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