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Product and Pricing

The long-term success of any marketing effort depends on a strong product. A product is really a bundle of attributes that consumers want or need.

A marketing campaign must be based on a product's stage in the product life cycle.

The first stage is an introductory period that generates little revenue.

Then comes a phase of rapid growth during which profits peak.

In the third stage, maturity, the product's sales level off and slowly start to fall.

In the final stage, sales fall sharply and the product is usually taken off the market.

A brand is a name, symbol, design or term used singly or in combination to identify the goods or services of a specific producer. Companies build brand identification to distinguish their goods from those of their competitors.

Packaging is the container, wrapper or other means in which a product is presented. It protects the contents, helps sell the item, facilitates handling, and can make the product more visible on the shelf.

Pricing - the process of setting a price for a product - is a second major element of the marketing mix. Many factors enter into a pricing decision.

There are several pricing strategies:

• Penetration pricing is the setting of low prices in order to capture a large market share..

• Price lining involves offering products at different levels of price

• Psychological pricing sets prices to appeal to buyer's subjective perceptions. A discount is a reduction in the price of a product.

There are different types of discounts

• A trade discount is a price reduction given to retailers and wholesalers.

• A cash discount

• A quantity

• A promotional

Nonprice competition is a seller's attempt to attract customers by offering incentives besides low prices. This may include attractive credit terms, customized service, warranties, free repairs, and other forms of encouragement.

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Classifying Goods and Services

Marketers have found it useful to classify goods and services as either consumer or industrial, depending on the purchases of the particular item.

Classifying Consumer Goods

A variety of classifications have been suggested for consumer goods, but the categories most typically used are convenience, shopping, and specialty products

Convenience products are items the consumer seeks to purchase frequently, immediately, and with little effort

Shopping products are those typically purchased only after the consumer has compared competing products in competing stores on bases such as price, quality, style, and color.

Specialty products are those that a purchaser is willing to make a special effort to obtain. The purchaser is already familiar with the item and considers it to have no reasonable substitute.

Marketing Strategy Implications The consumer product classification is a useful tool in marketing strategy.

1.1.Classifying Industrial Goods

The five main categories of industrial, or organizational, products are installations, accessory equipment, component parts and materials, raw materials, and supplies. While consumer products are classified by buying habits, industrial products are classified based on how they are used and by their basic characteristics. Products that are long-lived and usually involve large sums of money are called capital items. Less costly products that are consumed within a year are referred to as expense items.

Installations are major capital items such as new factories, heavy equipment and machinery, and custom made equipment.

Accessory equipment includes capital items that are usually less expensive and shorter-lived than installations. Examples are hand tools and fax machines.

Component parts and materials are industrial goods that become part of a final product.

Raw materials are similar to component parts and materials because they are used in the production of a final product. They include farm products such as cotton, wheat, cattle, and milk, and natural materials such as iron ore, lumber, and coal.

Supplies are expense items used in a firm's daily operation, but they do not become part of the final product.

Marketing Strategy Implications Each group of products requires a different marketing strategy. Because most installations and many component parts are marketed directly from the manufacturer to the buyer, the promotional emphasis is on personal selling rather than on advertising. By contrast, marketers of supplies and accessory equipment rely more on advertising since their products are often sold through an intermediary such as a wholesaler.