FDNMARK PRODUCT

Marketing Elements of Product Planning for Goods & Services

 more than just selling and advertising
 performance of activities that aims to 1. Product Idea
accomplish a firm’s objectives through - physical good or service
satisfying the customer’s needs – for profit - experience, benefits and features
 begins w potential customer’s needs
2. Branding
Marketing Discrepancies & Separations - creating a name, symbol or design that
- Discrepancies of Quantity identifies and differentiates a product from
- Discrepancies of Assortment other products 5L of Brand Familiarity
- Spatial Separation
- Separation in time Manufacturer –
- Separation of information national brand owned
- Separation in values by producers
- Separation of ownership Dealer – private brands
owned by
Marketing Functions intermediaries
- Buying
- Selling 3. Packaging
- Transporting Protecting
- Storing Promoting
- Standardization & grading Enhancing
- Financing
- Risk taking 4. Warranty
- Market information - what sellers promise about the product
Limited Warranty – specified scope
Marketing Concept Full Warranty – repair or replacement of a
- Customer satisfaction product for a certain time period
- Total company effort
- Profit 5. Product Classes
- depends on the type of customer
Marketing Orientation – from a firm 1. Consumer Products – final consumer
Production Orientation – from a customer a. Convenience – purchased quickly
with little effort staple impulse emrgn
Customer Value – benefits vs costs obtaining the b. Shopping – worthy to compare
benefits c. Specialty – no substitutes
d. Unsought – not normally bought
Micro-macro dilemma – economic phenomenon 2. Business Products – how products will be
results in negative social consequences used
a. Installations – major facilities
Marketing Management Process b. Accessories – short-lived capital item
1. Planning c. Raw materials – becomes part of the
2. Implementation physical good
3. Controlling d. Components – processed and
becomes a part of the final product
4Ps of Marketing e. Maintenance, repair & operations
1. Product – Customer’s needs; goods/services Supplies - not directly related to
2. Place – Convenience; channel of distrib making a finished product but are
3. Promotion – Communication necessary to keep their operation
4. Price – Cost going
f. Professional Services – supports a
Product Life Cycle firm’s operations
1. Introduction
2. Growth
3. Maturity
4. Decline
New Product Development Process PRICE
1. Idea Generation
2. Screening – S&W Pricing Objectives
3. Idea Evaluation – concept testing 1. Profit-oriented
4. Development – prototypes; market test - profit as an objective; target return
5. Commercialization – putting into the market 2. Sales-oriented
- objectives seek to boost volume or market
PLACE share
3. Status quo oriented
Distribution channel - chain of intermediaries - don’t-rock-the-boat objectives
through which a good or service passes until it - copies the price levels of its competitors or
reaches the final buyer or the end consumer maintains the current price levels of similar
products or services in the market
Direct – maintains control; lower costs; no
intermediaries; direct contact w consumers Pricing Policies
Indirect – through intermediaries Administered prices – prices set by firms

Regrouping Activities One-price policy – same price to all customers

Assortment Flexible-price policy – same product & quantities to
Sorting – separating products into grades & qualities diff customers at diff prices
by diff target markets
Assorting – putting together variety of products to Dynamic pricing – products at a price changing
give target market what it wants depending on the level of demand, customer or
Quantity season
Accumulating – collecting products from many Price-cutting – cut prices to dominate market
small producers
Bulk-breaking – dividing larger quantities into smaller PP Over the Product Life Cycle
quantities as it approach the final market Skimming Price- sets a relatively high initial price
then lowers the price over time
Types of Channel Penetration Pricing – sets a low initial price to attract
1. Traditional new customers
2. Vertical Marketing Introductory Price Dealing - set low prices in order to
enter a new market for your company and raises
Market Exposure Strategies prices after introductory is over
1. Intensive - when a business ignores market
segmentation and decides to supply their DISCOUNTS
product to every market available - are deductions from the list price
2. Selective - through intermediaries who will
give their product special attention Quantity Discounts – encourage customers to buy in
3. Exclusive – selling in only one intermediary in large quantities
a particular location a. Cumulative - encourages repeat buying;
adds potential discount to every purchase
Entering International Markets b. Non-cumulative- a one-time discount
1. Exporting
2. Licensing Seasonal Discounts - are offered on seasonal goods
3. Management Contracting during a certain season
4. Joint Venture
5. Direct Investment Cash Discounts - encourages customers to pay bills
earlier (ex 2% if paid within 5 days)
Logistics – physical distribution
Physical Distribution Concept – transporting, storing Trade Discount (functional) - discount given by the
& product-handling activities of a firm and a whole seller as a deduction in the list price
channel system should be coordinated
Total Cost Approach – evaluating each possible PD Sale Price – temporary discount; encourages
system and identifying all costs for each alternative immediate buying
ALLOWANCES
- these are reduction in the price due to a problem Price Setting
with the product or service Cost-Oriented Approach
- takes into account the company's profit
Common Types of Allowances objectives and that covers its costs of production
Advertising All. - price reductions given to firms to 1. Markups - amount added to the cost price
get the word out about the product of goods to cover overhead and profit
2. Average-cost pricing - setting prices close to
Stocking All. – or slotting allowances; given to average cost ; maximize sales while
intermediaries such as retailers to get shelf space for maintaining normal profit; dangerous; no
their products allowances
a. Average-variable – depends on output
Push Money – spiffs; given to retailers to ensure that b. Average-fixed – fixed cost
they display the product significantly and ensuring c. Average-total – sum of all production
that products will be sold costs

Trade-in allowances - the amount a seller reduces Types of Total Costs

to a certain thing in return for a new product 1. Total Fixed Cost
bought 2. Total Variable Cost
3. Total Cost – sum of the two
Rebates or Cash back - unlike discount, these are
given to a customer after the payment of the full 3. Breakeven Analysis – cost and income to
amount determine profit
4. Marginal Analysis – examination of the
GEOGRAPHICAL PRICING associated costs and potential benefits;
- practice of modifying a basic list price based on profit maximization
the location of the buyer
Demand-Oriented Approach
Geographic Pricing Policies - uses the customer demand to set up the price in
Freight on board - the shipping fee is paid by the the market
purchaser 1. Value-in-use Pricing – based on the
Zone pricing - prices increase as distance increases product’s value to customers
(LBC) 2. Auctions – bidding for the selling item
Uniform delivery pricing - the same price is 3. Sequential price Reductions – starts at a
charged to all relatively high price then step by step
Freight-absorption pricing - seller absorbs all or a reductions
part of the cost of shipping as a promotional tactic 4. Reference Prices – prices customers expect
to pay (competition)
Value Pricing – setting a fair price level based on 5. Leader Pricing – setting very low prices to sell
the value consumers perceive a service or good to large quantities and also buy other products
have 6. Bait Pricing – set low prices to attract
customers and try to sell expensive brands
Legality of Pricing Policies once the customer is in store; false advertise
Unfair Trade Practice Acts – places a lower limit on 7. Demand-backward Pricing – estimates the
prices price from a consumer perspective and
Dumping – pricing a product in a foreign market adjusts accordingly
below the cost of producing it 8. Psychological – special appeal to customers
Phony List Prices – prices shown to customer to Odd-even – ends in certain numbers
suggest discounts 9. Price Lining - separating goods into cost
Price Fixing - the maintaining of prices at a certain categories in order to create various quality
level by agreement between competing sellers levels in the minds of consumers
Price Discrimination – selling same products to diff 10. Prestige – setting a high price to suggest
buyers at diff prices high quality

Full-line Pricing – setting prices for a whole line of Product-bundle – one price for a set of products
products Bid Pricing – offering a specific price for each
Complementary product – set prices on several possible job
products as a group Negotiated Price – based on bargaining