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Introduction to. 13. Chapter. Product and Pricing Strategies. Learning Objectives. Identify factors that affect a target market. Identify steps to create new products. Explain methods for product differentiation. Identify main phases of product life cycle.

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  1. Introduction to 13 Chapter Product and Pricing Strategies 2001 South-Western College Publishing

  2. Learning Objectives • Identify factors that affect a target market. • Identify steps to create new products. • Explain methods for product differentiation. • Identify main phases of product life cycle. • Identify factors influencing pricing decisions. 2001 South-Western College Publishing

  3. Product and Pricing Strategy Firm’s Revenue Pricing Strategies Firm's Profits and Value Product Strategies Firm’s Cost of Production Firm's Expenses 2001 South-Western College Publishing

  4. Classifications of Products • Convenience products • Shopping products • Specialty products 2001 South-Western College Publishing

  5. Convenience Products • Widely available. • Purchased frequently. • Easily accessible. 2001 South-Western College Publishing

  6. Shopping Products • Consumers shop around and compare prices and quality. • Not purchased frequently. 2001 South-Western College Publishing

  7. Specialty Products • Special effort to purchase. • Purchase decision: based on personal preferance. 2001 South-Western College Publishing

  8. Product Line A set of related products or services offered by a single firm. COCA-COLA • 1886 COCA-COLA • 1960 FANTA • 1961 SPRITE • 1963 TAB • 1966 FRESCA • 1972 MR. PIBB • 1974 SUGAR-FREE SPRITE 1982 DIET COKE 1992 "NEW" COKE, RENAMED COKE II NESTEA 1994 FRUITOPIA 1995 BARQ'S 1997 SURGE CITRA Not inclusive Source: Coca-Cola Web Site march 2000 2001 South-Western College Publishing

  9. Product Mix Product Mix • The assortment of products offered by a firm. 2001 South-Western College Publishing

  10. Target Markets • A group of individuals or organizations with similar traits who may purchase a particular product. • Two types of target markets: • Consumer • Industrial 2001 South-Western College Publishing

  11. Factors Affecting Target Markets • Demographics • Geography • Economic factors • Social values 2001 South-Western College Publishing

  12. Demographics 2001 South-Western College Publishing

  13. Geographic Target Marketing • Global regions • Nations • National regions • States, counties, cities, neighborhoods • Climate • Terrain • Population density • Market density 2001 South-Western College Publishing

  14. Target Markets and Economic Factors • Targeting by: • Business cycle: Recession, prosperity. • Interest rates: High, low. 2001 South-Western College Publishing

  15. Target Markets and Social Values • Lifestyles • Personal values 2001 South-Western College Publishing

  16. Marketing Research Accumulation and analysis of data to make marketing decisions. Purpose: • Identify consumer needs. • Understand consumer perception. • Test new product ideas. Investment: • Firms invest funds in research and development (R&D). • Manufacturing firms tend to invest more money than service firms. 2001 South-Western College Publishing

  17. Research and Design Purpose: • Develop and test new products. • Improve existing products. • Patent: Allows exclusive rights to production and sale of specific product. 2001 South-Western College Publishing

  18. Steps to Create a New Product • Develop product idea. • Assess feasibility of idea. • Design and test product. • Distribute and promote product. • Post-audit product. Rocky Mountain Bicycles Business Online 2001 South-Western College Publishing

  19. Product Differentiation • Efforts to distinguish a product from competitive products so that it is more desirable. Products are differentiated by: • Unique design. • Unique packaging. • Unique branding. 2001 South-Western College Publishing

  20. Classification of Brands • Producer: represent the manufacture of products. • Store: represents the retail store where the product is being sold. Arizona Jean Co.® Sports Cap Sold at JC Penney • Generic: products are not branded and simply describe the product. 2001 South-Western College Publishing

  21. Maturity Decline Growth Introduction Time Units/Sales Profits Product Life Cycle Pentium 133 2001 South-Western College Publishing

  22. PRICE Value that is placed on a product. Factors which determine price: • Cost of production. • Supply of inventory. • Competitor’s prices. 2001 South-Western College Publishing

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