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PRODUCT & PRICE
Unit - 4
Discussion Questions
1. What are the characteristics of a product, and how
do marketers classify products?
2. How can comp...
Suggested Readings
1. Product Management - Donald R. Lehmann and Russell S.
Winer - 4ed.
2. New Product Management - Merle...
Introduction
 Marketing begins with the identification of consumer
needs & wants
 A marketer can satisfy these needs & w...
PRODUCT PLANNING
Needs
Wants
It can be defined as set of attributes assembled
in a distinct & identifiable form
Product Definition
• In general, the product is defined as a "thing produced by
labor or effort”
• In marketing, a product...
Product Levels
Customer-value
Hierarchy
Potential Product
(Future augmentations)
Core Benefit
(Rest and sleep)
Basic Produ...
Product and Services Differentiation
Difference between
goods & services
Product Differentiation
Form
Customization
Performance
Reliability
Features
Durability
Conformance
Repairability
Style
Services Differentiation
Ordering Ease
Delivery &
Returns
Installation
Training
Maintenance & Repair
Customer
Consulting
Design
Functional
Benefits
Aesthetic
Benefits
Design is the totality of features that affect how a product looks,
feels, a...
Product Relationships
Product Hierarchy
Product
Systems/Mixes
Product Line Analysis
Product Line Length
Product Mix Pricin...
Product Hierarchy
Need Family
Product Family
Product Class
Product Line
Product Type
Item
Product Systems and Mixes
Product System
Consistency
Group of diverse but related items that
function in a compatible mann...
Product Concepts
 Product line – a group of closely related product items.
 Product mix – all products that a firm sells...
Proctor & Gamble Product Mix
Detergents Toothpaste
Bar
Soap
Disposable
Diapers
Paper
Product
Ivory
Snow
Gleem Ivory Pamper...
Product mix strategies
• Manufactures and middlemen use several
strategies to manage their product mix
– Expansion of prod...
Product mix strategies
• Positioning the product – image projected by product-
various strategies to position
– Relation t...
Product Line Analysis
Sales and Profit
Market Profile
Managing Product Lines
large percentage of sales
monitored and prote...
Product Line Length
Line
modernization,
featuring, and
pruning
Line
filling
Up-market stretch
Line
stretching
Down-market ...
Line filling
• A product line can be extended by adding more
items to the existing range.
 Reasons:
• Reaching for more p...
Line Stretching
• Product lines tend to lengthen over the years for
different reasons like manufacturing capacity,
new mar...
Line Stretching
• Downward Line stretch
– Introducing new products with an objective
– Company may attack upper end to get...
Line stretching decisions
Line Pruning
• Cutting down some of the non moving products in
markets contains unnecessary variants & pack sizes
• Due to...
Line Modernization
• Modernization is carried out continuously as competitors
are constantly growing and coming out with n...
Product Mix Pricing
Product line pricing
Optional-feature pricing
Captive-product pricing
Two-part pricing
By-product pric...
Factors influencing change
in product mix
• Changes in market demand
• Competitors actions and reactions
• Cost of product...
Discussion Questions
1. What challenges does a company face in
developing new products?
2. What are the main stages in dev...
Introduction
• Advance in science & technology have changed the
lifestyle of people & their food habits, standard of
livin...
Developing New Product
 New to the World’ Products
 Android platforms
 New Product Lines
 Companies enter with a new p...
NEW PRODUCT DEVELOPMENT
PROCESS
Other sources are scientists, resellers, marketing
personnel, researchers, sales people & engineers
Generating Ideas
Emplo...
Creativity Techniques
Lateral
Marketing
Mind Mapping
Attribute
Listing
Morphological
Analysis
Forced
Relationships
attribu...
Idea Generation
• BRAINSTORMING is a process, where a small group of
people are encouraged to came up with their ideas on ...
Idea Screening
• The aim of screening is to reject the poor ideas as early as possible
because the costs of new product de...
New Idea Spoilers
Concept to Strategy
Concept
Development
Business
Analysis
Marketing Strategy
Development
Concept Development
Concept
B
Concept
C
Concept
A
Conjoint Analysis
Design Elements
• Three package designs (A, B, C)
• Three brand names (ABC, XYZ, IJK)
• Three Prices (Rs...
Continuum of Evaluation for
Products
Concept Testing
• Concept testing of a new product idea refers to a more detailed
version of the idea.
• It involves descr...
Concept Testing
Product Dimensions
1. Communicability and
Believability
2. Need level
3. Gap level
4. Perceived value
5. P...
Marketing Strategy Development
Marketing
Mix
Target Market’s
• Size
• Structure
• Behavior
Marketing-mix strategy
Business Analysis
• It is an assessment to determine the new product’s
potential contribution to the company’s sales, cost...
Development to Commercialization
Product
Development
Commercialization
Market
Testing
Product Development
Physical
Prototype
Alpha Testing
(Internal)
Beta Testing
(Customers)
Customer
Tests
At this stage the...
Market Testing
Simulated
Test
Marketing
Controlled
Test Marketing
Sales-Wave
Research
Test
Markets
who initially try the p...
Test Marketing
• Test marketing is essentially a limited introduction in some carefully
selected geographic area that is v...
Commercialization
How?
To
Whom?
When
?
Where?
Commercialization
• At this stage the company takes decision to go in for large scale
production & marketing of the new pr...
• Factors to be considered
• Always start with the consumer. Do consumers
want/need this product?
• Assess the opportunity...
New Product Launch
• Determine marketing strategy for new product
(Think 4Ps)
• Price – set to reflect positioning (premiu...
New-Product Failures
Only 10% of new consumer products succeed in the
long run.
Why Customers Switch Products
Pricing
Response to
Failure
Ethical
Issues
Competition
Service
Failure
Reasons for New-Product Failures
Don’t fulfill a real need or want
Overestimation
of market size
Pushed despite poor marke...
Reasons for New-Product Failures
Product Design Problems
Why do most products fail?
Fault pricing
Product Incorrectly Posi...
Reasons for New-Product Failures
Why do most products fail?
Inadequate promotion
Development costs
go over budget
Poor pla...
The Consumer-Adoption Process
Stages in the Adoption Process
New product introductions and their adoption,
particularly in...
The Consumer-Adoption Process
Other Influencing Factors
• Time of Adoption
• Personal Influence
• Innovation
Characteristi...
Time of Adoption
Innovators
Early Adopters
Early Majority
Late Majority
Laggards
technology enthusiasts
opinion leaders
be...
Innovation Characteristics
Communicability
Relative Advantage Compatibility
Complexity
Divisibilitydegree to which the
inn...
Product Life-Cycle
Definitions
 product life cycle is the course of a product’s sales and profits
over time.
 product life cycle(PLC) deals...
Product Life-Cycle Stages
Introduction
Sales and Profit Life Cycles
Product Life-Cycle Strategies
• Products have a limited life
• Sales pass through stages
• Profits rise, then fall
• Diffe...
Slow sales growth, negative profits
PLC: Introduction Stage
Marketing Strategies:
1.Create awareness
2.Induce product tria...
Order of Market Entry
First Mover Advantage
• Brand name association
• Define product class
• Customer inertia
• Producer ...
PLC: Growth Stage
Rapid sales growth; New competitors
Marketing Strategies:
1.Improve product quality; add new features
2....
PLC: Maturity Stage
Growth slows; Weak competitors exit
Marketing Objectives:
1.Maximize profit
2.Defend market share
Mark...
PLC: Decline Stage
Slow sales growth, negative profits
Product Options:
1.Rejuvenate
2.Harvest
3.Divest
CHARACTERISTICS OF THE PLC
Introduct
ion
Growth Maturity Decline
Characteristics
Sales Low Rapidly rising Peak Declining
C...
DEFINED
“A name, term, sign, symbol, or design, or a combination
of them, intended to identify the goods or services of
on...
Rs. 50Rs. 250
Scope of Branding
Creating difference between
products
Brand
Types of Brand
• There are several brand options that include
manufacturer brand (also called national brand), private
bra...
Developing Brand Elements
Easy to recall
Descriptive
Persuasive
What was the
name of that
cookie I like?
Brand Element Choice Criteria
Memorable - Easily Recognized, Easily Recalled
Meaningful - Descriptive, Persuasive
Likable ...
Brand Elements
which the function is
described literally in brand
name
URLsBrand Names
Use a new term for the real word
Us...
Secondary Associations
Brand
Geographic
Regions
Other Brands
Characters
Spokespeople
Sporting Events
Brand Equity
“Brand equity is defined in terms of marketing effects uniquely attributed
to the brands – for example, when ...
Managing Brand Equity
Brand Revitalization
understand what the sources of brand equity were to
begin with
Expanding Brand ...
how the brand makes products superior unique brand associations should
exist in consumers’ minds.
Managing Brand Equity
Br...
Branding Strategies
• Product Branding Strategy
• Line Branding Strategy
- products share a common concept
• Umbrella Bran...
Means of Differentiation
Employees
Channels
Image
Services
Packaging & Labelling
Definition
• An activity of designing & producing the container for a
product.
• More than merely containing the product.
...
PURPOSES OF PACKAGING
• Physical protection
• Barrier protection
• Containment or agglomeration
• Information transmission...
Labelling
• A label may be a part of package or it may be
a tag attached to the product.
• The labels perform a descriptiv...
Universal product code
• Which consists of unique lines that identifies a
product
• The data’s are regarding the price, ma...
Developments in Packaging
• Package design starts with the identification of all
the requirements: structural design, mark...
Pricing Strategies
Marketing Mix
Product Price
PromotionPlace
Revenue
Producer
Cost
Cost
Cost
Significance & Importance of price
• Only element that generates revenues for the company
• Adopting the right pricing str...
Pricing concept
• Pricing exercise begins with an understanding of corporate
mission, target markets & marketing objective...
Changing Price Environment
Instant Price Comparisons
I’ll pay
Rs.235.00
Name Your Own Price
Get Products Free
Buyers
Changing Price Environment
Rs 29.99 Rs 19.99 Rs 24.99Sellers
Monitor Customers
Selective Pricing
Negotiate Prices
How Companies Price
Pricing Department
Small Business Owner
Product-line Managers
(w/guidance)
Select Final Price
Setting the Price
1
Price Method
Competitor Analysis
2
3
4
5
6
Estimate Costs
Determine Demand
Pricing ...
Selecting the Pricing Objective
Survival
Maximum Current Profit
Maximum Market Share
Maximum Market Skimming
Product-Quali...
Determining Demand
– Way to analyze demand curve are
– Past sales analysis, volumes sold etc.,
– Usually P - D & vice vers...
--------------------------------------------------------------------------------------------------------------------------...
Estimating Costs
Demand Price Ceiling
Price Floor
Costs
Price
Profit
Break Even Analysis (BEA)
• The point at which cost of making a product is equal to the
revenue generated from selling tha...
Analyzing Competitors’ Offers
Worth to Customer
Costs Reaction
Price
Selecting a Pricing Method
Pricing Methods
• Promotional
• Psychological
• Target-return
• Perceived-Value
• Value
• Going...
New Product Pricing
• Base price Recover the product cost quickly
• Need to analyze about competitors move, strength of en...
Psychological pricing
• Consumers generally judge product quality by price
• Price will be more apparent when we see goods...
Promotional pricing
Loss Leader Pricing
– Retail outlets use mainly to sell the volumes of routinely
purchasing product
–...
Selection of pricing method
Target return pricing – ROI, the leaders in the industry will adapt
• TRP = unit cost + (Desi...
Selection of pricing method
Product Range pricing – prices are determined based on other
products in the same range
• Opt...
Perceived-Value Pricing
Customer’s perceived-value
• Performance
• Warranty
• Customer support
• Reputation
Selection of pricing method
Two-Part Pricing – charge a fixed price for basic service &
variable usage rate – BSNL
Disco...
Auction Pricing
English auction
(ascending bids)
Dutch auction
(descending bids)
Sealed-bid auction
Adapting the Price
Geographic Pricing
Price Discounts
and Allowances
Promotional Pricing
Differentiated Pricing
Dealing with Price Changes
Competitor Moves
Raising Prices
Cutting Prices
ajaykumarta-Unit   4 product & price
ajaykumarta-Unit   4 product & price
ajaykumarta-Unit   4 product & price
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MBA UOM second sem MM

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ajaykumarta-Unit 4 product & price

  1. 1. PRODUCT & PRICE Unit - 4
  2. 2. Discussion Questions 1. What are the characteristics of a product, and how do marketers classify products? 2. How can companies differentiate products? 3. How can a company build and manage its product mix and product lines? 4. How can companies use packaging, labeling, warranties, and guarantees as marketing tools? 5. How a product management organization will function? 6. What are strategies followed by a market leader to hold the position?
  3. 3. Suggested Readings 1. Product Management - Donald R. Lehmann and Russell S. Winer - 4ed. 2. New Product Management - Merle Crawford and Anthony Di Benedetto - 9ed. 3. Product Management - S.A. Chunawalla - 7ed.
  4. 4. Introduction  Marketing begins with the identification of consumer needs & wants  A marketer can satisfy these needs & wants by Offering Something for money  Offering is basically a product  A product can be a Good or Service Or an idea  Consumers buy for specific benefit & for their satisfaction
  5. 5. PRODUCT PLANNING Needs Wants It can be defined as set of attributes assembled in a distinct & identifiable form
  6. 6. Product Definition • In general, the product is defined as a "thing produced by labor or effort” • In marketing, a product is anything that can be offered to a market that might satisfy a want or need
  7. 7. Product Levels Customer-value Hierarchy Potential Product (Future augmentations) Core Benefit (Rest and sleep) Basic Product (Bed, bathroom, towels) Expected Product (Clean bed, fresh towels) Augmented Product (Free Internet; free breakfast)
  8. 8. Product and Services Differentiation
  9. 9. Difference between goods & services
  10. 10. Product Differentiation Form Customization Performance Reliability Features Durability Conformance Repairability Style
  11. 11. Services Differentiation Ordering Ease Delivery & Returns Installation Training Maintenance & Repair Customer Consulting
  12. 12. Design Functional Benefits Aesthetic Benefits Design is the totality of features that affect how a product looks, feels, and functions to a consumer important aspect of luxury products.
  13. 13. Product Relationships Product Hierarchy Product Systems/Mixes Product Line Analysis Product Line Length Product Mix Pricing Co-Branding stretches from basic needs to particular items a group of diverse but related items Different customer requirements and lower production costs tend to lengthen over time. set of prices that maximizes profits two or more well known brands are combined
  14. 14. Product Hierarchy Need Family Product Family Product Class Product Line Product Type Item
  15. 15. Product Systems and Mixes Product System Consistency Group of diverse but related items that function in a compatible manner
  16. 16. Product Concepts  Product line – a group of closely related product items.  Product mix – all products that a firm sells.  Width – refers to how many different product lines the firm carries  P & G - Five lines - Detergents, Toothpaste, Bar soap, diapers, paper tissue  Length – the total number of item in that mix (25)  Avg length of line obtained by dividing total length by no of lines (5)  Depth – refers to how many variants of each product are offered  Pantene comes in 4 variants in 3 different sizes, the depth of the product mix becomes 4 X 3 = 12  Consistency – how closely the product lines are related in usage
  17. 17. Proctor & Gamble Product Mix Detergents Toothpaste Bar Soap Disposable Diapers Paper Product Ivory Snow Gleem Ivory Pampers Charmin Dreft Crest Camay Luvs Puffs Tide Zest Bounty Cheer Safegua rd Dash Oil of Olay Bold Gain Era Product Mix Width Product Line Length
  18. 18. Product mix strategies • Manufactures and middlemen use several strategies to manage their product mix – Expansion of product mix – by increasing its product lines or depth – Contraction of product mix – during economic slumps – eliminate low profit yielding products – Altering existing products – redesigning existing product than new one – packaging – tetra pack
  19. 19. Product mix strategies • Positioning the product – image projected by product- various strategies to position – Relation to competitors product - horlicks – Relation to target market – J & J – Relation to product class – tropicana – Relation to Price and quality – big bazzar • Trading up – offer prestige products to their existing product line to increase sales of their low priced products – enhance company image – Britania • Trading down – add low priced items to their existing line – Marriott introduced holiday inn
  20. 20. Product Line Analysis Sales and Profit Market Profile Managing Product Lines large percentage of sales monitored and protected positioned against competitors helpful in two key decision areas – product line length and product mix pricing.
  21. 21. Product Line Length Line modernization, featuring, and pruning Line filling Up-market stretch Line stretching Down-market stretch Two-way stretch
  22. 22. Line filling • A product line can be extended by adding more items to the existing range.  Reasons: • Reaching for more profits • Trying to satisfy dealers who complain about lost sales due to missing items in the line • Trying to utilize excess capacity • Trying to offer a full line of the production • Trying to plug holes in the positioning map
  23. 23. Line Stretching • Product lines tend to lengthen over the years for different reasons like manufacturing capacity, new market opportunities, demand from sales force etc.,
  24. 24. Line Stretching • Downward Line stretch – Introducing new products with an objective – Company may attack upper end to get reputation – Lower end products due to competitor attack or to occupy vacant slot – P&G introduces sachets – Car Manufacturers introducing E class, M class etc., • Upward Stretch – It is when company enters Upper market through Line Extension • Both-way stretch – From medium range they decide to target upper & low end market for raising opportunities
  25. 25. Line stretching decisions
  26. 26. Line Pruning • Cutting down some of the non moving products in markets contains unnecessary variants & pack sizes • Due to shortage of current production capacity • Allocating budget to the products may setback the new product development Product Flanking • Basically offering same product in different and price combinations to tap diverse market opportunities
  27. 27. Line Modernization • Modernization is carried out continuously as competitors are constantly growing and coming out with new products and ideas. • In this process an Organization should not be too early, if so, It can harm the existing product or late so that competitors already have a hold in the market.
  28. 28. Product Mix Pricing Product line pricing Optional-feature pricing Captive-product pricing Two-part pricing By-product pricing Product-bundling pricing Develop product lines rather than single products price the main products high offer optional products, features, and services fixed fee plus a variable usage charge low price for the main products offer goods as a bundles and charges less
  29. 29. Factors influencing change in product mix • Changes in market demand • Competitors actions and reactions • Cost of production • Quantity of production • Changes in company desire
  30. 30. Discussion Questions 1. What challenges does a company face in developing new products? 2. What are the main stages in developing new products? 3. What is the best way to manage the new- product development process? 4. What factors affect the rate of diffusion and consumer adoption of newly launched products? 5. What is the concept of product life cycle?
  31. 31. Introduction • Advance in science & technology have changed the lifestyle of people & their food habits, standard of living, social customs, expectations etc., • Consumers also looking for better comfortable & ease to use & storage, aesthetic appeal & value for money • For higher level of growth, firms beyond their product lines, product positioning & branding decisions • A new product or any product which is perceived by the customer as being new.
  32. 32. Developing New Product  New to the World’ Products  Android platforms  New Product Lines  Companies enter with a new product in established market  Additions to Existing Product Lines  Products are introduced into market with slight variations  Improvements in or Revisions of Existing Products  Improved version of existing products  Repositioning  Existing product to new market or newer segment  Cost Reductions  New products that provide Same benefits but lower cost
  33. 33. NEW PRODUCT DEVELOPMENT PROCESS
  34. 34. Other sources are scientists, resellers, marketing personnel, researchers, sales people & engineers Generating Ideas Employees Competitors Crowd Sourcing Lead Users
  35. 35. Creativity Techniques Lateral Marketing Mind Mapping Attribute Listing Morphological Analysis Forced Relationships attributes of an object, such as a screwdriver several ideas and consider each in relationship to each of the others Start with a problem Reverse assumption ana Start with a thought
  36. 36. Idea Generation • BRAINSTORMING is a process, where a small group of people are encouraged to came up with their ideas on a specified problem. • Whereas in SYNECTICS, the real problem is kept away initially from the group & only a broader framework of the problem is given to them. • The group is encouraged to think in all possible dimensions and slowly the problem will be made clear to them, & their ideas would get refined. • New ideas sometimes arise quite by accidently in labs or in R&D centre
  37. 37. Idea Screening • The aim of screening is to reject the poor ideas as early as possible because the costs of new product development keep rising sharply with each successive development phase. • Thus an idea committee is formed to classify the proposed ideas into 3 categories, such as: promising, marginal & rejects. • Criteria – Market Size – Product Price – Development Time & Costs – Manufacturing Costs – Rate of Return • Drop Error & Go error
  38. 38. New Idea Spoilers
  39. 39. Concept to Strategy Concept Development Business Analysis Marketing Strategy Development
  40. 40. Concept Development Concept B Concept C Concept A
  41. 41. Conjoint Analysis Design Elements • Three package designs (A, B, C) • Three brand names (ABC, XYZ, IJK) • Three Prices (Rs.10, Rs.12, Rs.14) • A possible Good Housekeeping seal (yes, no) • A possible money-back guarantee (yes, no) Respondents see different hypothetical offers formed by combining varying levels of the attributes, then rank the various offers
  42. 42. Continuum of Evaluation for Products
  43. 43. Concept Testing • Concept testing of a new product idea refers to a more detailed version of the idea. • It involves describing the product concept through oral or written description and the benefits to a small number of potential customers, and make an assessment of their responses regarding the product. • The company can fix one or more concept, the more clearly the concept is presented & resembles the final product or helps consumers visualize the experience with it, the more reliable its testing
  44. 44. Concept Testing Product Dimensions 1. Communicability and Believability 2. Need level 3. Gap level 4. Perceived value 5. Purchase intention 6. User targets, purchase occasions, frequency
  45. 45. Marketing Strategy Development Marketing Mix Target Market’s • Size • Structure • Behavior Marketing-mix strategy
  46. 46. Business Analysis • It is an assessment to determine the new product’s potential contribution to the company’s sales, costs, and profits and for this reason a financial analysis is necessary. • This stage will decide whether from financial as well as marketing point of view, the project is beneficial or not. • Here management needs to prepare sales as well as cost & profit projections to determine whether they satisfy company objectives.
  47. 47. Development to Commercialization Product Development Commercialization Market Testing
  48. 48. Product Development Physical Prototype Alpha Testing (Internal) Beta Testing (Customers) Customer Tests At this stage the company will determine whether the product idea can be translated into technically & commercially feasible product. Find a prototype that performs safely under normal use & conditions 200 Gillette employees tested the products & gave feedback
  49. 49. Market Testing Simulated Test Marketing Controlled Test Marketing Sales-Wave Research Test Markets who initially try the product at no cost are reoffered it qualified shoppers are asked about brand familiarity
  50. 50. Test Marketing • Test marketing is essentially a limited introduction in some carefully selected geographic area that is viewed as representing the intended market. • Test marketing is a sample launching of the entire marketing mix. Companies use various testing methods. Some of the more popular ones are:  Sales-Wave – free samples for trial & advertisements & offers products for reduced price & who select the product again will be recorded  Controlled Test Marketing – placing the product in specific geographic area & tested helps to decide the promotion, price & responses  Simulated Test Marketing – firms try to identify the consumers other brand awareness, then the product is shown with advertisement & customers who select the product are interviewed, helps in advertising effect  Test Market – it is quite expensive where firm select a few cities representing the target market & product is launched like national launch of product
  51. 51. Commercialization How? To Whom? When ? Where?
  52. 52. Commercialization • At this stage the company takes decision to go in for large scale production & marketing of the new product. • Various marketing strategies are employed by the company at this stage, when it starts commercialization of a new product idea. • The important factors to which strategists should focus here are: • Market entry timing period. • Whether to lunch the product in a single locality, a region, several regions, nationally or internationally, i.e. geographic strategy. • To whom the new product should target for i.e. targeting & segmenting.
  53. 53. • Factors to be considered • Always start with the consumer. Do consumers want/need this product? • Assess the opportunity: – Size of the market—How big is the consumer need? – Competition—Have they entered? Are they likely to? – Estimate of your market share—Will this product have a fast adoption rate? – Cost/ease of entry (capital investment and manufacturing, branding, distribution, company skills, etc.) New Product Launch
  54. 54. New Product Launch • Determine marketing strategy for new product (Think 4Ps) • Price – set to reflect positioning (premium, popular, or value) and drive profit • Product – which attributes to offer (flavor, size, etc.) • Promotion – how will you create awareness and trial of product (advertising, coupons, sampling, product demos, etc.) • Placement – where will consumers buy product (grocery, mass, drug, club, convenience, etc.)
  55. 55. New-Product Failures Only 10% of new consumer products succeed in the long run.
  56. 56. Why Customers Switch Products Pricing Response to Failure Ethical Issues Competition Service Failure
  57. 57. Reasons for New-Product Failures Don’t fulfill a real need or want Overestimation of market size Pushed despite poor marketing research findings Design problems that compromise functionality Why do most products fail? Technical problems
  58. 58. Reasons for New-Product Failures Product Design Problems Why do most products fail? Fault pricing Product Incorrectly Positioned Competitive Actions Costs of Product Developmen
  59. 59. Reasons for New-Product Failures Why do most products fail? Inadequate promotion Development costs go over budget Poor planning Poor packing
  60. 60. The Consumer-Adoption Process Stages in the Adoption Process New product introductions and their adoption, particularly in case of new-to-the-world products often takes a very long time. Customers are sometimes suspicious, even skeptical about adopting new products. New to world products bring changes in use & consumption of consumers Recent trend is Internet Shopping, 3G, 4G etc.,
  61. 61. The Consumer-Adoption Process Other Influencing Factors • Time of Adoption • Personal Influence • Innovation Characteristics • Organizations Readiness
  62. 62. Time of Adoption Innovators Early Adopters Early Majority Late Majority Laggards technology enthusiasts opinion leaders benefits are proven technology shy tradition-bound
  63. 63. Innovation Characteristics Communicability Relative Advantage Compatibility Complexity Divisibilitydegree to which the innovation matches degree to which the innovation appears degree to which the innovation can be tried degree to which the benefits of use are which the innovation is difficult to understand
  64. 64. Product Life-Cycle
  65. 65. Definitions  product life cycle is the course of a product’s sales and profits over time.  product life cycle(PLC) deals with the life of a product in the market with respect to business or commercial costs and sales measures.  The five stages of each product lifecycle are product development, introduction, growth, maturity and decline.
  66. 66. Product Life-Cycle Stages Introduction
  67. 67. Sales and Profit Life Cycles
  68. 68. Product Life-Cycle Strategies • Products have a limited life • Sales pass through stages • Profits rise, then fall • Different strategies needed
  69. 69. Slow sales growth, negative profits PLC: Introduction Stage Marketing Strategies: 1.Create awareness 2.Induce product trial 3.Secure retail distribution. Which is more profitable over 5 years? • 6 months late, but on budget? • On time, but 50% over budget? Speed to Market
  70. 70. Order of Market Entry First Mover Advantage • Brand name association • Define product class • Customer inertia • Producer advantages Imitator Advantage Inventor Product pioneer Market pioneer Pioneer Advantage Technology available Time & Cost saved
  71. 71. PLC: Growth Stage Rapid sales growth; New competitors Marketing Strategies: 1.Improve product quality; add new features 2.Add new models and flanker products 3.Enter new market segments 4.Focus advertising on preferences 5.Increase distribution coverage 6.Lower price; Attract price-sensitive buyers
  72. 72. PLC: Maturity Stage Growth slows; Weak competitors exit Marketing Objectives: 1.Maximize profit 2.Defend market share Marketing Strategies 1.Market Modification 2.Product modification 3.Quality improvement
  73. 73. PLC: Decline Stage Slow sales growth, negative profits Product Options: 1.Rejuvenate 2.Harvest 3.Divest
  74. 74. CHARACTERISTICS OF THE PLC Introduct ion Growth Maturity Decline Characteristics Sales Low Rapidly rising Peak Declining Costs/customer High Average Low Low Profits Negative Rising High Declining Customers Innovators Early Adopters Middle majority Laggards Competitors Few Increasing Stable number Declining
  75. 75. DEFINED “A name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors.” - American Marketing Association
  76. 76. Rs. 50Rs. 250 Scope of Branding Creating difference between products Brand
  77. 77. Types of Brand • There are several brand options that include manufacturer brand (also called national brand), private brand (also called distributor, reseller, store, or house brand), or a licensed brand. • Manufacturer brands are initiated by manufacturers and identify the producer. • Private brands is that they are resellers initiated brands. • Licensed brand is a relatively new trend and involves licensing of trademarks – allows approved manufacturers to use its trademark
  78. 78. Developing Brand Elements Easy to recall Descriptive Persuasive What was the name of that cookie I like?
  79. 79. Brand Element Choice Criteria Memorable - Easily Recognized, Easily Recalled Meaningful - Descriptive, Persuasive Likable - Fun and Interesting Transferable - Across Geographical Boundaries Adaptable - Flexible, Updateable Protectable - Legally Protected, Competitively Protected Brand Builders Defensive
  80. 80. Brand Elements which the function is described literally in brand name URLsBrand Names Use a new term for the real word Use catchy phrases Logos Symbols Fonts shapes Slogans Slogans are short phrases that are descriptive or persuasive in nature Jingles These are musical slogans that help in reminding by repetition. Packaging It helps to identify the brand, information through labelling, allows protection Characters Characters can also be used as brand elements.
  81. 81. Secondary Associations Brand Geographic Regions Other Brands Characters Spokespeople Sporting Events
  82. 82. Brand Equity “Brand equity is defined in terms of marketing effects uniquely attributed to the brands – for example, when certain outcomes result from the marketing of a product or service because of its brand name that would not occur if the same product or service did not have the name.” -Kevin Lane Keller
  83. 83. Managing Brand Equity Brand Revitalization understand what the sources of brand equity were to begin with Expanding Brand Awareness by identifying additional or new usage opportunities of the brand. Improving Brand Image by repositioning the Brand in the market Entering New Markets by venturing into new markets and exploring the possibility of establishing the brand in completely different arenas
  84. 84. how the brand makes products superior unique brand associations should exist in consumers’ minds. Managing Brand Equity Brand Reinforcement Maintaining Brand Consistency to continuously improve the brand to build and sustain Protecting Sources of Brand Equity Fortifying versus Leveraging strengths of the brand should be leveraged upon and the weaknesses should be fortified Fine-tuning the Supporting Marketing Program
  85. 85. Branding Strategies • Product Branding Strategy • Line Branding Strategy - products share a common concept • Umbrella Branding Strategy • Double Branding Strategy • Endorsement Branding Strategy
  86. 86. Means of Differentiation Employees Channels Image Services
  87. 87. Packaging & Labelling
  88. 88. Definition • An activity of designing & producing the container for a product. • More than merely containing the product. • Also referred to as the 5th P in the marketing mix. • Packaging is the science, art and technology of enclosing or protecting products for distribution, storage, sale, and use. • Today, good package design is regarded as an essential part of successful business practice Potent tool to differentiate products from their competitors
  89. 89. PURPOSES OF PACKAGING • Physical protection • Barrier protection • Containment or agglomeration • Information transmission • Marketing • Security • Convenience • Portion control
  90. 90. Labelling • A label may be a part of package or it may be a tag attached to the product. • The labels perform a descriptive function relating to – a product’s source, – its contents, – important features and benefits, – use instructions, – cautions or warnings, – storage instructions, – batch number, – date of manufacture, and – date of expiry.
  91. 91. Universal product code • Which consists of unique lines that identifies a product • The data’s are regarding the price, manufacturer & retailer code used for inventory • Also called as Bar code • Which is done by bar code scanner & computer
  92. 92. Developments in Packaging • Package design starts with the identification of all the requirements: structural design, marketing, shelf life, quality assurance, logistics, legal, regulatory, graphic design, end-use, environmental, etc. • The traditional “three R’s” of reduce, reuse, and recycle
  93. 93. Pricing Strategies
  94. 94. Marketing Mix Product Price PromotionPlace Revenue Producer Cost Cost Cost
  95. 95. Significance & Importance of price • Only element that generates revenues for the company • Adopting the right pricing strategy helps a company achieve its objectives • Price represents the value that exchanged in an marketing transaction • Some marketers do not give adequate importance to pricing due to certain reasons • The sale of a product have an impact on pricing mechanism • The management of a company must establish a process to ensure that all the relevant factors are taken into consideration
  96. 96. Pricing concept • Pricing exercise begins with an understanding of corporate mission, target markets & marketing objectives • Pricing decision should also involve the other items in product line, promotional decisions, & distribution channels • There are two types of pricing decisions • New product pricing • Adjusting prices of existing products • The price reflects the buyers interest & satisfaction of the product
  97. 97. Changing Price Environment Instant Price Comparisons I’ll pay Rs.235.00 Name Your Own Price Get Products Free Buyers
  98. 98. Changing Price Environment Rs 29.99 Rs 19.99 Rs 24.99Sellers Monitor Customers Selective Pricing Negotiate Prices
  99. 99. How Companies Price Pricing Department Small Business Owner Product-line Managers (w/guidance)
  100. 100. Select Final Price Setting the Price 1 Price Method Competitor Analysis 2 3 4 5 6 Estimate Costs Determine Demand Pricing Objective
  101. 101. Selecting the Pricing Objective Survival Maximum Current Profit Maximum Market Share Maximum Market Skimming Product-Quality Leadership Other Objectives Nonprofit and public organizations may have other pricing objectives
  102. 102. Determining Demand – Way to analyze demand curve are – Past sales analysis, volumes sold etc., – Usually P - D & vice versa – Classic demand curve shows products will be sold at different prices keeping the other factors constant – But in some cases like share markets price decreases, demand also decreases & petrol – Status reflecting products P increases Demand increases, prestige products after a certain level the demand decreases
  103. 103. ------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------- ----------------------------------------------------------- Determination of demand • If there is little or no change in demand, it is said to be price inelastic. • If there is significant change in demand, then it is said to be price elastic. Price Rs 15 Rs 10 100 105 Rs 15 Rs 10 50 150 (a) Inelastic Demand (b) Elastic Demand Quantity Demanded per Period Quantity Demanded per Period
  104. 104. Estimating Costs Demand Price Ceiling Price Floor Costs Price Profit
  105. 105. Break Even Analysis (BEA) • The point at which cost of making a product is equal to the revenue generated from selling that product • BEA = Total fixed cost (Unit price – Average variable cost)
  106. 106. Analyzing Competitors’ Offers Worth to Customer Costs Reaction Price
  107. 107. Selecting a Pricing Method Pricing Methods • Promotional • Psychological • Target-return • Perceived-Value • Value • Going-rate • Auction-type
  108. 108. New Product Pricing • Base price Recover the product cost quickly • Need to analyze about competitors move, strength of entry campaign, impact on primary demand • Price skimming – generates much cash flows in absence of competitors • Penetration pricing - when entering into the competition to capture high market share • Low unit production decrease price added advantage • Some marketers initially adapt skim and then to penetrate
  109. 109. Psychological pricing • Consumers generally judge product quality by price • Price will be more apparent when we see goods like perfume and higher-end products • If no other information is available to the customers then price becomes a major factor in judging the quality • Prices ending with 9 have a significant impact on the psychology of customers • When products cannot be differentiated on basis of features and other aspects • Odd even pricing is basically a psychological way of pricing
  110. 110. Promotional pricing Loss Leader Pricing – Retail outlets use mainly to sell the volumes of routinely purchasing product – Compensates for the lower margin products • Superficial Pricing – Setting artificially high price & offering at a highly reduced price • Special Event Pricing – Seasonal or special occasions price cuts
  111. 111. Selection of pricing method Target return pricing – ROI, the leaders in the industry will adapt • TRP = unit cost + (Desired cost* Invested Capital/ Unit sales) cost 2oo, invested 1,00,000 sells 500 & 15% ROI Competition based pricing – Going rate pricing, simply follows prevailing pricing patterns in the market Demand Based pricing – considering the level of demand. The marketers need to estimate the different product price the customers will demand
  112. 112. Selection of pricing method Product Range pricing – prices are determined based on other products in the same range • Optional additional items • Captive product Pricing – Gillette Perceived-Value Pricing – price of the product on basis of customers perceived value in minds • Marketers shows the brand image through advertising, sales promotion etc., to enhance the value.
  113. 113. Perceived-Value Pricing Customer’s perceived-value • Performance • Warranty • Customer support • Reputation
  114. 114. Selection of pricing method Two-Part Pricing – charge a fixed price for basic service & variable usage rate – BSNL Discount Policies – price that sellers gives to buyers • Cumulative & Non-Cumulative quantity discounts • Seasonal discounts Bid Pricing – more suitable for industrial products, price will be quoted in a sealed cover. Government organizations
  115. 115. Auction Pricing English auction (ascending bids) Dutch auction (descending bids) Sealed-bid auction
  116. 116. Adapting the Price Geographic Pricing Price Discounts and Allowances Promotional Pricing Differentiated Pricing
  117. 117. Dealing with Price Changes Competitor Moves Raising Prices Cutting Prices

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