Vocabulary Terms:
Product/service management: Product/service management is a marketing function that involves obtaining, developing, maintaining,and improving a product or service mix in response to market opportunities.
Product: can be either a good or a service
Good: is a tangible object that can be manufactured and produced for resale, along with its associated benefits
Product Brand: a name, term, symbol, or design (or combination of them) that identifies a product and distinguishes it from competitors’products.
Trade Name: the name that identifies the company
Brand Name: the part of the brand that can be spoken, such as a word, a phrase, a letter, a number, or any combination of these.
Brand Mark: a distinctive symbol, design, sound, or group of letters that is seen or heard but cannot be spoken.
Trade Characters: They are brand marks that have been made to seem lifelike.
Manufacturer’s Brand: also known as a national brand, is one that the manufacturer has assumed all the responsibility of branding.
Private Brand: sometimes called a store brand, is a brand owned by an intermediary.
Family branding: involves using the same brand for related products in a product line.
Individual branding: involves using different brands for products owned by one company
Brand Loyalty: A customers’ allegiance to a particular brand.
Brand Recognition: when consumers become aware of a brand and know a bit about it.
Brand Preference: when consumers prefer to purchase a certain brand based on their positive experience with the brand.
Brand Insistence: When consumers insist on “their” brand and will not accept a substitute, the brand has reached
Generic Items: unbranded products that are plainly packaged, have lower or standard quality, are sold at lower prices than branded products, and receive little or no promotion.
Pricing: a marketing function that involves the determination of an exchange price at which the buyer and seller perceive optimum value for a good or service.
Selling Price : The amount a seller charges for a good or a service
Maximization: to make the most possible immediate profit
Fixed costs: costs that are not affected by changes in sales volume
Total costs:made up of two kinds of costs—fixed and variable
Variable costs: Coststhat change according to changes in sales volume.
Product: can be either a good or a service
Good: is a tangible object that can be manufactured and produced for resale, along with its associated benefits
Product Brand: a name, term, symbol, or design (or combination of them) that identifies a product and distinguishes it from competitors’products.
Trade Name: the name that identifies the company
Brand Name: the part of the brand that can be spoken, such as a word, a phrase, a letter, a number, or any combination of these.
Brand Mark: a distinctive symbol, design, sound, or group of letters that is seen or heard but cannot be spoken.
Trade Characters: They are brand marks that have been made to seem lifelike.
Manufacturer’s Brand: also known as a national brand, is one that the manufacturer has assumed all the responsibility of branding.
Private Brand: sometimes called a store brand, is a brand owned by an intermediary.
Family branding: involves using the same brand for related products in a product line.
Individual branding: involves using different brands for products owned by one company
Brand Loyalty: A customers’ allegiance to a particular brand.
Brand Recognition: when consumers become aware of a brand and know a bit about it.
Brand Preference: when consumers prefer to purchase a certain brand based on their positive experience with the brand.
Brand Insistence: When consumers insist on “their” brand and will not accept a substitute, the brand has reached
Generic Items: unbranded products that are plainly packaged, have lower or standard quality, are sold at lower prices than branded products, and receive little or no promotion.
Pricing: a marketing function that involves the determination of an exchange price at which the buyer and seller perceive optimum value for a good or service.
Selling Price : The amount a seller charges for a good or a service
Maximization: to make the most possible immediate profit
Fixed costs: costs that are not affected by changes in sales volume
Total costs:made up of two kinds of costs—fixed and variable
Variable costs: Coststhat change according to changes in sales volume.
Questions and Answers:
WHAT ARE FOUR TYPES OF BRANDS?manufacturer’s brandfamily brandingindividual brandingprivate brand
WHY IS IT IMPORTANT THAT A BRAND NAME BE ADAPTABLE?A good brand name should be easy to pronounce in all countries where the product will be marketed, and it must have an acceptable meaning in these foreign countries.
DESCRIBE THE THREE STAGES OF BRAND LOYALTY?First comes brand recognition, when consumers become aware of a brand and know a bit about it. Next is brand preference, when consumers prefer to purchase a certain brand based on their positive experience with the brand. However, if that brand is not available, the consumer will purchase another brand. And when consumers insist on “their” brand and will not accept a substitute, the brand has reached brand insistence. Only that particular brand will satisfy a customer for a given purpose.
EXPLAIN THREE TYPES OF BRANDING STRATEGIES.-Brand position really means the way that consumers see the brand as compared to competitive brands. The marketer’s goal in positioning a brandis to try to establish the “point of difference”—the factor that separates the brand from its competitors. What makes this brand special? What are its benefits? Marketers must ask these questions to create the right image for their brand—the image that will make their brand successful.-Brand extension. Some companies use brand extensions, in which an existing brand name is used for a new or improved product line. Starbucks,for example, extended its successful coffee brand to ice cream and candy.Cheerios cereal is another brand that has successfully extended its brand to include similar products.-Brand licensing. Brand licensing. Brand licensing allows one company to use another’s brand name, logo, or character for a fee. Fashion designers, such as Donna Karan and Tommy Hilfiger, may license the use of their names to jewelry and perfume manufacturers. Although licensees produce and sell these products, they become, in effect, extensions of the core brand
What factors affect prices? • Costs • Supply and demand • Economic conditions •Competition • Government regulations • Channel members • Company objectives and strategies
How does pricing affect product decisions? Research. Pricing affects the type of research conducted, the length of the research project, and the amount of money spent on research.Materials used in production. Which costs more—a silver ring or a platinum ring? The quality of materials used in production is reflected in the product’s price. Profit decisions. Just because a good or service looks great on paper, it doesn't mean that the good or service will ever hit the market.Companies must first determine if there is a market for the product and if there will be sufficient demand for it. Customer decisions. Different companies seek to attract different types of customers.Low prices attract customers who are looking for bargains, while high prices attract customers looking for prestige and high quality
1. What are channels of distribution? Channels of distribution are the paths, or routes, that goods andservices take from the producer to the ultimate consumer or industrial user.
2. What is a producer? A producer makes or provides goods and services.
3. What is an ultimate consumer? An ultimate consumer is anyone who personally uses a good orservice to satisfy her/his own wants.
4. What is an industrial user? An industrial user is a business that buys materials, services, or goods thatwill be used to make other goods or used in the operation of the company
5. Where do channels of distribution begin and end? A channel of distribution ends, then, when thegood or service has reached the ultimate consumer or industrial user. A channel also ends when changesare made to the form of the good. For example, the channels of distribution for the milk, flour, eggs, andsugar purchased by a bakery end when the items are combined to make doughnuts. However, a newchannel of distribution for the doughnuts begins.
6. What are intermediaries? They operate between the producer and the consumer or user to help inthe movement of goods and services
7. What are retailers? Businesses that buy consumer goods and sell them to ultimate consumers areretailers.
8. What are wholesalers? . Businesses that buy goods from producers or agents and sell them toretailers are called wholesalers.
9. What are agents? Businesses or individuals that assist in the sale and/or promotion of goods andservices but do not buy them from the producer are known as agents.
WHY IS IT IMPORTANT THAT A BRAND NAME BE ADAPTABLE?A good brand name should be easy to pronounce in all countries where the product will be marketed, and it must have an acceptable meaning in these foreign countries.
DESCRIBE THE THREE STAGES OF BRAND LOYALTY?First comes brand recognition, when consumers become aware of a brand and know a bit about it. Next is brand preference, when consumers prefer to purchase a certain brand based on their positive experience with the brand. However, if that brand is not available, the consumer will purchase another brand. And when consumers insist on “their” brand and will not accept a substitute, the brand has reached brand insistence. Only that particular brand will satisfy a customer for a given purpose.
EXPLAIN THREE TYPES OF BRANDING STRATEGIES.-Brand position really means the way that consumers see the brand as compared to competitive brands. The marketer’s goal in positioning a brandis to try to establish the “point of difference”—the factor that separates the brand from its competitors. What makes this brand special? What are its benefits? Marketers must ask these questions to create the right image for their brand—the image that will make their brand successful.-Brand extension. Some companies use brand extensions, in which an existing brand name is used for a new or improved product line. Starbucks,for example, extended its successful coffee brand to ice cream and candy.Cheerios cereal is another brand that has successfully extended its brand to include similar products.-Brand licensing. Brand licensing. Brand licensing allows one company to use another’s brand name, logo, or character for a fee. Fashion designers, such as Donna Karan and Tommy Hilfiger, may license the use of their names to jewelry and perfume manufacturers. Although licensees produce and sell these products, they become, in effect, extensions of the core brand
What factors affect prices? • Costs • Supply and demand • Economic conditions •Competition • Government regulations • Channel members • Company objectives and strategies
How does pricing affect product decisions? Research. Pricing affects the type of research conducted, the length of the research project, and the amount of money spent on research.Materials used in production. Which costs more—a silver ring or a platinum ring? The quality of materials used in production is reflected in the product’s price. Profit decisions. Just because a good or service looks great on paper, it doesn't mean that the good or service will ever hit the market.Companies must first determine if there is a market for the product and if there will be sufficient demand for it. Customer decisions. Different companies seek to attract different types of customers.Low prices attract customers who are looking for bargains, while high prices attract customers looking for prestige and high quality
1. What are channels of distribution? Channels of distribution are the paths, or routes, that goods andservices take from the producer to the ultimate consumer or industrial user.
2. What is a producer? A producer makes or provides goods and services.
3. What is an ultimate consumer? An ultimate consumer is anyone who personally uses a good orservice to satisfy her/his own wants.
4. What is an industrial user? An industrial user is a business that buys materials, services, or goods thatwill be used to make other goods or used in the operation of the company
5. Where do channels of distribution begin and end? A channel of distribution ends, then, when thegood or service has reached the ultimate consumer or industrial user. A channel also ends when changesare made to the form of the good. For example, the channels of distribution for the milk, flour, eggs, andsugar purchased by a bakery end when the items are combined to make doughnuts. However, a newchannel of distribution for the doughnuts begins.
6. What are intermediaries? They operate between the producer and the consumer or user to help inthe movement of goods and services
7. What are retailers? Businesses that buy consumer goods and sell them to ultimate consumers areretailers.
8. What are wholesalers? . Businesses that buy goods from producers or agents and sell them toretailers are called wholesalers.
9. What are agents? Businesses or individuals that assist in the sale and/or promotion of goods andservices but do not buy them from the producer are known as agents.
Practice Test
1. What is an external factor that affects the price that a business charges for its products?
A. Operating costs
B. Variable expenses
C. Economic conditions
D. Employee benefits
2. What is an example of an unethical pricing practice?
A. A company prices its products low in an attempt to drive its competitors out of business.
B. A business increases its prices when the cost of the materials to make the products increases.
C. A firm sets a business objective to increase its profit margins over the next five years.
D. A business prices a new product line to reflect high quality and status.
3. Why do some new companies set their selling prices as low as they can?
A. To eliminate all possible competition
B. To get market share as fast as possible
C. To earn a high return on investment
D. To quickly make a large profit
4. What would be the most appropriate pricing strategy for a business in a small town where unemployment has skyrocketed and the economy is in a downturn?
A. Below-cost pricing
B. High-level pricing
C. Odd-cents pricing
D. Flexible pricing
5. What might happen if a business's customers feel that they are not getting the most value for their money?
A. Sales remain the same.
B. Sales increase.
C. Customers spend money elsewhere.
D. Customers purchase more.
6. Which of the following factors should businesses consider when establishing a product's selling price:
A. Economic conditions
B. Unfair sales laws
C. Pricing agreements
D. Trade practices
7. Which of the following is an example of an ethical issue as it relates to predatory pricing:
A. An international book publisher sells similar products to similar customers at different prices.
B. A tire producer introduces a new item to its product line and sets the initial price very low.
C. A salesperson encourages a customer to purchase an extended vehicle warranty for a new car.
D. A local ice-cream shop prices menu items below cost in an effort to eliminate its competition.
8. What is the advantage to a business of using bar-code pricing?
A. Easier for customers to read
B. Reduces required business security
C. Easier to change prices
D. Reduces number of employees needed for sales
9. Companies A, B, and C sell similar products. Together, they recently decided to sell their products for the same price. In what unethical activity are the businesses engaging?
A. Bait-and-switch
B. Price fixing
C. Loss-leader pricing
D. Gray markets
0. Technology allows manufacturers to pre-print product packaging with Universal Product Codes (UPCs) which contain __________ information.
A. pricing
B. sampling
C. operating
D. selling
11. A business charges a small company a higher price for a product than it charges a large company for the same product. What does this represent?
A. Price discrimination
B. Controlled pricing
C. Price competition
D. Regulated pricing
12. How does technology help businesses when it enables them to obtain and analyze vast amounts of information that impact the pricing function?
A. By generating profit-and-loss statements
B. By deciding how much to spend on advertising
C. By calculating the cost of hiring more employees
D. By determining the best time to adjust prices
13. What costs do businesses usually include in the price of their products?
A. Regulations
B. Inflation
C. Transportation
D. Orientation
14. The Standard Oil Company's price-fixing tactics and monopolistic control over oil refining and distribution in the late 1800's was a major contributing factor in the enactment of which piece of legislation?
A. Sherman Antitrust Act
B. Clayton Act
C. Robinson-Patman Act
D. Federal Trade Commission Act
5. Charging premium prices for lumber to hurricane victims because supply is limited is
A. unethical and illegal.
B. unethical and legal.
C. ethical and legal.
D. ethical and illegal.
16. One way that many businesses use technology to reduce the costs associated with marking prices on products is by using
A. electronic scanning devices.
B. automated inventory systems.
C. preprinted gummed labels.
D. computer-generated tags.
17. Wal-Mart and Sears attract two different types of customers because of their pricing strategies. They have established their prices based on __________ decisions.
A. promotional
B. customer
C. place
D. profit
18. What pricing tactic might be considered questionable by some businesses?
A. Matching the prices of a competitor
B. Developing a complex pricing structure
C. Marking up prices to earn a profit
D. Providing a reference price
P
A. Operating costs
B. Variable expenses
C. Economic conditions
D. Employee benefits
2. What is an example of an unethical pricing practice?
A. A company prices its products low in an attempt to drive its competitors out of business.
B. A business increases its prices when the cost of the materials to make the products increases.
C. A firm sets a business objective to increase its profit margins over the next five years.
D. A business prices a new product line to reflect high quality and status.
3. Why do some new companies set their selling prices as low as they can?
A. To eliminate all possible competition
B. To get market share as fast as possible
C. To earn a high return on investment
D. To quickly make a large profit
4. What would be the most appropriate pricing strategy for a business in a small town where unemployment has skyrocketed and the economy is in a downturn?
A. Below-cost pricing
B. High-level pricing
C. Odd-cents pricing
D. Flexible pricing
5. What might happen if a business's customers feel that they are not getting the most value for their money?
A. Sales remain the same.
B. Sales increase.
C. Customers spend money elsewhere.
D. Customers purchase more.
6. Which of the following factors should businesses consider when establishing a product's selling price:
A. Economic conditions
B. Unfair sales laws
C. Pricing agreements
D. Trade practices
7. Which of the following is an example of an ethical issue as it relates to predatory pricing:
A. An international book publisher sells similar products to similar customers at different prices.
B. A tire producer introduces a new item to its product line and sets the initial price very low.
C. A salesperson encourages a customer to purchase an extended vehicle warranty for a new car.
D. A local ice-cream shop prices menu items below cost in an effort to eliminate its competition.
8. What is the advantage to a business of using bar-code pricing?
A. Easier for customers to read
B. Reduces required business security
C. Easier to change prices
D. Reduces number of employees needed for sales
9. Companies A, B, and C sell similar products. Together, they recently decided to sell their products for the same price. In what unethical activity are the businesses engaging?
A. Bait-and-switch
B. Price fixing
C. Loss-leader pricing
D. Gray markets
0. Technology allows manufacturers to pre-print product packaging with Universal Product Codes (UPCs) which contain __________ information.
A. pricing
B. sampling
C. operating
D. selling
11. A business charges a small company a higher price for a product than it charges a large company for the same product. What does this represent?
A. Price discrimination
B. Controlled pricing
C. Price competition
D. Regulated pricing
12. How does technology help businesses when it enables them to obtain and analyze vast amounts of information that impact the pricing function?
A. By generating profit-and-loss statements
B. By deciding how much to spend on advertising
C. By calculating the cost of hiring more employees
D. By determining the best time to adjust prices
13. What costs do businesses usually include in the price of their products?
A. Regulations
B. Inflation
C. Transportation
D. Orientation
14. The Standard Oil Company's price-fixing tactics and monopolistic control over oil refining and distribution in the late 1800's was a major contributing factor in the enactment of which piece of legislation?
A. Sherman Antitrust Act
B. Clayton Act
C. Robinson-Patman Act
D. Federal Trade Commission Act
5. Charging premium prices for lumber to hurricane victims because supply is limited is
A. unethical and illegal.
B. unethical and legal.
C. ethical and legal.
D. ethical and illegal.
16. One way that many businesses use technology to reduce the costs associated with marking prices on products is by using
A. electronic scanning devices.
B. automated inventory systems.
C. preprinted gummed labels.
D. computer-generated tags.
17. Wal-Mart and Sears attract two different types of customers because of their pricing strategies. They have established their prices based on __________ decisions.
A. promotional
B. customer
C. place
D. profit
18. What pricing tactic might be considered questionable by some businesses?
A. Matching the prices of a competitor
B. Developing a complex pricing structure
C. Marking up prices to earn a profit
D. Providing a reference price
P
Practice Test Answers:
- C
- A
- B
- D
- C
- A
- D
- C
- B
- A
- A
- D
- C
- A
- B
- D
- B
- B