Matakuliah
Tahun
: J0712 - Pengantar Bisnis
: 2009
Developing and Pricing Products
Pertemuan 10
Developing and Pricing Products
•Outline:
What Is A Product?
Developing New Products
Identifying Products
Determining Prices
Pricing Strategies & Tactics
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What is a Product?
• Features are the qualities, tangible and intangible, that a
company builds into its products.
• Benefits are what the consumer derives from the product:
the want-satisfying value.
• Value package is a product marketed as a bundle of valueadding attributes.
Features?
Benefits?
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Goods/Services-Classification
• Consumer
• Industrial
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Consumer Products
• Convenience- Rapidly Consumed
• Shopping
– Moderately Priced
– Infrequent Purchase
• Specialty
– Expensive
– Rarely Purchased
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Industrial Products
• Expense Items
– Regularly Purchased
– Consumed Rapidly
• Capital Items
– Expensive
– Long-lasting
– Infrequently Purchased
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The Product Mix
Product mix is a group of products that a firm makes available for sale (e.g.
Nestle).
Product line is a group of similar products intended for a similar group of
buyers who will use them in similar ways.
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Ex: Product Mix - Minute Maid
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New Product Development
Product Mortality
Failure rates for new products
are high.
Speed to market is a
strategy of introducing new
products to respond quickly
to customer or market
changes.
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New Product Development Process
1.
2.
3.
4.
5.
6.
Product Ideas
Screening
Concept Testing
Business Analysis
Prototype Development
Product Testing and Test
Marketing
7. Commercialization
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Variations in the Process for Services
Steps 2, 3, 4, 6 & 7 are the same.
Differences in steps 1 and 5:
Service Ideas
Service package is the tangible and
intangible features that characterize a
service product.
Service Process Design
Service process design is three aspects
(process selection, worker
requirements, facilities requirements) of
developing a service product.
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Product Life Cycle
Series of stages in a product’s
profit-producing life
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Stages of PLC
• Introduction: This stage begins when the product
reaches the marketplace.
• Growth: If the new product attracts enough consumers,
sales start to climb rapidly.
– Consumers Attracted
– Sales Climb
• Maturity: Sales growth starts to slow.
• Decline: Sales and profits continue to fall as new
products in the introduction stage take away sales.
– Other Competing New Products Introduced.
– Sales & Profits Decline.
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Extending Product Life: An Alternative to
New Products
• Product extension is an existing product that is marketed
globally.
• Product adaptation is the product modified to have
greater appeal in foreign markets.
• Reintroduction is the process of reviving for new markets
products that are obsolete in older ones.
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Branding Products
• Branding is the process of using
symbols to communicate the qualities of
a product made by a particular producer.
– Adding Value through:
• Brand equity is the degree of
consumers’ loyalty to and awareness
of a brand and its resultant market
share.
• Brand awareness is the extent to
which a brand name comes to mind
when the consumer considers a
particular product category.
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World’s 10 Most Valuable Brands
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Types of Brand Names
– National brand is a product
produced by, widely distributed by, and
carry the name of the manufacturer.
– Licensed brand is a product for
whose name the seller has purchased
the right from an organization or
individual.
– Private brand (or Private label) is
Costco-Kirkland
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a product that a wholesaler or retailer
has commissioned from a manufacturer.
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Packaging and Labeling Products
• Packaging is the physical container in which a
product is sold, advertised or protected.
• Labeling can help market the product
– Label is the part of a product’s packaging that
identifies its name, manufacturer and contents.
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What is Pricing?
• Process of determining what a company will receive in
exchange for its products
•Pricing objectives are goals that producers hope to attain in
pricing products for sale.
•Profit-Maximizing Objectives:
•Pricing for E-Business Objectives
•Market Share Objectives:
•Market share is a company’s percentage of total market sales
for a specific product type.
•Other Pricing Objectives
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Cost Oriented and Break Even Analysis
• Cost-oriented pricing considers the firm’s desire to make
a profit and its need to cover production costs.
– Markup is the amount added to an item’s cost to sell it at a profit.
– Components:
• Markup $
• Markup %
• Sales Price
• Break Even Analysis
– Components:
• Variable Cost
• Fixed Cost
• Breakeven Point
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Pricing Existing Products
• Relative To Current Market
Prices For Similar Products
• Current Market
– Above
– Below
– At/Near
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Pricing New Products
• Price skimming is setting an
initial high price to cover new
product costs and generate a
profit.
• Penetration pricing is setting an
initial low price to establish a
new product in the market.
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E-Business Pricing
• Dynamic pricing works because
information flow on the Web notifies
millions of buyers of instantaneous
change in product availability.
– Sellers can alter prices privately,
on a one-to-one, customer-tocustomer basis.
• Fixed pricing is still the most
common option for cybershoppers.
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Pricing Tactics
• Price lining is setting a limited number of
prices for certain categories of products.
• Psychological pricing takes advantage of
the fact that consumers do not always
respond rationally to stated prices.
– Odd-even pricing is based on the premise that
customers prefer prices not stated in even dollar
amounts.
• Discount is a price reduction offered as an
incentive to purchase.
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International Pricing
• Determine what market will bear
• Post-purchase-encourage to
trade up as personal economics
allow
• Dumping
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