PRIDE HUGHES KAPOOR INTRODUCTION TO BUSINESS ELEVENTH EDITION Chapter Fifteen Creating and Pricing Products That Satisfy Customers 15 | 1
Learning Objectives • Explain what a product is and how products are classified • Discuss the product life cycle and how it leads to new product development • Define product line and product mix and distinguish between the two • Identify the methods available for changing a product mix • Explain the uses and importance of branding, packaging, and labeling 15 | 2
Learning Objectives (cont’d) • Describe the economic basis of pricing and the means by which sellers can control prices and buyers’ perceptions of prices • Identify the major pricing objectives used by businesses • Examine the three major pricing methods that firms employ • Explain the different strategies available to companies for setting prices • Describe three major types of pricing associated with business products 15 | 3
Classification of Products • Define • Product • Know the difference between a Consumer Product and a Business (Industrial) Product • ConvenienceProduct • ShoppingProduct • Specialty Product • RawMaterial 15 | 4
Business Product Classifications (cont’d) • Define • Major Equipment • Accessory Equipment • Component Part • Process Material • Supply • Business Service 15 | 5
The Product Life Cycle • Be able to explain the Product Life Cycle • Know the stages • Introduction • Growth • Maturity • Decline • Be able to explain what happens to sales and profits at each stage • Why is it important that marketers understand the product life cycle? 15 | 6
Product Line and Product Mix • Define • Product Line • Product Mix • Be able to explain the width and depth of the mix 15 | 7
Managing the Product Mix • Be able to discuss how firms manage existing products • Product Modification • Line Extensions • Deleting Products • Be familiar with the seven phases of New Product Development • Idea development • Screening • Concept testing • Business analysis • Product development • Test marketing • Commercialization 15 | 8
Why Do Products Fail? • Be prepared to discuss the reasons why products fail • Improperly/Incompletely planned and tested • Commercialization launched too quickly • Pushing ahead even when flaws are known • Inadequate financing • Be able to think of some prominent product failures 15 | 9
Branding • Define • Brand • Brand Name • Brand Mark • Trademark • Trade Name • Know the different Types of Brands • Manufacturer (Producer) Brand • Store (Private) Brand • Generic 15 | 10
Benefits of Branding • Be able to discuss the various Benefits of Branding • Define • Brand Loyalty • Brand Equity • What criteria should a firm consider when Choosing a Brand? • What steps must a firm take to Protect a Brand? 15 | 11
Branding Strategies • Know the different Branding Strategies • Individual Branding • Family Branding • Brand Extensions • What are the advantages and drawbacks of each of these strategies? 15 | 12
Packaging • Define Packaging • Know the Functions of Packaging • What are the principle Design Considerations? 15 | 13
Labeling • Define Labeling • What information mustbe included on a product’s label? • What elements might be included on a label? • What is an Express Warranty? 15 | 14
Pricing Products • What is the meaning and use of price? • Define • Supply • Demand • Equilibrium Price • How does Supply and Demand affect prices? • Be familiar with Supply and Demand Curves and how to determine the Equilibrium Price 15 | 15
Pricing Objectives and Methods • Define • Price Competition • Non-Price Competition • Be prepared to discuss Buyers’ Perceptions of Price • Be able to define the following terms related to Pricing Objectives • Survival • Profit Maximization • Target Return on Investment (ROI) • Market-Share Goals • Status Quo Pricing 15 | 16
Breakeven Analysis • Understand Breakeven Analysis and the variables used to calculate it • Breakeven Quantity • Total Revenue • Fixed Cost • Variable Cost • Total Cost • Be able to read a table displaying the breakeven point 15 | 17
Pricing Methods • Define • Cost-Based Pricing • Demand-Based Pricing • Price Differentiation • Competition-Based Pricing • When are each of these pricing methods used? • What are the benefits and drawbacks of each of these pricing methods? 15 | 18
Pricing Strategies • Be familiar with the different types of Pricing Strategies • New-Product Strategies • Price Skimming • Penetration Pricing • Differential Pricing • Negotiated Pricing • Secondary-Market Pricing • Periodic Discounting • Random Discounting 15 | 19
Pricing Strategies (cont’d) • Psychological Pricing • Odd-Number Pricing • Multiple-Unit Pricing • Reference Pricing • Bundle Pricing • Everyday Low Prices (EDLPs) • Customary Pricing • Product-Line Pricing • Captive Pricing • Premium Pricing • Price Lining 15 | 20
Pricing Strategies (cont’d) • Promotional Pricing • Price Leaders • Special-Event Pricing • Comparison Discounting • Geographic Pricing • Deals with Delivery Costs • FOB (Free-on-Board) Origin Pricing • FOB Destination Pricing • Transfer Pricing • Discounting 15 | 21
Discounts Used for Business Markets • Be able to list and describe discounts used exclusively for business markets • Trade (Functional) • Quantity • Seasonal • Allowance 15 | 22
