Business Copyright 2005 Prentice- Hall, Inc. 11-1
11-2 Chapter 11 Developing And Pricing Products
Business Copyright 2005 Prentice- Hall, Inc Chapter Outline What Is A Product? What Is A Product? Developing New Products Developing New Products Identifying Products Identifying Products Determining Prices Determining Prices Pricing Strategies & Tactics Pricing Strategies & Tactics
Business Copyright 2005 Prentice- Hall, Inc Product? Value PackageValue Package FeaturesFeatures –Tangible –Intangible Warranty
Business Copyright 2005 Prentice- Hall, Inc Goods/Services- Classification ConsumerConsumer IndustrialIndustrial
Business Copyright 2005 Prentice- Hall, Inc Consumer Products Convenience- Rapidly ConsumedConvenience- Rapidly Consumed ShoppingShopping –Moderately Priced –Infrequent Purchase SpecialtySpecialty –Expensive –Rarely Purchased
Business Copyright 2005 Prentice- Hall, Inc Online Shopping In $ Billon Source: VeriSign “VeriSign Reports $8.8 Billion in Onlines Purchases During the 2004 Holiday Shopping Season”, inc/news-and-events/news-archive/us-news-2004/index.html Thanksgiving - Christmas
Business Copyright 2005 Prentice- Hall, Inc Average Online Transaction Size (Thanksgiving – Christmas) Source: VeriSign “VeriSign Reports $8.8 Billion in Onlines Purchases During the 2004 Holiday Shopping Season”, inc/news-and-events/news-archive/us-news-2004/index.html
Business Copyright 2005 Prentice- Hall, Inc Industrial Products Expense ItemsExpense Items –Regularly Purchased –Consumed Rapidly Capital ItemsCapital Items –Expensive –Long-lasting –Infrequently Purchased
Business Copyright 2005 Prentice- Hall, Inc Product Mix Product LineProduct Line –Similar Products –Similar Buyers –Similar Use SingleSingle Multiple/DiversifiedMultiple/Diversified
Business Copyright 2005 Prentice- Hall, Inc Product Mix- Minute Maid
Business Copyright 2005 Prentice- Hall, Inc New Product Development Product Mortality- Failure Or ObsolescenceProduct Mortality- Failure Or Obsolescence Speed To Market- Market ChangesSpeed To Market- Market Changes
Business Copyright 2005 Prentice- Hall, Inc New Product Development Process Product Ideas Screening Concept Testing Business Analysis Prototype Testing & Marketing Commercialization
Business Copyright 2005 Prentice- Hall, Inc Services Process Variations Service Package- Tangible & Intangible FeaturesService Package- Tangible & Intangible Features Service Process DesignService Process Design –Process Selection –Worker Requirements –Facility Requirements
Business Copyright 2005 Prentice- Hall, Inc Product Life Cycle
Business Copyright 2005 Prentice- Hall, Inc Stages Of Product Life Cycle Introduction- New ProductIntroduction- New Product GrowthGrowth –Consumers Attracted –Sales Climb Maturity- Sales Level-OffMaturity- Sales Level-Off DeclineDecline –Other Competing New Products Introduced –Sales & Profits Decline
Business Copyright 2005 Prentice- Hall, Inc Alternatives To New Products ExtensionExtension AdaptationAdaptation ReintroductionReintroduction
Business Copyright 2005 Prentice- Hall, Inc Identifying Products BrandingBranding PackagingPackaging LabelingLabeling
Business Copyright 2005 Prentice- Hall, Inc Product Branding Adding ValueAdding Value –Brand Equity –Brand Awareness E-BusinessE-Business Types Of Brand NamesTypes Of Brand Names –National –Licensed –Private
Business Copyright 2005 Prentice- Hall, Inc World’s 10 Most Valuable Brands
Business Copyright 2005 Prentice- Hall, Inc Pricing Objectives Profit-MaximizingProfit-Maximizing E-BusinessE-Business Market-ShareMarket-Share
Business Copyright 2005 Prentice- Hall, Inc Cost-Oriented Pricing ComponentsComponents –Markup $ –Markup % –Sales Price
Business Copyright 2005 Prentice- Hall, Inc Breakeven Analysis Components Variable CostVariable Cost Fixed CostFixed Cost Breakeven PointBreakeven Point
Business Copyright 2005 Prentice- Hall, Inc Breakeven Analysis
Business Copyright 2005 Prentice- Hall, Inc Pricing Existing Products Relative To Current Market Prices For Similar ProductsRelative To Current Market Prices For Similar Products Current MarketCurrent Market –Above –Below –At/Near
Business Copyright 2005 Prentice- Hall, Inc New Product Pricing Price SkimmingPrice Skimming Market PenetrationMarket Penetration
Business Copyright 2005 Prentice- Hall, Inc E-Business Pricing Fixed- Most CommonFixed- Most Common Dynamic- Available Information Forces Constant Price AdjustmentDynamic- Available Information Forces Constant Price Adjustment
Business Copyright 2005 Prentice- Hall, Inc Pricing Tactics Price LiningPrice Lining Psychological- Odd/EvenPsychological- Odd/Even DiscountingDiscounting
Business Copyright 2005 Prentice- Hall, Inc International Pricing Determine What Market Will BearDetermine What Market Will Bear Post-Purchase- Encourage To Trade Up As Personal Economics AllowPost-Purchase- Encourage To Trade Up As Personal Economics Allow DumpingDumping