Chapter 9: New-Product Development and
Product Life-Cycle Strategies
New-Product Development
Strategy
Chapter 8 - Product, Services, and Brands: Building customer value
Chapter 10 : pricing : Understanding and Capturing Customer Value
What is a product?
Product and services decisions
Services marketing
Branding strategy: Building strong brands
Products, services, and experiences
Prodcut
Services
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What Is a Price?
Experiences
Levels of product and services
Product and service classifications
New-Product Development
Process
Managing New-Product
Development
Product Life-Cycle Strategies
Additional Product and Service
Considerations
price is only the element in the marketing that produces
Organizations, persons, places, and ideas
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Price is the amount of money charged for a product or service.
Acquisition
New product development
Capital items
It is the sum of all the values that consumers give up in order to gain the benefits of having or using a product or service.
Material and parts
Supplies and services
Major Pricing Strategies
Customer Value-Based Pricing
Organization marketing
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Idea Generation is the systematic search for
new-product ideas
value - based pricing is customer driven
Person Marketing
Place marketing
Social marketing
Individual product and services decisions
cost - based pricing is product driven
Sources of new-product ideas
internal
external
Product or service attributes
Product quality level
Product conformance quality
Product features
Good-value
Everyday low pricing (EDLP) charging a constant everyday low price with few or no temporary price discounts
pricing offers the right combination of quality and good service at a fair price
Style, design, brand, packaging, labels
Crowdsourcing
Product line decisions
Idea Screening
Product line
Identify good ideas and drop poor ideas
Product line length
R-W-W Screening Framework
Concept Development and Testing
Product mix decisions
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Product idea i
Product concept
Product image
Types of service industries
Marketing Strategy Development
Nature and characteristics of a service
Description of the target market
Value proposition
Sales and profit goals
Marketing strategies for services firms
Gorvernment
Business analysis
Private not-for-profit organizations
Test marketing
Business services
Intangibility
Commercialization is the introduction
Inseparability
Variability
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Successful new-product development should
be:: Customer centered, Team-based, Systematic
Services-profit chain
Internal marketing
Interactive marketing
Managing service differentiation
New-Product Development Strategies
Customer-centered new product
development
Sequential new-product development
Team-based new-product development
Systematic new-product development
Product development
Introduction
Growth
Maturity
Decline
Managing service quality
Brand equity
Fads are temporary periods of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity
Brand positioning
Brand name selection
Brand sponsorship
Brand development strategies
Introduction Stage
Slow sales growth
Little or no profit
High distribution and promotion expense
Growth Stage
Sales increase
New competitors enter the market
Price stability or decline to increase
volume
Consumer education
Profits increase
Promotion and manufacturing costs gain economies of scale
Maturity Stage
Slowdown in sales
Many suppliers
• Substitute products
• Overcapacity leads to competition
• Increased promotion and R&D to
support sales and profits
Chapter 11-Pricing Strategies
Maturity Stage Modifying Strategies
Market modifying
• Product
modifying
• Marketing mix
modifying
Decline Stage
Maintain the product
• Harvest the product
• Drop the product
Product Decisions and Social
Responsibility
International Product and
Service Marketing—Challenges
Determining what products and services to introduce in which countries
Standardization versus customization
Packaging and labeling
Customs, values, laws
New-product pricing strategies
Price adjustment strategies
Price changes
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Product mix pricing strategies
Public Policy and Marketing
Public Policy and Marketing
Market-skimming pricing
Market penetration pricing
Market-skimming pricing is a strategy with high initial prices to “skim” revenue layers from the market
Market-penetration pricing sets a low initial price in order to penetrate the market quickly and deeply to attract a large number of buyers quickly to gain market share
Product line pricing
Optional-product pricing
Captive-product pricing
By-product pricing
Product bundle pricing
Discount and allowance pricing
Segmented pricing
To be effective:
Market must be segmentable
Segments must show different degrees of demand
Watching the market cannot exceed the extra revenue obtained from the price difference
Must be legal
Psychological pricing
Reference prices
Promotional pricing
FOB-origin pricing
Uniformed-delivered pricing
Zone pricing
Basing-point pricing
Freight-absorption pricing
FOB-origin (free on board) pricing
Uniformed-delivered pricing
Zone pricing means that the company sets up two or more zones where customers within a given zone pay a single total price
Basing-point pricing means that a seller selects a given city as a “basing point” and charges all customers the freight cost associated from that city to the customer location, regardless of the city from which the goods are actually shipped
Freight-absorption pricing means the seller absorbs all or part of the actual freight charge as an incentive to attract business in competitive markets
Dynamic pricing is when prices are adjusted continually to meet the characteristics and needs of the individual customer and situations
International pricing is when prices are set in a specific country based on country-specific factors
Economic conditions
Competitive conditions
Laws and regulations
Infrastructure
Company marketing
objective
Initiating Pricing Changes
Buyer Reactions to Pricing Changes
Responding to Price Changes
Solutions
Reduce price to match competition
– Maintain price but raise the perceived value
through communications
– Improve quality and increase price
– Launch a lower-price “fighting” brand
Pricing Within Channel Levels
Price fixing: Sellers must set prices without talking to competitors
Predatory pricing: Selling below cost with the intention of punishing a competitor or gaining higher long-term profits by putting competitors out of business
Robinson-Patman Act prevents unfair price discrimination by ensuring that the seller offer the same price terms to customers at a given level of trade
Retail (or resale) price maintenance is when a manufacturer requires a dealer to charge a specific retail price for its products
Deceptive pricing occurs when a seller states prices
or price savings that mislead consumers or are not actually available to consumers
Scanner fraud failure of the seller to enter current or sale prices into the computer system
Price confusion results when firms employ pricing methods that make it difficult for consumers to understand what price they are really paying