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COMMERCE 1E03 Final: Chapter 15 Exam Study Guide

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McMaster University
Rita Cossa

Chapter15–ManagingtheMarketingMix Product Development and the Total Product Offer • Intense competition forces companies to constantly develop new products • The total product offer/value packaging is everything that the consumer evaluates when deciding to buy • The includes both tangibles and intangibles such as packaging, store experience, delivery, experience, brand image, name, reputation, etc. • Brand Equity • Brands can create significant economic value for the businesses they serve, as well as for stakeholders • Strong brands develop strong products and services • They… o Command premium prices o Attract the best talent o Reward investors o Fare better in economic downturns o Support their communities and instill pride • Brand name selection: o Suggest product benefits and qualities o Easy to remember and pronounce o Simple and distinctive o Can be protected legally o Translath easily in international markets • Packaging (the 5 P) o Attract buyers’ attention o Protect goods inside o Ease of opening and use o Describing and giving information about the contents o Explaining the benefits of the good inside o Providing information on warranties, warnings and other consumer matters o Giving some indication of price, value and uses Traditional S-Shape Life Cycle (PLC) • 4 stages: o Introduction o Growth – profits usually peak o Maturity o Decline o ****not all products classes follow this shape**** Pricing Objectives • Marketers spend a lot of time and money trying to find the perfect price, and still cannot be sure that their price is correct • The goal of all marketing activity is to increase sales and profits o Price and cost are not always related • Each product requires its own pricing strategy o Achieving a target return on investment/profit o Building traffic o Achieving a greater marketing share o Creating an image o Furthering social objectives • Non-Price competition o Price competition – emphasize low price o Non-price competition – based on quality and service (example: promptness and friendliness) ▪ Add value ▪ Educate customers ▪ Establish relationships ▪ Nonprice competition is emphasized as price changes are easy to match o Due to globalization, the trend is towards more choice and more value Pricing Approaches 1. Cost based pricing – producers often set the price based on the profit margin desired 2. Demand based pricing – designing a product so that it satisfies customers and meets the profit margins desired by the firm; an example is target costing 3. Competition based Pricing – setting a price at, abov
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