CHAPTER 5: PRODUCT AND PRICE DECISIONS-SPORTS

1. CHAPTER 5: PRODUCT AND PRICE DECISIONS-SPORTS

2. I. PRODUCT DEFINED • A PRODUCT CAN BE TANGIBLE (BASEBALL BAT-GOOD) OR INTANGIBLE (WATCHING A SPORTING EVENT-SERVICE)

3. A. PRODUCT LINE VS. PRODUCT ITEM ITEM-SPECIFIC MODEL-NIKE SHOE LINE-CLOSELY RELATED PRODUCTS SOLD BY A COMPANY –NIKE HAS 3: -ATHLETIC CLOTHING -ATHLETIC FOOTWEAR -ATHLETIC EQUIPMENT

4. B. PRODUCT CLASSIFICATIONS- CONSUMER VS. BUSINESS GOODS

5. C. POINT OF DIFFERENCE- UNIQUE PRODUCT CHARACTERISTIC THAT MAKES A PRODUCT STAND OUT AGAINST OTHERS. (BASEBALL TEAM THAT WON WORLD SERIES, NIKE W/ IPOD)

6. II. STEPS IN NEW PRODUCT DEVELOPMENT • TYPICALLY 7 STEPS IN DEVELOPING A NEW PRODUCT:

7. A. STEP 1- SWOT ANALYSIS -STRENGTHS -WEAKNESSES -OPPORTUNITIES -THREATS

8. B. IDEA GENERATION- THESE CAN COME FROM A VARIETY OF SOURCES: -RESEARCH -EMPLOYERS -CONSUMERS -COMPETITORS

9. C. SCREENING & EVALUATION- CAN THE COMPANY ACTUALLY MAKE AND SELL THE PRODUCT? FOCUS GROUPS

10. D. BUSINESS ANALYSIS- FINANCIAL ASPECT-BUSINESS PLAN

11. E. DEVELOPMENT- MAKING THE ACTUAL PRODUCT OR A PROTOTYPE OF THE PRODUCT

12. F. TEST MARKETING- OFFERING THE PRODUCT FOR SALE IN SMALL AREAS OR POSSIBLY FREE SAMPLES TO CONSUMERS MOVIES

13. G. COMMERCIALIZATION- USE OF 5 P’S AND MARKETING TO TARGET CONSUMERS http://www.youtube.com/watch?v=xffOCZYX6F8 http://www.youtube.com/watch?v=6CbQOLqZ8IA

14. III. PRODUCT LIFE CYCLE • THIS REPRESENTS THE STAGES THAT A PRODUCT GOES THROUGH DURING ITS LIFE IN THE MARKETPLACE. • THERE ARE 5 STAGES:

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16. A. INTRODUCTION- MOST $$$ SPENT FOR RESEARCH, DEVELOPMENT, MARKETING HIGH FAILURE RATE EDUCATING CONSUMERS (GATORADE)

17. B. GROWTH- COMPETITORS BEGIN ENTERING THE MARKET IF PRODUCT IS SUCCESSFUL - POWERADE DISTRIBUTION BECOMES GREATER

18. C. MATURITY- SALES BEGIN TO SLOW DOWN AND CHANGES MAY BE MADE TO A PRODUCT TO KEEP IT IN CIRCULATION APPLE IPHONE IS ENTERING INTO THIS PHASE TWO PLACES TO GO FROM HERE…

19. D. RENEWAL - PRODUCT IS ABLE TO SAVE OR RE-INVENT IPHONE – NEW MODELS, NEW FEATURES, NEW APPS, IWATCH, GLASSES?

20. E. DECLINE- PROFITS BEGIN TO DROP AND PRODUCT MAY BE DROPPED TOTALLY

21. IV. MANAGEMENT OF THE PRODUCT LIFE CYCLE • PRODUCT MANAGERS NEED TO MANAGE A PRODUCT THROUGH ITS LIFE CYCLE. THIS IS DONE IN THREE WAYS:

22. A. PRODUCT MODIFICATON- CHANGING CHARACTERISTICS, FEATURES AND/OR APPEARANCE. GATORADE OFFERED-FIERCE, FROST, ICE, XTREMO

23. B. MARKET MODIFICATION- FINDING NEW WAYS TO FIND NEW CUSTOMERS OR ENCOURAGE CURRENT CUSTOMERS TO BUY MORE

24. C. REPOSITIONING- CHANGING A PRODUCTS IMAGE IN RELATION TO COMPETITION. NEW BALANCE MARKETING TO PODIATRISTS

25. V. PRICING • HOW MUCH WILL SOMEONE PAY FOR SOMETHING? THAT IS THE MILLION DOLLAR QUESTION!!!

26. A. PRICING AND PROFIT- PRICE MUST BE SET TO MAKE A PROFIT AND COVER OVERHEAD

27. B. PRICING AND THE MARKETING MIX PRICE MUST BE SET FOR THE CORRECT TARGET MARKET. ROAD BIKES

28. VI. PRICING CONSIDERATIONS • FIVE PRIMARY FACTORS AFFECT PRICING DECISIONS:

29. A. CONSUMER PERCEPTIONS- -PRESTIGE PRICING -ODD-EVEN PRICING -TARGET PRICING

30. B. DEMAND- SUPPLY VS. DEMAND HIGHER DEMAND (SHORTAGE) = HIGHER PRICE HIGHER SUPPLY (SURPLUS) = LOWER PRICE

31. C. COST- MUST PRICE HIGH ENOUGH TO COVER COST TO MAKE PROFIT (COST-PLUS PRICING)

32. D. NEWNESS OF PRODUCT- PRICE MAY BE SET SUBSTANTIALLY HIGHER IN THE BEGINNING OF A PRODUCTS LIFE BUT LOWER THRU GROWTH AND DECLINE

33. E. COMPETITION THEY MAY LOWER OR RAISE THE PRICE TO COMPETE WITH COMPETITION.

34. VII. PRICING STRATEGIES • BUNDLE PRICING-4 FOR 5.00 • LOSS LEADER PRICING-AT OR BELOW COST TO GET CUSTOMERS IN (ILLEGAL) • YIELD-MANAGEMENT PRICING-ITEMS AT DIFFERENT PRICES (STADIUMS) • PRICE LINING-SELLING ALL GOODS IN A LINE AT SPECIFIC PRICE PTS.