Marketing Chapters 9, 10, and 11: Product Development, Product Life Cycle, and Pricing Strategies

Comprehensive vocabulary flashcards covering new product development stages, product life cycle strategies, pricing concepts, and legal pricing regulations.

Acquisition

The buying of a whole company, a patent, or a license to produce someone else's product.

New Product Development

Original products, product improvements, product modifications, and new brands developed from the firm's own research and development.

Idea Generation

The systematic search for new product ideas.

Internal Sources (Idea Generation)

Company-owned sources for new product ideas, including formal research and development, management and staff, and intrapreneurial programs.

External Sources (Idea Generation)

Sources outside the company for new product ideas, such as customers, competitors, distributors, suppliers, and outside design firms.

Crowdsourcing

Inviting broad communities of people—customers, employees, independent scientists and researchers, and the public at large—into the new product innovation process.

R-W-W Screening Framework

An idea screening framework that evaluates a product idea by asking: Is it real? Can we win? Is it worth doing?

Product Idea

An idea for a possible product that the company can see itself offering to the market.

Product Concept

A detailed version of the product idea stated in meaningful consumer terms.

Product Image

The way consumers perceive an actual or potential product.

Concept Testing

Testing new product concepts with groups of target consumers.

Marketing Strategy Development

Designing an initial marketing strategy for a new product based on the product concept.

Business Analysis

A review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the company's objectives.

Product Development (Stage)

Developing the product concept into a physical product to ensure that the product idea can be turned into a workable market offering.

Test Marketing

The stage of new product development in which the product and its proposed marketing program are tested in realistic market settings.

Commercialization

Introducing a new product into the market.

Customer-Centered New Product Development

An approach that focuses on finding new ways to solve customer problems and creating more customer-satisfying experiences.

Team-Based New Product Development

An approach involving various company departments working closely together, overlapping steps in the product development process to save time and increase effectiveness.

Innovation Management System

A systematic approach that creates an innovation-oriented company culture and yields a large number of new product ideas.

Introduction Stage

The product life cycle stage characterized by slow sales growth, little or no profit, and high distribution and promotion expenses.

Growth Stage

The product life cycle stage characterized by rapid market acceptance, increasing profits and sales, new competitors entering the market, economies of scale, and consumer education.

Maturity Stage

The product life cycle stage characterized by a slowdown in sales growth, leveling off or declining profits, increased competition from substitute products and overcapacity, and higher promotion and R&D spending.

Decline Stage

The product life cycle stage where sales fall off and profits drop, prompting strategies to maintain, harvest, or drop the product.

Price

The amount of money charged for a product or service, or the sum of all the values that customers exchange for the benefits of having or using the product or service.

Customer Value-Based Pricing

Setting prices based on buyers' perceptions of value rather than on the seller's cost.

Good-Value Pricing

Offering just the right combination of quality and good service at a fair price.

Everyday Low Pricing (EDLP)

Charging a constant everyday low price with few or no temporary price discounts.

High-Low Pricing

Charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items.

Value-Added Pricing

Attaching value-added features and services to differentiate a company's offers and support higher prices.

Cost-Based Pricing

Setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk.

Fixed Costs

Costs that do not vary with production or sales level, such as rent, heat, interest, and executive salaries.

Variable Costs

Costs that vary directly with the level of production, such as raw materials and packaging.

Total Costs

The sum of the fixed and variable costs for any given level of production.

Cost-Plus Pricing

Adding a standard markup to the cost of the product.

Break-Even Pricing (Target Return Pricing)

Setting price to break even on the costs of making and marketing a product, or to make a target return.

Competition-Based Pricing

Setting prices based on competitors' strategies, costs, prices, and market offerings.

Target Costing

Pricing that starts with an ideal selling price based on consumer value considerations and then targets costs that will ensure that the price is met.

Oligopolistic Competition

A market structure where a small number of large firms dominate the market.

Demand Curve

A curve that shows the number of units the market will buy in a given period at different prices.

Price Elasticity

A measure of the sensitivity of demand to changes in price.

Inelastic Demand

Demand that hardly changes with a small change in price.

Elastic Demand

Demand that changes greatly with a small change in price.

Market-Skimming Pricing

Setting high initial prices to skim revenue layers from the market.

Market-Penetration Pricing

Setting a low initial price for a new product in order to attract a large number of buyers and a large market share.

Product Line Pricing

Setting price steps across products in a line by taking into account cost differences, customer evaluations of features, and competitors' prices.

Optional-Product Pricing

Pricing optional or accessory products sold along with the main product.

Captive-Product Pricing

Pricing products that must be used along with the main product.

By-Product Pricing

Setting a price for by-products in order to make the main product's price more competitive.

Product Bundle Pricing

Combining several products and offering the bundle at a reduced price.

Discount and Allowance Pricing

Reducing prices to reward customer responses such as volume purchases, paying early, or promoting the product.

Allowances

Reductions from list prices that provide promotional money to dealers in return for an agreement to feature manufacturer products, including trade-in and promotional allowances.

Segmented Pricing

Selling a product or service at two or more prices, where the difference in prices is not based on differences in costs.

Psychological Pricing

Adjusting prices for psychological effects, considering that the price is used to say something about the product rather than relying solely on economics.

Reference Prices

Prices that buyers carry in their minds and refer to when looking at a given product.

Promotional Pricing

Temporarily reducing prices below list price—and sometimes even below cost—to spur short-run sales.

FOB-Origin Pricing

A geographical pricing strategy in which goods are placed free on board a carrier, and the customer pays the freight from the factory to the destination.

Uniform-Delivered Pricing

A geographical pricing strategy in which the company charges the same price plus freight to all customers, regardless of their location.

Zone Pricing

A geographical pricing strategy in which the company sets up two or more zones where all customers within a given zone pay the same price.

Basing-Point Pricing

A geographical pricing strategy where a seller selects a given city as a basing point and charges all customers freight cost from that city to their location.

Freight-Absorption Pricing

A geographical pricing strategy in which the seller absorbs all or part of the freight charges to get the desired business.

Dynamic Pricing

Adjusting prices continually to meet the characteristics and needs of individual customers and situations.

International Pricing

Adjusting prices for international markets to meet the specific characteristics and needs of different countries.

Price Fixing

An illegal agreement among competitors to set prices, prohibited by legislation that requires sellers to establish prices independently.

Predatory Pricing

Selling below cost with the intention of punishing a competitor or gaining higher long-term profits by putting competitors out of business.

Robinson-Patman Act

Legislation that prevents unfair price discrimination by ensuring that sellers offer the same price terms to customers at a given level of trade.

Retail Price Maintenance

An illegal practice occurring when a manufacturer requires a dealer to charge a specific retail price for its product.

Deceptive Pricing

An illegal practice where a seller states prices or price savings that mislead consumers or are not actually available, such as bogus comparison prices or scanner fraud.