Transcript Notes - Holly High School

CHAPTER 5: PRODUCT AND
PRICE DECISIONS-SPORTS
I. PRODUCT DEFINED

A PRODUCT CAN BE TANGIBLE (BASEBALL BAT-GOOD) OR INTANGIBLE
(WATCHING A SPORTING EVENT-SERVICE)
A. PRODUCT LINE VS. PRODUCT ITEM
ITEM-SPECIFIC MODEL-NIKE SHOE
LINE-CLOSELY RELATED PRODUCTS SOLD BY A COMPANY –NIKE HAS
3:
-ATHLETIC CLOTHING
-ATHLETIC FOOTWEAR
-ATHLETIC EQUIPMENT
B. PRODUCT CLASSIFICATIONS-
CONSUMER VS. BUSINESS GOODS
C. POINT OF DIFFERENCEUNIQUE PRODUCT CHARACTERISTIC THAT MAKES A PRODUCT
STAND OUT AGAINST OTHERS.
(BASEBALL TEAM THAT WON WORLD SERIES, NIKE W/ IPOD)
II. STEPS IN NEW PRODUCT
DEVELOPMENT

TYPICALLY 7 STEPS IN DEVELOPING A NEW PRODUCT:
A. STEP 1-
SWOT ANALYSIS
-STRENGTHS
-WEAKNESSES
-OPPORTUNITIES
-THREATS
B. IDEA GENERATION- THESE CAN COME FROM A VARIETY OF SOURCES:
-RESEARCH
-EMPLOYERS
-CONSUMERS
-COMPETITORS
C. SCREENING & EVALUATION-
CAN THE COMPANY ACTUALLY MAKE AND SELL THE PRODUCT?
FOCUS GROUPS
D. BUSINESS ANALYSIS-
FINANCIAL ASPECT-BUSINESS PLAN
E. DEVELOPMENT-
MAKING THE ACTUAL PRODUCT OR A PROTOTYPE OF THE PRODUCT
F. TEST MARKETING-
OFFERING THE PRODUCT FOR SALE IN SMALL AREAS OR POSSIBLY
FREE SAMPLES TO CONSUMERS
MOVIES
G. COMMERCIALIZATIONUSE OF 5 P’S AND MARKETING TO TARGET CONSUMERS
http://www.youtube.com/watch?v=xffOCZYX6F8
http://www.youtube.com/watch?v=6CbQOLqZ8IA
III. PRODUCT LIFE CYCLE

THIS REPRESENTS THE STAGES THAT A PRODUCT GOES THROUGH DURING
ITS LIFE IN THE MARKETPLACE.

THERE ARE 5 STAGES:
CLICK ME!!!
A. INTRODUCTION-
MOST $$$ SPENT FOR RESEARCH, DEVELOPMENT, MARKETING
HIGH FAILURE RATE
EDUCATING CONSUMERS
(GATORADE)
B. GROWTH-
COMPETITORS BEGIN ENTERING THE MARKET IF PRODUCT IS
SUCCESSFUL - POWERADE
DISTRIBUTION BECOMES GREATER
C. MATURITY-
SALES BEGIN TO SLOW DOWN AND CHANGES MAY BE MADE TO A
PRODUCT TO KEEP IT IN CIRCULATION
APPLE IPHONE IS ENTERING INTO THIS PHASE
TWO PLACES TO GO FROM HERE…
D. RENEWAL -
PRODUCT IS ABLE TO SAVE OR RE-INVENT
IPHONE – NEW MODELS, NEW FEATURES, NEW APPS, IWATCH,
GLASSES?
E. DECLINE-
PROFITS BEGIN TO DROP AND PRODUCT MAY BE DROPPED
TOTALLY
IV. MANAGEMENT OF THE PRODUCT LIFE
CYCLE

PRODUCT MANAGERS NEED TO MANAGE A PRODUCT THROUGH ITS LIFE
CYCLE. THIS IS DONE IN THREE WAYS:
A. PRODUCT MODIFICATON-
CHANGING CHARACTERISTICS, FEATURES AND/OR APPEARANCE.
GATORADE OFFERED-FIERCE, FROST, ICE, XTREMO
B. MARKET MODIFICATION-
FINDING NEW WAYS TO FIND NEW CUSTOMERS OR ENCOURAGE
CURRENT CUSTOMERS TO BUY MORE
C. REPOSITIONING-
CHANGING A PRODUCTS IMAGE IN RELATION TO COMPETITION.
NEW BALANCE MARKETING TO PODIATRISTS
V. PRICING

HOW MUCH WILL SOMEONE PAY FOR SOMETHING? THAT IS THE MILLION
DOLLAR QUESTION!!!
A. PRICING AND PROFIT-
PRICE MUST BE SET TO MAKE A PROFIT AND COVER OVERHEAD
B. PRICING AND THE MARKETING MIX
PRICE MUST BE SET FOR THE CORRECT TARGET MARKET.
ROAD BIKES
VI. PRICING CONSIDERATIONS

FIVE PRIMARY FACTORS AFFECT PRICING DECISIONS:
A. CONSUMER PERCEPTIONS-
-PRESTIGE PRICING
-ODD-EVEN PRICING
-TARGET PRICING
B. DEMAND-
SUPPLY VS. DEMAND
HIGHER DEMAND (SHORTAGE) = HIGHER PRICE
HIGHER SUPPLY (SURPLUS) = LOWER PRICE
C. COST-
MUST PRICE HIGH ENOUGH TO COVER COST TO MAKE PROFIT
(COST-PLUS PRICING)
D. NEWNESS OF PRODUCT-
PRICE MAY BE SET SUBSTANTIALLY HIGHER IN THE BEGINNING OF A
PRODUCTS LIFE BUT LOWER THRU GROWTH AND DECLINE
E. COMPETITION
THEY MAY LOWER OR RAISE THE PRICE TO COMPETE WITH
COMPETITION.
VII. PRICING STRATEGIES

BUNDLE PRICING-4 FOR 5.00

LOSS LEADER PRICING-AT OR BELOW COST TO GET CUSTOMERS IN (ILLEGAL)

YIELD-MANAGEMENT PRICING-ITEMS AT DIFFERENT PRICES (STADIUMS)

PRICE LINING-SELLING ALL GOODS IN A LINE AT SPECIFIC PRICE PTS.