Product Types & Classification
What is a convenience good?
Inexpensive, frequently purchased item like bottled water or snacks.
How many ideas typically result in one successful product?
About 50 ideas are needed.
What are the 4 stages of the product life cycle?
Introduction, Growth, Maturity, Decline.
What are the two main pricing objectives?
Profit-maximizing and market share.
What is price skimming?
Setting a high initial price to maximize profits early.
What is a capital item?
A long-lasting industrial product like machinery or a building.
What is the most time-consuming step in product development?
Product testing and test marketing.
What happens during the maturity stage?
Sales peak, profits high, but growth slows.
What are fixed and variable costs?
Fixed = rent, salaries; Variable = costs that change with output.
What is penetration pricing?
Starting with a low price to gain market share quickly.
What is a value package?
A bundle of features and benefits designed to add value to a product.
What does “speed to market” mean?
Getting a product into the market quickly to beat competitors.
What is product reintroduction?
Bringing back an older product to the market.
What is the markup percentage formula?
(Selling Price – Cost) ÷ Selling Price × 100
What is bundling?
Selling products together for one discounted price.
What is the difference between shopping and specialty goods?
Shopping goods are moderately expensive and infrequently bought; specialty goods are unique and have brand loyalty.
Name 3 steps in the new product development process.
Idea generation, screening, concept testing, business analysis, prototype development, product testing/test marketing, commercialization
What is product placement?
Advertising tactic where branded items appear in media.
What is breakeven analysis?
Calculates how many units must be sold to cover total costs.
What is psychological pricing?
Using prices like $9.99 to make products seem cheaper.
What is a product mix and a product line?
Product mix = all products a company sells; product line = group of related products.
What is product mortality?
The high failure rate of new products before reaching the market.
What is the difference between national, private, and licensed brands?
National = name brand; Private = store-owned; Licensed = paid rights to use brand.
Why is cost-oriented pricing used?
To ensure prices cover expenses and generate profit.
What is price lining?
Setting a limited number of fixed price points for a product.