Podcast
Questions and Answers
What is the difference between goods and services?
What is the difference between goods and services?
- Goods can be experienced, while services are tangible.
- Goods are intangible, while services are tangible.
- Goods are derived from services, while services are tangible.
- Goods are tangible, while services are intangible. (correct)
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?
- Feature
- Function (correct)
- Benefit
- Value
What does a product's feature contribute to?
What does a product's feature contribute to?
- Functionality (correct)
- Value
- Service operations
- Tangibility
Which category of products should companies invest in according to the text?
Which category of products should companies invest in according to the text?
What should companies do with products categorized as 'Low Share, Low Growth'?
What should companies do with products categorized as 'Low Share, Low Growth'?
What does a product's benefit refer to?
What does a product's benefit refer to?
What is the purpose of odd-even pricing strategy?
What is the purpose of odd-even pricing strategy?
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?
What does break-even quantity represent?
What does break-even quantity represent?
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?
What does contribution margin represent?
What does contribution margin represent?
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?
What is the break-even quantity?
What is the break-even quantity?
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?
What is the fixed cost for the Mid-price Pizza?
What is the fixed cost for the Mid-price Pizza?
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?
What does the break-even quantity help businesses determine?
What does the break-even quantity help businesses determine?
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?
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?
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
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.
