Exam 14: Developing and Pricing Goods and Services

Product testing is designed to reduce the number of new product ideas that a firm works on at any one time.

Successful marketers attempt to think like consumers and evaluate the total product offer as a collection of impressions created by all parts of the value package.

Brand association is the linking of a brand to other favorable images such as a celebrity or geographic location.

A shopping good for one consumer could be a specialty good for another consumer.

A pricing strategy that uses bundling groups two or more related products together.

The classification of goods or services into a particular class depends on the individual consumer.

Some goods can be classified as either consumer goods or as industrial goods.

One of the reasons marketers emphasize non-price differences in their competitive strategies is because:

Accessory equipment consists of capital items that cost less and are shorter lived than installation items.

The purpose of a brand name is to establish an image of generic goods or services.

Mini-Case Gourmet Pets is an innovative competitor in the billion-dollar pet food industry. In fact, two of its products, Kitty Sirloin and McDog Tbone, each claim over a 30% share in their market segments. The company has done detailed research and discovered that, for a growing number of pet owners, the family pet serves as a "baby substitute." These owners tend to pamper their pets, and are very discriminating in what they purchase. With this in mind, the company has put a great deal of effort into developing a new dog food: Prime Cuts. The new product is packaged in a resealable, microwaveable container and can be purchased in a variety of flavors (including Western BBQ, Teriyaki, Australian Outback, and Hickory Smoked.) Gourmet Pets promotes the product as far superior to "average" dog foods, even though the quality of meat and nutrient content of the food is virtually identical to many other brands. The company faces no competition in this market segment so it plans to charge a high price for the product. -Gourmet Pets is interested in computing the break-even point for its new product Prime Cuts. The fixed costs of adding this product to the product line amounts to $20,000. Variable costs to produce one package of Prime Cuts are $2. Prime Cuts will sell for $6 per package. The break-even point would be:

One function of effective packaging is to attract the attention of consumers.

Miranda is a marketing manager for a large manufacturer. Her boss has asked her to evaluate a new product idea. One of the things Miranda wants to determine is how much of this product her firm would have to sell in order to break even. In order to compute this break-even level of sales, she will need to know the price of the good, the total fixed costs, and variable cost of producing each unit.

Equipment maintenance and repair of equipment used by businesses is an industrial support good.

In evaluating colleges, students and parents are likely to judge a school:

Ultimately, the price of a good is determined by the interaction of supply and demand in the marketplace.

For most firms, price competition is the most important way to gain a competitive advantage over rivals.

Successful product differentiation:

Which of the following would a firm most likely use to differentiate its product?

Admiral Motors is the dominant firm in the auto market. When Admiral announces an increase in the prices of its automobiles, Chord and Frysler, the smaller firms in the market, usually quickly announce similar price increases for their own cars. This situation is an example of demand-oriented pricing.