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Developing and Pricing Goods and Services - Coggle Diagram
Developing and Pricing Goods and Services
Product Development and the Total Product Offer
Total Product Offer
Total Product Offer -- Everything consumers evaluate when deciding whether to buy something.
Products are evaluated on many different dimensions, tangible and intangible.
Potential components of a total product offer: Price, Brand name, Convenience, and Package.
Developing Value
Product development is a key activity in any modern business.
Products "Untouchable" by spending cuts: Internet services, cell phone services, haircuts, fast food.
Developing value: Value - Good quality at a fair price.
Products "Expendable" by spending cuts: Luxury handbags, High-end cosmetics, Facials, etc.
Product Mix -- The combination of all product lines offered by a manufacturer or service provider. (Ex: P&G: Laundry detergent, Cosmetics, etc).
Product Line -- A group of products that are physically similar or intended for a similar market. (Ex: M&Ms, Peanut M&Ms, Mint M&Ms, etc)
Product Differentiation
Convenience Goods and Services -- Products
consumers purchase frequently with minimal effort (Ex: snacks, gas, candy, etc)
Shopping Goods and Services -- Products
consumers buy only after comparing value, quality, price, and styles. (Ex: Cloth, shoes, appliances and furniture, etc)
Product Differentiation -- The creation of real or perceived product differences. (Ex: fast food, laundry detergent, shampoo, etc)
Specialty Goods and Services -- Products with unique characteristics and brand identity. (Ex: Rolex Watches, Lamborghini automobiles, etc)
Unsought Goods and Services -- Products
consumers aren’t aware of or haven’t thought of buying until they need them. (Ex: Renter's insurance, car-towing services, etc)
Industrial Goods -- Products used in the production of other products and sold in the B2B market. (Ex: Installations, Capital items, Accessory equipment, etc)
Packaging changes the Product
Protect the goods inside and be tamperproof
Describe and provide information about the product
To attract buyers’ attention
Explain the product’s benefits
Provide warranty information and warnings
Give an indication of price, value, and uses
Branding and Brand Equity
Trademark -- A brand that has exclusive legal protection for both its brand name and design.
Key Brand Categories:
Manufacturers’ Brands – Brand names of manufacturers that distribute products nationally
Dealer (Private-Label) Brands -- Products that carry a retailer’s or distributor’s brand name instead of a manufacturer's
Knockoff Brands -- Illegal copies of national brands.
Generic Goods -- Non-branded products that sell at a discount compared to manufacturers’ or dealers’ brands
Brand -- Name, symbol, or design that identifies the
goods or services and distinguishes them from competitors' offerings
Generating Brand Equity and Loyalty
Brand Equity – The combination of factors (awareness, loyalty, perceived quality, images, and emotions) that people associate with a brand name
Brand Loyalty -- The degree to which consumers are satisfied and are committed to further purchases
Creating Brand Associations
Brand Manager: Person responsible for a particular brand and handles all the elements of the brand’s marketing mix
Brand Association: Linking a brand to other favorable images, like celebrities or a geographic area
The New-Product Development Process
Product Screening: Reduces the number of new products a firm is working on to focus on the most promising
Product Analysis: Focuses on the cost estimates and sales forecasts to get an idea of potential profitability
Idea generation -> Product screening -> Product analysis -> Development -> Testing -> Commercialization
Concept Testing: Takes a product idea to consumers to test reactions.
Commercialization: Promoting the product to distributors and retailers and developing the promotional campaign.
The Product Life Cycle
4 stages: Introduction - Growth- Maturity - Decline
Example: Sales and Profit during the Product life cycle
Product Life Cycle: A theoretical look at what happens to sales and profits for a product over time
Competitive Pricing
Cost-based pricing measures cost of producing a product including materials, labor, and overhead.
Pricing Objectives
Building traffic
Achieving greater market share
Achieving a target return on investment or profit
Furthering social objectives both short-run and
long-run
Creating an image
Demand-based pricing: making the final price of a product an input in the product development process by estimating the selling price consumers will pay
Competition-Based Pricing -- A strategy based on what the competition is charging for its products.
Break-Even Analysis: The process used to determine profitability at various levels of sales. The break-even point is where revenues equals cost.
Other pricing strategies
Skimming Price Strategy: Pricing new products high to recover costs and make high profits while competition is limited
Penetration Price Strategy -- Pricing products low with the hope of attracting more buyers and discouraging other companies from competing in the market.
Everyday Low Pricing (EDLP) -- Setting prices lower than competitors with no special sales.
High-Low Pricing -- Using regular prices that are higher than EDLP except during special sales when they are lower
Psychological Pricing -- Pricing products at price points that make a product seem less expensive than it is.