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CLEP Principles of Marketing Study Notes

Relative to their concept of competitive brands is

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relative to their concept of competitive brands is known as the Product Position. Firms try to shape this perception of a product through Product Positioning. For instance, Volvo has often emphasized its safety features, creating the image of a safer car than other manufacturers.
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Product Mix Expansion - Adding new product lines or adding new products to existing product lines. Gives the company new opportunities for growth. The opposite of this is product mix contraction , and involves reducing the product mix in width or depth. Depth Product Mix - measured by the number of different products offered in each product line. The depth of a product line is the number of products in it. When a firm has a deep product mix, it is focusing on less product lines, more products per line so that it can target numerous segments within each market. Width Product Mix - number of product lines . When a company has a wide product mix, or many product lines, they are employing a diversification strategy --meeting many types of customer needs. A wide product mix indicates many product lines. The width of a product mix is the number of product lines. Calculate the markup as a percentage of the selling price when the product costs $50 and its selling price is $100. The markup percentage in this case would be 50 %. The markup as a percentage of the selling price would be 50%. The first step in calculating this is determining the markup . Subtract the cost from the price to see how much more the company is charging than it cost them--the markup. Then you take this value (100 - 50 = 50) and divide it by the selling price (50 / 100 = 0.50). Product Life Cycle - A product goes through a cycle of growth and decline, from the time it is introduced into the marketplace until it is terminated. 4 Stages: 1. Introduction - product makes its first appearance in the marketplace. During this stage, the profits are below zero, because the company must cover the initial costs associated with promotion and distribution. When the product begins to turn a profit, it enters the next stage, the Growth stage. 2. Growth - sales rise rapidly and profits reach a peak and then begin to decline. Very few products make it past the Introduction stage, which is the commercialization of a product. However, once it starts making a profit, it is considered the growth stage. Competition begins to appear during the Growth stage and can determine the product's life expectancy. 3. Maturity - sales peak and begin to decline and profits continue to decline. The Maturity stage is marked by a peaking of sales and then a decline. The difference between maturity and growth stages is that in the growth stage, *profits * peak and begin to decline as more money is spent due to heavier competition, while in the maturity stage, *sales* peak and begin to decline.
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