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Marketing Management
- 1. Product and Price Management Rahul Pratap Singh Kaurav, Asst. Professor Vikrant Institute of Management, Gwalior
- 3. What is a product? • A product is any offering by a company to a market that serves to satisfy customer needs and wants. » It can be an object, service, idea etc.
- 4. Product Mix • Assortment of product lines and individual product offerings a company sells. • Measured by width, length, and depth
- 5. Product Mix WIDTH • Number of product lines a firm offers. • Godrage offers some different product lines: food, bath soaps, hair dye, almirah and security equipments etc.
- 6. Product Mix LENGTH • Number of different products the firm offers. Product Mix DEPTH • DEPTH refers to the variations of each product in the mix.
- 7. TOYOTA
- 8. Product Group Product Model Other Models and Prices Car Echo 2 Door 4 Door Corolla CE S XRS LE Avalon XL Touring XLS Limiting Matrix XR XRS Celica GT GT-S Camry Standard LE SE XLE Camry Solara SE Coupe SE Sport Coupe SLE Coupe Convertible SE Prius MR2 Spyder Van Sienna CE LE XLE XLE Limited SUV RAV4 Highlander Standard Limited 4Runner SR5 Sport Edition Limited Sequoia SR5 Limited Land Cruiser Truck Tacoma Regular Cab Tacoma Access Cab Tacoma Double Cab Tacoma X-Runner Tundra Regular Cab Tundra Access Cab Tundra Double Cab
- 9. Product Mix Decisions • What to think about: – Unprofitable product lines and products – Retailers can’t carry full range of merchandise – Feasibility of a line extension.
- 10. New Product Development • Most new product development is an improvement on existing products • Less than 10% of new products are totally new concepts.
- 11. Success rate of new products • The success rate of new products is very low – less than 5%. ‘You have to kiss a lot of frogs to find a prince.” • Product obsolescence is rapid with improvements in technology • Shorter PLCs
- 12. Product Development Stages • Idea generation • Idea screening • Concept development and testing • Concept testing • Conjoint analysis – to find out the best valued attributes by consumers
- 13. Business analysis • The most customer appealing offer is not always the most profitable to make • Estimate on costs, sales volumes,pricing and profit levels are made to find out the optimal price – volume mix. • Breakeven and paybacks • Discounted cash flow projections
- 14. Market testing • Test markets • Test periods • What information to gather? • What action to take?
- 15. Commercialization • When? (Timing) • Where? (Which geographical markets) • To whom? (Target markets) • How? (Introductory Marketing strategy)
- 16. Product Levels Customer value hierarchy • Core benefit • Basic product • Expected product • Augmented product • Potential product
- 17. Customer Delight • When you exceed customer expectations
- 18. Product Hierarchy • Need • Product family • Product class • Product Line • Product type • Brand • Item
- 19. Product classification • Durable • Non – durable • Services
- 20. Consumer goods classification • Convenience goods • Shopping goods • Specialty goods • Unsought goods
- 21. Industrial goods classification • Materials and Parts - raw materials - manufactured materials and parts • Capital items • Supplies and business services
- 22. Product Life Cycle Maturity Growth Decline Introduction Time
- 23. Product Life Cycle Maturity Sales Growth Decline Introduction Profit Loss Loss
- 24. PLC Management Maturity Longer Growth Higher Decline Introduction Faster More profitably …
- 25. Product Life Cycle Competitive Positioning Industry Strong First Mover, or Competitor Predatory Follower Last In … Weak Competitor
- 26. Technology Adoption Life Cycle 34% 34% 2.5% 13.5% Innovators Early Early Late 16% adopters majority majority Laggards Time of adoption of innovations Adapted from Geoffrey Moore, Crossing the Chasm
- 27. Price Management
- 28. Common Pricing Mistakes • Determine costs and take traditional industry margins • Failure to revise price to capitalize on market changes • Setting price independently of the rest of the marketing mix • Failure to vary price by product item, market segment, distribution channels, and purchase occasion 1-28
- 29. Setting Pricing Policy 1. Selecting the pricing objective 2. Determining demand 3. Estimating costs 4. Analyzing competitors’ costs, prices, and offers 5. Selecting a pricing method 6. Selecting final price 1-29
- 30. Step 1: Selecting the Pricing Objective • Survival • Maximum current profit • Maximum market share • Maximum market skimming • Product-quality leadership 1-30
- 31. Step 2: Determining Demand • Price sensitivity • Estimating demand curves • Price elasticity of demand Step 3: Estimating Costs Types of Costs Accumulated Production Activity-Based Cost Accounting Target Costing 1-31
- 32. Types of Costs Fixed Costs Variable Costs (Overhead) Costs that don’t Costs that do vary vary with sales or directly with the production levels. level of production. Executive Salaries Raw materials Rent Total Costs Sum of the Fixed and Variable Costs for a Given Level of Production 1-32
- 33. Step 4: Analyzing competitor Step 5: Selecting a Pricing Method • Markup pricing • Target-return pricing • Perceived-value pricing • Value pricing • Going-rate pricing • Auction-type pricing 1-33
- 34. Step 6: Selecting the Final Price • Impact of other marketing activities • Company pricing policies • Gain-and-risk sharing pricing • Impact of price on other parties 1-34
- 35. Price-Adaptation Strategies • Geographical pricing • Discounts/allowances • Promotional pricing • Differentiated pricing 1-35
- 36. Price-Adaptation Strategies Discounts/ Allowances • Cash discount • Quantity discount • Functional discount • Seasonal discount • Allowance 1-36
- 37. Promotional Pricing Tactics • Loss-leader pricing • Special-event pricing • Cash rebates • Low-interest financing • Longer payment terms • Warranties and service contracts • Psychological discounting 1-37
- 38. Discriminatory Pricing Customer Segment Product-form Location Time 1-38
- 39. Increasing Prices • Delayed quotation pricing • Escalator clauses • Unbundling • Reduction of discounts 1-39
- 40. Brand Leader Responses to Competitive Price Cuts • Maintain price • Maintain price and add value • Reduce price • Increase price and improve quality • Launch a low-price fighter line 1-40