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• Product


  Everything, both favorable and unfavorable, that a person receives in an exchange. May be a tangible good or an intangible service.
• Branding


  The main tool marketers use to distinguish their products from the competition's
• Brand


  A name, term, symbol, design, or combination thereof that identifies a seller's products and differentiates them from competitors' products
• Brand name


  That part of a brand that can be spoken, including letters, words, and numbers
• Brand mark


  The elements of a brand that cannot be spoken, e.g. the Mercedes-Benz and Delta Air Lines symbols
• Benefits of branding


  • Product identification
  • Repeat sales
  • New product
• Brand equity


  The value of company and brand names
• Branding strategies


  • Manufacturers' brands
  • Private (distributor) brands
• Trademark


  The exclusive right to use a brand or part of a brand
• Examples of trademarks


  • Shapes
  • Ornamental color or design
  • Catchy phrases
  • Abbreviations
  • Sounds
• Packaging functions


  • Contain and protect products
  • Promote products
  • Facilitate storage, use, and convenience
  • Facilitate recycling and reduce environmental damage
• Containing and protecting products


  Packaging enables marketing of products in specific quantities and protects products from various conditions
• Promoting products


  Packaging differentiates a product from competitors and associates it with a manufacturer's brand
• Facilitating storage, use, and convenience


  Packaging that is easy to ship, store, stock, handle, open, and reclose can increase a product's utility and market share
• Facilitating recycling and reducing environmental damage


  Packaging that is compatible with the environment and can be perpetually recycled
• Advantages of new products

  • Increased sales through longer sales life
  • Increased margins
  • Increased product loyalty
  • More resale opportunities
  • Greater market responsiveness
  • A sustained leadership position
• New-product strategy


  Links the new-product development process with the objectives of the marketing department, the business unit, and the corporation

  
• Sources of new-product ideas

  • Customers
  • Employees
  • Distributors
  • Vendors
  • Competitors
  • R & D
  • Consultants
• Idea screening


  The first filter in the product development process that eliminates ideas inconsistent with the organization's new-product strategy or inappropriate
• Concept test


  Evaluates a new-product idea, usually before any prototype has been created
• Business analysis


  Calculates preliminary figures for demand, cost, sales, and profitability, considering the newness of the product, the size of the market, and the nature of the competition
• Development


  The R&D or engineering department develops a prototype, and the marketing department decides on packaging, branding, labeling, etc. All relevant functional areas and outside suppliers participate in all stages.
• Test marketing


  The limited introduction of a product and a marketing program to determine the reactions of potential customers in a market situation
• Commercialization


  The final stage where the decision is made to market the product, setting in motion various tasks like ordering production materials, starting production, building inventories, training the sales force, and advertising to potential customers
• Product life cycle (PLC)


  A biological metaphor that traces the stages of a product's acceptance, from its introduction (birth) to its decline (death)

  
• Price


  That which is given up in an exchange to acquire a good or service
• Price


  • Plays two roles in the evaluation of product alternatives:
  • The Sacrifice Effect of Price
  • The Information Effect of Price

  
• Sacrifice Effect of Price


  Price is "that which is given up," which means what is sacrificed to get a good or service. It may also be time lost while waiting to acquire the good or service.
• Information Effect of Price

  We infer quality information from price. Higher quality equals higher price.

  
• Importance of Price to Marketing Managers

  • Prices are the key to revenues, which in turn are the key to profits for an organization
  • Revenue is the price charged to customers multiplied by the number of units sold
  • Managers usually strive to charge a price that will earn a fair profit
• Markup Pricing


  1. Cost of buying the product from the producer

  2. Amounts for profit

  3. Amounts for expenses not otherwise accounted for

  4. Total determines the selling price
• Markup


  The difference between the selling price and the cost price, expressed as a percentage of the cost price

  
• Markup Pricing


  • Item costs the retailer RM1.80 and is sold for RM2.20, carrying a markup of RM0.40 cents, which is a markup of 22 percent of the cost
  • Many small retailers mark up merchandise 100 percent over cost (double the cost), called keystoning
• Profit Maximization Pricing


  Occurs when marginal revenue equals marginal cost<|>Marginal cost is the change in total costs associated with a one-unit change in output<|>Marginal revenue is the extra revenue associated with selling an extra unit of output
• As long as the revenue of the last unit produced and sold is greater than the cost of the last unit produced and sold, the firm should continue manufacturing and selling the product
• Break-Even Pricing


  Determines what sales volume must be reached before the company breaks even (total costs equal total revenue) and no profits are earned<|>Provides a quick estimate of how much the firm must sell to break even and how much profit can be earned if a higher sales volume is obtained
• Price Strategies


  • Price skimming: Charge a high introductory price, often coupled with heavy promotion
  • Penetration pricing: Charge a relatively low price for a product initially as a way to reach the mass market
  • Status Quo Pricing: Charge a price identical to or very close to the competition's price