Creating Products and Pricing Strategies

FBLA intro to business concepts

benefit segmentation

The differentiation of markets based on what a product will do rather than on customer characteristics.

big data

Large data sets and systems and solutions developed to manage large accumulations of data.

brainstorming

A method of generating ideas in which group members suggest as many possibilities as they can without criticizing or evaluating any of the suggestions.

bundling

The strategy of grouping two or more related products together and pricing them as a single product.

buyer behavior

The actions people take in buying and using goods and services.

capital products

Large, expensive items with a long life span that are purchased by businesses for use in making other products or providing a service.

competitive advantage

A set of unique features of a company and its products that are perceived by the target market as significant and superior to those of the competition; also called differential advantage.

convenience products

Relatively inexpensive items that require little shopping effort and are purchased routinely without planning.

cost competitive advantage

A firm’s ability to produce a product or service at a lower cost than all other competitors in an industry while maintaining satisfactory profit margins.

culture

The set of values, ideas, attitudes, and other symbols created to shape human behavior.

customer satisfaction

The customer’s feeling that a product has met or exceeded expectations.

customer value

The ratio of benefits to the sacrifice necessary to obtain those benefits, as determined by the customer; reflects the willingness of customers to actually buy a product.

demographic segmentation

The differentiation of markets through the use of categories such as age, education, gender, income, and household size.

differential competitive advantage

A firm’s ability to provide a unique product or service with a set of features that the target market perceives as important and better than the competitor’s.

distribution strategy

Creating the means by which products flow from the producer to the consumer.

dynamic pricing

Computer algorithms that allow for prices to change based on demand.

environmental scanning

The process in which a firm continually collects and evaluates information about its external environment.

exchange

The process in which two parties give something of value to each other to satisfy their respective needs.

expense items

Items (purchased by businesses) that are smaller and less expensive than capital products and usually have a life span of less than one year.

experiment

A marketing research method in which the investigator changes one or more variables—price, packaging, design, shelf space, advertising theme, or advertising expenditures—while observing the effects of these changes on another variable (usually sales).

five Ps

The traditional 4Ps of marketing: product, price, promotion, place (distribution), now with people added as a key marketing component, which together make up the marketing mix.

focus group

A group of eight to 12 participants led by a moderator in an in-depth discussion on one particular topic or concept.

geographic segmentation

The differentiation of markets by region of the country, city or county size, market density, or climate.

leader pricing

The strategy of pricing products below the normal markup or even below cost to attract customers to a store where they would not otherwise shop.

line extension

A new flavor, size, or model using an existing brand name in an existing category.

loss leader

A product priced below cost as part of a leader-pricing strategy.

market segmentation

The process of separating, identifying, and evaluating the layers of a market in order to identify a target market.

marketing

The process of discovering the needs and wants of potential buyers and customers and then providing goods and services that meet or exceed their expectations.

marketing concept

Identifying consumer needs and then producing the goods or services that will satisfy them while making a profit for the organization.

marketing database

Computerized file of customers’ and potential customers’ profiles and purchase patterns.

marketing mix

The blend of product offering, pricing, promotional methods, distribution system, and strategies for utilizing people that creates an offering that brings a specific group of consumers superior value.

marketing research

The process of planning, collecting, and analyzing data relevant to a marketing decision.

niche competitive advantage

A firm’s ability to target and effectively serve a single segment of the market, often within a limited geographic area.

observation research

A marketing research method in which the investigator monitors respondents’ actions without interacting directly with the respondents; for example, by using cash registers with scanners.

odd-even (psychological) pricing

The strategy of setting a price at an odd number to connote a bargain and at an even number to suggest quality.

one-to-one marketing

Creating a unique marketing mix for every customer.

penetration pricing

The strategy of selling new products at low prices in the hope of achieving a large sales volume.

personality

A way of organizing and grouping how an individual reacts to situations.

prestige pricing

The strategy of increasing the price of a product so that consumers will perceive it as being of higher quality, status, or value.

price skimming

The strategy of introducing a product with a high initial price and lowering the price over time as the product moves through its life cycle.

pricing strategy

Setting a price based upon the demand for and cost of a good or service.

product

In marketing, a good, service or idea, along with its perceived attributes and benefits, that creates value for the customer.

product life cycle

The pattern of sales and profits over time for a product or product category; consists of an introductory stage, growth stage, maturity, and decline (and death).

product manager

The person who develops and implements a complete strategy and marketing program for a specific product or brand.

product strategy

Taking the good or service and selecting a brand name, packaging, colors, a warranty, accessories, and a service program.

promotion strategy

The unique combination of personal selling, traditional advertising, publicity, sales promotion, social media, and e-commerce to stimulate the target market to buy a product. Sometimes referred to as the promotion mix.

psychographic segmentation

The differentiation of markets by personality or lifestyle.

reference groups

Formal and informal groups that influence buyer behavior.

relationship marketing

A strategy that focuses on forging long-term partnerships with customers by offering value and providing customer satisfaction.

shopping products

Items that are bought after considerable planning, including brand-to-brand and store-to-store comparisons of price, suitability, and style.

specialty products

Items for which consumers search long and hard and for which they refuse to accept substitutes.

survey research

A marketing research method in which data is gathered from respondents, either in person, by telephone, by mail, at a mall, or through the internet to obtain facts, opinions, and attitudes.

target market

The specific group of consumers toward which a firm could direct its marketing efforts. It is often divided into segments so that marketing strategies can be directed to a more specific target.

test marketing

The process of testing a new product among potential users.

unsought products

Products that either are not planned as a purchase by a potential buyer or are known but the buyer does not actively seek them, such as funeral services.

volume segmentation

The differentiation of markets based on the amount of the product purchased.