Product Management and Pricing Michael F Smith

“…position your brand for future growth by being a beacon that reflects aspirations vs. a spotlight that simply confirms realities.” Rose Cameron

Product Development “...there is the common sin of slaughtering tomorrow’s opportunity at the altar of yesterday. It is the sin that underlies the decline of IBM.” (mainframes versus personal computers) Drucker

Relevance?

Guest Speaker Joshua Palau, Sr. Director Digital Innovation and Social Media, Johnson & Johnson Personal statement: Over the past 18 years I’ve worked extensively in the digital space on the publisher, agency, and client side. During that time I've been fortunate to work for and on some of the largest and most recognized brands. This experience has given me the ability to innovate, execute and drive results in organizations of all sizes. I have significant experience with Search, Display, Mobile, Social Media, Content Marketing, Analytics, Website Optimization, Personalization, Usability, and Sales Path Conversion. I have developed a reputation as a trusted advisor who is able to identify and solve problems as well as simplify digital to all levels of an organization.

New Product Development www.learnmarketing.net

Diffusion

Product Life Cycle

REFLECTION: Product Management Relationship development versus transaction execution Off the shelf, mass customization, customization

REFLECTION: HBS Case Hulu Hulu • Define Hulu’s brand positioning strategy based on its value proposition. • Describe how cordcutting from cable companies can benefit Hulu. • What impact does or would a la carte packages from cable providers have on Hulu? • Identify Hulu’s major competitors and also identify potential consumer bundle complements. • What company would identify Hulu as an attractive acquisition? Why?

Pricing Overview

Pricing Concepts Cost oriented versus demand oriented (or both) Price as information. Seller’s “price” is an offer. Perception and Positioning Discrimination and dynamic pricing Customer and product form Elasticity Importance of price Market structure and pricing flexibility Price promotions Price transparency Competitive advantage

REFLECTION: HBS Uber Uber Pricing Strategies and Marketing Communications • Describe Uber’s product mix and evaluate the role of Uber’s pricing strategy in its value proposition. • What are other key value drivers that complement pricing? • What is the greatest threat to Uber’s business model? Is the primary threat from existing taxi/limousine business models or a new model?

Factors Affecting Consumer Price Sensitivity Perceived Substitutes Effect: as substitutes increase, sensitivity to price increases. Unique Value Effect: buyers are less price sensitive to a product’s price the more they value any unique attributes that differentiate it. Switching Cost Effect: buyers are less sensitive to the price of a product the greater the added cost of switching suppliers.

Difficult Comparison Effect: Buyers are less sensitive to a product’s price when comparison of competing offers is difficult. Price-Quality Effect: buyers less price sensitive to product’s price where higher price signals higher quality. Effect is magnified when consequences of obtaining lower quality are greater. Expenditure Effect: more price sensitive when expenditure is larger.

End-Benefit Effect: more price sensitive when they are more sensitive to the cost of the end-benefit to which it contributes and when the product’s price accounts for a large share of the total cost of the end- benefit. Shared Cost Effect: less price sensitive the smaller portion of the price they actually pay.

Fairness Effect: more sensitive to a product’s price when it is outside the range that they perceive as fair or reasonable given purchase context. Inventory Effect: more price sensitive in the short run when they can hold inventories of a product and believe that the current price is temporarily lower or higher than the future price.