Review for Exam 3
1) Product life cycle- the stages a new product goes through in the marketplace:
Introduction, Growth, Maturity, and Decline. Consider total industry sales
revenue and total industry profit.
a. Introduction- a product is intro
Factors that limit the range of prices a firm may set
Demand for the product class, product and brand
Newness of the product stage in the PLC
Single product vs. a product line
Cost of producing and marketing the product
Cost of changing prices and time pe
Break-even point (know what it is & how to calculate it) is the quantity at
which total revenue and total costs are equal (didnt make money or lose
EX: Rent $45
Break even point formula: fixed cost divided by unit price- unit variable cost
Cost plus pricing: involves summing the total unit cost of
providing a product or service and adding a specific amount to the
cost to arrive at a price
Experience curve pricing: is based on the learning effect, which
holds that the unit cost of many prod
Are reductions from list or quoted price to buyers for performing some activity
Trade in allowance: is price reduction given when a used product is part of the
payment on a new product
Promotional allowances: from undertaking certain advertising or selli
Price discrimination: the practice of charging different prices to different
buyers for good of like grade and quality
o Deceptive pricing: is price deal that misleads consumers fall in to
deceptive pricing is outlawed by federal trade commission act
1. delivered by a travel agency.
2. Terms for marketing intermediaries (figure 15-1)
3. Types of consumer marketing channels (figure 15-3)
Direct channel- when a producer and ultimate customer deal directly with each other.
Indirect Channel- when inte
ich channel and intermediaries will provide the best coverage of the target
Which channel and intermediaries will bet satisfy the buying requirements of
the target market?
Which channel and intermediaries will be the most profitable?
1. Direct vs. indirect channels- same as above
2. Direct Marketing allows consumers to buy products by interacting with various
advertising media without a face-to-face meeting with a salesperson; includes mailorder selling, direct-mail sales, catalog sal
1) Types of competition and pricing (fig. 13-4)
2) Pricing objectives and constraints factors that limit the range of prices a firm
Identifying pricing objectives.
Pricing objectives involve specifying the role of price in an organizations
*The most important dimension of service quality is RELIABILITY! the
ability to perform service dependably and accurately
1) Types of prices- tuition(education), rent(apt), interest(bank credit card), premium
(car insurance), fee( dentist or ph
a.i. Distribution- maximum distribution
b. Decline- Sales and profits continue to decline. Objective is to maintain
product as long as profitable and delete when appropriate.
b.i. Product- best sellers
b.ii. Promotion- minimal
b.iii. Pricing- stay profita
a. readily understood. Ex: Gillette razor
b. Fashion- style of the times.
c. Fade- rapid sales on introduction and then equally raid decline.
2) Categories and profiles of product adopters
a. Diffusion of Innovation- rate at which a product diffuses or sp
1) changing one or more of the 4 marketing mix elements. EX: change the way
people think about it
a. Reacting to a competitors position
b. Reaching a new market
c. Catching a rising trend
d. Changing the value trend.
2) Trading up- adding value to the pro
1) traditional, romantic, rugged, sophisticated, rebellious and choose brands that
are consistent with their own or desired self-image. Also show personality through
advertising. Ex: Pepsi- young and exciting, Disney
2) Brand Licensing- contractual agreem
1) Packaging- component of a product that refers to any container in which it is
offered for sale and on which label information if communicated. To a great
extent, the customers first exposure to a product is the package. Packaging is
expensive and an im
a. Intangibility- services are intangible. Because service tends to be a
performance rather than an object, they are much more difficult for
consumers to evaluate.
b. Inconsistency- developing, pricing, promoting, and delivering services is
1) Gap analysis- differences between the consumers expectations and experience.
This type of analysis asks consumers to assess their expectations and experiences
on dimensions of service quality.
2) Dimensions of service quality
a. Reliability- ability to
a. or identifying logo of the service organization is important when a
consumer makes a purchase.
b. Price- perceived by consumers as a possible indicator of the quality of the
service. When customer buys a service, they also consider nonmonetary
Dependability the consistency of replenishment
EX: how often do you return to a store if it fails to have in stock the item you want to
Communication is a two way link between the buyer and seller that
helps in monitoring service and anticipa