Copyright © 2004 South-Western. All rights reserved.12–1 Rough Draft #2 Outline – Reference Sheet (works cited – to be CITED in the paper – footnote, or in text citations with references: Minimum % - I would suggest MANY more) Library Web Page (proper citation format MLA – dated and use books, magazines, personal interviews, competitor info., etc) Only chart is promo plan ($$’s estimated)

Copyright © 2004 South-Western. All rights reserved.12–2 Background on Products Products include physical goods and services that satisfy customer needs –Convenience products  available  frequently  accessible –Shopping products  Not purchased frequently  Consumers shop around to compare quality and price –Specialty  Consumers must make a special effort to purchase

Copyright © 2004 South-Western. All rights reserved.12–3 Background on Products Product line  Coke, Diet Coke, Caffeine-free Diet Coke, Sprite Product mix –Assortment of products offered by a firm  Amazon.com: books, electronics, toys, music, kitchen items, drugs, health and beauty products

Copyright © 2004 South-Western. All rights reserved.12–4 Identifying a Target Market Consumers who buy a particular product may have specific traits in common and similar needs –Consumer markets –Industrial markets

Copyright © 2004 South-Western. All rights reserved.12–5 Size of Target Market Depends on: –Demographics –Geography –Economic factors –Social values Activity

Copyright © 2004 South-Western. All rights reserved.12–6 Target Market Gender Age Ethnicity Income Level Geographic Range Social Values Other

Copyright © 2004 South-Western. All rights reserved.12–7 Small Business Survey What Are the Keys to Creating Successful Products?

Copyright © 2004 South-Western. All rights reserved.12–8 Creating New Products Develop a product idea Assess the feasibility of the product idea Design and test the product Distribute and promote the product Post-audit the product

Copyright © 2004 South-Western. All rights reserved.12–9 Product Life Cycle Typical phases over the lifetime of products –Introduction - create awareness of product –Growth - reinforce product features –Maturity - competition increases –Decline - reduced demand Marketing decisions may be influenced by the stage in the product life cycle

Copyright © 2004 South-Western. All rights reserved.12–10 Product Life Cycle Phases Exhibit 12.5

Copyright © 2004 South-Western. All rights reserved.12–11 Pricing Strategies Pricing considerations –Production costs per unit + mark-up (cost-based pricing) –Supply of inventory –Competitors’ prices Competitors’ prices (Choose a SINGLE, STATED STRATEGY for your plan) –Penetration pricing –Defensive pricing –Predatory pricing –Prestige pricing

Copyright © 2004 South-Western. All rights reserved.12–12 Pricing Example Hot dog vendor in New Orleans –Rent hot dog cooker for $4000 a year (a fixed cost that doesn’t depend on volume of hot dogs sold) –Cost for hot dogs, buns, ketchup, etc. are $.60 per hot dog (variable costs that depend on volume of hot dogs) –Other vendors charge $2.00 each, you charge $1.80 –Forecast that you can sell 20,000 hot dogs if you have a competitive price –Identify the break-even quantity

Copyright © 2004 South-Western. All rights reserved.12–13 Estimation of Costs and Revenue at Various Quantities Produced Exhibit 12.6a

Copyright © 2004 South-Western. All rights reserved.12–14 Estimation of Costs and Revenue at Various Quantities Produced (cont’d) Exhibit 12.6b

Copyright © 2004 South-Western. All rights reserved.12–15 Breakeven Quantity Example

Copyright © 2004 South-Western. All rights reserved.12–16 Promotional Plan (Will go over next time) MediaCostFrequencyTotal per year Business Cards Signage Advertising Special Events Sales Promos Other TOTAL (Divide by 12 for monthly)

Copyright © 2004 South-Western. All rights reserved.12–17 Type of MediaCost Per Placement TV – Prime Time - NBC, ABC, CBS$250,000 per 30 seconds TV – Non-Prime Time - NBC, ABC, CBS$75,000 per 30 seconds TV – Prime Time - Cable$100,000 per 30 seconds TV – Non-Prime Time - Cable$15,000 per 30 seconds Regional Newspaper – e.g., Oregonian$50 per day National Newspaper – e.g, New York Times$100 per day Magazine – Local Circulation$35 per day Magazine – National Circulation$100 per day Billboard - Downtown$500 per month Billboard - Freeway$750 per month Pamphlet/Flyer$2.50 per flyer Sidewalk Placard$500 Radio – Premium Station$1000 per 30 seconds Radio – Non-premium Station$500 per 30 seconds

Copyright © 2004 South-Western. All rights reserved.12–18 Next Time Read chapter 13 AND 14 (Both next class – TWO quizzes) In text study guide Meet with group