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Chapter Fourteen - PowerPoint PPT Presentation


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Chapter Fourteen. Developing and Pricing Products and Services. Consumer Choices of Best Product Innovation of ALL Time. Source: American Demographics. Product Development & Value Package. Value- Total Product Offer Product Line Product Mix Product Differentiation.

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Presentation Transcript
slide1

Chapter

Fourteen

Developing and Pricing

Products and Services

product development value package
Product Development & Value Package
  • Value- Total Product Offer
  • Product Line
  • Product Mix
  • Product Differentiation
classic product failures
Classic Product Failures

Company

Loss

Failure

Edsel

Corfam

VideoDisc

PCjr

New Coke

Premier

Ford Motor Co.

DuPont

RCA

IBM

Coca-Cola

R. J. Reynolds

$250 M

$100 M

$500 M

$ 40 M

No $ Number

No $ Number

first products produced by five major companies
First Products Produced byFive Major Companies

Hershey Caramels

Amway No-rinse car wash

Heinz Horseradish

Avon Little Dot perfume set

3M Sandpaper

Horseradish

Source: World Features Syndicate

mickey mouse s product mix
Theme parks & resorts

ABC Television Network

TV & radio stations

Film studios & production

Video programs & licensing

Consumer products

Publishing

Mickey Mouse’sProduct Mix
marketing classes of goods services
Marketing Classes of Goods & Services
  • Consumer
    • Convenience
    • Shopping
    • Specialty
    • Unsought
  • Industrial
packaging
Packaging
  • Protect
  • Attract
  • Describe
  • Explain
  • Warranties
  • Price, Value, Uses
branding
Brand & Trademark

Categories

Manufacturers’

Knockoff

Dealer/Private

Generic

Equity

Loyalty

Awareness

Association

Branding

Mary’s Fresh Fruit Jams

Fresh Daily

Straight from the Garden

market value of a brand name
Market Value of A Brand Name

Billions of Dollars

Source: Interbrand Group

a good brand name
A Good Brand Name...
  • Speaks directly to product’s target customers
  • Attracts/motivates consumers to try it
  • Is memorable/sticks in customers’ minds
  • Is distinctive enough to protect it legally

Brand Name

new product development
New-Product Development

Idea Generation

Screening

Analysis

Development

Testing

Commercialize

what they cost when first introduced
What They Cost When First Introduced

1927 Transatlantic Call $ 75/3 min.

1947 Microwave Oven $ 3,000

1964 FAX unit rental $ 850/month

1970 Pocket Calculator $ 150

1974 VCR Tape $ 50

Source: World Features Syndicate

pricing
Objectives

ROI

Traffic

Market Share

Sales

Image

Social

Cost-Based

Value- Service

Break-Even

Fixed Cost

Variable Cost

Strategies

Skim

Penetration

EDLP

High-Low

Leadership

Pricing
slide16

Breakeven Chart

(Figure 14.9)

Total Revenue or Total Cost

Number of Units

pricing using breakeven analysis
Pricing Using Breakeven Analysis

ProblemShould we charge $2 or $3 per box?

CostsTotal Fixed Costs $400,000

Variable Cost $ 1 per box

Market Research Forecast

Company can sell: 290,000 boxes at $2 @

210,000 boxes at $3 @

Breakeven point = total fixed cost

price - variable cost

(per unit) (per unit)

$2 price = $400,000 400,000 units to breakeven

$2 - $1

$3 price = $400,000 200,000 units to breakeven

$3 - $1

Breakeven

Analysis

market share cable
Market Share-Cable

Source:Wall Street Journal 1/12/2000

movies domestic box office market share
Movies- Domestic Box Office Market Share

Source: Wall Street Journal, 1/12/2000

market share of video sales
Market Share ofVideo Sales

Source:Wall Street Journal, 1/12/2000