Learning ObjectivesChapter 13

1
Learning Objectives-Chapter 13

• Describe the four stages in the life cycle of a
  product.
• Identify four ways of expanding a product line
  and discuss two risks that product-line
  extensions pose.
• Highlight several factors that should be
  considered when developing strategies for
  international markets.
• Highlight several factors that should be
  considered when developing strategies for
  international markets.
• Cite three levels of brand loyalty.
• Discuss the functions of packaging.
• List seven factors that influence pricing
  decisions.
• Explain what dynamic pricing is and discuss why
  dynamic pricing has been slow to catch on.

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Product

• Anything offered for the purpose of satisfying a
  want or need in a marketing exchange. Products
  contain both tangible and intangible components.
• Tangible Predominately tangible products are
  called goods.
• Intangible Predominately intangible products are
  considered services.

3
Product Continuum
Salt
Automobile
Insurance
Education
Shoes
VCR
Fast Food
Cruise
Consulting
Source Business Today, Ninth Edition, Mescon,
Bovee Thill, Prentice Hall Publishers.
4
Service Products

• Advertising on the internet is both
• Intangible
• Perishable

Click to access Web Site
Yahoo! Fusion Marketing is all about providing a
platform to both create and deliver your business
messages.
The goal of course is to generate a response. But
how do you know your advertising worked?
5
Consumer Products
Classification is based upon how people shop for
the products.

• Convenience Products
• Shopping Products
• Specialty Products
• Unsought Goods

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Convenience Products

• Goods and services that are bought frequently,
  and without much thought.

7
Shopping products

• Fairly important goods and services, buy less
  frequently.
• Usually requires more thought.
• Comparison shopping, price, features, quality.

8
Specialty Products

• Particular brands that a buyer especially wants
  and seeks out, regardless of location or price.
• Not all specialty products are expensive.

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Unsought Goods

• Products not normally considered.
• Consumer needs to be made aware of through
  promotion.

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Organizational Products
Are sold to firms, and are generally purchased in
large quantities and are not for personal use.

• Expense items
• Capital items
• Intended usage

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Intended Usage

• Raw Materials
• Components
• Supplies
• Installations
• Equipment
• Business Services

12
Product Life Cycle
Internet
Cellular Phones
VCRs
Cassette Tapes
13
Life Cycle Introductory Stage

• The launch of a new product.
• Spend heavily on conducting research-and-developme
  nt.
• Spend heavily on promoting to build awareness.
• Establishment of a distribution system.
• Little profit is made.

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Life Cycle Growth Stage

• Marked by sales increase.
• Competition increases.
• Market share increase are difficult.
• Pressure to maintain large promotional budgets.
• In general, marketing expenses are very high.

15
Life Cycle Maturity Stage

• The longest stage.
• Sales begin to level off, may show a decline.
• Increased competition.
• Market share is maximized.
• May attempt to extend the life of the product.

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Life Cycle Decline Stage

• Sales slip.
• Profits fall off.
• Need to make a decision, keep, discontinue or
  develop a new product(s).

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Six Stages ofNew-Product Development

• Idea Generation
• Idea Screening
• Business Analysis
• Prototype Development
• Test Marketing
• Commercialization

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Positioning Strategies

• By specific product features or attributes.
• On the services that come with the product.
• On the products image.
• On price.
• On category leadership.

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Three Positioning Errors

• Under-Positioning Failing to position the
  product at all.
• Over-Positioning Promoting to many benefits.
• Confused Positioning Mixing benefits that
  confuse the buyer.

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Pricing Strategies

• Cost-Based What it costs to produce the product
  and then add a markup sum.

• Price Skimming.
• Penetration Pricing.
• Discount Pricing.
• Value Pricing.
• Dynamic Pricing.

• Price-Based Considers products competitive
  advantages, users perception and target market.

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Dynamic Pricing Strategies

• Auction Buyers bid against each other.
• Group By joining a group a volume discount is
  possible.
• Name-Your-Price Buyer specifies price and seller
  accepts or declines.