1. Creating and Pricing Products that Satisfy Customers
Chapter Fourteen
Creating and Pricing Products that Satisfy Customers

2. Classification of Products
Everything, both favorable and unfavorable, one receives in an exchange. Can be a good or service
Consumer product
A product purchased to satisfy personal and family needs-grouped by how shop for them
Business (industrial) product
A product bought for resale, for making other products, or for use in a firm’s operations-grouped by what you use them for
Many products can be both

3. Consumer Product Classifications
Convenience
Product
Shopping
Specialty
Unsought
A relatively inexpensive item that merits little shopping effort.
A product that requires comparison shopping, because it is usually more expensive and found in fewer stores.
A particular item that consumers
search extensively for and are reluctant to accept substitutes.
A product unknown to the potential buyer or a known product that the buyer does not actively seek.

4. Business Product Classifications
Major Equipment-machines & vehicles-custom made
Accessory Equipment-drills copiers
Raw Materials-no processing - oil, fish, trees
Component Parts-identifiable in final
product-bolts, tires
Processed Materials- not identifiable in
final product - plastic, sugar
Supplies-not in final product-pens, lube oil
Business Services-legal, maintenance

5. The Product Life Cycle
A series of stages in which a product’s sales revenue and profit increase, reach a peak, then decline
Introduction
Customer awareness and acceptance are low
Growth
Sales increase rapidly as the product becomes
well known
Maturity
Sales still increasing but at a slower rate and
profits begin to decline. later in this stage,
sales peak
Decline stage
Sales volume decreases sharply and profits
continue to fall

6. Product Life Cycle Sales Growth Stage Maturity Stage Decline Stage
Introductory
Stage
Growth
Stage
Maturity
Stage
Decline
Stage
Sales
Profits
Dollars
Time

7. Using the Product Life Cycle
The stage of the product life cycle affects the marketing strategy for a product
Introduction
Make potential customers aware of product
Growth
strengthen product position by encouraging brand loyalty
Improve product; reduce price; broaden distribution
Maturity
Redesign packaging; encourage new product uses; increase promotional efforts
Decline
Retain or eliminate product

8. Class Exercise
For the products below, determine what stage of product life cycle the product is currently in and the marketing implications involved.
ipod
Car gps navigation systems
Aspirin
vcrs

9. Product Line and Product Mix
A group of similar products that differ only in relatively minor characteristics
Product mix
All of the products that a firm offers for sale
Width of the mix
The number of product lines the mix contains
Depth of the mix
The number of individual products within each line

10. Width of the product mix Depth of the product lines
Product Mix Example
Blades and Writing
razors Toiletries instruments Lighters
Mach 3 Series Paper Mate Cricket
Sensor Adorn Flair
Trac II Toni Atra Right Guard
Swivel Silkience
Double-Edge Soft and Dri
Lady Gillette Foamy
Super Speed Dry Look
Twin Injector Dry Idea
Techmatic Brush Plus
Width of the product mix
Depth of the product lines

11. Product Mix Width-Slice of Another Pie
The number of product lines an organization offers.
Diversifies risk
Capitalizes on established reputations
Notes:
In Exhibit 8.3, Gillette’s product mix width is four product lines.
Product mix width diversifies risk across many product lines rather than depend on one or two lines. Widening the mix also capitalizes on established reputations.

12. Product Line Depth-Bigger Slice of your Pie
The number of product items in a product line.
Attracts buyers with different preferences
Increases sales/profits by further market segmentation
Capitalizes on economies of scale
Notes:
In Exhibit 8.3, product line depth can be seen in Gillette’s ten product items in its razor and blade product line.

13. What is a Brand
A name, term, symbol, design, or any combination of these that identifies a seller’s products as distinct from those of other sellers
Brand name
The part of a brand that can be spoken
Brand mark
The part of a brand that is a symbol or distinctive design
Trademark
A brand name or mark that is registered with the U.S. Patent and Trademark Office and is legally protected

14. Branding Choices No Brand- Brand Generic Manufacturer’s Brand
Private Brand
Individual Brand
Family Brand
Individual Brand
Family

15. Advantages of Manufacturers’ Brands to the Retailer
Develop customer loyalty
Attract new customers
Enhance store’s prestige
Offer rapid delivery, can carry less inventory

16. Advantages of Private Brands to the Retailer
Earn higher profits
Less pressure to mark down prices
Manufacturer may drop a brand
Ties customer to wholesaler or retailer
More control over distribution – retailers have no control over distribution of manufacturers’ brands

17. Benefits of Branding
Because brands are easily recognizable, they reduce the amount of time buyers must spend shopping
Brands help consumers judge quality
Branding helps a firm introduce a new
product with the same brand name
Branding aids in promotional efforts because promotion of each branded product indirectly promotes others with the same brand

18. Choosing a Brand Name Is easy to pronounce
Is easy to recognize and remember
Is short, distinctive, and unique
Describes the product, use, and benefits
Has a positive connotation
Reinforces the product image
Is legally protectable
Kleenex