Chapter 11 - Product, Price, Place (copy)

products

Goods and services

Are services different from goods?

Services are different from goods.

Intangible

means something cannot be touched

Inseparable

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

variable

means each service is almost always unique

perishable

means that services cannot be stored for later use

features, usage, protection

Product elements can be changed to meet customer needs

Features

are facts about a good or service

Service and option features

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

Quality

an indicator of a product’s excellence

Three general quality levels

premium, moderate, value

Usage

the way something is used

Instructions

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

Installation

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

Technical support

includes people and resources available to help customers with usage problems

Protection

intended to protect the product, user, or both

Safety inspections

verify product safety

Packaging

protects products until customers are ready to use them

Warranty

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

Guarantee

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

Protection includes what services?

Maintenance and repair services

Product mix

all the goods and services that a business sells

Product line

a group of closely related products within the product mix

Product width

the number of product lines a company offers

Product item

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

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)

Product width (2)

the number of product lines a company offers (2)

Product depth (2)

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

Procur planning

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

Consumer products

sold to consumers for their personal use

Convenience goods

bought often and with little effort

Shopping goods

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

Specialty goods

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

Business Products

items sold to businesses for use in their operations

Raw materials

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

Process materials

used in product manufacturing 

Component parts

become a part of a finished product 

Major equipment

large machines and other equipment used for production purposes

Office equipment and supplies

are products for basic office needs

Business services

tasks necessary to keep a business running

Price

the amount of money requested or exchanged for a product

Value

the relative worth of something to a person

Value proposition

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

What are the pricing tiers?

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

List price

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

Selling price

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

Manufacturer’s suggested retail price (MSRP)

the price recommended by the manufacturer

Pricing objectives

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

Maximizing sales

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

Maximizing profit

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

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

What is the pricing throughout a product life cycle?

Introduction stage, growth stage, maturity stage, decline stage

Introduction stage

Price of a brand new product is often high

Growth stage

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

Maturity stage

Sales and price of products are stable

Decline stage

Price is often significantly reduced and some products are eliminated

What should be considered when setting selling price?

Consider the costs of creating products when setting _______ _____

Break-even point

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

Markup

the amount added to the cost to determine the selling price

Base price

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

Psychological pricing strategies

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

Odd pricing

Prices end in an odd number

Even pricing

Prices end in an even number

Prestige pricing

Prices high to convey quality and status

Price lining

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

Buy one, get one (BOGO) pricing

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

Bundling

Combines two or more products for one price

What are the discount pricings in the B2B market?

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

Cash discount 

usually a percentage deducted from the total invoice amount

Promotional discount

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

Quantity discount

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

Seasonal discount

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

Trade discount

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

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

Price fixing

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

Price discrimination

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

Deceptive pricing

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

Predatory pricing

the practice of setting very low prices to remove competition

Loss leader

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

Price gouging

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

Can the government intervene with pricing?

Yes, in order to help the economy or consumers

Price ceilings

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

Price floors

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

Place

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

Supply chain

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

Channel of Distribution

the path that goods take through the supply chain

Direct channel

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

Indirect channel

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

Producers

businesses that create goods and services

Natural resources

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

Agricultural products

Farmers raise crops and livestock that are sold to end users

Finished goods

Manufacturers use supplies from other producers to make products

Producers make what three types of products?

Natural resources, agricultural products, finished goods

intermediaries

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

Transactional function

sales and marketing activities for the business

Logistics function

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

Facilitating function

selling product to end users

Wholesaler

purchases large amounts of goods directly from manufacturers; distributor