MARK 3336 Quiz 2

market skimming pricing

setting a high price for a new product to skim maximum revenues layer by layer from customer segments in line with their willingness to pay

price fixing

sellers must set prices without talking to competitors

stages of a product lifecycle

• development stage

• introduction stage

• growth stage

• maturity stage

• decline stage

development stage of a product lifecycle

company finds and develops new product idea

introduction stage of a product lifecycle

slow growth, low profits as the product is distributed

growth stage of a product lifecycle

rapid sales growth and increasing profits

maturity stage of a product lifecycle

growth stabilizes, profit slows down

decline stage of a product lifecycle

growth and profits dwindle. decide to maintain, harvest, or drop product

value-added pricing

attaching value-added features and services to differentiate a company’s offers and charging higher prices

multi-channel distribution systems

a single firm sets up 2 or more marketing channels to reach 1 or more customer segments, maximizing total profits

intensive distribution

stocking the product in as many outlets as possible

selective distribution

the use of more than one but fewer than all of the intermediaries that are willing to carry the company’s products

optional product pricing

the pricing of optional or accessory products along with a main product

product line pricing

setting the price steps between various products in a product line based on cost differences, different features, and competitor prices

captive product pricing

setting a price for products that must be used along with a main product (ie: video games)

by-product pricing

setting a price for by-products to help offset the cost of disposing of them, help make the main product’s price more competitive

product bundle pricing

combining several products and offering a bundle at a reduced price

price elasticity

demand changes greatly

price inelasticity

demand hardly changes with a small change in price

exclusive distribution

giving a limited number of dealers the exclusive right to distribute a product in their territories

customer segment pricing

pricing something higher or lower for a specific demographic (kids menu, veterans discount)

what do manufacturer’s agents do

wholesale operations for sellers

the value chain

set of internal departments that design, produce, market, deliver, and support a product

primary activities of a value chain

• inbound logistics (buying)

• operations

• outbound logistics (distribution)

• marketing (including sales)

• service

secondary activities of a value chain

• procurement (buying)

• tech development

• HR management

• firm infrastructure (finance)

the law of leadership

it is better to be first than it is to be better

the law of unpredictability

unless you write your competitors’ plans, you can’t predict the future

the law of division

over time, a product category will divide into 2 or more categories. always look for “what should i do next”

the law of perception

marketing is not a battle of products, but of perceptions

the law of focus

the most powerful concept in marketing is owning a word in the prospect’s mind

the law of the ladder

the strategy to use depends on what rung you occupy in the ladder