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Chapter Fourteen

Chapter Fourteen. Developing and Pricing Products and Services. Consumer Choices of Best Product Innovation of ALL Time. Source: American Demographics. Product Development & Value Package. Value- Total Product Offer Product Line Product Mix Product Differentiation.

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Chapter Fourteen

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  1. Chapter Fourteen Developing and Pricing Products and Services

  2. Consumer Choices of Best Product Innovation of ALL Time Source:American Demographics

  3. Product Development & Value Package • Value- Total Product Offer • Product Line • Product Mix • Product Differentiation

  4. Classic Product Failures Company Loss Failure Edsel Corfam VideoDisc PCjr New Coke Premier Ford Motor Co. DuPont RCA IBM Coca-Cola R. J. Reynolds $250 M $100 M $500 M $ 40 M No $ Number No $ Number

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

  6. Theme parks & resorts ABC Television Network TV & radio stations Film studios & production Video programs & licensing Consumer products Publishing Mickey Mouse’sProduct Mix

  7. Marketing Classes of Goods & Services • Consumer • Convenience • Shopping • Specialty • Unsought • Industrial

  8. Packaging • Protect • Attract • Describe • Explain • Warranties • Price, Value, Uses

  9. Brand & Trademark Categories Manufacturers’ Knockoff Dealer/Private Generic Equity Loyalty Awareness Association Branding Mary’s Fresh Fruit Jams Fresh Daily Straight from the Garden

  10. Market Value of A Brand Name Billions of Dollars Source: Interbrand Group

  11. A Good Brand Name... • Speaks directly to product’s target customers • Attracts/motivates consumers to try it • Is memorable/sticks in customers’ minds • Is distinctive enough to protect it legally Brand Name

  12. New-Product Development Idea Generation Screening Analysis Development Testing Commercialize

  13. Figure 14.7 Sales and Profits During the PLC

  14. What They Cost When 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

  15. Objectives ROI Traffic Market Share Sales Image Social Cost-Based Value- Service Break-Even Fixed Cost Variable Cost Strategies Skim Penetration EDLP High-Low Leadership Pricing

  16. Breakeven Chart (Figure 14.9) Total Revenue or Total Cost Number of Units

  17. Pricing Using Breakeven Analysis ProblemShould we charge $2 or $3 per box? CostsTotal Fixed Costs $400,000 Variable Cost $ 1 per box Market Research Forecast Company can sell: 290,000 boxes at $2 @ 210,000 boxes at $3 @ 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

  18. Market Share-Cable Source:Wall Street Journal 1/12/2000

  19. Movies- Domestic Box Office Market Share Source: Wall Street Journal, 1/12/2000

  20. Market Share ofVideo Sales Source:Wall Street Journal, 1/12/2000

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