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4 product life cyle stages
- - introduction
- - growth
- - maturity
- - decline
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occurs when a product is introduced to its intended market
- introduction stage
- - sales grow slowly
- - profit is minimal
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stage of product life cycle characterized by rapid increases in sales
- growth stage
- - competitors appear
- - product sales in growth stage grow at an increasing rate
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stage is characterized by a slowing of total industry sales or product class revenue
maturity stage
- sales increase a a decreasing rate
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stage when sales drop
- decline stage
- - companies wil either use deletion or harvesting
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deletion?
dropping the produt from the companies product line, the most drastic strategy
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harvesting?
when a company retains the product, but reduces marketing costs
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3 impotant aspects of product life cycles
- 1. their length
- 2. the shape of their sales curves
- 3. the rate at which consumers adopt products
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which has a shorter ife cycle, consumer products or business products?
consumer products
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technological change tends to ______ product life cycles
shorten
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fashion products?
is the style of the times
ie: womens and mens apparel
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fad products
- experiences rapid sales on introduction then an equally rapid decline
- products are typically novelties and have a short life cycle
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several factors whch affect whether a consumer will adop a new product or not
- - usage barriers
- - value barriers
- - risk barriers
- - psychological barriers
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advertising plays a major role in the ________ stage of the product life cycle, and _________ plays a major role in maturity
- A. introduction stage
- B. product differentiation
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how do high-learning and low-learning products differ
high learning products require significant customer education and have an extended introductory period, while low-learning product sales begin immediately because little learning is required
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what does a product manager do?
- they are responsible for managing existing products through the stages of the life cycle.
- also include approving ad copy, media selection, and packaging design
- they also engage in extensive data analysis related to their products and brands
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product modification involves.....
altering a products characteristic such as its quality, performance, or appearance, to increase the products value to customers and increase sales
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________ changes the place a product occupies in a consumers mind relative to competitive products
product repositioning
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__________ involves adding value to the product or line through additional features or higher-quality materials
trading up
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a set of human characteristics associated with a brand name
brand personality
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the first step to creating brand equity
develop positive brand awareness and an association of the brand in consumers minds
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2nd step in creating brand equity
establish a brands meaning in he minds of consumers
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3rd step in creating brand equity
elicit the proper consumer respones to a brands identity and meaning
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final step in creating brand equity
also the most difficult, is to create a consumer brand connection evident in and intense, active loyalty relationship between consumers and the brand
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_______ is a contractural agreement whereby one company allows its brand name or tradmarks o be used with products or services offered by another company for a royalty or fee
brand licensing
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5 criteria when selecting a good brand name
- 1. the name should suggest the product benefits
- 2. the name should be memorable distinctive, and positive
- 3. the name should fit the company or product image
- 4. the name should have no legal or regulatory restritions
- 5. the name should be simple, and emotional
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a company who uses one name for all its products in a product class is...
multiproduct branding
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multibranding involves?
giving each product a distinct name
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packaging and labeling accounts for about ___ cents of every dollar spent by consumers for products
15
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off peak pricing
consist of charging different prices during different times of the dy or days of the week to reflect variations in demand for the service
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____ is the money or other considerations exchanged fo the ownership or use of a good or service
price
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price equation is?
price = list price - incentives and allowances + extra fees
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_____ is the ratio of perceived benefits to price
value
value = perceived benefits / price
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profit equation?
profit = total revenue - total cost
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settig the highest initial price that customers really desiring the product are willing to pay is?
skimming pricing
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setting a low initial price on a new product to appeal immediately to the mass market is?
penetration pricing
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prestige pricing is
setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it
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odd- even pricing is?
setting prices a few dollars or cents under an even number
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manufacturer deliberately adjusting the compositon and features of a product to achieve the target price to consumers
target pricing
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marketing of two or more products in a single package price
bundle pricing
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the charging of different prices to maximize revenue for a set amount of capacity at any given time
yield management pricing
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adding a fixed percetnage to the cost of all items in a specific product class
standard markup pricing
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summing the total unit cost of providing a product or service and adding a specific amount to the cost to arriv at a price
- cost-plus pricing
- the most commonly used method to set prices or business proucts
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when a firm sets an annual target of a specific dollar volume of profit
target profit pricing
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set prices that will give them a profit that is a specified percentage of the sales volume
target return-on-sales pricing
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set prices to achieve a return on investment
target return on ivestment pricing
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market price of a product is
what customers are generally willing to pay
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deliberately selling a product below its customary price to attract attention to it
loss-leader pricing
not to increase sales, but to attract customers in hopes they will buy other products as well
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a graph relating the quantity sold and the price, which shows the maximum number of units that ill e sold at a given price
demand curve
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price elasticity of demand is
percentage change in quantity demanded relative to a percentage change in price
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a product with elastic demand i one in which...
a slight decrease inprice results in a relatively largeincreas in demand, or units sold
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a product with inelastic demand means...
that slight increases or decreases in price will not significantly affect the demand or units sold
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costs
the monies the firm pays out to its employees and suppliers
includes: total cost, fixed cost, variable cost, and unit variable cost
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total cost
- the total expense incurred by a firm in producing and marketing a product.
- the sum of fixe cost and variable cost
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fixed cost
sum of al expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold
ie - rent on building, executive salaries, and insurance
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variable costs
sum of the expenses of the firm that vary directly with the quantity of a product that is produced and sold
ie - direct labor direct materials used in producin the product, and the sales commission tied directly to the quantity sold
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unit variable costs
expressed on a per unit basis
UVC = VC / Q
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break even point
the quantity at which total revenue and total cost are equal
FC / P - UVC
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factors that limit the rangeof price a firm ay set are
pricing constraints
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price fixing
conspiracy among firms to set pricesfor a product
illegal under the sherman act
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bait and switch
when a firm offers a very low price on a product to attract customers to a store, once in the store, the customer is persuaded to purchase a higher-priced item using a variety of tricks, including degrading the promoted item, and not having the promised item in stock or refusing to take orders for it
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setting different prices for products and services depending on individual buyers and purchase situation in light of demand, cost, competitive factors
flexible-price policy
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allowances
are reductions from list or quoted price to buyers fr performing some activity
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promotional allowances
qualify by understaking certain advertising or selling activities to promost a product
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3 steps in seting the final price
- 1. select an approximate price level
- 2. set the list or quoted price
- 3. make special adjustments to the list or quoted price
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