Presentation on theme: "Creating and Pricing Products that Satisfy Customers"— Presentation transcript:
1 Creating and Pricing Products that Satisfy Customers Chapter FourteenCreating and Pricing Products that Satisfy Customers
2 Classification of Products Everything, both favorable and unfavorable, one receives in an exchange. Can be a good or serviceConsumer productA product purchased to satisfy personal and family needs-grouped by how shop for themBusiness (industrial) productA product bought for resale, for making other products, or for use in a firm’s operations-grouped by what you use them forMany products can be both
3 Consumer Product Classifications ConvenienceProductShoppingSpecialtyUnsoughtA relatively inexpensive item that merits little shopping effort.A product that requires comparison shopping, because it is usually more expensive and found in fewer stores.A particular item that consumerssearch extensively for and are reluctant to accept substitutes.A product unknown to the potential buyer or a known product that the buyer does not actively seek.
4 Business Product Classifications Major Equipment-machines & vehicles-custom madeAccessory Equipment-drills copiersRaw Materials-no processing - oil, fish, treesComponent Parts-identifiable in finalproduct-bolts, tiresProcessed Materials- not identifiable infinal product - plastic, sugarSupplies-not in final product-pens, lube oilBusiness Services-legal, maintenance
5 The Product Life CycleA series of stages in which a product’s sales revenue and profit increase, reach a peak, then declineIntroductionCustomer awareness and acceptance are lowGrowthSales increase rapidly as the product becomeswell knownMaturitySales still increasing but at a slower rate andprofits begin to decline. later in this stage,sales peakDecline stageSales volume decreases sharply and profitscontinue to fall
7 Using the Product Life Cycle The stage of the product life cycle affects the marketing strategy for a productIntroductionMake potential customers aware of productGrowthstrengthen product position by encouraging brand loyaltyImprove product; reduce price; broaden distributionMaturityRedesign packaging; encourage new product uses; increase promotional effortsDeclineRetain or eliminate product
8 Class ExerciseFor the products below, determine what stage of product life cycle the product is currently in and the marketing implications involved.ipodCar gps navigation systemsAspirinvcrs
9 Product Line and Product Mix A group of similar products that differ only in relatively minor characteristicsProduct mixAll of the products that a firm offers for saleWidth of the mixThe number of product lines the mix containsDepth of the mixThe number of individual products within each line
10 Width of the product mix Depth of the product lines Product Mix ExampleBlades and Writingrazors Toiletries instruments LightersMach 3 Series Paper Mate CricketSensor Adorn FlairTrac II Toni Atra Right GuardSwivel SilkienceDouble-Edge Soft and DriLady Gillette FoamySuper Speed Dry LookTwin Injector Dry IdeaTechmatic Brush PlusWidth of the product mixDepth of the product lines
11 Product Mix Width-Slice of Another Pie The number of product lines an organization offers.Diversifies riskCapitalizes on established reputationsNotes:In Exhibit 8.3, Gillette’s product mix width is four product lines.Product mix width diversifies risk across many product lines rather than depend on one or two lines. Widening the mix also capitalizes on established reputations.
12 Product Line Depth-Bigger Slice of your Pie The number of product items in a product line.Attracts buyers with different preferencesIncreases sales/profits by further market segmentationCapitalizes on economies of scaleNotes:In Exhibit 8.3, product line depth can be seen in Gillette’s ten product items in its razor and blade product line.
13 What is a BrandA name, term, symbol, design, or any combination of these that identifies a seller’s products as distinct from those of other sellersBrand nameThe part of a brand that can be spokenBrand markThe part of a brand that is a symbol or distinctive designTrademarkA brand name or mark that is registered with the U.S. Patent and Trademark Office and is legally protected
15 Advantages of Manufacturers’ Brands to the Retailer Develop customer loyaltyAttract new customersEnhance store’s prestigeOffer rapid delivery, can carry less inventory
16 Advantages of Private Brands to the Retailer Earn higher profitsLess pressure to mark down pricesManufacturer may drop a brandTies customer to wholesaler or retailerMore control over distribution – retailers have no control over distribution of manufacturers’ brands
17 Benefits of BrandingBecause brands are easily recognizable, they reduce the amount of time buyers must spend shoppingBrands help consumers judge qualityBranding helps a firm introduce a newproduct with the same brand nameBranding aids in promotional efforts because promotion of each branded product indirectly promotes others with the same brand
18 Choosing a Brand Name Is easy to pronounce Is easy to recognize and rememberIs short, distinctive, and uniqueDescribes the product, use, and benefitsHas a positive connotationReinforces the product imageIs legally protectableKleenex