AD212 American Business and Management

AD212

Fall 2002

Chapter 14: Creating and Pricing Products that Satisfy Customers

There is no extra reading.

Why would a company ever want to speed up the decline of its own existing products? (This possibility is suggested in the last paragraph on page 387: "In some cases, a firm may be willing to take the chance of speeding up the decline of existing products.")

Are there any dangers in expanding a popular product line, such as Coke (shown on the bottom of page 388)? Why is it often difficult for a company to delete a product?

Are there other reasons why a product might fail besides those given on page 392 ("Why Do Products Fail")?

What are the advantages of a product differentiation strategy? How can it be carried out? Can you think of any disadvantages of the strategy?

Consider cost-based, demand-based, and competition-based pricing: How does Colby set its tuition and fees each year?

It is not uncommon for a company to price a new product below its cost of research/development/production/distribution. That is, in the early going, the company loses money on every unit it sells. What are the reasons for doing this? What are the risks?

What is the actual interest rate that you would earn by paying your bill on the 10th day rather than the 30th day under the terms "2/10 net 30" as given under "Discounting" on page 410. Is it worth it to pay early? EVERYONE should work out the answer to this question.