MGT301 Final Term Subjective by Mahad

MGT301 Principles of Marketing Lecture Wise Question and Answers

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Define the key term Augmented product?

The AUGMENTED product is the non-physical part of the product. It usually consists of lots of added value, for which you may or may not pay a premium. So when you buy a car, part of the augmented product would be the warranty, the customer service support offered by the car's manufacturer and any after-sales service. The augmented product is an important way to tailor the core or actual product to the needs of an individual customer. The features of augmented products can be converted in to benefits for individuals.

What is core Product?

The set of problem-solving or need-meeting benefits that customers are buying when they purchase a product Customers are rarely prepared to pay a premium for these elements of a product.

What is Product development?

A strategy for company growth by offering modified or new products to current market segments, Developing the product concept into a physical product in order to ensure that the product idea can be turned into a workable product

What are the stages of product life cycle?

Introduction stage The product life-cycle stage in which the new product is first distributed and made available for purchase.

Growth stage The product life-cycle stage in which a product's sales start climbing quickly.

Maturity stage The stage in the product life cycle in which sales growth slows or levels off.

Decline stage The product life-cycle stage in which a product's sales decline. What internal factors affect the pricing decision?

Internal factors affecting pricing include the company's marketing objectives, marketing mix strategy, costs, and organizational considerations.

What is market skimming?

Market skimming is a pricing strategy in which marketers set relatively high price at first and then lower its price. It is done to get maximum revenues from the segment who are willing to pay high for the product, in this way company make fewer but profitable sales.

What are pricing decisions made by company?

There are different external factors that have an impact on pricing decisions. The nature of the market in which brand is selling, the demand of the product, the competitors present in the market, level of competition, the substitutes available in the market, changing consumers want and competitor‘s position in the market.

Define the term Targeting.

Targeting is when the market has been divided into different segments based on geographic segmentation, demographic segmentation, psychographic segmentation and behavioral segmentation; the marketer will select a segment or group of segments and target them

What is Price - Variable Cost?

The manufacturer should consider different prices and estimate break-even volumes, probable demand, and profits for each.

What is Cost based pricing?

Cost-Based Pricing:

The simplest pricing method is cost-plus pricing—adding a standard markup to the cost of the product. Construction companies, for example, submit job bids by estimating the total project cost and adding a standard markup for profit. Lawyers, accountants, and other professionals typically price by adding a standard markup to their costs. Some sellers tell their customers they will charge cost plus a specified markup; for example, aerospace companies price this way to the government. To illustrate markup pricing, suppose any manufacturer had the following costs and expected sales: Then the manufacturer's cost per toaster is given by:

Unit Cost = variable Cost + Fixed Cost

The manufacturer's markup price is given by:

Markup Price = Unit Cost

What is Break-even analysis?

Break-even analysis is used to determine the point when a company‘s total sales or revenues equal to its total expenses. At the breakeven point, neither profit nor loss is incurred. It is important to identify the startup costs, which will help to determine the sales revenue. To calculate the breakeven point, one will need to identify the fixed and variable costs. Breakeven point = fixed costs/ (unit selling price – variable costs). Break-even analysis is only used when cost based pricing strategy is adopted. In this way company add a standard markup to the cost of the product and in reality the company is not generating much profit neither facing loss, in fact the whole process is balanced.

What is Captive product price?

Captive product price is actually setting a price for products that must be used along with a main product. Many companies make very low margins on the main products but are able to make very high margins on the expendable secondary products.

What are Monopolistic competition and Oligopolistic competition?

Monopolistic competition basically a type of imperfect competition, it means many producers sell products that are differentiated from one another but are not considered as substitutes with respect to price, branding, and quality etc.

Oligopolistic competition is practiced in a market in which market or industry is dominated by small number of sellers, basically lack of competition lead to higher cost of consumers. There are few sellers that is why they have to keep eye on action of others.