1. Define product. Provide 3 examples.

Anything that can be offered to market for attention, acquisition, use, or consumption that might satisfy
want or need. Ex. Automobiles, Medical Care, Smell of coffee
2. Define 4 types of consumer products. Provide examples of each.
Convenience goods are consumer goods and services that the customer usually buys frequently,
immediately, and with minimum of comparison and buying effort (tobacco products, soap, and
newspapers)
Shopping goods are consumer goods that the customer, in the process of selection and purchase, usually
compares on such bases as suitability, quality, price, style (furniture, clothing, cars, major appliances)
Specialty goods are consumer goods that have unique characteristics or brand identification for which
significant group of buyers is willing to make special purchase effort (specific brands and types of cars
-Jaguar, high-priced photographic equipment)
Unsought goods are consumer goods that the consumer either does not know about or knows about but
does not normally think of buying (life insurance and encyclopedias)
3. What is core, actual and augmented product? Define, provide examples.
Core benefits represent what the buyer is really buying
Actual product represents the design, brand name, and packaging that delivers the core benefit to the
customer
Augmented product represents additional services or benefits of the actual product
4. What are four characteristics of a service? Explain, provide examples.
Intangibility: services cannot be seen, tasted, felt, heard, or smelled before purchase. E.g., education, air
travel, sporting events
Variability: quality of services depends on who provides them and when, where, and how
Inseparability: services cannot be separated from their providers. For example, we cannot take a hotel
room home for consumption; we must consume this service at the point of provision.
Perishability: services cannot be stored for later sale or use
5. How quality can be defined? What is the best quality? Justify.
Quality in terms of the product or service is the lack of defects.
Quality in terms of the customer is the value and satisfaction provided by the product or service
6. What is product line? What is the difference between Product line stretching and Product line filling?
Provide examples.
Product line is a group of products that are closely related because they function in a similar manner, are
sold to the same customer groups, are marketed through the same types of outlets, or fall within given
price ranges
Line filling occurs when companies add more items within the present price range of the line
Product line stretching is when a company lengthens its product line beyond its current price range
Ex: Toyota and Lexus

7. What are the main types of brand sponsorship? Provide examples.

Manufacturers brand- The brand owned by manufacturer and promoted either directly or
indirectly. Ex: Toshiba, Epson, Intel

Private brand- Private brands are also called as store brands. Ex: Private labels in Russian
supermarkets: 20 % , 10-15 %

Licensed brand- It is the legal authorization by the trade marked brand owner to allow another
company to use its brand for a fee. For example, Hugo boss, Tommy Hilfiger, Lovable,
Lacoste, and Nike are some of the textile brands those licensed their brands in the Indian
market.

Co-brand- practice of using the established brand names of two different companies on the
same product. Ex: Apple Computers with Intel Processors, Motorola Z8 Ferrari Limited
Edition

8. What are the benefits of branding for consumers, producers, and retailers?
Brand names help buyers in a number of ways:

tell the buyer something about product quality

increase the shoppers efficiency

help call consumers attention to new products

Branding also gives the supplier several advantages:

makes it easier for the supplier to process orders and track down problems

provides legal protection for unique production features that otherwise might be copied by
competitors

helps supplier attract a loyal and profitable set of customers

helps the supplier to segment markets

helps build the corporate image, making it easier to launch new brands & gain acceptance by
distributors & consumers

Branding also gives the seller several advantages.

easier to process orders and track down problems

to provide legal protection for unique product features that might otherwise be copied by
competitors

to attract a loyal and profitable set of customers

to help segment markets

9. List and briefly discuss the pricing limits and factors affecting pricing decisions.
Product Costs- Materials, Labor, Energy, Distribution, Promotion, Administration
Other Internal & External Factors- Company Objectives, Marketing Mix, Competitive Forces,
Legislation, Ethics
Customer perceptions of value

MIN
No profits below this price

MAX
No demand above this price

10. Define and provide examples of market skimming and market penetration pricing.
Market-Skimming Pricing- Setting a high price for a new product to skim maximum revenues layer by
layer from the segments willing to pay the higher price; the firm makes fewer but more productive sales.
Ex. Sonys High Definition TV. 1990 - $43 000, 1993 - $6 000, 2001 - $2 000
Market-Penetration Pricing- Setting a low price for a new product in order to attract large numbers of
buyers and a large market share. Ex. Texas Instruments. Build a large plant, set its price as low as
possible, win a large market share
11. Define and provide examples of optional pricing and captive pricing.
Pricing optional or accessory products sold with the main product
Ex: Supplemental software, digital cameras, and printers sold with a new PC
Captive pricing- Pricing products that must be used with the main product.
Ex. Play Station reasonable price, make money on games
12. Define and provide examples of product bundle pricing and multiple unit pricing.
Product Bundle Pricing - Combining several products and offering the bundle at a reduced price
Ex. Mc Burger: Burger + fries + cola
Multiple Unit Pricing- the product is priced for more than one unit
Ex. 4 yogurts in a pack
13. Define and provide examples of product line pricing.
Product line pricing - setting the price steps between various products in a product line based on
cost differences between the products,

customer evaluations of different features,

and competitors prices

Ex. Calina Concern

Clear Line, Silver Line, Golden Line
-Ex. Kodak
Funtime, Regular Kodak, Kodak Royal Gold
14. Define and provide examples of loss leader pricing.
Loss leader pricing places the price of stuff at levels lower than necessary to make a profit, hoping they'll
sell you other stuff by getting you in the door. Ex. diet Pepsi 12 oz. cans for $4.99, one per family, is a
losing proposition unless you buy other things while you are at the grocery store.
15. How a company can use segmentation in pricing. Comment and provide examples of four types of
segmented pricing.
Consumer segment pricing Different customers pay different prices for the same product or service.
Ex. Museums or cinemas may charge a lower admission for students and senior citizens.
Product-form pricing Different versions of the product are priced differently, but not according to
differences in their costs. Ex. Skil, Dutch company. Drill X (more powerful) at 100, drill Y at 40.
Costs are almost the same.
Location pricing Different locations are priced differently, even the cost of offering each location is the
same. Ex. Theaters seat prices

Time pricing Prices vary by season, month, day, even hour. Resorts give weekend and seasonal
discount.
Ex. Off-Peak holidays, nigh phone calls
16. List and comment on conditions necessary for segmented pricing effectiveness.
Market can be segmented segments must show different degrees of demand.
Lower priced segments are not able to resell to higher priced segments
Pricing must be legal
The costs of segmenting and washing the market cannot exceed the extra revenue obtained from the price
difference
Segmented pricing must reflect real differences in buyers perceived value. Otherwise, in the long run, the
practice will lead to customer resentment and ill will.