Académique Documents
Professionnel Documents
Culture Documents
Role of College
1. To teach You to think-to understand and solve problems
2. To teach you to communicate better:
to speak effectively and convincingly;
to write coherently and concisely.
Product
A. Product defined: a bundle of benefits (needs and wants)
B. Classes of goods:
1. Convenience goods
- intensively distributed
- promoted through branding
- entail high sales volume
- low unit profit ascribable to above
2. Shopping goods
- buyer makes a comparison
3. Specialty goods
- defined in the mind of the buyer
- sold in specialty shops, sites, and catalogs
-2-
-3-
Product (continued)
C. Branding
1. Brand defined:
2. brand name, trade mark
3. Brand Strategies: (4)
a). individual brands
b). manufacturers brands
- goodwill or consumer franchise
c). middleman or reseller brands
(e.g., Jegs)
d). generics, non-brands
-4-
Brand defined:
name, term, sign, symbol, slogan
used to identify products of a manufacturer
and differentiate them from competing items.
Just do it
Coke
GM Performance Products
-5-
-6-
Product, continued
D. Product Life Cycle
1. Purpose:
- means to view and assess
development of a product or brand
- a tool for planning
2. Stages: (4)
- introduction,
- growth,
- maturity,
- decline
-7-
d
e
t
a
r
u
Sa t
e
u
n
e
v
e
R
Profit
Introduction
Growth
Maturity
Decline
-8-
Growth
Maturity
Decline
Product : New
Same
Small change
Crash
Prmtn. :
Inform
Price :
High
Stable
Drops
Dist. :
Limited
Expands
Level
Comp. :
None
Influx
Shake out
Find a new
use or a new
market for the
product
-9-
Brand
-10-
risk
prone
Pretty risk
prone
Innovator
Early adopter
.5%
5%
h
t
w
gro
risk averse
Early mjty.
35%
Need to get here
Late majority
laggards
40%
balance
10%
-11-
-12-
Organizations
1. New product department r
matrix mgmt.
new prod.
prod. A
prod. B
mkt. rsch.
engineering
prodctn.
*2. New product committee subotimize
3. Project team or venture team
-13-
D
0
6 yrs.
5 yrs .
3 yrs.
1 yr.
17 yrs.
-14-
Brainstorming Recipe:
Ingredients:
Specific problem to solve
Short period 45 - 1 hr.
No criticism
None of people are experts
generate as many
ideas as possible
Attribute listing:
Take an existing product;
List its attributes;
Think up new features that may enhance the product.
-15-
Employees
Consultants/inventors
Retailers
1IDEAS
No
2 SCREENING
Does idea meet objectives & optimally utilize resources of firm?
Yes
3 CONCEPT DEVELOPMENT
1. Who will use the product?
2. What will product be used for?
3. How often will it be used?
4. What benefits will it provide?
Distributors
-16-
4 CONCEPT TESTING
Which, if any, of these concepts is viable?
none
one
5 STRATEGY DEVELOPMENT
1. Target market description
2. Product positioning
3. Projections: initial sales, ROI, mkt. share
4. Suggested price, distribution, promotion
5. Long-run sales projection, and mktg, mix strategy
Cycle
e
f
i
L
.
Prod
-17-
6 BUSINESS ANALYSIS
No
yes
tangible product
Idea champion
No
yes
-18-
MARKET TESTING
No
yes
9 COMMERCIALIZATION (implementing)
1. When (seasonal product or new entrant?)
2. Where (planned rollout or new issue?)
3. How (new version or upgrade?)
4. By whom (distribution strategy)
-19-
Rollout
Mar
May
Sep
-20Manufacturer
Corporate sales team
Retail unit
managers
Direct marketing or advertising
Consumers
-21-
Pricing
1). Review of Economics
2). Pricing Strategies
3). Pricing Mechanics
I.
Review of Economics
A. Demand Curves
1. Why discuss?
2. What determines?
3. Law of diminishing demand
4. Moving along the demand curve
5. Shifting the demand curve
-22-
P1
P2
P3
QUANTITY
1000
2000
6000
-23-
Ps
D
1K 1.5K 2K
PRICE
$6
$5
$4
QUANTITY
1,000
1,500
2,000
TR
6K
7. 5K
8K
-24Major Change
in
Price
P1
P2
Pricing Strategy
Product
Promotion
Place
P3
D1
Q1
$6 - 1k
$5 - 3k
$2 - 10k
Q2
Q3
D2
Quantity
Q10
4Ps
-25-
- 10
+ 25%
= .4
3. Elastic
E>1
Inelastic
E<1
Unit elastic
E=1
Perfectly inelastic E = 0
4. Ideally, want demand for product
relatively inelastic
EXAMPLE:
-26-
% Qd
% P
% Qd
% P
- 1%
+ 5%
= .20
% Qd
% P
- 2%
+ 5%
= .40
-27-
Product
differentiation
Us
Them
-28-
-29-
MC = MR
ATR
P1
ATR
D1
Q1
-30-
Penetration Pricing
1. Introduce a quality product
@ / below competitors price
2. cut price
3. harvest profit over long run
Conditions of use:
1. buyer are price sensitive (elastic)
2. economics of scale in production exist
3. barriers to entry exist for competitors
-31-
-32-
Markup Calculation
-33-
Break even:
How many units of a product do we have
to sell @ a given price to cover our fixed costs?
Selling price
100,000
7.5 - 5.0
$2.5
Variable cost
Contribution margin
Fixed cost
Break even point in units =
$1,000,000
Selling price
per unit
$60 - $40
Contribution margin = $20
Break even : we cover our fixed costs
-34-
-35-
Discount:
A reduction in list price granted to a buyer for performing
some function.
Function =
a). purchasing a larger quantity of a product,
b). handling shipping,
c). paying in cash or within a designated period,
d). buying in a specific season.
-36-
Gross revenue
less returns and allowances
yields net sales
less cost of goods sold
yields gross margin
less marketing expenses
yields net profit before taxes
-37-
%
Gross Sales
(rtns & allow)
$540k
40k
- Net Sales
* (COGS)
500k
300k
100
(60)
* Gross Mgn
(expenses)
200k
160k
40
(35)
* Net Profit
$40k