Product Planning & Prices

1. Product Planning & Prices How they impact business

2. Product Planning Involves making decisions about those features that are needed to sell a business’s products, services, or ideas.

3. Product Line A group of closely related products manufactured and/or sold by a business.

4. Product Item A specific model, brand, or size of a product within a product line.

5. Developing New Products • Generate Ideas • Come from a variety of sources • Creativity is essential Screen Ideas Commercialization Produce & market the product Develop a Business Proposal Test the Product • Developing the Product • The new idea takes physical shape • Marketers develop a marketing strategy.

6. Developing Existing Products Line Extensions – new product lines, items, or services Original Product Newer Products

7. Developing Existing Products Product Modifications – an alteration in a company’s existing product

8. Deleting a Product or Product Line • Obsolescence • Loss of appeal • Conflict with current company objectives • Replacement with new products • Lack of profit • Conflict with other products in the line • Examples????

9. Product Life Cycle • Stages a product goes through during its life • At each stage, marketers must adjust their product mix and marketing strategies

10. Introduction Stage • Product is introduced to the market • Efforts focused on promotion and production • Least profitable stage • Examples???

11. Growth Stage • The product is enjoying success • Increasing sales and profits • Competition is aware and is offering new products to compete • Examples??

12. Maturity Stage • Sales level off or slow down • Most of target market owns product • Spend a great deal of time and money in efforts to fight off the competition • Decide whether to continue to improve the product to gain additional sales • Examples??

13. Decline Stage • Profits may be smaller than cost • Sell or license the product • Recommit to the product line • Discount the product • Regionalize the product – restrict sales of a product to certain local areas. • Modernize or alter the product offering • Examples??

14. Gauge Your Prices Objectives: Explain the concept of pricing Identify factors affecting pricing

15. Why is it important? • Customers want the ‘most’ for their money • Quality • Quantity • Combination of both • Many factors can impact pricing • Increased rent • Time of year

16. Why is it Important? • MOST Visible element – tells more than advertising does • Can be changed at any time • Main concern for customers

17. Value • Price can imply the value of a product • Based on perceived benefits • Tangible Benefits: • Like the color • Perfect size • Intangible Benefits: • Spending time with your friends

18. Sport Event Price decisions • Tickets • Concessions • Equipment • Sale • Rental • Souvenirs • Clothing • Sport apparel • Licensed merchandise • Media • Magazines • Pay-per-view events • Memberships • Health clubs • Golf courses

19. Why it’s Unique • Extremely High Demand • Total Cost • Ticket price, gas, parking, lodging, airfare

20. Since celebrities & professional athletes are paid enormous salaries for what they do, ticket prices to games & concerts are extremely high. • Are high ticket prices a direct result of high salaries or are other factors involved?

21. Pricing ObjectivesWhat result can be achieved because of the price? • Focus on the Company • Enhance image, cover costs, create profits • Focus on the Customer • Specific target market, a ‘fair’ price, maximum participation • Focus on the Competition • Lowest price, highest price (luxury)

22. Company-related FactorsMarketing Mix Distribution • Chanel • Manufacturer (cheapest) • Wholesaler • Retailer (mark-up the price) • Actual facility • Convenience Product • Quality • Life cycle Promotion • Discounts • Coupons • Rebates

23. Company-related FactorsCOSTS Fixed Costs Variable Costs Materials Packaging Advertising Others??? • Rent • Equipment • Salaries • Maintenance • Others???

24. Company-related FactorsEnvironment • Market Demand • Elasticity • Elastic - Small price change = big change in demand • Inelastic – No impact to sales with price change • Economic factors • Technology • More technology = higher price

25. Legal Issues • Sherman Antitrust Act • “Price Fixing” is illegal • Predatory pricing – can’t lower prices to drive competitors out of the market • Consumer Goods Pricing Act • Retailers have right to set product’s final price • Clayton Act & Robinson-Patman Act • Can’t use price to discriminate against people • Wheeler-Lea Act • Customer’s aren’t deceived by pricing practices

26. Customer-related factorsMarket Segmentation • Target Market • Demographics • Age, gender, ethnicity, education, income, occupation • Geographics • Large town, region of the world • Psychographics • Needs, motives, lifestyle, interests

27. Customer-related factorsYield-Management • Time • offer discounts for ‘non-used’ times • Place • Different seats = different prices

28. Competition-related Factors • Non-price / Price • Design, packaging, distribution, promotion • Penetration Pricing • Lower prices on new products • Price Skimming • Higher prices • Prestigious image