What is the lowest level of production and sales at which a company can break even on a particular product?

Cost-volume-profit (CVP) formula:

px = vx + FC + Profit

p is the price per unit,
x is the number of units,
v is variable cost per unit and
FC is total fixed cost.

Describe three major types of pricing associated with business products.

Describe three major types of pricing associated with business products.

Setting prices for business products is different from setting prices for consumer products because of several factors, including the size of purchases, transportation considerations, and geographic issues.

The three types of pricing associated with business products are geographic pricing, transfer pricing, and discounting.

Explain the different strategies available to companies for setting prices.

Explain the different strategies available to companies for setting prices.

Pricing strategies fall into five categories: new-product pricing, differential pricing, psychological pricing, product-line pricing, and promotional pricing.

Price skimming and penetration pricing are two strategies used for pricing new products.

Differential pricing can be accomplished through negotiated pricing, secondary-market pricing, periodic discounting, and random discounting.

Types of psychological pricing strategies are odd-number pricing, multiple-unit pricing, reference pricing, bundle pricing, everyday low prices, and customary pricing.

Product-line pricing can be achieved through captive pricing, premium pricing, and price lining.

The major types of promotional pricing are price-leader pricing, special-event pricing, and comparison discounting.

Examine the three major pricing methods that firms employ.

Examine the three major pricing methods that firms employ.

The three major pricing methods are cost-based pricing, demand-based pricing, and competition-based pricing.

When cost-based pricing is employed, a proportion of the cost is added to the total cost to determine the selling price.

When demand-based pricing is used, the price will be higher when demand is higher, and the price will be lower when demand is lower.

A firm that uses competition-based pricing may choose to price below competitors' prices, at the same level as competitors' prices, or slightly above competitors' prices.

Identify the major pricing objectives used by businesses.

Identify the major pricing objectives used by businesses.

Objectives of pricing include survival, profit maximization, target return on investment, achieving market goals, and maintaining the status quo.

Firms sometimes have to price products to survive, which usually requires cutting prices to attract customers.

The return on investment (ROI) is the amount earned as a result of the investment in developing and marketing the product. Some firms set an annual percentage ROI as the pricing goal. Other firms use pricing to maintain or increase their market share.

In industries in which price stability is important, firms often price their products by charging about the same as competitors.

Describe the economic basis of pricing and the means by which sellers can control prices and buyers' perceptions of prices.

Describe the economic basis of pricing and the means by which sellers can control prices and buyers' perceptions of prices.

A product is a set of attributes and benefits that has been designed to satisfy its market while earning a profit for its seller.

Each product has at price at which it balances consumers desires and expectations with a firm's need to make a profit.

The price of a product is the amount of money a seller is willing to accept in exchange for the product at a given time and under given circumstances.

Price thus serves the function of allocator. It allocates goods and services among those who are willing and able to buy them. It allocates financial resources among producers according to how well they satisfy customers' needs.

Price also helps customers to allocate their own financial resources among products.

Price competition occurs when a seller emphasizes a product's low price and sets a price that equals or beats competitors' prices. To use this approach most effectively, a seller must have the flexibility to change prices often.

Price competition allows a marketer to set prices based on demand. The Internet has made it more difficult than ever for sellers to compete on price.

Non-price competition is based on factors other than price. It is used most effectively when a seller can make its product stand out from the competition by differentiating product quality, customer service, promotion, packaging, or other features.

Buyers must be able to perceive these distinguishing characteristics and consider them desirable.

Buyers' perceptions of prices are affected by the importance of the product to them, the range of prices they consider acceptable, their perceptions of competing products, and their association of quality with price.

Explain the uses and importance of branding, packaging, and labeling.

Explain the uses and importance of branding, packaging, and labeling.

A brand is a name, term, symbol, design, or any combination of these that identifies a seller's products as distinct from those of other sellers.

Brands can be classified as manufacturer brands, store brands, or generic brands.

A firm can choose between two branding strategies—individual or family branding, which are used to associate (or not associate) particular products with existing products, producers, or intermediaries.

Packaging protects goods, increases consumer convenience, and enhances marketing efforts by communicating product features, uses, benefits, and image.

Labeling provides customers with product information, some of which is required by law.

Identify the methods available for changing a product mix.

Identify the methods available for changing a product mix.

Customer satisfaction and organizational objectives require marketers to develop, adjust, and maintain an effective product mix.

Marketers may improve a product mix by changing existing products, deleting products, and developing new products.

New products are developed through a series of seven steps.

The first step, idea generation, involves developing a pool of product ideas.

Screening, the second step, removes from consideration those product ideas that do not match organizational goals or resources.

Concept testing, the third step, is a phase in which a sample of potential buyers is exposed to a proposed product through a written or oral description in order to determine their initial reactions and buying intentions.

The fourth step, business analysis, generates information about potential sales, costs, and profits.

During the development step, the product idea is transformed into mock-ups and prototypes to determine if product production is technically feasible and can be produced at reasonable costs.

Test marketing is an actual launch of the product in selected cities chosen for their representative-ness of target markets.

Finally, during commercialization, plans for full-scale production and marketing are refined and implemented.

Most product failures result from inadequate product planning and development.

Define product line and product mix and distinguish between the two.

Define product line and product mix and distinguish between the two.

A product line is a group of similar products marketed by a firm.

They are related to each other in the way they are produced, marketed, and consumed.

The firm's product mix includes all the products it offers for sale.

The width of a mix is the number of product lines it contains.

The depth of the mix is the average number of individual products within each line.

Discuss the product life-cycle and how it leads to new-product development.

Discuss the product life-cycle and how it leads to new-product development.

Every product moves through a series of four stages—introduction, growth, maturity, and decline—which together form the product life-cycle.

As the product progresses through these stages, its sales and profitability increase, peak, and decline.

Marketers keep track of the life-cycle stage of products in order to estimate when a new product should be introduced to replace a declining one.

Explain what a product is and how products are classified.

Explain what a product is and how products are classified.

A product is everything one receives in an exchange, including all attributes and expected benefits. The product may be a manufactured item, a service, an idea, or a combination.

Products are classified according to their ultimate use.
Classification affects a product's distribution, promotion, and pricing. Consumer goods, which include convenience, shopping, and specialty products, are purchased to satisfy personal and family needs.

Business products are purchased for resale, in making other products, or for use in a firm's operations. Business products can be classified as raw materials, major equipment, accessory equipment, component parts, process materials, supplies, and services.

Identify the major steps in the consumer buying decision process and the sets of factors that may influence this process.

Identify the major steps in the consumer buying decision process and the sets of factors that may influence this process.

Buying behavior consists of the decisions and actions of people involved in buying and using products.

Consumer buying behavior refers to the purchase of products for personal or household use.

Organizational buying behavior is the purchase of products by producers, re sellers, governments, and institutions.

Understanding buying behavior helps marketers predict how buyers will respond to marketing strategies.

The consumer buying decision process consists of five steps: recognizing the problem, searching for information, evaluating alternatives, purchasing, and post-purchase evaluation.

Factors affecting the consumer buying decision process fall into three categories: situation influences, psychological influences, and social influences.

Distinguish between a marketing information system and marketing research.

Distinguish between a marketing information system and marketing research.

Strategies are monitored and evaluated through marketing research and marketing information systems, which store and process internal and external data and produce reports in a form that aids marketing decision making.

A marketing information system manages marketing information that is gathered continually from internal and external sources.

Marketing research is the process of systematically gathering, recording, and analyzing data concerning a particular marketing problem.

Technology is making information for marketing decisions more accessible. Electronic communication tools can be very useful for accumulating accurate and affordable information. Information technologies that are changing the way marketers obtain and use information are databases, online information services, and the Internet.

Many companies are using social media to obtain research data and feedback from customers.

Describe how market measurement and sales forecasting are used.

Describe how market measurement and sales forecasting are used.

Market measurement and sales forecasting are used to estimate sales potential and predict product sales in specific market segments.

Understand the major components of a marketing plan.

Understand the major components of a marketing plan.

A marketing plan is a written document that specifies an organization's resources, objectives, strategy, and implementation and control efforts to be used in marketing a specific product or product group.

The marketing plan describes a firm's current position, establishes marketing objectives, and specifies the methods the organization will use to achieve these objectives. Marketing plans can be short-range for one year or less, medium-range for two to five years, or long-range for periods of more than five years.

Explain how the marketing environment affects strategic market planning.

Explain how the marketing environment affects strategic market planning.

To achieve a firm's marketing objectives, marketing-mix strategies must begin with an assessment of the marketing environment, which, in turn, influences decisions about marketing-mix ingredients. Marketing activities are affected by the external forces that make up the marketing environment.


These forces include economic, socio-cultural, political, competitive, legal and regulatory, and technological forces.


Economic forces affect customers' ability and willingness to buy. Socio-cultural forces are societal and cultural factors, such as attitudes, beliefs, and lifestyles, that affect customers' buying choices. Political forces and legal and regulatory forces influence marketing planning through laws that protect consumers and regulate competition.

Competitive forces involve the actions of competitors. Technological forces can create new marketing opportunities or cause a product to become obsolete.

Understand the two major components of a marketing strategy—target market and marketing mix.

Understand the two major components of a marketing strategy—target market and marketing mix.

A marketing strategy is a plan for the best use of an organization's resources to meet its objectives. Developing a marketing strategy involves selecting and analyzing a target market and creating and maintaining a marketing mix that will satisfy the target market.

A target market is chosen through the undifferentiated or the market segmentation approach. A market segment is a group of individuals or organizations within a market that have similar characteristics and needs. Businesses that use an undifferentiated approach design a single marketing mix and direct it at the entire market for a particular product. The market segmentation approach directs a marketing mix at a segment of a market.

The four elements of a firm's marketing mix are

1. Product, 
2. Price, 
3. Distribution, and 
4. Promotion. 

The product ingredient includes decisions about

1. The product's design, 
2. Brand name, 
3. Packaging, and 
4. Warranties. 

The pricing ingredient is concerned with base prices and various types of discounts. Distribution involves not only transportation and storage but also the selection of intermediaries. Promotion focuses on providing information to target markets. The elements of the marketing mix can be varied to suit broad organizational goals, marketing objectives, and target markets.

Understand what markets are and how they are classified.

Understand what markets are and how they are classified.

A market consists of people with a need, the ability to buy, and the desire and authority to purchase. Markets are classified as consumer and business-to-business or industrial, which includes producer, reseller, governmental, and institutional markets.

Trace the development of the marketing concept and understand how it is implemented.

Trace the development of the marketing concept and understand how it is implemented.

From the Industrial Revolution until the early 20th century, business people focused on the production of goods. From the 1920s to the 1950s, the emphasis moved to the selling of goods. During the 1950s, business people recognized that their enterprises involved not only producing and selling products, but also satisfying customers' needs.

They began to implement the marketing concept, a business philosophy that involves the entire organization in the dual processes of meeting the customers' needs and achieving the organization's goals.

Implementation of the marketing concept begins and ends with customers—first to determine what customers' needs are and then to evaluate how well the firm is meeting these needs.

Explain how marketing adds value by creating several forms of utility.

Explain how marketing adds value by creating several forms of utility.

Marketing adds value in the form of utility, or the power of a product or service to satisfy a need. It creates place utility by making products available where customers want them, time utility by making products available when customers want them, and possession utility by transferring the ownership of products to buyers.