Marketing Concepts Quiz

Product Classifications

• Consumer Products: Items purchased directly by end users.
• Business Products: Products purchased by organizations for producing other products; includes components (part of final products) and support parts (assist in production).

Types of Consumer Products

• Convenience Products: Frequently purchased items.
• Shopping Products: Items compared based on price, quality, or style.
• Specialty Products: Items bought after significant effort.
• Unsought Products: Items consumers are unaware of or initially do not want.

Derived Demand

• Demand for business products is linked to consumer product sales. Example: Increased consumer demand for cars boosts demand for business products like paint equipment.

Business Product Classifications

• Components: Integral parts of the final product.
• Support Parts: Items aiding in the production process.

Support Classified Business Products

• Installations: Major facilities and equipment.
• Accessory Equipment: Tools and supporting devices.
• Supplies: Everyday items like stationery.
• Industrial Services: Maintenance and repair services.

Service Delivery Classification

• Classification can depend on delivery by people or equipment, being for profit or nonprofit, or coming from government entities.

Product Mix

• The complete range of products a company offers. Example: Procter & Gamble has a diverse mix compared to Cray, Inc.'s limited offerings.

Product and Class Definitions

• Product Class: The industry segment belonging to an item.
• Product Line: A group of related products that meet similar needs or target the same customer group.

Product Item and SKU

• Product Item: Specific products identified by a unique SKU (Stock Keeping Unit).
• SKU: Unique number used for inventory and ordering.

New Product Definition

• Defined as any product up to six months after entering distribution by the FTC.

Innovation Types

• Continuous Innovation: Minor adjustments that do not require significant behavioral changes (e.g., toothpaste with new features).
• Dynamically Continuous Innovation: Requires slight behavioral adaptations (e.g., new ketchup designs).
• Discontinuous Innovation: Requires full adaptation to new consumption patterns (e.g., setting up a router).

Product Protocol

• A statement addressing target market, customer needs, and product functions before product development begins.

New Product Development Process Stages

• Key stages include strategy development, idea generation, screening, business analysis, development, testing, and commercialization.

Product Life Cycle (PLC)

• A concept describing the stages products go through: introduction, growth, maturity, and decline.

PLC Stages Summary

• Introduction Phase: Limited product and promotion, with high prices.
• Growth Phase: Increased product versions, broader distribution, competitive pricing.
• Maturity Phase: Full product line with major outlets and reminders in marketing.
• Decline Phase: Focus on best sellers, fewer outlets, minimal promotion.

Role of Product Manager

• Oversees marketing efforts for a range of related products or brands throughout their life cycles.

Product Modification and Market Modification

• Altering product characteristics to enhance value or finding new customers and uses for existing products.

Repositioning

• Changing the perception of a product relative to competitors through marketing mix adjustments.

Product Packaging Benefits

• Includes communication, functional, and perceptual advantages.

Warranties Overview

• Statements outlining manufacturer liability for product deficiencies; includes express (written) and implied warranties.

Service Marketing Concept

• Involves providing intangible benefits or activities to satisfy consumer needs in exchange for value.

Unique Characteristics of Services

• Intangibility: Cannot be physically touched before purchase.
• Inconsistency: Quality can vary based on service provider.
• Inseparability: Service delivery is linked with the provider.
• Inventory Management: Costs are associated with idle service capacity.

Capacity Management

• Strategy to align service delivery with consumer demand.

Service Quality Dimensions

• Key factors include reliability, tangibility, responsiveness, assurance, and empathy.

Pricing Concepts

• Includes definitions of price, value, price elasticity, fixed and variable costs, total cost, and marginal cost.

Break Even Analysis

• Technique to analyze profitability at varying outputs by comparing total revenue and total costs.

Breakeven Point

• The production level at which total revenue equals total costs, marking the threshold for profit or loss.### Breakeven Concepts
• Profit is generated from sales exceeding the Breakeven Point (BEP).
• A Breakeven Chart visually represents the break-even analysis, illustrating the point at which total revenues equal total costs.

Pricing Strategies

• Skimming Pricing:

  • Involves setting a high initial price to target early adopters who perceive high value.
  • Utilized when there is sufficient demand at the high price and minimal competition.
  • High price can signify high quality to customers.

• Penetration Pricing:

  • Opposite of skimming; establishes a low initial price to gain mass market appeal.
  • Effective when market segments are price sensitive and competition is discouraged.
  • Results in lower production and marketing costs as volume increases.

• Prestige Pricing:

  • Setting high prices to attract quality or status-conscious customers.

• Price Lining:

  • Involves pricing different products at specific price points.
  • Example: Women’s slacks priced at $88, $55, and $37 in a department store.

• Odd-Even Pricing:

  • Prices are set just below whole numbers to create a perception of value.
  • Example: Pricing a product just over $400 instead of nearly $500.

Targeting and Bundling

• Target Pricing:

  • Manufacturers estimate the price consumers are willing to pay and adjust backward through markups to set wholesaler prices.

• Bundled Pricing:

  • Marketing multiple products within a single package price.
  • Example: Vacation packages that include airfare, car rental, and lodging.

Revenue Maximization Techniques

• Yield Management Pricing:

  • Charges different prices to maximize revenue for fixed capacity.
  • Common in industries like airlines, offering discounts on off-peak travel.

• Standard Markup Pricing:

  • Adding a consistent percentage to the cost across a specific product category.
  • Variations are influenced by the type of retail environment and product.

• Cost Plus Pricing:

  • Totals product costs and adds a markup to determine the price.
  • Frequently used in business products; for example, additional fees on services like tanning.

Cost Management Strategies

• Experience Curve Pricing:
  • Cost decreases by 10% to 30% with each production volume doubling due to the learning effect.
  • As production increases, unit costs decrease significantly.

Profit Targeting Methods

• Target Profit Pricing:

  • Firms establish annual profit targets in dollar volume.

• Target Return on Sales Pricing:

  • Prices are set to achieve a desired profit percentage based on sales volume.

• Target Return on Investment Pricing:

  • Establishes prices to ensure an annual return on investment target is met.

Test your knowledge on key marketing concepts, including the classifications of firms' offerings and the types of consumer products. This quiz covers essential terms and definitions used in marketing. Perfect for students and professionals looking to enhance their understanding of marketing principles.