Presentation on theme: "Chapter Fourteen Creating and Pricing Products that Satisfy Customers."— Presentation transcript:
Chapter Fourteen Creating and Pricing Products that Satisfy Customers
Classification of Products Product –Everything, both favorable and unfavorable, one receives in an exchange. Can be a good or service Consumer product –A product purchased to satisfy personal and family needs-grouped by how shop for them Business (industrial) product –A product bought for resale, for making other products, or for use in a firm’s operations-grouped by what you use them for Many products can be both
Consumer Product Classifications Convenience Product Convenience Product Shopping Product Shopping Product Specialty Product Specialty Product Unsought Product Unsought Product A 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 consumers search extensively for and are reluctant to accept substitutes. A particular item that consumers search 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.
Business Product Classifications Major Equipment - machines & vehicles-custom made Accessory Equipment-drills copiers Raw Materials-no processing - oil, fish, trees Component Parts-identifiable in final product-bolts, tires Component Parts-identifiable in final product-bolts, tires Processed Materials- not identifiable in final product - plastic, sugar Processed Materials- not identifiable in final product - plastic, sugar Supplies-not in final product-pens, lube oil Business Services-legal, maintenance
The Product Life Cycle A series of stages in which a product’s sales revenue and profit increase, reach a peak, then decline –Introduction Customer awareness and acceptance are low –Growth Sales increase rapidly as the product becomes well known –Maturity Sales still increasing but at a slower rate and profits begin to decline. later in this stage, sales peak –Decline stage Sales volume decreases sharply and profits continue to fall
Time Profits Sales IntroductoryStageGrowthStageMaturityStageDeclineStage 0 Product Life Cycle Dollars
The stage of the product life cycle affects the marketing strategy for a product –Introduction Make potential customers aware of product –Growth strengthen product position by encouraging brand loyalty Improve product; reduce price; broaden distribution –Maturity Redesign packaging; encourage new product uses; increase promotional efforts –Decline Retain or eliminate product Using the Product Life Cycle
Class Exercise For the products below, determine what stage of product life cycle the product is currently in and the marketing implications involved. –ipod –Car gps navigation systems –Aspirin –vcrs
Product Line and Product Mix Product line –A group of similar products that differ only in relatively minor characteristics Product mix –All of the products that a firm offers for sale –Width of the mix The number of product lines the mix contains –Depth of the mix The number of individual products within each line
Product Mix Example Blades andWriting razorsToiletriesinstrumentsLighters Mach 3 Series Paper Mate Cricket SensorAdorn Flair Trac IIToni Atra Right Guard Swivel Silkience Double-Edge Soft and Dri Lady Gillette Foamy Super Speed Dry Look Twin Injector Dry Idea Techmatic Brush Plus Width of the product mix Depth of the product lines
Product Mix Width-Slice of Another Pie Diversifies risk Capitalizes on established reputations The number of product lines an organization offers.
Product Line Depth-Bigger Slice of your Pie Attracts buyers with different preferences Increases sales/profits by further market segmentation Capitalizes on economies of scale The number of product items in a product line.
What is a Brand –A name, term, symbol, design, or any combination of these that identifies a seller’s products as distinct from those of other sellers –Brand name The part of a brand that can be spoken –Brand mark The part of a brand that is a symbol or distinctive design –Trademark A brand name or mark that is registered with the U.S. Patent and Trademark Office and is legally protected
Branding Choices Brand No Brand- Generic No Brand- Generic Manufacturer’s Brand Private Brand Individual Brand Family Brand Individual Brand Family
Advantages of Manufacturers’ Brands to the Retailer Develop customer loyalty Attract new customers Enhance store’s prestige Offer rapid delivery, can carry less inventory
Advantages of Private Brands to the Retailer Earn higher profits Less pressure to mark down prices Manufacturer may drop a brand Ties customer to wholesaler or retailer More control over distribution – retailers have no control over distribution of manufacturers’ brands
Benefits of Branding –Because brands are easily recognizable, they reduce the amount of time buyers must spend shopping –Brands help consumers judge quality –Branding helps a firm introduce a new product with the same brand name –Branding aids in promotional efforts because promotion of each branded product indirectly promotes others with the same brand
Choosing a Brand Name Kleenex Is easy to pronounce Is easy to recognize and remember Is short, distinctive, and unique Describes the product, use, and benefits Has a positive connotation Reinforces the product image Is legally protectable