Chapter 12 - Developing & Pricing Products

Developing & Pricing Products

1. Identifying Products

Branding and brand awareness.Branding is process of using symbols to communicate the quantities of a product made by a particular producer.Brand awareness is extent to which a brand name comes to mind when a consumer considers a particular product category.

2. The Seven-Step Development Process

The Seven-Step Development Process is product ideas,screening,concept testing,business analysis,prototype development,product testing,test marketing and commercialization.Product ideas is typically come from consumers,the sales force,R&B departments,suppliers,or engineering personnel.Screening is eliminate ideas that do not mesh with the firm's abilities or objectives.Concept testing is companies use market research to get consumers' input about benefits and prices.Business analysis is marketers compare production costs and benefits.Prototype development is engineering,R&B or design groups produce a prototype.Product testing and test marketing is test the product to see if it meets performance requirements.Last,commercialization is the company begins full scale production and marketing.

3. Product Life Cycle

Product life cycle is series of stages in a product's commercial life.There are four stages in the PLC it is introduction,growth,maturity and decline.

4. Pricing New Products

There are four pricing new products.It is price skimming,penetration pricing,bundling strategy and price lining.Price skimming is setting an initially high price to cover new product costs and generate a profit.Penetration pricing is setting an initially low price to establish a new product in the market.Bundling strategy is grouping several products together to be sold as a single unit at a reduced price,rather than individually.Price lining is setting a limited number of prices for certain categories of products.

5. Pricing to Meet Business Objectives(cont.)

There are ten pricing to meet business objectives.It is pricing,pricing objectives,profit-maximizing objectives,market share,cost-oriented pricing,markup,variable cost,fixed cost,breakeven analysis and breakeven point.Pricing is the process of determining what a company will receive in exchange for its products.Pricing products is the goals that sellers hope to achieve in pricing products for sale.Profit-maximizing objectives is the seller's pricing decision is critical for determining the firm's revenue,which is the result of the selling price times the number of units sold.Market share is company's percentage of the total industry sales for a specific product type.Cost-oriented pricing is pricing that considers the firm's desire to make a profit and its need to cover production costs.Makeup is amount added to an item's purchase cost to sell it at a profit.Variable cost is cost that changes in the quantity of a product produced and sold.Fixed cost is cost that is incurred regardless of the quantity of a product produced and sold.Breakeven analysis is for a particular selling price,assessment of the seller's costs versus revenues at various sales volume.Lat but not least,breakeven point is the sales volume at which the seller's total revenue from sales equals total costs (variable and fixed) with neither profit nor loss.