MT 219 Marketing Unit Five New Products and Pricing Note: This seminar will be recorded by the...
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![Page 1: MT 219 Marketing Unit Five New Products and Pricing Note: This seminar will be recorded by the instructor.](https://reader034.fdocuments.us/reader034/viewer/2022052702/56649f145503460f94c29046/html5/thumbnails/1.jpg)
MT 219 Marketing Unit Five
New Products and Pricing
Note: This seminar will be recorded by the instructor.
![Page 2: MT 219 Marketing Unit Five New Products and Pricing Note: This seminar will be recorded by the instructor.](https://reader034.fdocuments.us/reader034/viewer/2022052702/56649f145503460f94c29046/html5/thumbnails/2.jpg)
Review of Unit 4
• How did Unit 4 go? Questions or concerns?
• Instructor suggestions for Unit- Research for your Unit 6 research Project
• Questions?
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New Product Development Process
• Idea Generation – ideas come from many sources• Idea Screening – need to avoid “go” or “no go” error• Concept Development and Testing – iterative process of consumer
feedback• Marketing Strategy Development- initial marketing strategy for the
new product• Business Analysis – what is the potential for sales, costs, and
profits?• Product Development – lengthy and expensive• Test Marketing – realistic settings• Commercialization – when, where, and how
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Product Life Cycle Characteristics
• Product development – sales are zero and expense outlays are significant
• Introduction- sales begin at zero, profits negative
• Growth – sales rise rapidly, profits peak
• Maturity – sales peak and start to decline as profits fall
• Decline – sales fall rapidly
• See figure 8.2 in text
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Marketing Objectives at each stage
• Introduction – create awareness and trial
• Growth – establish unique selling proposition; differentiate, build mass market awareness
• Maturity – hold share, consumer loyalty, diversify product, increase distribution points
• Decline – decrease expenditures, milk the brand and discontinue if necessary
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What is Price?
• Value exchanged for products- Money
- Barter
• Only primary source of revenue
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Major Pricing Strategies
• Customer value-based pricing
• Cost-based pricing
• Competition-based pricing
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Customer Value-Based Pricing
• Assesses prices based on customer perceptions of value
• Good-value pricing- The correct amount of quality and service at a fair price
• Value-added pricing- Differentiates the product by attaching value-added features and services and charges higher prices for them
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Cost-Based Pricing
• Assesses price based on costs
• Cost-plus pricing- adds a markup to the cost of the product
• Breakeven pricing- sets prices to ensure that costs are covered and there is a certain rate of return
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Competition-Based Pricing
• Sets prices based upon what the competition’s strategies, market offerings, costs and prices are.
• Consumers will look at value in the product compare it to the competition and make a purchase decision based on what they see.
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Other Considerations Impacting Pricing
• Can be internal or external to the firm• Marketing strategies and objectives• Organizational considerations such as internal costs• The economy• Government requirements• Social considerations• Demand and the marketplace
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Price Elasticity
• Measures the sensitivity of demand to price changes
• If acceptable substitutes are available, markets tend to be elastic
• If not, they tend to be inelastic
• Examples of inelastic products?
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New Product Pricing
• Skimming – set initial price high. Useful for unique products when competition cannot follow quickly.
• Where does the term come from?• Examples?
• Penetration – set initial price low to capture as much of the market as possible before competition enters.
• Examples?
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Price Adjustments
• Adjusts prices based on situational, product and customer differences
• Discount and allowance pricing- price reductions are provided based on customer behavior such as frequent purchases and paying early
• Psychological pricing- prices that impact the customer psychologically such as pricing products at $1.99 or reference pricing
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Price Adjustments- continued
• Promotional pricing- temporary reductions in prices to increase sales,. Examples: white sales and rebates
• Geographical pricing- Pricing based on where customers are located. Examples: delivery based on zones or a uniform delivered price
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Price Adjustments- continued
• Dynamic pricing- prices are continually changed and adjusted depending on individual characteristics and needs of customers. Examples: negotiated prices and pop machines that charge based on temperature outside.
• International pricing- Price adjustments made in marketing products internationally. Examples: Pharmaceuticals and McDonalds are priced differently in different countries.
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Any Questions?
Thank you for attending!
See you next week!
Instructor will post the link to the recording of tonight’s seminar in the course Announcements.