Pricing

Price is the amount of money charged for a product or service, it’s a sum of all the values that the consumers exchange for the benefits of having or using the product or service.

A company’s pricing decisions are affected by the internal company factors and by the external environmental factors.

The internal factors that affect the pricing are: the company’s marketing objectives, marketing mix strategy, cost and the organisation.
Examples of common objectives are survival, current profit maximisation and product quality leadership.

Price is also one of the marketing mix tools that a company uses to achieve its marketing objectives.

Company wants to charge a price that covers the costs for producing, distribution, selling the product and make a certain amount of profit.

There are two forms of company’s costs, a fixed and a variable cost. Fixed costs do not vary with production or sales level, for example monthly rent, interest, executive salaries, etc. and variable costs vary directly with the level of the production.

Totals cost is the sum of the fixed and variable costs for any given level of production.

The external factors that effect the pricing include the nature of the marketing and demand, competition and other environmental elements.

Next week..........The external factors that effect the pricing (Four types of market )

Individual product decisions

This week I would like to write about the decisions relating development and marketing of individual products. Focusing on the decisions about product attributes, branding, packaging, labelling and product-support services.

Product quality
The ability of a product to perform its functions and how durable a certain product is. The reliability, precision, ease of operation and repair.

Product features
A product can be offered with variety of features, the company van create more features by adding higher-level models. Features are a competitive tool for differentiating the company’s products from the competitors products. Being the first producer to introduce a needed and valued new feature is one of the most effective ways to compete.

Product style and design
Another way to add customer value is through product design. Some companies have reputations for outstanding style and design. This could be the colour, material, shape, and etc.

Branding
Consumers view a brand as an brand as an important part of a product, branding adds value to a brand. It maintains, protects and enhances the product.

A brand is a name, term, sign, symbol, design or a combination of these, which are used to identify the goods or services.

A brand can deliver up to four levels of meaning:
1. Attributes
2. Benefits
3. Values
4. Personality

Brand name selection
Selecting the right name is very important, a good name can add to great success to a products.

It should include the benefits and the qualities of the product, it should also be recognisable for the consumers. Short names are easy to remember as well such as Dove (Soap).

The brand name should be distinctive, but easy to translate. And once chosen the brand name it must be registered with the appropriate Trade Marks Register, giving the owner property rights and preventing competitors from using the same name.

Type Of Consumer Product

Consumer products are those bought by final consumers for personal consumption. Marketers usually classify these goods based on consumer shopping habits. Consumer products include convenience products, shopping goods, specialty products and unsought products.

Convenience products are consumer goods and services that the consumer usually buy with a minimum level of effort. For example soap, newspaper, washing detergent, fast food etc.

Convenience products can be divided further into three different types: staples, impulse goods and emergency goods.

Staples are goods that consumers buy on a regular basis, such as milk, toothpaste or bread. Impulse goods are purchased with little planning or search effort, such as magazines, chocolate bars product that are often placed next to checkout counters. Because shoppers may not otherwise think of buying them. Emergency product are purchased when a need is urgent, for example umbrellas during a rainstorm.

Shopping products are less frequently purchased and consumers spend considerable time and effort gathering information and comparing alternative brands carefully on suitability, quality, price and style. Examples of shopping products are furniture, clothing, used cars and major household appliances. Shopping products can be divided into homogeneous and heterogeneous goods.

Specialty products are consumer goods with unique characteristic or brand identification for which a group of buyers is willing to make a special purchasing effort. Examples include specific brands and types of car, home en system, photographic equipment, designer clothes and the services of medical or legal specialist and luxury goods.

Unsought goods are consumer goods that the consumer either does not know about or knows about but does not normally think of buying. Most new innovations are unsought until the consumer becomes aware of them through advertising. Few examples of unsought goods are life insurance, home security, blood donations etc. These products require a lot of advertisement, personal selling and other marketing efforts.

Three Levels of Product

Brands, products, packaging and support services

We define a product as anything that is offered to a market for use, and that will satisfy a want or a need. Product include physical objects, services, persons, places, organizations and ideas.

Services are products that consist of activities, benefits or satisfaction that are offered for sale, but don not result in the ownership of anything. Examples are banking, haircuts, home repairs and hotel.

There are three level of a product: the core product, the actual product and the augmented product.

The core product is answer to the question What is the buyer really buying? The core product stands in the center or the total product. If a consumer buys washing detergent the core product would be clean clothes.

The actual product is the level around the core product, for example the quality of the product, features, styling, a brand name and packaging. The actual product would be the brand of the detregent, quality and the packaging.

Finally an augmented product around the core and actual product by offering additional consumer services and benefits. The additional services, the Internet site or the hot line of the company.