pricing concepts and establishing value

• 5 c's of pricing 
• the overall sacrifice a consume is willing to make to acquire a specific product or service 
• succesful pricing strategies are buit around the 5 components 
• comprpany pricing obojectives 
• profit oriented - maximizing profits or reaching a target level  
• sales oriented - the aim to improve market share - set prices low temporarily, generate new sales; and take sales away from competitors 
• competitor oriented - prices set according to the competition, competitive parity, status quo 
• customer oriented - focus on customer expectations by matching prices to customer expectations 
• customers 
• economic theory: price-demand 
• changes in price affect demand 
• assessing customers' sensitivity to change in prices 
• demand increases as price decreases 
• when you have a lot of suppliers they are able to meet the demand then price will go down 
• the price-demand relationship is different for prestige products/services 
• demand increase as price decreases 
• demand decreases as price decreases 
• customer sensitivity to price changes = price elasticity of demand 
• measures the extent of the effect of price on the consumers demand ( purchase behavior) 
• income effect - change in income effects the quantity of a product demanded by consumers 
• substitution effect - the price of substitution effect the quantity of a product demand by consumers 
• cross-price elasticity : the effect of a change in the price of a product A on the demand Product B 
• Cost 
• Variable cost - cary with production and volume ( materials and labor costs) 
• fixed costs - uneffected by production volume - factory costs (e.g. rent, utilities, executive salaries)
• total cost - sum of variable and fixed costs = variable costs + fixed costs  
• break even point- just enough revenues to cover total costs 
• Channel Members - Manufacturers, wholesalers and retailers can have different perspective on pricing strategies 
• i.e. concerns for slaes versus image 
• manufacturers must protect against gray market transactions 
• where a product is bought and sold outside of the manufacturer's authorized (intended trading channels) 
• manufacturers,wholesalers and retailers can have different perspectives on pricing strategies 
• competition 
• monopoly- one firm control the market 
• oligopoly - a handful of firms control the market 
• mopolistic competition - many firms selling differentiated products at different prices 
• pure competition - many firms selling commodities for the same prices 

October 19,2016

• the diffusion of innovation model - explains how new ideas and technology spread through society over time 
• assumes inovations spread through 5 distinct categories of adopters 
• innovators 
• early adopters 
• early majority 
• late majority 
• laggards 
• this helps marketers predict which types of consumers will buy their products/services 
• innovators - 2.5% of consumers - they seek out new products; buyers who want to be the first to have the new product or service 
• early adopters - less venturesome; will wait to purchase after careful review 
• early majority - risk averse; tend to wait until the bugs have been worked out before purchasing 
• late majority - purchase the product after it has achieved its full market potential (saturation) 
• Laggards - avoid change: rely on traditional products until no longer available; may never adopt a certain product or service 
• innovators " i want to be the first to get this new product" 
• early adopters " this new product is great" 
• earl majority " i heard that the jones' have one" 
• late majority " i found it at TJ Maxx yay" 
• laggards "what new product"... Do I have to?"
• factors affecting the rate of diffusion 
• different products diffuse at different rates 
• various factors increase the speed of diffusion of a new product 
• factoring affecting product diffusion - relative advantage - compatibility - observability - complexity - trialability-
• the product life cycle - defines the stages that products move through as they enter, get established in, and ultimately leave the marketplace

Chapter 11

• vaeline
• cleanex
• chapstick
• white out
• Jacuzzi
• Kawasaki
• ziplock
• all have strong brands which are synonymous with the product itself
• people will not look for your product
• what is a brand ? What are its functions?
• A brand is a name, term, sign, symbol, or design, or a combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate thm fro those of other sellers
• key brand elements
• characters
• slogan
• design
• jingles
• name
• advertising
• marketing
• logo
• color
• advertising and marketing is binding elements that must align wit the company
• brands
• facilitate purchases
• establish loyalty
• protect from competition and price compet
• ition
• reduce marketing costs
• are ( intangible) assets
• impact market value
• brand equity - the commercial value that derives from consumer perception of the brand name of a particular product or service, rather than from the product or service itself.
• brand equity is the difference between the market value and book value
• brand ownership
• manufacturer brands  ( national brands)
• owned and managed by the manufacturer
• " name brand"
• Private- label brands
• ( retailer/store brands
• products developed by retailers
• "generic brand"
• branding strategies
• naming product lines and brands
• individual brand name and strategy
• each product in the product mix is given a specific brand name
• family brand name strategy
• all or most products are associated
• the use of the same brand name for new products being introduced to the same or new markets
• more likely to be accepted
• brand dilution occurs when a brand adversely changes what they sell
• a contractual agreement between firms, where by one firm allows another to use its brand name, logo, symbols, and /or characters in exchange for a negotiated fee
• creation of a new look and feel for an established brand
• adjust a changing market preferences
• change a brand's focus to target new markets

product, branding, and packaging decisions

• product : creating value
• The right product to satisfy the needs of your target customer
• what is a product?
• anything that is of value to a consumer and can be offered through a vouluntary marketing exchange
• 3 key components
• core customer value ( basic problem- solving benefits sought by the customer )
• Actual product ( physical attributes)
• Associated Services ( Augmented product)
• types of consumer products
• convenience product - every day purchase i.e. groceries
• shopping product - a product that requires comparison  include shoes, appliances and apparel
• specialty product - spend the most time on the decisions - medical services, wedding gowns, antiques   
• unsought product - fire extinguishers, cemetery plots, new innovations
•  product mix - includes all of the products a company produces
• Product portfolio
• product line - A group of related items in a company product portfolio
• new flavors is an increase in depth
• benefits of offering multiple product lines
• protection against competition - reduced effect of competitors actions in any one particular area
• increased market growth and profits - market diversification
• offset sales fluctuations - seasonal variation
• Achieve greater impact- greater importance among consumers an channel members
• enable economical resource usage - spreading operational costs
• avoid obsolesce - security in the event that one of its product line reaches the end of its life cycle
• categories of packaging
• primary packaging - the layer of packaging in immediate contact with the product
• secondary packaging- the wrapper or exterior carton containing the primary packaging
• primary packaging - tube of toothpaste
• secondary packaging - box holding the tube
• key roles of packaging include
• attracting consumer attention ( design) - identifies/ differentiates product from competitors
• promoting updates - "improved formula" use of "sustainable materials)
• enhancing usage ( user friendly design)
• Adjustable to appeal to different markets - size offering - travel, convenience and bulk
• packaging functions
• enhancing functionality
• packaging - a subtly way of repositioning a product
• to appear more up to date
• to attract new target market
• product labeling
• more than just a sticker on the package, it's a communication too
• design with end user in mind
• information must comply with industry- specific laws and regulation
• product labeling regulation
• products must meet specific tests before placing terms such as "organic" or "made in the usa"
• 5 digit code starting with 9 - organic