Entrepreneurship Chapter 9 Ethan Chazin

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Great tips, resources, best practices and strategies for entrepreneurs, start-ups, professionals and small business owners.to plan launch and grow successful businesses.

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Entrepreneurship Chapter 9 Ethan Chazin

  1. 1. Chapter 9 Business Marketing: ProductProduct PRICINGPRICING StrategiesStrategies
  2. 2. This Week’sThis Week’s KEYKEY ResourcesResources
  3. 3. • New Jersey Entrepreneurial Network. • Venture Association of NJ. • NJ Economic Development Authority. • www.nyc.gov/html/sbs/nycbiz/html/library/library.shtml • www.sba.gov/smallbusinessplanner/start/financestartup/ • www.nyc.gov/html/sbs/nycbiz/html/business_planning/g • http://www.nypl.org/smallbiz/ Resources
  4. 4. Resources
  5. 5. Resources
  6. 6. Resources
  7. 7. ProductsProducts vs.vs. ServicesServices
  8. 8. • A product is anything that is offered to the market to satisfy customer wants, needs, and demands • A Good versus A Service: – Tangibility: physical items – Inseparability: Services are inseparable from consumption (a haircut) – Heterogeneity: The quality of the service depends entirely on the co. and person performing the service, and the circumstances at the time of the service – Perishability: a good can be stored for later use/consumption What’s a “Product”
  9. 9. • HYBRID products: a balance of tangible and intangible (meal at restaurant) – Chuck e cheese or Wolfgang Puck • Total ProductTotal Product = CORE + Augmented – CORE: Clean houses, help people find jobs, make wine – AUGMENTED: What distinguishes you from the competition but is still associated with the CORE – TOTALTOTAL: Comprises both but includes other aspects that change over time Making Intangible More TANGIBLE
  10. 10. • A small business’s resources are limited, so you MUST focus on your TARGET MARKET: – The group of people on which a marketer focuses their promotional efforts What’s a “Product”
  11. 11. What’s aWhat’s a BrandBrand
  12. 12. Resources
  13. 13. Resources
  14. 14. • Avoid using JUST your family name • Is your name appropriate (Ex. Pain Dental) • Watch your intellectual capital, website domains, etc. • Don’t use a name that’s so narrow that it prevents your future growth (Ex. Just Screws) Brand Guidelines
  15. 15. • Idea Generation / SCAMPER (Chpt. 4) • Idea screening for business potential, which do we evaluate further • Idea evaluation – specifying the details of each idea’s technological feasibility, cost, market potential • Product Development – start with prototypes, test marketing • Commercialization Product Development Process
  16. 16. • SS - Substitute • CC - Combine •A - Adapt • MM - Magnify/Modify • PP - Put to other uses • EE - Eliminate •R - Rearrange SCAMPER
  17. 17. Product Development
  18. 18. Product Development
  19. 19. Social Product Development
  20. 20. Product Development
  21. 21. Product Development http://www.slideshare.net/nusantara99/new-product-development-strategy
  22. 22. New Product Development
  23. 23. Product Life Cycle
  24. 24. • Post commercial launch sales grow slowly • Building brand awareness/recognition is CRITICAL • Advertising must focus on the advantage this product/service offers • Let them try your new product out (samples) • Let them see it in action (Shamwow) STAGE 1: Introduction
  25. 25. • Product acceptance happens rapidly • Sales and profits grow at a high rate • Not a huge need for advertising and promotions • Marketing goal is maximize market share • Critical time for small firms – larger firms can now see you coming at them from the rear view mirror STAGE 2: Growth
  26. 26. Growth is aGrowth is a Double-EdgedDouble-Edged SwordSword
  27. 27. • Rapid growth begins to slow • Competition is fierce • New client acquisition comes from taking customers from competitors • When competitors go out of business you snatch up their accounts • Less advertising more promotions • Expand your suite of products and services STAGE 3: Maturity
  28. 28. • Can be slow or fast, steady or sporadic • Sales and profits fall • Stop advertising and promoting • Scale back production, phase out certain products and/or services STAGE 4: Decline
  29. 29. Product Life Cycle
  30. 30. Product Life Cycle
  31. 31. What isWhat is Pricing?Pricing?
  32. 32. • So much more than the cost of making the product plus a mark up • Implies VALUEVALUE or WORTH • Need to understand the “psychologypsychology” behind consumer purchase decisions • A MAJOR factor in affecting customers’ beliefs about your quality and desirability • The easiest variable of the 5P marketing mix to change • A critical component of your competitive strategy What’s “Pricing”
  33. 33. • Seller tendency to overcharge • Highest versus optimum price • Optimum price is a function of 4 things: – Demand for the product – Value delivered to the customer – Competitor pricing – Your business strategy and product placement • Markup: what you sell it for -what it cost to make it – As a %: markup / cost What’s “Pricing”
  34. 34. • Price elasticity: inelastic product is one people can’t do without. Now matter how much you increase the price, they will still buy it. • Got any examples???Got any examples??? • Inelastic products have almost NO substitutes • Elastic products have LOTS of substitutes Price Elasticity
  35. 35. • We all have INTERNAL & EXTERNAL reference prices: – Internal: A consumer’s mental image what the price should be – External: An estimation what the price should be based on information external to the consumer • Price Range ACCEPTABILITY Pricing Psychology
  36. 36. • Align pricing to your company objectives • Reflect your marketing strategy • Channels of Distribution (pay off every hand in the pot) • Competition • Legal Regulatory Issues: – Price gouging Factors in Setting Prices
  37. 37. • Skimming: set it high, bring it down over time • Prestige/Premium – the higher the price, the higher the “perceived” value • Odd-Even: End with a $.05$.05, $.07$.07, or $.09$.09 • Partitioned: Charging for all the “EXTRAS” • Captive: The base unit pricing is inexpensive but the expendable is COSTLY (Ex. Printer + ink cartridge, single coffee cups, home water service) • Price Lining: Different product versions to appeal to different markets. Pricing Strategies
  38. 38. • Periodic/random discounting • Off-Peak Pricing • Bundling/Multi-pack Pricing • Coupons, Rebates, Loyalty Programs • Referral Discounts Price Lowering Techniques
  39. 39. Pricing Strategies
  40. 40. Pricing Strategies
  41. 41. Industry ResearchIndustry Research
  42. 42. FREEFREE Industry Research
  43. 43. FREEFREE Industry Research
  44. 44. FREEFREE Industry Research
  45. 45. FREEFREE Industry Research
  46. 46. FREEFREE Industry Research
  47. 47. FREEFREE Industry Research
  48. 48. Resources

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