PROJECT BREAKOUT

Project Activity #7: Design your product. Establish your pricing model. After working on this for a full semester, you’ve researched your target market, developed a value proposition that resonates with their needs, assessed competition to establish a brand position, evaluated how your technology enhances the customer journey and your prospective clients marketing communications plan, and this week, you’ll work on the product features that your AR solution will offer. You’ve developed a customer segmentation strategy, a value proposition, and brand positioning. Use those as the foundation to build your AR product, so that it fulfills the value proposition without including unnecessary features. Build the Product What is the core benefit required to compete in your category? What is the basic product? What is expected product? Is it necessary to offer an augmented product? What potential does the product have for the future.

Project Activity #7: Design your product. Establish your pricing model. Set your pricing model. Which of the three pricing models will you use? Why are you choosing that particular model? With the model selected, describe your process of establishing your price. What information will you need to gather? How will your sales efforts and marketing promotions impact your pricing ability? Are there opportunities to use collaborative pricing or dynamic pricing models? It’s not likely that you’ll have time to cover all of this in-depth. As you progress on the project, please use this – and other activities – as guides to help you work through the project requirements.

FIRMS DEVELOP PRODUCTS TO ALIGN VALUE PROPOSITION, BRAND POSTION, & PRICE. BASIC Basic requirements for participating in the category EXPECTED The basic requirement and the minimum that the customer expects in the category AUGMENTED Includes value-enhancing features that differentiate the product from others POTENTIAL Includes all possible augmentations & additions that cover “everything that might be done to attract and hold customers”

OPPORTUNITIES TO DIFFERENTIATE PRODUCTS. Product Characteristics Design Form Features Customization Performance Conformance Durability Reliability Repairability Style Added Services Ordering ease Delivery Installation Customer training Customer consulting Maintenance and repair Returns Firms differentiate product characteristics in a number of ways: DESIGN: it refers to the totality of features that affects how a product looks, feels, and functions to a consumer. It appeals to a customer’s rational and emotional side. Form: Size, shape, physical structure Features: Supplement the basic function Customization: Mass customization is the firm’s ability to customize a product for each customer (Levi’s) Performance: The level at which a product’s characteristics operate (low, average, high, superior). - Appliances, cars Conformance: Degree to which all units are identical and meet product specifications. Durability: Measure of the product’s operating life. Reliability: The probability that a product will fail within a certain timeframe. Buyers will pay more for more reliable products. Repairability: The measure of the product’s ability to be fixed. Style: The product’s look feel. (Apparel). When products are difficult to differentiate, firms may add services to differentiate from the market. Ordering Ease: How is it to order with the firm? Delivery: How well the product or service is brought to the customer. Installation: How is the product made operational in its final location? Customer Training: Helps the customer use the product properly. (GE trains hospital employees on equipment). Consulting: Providing advice to customers – IBM, Oracle, etc. Maintenance & Repair: Helps customers keep products working. Returns: Simplify the returns process.2

FIRMS USE 3 MAIN PRICING STRATEGIES. Value-based Cost-oriented Competition Value-based pricing: The price is based on the customer’s PERCEIVED VALUE of the product. Cost-oriented pricing: The price is a percentage markup over the product/service cost. Competition-based pricing: Aligned with competition.