Study your flashcards anywhere!

Download the official Cram app for free >

  • Shuffle
    Toggle On
    Toggle Off
  • Alphabetize
    Toggle On
    Toggle Off
  • Front First
    Toggle On
    Toggle Off
  • Both Sides
    Toggle On
    Toggle Off
  • Read
    Toggle On
    Toggle Off

How to study your flashcards.

Right/Left arrow keys: Navigate between flashcards.right arrow keyleft arrow key

Up/Down arrow keys: Flip the card between the front and back.down keyup key

H key: Show hint (3rd side).h key

A key: Read text to speech.a key


Play button


Play button




Click to flip

203 Cards in this Set

  • Front
  • Back
A Product Defined
-A good, a service, or an idea received in an exchange.
-It can be tangible (a good) or intangible (a service or an idea) or a combination of both.
-It can include functional, social, and psychological utilities or benefits.
Why Buyers Purchase a Product
-To get the benefits and satisfaction that they think the product will provide
-Symbols and cues provided by marketing help consumers make judgments about products.
Consumer Products
Products purchased to satisfy personal and family needs
Business Products
Products bought to use in an organization’s operations, to resell, or to make other products (raw materials and components)
Convenience Products [definition]
Relatively inexpensive, frequently purchased items buyers exert minimal purchasing effort
Convenience Products
-Marketed through many retail outlets
-Relatively low per-unit gross margins
-Little promotional effort at the retail level
-Packaging is important marketing mix element
Shopping Products
Items buyers are willing to expend considerable effort in planning and making purchases
Shopping Products
-Expected to last a long time; less frequently purchased
-Do not have brand loyalty appeal
-Require fewer retail outlets
-Inventory turnover is lower
-higher gross margins
-More amenable to personal selling
-Supported (servicing and promoting the product) by both the producer and channel members
Specialty Products
Items with unique characteristics buyers are willing to expend considerable effort to obtain
Specialty Products
- preselected by the consumer
- no close substitutes or alternatives
- available in limited # of retail outlets
- purchased infrequently
- significant and expensive investment
- high gross margins, low inventory turnover
Unsought Product
purchased to solve a sudden problem, products of which the customers are unaware, and products that people do not necessarily think about buying
Unsought Products
-Speed and problem resolution of the utmost importance
-Price and other features not considered
-No consideration of substitutes or alternatives
-Purchased infrequently
Facilities and nonportable major equipment [Office buildings, factories and warehouses, production lines, very large machines]
Accessory Equipment
Equipment used in production or office activities [File cabinets, small motors, calculators, and tools]
Raw Materials
Basic natural materials that become part of a physical product such as ores, water, lumber, grains, and eggs
Component Parts
Items that become part of the physical product:
-Finished items ready for assembly
-Items needing little processing before assembly
-Computer chips, engine blocks, girders, and paints
Process Materials
not readily identifiable materials when used directly in production of other products such as screws, knobs, and handles
MRO Supplies
Maintenance, repair, and operating items that facilitate production and do not become part of the finished product such as cleaners, rubber bands, and staples
Business Services
The intangible products that many organizations use in their operations such as cleaning, legal, consulting, and repair service.
Product Item
A specific version of a product
Product Line
A group of closely related product items viewed as a unit because of marketing, technical, or end-use considerations
Product Mix
The total group of products that an organization makes available to customers
Width of Product Mix
The number of product lines a company offers
Depth of Product Mix
The average number of different products in each product line
Product Life Cycle
The progression of a product through four stages: introduction, growth, maturity, and decline.
Introduction Stage
The initial stage of a product’s life cycle—its first appearance in the marketplace—when sales start at zero and profits are negative
Growth Stage
when sales rise rapidly and profits reach a peak and then start to decline:
-More competitors enter the market
-Product pricing is aggressive
-Brand loyalty becomes important
-Gaps in market coverage are filled
-Promotion expenditures moderate
-Production efficiencies lower costs
Maturity Stage
when the sales curve peaks and starts to decline and profits continue to fall:
-Intense competition
-Emphasis on improvements and differences in competitors’ products
-Weaker competitors lose interest and exit the market
-Advertising and dealer-oriented promotions predominate
-Distribution sometimes expands to the global market
Strategic objectives for maturity stage
-Generate cash flow
-Maintain market share
-Increase share of customer
Decline Stage
when sales fall rapidly:

-Pruning items from product line
-Cutting promotion expenditures
-Eliminating marginal distributors
-Planning to phase out product
Production Adoption Process
stages buyers go through in accepting a product:
- Awareness
- Interest
- Evaluation
- Trial
- Adoption
Categories of Product Adopters
-Early adopters
-Early majority
-Late majority
First adopters of new products
Early adopters
Careful choosers of new products
Early majority
Those adopting new products just before the average person
Late majority
Skeptics who adopt new products when they feel it is necessary
The last adopters, who distrust new products
-An identifying name, term, design, or symbol
-One item, family of items, or all items of a seller
Brand Name
-The part of a brand that can be spoken
-Words, letters, numbers
Brand Mark
-The part of a brand not made up of words
-Symbols or designs
A legal designation of exclusive use of a brand
Trade Name
Full legal name of an organization
Value of Branding To Buyers
-Helps speed consumer purchases by identifying specific preferred products
-Provides a form of self-expression and status
-Evaluates product quality to reduce the risk of purchase
Value of Branding To Sellers
-Identifies and differentiates a firm’s products from competing products
-Helps in the introduction of new products
-Facilitates the promotion of all same-brand products
-Fosters the development of brand loyalty
Brand Equity
The marketing and financial value associated with a brand’s strength in a market
Brand Loyalty
A customer’s favorable attitude toward a specific brand
Brand Recognition
A customer’s awareness that a brand exists and is an alternative purchase
Brand Preference
The degree of brand loyalty in which a customer prefers one brand over competitive offerings
Brand Insistence
The degree of brand loyalty in which a customer strongly prefers a specific brand and will accept no substitute
Manufacturer Brands
Brands initiated by producers
Private Distributor Brands
Brands initiated and owned by resellers
Generic Brands
Brands indicating only the product category
Selecting a Brand Name
-easy to say, spell, and recall.
-indicate major benefits.
-suggest major uses and special characteristics.
-distinctive, set apart from competing brands.
-compatible with all products in line.
-designed for use and recognition in all types of media.
Protecting a Brand
-Surnames and descriptive, geographic, or functional names are difficult to protect.
-Registration with the U.S. Patent and Trademark Office protects a brand for ten years with indefinite renewals.
Degree of Brand Protection Through Registration [from MOST to LEAST]
Individual Branding
- naming each product differently
-avoids stigmatizing all products due to a failed product
Family Branding
-Branding all of a firm’s products with same name
-Promotion of one item also promotes all other products
Brand Extensions
-Using an existing brand name on a new product in a different category.
-Provides support for new products through established brand name and image.
-Using two or more brands on one product to capitalize on the brand equity (customer confidence and trust) of multiple brands
-Brands involved must represent a complementary fit in the minds of consumers.
Brand Licensing
agreement whereby a company permits another organization to use its brand on other products for a licensing fee
Brand Licensing PROS & CONS
-Low-cost and/or free publicity
-Revenues from royalty fees

-Lack of manufacturing control
-Creating too many unrelated products
development of a container and a graphic design for a product
Packaging Functions
-Protect product from damage
-Offer convenience to consumers
-Prevent waste and make storage easier
-Promote product by communicating features, uses, benefits, and image
Cost of Packaging Consideration
Limited consumer willingness to pay for better packaging
Family Packaging Consideration
Similar packaging for all of a firm’s products or packaging that has one common design element
Promotional Role of Packaging
-Verbal and nonverbal symbols
-Size, shape, texture, color, and graphics
Reseller Needs of Packaging
Transportation, storage, and handling
Packaging and Marketing Strategy
-Altering the Package
-Secondary-Use Packaging
-Category-Consistent Packaging
Altering the Package Strategy
-To update style and to meet increased competition
-To highlight new features
-To take advantage of new packaging materials
-To make the product safer or easier to use
-To reduce packaging costs
Secondary-Use Packaging Strategy
-Reusable packaging adds customer value
-Category-Consistent Packaging
-Packaging reflects customer expectations for the expected appearance of products in a category
Innovative Packaging Strategy
Unique features or ways of packaging that make a product more distinct from its competitors
Multiple Packaging Strategy
Bundling multiple units of a product together to encourage usage and to increase demand
Handling-Improved Packaging Strategy
Packaging that has been changed to facilitate product handling in the distribution channel
Providing identifying, promotional, legal, or other information on package labels
Purposes of Labels
-Help identify the product
-Support promotional efforts for the product
-Provide legally required labeling information
-Provide information on product origin
Line Extension
-Development of a product that is closely related to existing products in the line but meets different customer needs
Line Extension Advantages
-Is a less expensive, low risk alternative
-May focus on the same or a new segment
-Can be used to counter competing products
Product Modifications
A change in one or more characteristics of the product and the elimination of the original product from the product line
-Product must be modifiable.
-Customer must be able to perceive modification has been made.
-Modified product more closely satisfies customers’ needs.
Quality Modifications
Changes in material or production processes related to a product’s dependability and durability
-Reducing quality to offer a lower price to customers
-Increasing quality to gain a competitive advantage
Functional Modifications
Changes affecting a product’s versatility, effectiveness, convenience, or safety; usually requiring redesign of the product
Aesthetic Modifications
Changes to the sensory appeal of a product such as altering taste, texture, sound, smell, or appearance
Developing New Products Benefits & Risks
-Enhances product mix
-Expensive to develop
-Creates risk of market failure
-Loss of market share without new products
Idea Generation
Seeking product ideas to achieve objectives
Idea Generation Internal sources
SOURCES: marketing managers, researchers, sales personnel, and engineers
Idea Generation External sources
SOURCES: customers, competitors, advertising agencies, consultants, and new-product alliances
Developing New Products
-Idea generation
-Concept testing
-Business analysis
-Product Development
-Test marketing
Choosing the most promising ideas for further review:
-Concerns about cannibalization of existing products
-Company capabilities to produce and market the product
-Nature and wants of buyers
Concept Testing
Seeking potential buyers’ responses to a product idea:
-Low cost determination of initial reaction to product idea
-Identification of important product attributes and benefits
Business Analysis
Assessing the potential of a product idea for the firm’s sales, costs, and profits:
-Does product fit in with existing product mix?
-Is demand strong enough to enter the market?
-How will introducing the product change the market?
-Is the firm capable of developing the product?
-What are the costs for developing and marketing?
Product Development
Determining if producing a product is feasible and cost effective:
-Construction of a prototype, or working model
-Testing of the prototype’s overall functionality
-Determining the level of product quality
-Branding, packaging, labeling, pricing, and promotion decisions
Test Marketing
Introducing product on a limited basis to measure the extent potential customers will actually buy:
-Sample launch of entire marketing mix
-Lessens risk of larger market failure
-Expensive; simulated test marketing is an alternative
Deciding on full-scale manufacturing and marketing plans and preparing budgets:
-Modifications indicated by test marketing are incorporated into production design.
-Marketing, distribution, and servicing plans are finalized.
-Product roll-out occurs in stages to lessen risks of introducing new product.
Product Differentiation
Creating and designing products so that customers perceive them as different from competing products:
-Perceived differences in product quality, product design and features, and product support services
-Branding—crucial way to differentiate a product
Product Quality
-Overall characteristics of a product that allow it to perform as expected in satisfying customer needs
-Level of quality is relative amount of quality a product possesses.
-Consistency of quality is degree a product has the same level of quality over time.
Product design
-How a product is conceived, planned, and produced
-Good design provides a strong competitive advantage.
-Customers typically desire products with good designs and that function well.
-include specific design characteristics that allow a product to perform certain tasks.
physical appearance of a product
Customer services
-Human or mechanical efforts or activities that add value to a product
-Delivery and installation, financing, customer training, warranties and guarantees, repairs, online product information
-Competitive advantage when all other product features are equally matched by competitors
Product Positioning
-Creating and maintaining a certain concept of product in customers’ minds
-Product’s position results from customers’ perceptions of product’s attributes relative to those of competing products.
-Marketers emphasize characteristics most desired by target market (or segment) in advertising.
Perceptual Mapping
Bases for positioning
Perceptual maps
show marketers how closely products are conceptually positioned by consumers to “ideal points,” to their own products, and to competitors’ products.
Repositioning a Product
- Adjusting a product’s present position can strengthen/increase its market share and profitability.
- Accomplished by changing product’s features, price, distribution, or image.
- Adding new products to the line may necessitate in older products.
Product Deletion
process of eliminating a product from the product mix
Reasons to remove a product
-Slow sales create higher unit-production costs, inventory costs, and distribution costs.
-To prevent negative feelings from affecting company’s other products.
-An intangible product involving a deed, performance, or effort that cannot be physically possessed
-Application of human and/or mechanical efforts directed at people or objects
actions that have no permanent physical qualities as opposed to goods which can be touched and possessed over time.
Inseparability of Production and Consumption
cannot be separated from its consumption by the customer. Produced, sold, and consumed all at the same time.
cannot be produced ahead of time and stored until needed.
Variation in the quality of services delivered by individuals and organizations
Client-Based Relationships
Interactions that result in satisfied customers who use a service repeatedly over time
Customer Contact
level of interaction between the service provider and the customer necessary to deliver the service
High-contact services
require the customer to be present during the production of the service and require well-trained and motivated service personnel.
Low-contact services
do not require the customer’s continuous presence while the service is carried out.
Package or bundle of services
-core services that are expected basic service experience.
-supplementary services that differentiate service bundle from those of other competitors.
Development of Services
-Marketers can customize services to match specific customer needs; can also offer standardized packages
-Marketers employ promises and tangible cues to help assure customers about quality of service
-Customer contact and other customers can affect service experience
Pricing of Services
-Performance of specific tasks
-Amount of time to complete the service
-Variable pricing based on the level of demand; high price at peak demand, lower prices when demand slackens
-Bundling of services requires decisions on unit, combination, or separate pricing
-Pricing as an indicator of quality is used when consumers have no other cues to indicate quality.
Distribution of Services
-Customers come to a service facility.
-Services are brought to the consumer.
-Services are provided at “arm’s length”, with no face-to-face customer contact.
-Marketing channels are short and direct, no or few intermediaries.
-Inseparability of service requires focus on service demand/supply management
-Accessibility to services increased by substituting automated equipment for contact personnel.
Promotion of Services
-Providing tangible (symbolic) cues/images
-Promoting price, guarantees, availability, personnel
-Using concrete, specific language in advertising
-Using personal selling and word-of-mouth advertising
-Offering services on a trial basis
Product manager
person responsible for a product, a product line, or several distinct products that make up a group
Brand manager
person responsible for a single brand
Market manager
person responsible for managing marketing activities that serve a particular group of customers
Venture team
cross-functional group that creates entirely new products that may be aimed at new markets
value exchanged for products in a marketing exchange
trading of products; the oldest form of exchange
Nature of Price
- most readily changeable characteristic (under favorable circumstances) of a product.
-key element in the marketing mix; relates directly to generation of revenues and quantities sold.
-key component of the profit equation, having strong effect on profitability.
-symbolic value to customers—prestige pricing.
Price Competition
-Emphasizing price and matching or beating competitors’ prices
-effective strategy in markets with standardized products
-Lowest-cost competitor (seller) will be most profitable.
-Allows marketers to respond quickly to competitors
-Price wars can weaken competing organizations.
Nonprice Competition
-Emphasizing factors other than price to distinguish from competing brands
-Advantage in increasing brand’s unit sales without changing price.
-effective when features are difficult to imitate by competitors and customers perceive their value
-Builds customer loyalty by focusing on nonprice features
Demand Curve
-A graph of the quantity of products expected to be sold at various prices
-Decreases in price create increases in quantities demanded.
-Increased demand means larger quantities sold at the same price.
-Prestige items sell best in higher price ranges.
Demand Fluctuations
-Changes in buyers’ needs
-Variations in the effectiveness of the marketing mix
-The presence of substitutes
-Dynamic environmental/market factors
Assessing Price Elasticity of Demand
measure of the sensitivity of demand to changes in price—the greater the change in demand for a specific change in price, the more elastic demand is
Marginal Analysis
Examines what happens to a firm’s costs and revenues when product changes by one unit
Marginal Revenue
-change in total revenue resulting from sale of an additional unit of product
-Profit maximized where marginal costs (MC) are equal to marginal revenue (MR).
Fixed Costs
costs that do not vary with changes in the units produced or sold
Average Fixed Cost
the fixed cost per unit produced
Variable Costs
costs that vary directly with changes in the number of units produced or sold
Average Variable Costs
variable cost per unit produced
Total Cost
sum of average fixed cost and average variable cost times the quantity produced
Average Total Cost
sum of the average fixed cost and the average variable cost
Marginal Cost (MC)
extra cost incurred by producing one more unit of a product
Breakeven Point
-point at which costs of producing a product equal revenue made from selling the product
-point after which profitability begins
Organizational and Marketing Pricing Objectives
-should be set that are consistent with organization’s goals and mission.
-must be compatible with marketing objectives
Types of Pricing Objectives
-Setting prices low to increase market share
-Using temporary price reductions to gain market share
-Lowering prices to raise cash quickly
Factors Affecting Pricing Decisions
-Price/quality image of the product or brand
-Selective or intensive product distribution
-Product pricing used as a promotional tool
Channel Member Expectations
-To make a profit at least equivalent to potential profit from handling a competitor’s brand
-To earn a profit commiserate with effort and resources channel member expends on the product
-To receive discounts for volume purchases and prompt payment
-To be supported by producer with training, advertising, sales promotion, and return policies
Internal reference price
price developed in the buyer’s mind through experience with the product
External reference price
comparison price provided by others
Buyers’ Responses to Price
-Value consciousness
Concern about price and quality
-Price consciousness
Striving to pay low prices
-Prestige sensitivity
Being drawn to products that signify prominence and status
Quantity Discounts
Deductions from list price for purchasing large quantities
Trade (Functional) Discounts
reduction off the list price given by a producer to an intermediary for performing for performing certain functions
Cumulative Discounts
Quantity discounts aggregated over a stated period
Noncumulative Discounts
One-time reductions in price based on specific factors
Cash Discount
price reduction given to buyers for prompt payment or cash payment
Seasonal Discount
price reduction given to buyers for purchasing goods or services out of season
concession in price to achieve a desired goal
Geographic Pricing
Reductions for transportation costs and other costs related to the physical distance between buyer and seller
Transfer Pricing
The price of products that one organizational unit charges when selling to another unit in the same organization
Actual full cost
All fixed and variable costs divided by the number of units produced
Standard full cost
Pricing based on what it would cost to produce the goods at full plant capacity.
Cost plus investment
Full cost plus internal cost of assets used in production
Market-based pricing
Market price less marketing and selling costs
Pricing Objectives
-Goals that describe what a firm wants to achieve through pricing.
-Form basis for decisions about other stages of pricing.
-Must be consistent with overall marketing objectives.
-Can support attainment of multiple short-term and long-term goals.
Stages for Establishing Prices
1. Development of Pricing objectives
2. Assessment of target market's evaluation of price
3. evaluation of competitors'prices
4. selection of basis for pricing
5. selection of pricing strategy
6. determination of a specific price
Importance of Price
-Type of product
-Type of target market
-The purchase situation
Value Focus
-Combination of price and quality attributes
-Helps customers differentiate a product from competing brands
-Guides marketers in evaluation of importance of price to consumer
Importance of Knowing Competitors’ Prices
-Helps determine how important price will be to customers
-Helps marketers in setting competitive prices for their products
Comparative shoppers
Persons who systematically collect data on competitors’ prices
Dimensions of Pricing
Cost, demand, and competition
Bases for Pricing
-Type of product
-Market structure of the industry
-Brand’s market share relative to competing brands
-Customer characteristics
Cost-Based Pricing
Adding a dollar amount or percentage to the cost of the product
Cost-Plus Pricing
Adding a specified dollar amount or percentage to the seller’s cost
Markup Pricing
Adding to the cost of the product a predetermined percentage of that cost
Demand-Based Pricing
-Customers pay a higher price when demand is strong and and lower price when demand is weak.
-Effectiveness depends on marketer’s ability to estimate demand accurately.
Competition-Based Pricing
-Pricing influenced primarily by competitors’ prices
-Importance increases when competing products are relatively homogeneous
-May necessitate frequent price adjustments
Differential Pricing
Charging different prices to different buyers for the same quality and quantity of product
Price Skimming
Charging the highest possible price that buyers who desire the product will pay
Penetration Pricing
Setting prices below those of competing brands to penetrate a market and gain a significant market share quickly
Product-Line Pricing
Establishing and adjusting prices of multiple products within a product line
Captive Pricing
pricing basic product in poroduct line low while pricing rel
Premium Pricing
pricing highest-quality or most versatile products higher than other models in product line
Bait Pricing
pricing product in product line low with intention of selling higher-priced item in the line
Price Lining
setting limited number of prices for selected groups or lines of merchandise
Psychological Pricing
Pricing that attempts to influence a customer’s perception of price to make a product’s price more attractive
Reference Pricing
pricing at moderate level and positioning next to a more more expensive model or brand
Bundle Pricing
packaging together two or more complementary products and selling for a single price
Multiple-Unit Pricing
packaging together two or more products and selling for a single price
Everyday low prices [EDLP]
setting low price for products on a consistent basis
Odd-Even Pricing
ending price with certain numbers to influence perceptions of price or product
Customary Pricing
pricing on the basis of tradition
Prestige Pricing
setting prices artificially high to convey prestige or quality image
Professional Pricing
Fees set by people with great skill or experience in a particular field
Price leaders
Products priced below the usual markup, near cost, or below cost
Special-event Pricing
Advertised sales or price cutting linked to a holiday, season, or event
Comparison discounting
Setting a price at a specific level and comparing it with a higher price
Determination of a Specific Price
-After determining a pricing strategy that yields a certain price, the price may need refinement to ensure consistency with pricing practices in the market and industry.
-The way pricing is used in the marketing mix will affect the final price.
-Pricing is a flexible and convenient way to adjust the marketing mix.
Negotiated Pricing
Establishing a final price through bargaining
Secondary-Market Pricing
setting one price for primary market and different price for another market
Periodic Discounting
temporary reduction of prices on patterned or systematic basis
Random Discounting
temporary reduction of prices on an unsystematic basis