Product and Pricing Strategies

Module 4: Product & Pricing

• Module 4 focuses on product and pricing strategies including product mix, product life cycle, new product development, branding and packing, pricing objectives, influencing factors, and pricing methods.

Product

• It is a bundle of satisfactions in the form of product benefits.
• Components include physical attributes, special features, brand image, intangible or psychological benefits, safety, and after-sales service.

Product Mix

• Also known as product assortment, is the total number of product lines offered to customers.
• Product lines can range from one to many, with multiple products under each line.
• Product lines grouped together form the company's product mix.
• It is a subset of the marketing mix and is an important part of a company's business model.
• Dimensions include width (number of product lines), length(number of items), depth (number of variations), and consistency (relatedness among product lines).

Product Mix Breadth/Width

• Shows the different kinds of product lines a firm carries.
• It shows the number of items in the product line.
• It represents the extent to which a firm's activities are diversified.
• Coca-Cola's product mix is three products wide because it deals in juices, soft drinks, and mineral water.

Product Mix Length

• Refers to the total number of products in the product mix.
• It is the sum of all items across all product lines.
• In reference to the ITC example, foods line - 3 items, cigarettes - 3 items and so on.

Product Mix Depth

• Refers to the variations of each product in the product line.
• If a company sells three sizes and two flavors of toothpaste, that toothpaste line has a depth of six. (3 * 2)
• Variations can include size, flavor, and other distinguishing characteristics.

Product Mix Consistency

• Shows the extent to which product lines are related in terms of end-use, distribution requirements, production requirements, price ranges, and advertising media.
• ITC's product lines are less consistent as they perform various functions for buyers.
• The more product variations, the less the product consistency.
• A dairy company with milk and yogurt lines has consistent product lines due to the similar users and distribution channels.

Product Life Cycle: Introduction Stage

• Challenges include small or no market, high costs, and losses.
• Benefits include limited competition and high price.
• Focus is on building demand through promotion, cost-effective production, and developing distribution channels.

Product Life Cycle: Growth Stage

• This is the key stage for establishing a product's position in the market, increasing sales, and improving profit margins.
• Achieved through marketing, promotional activity, and reduced manufacturing costs.
• Characterized by strong growth in sales and profits, benefiting from economies of scale.
• Profits are reinvested in promotional activity to maximize potential & protect against competition.
• Challenges include increasing competition and lower prices.
• Benefits include reduced costs, greater consumer awareness, and increased profits.

Product Life Cycle: Maturity Stage

• The product is established, and the aim is to maintain market share.
• It is the most competitive time, requiring wise investment in marketing.
• Product modifications or improvements are necessary for competitive advantage.
• The primary focus is maintaining market share amidst challenges.
• Challenges include market saturation, decreasing market share, and decreasing profits.
• Benefits include continued reduction in costs and increased market share through differentiation.

Product Life Cycle: Decline Stage

• The market for a product starts to shrink.
• It can result from a saturated market or consumers switching to a different type of product.
• Companies may switch to less-expensive production methods and cheaper markets to remain profitable.
• Challenges include declining market, falling sales & profits, and potential product withdrawal.

New Product Development

• Improving and updating product lines is crucial for success and to avoid sales decline due to competitors.
• Products go through life cycle stages and must eventually be replaced.
• Factors contributing to new product development include demand, market acceptance, economic viability, changing consumer preference, technological development, and government policy.

New Product Development (NPD) Process

• Includes idea generation, idea screening, concept development and testing, marketing strategy development, business analysis, product development, test marketing, and commercialization.

NPD Stage 1: Idea Generation

• The process starts with idea generation through systematic search for new-product ideas.
• Companies generate hundreds or thousands of ideas to find a few good ones.
• Sources include: Internal (R&D, employees' contributions) and External (distributors, suppliers, competitors, and especially customers).
• Focus should be on creating customer value.

NPD Stage 2: Idea Screening

• Involves filtering ideas to select the good ones.
• All generated ideas are screened to spot the good ones and drop the poor ones.
• Later stages cause product development costs to rise greatly, thus focusing on profitable product ideas proves crucial.

NPD Stage 3: Concept Developing and Testing

• Involves developing a product into alternative product concepts, then the company can find out how attractive each concept is to customers and choose the best one.
• For an electric car, concepts could include an affordable mid-size car, a sporty compact car, or a high-end midsize utility vehicle.
• Concepts are tested with groups of target consumers symbolically or physically to measure consumer appeal.
• Target consumers answer questions to determine consumer appeal and value.

NPD Stage 4: Marketing Strategy Development

• Designing an initial marketing strategy based on the product concept for market introduction.
• The marketing strategy consists of three parts and they should be formulated carefully: -Description of the target market, the planned value proposition, and sales, market share and profit goals for the first few years. -An outline of the product's planned price, distribution and marketing budget for the first year. -Planned long-term sales, profit goals and the marketing mix strategy.

NPD Stage 5: Business Analysis

• The analysis is conducted after deciding upon a product concept and it encompasses a product concept and marketing strategy, management evaluates the business attractiveness of the proposed new product.
• It involves a review of sales, costs, and profit projections to ensure satisfaction of company objectives.
• Sales are estimated by examining similar product history and conducting market surveys.
• Sales forecasts are prepared to estimate expected costs and profits.
• Analyzing sales and costs figures indicates the product's financial attractiveness.

NPD Stage 6: Product Development

• It refers to a process going on with the actual product development and if the product concept passes the business test from this point the product must be developed into a physical product to ensure that the product idea can be turned into a workable market offering.
• The R&D department develops and tests one or more physical versions of the product concept.
• Developing a successful prototype can take varying periods.
• Products undergo safety and effectiveness tests.
• Marketers involve customers in product testing by sharing prototypes and receiving feedback.

NPD Stage 7: Test Marketing

• In this stage of the new product development process before commercialization is often test marketing.
• A product and marketing program are tested in realistic market settings to provide marketer experience.
• It involves testing targeting, positioning, advertising, and distribution strategies.
• The amount of test marketing needs varies with the product.
• Test markets particularly beneficial with a higher product price.

NPD Stage 8: Commercialisation

• Marketing data provides the insight as to whether launch the new product.
• It refers to introducing a new product into the market.
• This entails the highest costs, involving facility construction/rental and marketing efforts.
• Introduction timing factors into commercialization especially with the economy and competitor timing.
• Launch decision also involves whether to initiate local, regional or international.

NPD General Information

• It is very important to create great customer value at every stage of product development
• That’s the only way products can be successful in the markets Risks and costs make it impossible to implement a new product without the above considerations

Brand

• That is a "name, term, design, symbol, or any other feature that identifies one seller's good or service as distinct from those of other sellers."
• The German word refers to hot or burning.
• It began with the ancient Egyptians around 2700 BC for livestock.
• Brands were used to differentiate livestock by way of burning marks to the animals skin, deducing the actual owner.
• Brands are intended to help the consumer remember their preferred product choices.
• Brands should not be confused with trademarks.

Selecting a Brand Name

• It should directly/indirectly reflect components of the product like usage.
• Examples of this usage include EZEE, Goodnight, Puma, and HIT
• A brand should be distinctive and easy to pronounce/remember.
• Examples of this: Taj or Lux
• Brands or names need to be legally protected

Examples of brands

• Dove hits emotional, level with women through gentleness, purity and care.
• The Sony pioneer walkman describes product experience instead of the product itself.
• Google equals one to 100th power creating a power of information online.
• Other examples are the Red Bull brand, Fair and Lovely, and Mother's Recipe.

Service Brand

• Service brands are hard to develop, it involves adding value of a service to a brand.
• Though intangible, it useful to beat competition in regards to both product and cost.
• Examples of Service branding include services like netflix or South West airlines.

Personal Brands

• A person has built a brand around oneself to be able to promote his or her career or related aspects
• Often associated with how a person markets themselves in different forms
• Celebrities are sports people are good examples of personal Brands.

Product Brand

• It concerns the perceptions of the commodity or goods so that it passes the functional capability.
• A very common type of branding for the FMSG industries.
• Tide detergent is a good example of a product brand.

Luxury Band

• Offers great quality for a greater price of product
• Forms a great market dedicated to it’s provision of premium service Does not dedicate itself to costs but it’s dedication to a unique high level of delivery.
• E.G Rolex

Value Branding

• Does not match luxury brining but provides basic service with lower price.
• Value brand is more dedicated to volume more generally
• For example: titan.

Innovative Brands

• Focuses on constantly improving the end product
• Technology is the main focus, constantly improving the end product
• E.G Apple

E-brands

• Exists in the virtual and real aspects.
• Provides different services with different online products
• Amazon is a good example.

Global Brands

• Used around the world and are generally well known
• Has a broad image to customers
• Essential when dealing with homogenous products.
• Eg: google/microsoft

Generic Brands

• Does not posses a widely recognizable name/logo and not advertised
• So expansive that the service and or product name becomes the verb for the associated goods
• Examples includes: Xerox

Private Label Brands

• Products which are made from third party to sale and provide a brand under another name for that Company
• Includes wide range of different food to cosmetics
• Examples include: Amazon basics

Advantages of branding

• Provides character for brands
• Differentiates between all different competitors
• Customers are able to display consistent loyalty

Disadvantages of branding

• Needs high level of investment
• Can create bad imagery if the product falls over
• Customers unwillingness to fund large scale
• Tough to change

The brand identity

• These are components that work to set a brand apart from all different options
• These aspects include: name, slogan, writing all the way through to font/brand imagery
• All aspects which are used must be easily associated to the brand
• If it can be seen to be a representation of positive traits customers associate themselves

Term: Brand recall

• Spontaneous awareness (unaided promotion)
• Ability to remember if prompted
• Example sanitizer .

Term brand recognition

• Occurs if recognized on seeing after hearing or reading list .

Packaging

• Many products have to be packaged labelled and set a specific style
• A key consideration for the marketing mix
• Packaging is activity of design of contents with wrapper
• The contents are referred to as contents

Importance of packaging

• Packing helps with product protection and safety
• It can provide information or transmission
• Marketing can be utilized to set a unique identity.
• Helps the convenience/usability
• helps lower risk

Attributes to manage a good packaging process

These main key features should be considered when looking for products success

1. as a product

• It must properly maintain contents
• Has to be safe to utilize
• Has to be easily dispensed with unique appearance
• Has to be eco friendly to reuse

2. as communication

• Must be attractive to be viable
• Should act a unique selling message
• Must be able to act easy label with ingredients + safety

Key types of packaging

• Paper boxes can easily be stored and custom shaped and structured
• Paper board includes a number of factors for usage includes solid bleached sulfate used for make up
• The plastic type Is used for wide range of application from paperclip spaceships .it is widely recycled and often more reliable
• Good level of hygiene is needed along with waterproof solutions

The packaging types can come in wide of different variations

• Packaging for solid cardboard is used the most and recycled a great deal comes I a large number of options. Pizza packets cereal ect

• Good form of flexibility with eco based uses that can be used often over a great number of uses. This form includes poly bags with thin material for different uses.

Final type of form is bags

• To retain content: bags are fully air sealed and designed for the purpose of food or clothes

Price determination

• The determination of the value that product receives. Main aim of pricing in a business Is to create a good level of profit Factors to look:
• Understand the environment and if that a good point.
• Consider aspects such as product nature, cost in the similar market and a wide range of additional elements all impacting the cost

Main influence of the price

• Internal (objectives company status and marketing mix)
• external: (buyers suppliers conditions competition )

Different forms of pricing strategies

• Penetration strategies are designed to quickly establish dominance in markets
• Dynamic forms often are set at discount
• Psychotics are done around the specific consumer for example prestige to appear luxurious

Selection of pricing strategy

• One to fully know and understand objective company status and market share
• The level of demand should always be looked into
• Estimate both fixed and variable values .

Analysis of competition

• Does any competitor hold extra features that require extra cost?
• Decide at this point how to position brand is it better or worse then alternatives

Selection for marketing

• This occurs once price is selected and finalized fully
• What are the implications on other operations.