business copyright 2005 prentice- hall, inc. 11-1
TRANSCRIPT
Copyright 2005 Prentice- Hall, Inc. 11-1
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11-2
ChapteChapte
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Developing And Developing And Pricing ProductsPricing Products
Copyright 2005 Prentice- Hall, Inc. 11-3
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ess Chapter OutlineChapter Outline
What Is A Product?What Is A Product?Developing New ProductsDeveloping New ProductsIdentifying ProductsIdentifying ProductsDetermining PricesDetermining PricesPricing Strategies & TacticsPricing Strategies & Tactics
Copyright 2005 Prentice- Hall, Inc. 11-4
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ess Product?Product?
• Value PackageValue Package
• FeaturesFeatures–TangibleTangible
– IntangibleIntangible
Warranty
Copyright 2005 Prentice- Hall, Inc. 11-5
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Goods/Services-Goods/Services-ClassificationClassification
• ConsumerConsumer
• IndustrialIndustrial
Copyright 2005 Prentice- Hall, Inc. 11-6
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ess Consumer ProductsConsumer Products
• Convenience- Rapidly ConsumedConvenience- Rapidly Consumed• ShoppingShopping–Moderately PricedModerately Priced– Infrequent PurchaseInfrequent Purchase
• SpecialtySpecialty–ExpensiveExpensive–Rarely PurchasedRarely Purchased
Copyright 2005 Prentice- Hall, Inc. 11-7
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ess Online ShoppingOnline Shopping
$0
$1
$2
$3
$4
$5
$6
$7
$8
$9
2002 2003 2004
In $ BillonIn $ Billon
Source: VeriSign “VeriSign Reports $8.8 Billion in Onlines Purchases During the 2004 Holiday Shopping Season”, http://www.verisign.com/verisign-inc/news-and-events/news-archive/us-news-2004/index.html
Thanksgiving - Thanksgiving - ChristmasChristmas
Copyright 2005 Prentice- Hall, Inc. 11-8
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Average Online Transaction Size Average Online Transaction Size (Thanksgiving – Christmas)(Thanksgiving – Christmas)
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
2002 2003 2004
Source: VeriSign “VeriSign Reports $8.8 Billion in Onlines Purchases During the 2004 Holiday Shopping Season”, http://www.verisign.com/verisign-inc/news-and-events/news-archive/us-news-2004/index.html
Copyright 2005 Prentice- Hall, Inc. 11-9
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ess Industrial ProductsIndustrial Products
• Expense ItemsExpense Items–Regularly PurchasedRegularly Purchased
–Consumed RapidlyConsumed Rapidly
• Capital ItemsCapital Items–ExpensiveExpensive
– Long-lastingLong-lasting
– Infrequently PurchasedInfrequently Purchased
Copyright 2005 Prentice- Hall, Inc. 11-10
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ess Product MixProduct Mix
• Product LineProduct Line–Similar ProductsSimilar Products
–Similar BuyersSimilar Buyers
–Similar UseSimilar Use
• SingleSingle
• Multiple/DiversifiedMultiple/Diversified
Copyright 2005 Prentice- Hall, Inc. 11-11
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Product Mix-Product Mix-Minute MaidMinute Maid
Copyright 2005 Prentice- Hall, Inc. 11-12
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New Product New Product DevelopmentDevelopment
• Product Mortality- Failure Product Mortality- Failure Or Obsolescence Or Obsolescence
• Speed To Market- Market Speed To Market- Market ChangesChanges
Copyright 2005 Prentice- Hall, Inc. 11-13
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New Product New Product Development ProcessDevelopment Process
Product Product IdeasIdeas
ScreeningScreening
Concept TestingConcept Testing
Business Business AnalysisAnalysis
PrototypePrototype
Testing & Testing & MarketingMarketing
CommercializationCommercialization
Copyright 2005 Prentice- Hall, Inc. 11-14
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ServicesServicesProcess VariationsProcess Variations
• Service Package- Tangible & Service Package- Tangible & Intangible FeaturesIntangible Features
• Service Process Service Process DesignDesign–Process SelectionProcess Selection
–Worker RequirementsWorker Requirements
– Facility RequirementsFacility Requirements
Copyright 2005 Prentice- Hall, Inc. 11-15
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ess Product Life CycleProduct Life Cycle
Copyright 2005 Prentice- Hall, Inc. 11-16
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Stages OfStages OfProduct Life CycleProduct Life Cycle
• Introduction- New ProductIntroduction- New Product• GrowthGrowth–Consumers AttractedConsumers Attracted–Sales ClimbSales Climb
• Maturity- Sales Level-OffMaturity- Sales Level-Off• DeclineDecline–Other Competing New Products Other Competing New Products
IntroducedIntroduced–Sales & Profits DeclineSales & Profits Decline
Copyright 2005 Prentice- Hall, Inc. 11-17
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Alternatives ToAlternatives ToNew ProductsNew Products
• ExtensionExtension
• AdaptationAdaptation
• ReintroductionReintroduction
Copyright 2005 Prentice- Hall, Inc. 11-18
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ess Identifying ProductsIdentifying Products
• BrandingBranding
• PackagingPackaging
• LabelingLabeling
Copyright 2005 Prentice- Hall, Inc. 11-19
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ess Product BrandingProduct Branding
• Adding ValueAdding Value–Brand EquityBrand Equity–Brand AwarenessBrand Awareness
• E-BusinessE-Business• Types Of Brand NamesTypes Of Brand Names–NationalNational– LicensedLicensed–PrivatePrivate
Copyright 2005 Prentice- Hall, Inc. 11-20
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World’s 10 MostWorld’s 10 MostValuable BrandsValuable Brands
Copyright 2005 Prentice- Hall, Inc. 11-21
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ess Pricing ObjectivesPricing Objectives
• Profit-MaximizingProfit-Maximizing
• E-BusinessE-Business
• Market-ShareMarket-Share
Copyright 2005 Prentice- Hall, Inc. 11-22
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ess Cost-Oriented PricingCost-Oriented Pricing
• ComponentsComponents–Markup $Markup $–Markup %Markup %–Sales PriceSales Price
Copyright 2005 Prentice- Hall, Inc. 11-23
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Breakeven Analysis Breakeven Analysis ComponentsComponents
• Variable CostVariable Cost
• Fixed CostFixed Cost
• Breakeven PointBreakeven Point
Copyright 2005 Prentice- Hall, Inc. 11-24
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ess Breakeven AnalysisBreakeven Analysis
Copyright 2005 Prentice- Hall, Inc. 11-25
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ess Pricing Existing ProductsPricing Existing Products
• Relative To Current Market Relative To Current Market Prices For Similar ProductsPrices For Similar Products
• Current MarketCurrent Market–AboveAbove
–BelowBelow
–At/NearAt/Near
Copyright 2005 Prentice- Hall, Inc. 11-26
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ess New Product PricingNew Product Pricing
• Price SkimmingPrice Skimming
• Market PenetrationMarket Penetration
Copyright 2005 Prentice- Hall, Inc. 11-27
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ess E-Business PricingE-Business Pricing
• Fixed- Most CommonFixed- Most Common
• Dynamic- Available Dynamic- Available Information Forces Constant Information Forces Constant Price AdjustmentPrice Adjustment
Copyright 2005 Prentice- Hall, Inc. 11-28
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ess Pricing TacticsPricing Tactics
• Price LiningPrice Lining
• Psychological- Psychological- Odd/EvenOdd/Even
• DiscountingDiscounting
Copyright 2005 Prentice- Hall, Inc. 11-29
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ess International PricingInternational Pricing
• Determine What Market Will Determine What Market Will BearBear
• Post-Purchase- Encourage To Post-Purchase- Encourage To Trade Up As Personal Trade Up As Personal Economics AllowEconomics Allow
• DumpingDumping