Developing and Pricing Products Leonardo Matarrese
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Developing and Pricing Products Leonardo Matarrese

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Developing and Pricing Products - Leonardo Matarrese

Developing and Pricing Products - Leonardo Matarrese

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  • 1. CHAPTER 12 Developing and Pricing Products Leonardo Matarrese @MyPlick
  • 2. Outline
    • What Is a Product?
    • Developing New Products
    • Identifying Products
    • Determining Prices
    • Pricing Strategies and Tactics
    Leonardo Matarrese @MyPlick
  • 3. What Is a Product?
    • Ideas, Goods, or Services
    • Customers buy products because they like what the products can do for them, either physically or emotionally--Utility
    • A product must include the right features and offer the right benefits to succeed
    • Feature 
      • Tangible quality that a company builds into a product
    What are some feature the company’s build in? Leonardo Matarrese @MyPlick
  • 4. Classifying Goods & Services
    • Convenience Good/Service  
      • Inexpensive product purchased and consumed rapidly and regularly
    • Shopping Good/Service 
      • Moderately expensive, infrequently purchased product
    • Specialty Good/Service 
      • Expensive, rarely purchased product
    CONSUMER PRODUCTS Leonardo Matarrese @MyPlick
  • 5. Classifying Goods & Services
    • Expense Item 
      • Industrial product purchased and consumed rapidly and regularly for daily operations
    • Capital Item 
      • Expensive, long-lasting, infrequently purchased industrial product such as a building
    INDUSTRIAL PRODUCTS Leonardo Matarrese @MyPlick
  • 6. The Product Mix
    • Product Mix 
      • Group of products that a firm makes available for sale
    • Product Line 
      • Group of similar products intended for a similar group of buyers who will use them in similar ways
    Leonardo Matarrese @MyPlick
  • 7. Developing New Products
    • The New Product Development Process
    • Product Mortality Rates
      • Strategy of introducing new products to respond quickly to customer or market changes
    Leonardo Matarrese @MyPlick Speed to Market
  • 8. The Seven-Step Development Process Product Ideas Screening Concept Testing Business Analysis Prototype Development Testing & Test Marketing       Commercialization  Leonardo Matarrese @MyPlick
  • 9.
    • Variations for Services
    • Service Ideas
      • Defining the Service Package — identification of the tangible and intangible features that characterize the service
    • Service Process Design
      • Services require a three-part service process design instead of prototype development
    The Seven-Step Development Process Leonardo Matarrese @MyPlick
  • 10. The Product Life Cycle (PLC)
    • Series of stages in a product’s profit-producing life
    Introduction Growth Maturity Decline Leonardo Matarrese @MyPlick
  • 11. Life Cycle Stages # - Leonardo Matarrese @MyPlick
  • 12. Life Cycle Stages # - Leonardo Matarrese @MyPlick
  • 13. Adjusting Marketing Strategy During the Life Cycle
    • Extending Product Life: An Alternative to New Products
    • Foreign Markets Offer Three Approaches to Longer Life Cycles
    • Product Extension
      • Existing product is marketed globally, instead of just domestically
    • Product Adaptation  
      • Product modified to have greater appeal in foreign markets
    • Reintroduction 
      • Process of reviving for new markets products that are obsolete in older ones
    Leonardo Matarrese @MyPlick
  • 14. Identifying Products
    • Branding: process of using symbols to communicate the qualities of a product made by a particular producer
    • Types of Brand Names
    • National Brand: brand-name product produced by, widely distributed by, and carrying the name of a manufacturer
    • Licensed Brand: brand-name product for whose name the seller has purchased the right from an organization or individual
    • Private Brand (or Private Label ): brand-name product that a wholesaler or retailer has commissioned from a manufacturer
    Leonardo Matarrese @MyPlick
  • 15. Packaging Products
    • Packaging 
      • Physical container in which a product is sold, advertised, or protected
    Leonardo Matarrese @MyPlick
  • 16. Packaging Products
    • Labeling
      • Can help market the product
    • Nonaerosol
    • Bio-Degradable
    • Recyclable
    • Ozone Friendly
    • Fat Free
    • Salt Free
    • Sugar Free
    • 30% More Free!
    Contents Under Pressure Do Not Puncture
      • Address issues of consumer safety
    Flammable Do Not Use Near Open Flame Child Proof Cap Leonardo Matarrese @MyPlick
  • 17. Labeling Laws
    • Food, Drug and Cosmetic Act of 1938
      • Empowers the Food and Drug Administration to check the accuracy of product ingredients as reported on labels
    • Fair Packaging and Labeling Act of 1966
      • Requires labels to include the product name, the name and address of the manufacturer or distributor, and the net quantity of product contained in the package
    • Child Safety Protection Act 1995
      • Requires labels to identify toys that are choking hazards
    Not For Children Under Three Years Old Leonardo Matarrese @MyPlick
  • 18. Determining Prices
    • Pricing 
      • Process of determining what a company will receive in exchange for its products
    • Pricing Objectives 
      • Goals that producers hope to attain in pricing products for sale
    • Market Share 
      • As a percentage, total of market sales for a specific company or product
    Leonardo Matarrese @MyPlick
  • 19. Price-Setting Tools
    • Cost-Oriented Pricing
      • Markup: Amount added to an item’s cost to sell it at a profit
    • Breakeven Analysis: Cost-Volume-Profit Relationships
      • Variable Cost: Cost that changes with the quantity of a product produced or sold
      • Fixed Cost: Cost unaffected by the quantity of a product produced
      • Breakeven Analysis: Assessment of the quantity of a product that must be sold before the seller makes a profit
    Leonardo Matarrese @MyPlick
  • 20. Markup
    • Markup is usually stated as a percentage of selling price.
    # - Leonardo Matarrese @MyPlick
  • 21. Breakeven Point
    • Quantity of a product that must be sold before the seller covers variable and fixed costs and makes a profit
    # - Leonardo Matarrese @MyPlick
  • 22. Breakeven Analysis # - Leonardo Matarrese @MyPlick
  • 23. Pricing Strategies & Tactics
    • Pricing above prevailing market prices for similar products
    • Pricing below market prices
    • Pricing at or near market prices (market pricing)
    Existing Products
    • Price Leader
      • Dominant firm that establishes product prices that other companies follow
    • Price Fixing
      • Occurs when producers illegally agree on prices among themselves
    Leonardo Matarrese @MyPlick
  • 24. Pricing Strategies & Tactics
    • Price Skimming 
      • Setting an initial high price to cover new product costs and generate a profit
    • Dynamic Pricing for E-business
      • Sellers can alter prices privately, on a one‑to‑one, customer-to customer basis
    • Penetration Pricing 
      • Setting an initial low price to establish a new product in the market
    • Price Lining
      • Offering all items in certain categories at a limited number of prices
    New Products Leonardo Matarrese @MyPlick
  • 25. Pricing Strategies & Tactics
    • Psychological Pricing 
      • Pricing tactic that takes advantage of the fact that consumers do not always respond rationally to stated prices
    • Odd-even Pricing 
      • Psychological pricing tactic based on the premise that customers prefer prices not stated in even dollar amounts
    • Discount 
      • Price reduction offered as an incentive to purchase
    New Products Leonardo Matarrese @MyPlick
  • 26. International Pricing
    • Why is pricing products for sale in other countries so complicated?
    Leonardo Matarrese @MyPlick