© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 1
Product and Product and Pricing StrategiesPricing Strategies
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 2
Types Types of Productsof Products
StagesStagesof Productsof Products
Product CharacteristicsProduct Characteristics
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 3
The Product The Product ContinuumContinuum
GoodsProducts
IdeasServices
Salt Shoes VCR Auto FastFood
Cruise Consulting EducationInsurance
TangibleDominant
IntangibleDominant
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 4
Augmenting the Basic Augmenting the Basic ProductProduct
Augmenting the Basic Augmenting the Basic ProductProduct
Core BenefitsCore Benefits
Actual ProductBrand Name Features
QualityLevel DesignPackaging
Augmented Product
Installation Warranty
Upgrades Accessories
Deliveryand Credit
After-SaleService
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 5
Characteristics ofCharacteristics ofService ProductsService Products
IntangibleIntangibleQualityQuality
IntangibleIntangibleQualityQuality
PerishablePerishableNatureNature
PerishablePerishableNatureNature
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 6
Consumer ProductsConsumer ProductsConsumer ProductsConsumer Products
SpecialtySpecialtyProductsProductsSpecialtySpecialtyProductsProducts
ConvenienceConvenienceProductsProducts
ConvenienceConvenienceProductsProducts
UnsoughtUnsoughtProductsProducts
UnsoughtUnsoughtProductsProducts
ShoppingShoppingProductsProducts
ShoppingShoppingProductsProducts
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 7
Industrial ProductsIndustrial Products
Expense ItemsExpense Items Capital ItemsCapital Items
PencilsPencils PrinterCartridges
PrinterCartridges ComputersComputersCopy
Machines
CopyMachines
Short-TermShort-Term Long-TermLong-Term
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 8
Products and Their UsesProducts and Their Uses
Raw materials
Components
Supplies
Installations
Equipment
Business services
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 9
TimeTime
IntroductionIntroduction GrowthGrowth MaturityMaturity DeclineDecline
In-FlightInternetService
Digital MusicPlayers
DVD Players VCRs
++00
Sal
es V
olum
e (u
nits
)S
ales
Vol
ume
(uni
ts)
Sales
Profits
The Product Life CycleThe Product Life Cycle
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 10
Product MakeoversProduct Makeovers
ReinvigoratedDesigns
ReinvigoratedDesigns
RefreshedMarketing Efforts
RefreshedMarketing Efforts
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 11
1.1. Screening of ideasScreening of ideas
2.2. Business analysisBusiness analysis
3.3. Prototype developmentPrototype development
4.4. Test marketingTest marketing
5.5. CommercializationCommercialization
New Product DevelopmentNew Product Development
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 12
Idea GenerationIdea Generation
Customers
Competitors
Employees
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 13
Consumer ProductsConsumer Products
Concept TestingConcept Testing
Industrial ProductsIndustrial Products
Feasibility StudyFeasibility Study
Idea ScreeningIdea Screening
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 14
Business AnalysisBusiness Analysis
Forecast Sales
Estimate Costs
Project Profits
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 15
Prototype DevelopmentPrototype Development
PackagingPackagingPackagingPackaging
Marketing MixMarketing MixMarketing MixMarketing Mix
ProductionProductionProductionProduction
ResourcesResourcesResourcesResources
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 16
Test MarketingTest Marketing
Introduce theIntroduce theProductProduct
Monitor Customer Monitor Customer ReactionsReactions
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 17
CommercializationCommercialization
ProductionProduction DistributionDistribution
ManufacturingManufacturing PackagingPackaging
DistributionDistribution PricingPricing PromotionPromotion
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 18
Product IdentitiesProduct Identities
Legal ProtectionsLegal ProtectionsUnique Name, Symbol or Design
Unique Name, Symbol or Design
Company orOrganization Brand
Company orOrganization Brand
The ProductBrand
The ProductBrand
Recognizing Products
Specifying Products
Marketing Products
Valuing Products
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 19
Branding of Branding of ProductsProducts
Equity Name Selection Sponsorship
Brand PreferenceBrand Preference
Brand InsistenceBrand Insistence
Brand LoyaltyBrand Loyalty
Brand AwarenessBrand Awareness
TrademarksTrademarks
Public DomainPublic Domain
Brand NamesBrand Names
Brand MarksBrand Marks
Generic ProductsGeneric Products
Co-Brandingand Licensing
Co-Brandingand Licensing
National BrandsNational Brands
Private BrandsPrivate Brands
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 20
Packaging and Packaging and LabelingLabeling
StrategyStrategy
Inventory ControlInventory Control
The ProductThe Product
InformationInformation
AppealAppeal
DisplayDisplay
DifferentiationDifferentiation
FunctionFunction
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 21
Product StrategiesProduct Strategies
ProductProductExpansionExpansionProductProduct
ExpansionExpansion
Product LineProduct LineProduct LineProduct Line
InternationalInternationalMarketsMarkets
InternationalInternationalMarketsMarkets
Product MixProduct MixProduct MixProduct Mix
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 22
Product LineProduct Lineand Product Mixand Product Mix
LengthLengthWidthWidth DepthDepth
Strengths andWeaknesses
Strengths andWeaknesses
Long-TermStrategy
Long-TermStrategy
Managerial Depth
Managerial Depth
Financial Resources
Financial Resources
RetailChannel
RetailChannel
Goods or Services
Risks orRewards
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 23
Product Expansion Product Expansion
Add Items in a Product Category Under the Same Brand NameAdd Items in a Product Category Under the Same Brand Name
Add New Products with the Same Product NameAdd New Products with the Same Product Name
Translate a Successful Brand in a Different Product FormatTranslate a Successful Brand in a Different Product Format
Apply a Successful Brand Name to a New CategoryApply a Successful Brand Name to a New Category
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 24
International MarketsInternational Markets
EntryRequirements
EntryRequirements
GovernmentGovernment
Tariffs andTrade Barriers
Tariffs andTrade Barriers
CultureCulture
LanguageLanguage
ConsumerPreferencesConsumer
Preferences
ExchangeRates
ExchangeRates
BusinessCustomsBusinessCustoms
StandardizationStandardization
CustomizationCustomization
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 25
Product PositioningProduct Positioning
FeaturesFeatures
ServicesServices
ImageImage
PricePrice
CategoryCategory
Size, ease of use, styleSize, ease of use, style
Convenience, customer supportConvenience, customer support
Reliability, sophisticationReliability, sophistication
Low cost or premiumLow cost or premium
Leading online sellerLeading online seller
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 26
ProductProductPositioning ErrorsPositioning Errors
ProductProductPositioning ErrorsPositioning Errors
UnderUnderPositioningPositioning
UnderUnderPositioningPositioning
OverOverPositioningPositioning
OverOverPositioningPositioning
ConfusedConfusedPositioningPositioningConfusedConfused
PositioningPositioning
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 27
Developing Pricing Developing Pricing StrategiesStrategies
QualityQualityPerceptionsPerceptions
QualityQualityPerceptionsPerceptions
MarketingMarketingObjectivesObjectivesMarketingMarketingObjectivesObjectives
ConsumerConsumerDemandDemand
ConsumerConsumerDemandDemand
GovernmentGovernmentRegulationsRegulations
GovernmentGovernmentRegulationsRegulations
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 28
Break-Even Analysis
Break-EvenPoint $$ Profits $$
More Than
$$ Losses $$
Less Than
Fixed costs
Selling price per unit-Variable costs per unit
Cost-Based PricingCost-Based Pricing
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 29
Break-Even Point Haircuts at $20 Break-Even Point Haircuts at $20 EachEach
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 30
Break-Even Point Haircuts at $30 Break-Even Point Haircuts at $30 EachEach
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 31
Other Pricing Other Pricing StrategiesStrategies
Price-BasedPrice-Based
OptimizationOptimization
SkimmingSkimming
PenetrationPenetration
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