BUS-X 100 Exam 3 Chapter 14

Product (Current Definition)

more than just the physical good or service; it's everything the consumer evaluates when deciding to buy. This includes the product itself and any value-added features, often called the "total product offer" or "value package."

Consumer Goods and Services

Items sold to final consumers for personal use. They are classified into four categories: convenience, shopping, specialty, and unsought goods.

Convenience Goods and Services

Products that consumers purchase frequently with minimal effort, like snacks or gas. Location and ease of access are essential for these goods.

Shopping Goods and Services

Products purchased only after comparing value, quality, and price, like clothing or furniture. Consumers invest time to make an informed choice.

Specialty Goods and Services

Unique products with specific brands that often require consumers to make a special effort to purchase. Examples include luxury watches and designer clothes.

Unsought Goods and Services

Products that consumers are usually unaware of or don't actively seek, often purchased in emergencies or due to specific needs, such as insurance or emergency services.

Industrial Goods

Also known as business or B2B goods, these products are used in producing other products. Examples include machinery and raw materials. They are marketed primarily to businesses.

Functions of Packaging

Packaging has several roles: attracts attention, protects the contents, resists damage, deters theft, is easy to open and use, describes the contents and benefits, provides warranty and consumer information, and conveys price, value, and potential uses.

Product Item

A single, specific product within a line, like a unique type or brand of toothpaste.

Product Line

A group of related products marketed under one brand, targeting similar customers and often facing similar competition, such as a line of shampoos for different hair types.

Product Mix

The complete range of products a company offers, which can include various product lines like personal care, food, and household items.

Width of Product Mix

The number of different product lines a company has within its product mix. A wide product mix includes many types of products.

Depth of Product Line

The variety of products offered within a single product line, such as multiple flavors or sizes of a specific snack brand.

Differentiation Strategy

Creating real or perceived differences between similar products to stand out in a competitive market through branding, packaging, and marketing strategies.

Product Differentiation

A strategy used to create unique qualities or brand identity for a product, making it more appealing compared to competitors.

Positioning

involves defining how a product stands in the market relative to competitors, based on its unique attributes, and clarifying how it meets the needs of the target audience.

STP Framework

includes Segmentation, Targeting, and Positioning, used to identify the best market segments and position the product accordingly.

Perceptual Map

A visual tool that shows how consumers view a product compared to competitors based on factors like price and quality, aiding in positioning decisions.

Brand Management

The process of overseeing a brand's marketing mix (product, price, place, promotion) to maintain a strong brand identity, customer loyalty, and market position.

Product Life Cycle (PLC)

A model that describes the stages a product goes through over time, from introduction to growth, maturity, and decline.

Growth Stage (PLC)

A phase of the product life cycle marked by rapid sales growth and high competition as the product gains popularity.

Maturity Stage (PLC)

A phase of the product life cycle where sales peak and profits begin to decline, often requiring adjustments in marketing strategy to maintain market share.

Product Life Cycle Marketing Strategies

Each stage of the product life cycle calls for specific strategies, such as introductory promotions during launch and brand loyalty focus during maturity.

Brand

A name, symbol, or design that identifies and differentiates a seller's products, building consumer recognition and loyalty.

Branding

The process of creating a unique identity for a product through a distinctive name, symbol, or design, which helps in consumer recognition and loyalty.

Brand Name

A word, letter, or group of words that identifies a product and differentiates it from competitors, like "Nike."

Brand Mark

The visual design or symbol associated with a brand, like Nike's swoosh, which enhances brand recognition.

Brand Equity

The value a brand holds, based on consumer perception, loyalty, and association, which adds significant worth to a company beyond the physical attributes of its product.

Manufacturer Brand

Brands owned by the producer and distributed nationally, such as Coca-Cola, which carries the manufacturer's name.

Private Label Brand

Brands owned by retailers, carrying the retailer's name instead of the manufacturer's, such as Target's Up&Up line.

Price

The monetary amount a consumer pays to acquire a product, playing a crucial role in both value perception and competitive positioning.

Pricing Objectives

The specific goals a company aims to achieve with its pricing, such as profit, market share, traffic building, and image enhancement.

Target Return on Investment (ROI)

A pricing objective focused on achieving a specific profit percentage or return on the money invested in the product.

Market Share (Pricing Objective)

A goal focused on increasing or maintaining a product's share of total sales within its market.

Build Traffic (Pricing Objective)

A strategy to attract customers, sometimes by pricing certain items lower, even at a loss, to draw people in.

Develop or Maintain an Image

A pricing goal to shape consumer perception, often by setting prices high to convey exclusivity or premium quality.

Value-Based Pricing

Also known as target costing or demand-based pricing, this strategy sets prices based on the customer's perceived value of the product.

Competition-Based Pricing

Setting prices based on the prices of competing products, positioning the product relative to market standards.

Cost-Based Pricing

Pricing determined by adding a profit margin to the production costs of the product.

New Product Pricing

A pricing strategy for introducing new products, often choosing between skimming (high initial price) or penetration pricing (low initial price to attract buyers).

Price Skimming

Setting a high price for a new product to maximize early profits when there is little competition.

Penetration Pricing

Setting a low price for a new product to quickly gain market share and discourage competitors.

Psychological Pricing

Pricing products at a level that makes them seem less expensive than they are, such as $9.99 instead of $10.

Odd-Number Pricing

A type of psychological pricing where prices end in an odd number, like $1.99, to give the perception of a bargain.

Multiple-Unit Pricing

Offering a discount on bulk purchases, encouraging consumers to buy more than one unit.

Bundle Pricing

Combining multiple products into one package and selling them at a single price, often perceived as a deal.

Everyday Low Pricing (EDLP)

A strategy where prices are consistently lower than competitors' without frequent sales, often used by stores like Walmart.

High-Low Pricing

Setting regular prices high but offering frequent sales, encouraging customers to wait for sales to buy at a discount.

Profitability Point

The level at which a company's revenues exceed all its costs, making it profitable.

Breakeven Point

The sales level at which total revenues equal total costs, meaning the company makes no profit or loss.

Breakeven Formula

A formula used to calculate the breakeven quantity: Fixed Costs / (Selling Price - Variable Cost per Unit).

Variable Costs

Costs that change in proportion to production levels, such as materials and labor used in making a product.

Fixed Costs

Costs that remain constant regardless of production volume, like rent or insurance.

Total Costs

The combined total of fixed and variable costs for producing a product.

Fixed Cost Contribution

The amount left after subtracting variable costs from the selling price, used to cover fixed costs and contribute to profit.

Fixed Cost Contribution Formula

Selling Price - Variable Cost per Unit, showing the contribution each unit makes toward covering fixed costs.

Price Reduction's Impact on Breakeven Quantity

Lowering the price increases the breakeven quantity, as more units need to be sold to cover the same fixed costs.