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Chapter. Developing and Pricing Products and Services. 14. 14- 1. Best Product Innovation of ALL Time. % of Consumers’ Choice. Source: American Demographics. Product Development & Value Package. Value- Total Product Offer Product Line Product Mix Product Differentiation.

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  1. Chapter Developing and Pricing Products and Services 14 14-1

  2. Best ProductInnovation of ALL Time % of Consumers’ Choice Source:American Demographics

  3. Product Development& Value Package • Value- Total Product Offer • Product Line • Product Mix • Product Differentiation

  4. How Six ProductsWere First Marketed

  5. Theme parks & resorts ABC Television Network TV & radio stations Film studios & production Video programs & licensing Consumer products Publishing Mickey Mouse’sProduct Mix

  6. Marketing Classesof Goods & Services • Consumer • Convenience • Shopping • Specialty • Unsought • Industrial

  7. Packaging • Protect • Attract • Describe • Explain • Warranties • Price, Value, Uses

  8. Brand & Trademark Categories Manufacturers’ Knockoff Dealer/Private Generic Equity Loyalty Awareness Association Branding

  9. Most PowerfulInternet Brands Source: Business 2.0, July 2002, p. 86.

  10. Brands ConsumersConsider Most Reliable • CRAFTSMAN TOOLS • WATERFORD CRYSTAL • ROLL-ROYCE MOTOR CARS • DISCOVERY CHANNEL • WD-40 LUBRICANT • BOSE STEREO/SPEAKER SYSTEMS • CRAYOLA CRAYONS/MARKERS • HERSHEY KISSES

  11. A Good Brand Name... • Speaks directly to product’s target customers • Attracts/motivates consumers to try it • Is memorable/sticks in customers’ minds • Is distinctive enough to protect it legally

  12. Juicy Fruit with Lemon Lime Lemon Merengue Cream Wizard Wintergreen Crow Clove Kentucky No Nip Cherry Julep Satan’s Punch Green Tangerine Sourer Key Lime Cream Soft Drink BrandsThat Didn’t Make It Source: St. Louis Post-Dispatch

  13. Renaming Brands OLD NAMENEW NAME BELL ATLANTIC VERIZON BELL SOUTH CINGULAR AMERICAN BRANDS FORTUNE BRANDS CIBA NOVARTIS VALUJET AIR TRON Source: Forbes Magazine, December 21, 2002

  14. First Products Producedby Five Major Companies Hershey Caramels Amway No-rinse car wash Heinz Horseradish Avon Little Dot perfume set 3M Sandpaper Source: World Features Syndicate

  15. New-Product Development Idea Generation Screening Analysis Development Testing Commercialize

  16. Sales & Profits During the PLC

  17. Objectives ROI Traffic Market Share Sales Image Social Cost-Based Value- Service Break-Even Fixed Cost Variable Cost Strategies Skim Penetration EDLP High-Low Market Forces Pricing

  18. What They CostWhen First Introduced 1927 Transatlantic Call $ 75/3 min. 1947 Microwave Oven $ 3,000 1964 FAX unit rental $ 850/month 1970 Pocket Calculator $ 150 1974 VCR Tape $ 50 Source: World Features Syndicate

  19. Breakeven Chart Total Revenue or Total Cost Number of Units

  20. Pricing UsingBreakeven Analysis Problem Should we charge $2 or $3 per box? Costs Total Fixed Costs $400,000 Variable Cost $ 1 per box Market Research Forecast Company can sell: 290,000 boxes at $2 @ 210,000 boxes at $3 @ Breakeven point = total fixed cost price - variable cost (per unit) (per unit) $2 price = $400,000 = 400,000 units to breakeven $2 - $1 $3 price = $400,000 = 200,000 units to breakeven $3 - $1 Breakeven Analysis

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