2. Product Design Pricing and Strategies 2

3. Product Defined product item A specific model of athletic shoe would be called a product item. product item specific model or size of a product 3 The entire group of a manufacturer’s athletic shoes would be called a product line.

4. Product Life Cycle The four stages in the product life cycle are: 4 Introduction GrowthMaturity Decline Product Life Cycle Not all products fit the life-cycle pattern.

5. Management of the Product Life Cycle The three ways to manage the product life cycle are: repositioning changing a product’s image in relation to a competitor’s image 5 Modifying the product. Marketing the product. Repositioning Repositioning the product.

6. Pricing Price Price is important in a business because it helps determine a company’s profit or loss. 6 price the value placed on goods or services being exchanged Price plays a significant role in the marketing mix.

7. Determining Profit 7 1,000 baseball bats sold $175 each $175,000 revenue = - $90,000 to purchase the bats $90 each - $60,000 in business expenses = $25,000 Profit Subtract the cost of goods sold and the company’s expenses from the money it generated in sales revenue.

8. Pricing Considerations and Strategies Three types of pricing strategies are: 8 prestige pricing pricing based on consumer perception Prestige pricing Odd-even pricing Target pricing odd-even pricing pricing goods with either an odd number or even number to match a product’s image target pricing pricing goods according to what the customer is willing to pay

9. Price Adjustments and Regulations Manufacturers will offer discounts in the following situations: 9 Buying in large quantities Buying prior to the buying season Allowances are reductions taken from the quoted price. One type of allowance is a trade-in.

10. Price Adjustments and Regulations price fixing The Sherman Anti-Trust Act prohibits price fixing and predatory pricing. 10 price fixing an illegal practice whereby competitors conspire to set the same price Price discrimination was originally prohibited by the Clayton Act and later by the Robinson-Patman Act.