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Business in Business in Action 6e Action 6e Bovée/ThillBovée/Thill
Product and Product and Pricing StrategiesPricing Strategies
Chapter 14Chapter 14
Consumer Products
Convenience Products Everyday goods
and services that people buy frequently, usually without much conscious planning
Shopping Products Fairly important
goods and services that people buy less frequently with more planning and comparison
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall14-2
Consumer Products
Specialty Products Particular brands that the buyer especially
wants and will seek out, regardless of location or price
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall14-3
Industrial and Commercial Products
Expense Items Inexpensive generally use within a year of
purchase
Capital Items More expensive organizational products with
a longer useful life, ranging from office and plant equipment to entire factories
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall14-4
The Product Life Cycle
Product Life Cycle Four stages through which a product
progresses: introduction, growth, maturity, and decline
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The New-Product Development Process
Product Development Process A formal process of generating, selecting,
developing, and commercializing product ideas
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The Product Development Process (cont.)
Prototypes Pre-production samples of products used for
testing and evaluation
Test Marketing The stage of product development in which a
product is sold on a limited basis to gauge its market appeal
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The Product Development Process
Commercialization Large-scale production and distribution of a
product
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Product Identities
Brand A name, term, sign, symbol, design, or
combination of those used to identify the products of a firm and to differentiate them from competing products
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall14-9
Product Identities (cont.)
Brand Equity The value that a
company has built up in a brand
Brand Loyalty The degree to
which customers continue to purchase a specific brand
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Brand Name Selection
Brand Names The portion of
brands that can be expressed orally, including letters, words, or numbers
Brand Marks The portion of
brands that cannot be expressed verbally
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Brand Name Selection (cont.)
Logo A graphical and/or
textual representation of a brand
Trademarks Brands that have
been given legal protection so that their owners have exclusive rights to their use
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall14-12
Product Identities
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Brand Ownership
National Brands Brands owned by
manufacturers and distributed nationally
Private Brands Brands that carry
the label of a retailer or a wholesaler rather than a manufacturer
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Expanding a Product Line
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Cost Structure
Fixed Costs Business costs that
remain constant regardless of the number of units produced
Variable Costs Business costs that
increase with the number of units produced
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Break-Even Analysis
Break-Even Analysis A method of calculating the minimum volume
of sales needed at a given price to cover all costs
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Pricing Methods (cont.)
Skim Pricing Charging a high price for a new product
during the introductory stage and lowering the price late
Penetration Pricing Introducing a new product at a low price in
hopes of building sales volume quickly
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall14-18