1. Business Copyright 2005 Prentice- Hall, Inc. 11-1

2. 11-2 Chapter 11 Developing And Pricing Products

3. Business Copyright 2005 Prentice- Hall, Inc. 11-3 Chapter Outline What Is A Product? What Is A Product? Developing New Products Developing New Products Identifying Products Identifying Products Determining Prices Determining Prices Pricing Strategies & Tactics Pricing Strategies & Tactics

4. Business Copyright 2005 Prentice- Hall, Inc. 11-4 Product? Value PackageValue Package FeaturesFeatures –Tangible –Intangible Warranty

5. Business Copyright 2005 Prentice- Hall, Inc. 11-5 Goods/Services- Classification ConsumerConsumer IndustrialIndustrial

6. Business Copyright 2005 Prentice- Hall, Inc. 11-6 Consumer Products Convenience- Rapidly ConsumedConvenience- Rapidly Consumed ShoppingShopping –Moderately Priced –Infrequent Purchase SpecialtySpecialty –Expensive –Rarely Purchased

7. Business Copyright 2005 Prentice- Hall, Inc. 11-7 Online Shopping In $ Billon Source: VeriSign “VeriSign Reports $8.8 Billion in Onlines Purchases During the 2004 Holiday Shopping Season”, http://www.verisign.com/verisign- inc/news-and-events/news-archive/us-news-2004/index.html Thanksgiving - Christmas

8. Business Copyright 2005 Prentice- Hall, Inc. 11-8 Average Online Transaction Size (Thanksgiving – Christmas) Source: VeriSign “VeriSign Reports $8.8 Billion in Onlines Purchases During the 2004 Holiday Shopping Season”, http://www.verisign.com/verisign- inc/news-and-events/news-archive/us-news-2004/index.html

9. Business Copyright 2005 Prentice- Hall, Inc. 11-9 Industrial Products Expense ItemsExpense Items –Regularly Purchased –Consumed Rapidly Capital ItemsCapital Items –Expensive –Long-lasting –Infrequently Purchased

10. Business Copyright 2005 Prentice- Hall, Inc. 11-10 Product Mix Product LineProduct Line –Similar Products –Similar Buyers –Similar Use SingleSingle Multiple/DiversifiedMultiple/Diversified

11. Business Copyright 2005 Prentice- Hall, Inc. 11-11 Product Mix- Minute Maid

12. Business Copyright 2005 Prentice- Hall, Inc. 11-12 New Product Development Product Mortality- Failure Or ObsolescenceProduct Mortality- Failure Or Obsolescence Speed To Market- Market ChangesSpeed To Market- Market Changes

13. Business Copyright 2005 Prentice- Hall, Inc. 11-13 New Product Development Process Product Ideas Screening Concept Testing Business Analysis Prototype Testing & Marketing Commercialization

14. Business Copyright 2005 Prentice- Hall, Inc. 11-14 Services Process Variations Service Package- Tangible & Intangible FeaturesService Package- Tangible & Intangible Features Service Process DesignService Process Design –Process Selection –Worker Requirements –Facility Requirements

15. Business Copyright 2005 Prentice- Hall, Inc. 11-15 Product Life Cycle

16. Business Copyright 2005 Prentice- Hall, Inc. 11-16 Stages Of Product Life Cycle Introduction- New ProductIntroduction- New Product GrowthGrowth –Consumers Attracted –Sales Climb Maturity- Sales Level-OffMaturity- Sales Level-Off DeclineDecline –Other Competing New Products Introduced –Sales & Profits Decline

17. Business Copyright 2005 Prentice- Hall, Inc. 11-17 Alternatives To New Products ExtensionExtension AdaptationAdaptation ReintroductionReintroduction

18. Business Copyright 2005 Prentice- Hall, Inc. 11-18 Identifying Products BrandingBranding PackagingPackaging LabelingLabeling

19. Business Copyright 2005 Prentice- Hall, Inc. 11-19 Product Branding Adding ValueAdding Value –Brand Equity –Brand Awareness E-BusinessE-Business Types Of Brand NamesTypes Of Brand Names –National –Licensed –Private

20. Business Copyright 2005 Prentice- Hall, Inc. 11-20 World’s 10 Most Valuable Brands

21. Business Copyright 2005 Prentice- Hall, Inc. 11-21 Pricing Objectives Profit-MaximizingProfit-Maximizing E-BusinessE-Business Market-ShareMarket-Share

22. Business Copyright 2005 Prentice- Hall, Inc. 11-22 Cost-Oriented Pricing ComponentsComponents –Markup $ –Markup % –Sales Price

23. Business Copyright 2005 Prentice- Hall, Inc. 11-23 Breakeven Analysis Components Variable CostVariable Cost Fixed CostFixed Cost Breakeven PointBreakeven Point

24. Business Copyright 2005 Prentice- Hall, Inc. 11-24 Breakeven Analysis

25. Business Copyright 2005 Prentice- Hall, Inc. 11-25 Pricing Existing Products Relative To Current Market Prices For Similar ProductsRelative To Current Market Prices For Similar Products Current MarketCurrent Market –Above –Below –At/Near

26. Business Copyright 2005 Prentice- Hall, Inc. 11-26 New Product Pricing Price SkimmingPrice Skimming Market PenetrationMarket Penetration

27. Business Copyright 2005 Prentice- Hall, Inc. 11-27 E-Business Pricing Fixed- Most CommonFixed- Most Common Dynamic- Available Information Forces Constant Price AdjustmentDynamic- Available Information Forces Constant Price Adjustment

28. Business Copyright 2005 Prentice- Hall, Inc. 11-28 Pricing Tactics Price LiningPrice Lining Psychological- Odd/EvenPsychological- Odd/Even DiscountingDiscounting

29. Business Copyright 2005 Prentice- Hall, Inc. 11-29 International Pricing Determine What Market Will BearDetermine What Market Will Bear Post-Purchase- Encourage To Trade Up As Personal Economics AllowPost-Purchase- Encourage To Trade Up As Personal Economics Allow DumpingDumping