Chapter 11 - Product, Price, Place (copy)

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Business

117 Terms

1

products

Goods and services

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Are services different from goods?

Services are different from goods.

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Intangible

means something cannot be touched

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Inseparable

means a service cannot be separated from the person who performs it

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variable

means each service is almost always unique

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perishable

means that services cannot be stored for later use

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features, usage, protection

Product elements can be changed to meet customer needs

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8

Features

are facts about a good or service

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Service and option features

Size, color, quantity, design, material, etc…

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10

Quality

an indicator of a product’s excellence

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11

Three general quality levels

premium, moderate, value

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Usage

the way something is used

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Instructions

are steps carried out in a specific order to successfully complete a task

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Installation

the act or process of putting a good in a certain place and getting it ready for use

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Technical support

includes people and resources available to help customers with usage problems

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Protection

intended to protect the product, user, or both

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Safety inspections

verify product safety

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Packaging

protects products until customers are ready to use them

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Warranty

a written document that states the quality of a product with a promise to correct certain problems that might occur

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Guarantee

a promise that a product has a certain quality or will perform in a specific way

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Protection includes what services?

Maintenance and repair services

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Product mix

all the goods and services that a business sells

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Product line

a group of closely related products within the product mix

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Product width

the number of product lines a company offers

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Product item

the specific model, color, or size of products in a line

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Product depth

the number of product items within a product line

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Product Line (2)

the group of closely related products under a single brand sold by the same company within the product mix (2)

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Product width (2)

the number of product lines a company offers (2)

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Product depth (2)

the number of product items within a product line (2)

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Procur planning

the process of deciding which products will appeal to the target market

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Consumer products

sold to consumers for their personal use

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Convenience goods

bought often and with little effort

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Shopping goods

are usually purchased after comparing price, quality, and style in more than one store

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Specialty goods

unique items that consumers are willing to spend considerable time, effort, and money to buy

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Business Products

items sold to businesses for use in their operations

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37

Raw materials

natural or man-made materials that become part of a manufactured product

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Process materials

used in product manufacturing

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Component parts

become a part of a finished product

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Major equipment

large machines and other equipment used for production purposes

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Office equipment and supplies

are products for basic office needs

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Business services

tasks necessary to keep a business running

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43

Price

the amount of money requested or exchanged for a product

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Value

the relative worth of something to a person

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Value proposition

an explanation of the value of a certain product over others that are similar

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46

What are the pricing tiers?

List price, Selling price, Manufacturer’s suggested retail price (MSRP)

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List price

is the established price printed in a catalog, on a price tag, or on a price list

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Selling price

the actual price a customer pays for a product after any discounts or coupons are deducted

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Manufacturer’s suggested retail price (MSRP)

the price recommended by the manufacturer

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Pricing objectives

goals defined in the business and marketing plans for the overall pricing policies of the company

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Maximizing sales

a pricing objective based on offering the lowest price possible to get the largest number of customers to buy the product

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Maximizing profit

a pricing objective that aims to generate as much revenue as possible in relation to total cost

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What are the many factors influence the price of a product?

  • Company Goals

  • Expenses

  • Customer perception

  • Competition

  • Supply and demand

  • Economic conditions

  • Product life-cycle

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What is the pricing throughout a product life cycle?

Introduction stage, growth stage, maturity stage, decline stage

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Introduction stage

Price of a brand new product is often high

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Growth stage

More competitors enter the market and the high price of new products usually falls

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Maturity stage

Sales and price of products are stable

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Decline stage

Price is often significantly reduced and some products are eliminated

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What should be considered when setting selling price?

Consider the costs of creating products when setting _______ _____

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Break-even point

the point at which revenue from sales equals the costs; product starts making profit

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Markup

the amount added to the cost to determine the selling price

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Base price

a product is the general price at which the company expects to sell the product

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Psychological pricing strategies

pricing techniques that create an image of a product and entice customers to buy

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Odd pricing

Prices end in an odd number

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Even pricing

Prices end in an even number

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Prestige pricing

Prices high to convey quality and status

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Price lining

Various prices for same type of product to indicate different levels of quality

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Buy one, get one (BOGO) pricing

Free or reduced-price item when another is purchased at full price

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Bundling

Combines two or more products for one price

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What are the discount pricings in the B2B market?

Cash discount, promotional discount, quality discount, seasonal discount, trade discount

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Cash discount

usually a percentage deducted from the total invoice amount

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Promotional discount

given to businesses that agree to advertise or promote a manufacturer’s product

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Quantity discount

offers a reduced per-item price for larger numbers of an item purchased

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Seasonal discount

offered by retailers when they buy goods well in advance of the season

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Trade discount

the way that manufacturers quote prices to wholesalers and retailers; percentage off list price

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Bait and switch

the practice of advertising one product with the intent of persuading customers to buy a more expensive item when they arrive in the store

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Price fixing

when a group of competitors get together and set the price for a specific product

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Price discrimination

occurs when a company sells the same product to different customers at different prices based on personal characteristics of the customers

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Deceptive pricing

the illegal pricing of products in a way that intentionally misleads customers

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Predatory pricing

the practice of setting very low prices to remove competition

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Loss leader

pricing an item much lower than the current market price or the cost of acquiring the product

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Price gouging

the raising of prices on certain kinds of goods to an excessively high level during an emergency

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Can the government intervene with pricing?

Yes, in order to help the economy or consumers

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Price ceilings

maximum prices set by the government for certain goods and services that it thinks are being priced too high

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Price floors

minimum prices set by the government for certain goods and services that it thinks are being priced too low

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86

Place

the activities in getting product to the end user (Distribution)

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Supply chain

the businesses, people, and activities involved in turning raw materials into products and delivering them to end users

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Channel of Distribution

the path that goods take through the supply chain

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Direct channel

a path directly from a manufacturer to end users without using intermediaries

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Indirect channel

uses intermediaries to get the product from the manufacturer to the end users

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Producers

businesses that create goods and services

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Natural resources

also called raw materials; Extractors are businesses or people that take natural resources from the land

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Agricultural products

Farmers raise crops and livestock that are sold to end users

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Finished goods

Manufacturers use supplies from other producers to make products

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Producers make what three types of products?

Natural resources, agricultural products, finished goods

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intermediaries

people and businesses between manufacturers/producers and end users; channel members

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Transactional function

sales and marketing activities for the business

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Logistics function

physically moving products from the manufacturers to distributors, retailers, or end users

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Facilitating function

selling product to end users

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Wholesaler

purchases large amounts of goods directly from manufacturers; distributor

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