Marketing Chapters 11–15: Product, Branding, New Product Development, Services, and Pricing

Comprehensive vocabulary flashcards covering marketing fundamentals from Chapters 11 through 15: product classification, branding, product life cycle, service characteristics, and pricing strategies.

SKU (Stock Keeping Unit)

A code a business uses to identify a specific version of a product.

Product Mix

Includes all of a firm's products and services.

Product Line

Associated items that consumers tend to use together or think of as part of a group.

Product Mix Breadth

The number of product lines offered by a firm.

Product Line Depth

The number of individual products contained within a specific product line.

Specialty Products

Products for which a consumer wants a particular brand or unique product and will make extra effort to obtain.

Shopping Products

Products for which consumers compare price, quality, and features before purchasing.

Convenience Products

Goods or services bought frequently with little thought or effort.

Unsought Products

Products that consumers do not normally think about buying until an urgent need arises.

Brand

A name, term, design, symbol, or other feature that increases consumer awareness and differentiates a firm's products from competitors.

Manufacturer (National) Brand

A brand owned by the manufacturer that can be sold across many different retailers.

Retailer (Private-Label) Brand

A brand owned and developed by a retailer, which may contract with outside manufacturers to produce the goods.

Brand Equity

The set of assets and liabilities linked to a brand that impact its value, representing the extra value a brand name adds to a product.

Brand Awareness

How easily and readily customers recognize and recall a brand.

Perceived Value

An aspect of brand equity evaluating whether customers believe the product's benefits are worth its price.

Brand Association

The mental links, thoughts, and feelings connected to a brand in consumers' minds.

Brand Loyalty

A consumer's repeated commitment to choosing a specific brand over competitors, even when competitors offer discounts.

Family Brand

A branding strategy where a corporate name is used across multiple brands and product lines.

Individual Brand

A strategy where a firm gives products distinct individual names and identities separate from other lines.

Brand Extension

Using an existing brand name to introduce a product into a completely different product line.

Line Extension

Using an existing brand name to introduce a new product within the same product line.

Brand Dilution

The weakening or blurring of a brand's image and perception resulting from an unsuccessful or mismatched brand extension.

Brand Licensing

A contractual agreement where one firm allows another to use its branding, logos, or trademarks in exchange for a fee.

Co-Branding

The marketing practice of pairing two or more brands together on a single product or promotion.

Primary Package

The package directly used by the consumer to hold and dispense the product.

Secondary Package

The wrapper or exterior container holding the primary package, which typically provides product labeling and protection.

Sustainable Packaging

Packaging designed to reduce environmental impact while continuing to effectively protect the product.

Pioneers (Breakthroughs)

New products that establish a completely new market or fundamentally change an existing one.

Diffusion of Innovation

The process by which the adoption of a new product spreads through a market over time.

Diffusion of Innovation Curve

A bell-shaped distribution illustrating consumer adoption speed: Innovators ($2.5\%$), Early Adopters ($13.5\%$), Early Majority ($34\%$), Late Majority ($34\%$), and Laggards ($16\%$).

Innovators

Adopters who try new products first ($2.5\%$ of adopters), enjoy experimenting, and are highly comfortable taking risks.

Early Adopters

Consumers ($13.5\%$ of adopters) who adopt a new product early once they recognize its clear benefits and serve as key opinion leaders.

Early Majority

A conservative adopter group representing $34\%$ of the market that waits for reviews or evidence of functionality before buying.

Late Majority

Skeptical buyers ($34\%$ of adopters) who adopt an innovation only after it has achieved widespread market use.

Laggards

Consumers ($16\%$ of adopters) who adopt last, typically purchasing an innovation only when traditional options are no longer available.

Opinion Leaders

Influential buyers (found among innovators, early adopters, and early majority) whose recommendations reduce uncertainty and persuade others to adopt.

Relative Advantage

A product diffusion factor measuring how much better a new product is perceived to be compared to the existing options.

Compatibility

A product diffusion factor evaluating how well a new product aligns with consumer needs, past experiences, and cultural values.

Observability

A product diffusion factor describing how easily potential buyers can witness the benefits of using an innovation.

Complexity

A product diffusion factor measuring how difficult an innovation is to understand and operate.

Trialability

A product diffusion factor measuring how easily potential consumers can test or sample an innovation before committing to purchase.

New Product Development Process

The structured six-stage process firms use to bring innovations to market: Idea generation, Concept testing, Product development, Market testing, Product launch, and Evaluation of results.

Sources of New Product Ideas

Internal and external avenues for generating ideas, including internal R&D, R&D consortia, licensing, brainstorming, outsourcing, competitors' products, and customer input.

Concept Testing

The stage in the product development process where a written description of a product concept is presented to potential buyers to gather feedback.

Prototype

An early, functioning model or sample of a product used for preliminary testing and evaluation.

Alpha Testing

An internal test in which the company's research team examines whether a prototype functions as intended.

Beta Testing

Testing in which potential customers evaluate a prototype under real-use conditions to provide practical feedback.

Premarket Testing

A market test measuring consumer exposure and response to a product in a controlled retail or laboratory setting.

Test Marketing

A limited, real-world market rollout accompanied by advertising to measure actual sales before committing to a full national launch.

Product Life Cycle (PLC)

The bell-shaped progression of sales and profits that a product category experiences over time through four stages: Introduction, Growth, Maturity, and Decline.

Product Life Cycle Stages (Characteristics)

The shifting market conditions regarding sales, profits, typical consumers, and number of competitors across the Introduction, Growth, Maturity, and Decline stages.

Intangibility

The characteristic of services denoting that they cannot be touched, held, or seen like physical goods.

Inseparability

The service characteristic meaning that service production and consumption take place concurrently.

Heterogeneity

The inherent variability in service quality from one delivery to another due to differences in human service providers.

Perishability

The service characteristic meaning that services cannot be stored or inventoried for future consumption.

Service-Product Continuum

A scale spanning from pure service-dominant offerings (e.g., doctor, hotel) to pure product-dominant offerings (e.g., grocery store).

Economic Importance of Services

The trend in developed economies toward service orientation driven by cheaper foreign goods production, high consumer value on convenience and leisure, and increased specialization of services.

Price

The overall sacrifice (in money, time, or effort) that a consumer is willing to make to acquire a product or service.

Value

The perceived benefits received by a consumer from a purchased product in relation to the sacrifice made.

Profit-Oriented Pricing

A pricing objective focused on generating a target profit, maximizing profits, or achieving a target return on investment.

Sales-Oriented Pricing

A pricing objective centered on increasing sales volume, total sales revenue, or overall market share.

Competitor-Oriented Pricing

A pricing objective that uses competitors' prices as the primary benchmark to set a firm's prices.

Customer-Oriented Pricing

A pricing approach based on setting prices directly according to consumer perceptions of product value.

Premium Pricing

A competitor-oriented pricing strategy where a firm deliberately sets prices higher than rivals to signal superior quality or prestige.

Competitive Parity

A pricing tactic of setting prices roughly equal to those of major competitors.

Status Quo Pricing

A pricing strategy where a firm alters its prices only in response to price moves made by competitors.

Price Elasticity of Demand

A metric defined as $\text{Price Elasticity of Demand} = \frac{\% \text{ change in quantity demanded}}{\% \text{ change in price}}$.

Elastic Demand

A condition where demand is sensitive to price changes, represented mathematically as $|x| > 1$.

Inelastic Demand

A condition where demand is relatively insensitive to price changes, represented mathematically as $|x| < 1$.

Complementary Products

Products whose demands are positively linked, where an increase in demand for one item causes an increase in demand for the other.

Substitute Products

Products that can replace each other; an increase in the price of one item leads to an increase in demand for the alternative item.

Dynamic Pricing

The practice of adjusting prices continuously based on customer type, time of day or season, and current demand levels.

Variable Costs

Costs that fluctuate directly in proportion to the volume of units produced.

Fixed Costs

Expenses that remain constant regardless of the quantity of goods manufactured.

Total Costs

The aggregate cost of production calculated as $\text{Total Costs} = \text{Variable Costs} + \text{Fixed Costs}$.

Break-Even Point

The point at which the number of units sold generates sufficient revenue to cover total costs, marking the threshold where profit begins.

Markup Pricing

Adding a predetermined percentage or dollar amount to the cost of a product to determine its selling price ($\text{Cost} + \text{Markup} = \text{Selling Price}$).

Four Levels of Competition

Market structures categorized by the number of firms and degree of price competition: Monopoly, Oligopolistic competition, Monopolistic competition, and Pure competition.

Cost-Based Pricing

A pricing approach where a firm determines costs to produce or buy the product and adds a markup to set the price, without accounting for consumer demand.

Value-Based Pricing

A pricing method that establishes prices based on what customers believe the product's benefits are worth.

Improvement-Value Method

A value-based pricing estimate of how much additional value a new product provides compared to available alternatives.

Cost-of-Ownership Method

A value-based pricing approach assessing the total financial cost of purchasing, using, maintaining, and replacing a product over its lifetime.

Reference Price

A baseline comparison price that consumers use to evaluate whether an offered selling price is reasonable.

Everyday Low Pricing (EDLP)

A pricing strategy of maintaining consistently low retail prices over time rather than relying on frequent short-term promotional discounts.

High/Low Pricing

A strategy of maintaining higher regular prices and periodically offering temporary promotional discounts.

Penetration Pricing

A new product pricing strategy setting a low initial price to rapidly generate sales volume and capture market share.

Price Skimming

A new product pricing strategy of introducing a product at a high premium price to capture value from innovators before lowering the price over time.

Leader Pricing

Pricing select high-demand products very low to draw shoppers into the store with the expectation they will purchase other items.

Loss-Leader Pricing

Pricing a product below the retailer's acquisition cost to generate traffic, an aggressive tactic that is illegal in some jurisdictions.

Bait and Switch

An illegal advertising tactic where a firm advertises an item at an artificially low price to lure customers, but aggressively pressures them to purchase higher-priced goods.

Predatory Pricing

Setting prices below cost with the deliberate intention of driving competitors out of business, which violates antitrust laws.

Price Discrimination

Selling the identical good or service to different buyers at different prices without cost-justified reasons.

Horizontal Price Fixing

An illegal agreement among competing firms operating at the same level of the market to fix or stabilize prices.

Vertical Price Fixing

An illegal arrangement where parties at different levels of the supply chain (such as a manufacturer and retailer) agree on prices consumers will pay.