Bài giảng Understanding Business - Chapter 14 Developing and Pricing Goods and Services

Developing and Pricing Goods and ServicesChapter 14McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.Describe a total product offer.Identify the various kinds of consumer and industrial goods.Summarize the functions of packaging.Contrast brand, brand name, and trademark, and show the value of brand equity.Explain the steps in the new-product development process.Describe the product life cycle.Identify various pricing objectives and strategiesLEARNING GOALSChapter Fourteen14-2Product Development and the Total Product OfferAccording to the American Marketing Association, value is a foundation of marketing.Value -- Good quality at a fair price.Adapting products to new markets is an ongoing challenge.Product development is a key activity in any modern business.DEVELOPING VALUELG114-3Internet serviceCell phone serviceCable televisionDiscount apparelHaircuts and coloringFast-foodPRODUCTS CONSUMERS WON’T GIVE UPSource: www.bigresearch.com. LG1Product Development and the Total Product Offer14-4Luxury handbagsSatellite radioSpecialty apparelHigh-end cosmeticsFacials PRODUCTS “EXPENDABLE” by SPENDING CUTSSource: www.bigresearch.com. LG1Product Development and the Total Product Offer14-5Distributed Product DevelopmentDistributed Product Development -- The handing off of various parts of your innovation process - often overseas.DISTRIBUTED PRODUCT DEVELOPMENTThe increase in outsourcing has resulted in using multiple organizations separated by cultural, geographic and legal boundaries.LG114-6Developing a Total Product OfferTotal Product Offer -- Everything consumers evaluate when deciding whether to buy something.DEVELOPING a TOTAL PRODUCTProducts are evaluated on many different dimensions, both tangible and intangible.Marketers must think like and talk to consumers to find out what’s important.LG114-7POTENTIAL COMPONENTS of a TOTAL PRODUCT OFFERLG1Developing a Total Product Offer14-8Product Lines & Product MixProduct Line -- A group of products that are physically similar or intended for a similar market.UNDERSTANDING PRODUCT LINESLG1Product lines often include competing brands like:Coca-ColaDiet CokeCoke ZeroCherry CokePhoto Courtesy of: Coca-Cola Art Gallery14-9Product Mix -- The combination of all product lines offered by a manufacturer or service provider.Product mixes like Procter & Gamble’s can be extensive:ToothpasteCosmeticsDiapersBatteriesBar soapThe PRODUCT MIXLG1Product Lines & Product Mix14-10Product Differentiation Product Differentiation -- The creation of real or perceived product differences.Marketers use a mix of pricing, advertising and packaging to create different images. Examples include:Bottled waterAspirinFast-foodLaundry detergentShampooDIFFERENTIATING PRODUCTSLG214-11Marketing Different Classes of Consumer Goods and Services Convenience Goods and Services -- Products consumers purchase frequently with minimal effort. These include:Candy and snacksGasMilk and eggsCLASSIFYING CONSUMER GOODS and SERVICESLG214-12Shopping Goods and Services -- Products consumers buy only after comparing value, quality, price, and styles. These include:Clothes and shoesAppliances and furnitureChildcareHome remodeling CLASSIFYING SHOPPINGGOODS and SERVICESLG2Marketing Different Classes of Consumer Goods and Services 14-13Specialty Goods and Services -- Products with unique characteristics and brand identity. These include:Tiffany jewelryRolex watchesLamborghini automobilesRitz Carlton HotelsUnsought Goods and Services -- Products consumers aren’t aware of or haven’t thought of buying until they need them. These include:Car-towing services; Funeral services; Renter’s insuranceCLASSIFYING GOODS and SERVICESLG2Marketing Different Classes of Consumer Goods and Services 14-14How would you classify these consumer products?Beautyrest mattressHonda AccordMcDonald’s Big MacRolls Royce automobilesOreo CookiesHarvard University degreeIDENTIFYING CONSUMER GOODS CLASSIFICATIONSLG2Marketing Different Classes of Consumer Goods and Services 14-15Marketing Industrial Goods and ServicesIndustrial Goods -- Products used in the production of other products and sold in the B2B market.CLASSIFYING INDUSTRIAL GOODS and SERVICES LG2Industrial goods include:InstallationsCapital itemsAccessory equipmentSuppliesService 14-16Packaging Changes the Product Companies often use packaging to change and improve their basic product. Examples include:Microwave popcornTuna pouchesMcDonald’s green packagingUSES of PACKAGING Good packaging can also make a product more attractive to retailers.LG314-17To attract buyers’ attentionProtect the goods inside and be tamperproofBe easy to openDescribe and give information about the productExplain the product’s benefitsProvide warranty information and warningsGive an indication of price, value, and usesSOME KEY FUNCTIONS of PACKAGINGLG3Packaging Changes the Product 14-18The Growing Importance of PackagingBundling -- Grouping two or more products together and pricing them as a unit.BUNDLINGVirgin Airlines bundles door-to-door limo service and inflight massage with some tickets.Financial institutions bundle advice with purchases.LG3Photo Courtesy of: Joey Day14-19Branding and Brand EquityBrand -- Name, symbol, or design that identifies the goods or services and distinguishes them from competitors’ offerings.UNDERSTANDING BRANDINGTrademark -- A brand that has exclusive legal protection for both its brand name and design.LG414-20Manufacturers’ Brands – Brand names of manufacturers that distribute products nationally. Dealer (Private-Label) Brands -- Products that carry a retailer’s or distributor’s brand name instead of a manufacturer’s. Generic Goods – Non-branded products that sell at a discount compared to manufacturers’ or dealers’ brands.Knockoff Brands -- Illegal copies of national brands.KEY BRAND CATEGORIESLG4Branding and Brand EquityPhoto Courtesy of: Joe Mudd14-21Generating Brand Equity and Loyalty Brand Equity – The value of the brand name and associated symbols. Brand Loyalty -- The degree to which consumers are satisfied and are committed to further purchases.ESTABLISHING BRAND EQUITY and LOYALTYLG414-22MOST VALUABLE BRANDSSource: Forbes, August 30, 2010.LG4Generating Brand Equity and Loyalty BrandValueApple$57.4 billionMicrosoft$56.6 billionCoca-Cola$55.4 billionIBM$43 billionGoogle$39.7 billionMcDonald’s$35.9 billionGE$33.7 billionMarlboro$29.1 billionIntel$28.6 billionNokia$27.4 billion14-23Volvo - Symbol for ironLamborghini - Company founder’s zodiac sign was TaurusVolkswagen - Product of an office contestPorsche - Coat of arms for city and state headquartersORIGINS of AUTOMOBILE SYMBOLSSource: World Features Syndicate.LG4Generating Brand Equity and Loyalty 14-24Brand Awareness -- How quickly or easily a given brand name comes to mind when someone mentions a product category.Consumers reach a point of brand preference when they prefer one brand over another.When consumers reach brand insistence, they will not accept substitute brands.Brand Association -- Linking a brand to other favorable images, like celebrities or a geographic area.Brand Manager -- Person responsible for a particular brand and handles all the elements of the brand’s marketing mix.BUILDING BRAND AWARENESS LG4Generating Brand Equity and Loyalty 14-25The New Product Development ProcessThe NEW PRODUCT DEVELOPMENT PROCESSLG514-26Product Screening -- Reduces the number of new products a firm is working on to focus on the most promising.Product Analysis -- Focuses on the cost estimates and sales forecasts to get an idea of potential profitability.BRINGING NEW PRODUCTS to the MARKETLG5Product Screening & Analysis14-27Concept Testing -- Takes a product idea to consumers to test reactions.BRINGING NEW PRODUCTS to the MARKETCommercialization -- Promoting the product to distributors and retailers and developing the promotional campaign.LG5Product Development and Testing14-28The Product Life CycleProduct Life Cycle -- A theoretical model of what happens to sales and profits for a product over time.Product Life Cycle Stages:IntroductionGrowth MaturityDecline The FOUR STAGES of a PRODUCT LIFE CYCLELG614-29SALES and PROFITS DURING the PRODUCT LIFE CYCLELG6The Product Life Cycle14-30Competitive PricingAchieving a target return on investment or profitBuilding trafficAchieving greater market shareCreating an imageFurthering social objectives both short-run and long-runPRICING OBJECTIVESLG714-31Cost-based pricing measures cost of producing a product including materials, labor, and overhead.Target Costing – Designing a product that satisfies customers and meets the firm’s targeted profit margins.Competition-Based Pricing -- A strategy based on what the competition is charging for its products.PRICING STRATEGIESLG7Competitive Pricing14-32Break-Even AnalysisBreak-Even Analysis -- The process used to determine profitability at various levels of sales. The break-even point is where revenues equals cost.Total Fixed Costs -- All costs that remain the same no matter how much is produced or sold.Variable Costs -- Costs that change according to the level of production.USING BREAK-EVEN ANALYSISLG714-33Other Pricing StrategiesSkimming Price Strategy -- Pricing new products high to recover costs and make high profits while competition is limited.Penetration Price Strategy -- Pricing products low with the hope of attracting more buyers and discouraging other companies from competing in the market. Everyday Low Pricing (EDLP) -- Setting prices lower than competitors with no special sales.PRICING ALTERNATIVESLG714-34High-Low Pricing -- Using regular prices that are higher than EDLP stores except during special sales when they are lower.Psychological Pricing -- Pricing products at price points that make a product seem less expensive than it is. PRICING STRATEGIES of RETAILERSLG7Other Pricing Strategies14-35