Advertising and Sells Promotion

Product and Price Planning Chapter 4 Product and Price Planning 4.1 Product Development  Goals  Identify the stages of new product _____________________.  Explain the various levels of ________________ and the components that make up the product mix.  Terms  ___________ mix – the product assortment, which includes all of the different products a business sells  __________ line – a group of closely related products with slight variations developed by the same business.  ______________ – A company’s exclusive right to use a brand name, symbol or design  _____________ brand – a well-known branded owned by one company that is sold for use by another company  It Starts with a Product  New products  Stages of new product planning  _________________ ideas – finding ideas for new product  _______________ ideas – carefully screening the ideas  Sales and profit potential  ________________ cost and time  Legal and safety issues  ____________________  Prepare a business analysis – _______________ the size of the market, costs of _________________ and marketing and sales projection  Develop a marketing strategy - product idea is _______________, a sample marketing strategy is created  Develop and test the product – can take many ____________ and can be very expensive  Market the product – introduces new product or service to the market

Advertising and Sells Promotion  Product Mix  Product levels – _________________ are familiar with the basic product  Product mix components  _______________ line – different soups are an example of product line, as is shampoo etc  _________________ and label – Two main functions are protection and promotion  _______________ – combination of unique qualities of a company, product, or product line.

Check Point 1. What are the six stages in the new product planning process?

2. Describe the three different levels of a product?

3.

Why would a business license the use of its brand to another business? Give an example of a licensed brand.

4. Select a product that you regularly purchase and recommend ways to improve the packaging and labeling.

Advertising and Sells Promotion

4.2 Product Life Cycle  Goals  Explain the _________________ of the product life cycle.  Describe real-world ____________________ of the product life cycle.  Terms  product life cycle – the ________________ of stages that a product goes through during its time on the market; there are four stages; introduction, growth, maturity and decline  brand extension – a marketing strategy that allows a business to use one of its wellknown brand names in a new _________________ category  intensive distribution – a marketing strategy to sell a product at as many ________________ as possible  Obsolescence – occurs when a product is out of date, no longer wanted, or unusable  The Stages of a Product  Introduction stage  Brand extension – business uses one of its ________________ brand names in a new product category  Benefits and risks of brand extensions – _______________ a product under an established brand name, the business reduces risk of failure  Growth stage – __________________ consumer preference and increasing sales  Maturity stage – sales continue to increase but at a _____________ pace than sales in the growth stage  Decline stage  Marketing strategies for the decline stage – business must ____________ to keep or eliminate weak products  _____________________ – occurs when a product is out of date, no longer wanted, or unusable  Real Strategies Using the Product Life Cycle  Kinko’s – in 1970 they made making copies more ____________________  BMW – they keep their vehicles at the introduction and growth stage to keep sales high. They pull their vehicles once they reach the ___________________ stage  PepsiCo and Coca-Cola – entering into contracts with _________________, such as ISD’s and restaurants to stay in front of the competition

Advertising and Sells Promotion  Blockbuster and Netflix – Blockbuster went out of business because Netflix introduced its new ________________ mail-order. This convenience put blockbuster out of business

Check Point 1.

What are the stages of the product life cycle?

2.

How is the product life cycle concept useful to businesses?

3. Why is the maturity stage difficult for many businesses?

Advertising and Sells Promotion

4.3 Price Planning  Goals  Discuss pricing ___________________ used by businesses when setting prices.  Compare and contrast pricing ______________________.  Terms  price skimming – a pricing _______________ in which a high price is set to emphasize the uniqueness of a product and to recover the product development coast quickly  penetration pricing – a pricing _________________ in which a low price is set for new products to gain a larger market share rapidly  Markdown – a ___________________ from the original selling price  price competition – a pricing strategy by which a company tires too distinguish its product or service from competing products based on low price  Non-price competition – a pricing ___________________ by which a company tries to distinguish its product or service from competing products based on factors other than price, such as design, quality and workmanship  price equilibrium – the point at which demand and supply are __________________  elastic demand – occurs when the demand for a product is ______________ by its price  inelastic demand – occurs when a _______________ in price has very little effect on the demand for a product  consumer credit – _______________ made available by retailers to assist consumers in making purchases  trade credit – _________________ offered by one business to another business  Pricing Objectives  Maximize profits – setting prices as _____________ as consumers will pay  Earn a return on investment – ________________ business’s profits against the money invested in the product  Increase sales or market share – price may cover expenses, but it may not result in a _________________. Prices will usually be low to encourage customers to buy  Create a price-quality image – Consumers often associate high price with high quality  Pricing ____________________  Product life cycle pricing ____________________

Advertising and Sells Promotion  Competition pricing strategies – aware of the competition, setting ________________ prices  Supply and demand pricing strategies – supply is what the business is ______________ to produce and demand is what the consumer is _______________ to buy at different prices  Using credit as part of the pricing strategy – businesses _____________ credit to their customers to help them make purchases. Without credit, consumers would not be able to afford high-priced items Check Point

1. Why is it important for a business to set pricing objectives?

2. What factors should a business consider when setting prices?

3. How does supply and demand affect pricing?