Pricing and promotional strategies for Cosmetic products.New Product Development and Brand Development

1. P R I C I N G
A N D
P R O M O T I O N A L A P P R O A C H E S
F O R C O S M E T I C S .
N E W P R O D U C T A N D B R A N D
D E V E L O P M E N T

2. PROMOTIONAL ACTIVITIES FOR
COSMETICS

3. Direct Mail
 This is one of the oldest types of advertising media. Under this method message is sent to the
prospective buyers by post. A mailing list is prepared for this purpose. Circular letters, folders,
calendars, booklets and catalogues are sent under this type of advertising.
 It contains detailed information with regard to the product. The main aim of these letters is to
create the reader’s interest in the product. This method is very effective as it establishes direct
contact with the consumer and also maintains secrecy in advertising.
 Direct mail advertising suffers from certain drawbacks also. It has limited access i.e. a small number
of buyers can be covered.

4. Print Publications
 Print publications such as magazines, newspapers and Special Issue publications offer advertising
opportunities at all geographic levels. Additionally, magazines offer the option of allowing
marketers to present their message using high quality imagery (e.g., full color) and can also offer
touch and scent experiences (e.g., perfume).
 Newspapers have also incorporated color advertisements, though their main advantage rests with
their ability to target local markets.

5. Internet Advertising
 The fastest growing media outlet for advertising is the Internet. Compared to spending in other media,
the rate of spending for Internet advertising is experiencing tremendous growth. The Internet offers
many advertising options with messages delivered through websites, social media or by email.
 For marketers, website advertising offers many options in terms of creative types, placements, fonts ,size,
delivery etc.
 Using email to deliver an advertisement affords marketers the advantage of low distribution cost and
potentially high reach.

6. Radio Advertising
 Radio advertising is very popular these days. The advertisements are broadcasted from different stations
of All India Radio. Radio advertising can be explained as “word of mouth advertising on a wholesale
scale”. The advertising messages can be in different regional languages.
 The most important advantage derived from radio advertising is that it covers every type of listener
whether illiterate or educated. It is a very effective medium for popularizing on mass scale various
consumer articles.
 Radio advertising suffers from shorter life, limited memory and short messages. Cost of advertising is
higher.
 Eg. LUSH COSMETICS,JUST ON COSMETICS etc.

7. Television advertisement
 This is the latest and the fast developing medium of advertising and is getting increased popularity these
days. It is more effective as compared to radio as it has the advantages of sound and sight. On account of
pictorial presentation, it is more effective and impressive and leaves ever lasting impression on the mind
of the viewer.
Drawbacks:
 It is a very costly medium which can be employed by big concerns only. The duration of the
advertisement is very limited.

8. Film Advertising
 This is also known as cinema advertising. This also provides sight and hearing facilities like television. Short
advertisement films are not prepared by big business houses which are sent to different cinema houses to
be shown to the audience before the regular shows or during the intermission.
 It has more repetitive value but not to the same viewers. Its coverage is limited which benefits the local
population only.
Drawbacks:
 It is a very costly medium involving higher distribution and film making costs. Film making is a time
consuming process.
Eg: VICO TURMERIC

9. Outdoor Advertising
 This type of advertising include different media like posters, placards, electric displays or neon signs, sky
writing, bus, train and tram advertising. This is also known as ‘Mural advertising’. The main aim of outdoor
advertising is to catch the attention of passerby within twinkling of an eye. This is the most effective
medium of advertising.
 This type of advertising has a wider coverage and leaves effective impression on the people. It is very
suitable for making the product popular and creating proper brand image. It has greater flexibility and can
be designed by keeping in view the peculiarities of a particular locality. It requires lesser time and effort on
the part of the advertiser to undertake this medium. This is more durable form of advertising medium.
Drawbacks
Various media like skywriting, sandwichmen, balloons and electric displays are very costly. They are beyond the
means of a small trader.

10. Window Display
 It is a common method which is usually undertaken by retailers who display their products in the shop
windows in order to attract the customers. It is the most effective and direct method of influencing the
people. Window display has direct appeal to the onlookers. It is instrumental in arousing the desire to
purchase in the prospective customers.
Specially Advertising
 Most of the business houses in order to increase their sales, advertise their products, give free gifts like
diaries, purses, paper weights and calendars to the customers. The name of the firm or the dealer is
inscribed on the articles presented.

11. Fairs and Exhibition
 A trade exhibition or a fair is organized on extensive scale which is attended by different manufacturers
and traders along with their products to be sold to the large number of people who visit the exhibition.
The exhibition may be either organized on local, provincial or international basis.
 The manufacturers can distribute the sales literature and sometimes free samples of goods to the
people. Facilities of practical demonstration are also provided to the customers. The customers clearly
understand the method of operation and use of the product.

12. PRICING APPROACH FOR COSMETICS

14. Penetration Pricing
 Price set to ‘penetrate the market’
 ‘Low’ price to secure high volumes
 Typical in mass market products – Cosmetis, food stuffs,etc.
 Suitable for products with long anticipated life cycles
 May be useful if launching into a new market
Market Skimming
 High price, Low volumes
 Skim the profit from the market
 Suitable for products that have short life cycles or which will face competition at some point in the future
(e.g. after a patent runs out)
 Examples include: etc.

15. Value Pricing
 Price set in accordance with customer perceptions about the value of the product/service
 Examples include status products/exclusive products .
Loss Leader
 Goods/services deliberately sold below cost to encourage sales elsewhere.
 Typical in supermarkets, e.g. at Christmas, selling bottles of gin at £3 in the hope that people will be
attracted to the store and buy other things.
 Purchases of other items more than covers ‘loss’ on item sold.

16. Psychological Pricing
 Used to play on consumer perceptions. Classic example - $9.99 instead of $10
 Links with value pricing – high value goods priced according to what consumers THINK should be the price
Going Rate (Price Leadership)
 In case of price leader, rivals have difficulty in competing on price – too high and they lose market share,
too low and the price leader would match price and force smaller rival out of market.
 May follow pricing leads of rivals especially where those rivals have a clear dominance of market share
where competition is limited, ‘going rate’ pricing may be applicable – banks, petrol, supermarkets,
electrical goods – find very similar prices in all outlets.

17. Tender Pricing
 Many contracts awarded on a tender basis.
 Firm (or firms) submit their price for carrying out the work.
 Purchaser then chooses which represents best value.
 Mostly done in secret.
Price Discrimination
 Charging a different price for the same good/service in different markets.
 Requires each market to be impenetrable
 Requires different price elasticity of demand in each market.
 Eg: price of cosmetics on airport

18. Destroyer/Predatory Pricing
 Deliberate price cutting or offer of ‘free gifts/products’ to force rivals (normally smaller and weaker) out
of business or prevent new entrants.
 Anti-competitive and illegal if it can be proved
Absorption/Full Cost Pricing
 Full Cost Pricing – attempting to set price to cover both fixed and variable costs
 Absorption Cost Pricing – Price set to ‘absorb’ some of the fixed costs of production

19. New Product Development
And
Brand Development

20. New Product Development
DEFINITION:
“A disciplined and defined set of tasks and steps that describe the normal means by which a
company repetitively converts embryonic ideas into saleable products or services.”
New Product Development Process

21. Stage 1: Idea Generation
Utilizing basic internal and external SWOT analyses, as well as current marketing trends, helps to
distant the business developer from the competition by generating ideologies which take
affordability, ROI, and widespread distribution costs into account.
Generation of idea for the development of a new product can be from two main sources:
 Internal idea sources:
R & D
 External idea sources:
Customers,
competitors,
distributors,
suppliers

22. Stage 2: Screening of Ideas
The new product drivers generate a continuous flow of new product ideas. Thus, there is also a
continuous screening of ideas to decide which ones to pursue further.
Screening is concerned with estimating the following:
 Market Size
 Product Price
 Development Time & Costs
 Manufacturing Costs
 Rate of Return
Once an idea is selected for further investigation the subsequent activities that need to be carried
out can be grouped into three groups: (i) product definition, (ii) project plan, and (iii) project
definition review
 Many companies have systems for rating and screening ideas.
 It is the Process to spot good ideas and drop poor ones as soon as possible.
 Then, the idea is evaluated against a set of general company criteria.

23. Stage 3: Concept Development And Testing
The process of generating feasible concept specifications is concerned with :
1. Identifying the possible concepts that can be pursued to meet the business objective and the
customer requirements.
2. Evaluating the most likely candidates in terms of performance .
3. Deciding on preferred concept(s)
The concept generation process starts with determining the overall functions (and sub-functions) of
the product. What the product should do, is defined through these functions, prior to exploring
product concepts and solutions

24. 1. Develop Product Ideas into
Alternative
Product Concepts
2. Concept Testing - Test the
Product Concepts with Groups
of Target Customers
3. Choose the Best One

25. Stage 4: Business analysis
 A new product idea that survives the screening stage of new product development (NPD)
requires a more sophisticated and detailed business analysis.
 A business analysis helps to determine the costs involved in your proposed NPD, and forecast
the profits made from the product in future financial years. The costs of developing a product
are substantial. Business analysis also helps to eliminate inappropriate ideas and avoid
unnecessary costs.
 Business analysis is a review of product sales, costs, and profits projections to see if they meet
company objectives. If yes then they move to product development.
https://www.business.qld.gov.au/business/business-improvement/becoming-innovative-business/developing-products-services/new-
productdevelopment/launching-commercialising-new-products

26. Stage 5: New product prototypes and market testing
 Prototype testing is one of the most rewarding phases of new product development (NPD).
 Developing a prototype of the product allows one to bring the product to life for the first time and
test it in its market.
 Building a prototype helps establish whether the idea or invention will function, provides
necessary to building the new product or system, and highlights any flaws or defects in the design.
 It Identifies the characteristics that are most important to the customers and test those attributes,
repeatedly.
 Test Marketing is the Stage Where the Product and Marketing Program are Introduced into More Realistic
Market Settings.
Stage 6: Commercialization
 Commercialization is the Introduction of the New Product into the Marketplace.
https://www.business.qld.gov.au/business/business-improvement/becoming-innovative-business/developing-products-services/new-productdevelopment/launching-
commercialising-new-products

27. BRAND DEVELOPMENT

28. Definition of a brand:
“A name, term, sign, symbol, or design, or a combination of these, intended to
identify the goods or services of one seller or group of sellers and to
differentiate them from the competition”
Brands can convey six levels of meaning:
Attributes
Benefits
Values
Culture
Personality
User

29. Brand identity decisions include:
Name
Logo
Colors
Tagline
Symbol
Ultimately Consumer experiences create brand bonding, brand advertising does
not.

30. Brand Development
There are three key objectives that need to be realised in the Brand Development
process for the new entity. These are:
Alignment on position for new entity: Brand supports how entity needs to be
positioned.
Style guide outlining protocols and rules: Guidelines available for all business units.
Schedule for roll out of application: Timeline for implementation across
organisation.

31. BRAND-BUILDING: THE STEPS
Determine the current image with
consumers
Define the desired image
Identify focus areas for action
•Product development/innovation
•Packaging/delivery systems
•Advertising/promotions
Implement action plan with
a monitoring programme
Feedback to action plan

34. References:
https://www.business.qld.gov.au/business/business-improvement/becoming-innovative-
business/developing-products-services/new-product-development/launching-commercialising-
new-products.
Brand-Development-Framework-LGNSW-Amalgamation-Toolkit.pdf
http://www.knowthis.com/types-of-advertising-media
http://managementhelp.org/marketing/advertising/methods.htm
https://www.garrisoneverest.com/brand-development/
www.marketing91.com/penetration-pricing/
Understanding Pricing Objectives and Strategies For the Value-Added Ag Producer ,College of
Agricultural Sciences Agricultural Research and Cooperative Extension.

35. THANK YOU