Chapter Fourteen

1. Chapter Fourteen Creating and Pricing Products that Satisfy Customers

2. Classification of Products • Product • Everything, both favorable and unfavorable, one receives in an exchange. Can be a good or service • Consumer product • A product purchased to satisfy personal and family needs-grouped by how shop for them • Business (industrial) product • A product bought for resale, for making other products, or for use in a firm’s operations-grouped by what you use them for Many products can be both

3. A relatively inexpensive item that merits little shopping effort. Convenience Product A product that requires comparison shopping, because it is usually more expensive and found in fewer stores. Shopping Product A particular item that consumers search extensively for and are reluctant to accept substitutes. Specialty Product A product unknown to the potential buyer or a known product that the buyer does not actively seek. Unsought Product Consumer Product Classifications

4. Major Equipment-machines & vehicles-custom made Accessory Equipment-drills copiers Raw Materials-no processing - oil, fish, trees Component Parts-identifiable in final product-bolts, tires Processed Materials- not identifiable in final product - plastic, sugar Supplies-not in final product-pens, lube oil Business Services-legal, maintenance Business Product Classifications

5. The Product Life Cycle • A series of stages in which a product’s sales revenue and profit increase, reach a peak, then decline • Introduction • Customer awareness and acceptance are low • Growth • Sales increase rapidly as the product becomes well known • Maturity • Sales still increasing but at a slower rate and profits begin to decline. later in this stage, sales peak • Decline stage • Sales volume decreases sharply and profits continue to fall

6. Product Life Cycle Introductory Stage Growth Stage Maturity Stage Decline Stage Sales Profits Dollars 0 Time

7. Using the Product Life Cycle • The stage of the product life cycle affects the marketing strategy for a product • Introduction • Make potential customers aware of product • Growth • strengthen product position by encouraging brand loyalty • Improve product; reduce price; broaden distribution • Maturity • Redesign packaging; encourage new product uses; increase promotional efforts • Decline • Retain or eliminate product

8. Class Exercise • For the products below, determine what stage of product life cycle the product is currently in and the marketing implications involved. • ipod • Car gps navigation systems • Aspirin • vcrs

9. Width of the product mix Blades and Writing razors Toiletries instruments Lighters Mach 3 Series Paper Mate Cricket Sensor Adorn Flair Trac II Toni Atra Right Guard Swivel Silkience Double-Edge Soft and Dri Lady Gillette Foamy Super Speed Dry Look Twin Injector Dry Idea Techmatic Brush Plus Depth of the product lines Product Mix Example

10. Diversifies risk • Capitalizes on established reputations Product Mix Width-Slice of Another Pie The number of product lines an organization offers.

11. Attracts buyers with different preferences • Increases sales/profits by further market segmentation • Capitalizes on economies of scale Product Line Depth-Bigger Slice of your Pie The number of product items in a product line.

12. What is a Brand • A name, term, symbol, design, or any combination of these that identifies a seller’s products as distinct from those of other sellers • Brand name • The part of a brand that can be spoken • Brand mark • The part of a brand that is a symbol or distinctive design • Trademark • A brand name or mark that is registered with the U.S. Patent and Trademark Office and is legally protected

13. Branding Choices Brand No Brand- Generic Manufacturer’s Brand Private Brand IndividualBrand Family Brand IndividualBrand Family

14. Advantages of Manufacturers’ Brands to the Retailer • Develop customer loyalty • Attract new customers • Enhance store’s prestige • Offer rapid delivery, can carry less inventory

15. Advantages of Private Brands to the Retailer • Earn higher profits • Less pressure to mark down prices • Manufacturer may drop a brand • Ties customer to wholesaler or retailer • More control over distribution – retailers have no control over distribution of manufacturers’ brands

16. Benefits of Branding • Because brands are easily recognizable, they reduce the amount of time buyers must spend shopping • Brands help consumers judge quality • Branding helps a firm introduce a new product with the same brand name • Branding aids in promotional efforts because promotion of each branded product indirectly promotes others with the same brand

17. Choosing a Brand Name • Is easy to pronounce • Is easy to recognize and remember • Is short, distinctive, and unique • Describes the product, use, and benefits • Has a positive connotation • Reinforces the product image • Is legally protectable Kleenex