branding

A marketing decision where an organization uses a name, phrase, design, or symbols, or combination to identify its products and distinguish them from those of competitors.

Brand Name

Word, device, sound, color, or both to distinguish a seller’s products or services.

Brand Personality

Set of human characteristics associated with brand name.

Brand Equity

Added value a brand name gives to a product beyond the functional benefits provided. Ex: Normal fruit snacks vs character ones.

Brand Licensing

A contractual agreement where one company (licensor) allows it's brand name or trademarks to be used with products or services offered by another company.

Packaging

Any container which it is offered for sale and on which label information is conveyed.

Label

Part of package that typically identifies the product or brand, who made it, where and when it was made, how it is to be used, and package contents and ingredients.

Communication Benefits

Information for consumers (what the consumers think).

Functional Benefits

Storage, convenience, or protection.

Intangibility

Cannot hold a service before purchase.

Inconsistency

Services depend on people and quality varies. Ex: Haircut

Inseparability

Cannot separate the deliverer of the service from the service itsel.

Inventory

Cost is paying the person even if no customers are there. Ex: Hairstylists must be at hair salon.

4 I’s of Service

Intangibility, inconsistency, inventory, and idle production capacity.

Idle Production Capacity

When service provider is available but there is no demand for service. Ex: Not needing a haircut.

Service Continuum

Range of offerings companies bring to the market, from the tangible to the intangible or the product dominant to the service.

College class is a what?

Service

Gap Analysis

Compares the differences between the consumers expectations about and experiences with a service based on dimensions of service quality.

Off- Peak Pricing

Charging different prices during different times of day or during days of week to reflect variations in demand for service.

7 P’s

Product, price, place (distribution), publicity (promotion, PSA, personal selling), people, physical environment, and process.

Internal Marketing

Notion that a service organization must focus on it’s employees or internal market, before successful programs can be directed at customers.

Skimming Pricing

Setting the highest initial price that customers really desiring the product are willing to pay when introducing a new or innovative product.

Penetration Pricing

Setting a low initial price on a new product to appeal immediately to the mass market.

Prestige Pricing

Setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it.

Price Lining

Setting the price of a line of products at a number of different specific pricing points.

Odd-Even Pricing

Setting prices a few dollars/cents under an even number.

Target Pricing

(1) Eliminating the price that ultimate consumers would be willing to pay for a product, (2) working backward through markups taken by retailers and wholesales to determine what price to charge wholesales, (3) deliberately adjusting the composition and features of the product to achieve the target price to consumers.

Bundle Pricing

Marketing two or more products in a single package price.

Yield Management Pricing

Charging different prices to maximize revenue for a set amount of capacity at any given time.

Standard Markup Pricing

Adding a fixed percentage to the cost of all items in a specific product class.

Cost-Plus Pricing

Summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at a price.

Target Profit Pricing

Setting an annual target of a specific dollar volume or profit.

Target Return-On-Sales Pricing

Setting a price to achieve a profit that is specified percentage of the sales volume.

Target Return-On-Investment Pricing

Setting a price to achieve an annual target return on investment.

Customary Pricing

Setting a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors.

Above, At, or Below-Market Pricing

Setting a market price for a product or product class based on a subjective feel for the competitors’ price or market price as the benchmark.

Loss-Leader Pricing

Deliberately selling a product below its customary price, not to increase sales, but to attract customers’ attention to it in hopes that they’ll buy other products with large markups as well.

Fixed-Price Policy

Setting one price for all buyers of a product or service.

Dynamic Pricing Policy

Setting different prices for products and services in real time in response to supply and demand conditions.

Product-Line Pricing

Setting prices for all items in a product line to cover the total cost and produce a profit for the complete line.

Price War

Successive price cutting by competitors to increase or maintain their unit sales or market share.

Quantity Disounts

Reductions in unit costs for a larger order.

Promotional Allowances

Cash payments or an extra amount of “free goods” awarded sellers in the marketing channel for undertaking certain advertising or selling activities to promote a product.

Everyday Low Pricing

Replacing promotional allowances with lower manufacturer list prices.

Price Fixing

A conspiracy among firms to set prices for a product.

Price Discrimination

Charging different prices to different buyers for products of like grade and quality.

Predatory Pricing

Charging a very low price for a product with the intent of driving competitors out of business.

Price

The money or other considerations (products and services) exchanged for the ownership or use of product/service.

Barter

Exchanging products or services for other products and services rather than money.

Value Pricing

The practice of simultaneously increasing product and service benefits while maintaining or decreasing price.

Value

Ratio of perceived benefits to price (perceived benefits/price).

Pricing Objectives

Specifying the rate of price in an organization marketing and strategic plans.

Pricing Constraints

Factors that limit the range of prices a firm may set.

Demand Curve

A graph that relates to quantity sold and price showing maximum number of units that will be sold at a given price.

Price Elasticity of Demand

The percentage change in quantity demanded relative to a percentage charge in price.

Inelastic

Putting it on sale or dropping price doesn’t change demand-necessities.

Total Revenue

Total money received from the sale of a product.

Inelastic Examples

Diapers, baby formula, and gas.

Total Cost

Total expense incurred by a firm in producing and marketing a product,

Variable Cost

Sum of expenses that vary. Ex: Shipping costs because of gas prices.

Break-Even Analysis

Analyzes the relationship between total revenue and total cost to determine profitability at various levels of output.

Washburn has success because…

They have multiple price points for gutairs.