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PRODUCT & PRICING DECISIONS Introduction 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. BRAND STRATEGY. 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 sale. Product Line: The broad product groups within the product mix are called product lines which are physically similar or are intended for similar market. Pricing 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. Pricing Setting a high price for a new product to skim maximum revenue layer by layer from the segment that is willing to pay the price. 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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