Lecture 9 Procuring a Product , Packaging a Product , and Pricing a Product Dr. Hatem Elaydi ECOM 5368 Engineering Management (Entrepreneurship & ework) Islamic University of Gaza Oct 1, 2016

Procuring a Product Can it be purchased or do we have to make it? If you can buy the parts (high quality) at reasonable prices, you should purchase rather than manufacture. On-site manufacturing requires time and money to: Obtain equipment, Create manufacturing processes, Hire and train a labour force, Supervise production. Can a subcontractor do it? Do you have to produce it yourself? Dr. Hatem Elaydi, IUG, Fall 2016, Entrepreneurship

Procurement Set the requirements to purchase all the material items, standard catalogue parts, unique piece parts and assemblies. Create a system that can track the flow of materials, parts, costs, delivery dates and more. Choosing Suppliers Prepare a request for a quotation and send one to all likely candidates. Compare all aspects of the returned quotations -- pricing, payment terms, delivery capability, discounts, product quality, etc. Obtain the names of companies the supplier has sold to and check with them about this particular potential supplier. It is ideal to have two or three suppliers for all materials and parts. Dr. Hatem Elaydi, IUG, Fall 2016, Entrepreneurship

Packaging a Product Factors that should be considered when packaging a product include: Size Colour Cost Graphics Physical structure Copy Legal requirements Image Product name Dr. Hatem Elaydi, IUG, Fall 2016, Entrepreneurship

Packaging a Product 2 Physical Structure: package be made of: Wood? Plastic? Fabric? Cardboard? Blister Pack? Box? Bag? Copy: "Copy" is the typography and writing on the package. It includes:- . Company trademark Positioning statement Advertising message Ingredients, measures, contents, etc. Packaging options: Paper bags, folded and decorated with product logo Cloth bags Fabric wrap, secured with ribbon Glass jars with fabric decor Dr. Hatem Elaydi, IUG, Fall 2016, Entrepreneurship

Pricing a Product Four steps pricing policy: First, you should define your pricing objectives. Do you want to increase or maintain your market share? Is an increased return on investments important? Do you want to prevent competition? Second, you should create price ranges. (break-even point, Profit goals should also be studied) Third, you should know the competition. What the competition does, and where your product stands in relation to the competition. Dr. Hatem Elaydi, IUG, Fall 2016, Entrepreneurship

Pricing a Product 2 Fourth, you should choose a suitable pricing strategy. For instance, an airline company might base its prices on a flight's full capacity. Other industries set prices by first determining the margin of profit they want to make. A third way to set price is called "value pricing". Here are three additional ways to price your product or service: Competitive pricing Skimming pricing Penetration pricing Dr. Hatem Elaydi, IUG, Fall 2016, Entrepreneurship

Pricing a Product 3 Competitive Pricing: Your price is fairly comparable to the competition. Skimming Pricing: You initially set a higher price to recoup things such as research and development costs, higher initial promotional costs and opportunity costs. Prices can then be lowered in the future, to make them more competitive. Penetration Pricing: You set at a lower level to attract customers. Dr. Hatem Elaydi, IUG, Fall 2016, Entrepreneurship

Dr. Hatem Elaydi, IUG, Fall 2016, Entrepreneurship