Marketing Strategies: Product Pricing

Study Notes

Product line pricing: Companies set incremental prices for different items within a product line to encourage consumer choice.
Optional product pricing: Prices are established for additional products or accessories that enhance the main item, aiming to boost sales.
Captive product pricing: Prices for products that are required to use a main product, often set higher to leverage dependency.
By-product pricing: Low-value pricing for secondary products helps maintain competitive pricing on the main product.
Product bundle pricing: Multiple products sold together at a reduced price to encourage consumers to purchase more.

Discounts and allowances: Price reductions categorized into discounts (quantity, seasonal, functional, trade, and cash) and allowances (trade-in and promotional).
Segmented pricing: Different prices for the same product/service based on customer segment, product version, location, or timing (seasonal/monthly/daily).

Types of new products:
- New to the world products: Innovative items that create new markets.
- New product lines: Products that allow entry into established markets for the first time.
- Additions to existing lines: New products that complement established offerings.
- Improvements/revisions: Enhanced versions of existing products offering better value.
- Repositioning: Existing products targeted to new market segments.
- Cost reduction: Products providing comparable performance to competitors at a lower cost.
New product development process: Stages involve idea generation, screening, concept testing, product development, business analysis, marketing strategy development, test marketing, and commercialization.

Brand definition: A name, term, design, or combination used to identify and differentiate products from competitors.
Brand equity: The value derived from brand awareness, perceived quality, and customer loyalty.
Major brand strategy decisions:
- Brand positioning: Clear positioning across attributes, benefits, beliefs, and values.
- Brand name selection: Criteria include ease of pronunciation, recognition, and memorability.
- Brand sponsorship: Options include manufacturer's brand, private brand, licensed brand, and co-branding.
- Brand development: Strategies like line extension, brand extension, new brand creation, or multi-branding approaches.

Market positioning definition: Establishing a product's location in the consumer's mind.
Positioning map: A graph showing product, brand, or group locations in two or more dimensions.
Positioning bases: Includes product features, price and quality, use/application, user demographics, product class, and competitor positioning.

Target marketing definition: Evaluating market segments to select those with the highest potential.
Factors for evaluating market segments:
- Segment size and growth potential.
- Structural attractiveness of the segment.
- Alignment with company objectives and available resources.

Undifferentiated marketing: A single offer targeting the entire market without segment differences.
Differentiated marketing: Tailored offers for multiple segments, focusing on distinct groups.
Concentrated marketing: Niche marketing targeting a single or few segments, often widening appeal due to limited competition.

Guide for implementation and control in strategy planning.
Steps in strategy planning (DSDP):
- Define the company mission.
- Set company objectives and goals.
- Design the business portfolio.
- Plan marketing and other functional strategies.

Market penetration: Selling existing products in current markets (e.g., localizing a well-known product like nasi lemak in a college).
Product development: Creating new products for existing markets.