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Chapter 14 - Developing and Pricing Goods and Services
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Food producers Kraft, Sara Lee, and General Mills have reported that prices on certain products
critical
thinking exercises
Name: ___________________________
Date: ___________________________
critical thinking exercise 14-1
CHOOSING A BRAND NAME
Suggest an appropriate brand name for each of the following consumer products:
3. A sporty car targeted at middle-aged women
4. A glow-in-the-dark light switch
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8. An inexpensive line of cosmetics featuring vibrant colors
critical thinking exercise 14-1 (continued)
12. A banana-flavored breakfast cereal
Chapter 14 - Developing and Pricing Goods and Services
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Name: ___________________________
Date: ___________________________
critical thinking exercise 14-2
MOST VALUABLE GLOBAL BRANDS
RANK
BRAND
VALUE
($ MILLIONS)
COUNTRY
OF ORIGIN
SECTOR
1
2
3
4
5
6
Chapter 14 - Developing and Pricing Goods and Services
7
8
9
10
Name: ___________________________
Date: ___________________________
critical thinking exercise 14-3
SILKY SKIN SOLUTION
Your company has just made the scientific breakthrough of the century. It has invented a wrinkle
cream that really works. One application results in smooth, wrinkle-free skin without costly and painful
plastic surgery. There are other products that claim they eliminate wrinkles, but they only conceal them
1. What pricing policy will you follow?
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2. What marketing approach will you use?
3. How will you treat your wholesalers?
notes on critical thinking exercise 14-3
1. What pricing policy will you follow?
2. What marketing approach will you use?
3. How will you treat your wholesalers?
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Name: ___________________________
Date: ___________________________
1. Perform a break-even analysis of your proposed business.
2. How many units will you have to sell each year to break even?
3. How many units will you have to sell each evening (use a 365-day year) to break even?
4. Considering your community, does it seem likely that there is a large enough market for gourmet
food for the restaurant to operate at or beyond the break-even point?
5. How much profit will the restaurant earn on sales of 40,000 meals?
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notes on critical thinking exercise 14-4
1. Perform a break-even analysis of your proposed business.
2. How many units will you have to sell each year to break even?
Chapter 14 - Developing and Pricing Goods and Services
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Using the formula, you can plug in the data and calculate the break-even volume: total fixed costs
3. How many units will you have to sell each evening (use a 365-day year) to break even?
4. Considering your community, does it seem likely that there is a large enough market for gourmet
food for the restaurant to operate at or beyond the break-even point?
5. How much profit will the restaurant earn on sales of 40,000 meals?
Chapter 14 - Developing and Pricing Goods and Services
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Name: ___________________________
Date: ___________________________
critical thinking exercise 14-5
COMPARISON SHOPPING ONLINE
It is possible to compare prices for products at many Internet sites. But how do you know that the
lowest-price product will be delivered on time and as expected? One way is to go to a website that com-
1. Which features of the product are important in comparing the cameras?
2. How important would the brand name be in your product selection?
3. Choose one camera model and compare prices for various vendors. Is there a relationship be-
tween price and customer satisfaction?
4. In which classification of product would you put digital cameras?
5. Would you use a website such as BizRate.com to buy a digital camera? A DVD player?
DVDs?
Chapter 14 - Developing and Pricing Goods and Services
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bonus
cases
bonus case 14-1
PANERA EXPANDS PAY-WHAT-YOU-CAN EXPERIMENT
When it comes to corporate philanthropy, many companies don’t go much further than cutting a
check. While it is certainly generous to give money to a good cause, donating to charities and food banks
simply wasn’t enough for Ronald Shaich, chair of the bakery-café chain Panera Bread. He wanted to lend
discussion questions for bonus case 14-1
1. What seems to be the strength of Panera’s nonprofit locations plan?
2. Do you suspect competitors will follow Panera’s lead?
Chapter 14 - Developing and Pricing Goods and Services
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notes on discussion questions for bonus case 14-1
1. What seems to be the strength of Panera’s nonprofit locations plan?
2. Do you suspect competitors will follow Panera’s lead?
bonus case 14-2
THE VALUE OF A PRODUCT OFFER
The heart of a successful marketing program is a product offer that people want and need. But
what do we mean when we say “product offer”? Is a service part of a product offer? Yes. Is an idea part
of a product offer? Sure, people try to market (and sell) ideas. A product offer, then, is not necessarily
something tangible nor is it always visible. Let’s see if we can clarify what the term product offer means
to a marketer.
First of all, notice that the same physical good (for example, a car) is worth different amounts to
different people. How can that be? Clearly, a product offer’s value is not determined by the good (e.g.,
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To make a product offer better, make consumers think it is better. It does no good to improve a
product unless consumers can be convinced that the improvement is there. This sounds confusing, but it
becomes clear when we look at an example:
Which is a better product, a BMW Z4 Roadster or a Ford Focus? Be careful and think before you
BENEFITS OF A BMW BENEFITS OF A FOCUS
Comfort Price
Status Mileage
Quality
In this case, the Focus would be the better product because it had more value to the consumer.
That is why more consumers buy Focuses than BMWs. “But wait a minute,” you say. “A BMW is still a
better car.” Yes, but the car is not the product. The product is the car as seen through the eyes of the con-
sumer who is evaluating not just the car and its quality, but price as well.
The answer to the question “Which is the better product, a BMW or a Ford Focus?” is that it all
discussion questions for bonus case 14-2
1. What is the product of a community college? (Be careful; the product is not what the school of-
fers, but what the school offers as seen through the eyes of students.)
2. Which is the better product, what you get at a community college, or what you get at Harvard?
3. How can you make a product better?
4. Is a better-quality product perceived as a better product by consumers?
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notes on discussion questions for bonus case 14-2
1. What is the product of a community college? (Be careful; the product is not what the school of-
fers, but what the school offers as seen through the eyes of students.)
Which is the better product, what you get at a community college, or what you get at Harvard?
“It all depends.” Community colleges have many benefits and lower cost. Harvard has many dif-
3. How can you make a product better?
4. Is a better-quality product perceived as a better product by consumers?
Chapter 14 - Developing and Pricing Goods and Services
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bonus case 14-3
THE TOY STORY ISN’T OVER JUST YET
More than a decade ago, Disney’s computer animation arm Pixar introduced the world to Woody
and Buzz Lightyear, the stars of its Toy Story franchise. After three movies and billions of dollars in box
office sales, the probability of a reunion of the animated pair in another feature-length film appears highly
unlikely. Pixar operates independently of the rest of the Disney creative machine and is famously devoted
to the artistic integrity of its inventions.
Still, the Toy Story properties, especially Woody and Buzz, remain a hot commodity for Disney
after the release of Toy Story 3. The company estimates toys and other products from the last film will
discussion questions for bonus case 14-3
1. With no new Toy Story feature movies planned, can Woody and Buzz remain hot?
2. What’s the marketing advantage of animated characters like Woody and Buzz?
1. With no new Toy Story feature movies planned, can Woody and Buzz remain hot?
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2. What’s the marketing advantage of animated characters like Woody and Buzz?
endnotes
i Source. Frederik Balfour, “Shelly Adelson’s Misstep in Macao,” Bloomberg Businessweek, December 14, 2009.
2010.
