LO1: Know the characteristics of goods and services.

• Goods differ from services in tangibility, inseparability, perishability and heterogeneity.
• Very few true goods or service exist; most products fall somewhere along a goods/service continuum and have components of each.

LO2: Define the total product.

• A product is a bundle of services and goods and has three basic levels: core, augmented and total product.
• Understanding the total product allows you to concentrate on the features and aspects important to the customer and to coordinate your other marketing activities.

LO3: Learn the stages of new product development.

• The stages include idea generation, idea screening, idea evaluation, product development, and commercialization.
• During the product development phase, prototypes can be developed in order to do additional screening, and test markets or test market simulations can be run.
• The last stage, commercialization, involves developing the final marketing plan, getting the product into production and the start of sales.
• "Me-toos" are products similar to competitive products that need a much-abbreviated new product development cycle. In this case, only the aspects that are different from competition need to be tested.

LO4: Learn the product life cycle.

• Like the Industry Life Cycle, the stages of the Product Life Cycle include introduction, growth, maturity and decline.
• From a marketing viewpoint, the different stages tell us about the competition, and how to focus the individual elements of the marketing plan—product, price, promotion and distribution.
• As services are usually more able to make incremental changes almost continually, the service life cycle is more typified by a series of mini product life cycles.

LO5: Understand why pricing is an important but difficult task for small business.

• Owners of small businesses give a great deal of attention to issues of pricing.
• The price of a product is a function of the value placed on the product by the customer.
• Price is directly related to revenue, and is indirectly related to volume.
• Price is the easiest marketing variable to change.
• Price is an essential part of competitive strategy.
• Market demand is the most important single factor in setting prices.
• Costs of producing a product or service are irrelevant to determining the "right" cost.
• In retailing, a markup system is used where each product is marked up a percentage based on cost or sales price.

LO6: Understand price elasticities, pricing psychology, and other price influences and their impact on pricing.

• Products tend to be price elastic or inelastic, that is, the quantity sold may vary considerably due to changes in price (elastic) or not (inelastic).
• Consumer psychology has an impact on pricing as well. Through a number of ways, consumers get ideas about what is an acceptable price and what is not.
• In addition to costs and consumers, price setting is influenced by five other factors: Company objectives, marketing strategy, channels of distribution, competition, and legal and regulatory restrictions.

LO7: Understand different pricing strategies.

• Firms may use a variety of different pricing strategies. Some of the more common ones include: skimming, prestige or premium pricing, odd-even pricing, partitioned pricing, captive pricing, and price lining.
• Dropped prices are hard to raise. Rather than dropping prices, firms should consider using periodic or random discounting, off-peak pricing, bundling, coupons, rebates, and referral discounts.