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_11_ Product _ Pricing Decisions

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   PRODUCT : The first P of the Marketing Mix.
   It is the good or service used as a mode of business.

   Basic products are of two types;

   Tangible & Intangible.

   Products can further be divided into two categories and
    these being
   Consumer products
   Organizational products.
Consumer Products
    Consumer Products are those which are sold exclusively
     to consumers and these have three varieties.
1)   Convenience Products
2)   Shopping Products
3)   Specialty Products

    Convenience Products: These are products that
     customers buy without much hesitation. These are low
     priced and heavily advertised.
    Shopping Products: These are products on which
     customers spend time to compare prices, quality and style.
Consumer Products
   Specialty Products: These are products that a consumer
    will make a special effort to find and will not
    compromise on a second choice.

   Organizational Products
   These are products exclusively sold to organizations.
    These are categorized in two types:
   Expense Items: These are items which are inexpensive
    and are consumed within one year of purchase.

   Capital Items: These are items which are relatively
    expensive and are used in running of the business.
Brands & Trademarks
   It is a name, term, logo, symbol or a design that identifies
    a product from comparative and competitive products.

   Brand Names and marks can be registered with the
    government so that no other can copy and use it.
   A trademark is a sign that is legally registered and
    becomes identity of the business.
   National Brands: These are brands owned by
    manufacturers and distributed nationally.
   Private Brands: They carry the label of the retailer and
    are only available at a specific outlet. (Marks & Spencer)
Product Brands & Trademarks
   Brand Equity: It is the overall strength of a brand in
    market and its value in the eye of its manufacturer.

   Companies work on brand strategies to develop brands
    and competitive markets.

   Family Branding: Family branding is done when a brand
    name is used on a variety of related products. Coke /
    Kinley & Pepsi / Aquafina.
   Licensing : It is about giving another company rights to
    use well known name to market products.
Product Brands & Trademarks
   Packaging & Labeling.

   Protection

   Attracts

   Discourages counterfeit.

   Universal Product Code.
Product Development
    There are five stages of product development.
1)   Screening of Ideas.

2)   Business Analysis.

3)   Prototype Development.

4)   Product Testing

5)   Large Scale Production. (Commercialization).
Product Life Cycle.
    There are four stage in the life of a product.

1)   Introductory Phase.

2)   Growth Phase

3)   Maturity Phase

4)   Decline Phase.
Product Mix & Product Line
   Product Mix: A complete range of
    products that are offered by a company for

   Product Line: The broad product groups
    within the product mix are called product
    lines which are physically similar or are
    intended for similar market.
    The pricing objectives are:-
1)   To achieve a certain overall profit.

2)   To increase sales.

3)   To get a bigger market share.

4)   To achieve high profit on a product.

5)   To promote a particular promote.

6)   To discourage competition.

7)   To accomplish social or ethical goals.
Factors in Pricing
   Pricing Strategy: Companies plan different strategies to
    maximize their returns and have options for pricing their
    product. Some of these strategies are:-

   Skimming: You go for skimming price strategy when
    you charge a high price for a new product during
    introductory phase and lower prices later.

   Penetration: We use penetration strategy when we while
    introducing a new product demand a low price and then
    increase the price with the growing demand.
   Setting a high price for a new product to
    skim maximum revenue layer by layer
    from the segment that is willing to pay the

   Setting a low price for a new product in
    order to attract a large number of buyers
    and a market share.

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