Podcast
Questions and Answers
What is the difference between goods and services?
What is the difference between goods and services?
Which element of a product describes the good or service at its most minimal?
Which element of a product describes the good or service at its most minimal?
What does a product's feature contribute to?
What does a product's feature contribute to?
Which category of products should companies invest in according to the text?
Which category of products should companies invest in according to the text?
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What should companies do with products categorized as 'Low Share, Low Growth'?
What should companies do with products categorized as 'Low Share, Low Growth'?
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What does a product's benefit refer to?
What does a product's benefit refer to?
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What is the purpose of odd-even pricing strategy?
What is the purpose of odd-even pricing strategy?
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Which pricing strategy involves combining multiple products and offering them at a price lower than the sum of their individual prices?
Which pricing strategy involves combining multiple products and offering them at a price lower than the sum of their individual prices?
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What does break-even quantity represent?
What does break-even quantity represent?
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What is the main factor that buyers associate with when using odd-even pricing strategy?
What is the main factor that buyers associate with when using odd-even pricing strategy?
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What does contribution margin represent?
What does contribution margin represent?
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In bundle pricing, what strategy is employed to entice customers to purchase multiple products?
In bundle pricing, what strategy is employed to entice customers to purchase multiple products?
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What is the break-even quantity?
What is the break-even quantity?
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For the Deluxe Gourmet Pizza, how many units must be sold to break even?
For the Deluxe Gourmet Pizza, how many units must be sold to break even?
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What is the fixed cost for the Mid-price Pizza?
What is the fixed cost for the Mid-price Pizza?
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Based on break-even analysis, what question should managers ask regarding selling pizzas?
Based on break-even analysis, what question should managers ask regarding selling pizzas?
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What does the break-even quantity help businesses determine?
What does the break-even quantity help businesses determine?
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How does the break-even quantity relate to the selling price and variable costs?
How does the break-even quantity relate to the selling price and variable costs?
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Study Notes
Product Classification
- Products can be classified as goods (tangible) or services (intangible)
- Examples of goods: laptops, jeans, pencils
- Examples of services: healthcare, education
Product Elements
- A product's function: what it's intended to do
- A product's feature: an additional attribute or offering that contributes to improved usefulness or better experience
- A product's benefit: an advantage derived from purchasing the product
- The combination of a product's functions, features, and benefits gives the product its value
Pricing Strategies
- Odd-Even Pricing: setting the price of a product just below the whole dollar amount
- Buyers tend to associate the price with the first digit they see, making the price seem lower
- Examples: $4.99, $399, $999 instead of $5, $400, $1000
Bundle Pricing
- Packaging several products together and offering the combined package at a single price that is less than the sum of parts
- Examples: "combo" or "package" deals, such as a large popcorn and medium drink for $5
Break-Even Analysis
- A tool that helps managers understand the relationship between costs, price, and number of units sold to make a profit
- Break-even quantity: the minimum number of units a business must sell to recover all costs and begin to make a profit
- Formula: fixed costs / (selling price - variable costs) = number of units to break even
Break-Even Analysis Examples
- Deluxe Gourmet Pizza: need to sell 20,000 units to break even
- Mid-price Pizza: need to sell 10,000 units to break even
- Low-price Pizza: need to sell 100,000 units to break even
Managerial Questions
- Using break-even analysis, managers must ask:
- Can we sell this many units?
- Should we raise the price, sell fewer, but make more profit on each?
- Should we cut the price, sell more, but make less profit on each?
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Description
Explore the concept of Odd-Even Pricing, a strategy where product prices are set just below whole dollar amounts to influence consumer perception. Learn about Bundle Pricing, which involves packaging multiple products together and offering them at a single price. Understand how these strategies can impact consumer behavior and purchasing decisions.
