Chapter 14 – Developing and Pricing Goods and Services
14-1
Developing and Pric-
ing Goods and Ser–
vices
chapter
=
what’s new in this edition 14.3
brief chapter outline and learning goals 14.4
lecture outline and lecture notes 14.6
PowerPoint slide notes 14.45
lecture links 14.67
lecture link 14-1: THERE IS NO SUCH THING AS A “BETTER” PRODUCT 14.69
lecture link 14-2: THE VENETIAN’S TROUBLES IN MACAO 14.69
lecture link 14-3: A CANVAS ON A KLEENEX BOX 14.69
lecture link 14-4: THE NEW BARCODES 14.70
lecture link 14-5: THE 100-CALORIE SNACK ATTACK 14.71
lecture link 14-6: THE MOST VALUABLE BRANDS 14.71
lecture link 14-7: BABY PRODUCTS STAY STRONG AS PRICES RISE 14.72
14
Chapter 14 – Developing and Pricing Goods and Services
14-2
lecture link 14-8: BRAND MANAGEMENT ICONS 14.73
lecture link 14-9: THE MYSTIQUE OF COCA-COLA 14.73
lecture link 14–10: TOP 10 NEW PRODUCTS IN HISTORY 14.74
lecture link 14-11: EXTENDING THE LIFE CYCLE ON A ROLLER COASTER 14.74
lecture link 14-12: EXTENDING SWEETHEARTS 14.75
lecture link 14-13: RISING FOOD PRICES 14.75
critical thinking exercises 14.76
critical thinking exercise 14-1: CHOOSING A BRAND NAME 14.76
critical thinking exercise 14-2: MOST VALUABLE GLOBAL BRANDS 14.78
critical thinking exercise 14-3: SILKY SKIN SOLUTION 14.79
critical thinking exercise 14-4: BREAK-EVEN ANALYSIS 14.81
critical thinking exercise 14-5: COMPARISON SHOPPING ONLINE 14.84
bonus cases 14.85
bonus case 14-1: PANERA EXPANDS PAY-WHAT-YOU-CAN EXPERIMENT 14.85
bonus case 14-2: THE VALUE OF A PRODUCT OFFER 14.86
bonus case 14-3: THE TOY STORY ISN’T OVER JUST YET 14.89
Chapter 14 – Developing and Pricing Goods and Services
14-3
what’s new in
this edition
additions to the 10th edition:
• Video case
revisions to the 10th edition:
deletions from the 9th edition:
• Getting to Know Ratan Tata from the Tata Group
Chapter 14 – Developing and Pricing Goods and Services
14-4
brief chapter outline
and learning goals
c h a p t e r 14
Developing and Pricing
Goods and Services
Getting To Know MARY BARRA from GM
learning goal 1
Describe a total product offer.
I. PRODUCT DEVELOPMENT AND THE TOTAL PRODUCT OFFER
A. Distributed Product Development
B. Developing a Total Product Offer
C. Product Lines and the Product Mix
II. PRODUCT DIFFERENTIATION
A. Marketing Different Classes of Consumer Goods and Services
B. Marketing Industrial Goods and Services
learning goal 3
III. PACKAGING CHANGES THE PRODUCT
A. The Growing Importance of Packaging
learning goal 4
IV. BRANDING AND BRAND EQUITY
A. Brand Categories
B. Generating Brand Equity and Loyalty
Chapter 14 – Developing and Pricing Goods and Services
14-5
C. Creating Brand Associations
D. Brand Management
learning goal 5
Explain the steps in the new-product development process.
V. THE NEW-PRODUCT DEVELOPMENT PROCESS
learning goal 6
VI. THE PRODUCT LIFE CYCLE
learning goal 7
VII. COMPETITIVE PRICING
A. Pricing Objectives
B. Cost-Based Pricing
C. Demand-Based Pricing
D. Competition-Based Pricing
E. Break-Even Analysis
F. Other Pricing Strategies
G. How Market Forces Affect Pricing
VIII. NONPRICE COMPETITION
IX. SUMMARY
Chapter 14 – Developing and Pricing Goods and Services
Getting to Know MARY BARRA from GM
Barra is General Motors’s (GM) highest-ranking woman and the senior vice president of
global product development. She focuses on the customer in the area of global design, vehicle
and power train engineering, program management, and quality. GM is working to increase its
presence in the hybrid market.
I. PRODUCT DEVELOPMENT AND THE TOTAL
PRODUCT OFFER
A. This chapter explores two key parts of the marketing
mix: PRODUCT and PRICE.
It’s no secret that the airline industry is extremely competitive and many airlines have
cut basic services like free baggage and food. In order to set itself apart from its com-
petitors, this company takes a different path by offering door-to-door limousine service
and in-flight massages. Name that company.
Chapter 14 – Developing and Pricing Goods and Services
14-7
(See complete PowerPoint slide notes on page 14.45)
(See complete PowerPoint slide notes on page 14.46.)
(See complete PowerPoint slide notes on page 14.46.)
(See complete PowerPoint slide notes on page 14.46.)
The best product is the one that best meets your needs. (See
the complete lecture link on page 14.67 in this manual.)
(See complete PowerPoint slide notes on page 14.47.)
Chapter 14 – Developing and Pricing Goods and Services
COSTS to see if the benefits exceed the costs.
5. To satisfy consumers, marketers must LISTEN
whether or not to buy something (also called the
value package).
a. The basic product may be a physical good or
service.
Chapter 14 – Developing and Pricing Goods and Services
(See complete PowerPoint slide notes on page 14.47.)
(See complete PowerPoint slide notes on page 14.47.)
Panera adapted its pricing plan in a Missouri store to in-
clude an honor system where customers can weigh their own
cost versus value. (See the complete case, discussion ques-
tions, and suggested answers beginning on page 14.85 of this
manual.)
Popular Las Vegas hotels are building in China but some
have missed the mark in what their customers want. Operators
need to find out how to fix their problems. (See the complete
lecture link on page 14.69 in this manual.)
14–10
(See complete PowerPoint slide notes on page 14.48.)
This case uses the comparison of value between a Ford and
a BMW. (See the complete case, discussion questions, and
suggested answers beginning on page 14.86 of this manual.)
(See complete PowerPoint slide notes on page 14.48.)
(See complete PowerPoint slide notes on page 14.48.)
Chapter 14 – Developing and Pricing Goods and Services
14–11
“CORE PRODUCT” and the total product of-
fer the “AUGMENTED PRODUCT.”
c. TANGIBLE ATTRIBUTES are the product it-
self and the packaging.
D. PRODUCT LINES AND THE PRODUCT MIX
1. Companies usually sell several different, but
A. PRODUCT DIFFERENTIATION is the creation of re-
al or perceived product differences.
14–12
(See complete PowerPoint slide notes on page 14.49.)
(See complete PowerPoint slide notes on page 14.49.)
thinking
green
(Text page 381)
PPT 14-14
Quality and
Sustainability
(See complete PowerPoint slide notes on page 14.49.)
(See complete PowerPoint slide notes on page 14.50.)
(See complete PowerPoint slide notes on page 14.50.)
Chapter 14 – Developing and Pricing Goods and Services
1. Actual product differences are sometimes quite
products that the consumer wants to purchase
frequently and with a minimum of effort.
a. For these, location, brand awareness, and im-
14–14
(See complete PowerPoint slide notes on page 14.50.)
(See complete PowerPoint slide notes on page 14.51.)
(See complete PowerPoint slide notes on page 14.51.)
Chapter 14 – Developing and Pricing Goods and Services
b. Examples: clothes, shoes, appliances, and
a. Because these products are perceived as
having no reasonable substitute, the con-
Chapter 14 – Developing and Pricing Goods and Services
Specialty toys, like Disney-Pixar’s Woody and Buzz, are a
hot commodity among kids. Though the movie trilogy has fin-
ished, the company is finding new ways to keep these charac-
ters’ toys in the hands of kids. (See the complete case, discus-
sion questions, and suggested answers beginning on page
14.89 of this manual.)
(See complete PowerPoint slide notes on page 14.52.)
(See complete PowerPoint slide notes on page 14.52.)
(See complete PowerPoint slide notes on page 14.53.)
(See complete PowerPoint slide notes on page 14.53.)
14–17
14–18
(See complete PowerPoint slide notes on page 14.54.)
(See complete PowerPoint slide notes on page 14.54.)
This text figure shows some of the categories of both con-
sumer and industrial goods.
(See complete PowerPoint slide notes on page 14.55.)
Chapter 14 – Developing and Pricing Goods and Services
learning goal 3
Summarize the functions of packaging.
III. PACKAGING CHANGES THE PRODUCT
A. PACKAGING plays an important role in customers’
Chapter 14 – Developing and Pricing Goods and Services
14–20
(See complete PowerPoint slide notes on page 14.56.)
Kleenex has turned the tissue box into a work of art and us-
es that in promotion. (See the complete lecture link on page
14.69 in this manual.)
(See complete PowerPoint slide notes on page 14.56.)
After years of using a 12-digit UPC barcode, U.S. compa-
nies are now using the same 13-digit standard that has long
been the worldwide standard. (See the complete lecture link
on page 14.70 of this manual.)
Food companies such as Kraft are introducing individual
100-calorie packages of popular snacks such as Cheetos and
Oreos. (See complete lecture link on page 14.71 of this manu-
al.)