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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
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
Note
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