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Developing and Pricing Products and Services. 1- 1. Product Development & Value Package. Value/Total Product Offer Product Line Product Mix Product Differentiation. Marketing Different Classes of Goods & Services. Consumer Convenience Shopping Specialty Unsought Industrial.

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  1. Developing and Pricing Products and Services 1-1

  2. Product Development& Value Package • Value/Total Product Offer • Product Line • Product Mix • Product Differentiation

  3. Marketing Different Classesof Goods & Services • Consumer • Convenience • Shopping • Specialty • Unsought • Industrial

  4. Importance Of Packaging • Protection • Attraction • Description • Explain Benefits • Information on warranties, warnings, etc. • Indication of price, value, and uses

  5. Brand & Trademark Categories Manufacturers’ Dealer/Private Generic Knockoff Equity Loyalty Awareness Association Branding

  6. Characteristics of a Good Brand Name • Short, sweet, and easily pronounced, but flexible and expandable, and does not lend itself to abbreviation • Unique within its industry and retain its age • Legally available and defensible • Good alliteration and linguistically clean • Embraces company personality / brand portfolio Source: The Brand Name Awards 2005

  7. Best/Worst/Weirdest Car Brand Names Source: FT Weekend, November, 2005

  8. Betty Crocker Chef Boyardee Uncle Ben Colonel Sanders Little Debbie Fake Real Both Real guy, fake rank Real Brand Characters: Are They Real or Fake? Source: Fast Company, August 2004

  9. 10 Most Valuable Brands Source: Business Week, August 7, 2006

  10. Top 10 Favorite Mascots of America • M&Ms figures / Mars • Doughboy / General Mills, Smucker’s • Duck / Aflac • Tony the Tiger / Kellogg • Gecko / Berkshire Hathaway’s Geico • Chester the Cheetah / Pepsi’s Frito-Lay • Energizer Bunny / Energizer Holdings • Kool-Aid Man / Kraft Foods • Trix Rabbit / General Mills • Snap, Crackle and Pop / Kellogg Source: Forbes, January 9, 2006

  11. Idea Generation Screening Analysis Development Testing Commercialize New-ProductDevelopment Process

  12. First Products Producedby Five Major Companies • Hershey - Caramels • Amway - No-rinse car wash • Heinz - Horseradish • Avon - Little Dot perfume set • 3M - Sandpaper Source: World Features Syndicate

  13. People Behind Product Innovation • Liquid Paper – an American Secretary • Paper Clip – a Norwegian Patent Clerk • Fax Machine – a Scottish Clock Maker • Lewis Waterman Fountain Pen – an American Insurance Salesman • Pencil Sharpener – French Mathematician • Ballpoint pen – a Hungarian Journalist • Eraser Head – English Chemist Source: World Features Syndicate

  14. Best ProductInnovation of ALL Time % of Consumers’ Choice Source: American Demographics

  15. Consumers Attitudes about New Products Source: USA Today

  16. Why People Purchase New Products Source: USA Today

  17. Sales & Profits During the PLC

  18. Objectives ROI Traffic Market Share Image Social Cost-Based Demand-Based Competition-Based Break-Even Fixed Cost Variable Cost Strategies Skimming Penetration EDLP High-Low Bundling Psychological Market Forces Pricing

  19. What They CostWhen First Introduced 1927 Transatlantic Call $ 75/3 min. 1947 Microwave Oven $ 3,000 1964 FAX unit rental $ 850/month 1970 Pocket Calculator $ 150 1974 VCR Tape $ 50 Source: World Features Syndicate

  20. Breakeven Chart Total Revenue or Total Cost Number of Units

  21. Pricing UsingBreakeven Analysis Problem Should we charge $2 or $3 per unit? Costs Total Fixed Costs $400,000 Variable Cost $ 1 per unit Market Research Forecast Company can sell: 290,000 boxes at $2 / unit 210,000 boxes at $3 / unit Breakeven point = total fixed cost price - variable cost (per unit) (per unit) $2 price = $400,000 = 400,000 units to breakeven $2 - $1 $3 price = $400,000 = 200,000 units to breakeven $3 - $1 Breakeven Analysis

  22. Advanced Breakeven Analysis

  23. Example of aUPC Barcode 12 34567 89012 8 Example only: not a valid UPC barcode

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