Jan 18, 2018
Developing and Pricing ProductsPertemuan 10
Matakuliah : J0712 - Pengantar BisnisTahun : 2009
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Developing and Pricing Products•Outline:
What Is A Product?Developing New ProductsIdentifying ProductsDetermining PricesPricing Strategies & Tactics
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 value-adding attributes.
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Features?Benefits?
Goods/Services-Classification
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•Consumer
•Industrial
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 MixProduct 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
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Product MortalityFailure rates for new products are high.
Speed to market is a strategy of introducing new products to respond quickly to customer or market changes.
New Product Development Process
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1. Product Ideas2. Screening3. Concept Testing4. Business Analysis5. Prototype Development6. Product Testing and
Test Marketing7. Commercialization
Variations in the Process for Services
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Steps 2, 3, 4, 6 & 7 are the same. Differences in steps 1 and 5:
Service IdeasService package is the tangible and intangible features that characterize a service product.
Service Process DesignService process design is three aspects (process selection, worker requirements, facilities requirements) of developing a service product.
Product Life Cycle
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Series of stages in a product’s profit-producing life
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 a product that a wholesaler or retailer has commissioned from a manufacturer.
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Costco-Kirkland
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.
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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 Relative To Current Market Prices For Similar ProductsPrices For Similar Products
• Current MarketCurrent Market– AboveAbove– BelowBelow– At/NearAt/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-to-customer 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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