CHAPTER 5: PRODUCT AND PRICE DECISIONS-SPORTS

I. PRODUCT DEFINED A PRODUCT CAN BE TANGIBLE (BASEBALL BAT-GOOD) OR INTANGIBLE (WATCHING A SPORTING EVENT-SERVICE)

A. PRODUCT LINE VS. PRODUCT ITEM ITEM-SPECIFIC MODEL-NIKE SHOE LINE-CLOSELY RELATED PRODUCTS SOLD BY A COMPANY –NIKE HAS 3: -ATHLETIC CLOTHING -ATHLETIC FOOTWEAR -ATHLETIC EQUIPMENT

B. PRODUCT CLASSIFICATIONS- CONSUMER VS. BUSINESS GOODS

C. POINT OF DIFFERENCE- UNIQUE PRODUCT CHARACTERISTIC THAT MAKES A PRODUCT STAND OUT AGAINST OTHERS. (BASEBALL TEAM THAT WON WORLD SERIES, NIKE W/ IPOD)

II. STEPS IN NEW PRODUCT DEVELOPMENT TYPICALLY 7 STEPS IN DEVELOPING A NEW PRODUCT:

A. STEP 1- SWOT ANALYSIS -STRENGTHS -WEAKNESSES -OPPORTUNITIES -THREATS

B. IDEA GENERATION- THESE CAN COME FROM A VARIETY OF SOURCES: -RESEARCH -EMPLOYERS -CONSUMERS -COMPETITORS

C. SCREENING & EVALUATION- CAN THE COMPANY ACTUALLY MAKE AND SELL THE PRODUCT? FOCUS GROUPS

D. BUSINESS ANALYSIS- FINANCIAL ASPECT-BUSINESS PLAN

E. DEVELOPMENT- MAKING THE ACTUAL PRODUCT OR A PROTOTYPE OF THE PRODUCT

F. TEST MARKETING- OFFERING THE PRODUCT FOR SALE IN SMALL AREAS OR POSSIBLY FREE SAMPLES TO CONSUMERS MOVIES

G. COMMERCIALIZATION- USE OF 5 P’S AND MARKETING TO TARGET CONSUMERS http://www.youtube.com/watch?v=xffOCZYX6F8 http://www.youtube.com/watch?v=6CbQOLqZ8IA

III. PRODUCT LIFE CYCLE THIS REPRESENTS THE STAGES THAT A PRODUCT GOES THROUGH DURING ITS LIFE IN THE MARKETPLACE. THERE ARE 5 STAGES:

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A. INTRODUCTION- MOST $$$ SPENT FOR RESEARCH, DEVELOPMENT, MARKETING HIGH FAILURE RATE EDUCATING CONSUMERS (GATORADE)

B. GROWTH- COMPETITORS BEGIN ENTERING THE MARKET IF PRODUCT IS SUCCESSFUL - POWERADE DISTRIBUTION BECOMES GREATER

C. MATURITY- SALES BEGIN TO SLOW DOWN AND CHANGES MAY BE MADE TO A PRODUCT TO KEEP IT IN CIRCULATION APPLE IPHONE IS ENTERING INTO THIS PHASE TWO PLACES TO GO FROM HERE…

D. RENEWAL - PRODUCT IS ABLE TO SAVE OR RE-INVENT IPHONE – NEW MODELS, NEW FEATURES, NEW APPS, IWATCH, GLASSES?

E. DECLINE- PROFITS BEGIN TO DROP AND PRODUCT MAY BE DROPPED TOTALLY

IV. MANAGEMENT OF THE PRODUCT LIFE CYCLE PRODUCT MANAGERS NEED TO MANAGE A PRODUCT THROUGH ITS LIFE CYCLE. THIS IS DONE IN THREE WAYS:

A. PRODUCT MODIFICATON- CHANGING CHARACTERISTICS, FEATURES AND/OR APPEARANCE. GATORADE OFFERED-FIERCE, FROST, ICE, XTREMO

B. MARKET MODIFICATION- FINDING NEW WAYS TO FIND NEW CUSTOMERS OR ENCOURAGE CURRENT CUSTOMERS TO BUY MORE

C. REPOSITIONING- CHANGING A PRODUCTS IMAGE IN RELATION TO COMPETITION C. REPOSITIONING- CHANGING A PRODUCTS IMAGE IN RELATION TO COMPETITION. NEW BALANCE MARKETING TO PODIATRISTS

V. PRICING HOW MUCH WILL SOMEONE PAY FOR SOMETHING? THAT IS THE MILLION DOLLAR QUESTION!!!

A. PRICING AND PROFIT- PRICE MUST BE SET TO MAKE A PROFIT AND COVER OVERHEAD

B. PRICING AND THE MARKETING MIX PRICE MUST BE SET FOR THE CORRECT TARGET MARKET. ROAD BIKES

VI. PRICING CONSIDERATIONS FIVE PRIMARY FACTORS AFFECT PRICING DECISIONS:

A. CONSUMER PERCEPTIONS- -PRESTIGE PRICING -ODD-EVEN PRICING -TARGET PRICING

B. DEMAND- SUPPLY VS. DEMAND HIGHER DEMAND (SHORTAGE) = HIGHER PRICE HIGHER SUPPLY (SURPLUS) = LOWER PRICE

C. COST- MUST PRICE HIGH ENOUGH TO COVER COST TO MAKE PROFIT (COST-PLUS PRICING)

D. NEWNESS OF PRODUCT- PRICE MAY BE SET SUBSTANTIALLY HIGHER IN THE BEGINNING OF A PRODUCTS LIFE BUT LOWER THRU GROWTH AND DECLINE

E. COMPETITION THEY MAY LOWER OR RAISE THE PRICE TO COMPETE WITH COMPETITION.

VII. PRICING STRATEGIES BUNDLE PRICING-4 FOR 5.00 LOSS LEADER PRICING-AT OR BELOW COST TO GET CUSTOMERS IN (ILLEGAL) YIELD-MANAGEMENT PRICING-ITEMS AT DIFFERENT PRICES (STADIUMS) PRICE LINING-SELLING ALL GOODS IN A LINE AT SPECIFIC PRICE PTS.