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Chapter 14 - Developing and Pricing Goods And Services
14-46
PPT 14-4
Kathy Ireland
KATHY IRELAND
Kathy Ireland Worldwide
14-4
• Began selling crafts door-to-
door as a small child.
• Toward the end of her modeling
career, she started licensing her
name to apparel products.
• Now she is in the house wares
business and bringing in more
money than Martha Stewart!
PPT 14-5
Name That Company
NAME that COMPANY
14-5
You’ve been using my product for years, yet it took
over 15 years for it to be accepted in the market.
It finally became popular during World War I, and
today you’ll find it on your pants, your travel
bags, and your hoodie.
Who am I and what do I make?
Company: Whitcomb Judson and the zipper
PPT 14-6
Developing Value
DEVELOPING VALUE
14-6
LO 14-1
• According to the American Marketing Association,
value is a foundation of marketing.
• Value -- Good quality at a fair price.
• Adapting products to new markets is an ongoing
challenge.
• Product development is a key activity in any
modern business.
Chapter 14 - Developing and Pricing Goods And Services
14-47
PPT 14-7
Products Consumers Won’t Give Up
PRODUCTS CONSUMERS
WON’T GIVE UP
14-7
LO 14-1
• Internet service
• Cell phone service
• Cable television
• Discount apparel
• Haircuts and coloring
• Fast-food
1. This slide profiles some of the goods and services
people do not eliminate during a recession.
2. Ask the students: Why are the items listed on the
slide considered “untouchables”?
3. To further the discussion ask the students: What
items do you consider to be “untouchable” and
why?
PPT 14-8
Products “Expendable” by Spending
Cuts
PRODUCTS “EXPENDABLE”
by SPENDING CUTS
14-8
LO 14-1
• Luxury handbags
• Satellite radio
• Specialty apparel
• High-end cosmetics
• Facials
1. This slide shows the flipside of the previous slide
and lists items that people are most likely to elimi-
nate.
2. Ask the students to get into groups and discuss:
Why are these items “expendable,” but the items
on the previous slide are “untouchable”?
PPT 14-9
Bellying Up to Social Media
BELLYING UP
to SOCIAL MEDIA
14-9
• Bocktown Beer and Grill is at the
front of mobile media marketing.
• It holds polls on Facebook and
Twitter that let customers pick the
beers on tap.
• It also uses Tabbedout, a mobile
app that allows customers to pay
their bill without returning to the bar
or giving their card to a server.
Chapter 14 - Developing and Pricing Goods And Services
14-48
PPT 14-10
Distributed Product Development
• Distributed Product Development -- The
handing off of various parts of your innovation
process - often overseas.
DISTRIBUTED PRODUCT
DEVELOPMENT
14-10
LO 14-1
• The increase in outsourcing has
resulted in using multiple
organizations separated by
cultural, geographic and legal
boundaries.
PPT 14-11
Developing a Total Product
• Total Product Offer -- Everything consumers
evaluate when deciding whether to buy something.
DEVELOPING a
TOTAL PRODUCT
14-11
LO 14-1
• Products are evaluated on
many different dimensions,
both tangible and intangible.
• Marketers must think like and
talk to consumers to find out
what’s important.
The total product offering includes tangible as well as in-
tangible benefits.
PPT 14-12
Product Innovation during the Great
Depression
PRODUCT INNOVATION DURING
the GREAT DEPRESSION
Source: BusinessWeek Small Biz. 14-12
Year Product
1929 Electric Razors
1930 Car Radios
1930 Supermarkets
1933 Chocolate Chip Cookies
1933 Laundromats
LO 14-1
1. The late 1920s and 1930s are associated with the
Great Depression, but the period was also one of
great product innovation.
2. The items on the slide were invented during the
Great Depression.
3. Have students look at the items and ask: Why do
you think these items were developed during a time
when most Americans had very little discretionary
income?
4. Have students work with a partner or small group
to come up with specific reasons they think these
products developed.
Chapter 14 - Developing and Pricing Goods And Services
14-49
PPT 14-13
Anything You Can Do . . .
ANYTHING YOU CAN DO…
Products Replacing Products
14-13
Starter Replacer Replacer’s
Replacement Future Threat
Friendster MySpace Facebook Quora
Nokia Blackberry iPhone Android
TiVo Blockbuster NetflixApple TV
Altavista Yahoo; Ask Google Blekko
The Shop Around
the Corner Borders Amazon Apple
Polaroid Kodak Canon Smartphones
Playstation Wii Xbox Kinect Playstation 4
LO 14-1
1. This slide shows that companies that innovated and
create new products don’t always remain the mar-
ket leaders.
2. Point out that while Apple didn’t introduce cell
phones, video recorders or game players, it has be-
come the market leader by listening to consumers
and improving these products to meet consumers’
wants and needs.
PPT 14-14
Potential Components of a Total Product
Offer
POTENTIAL COMPONENTS
of a TOTAL PRODUCT OFFER
14-14
LO 14-1
A product can be divided into the physical and the total
product. Marketing managers must take the physical and
add value to create the total product offer.
PPT 14-15
Understanding Product Lines
• Product Line -- A group of products that are
physically similar or intended for a similar market.
UNDERSTANDING
PRODUCT LINES
14-15
PhotoCourtesyof:Coca-ColaArtGallery
LO 14-1
• Product lines often include
competing brands like:
- Coca-Cola
- Diet Coke
- Coke Zero
- Cherry Coke
Chapter 14 - Developing and Pricing Goods And Services
14-50
PPT 14-16
The Product Mix
The PRODUCT MIX
14-16
LO 14-1
• Product Mix -- The combination of all product lines
offered by a manufacturer or service provider.
• Product mixes like Procter & Gamble’s can be
extensive:
- Toothpaste
- Cosmetics
- Diapers
- Batteries
- Bar soap
To give students a visual of the products offered by Procter
& Gamble, use its website at www.pg.com and click on the
products tab.
PPT 14-17
Sealing the Deal
SEALING the DEAL
14-17
• As a Navy Seal, Randy
Hetrick found keeping
his fitness levels up
while in the field was
difficult.
• He created the TRX
out of parachute
harnesses.
• While earning his MBA, he raised capital to
launch Fitness Anywhere. Now, a $50 million
company!
PPT 14-18
Differentiating Products
DIFFERENTIATING PRODUCTS
14-18
LO 14-2
• Product Differentiation -- The creation of real or
perceived product differences.
• Marketers use a mix of pricing, advertising and
packaging to create different images. Examples
include:
- Bottled water
- Aspirin
- Fast-food
- Laundry detergent
- Shampoo
Chapter 14 - Developing and Pricing Goods And Services
14-51
PPT 14-19
Classifying Consumer Goods
and Services
CLASSIFYING CONSUMER
GOODS and SERVICES
14-19
LO 14-2
• Convenience Goods and
Services -- Products
consumers purchase frequently
with minimal effort. These
include:
- Candy and snacks
- Gas
- Milk and eggs
Location, brand awareness, and image are important in mar-
keting these goods and services.
PPT 14-20
Classifying Shopping Goods
and Services
CLASSIFYING SHOPPING
GOODS and SERVICES
14-20
LO 14-2
• Shopping Goods and Services -- Products
consumers buy only after comparing value, quality,
price, and styles. These include:
- Clothes and shoes
- Appliances and furniture
- Childcare
- Home remodeling
Brand name, price, and quality differences are important in
marketing these goods and services.
PPT 14-21
Classifying Specialty Goods
and Services
CLASSIFYING SPECIALTY
GOODS and SERVICES
14-21
LO 14-2
• Specialty Goods and Services -- Products with
unique characteristics and brand identity. These
include:
- Tiffany jewelry
- Rolex watches
- Lamborghini automobiles
- Ritz Carlton Hotels
Purchasers of the items listed on this slide are brand in-
sistent and refuse to accept substitutes.
Chapter 14 - Developing and Pricing Goods And Services
14-52
PPT 14-22
Specialty Goods
Aren’t Just for Humans
SPECIALTY GOODS AREN’T
JUST for HUMANS
14-22
Source: Entrepreneur, www.entrepreneur.com, accessed November 2014.
LO 14-2
• Would you buy these for your dog?
- Wine with custom labels featuring Fido
- Doggy day camp and in-home pet care
- A bound journal of your pets exploits
- Luxury shampoos and hair-care products
- A sound system to eliminate pet-unfriendly frequencies
- A “dog beer” at the Pawbar
- Monthly gifts from BarkBox
1. People are doting on their pets more than ever.
These links show just a few things you could buy
for your best friend.
2. Ask students: Would you ever purchase any of
these for your pet? Do you have a pet product idea?
PPT 14-23
Classifying Unsought Goods
and Services
CLASSIFYING UNSOUGHT
GOODS and SERVICES
14-23
PhotoCredit:PaulChenoweth
LO 14-2
• Unsought Goods and Services -- Products
consumers aren
’
t aware of or haven
’
t thought of
buying until they need them. These include:
- Car-towing services
- Funeral services
- Renter’s insurance
Unsought goods and services often rely on personal selling
or specialty advertising—like the Yellow Pages.
PPT 14-24
Identifying Consumer Goods
Classifications
IDENTIFYING CONSUMER
GOODS CLASSIFICATIONS
14-24
LO 14-2
• How would you classify these consumer
products?
- Beautyrest mattress
- Honda Accord
- McDonald’s Big Mac
- Rolls Royce automobiles
- Oreo Cookies
- Harvard University degree
Beautyrest mattress—shopping good
Honda Accord—shopping good
McDonald’s Big Mac—convenience good
Rolls-Royce automobiles—specialty good
Oreo Cookies—convenience good
Harvard University degree—specialty good
Chapter 14 - Developing and Pricing Goods And Services
14-53
PPT 14-25
Odd Product Ideas That Were
Successful
ODD PRODUCT IDEAS
that WERE SUCCESSFUL
14-25
LO 14-2
• Pet Rock - For $3.95 you could buy a gift-wrapped
rock with eyes and a training manual.
• Garbage Pail Kids - Perhaps the grossest trading
cards ever produced.
• Mood Rings - Wildly popular as the changing colors
of the ring supposedly measured your mood.
• Chia Pets - Animal shaped (even President shaped)
clay figures that grew sprouts.
1. Not all successful products necessarily make sense.
Take for example the products mentioned on this
slide.
2. To start a discussion on odd product offerings, ask
students: What are some other examples of odd
products that were successful or unsuccessful?
3. For more examples of odd products that were not
successful go to
http://www.businessadministration.org/blog/15-
ridiculous-products-that-actually-sell.
PPT 14-26
Classifying Industrial Goods
and Services
• Industrial Goods -- Products used in the
production of other products and sold in the B2B
market.
CLASSIFYING INDUSTRIAL
GOODS and SERVICES
14-26
LO 14-2
• Industrial goods
include:
- Installations
- Capital items
- Accessory equipment
- Supplies
- Service
PPT 14-27
Categories of Industrial Goods and Ser-
vices
CATEGORIES of INDUSTRIAL
GOODS and SERVICES
14-27
LO 14-2
Chapter 14 - Developing and Pricing Goods And Services
14-54
PPT 14-28
Test Prep
TEST PREP
14-28
• What value enhancers may be included in a total
product offer?
• What’s the difference between a product line and
a product mix?
• Name the four classes of consumer goods and
services and give examples of each.
• Describe three different types of industrial goods.
1. Some value enhancers that may be included in the
total product offering include brand name, warran-
ty, service, store surroundings, and speed of deliv-
ery.
2. Product line refers to the group of products that are
physically similar or intended for a similar market.
These products may face similar competition. For
example, you can purchase a Diet Coke, Diet Coke
with Splenda, and so on. The product mix is the to-
tal of the product lines offered by a particular com-
pany. The text uses the example of Procter &
Gamble.
3. The four classes of consumer goods and services
include:
• Convenience goods and services—candy, gum
and milk
• Shopping goods and services—clothes, shoe,
and appliances
• Specialty goods and services—fur coats, im-
ported chocolates, and business consultants
• Unsought goods and services—burial service,
insurance, and emergency drain cleaning
4. Installation goods consist of major capital equip-
ment. Capital items are expensive products that last
a long time. Accessory equipment consists of capi-
tal items that are not quite as long-lasting or expen-
sive as installations and include computers, copy
machines, and various tools.
PPT 14-29
Uses of Packaging
USES of PACKAGING
• Good packaging can also make
a product more attractive to
retailers.
14-29
LO 14-3
• Companies often use packaging to change and
improve their basic product. Examples include:
- Microwave popcorn
- Tuna pouches
- McDonald’s green packaging
Chapter 14 - Developing and Pricing Goods And Services
14-55
PPT 14-30
Some Key Functions of Packaging
SOME KEY FUNCTIONS of
PACKAGING
14-30
LO 14-3
1) To attract buyers’ attention
2) Protect the goods inside and be
tamperproof
3) Be easy to open
4) Describe and give information about the
product
5) Explain the product’s benefits
6) Provide warranty information and warnings
7) Give an indication of price, value, and uses
PPT 14-31
Bundling
• Bundling -- Grouping two or more products together
and pricing them as a unit.
BUNDLING
14-31
PhotoCredit:JoeyDay
LO 14-3
• Virgin Airlines bundles
door-to-door limo
service and inflight
massage with some
tickets.
• Financial institutions
bundle advice with
purchases.
PPT 14-32
Understanding Branding
• Brand -- Name, symbol, or design that identifies the
goods or services and distinguishes them from
competitors
’
offerings.
UNDERSTANDING BRANDING
14-32
LO 14-4
• Trademark -- A brand
that has exclusive legal
protection for both its
brand name and design.
Recognized trademarks include the Nike Swoosh, the Pills-
bury Doughboy, and Apple’s Apple.
Chapter 14 - Developing and Pricing Goods And Services
14-56
PPT 14-33
Playing the Name Game
PLAYING the NAME GAME
14-33
• With a couple hundred countries
on the cyber-platform, choosing
the right name is a global issue.
• Every once in a while, a successful
name is created by accident.
Häagen-Dazs means nothing!
• What would you rename Very
Vegetarian if given the chance?
Would you want to ask an expert?
PPT 14-34
The Name Game
The NAME GAME
Source: Bloomberg Businessweek, www.businessweek.com, accessed November 2014. 14-34
Product Name Why?
Blackberry The “B” sounds relaxing and the “Y”
sounds friendly.
OreoThe bookending “O”s mirror the shape of
the cookie.
Viagra V is for vigor, vitality, virile and victory.
Wii The double ii symbolizes two players as
does the pronunciation.
1. Product names are not decided on lightly.
2. Many companies seek professional advice regard-
ing corporate identity.
PPT 14-35
Key Brand Categories
KEY BRAND CATEGORIES
14-35
PhotoCredit:JoeMudd
LO 14-4
• Manufacturers’ Brands –
Brand names of
manufacturers that distribute
products nationally.
• Dealer (Private-Label)
Brands -- Products that
carry a retailer
’
s or
distributor
’
s brand name
instead of a manufacturer
’
s.
Manufacturers’ brand examples: Ford, Microsoft, and Xer-
ox.
Dealer brand example: Kenmore, from Sears.
Chapter 14 - Developing and Pricing Goods And Services
14-57
PPT 14-36
Key Brand Categories
KEY BRAND CATEGORIES
14-36
LO 14-4
• Generic Goods -- Nonbranded products that sell at
a discount compared to manufacturers
’
or dealers
’
brands.
• Knockoff Brands -- Illegal copies of national
brands.
PPT 14-37
Establishing Brand Equity and Loyalty
ESTABLISHING BRAND EQUITY
and LOYALTY
14-37
LO 14-4
• Brand Equity – The value of the brand name and
associated symbols.
• Brand Loyalty -- The degree to which consumers
are satisfied and are committed to further purchases.
1. Brand equity is the combination of factors (aware-
ness, loyalty, perceived quality, images, and emo-
tions) that people associate with a brand name.
2. Examples: Coca-Cola and Ziploc have strong brand
equity.
PPT 14-38
Most Valuable Brands
MOST VALUABLE BRANDS
Source: Forbes, www.forbes.com, accessed November 2014. 14-38
Brand Value (in $millions)
Apple $124.2
Microsoft $63.0
Google $56.6
Coca-Cola $56.1
IBM $47.9
McDonald’s $39.9
GE $37.1
Samsung $35.0
Toyota $31.3
Louis Vuitton $29.9
LO 14-4
1. This slide lists the 10 most valuable brands accord-
ing to Forbes.
2. As you can see, six of the most valuable brands are
tech companies.
Chapter 14 - Developing and Pricing Goods And Services
14-58
PPT 14-39
Origins of Automobile Symbols
ORIGINS of
AUTOMOBILE SYMBOLS
Source: World Features Syndicate. 14-39
LO 14-4
• Volvo - Symbol for iron
• Lamborghini - Company founder’s
zodiac sign was Taurus
• Volkswagen - Product of an office
contest
• Porsche - Coat of arms for city and
state headquarters
1. This slide presents the origins of car symbols.
2. Ask the students: How important is the name and
symbol of a product? What aspects should be con-
sidered in the naming process? (Most students
should suggest that the name of your product is
very important, because it represents your compa-
ny, tells the customers what the product is, and
should mean something.)
3. Given that there are so many models of cars in so
many different countries, naming cars becomes a
very complex process. Should only one name be
used in all countries or different names for the
same model in different countries?
PPT 14-40
Building Brand Awareness
BUILDING BRAND AWARENESS
14-40
LO 14-4
• Brand Awareness -- How quickly or easily a given
brand name comes to mind when someone mentions
a product category.
• Consumers reach a point of brand preference
when they prefer one brand over another.
• When consumers reach brand insistence, they will
not accept substitute brands.
PPT 14-41
Building Brand Associations
BUILDING BRAND
ASSOCIATIONS
14-41
LO 14-4
• Brand Association -- Linking a brand to other
favorable images, like celebrities or a geographic
area.
• Brand Manager -- Person responsible for a
particular brand and handles all the elements of the
brand
’
s marketing mix.
Chapter 14 - Developing and Pricing Goods And Services
14-59
PPT 14-42
Made in America?
MADE in AMERICA?
Home Countries of America’s Favorite Brands
14-42
Brand Country
Budweiser Belgium and Brazil
Alka-Seltzer Germany
Good Humor Ice Cream UK and Holland
7-11 Japan
Gerber Switzerland
Firestone Japan
John Hancock Life Canada
Frigidaire Sweden
Holiday Inn UK
LO 14-4
1. This slide lists 9 of the U.S.’ favorite brands that
are now owned by companies in other countries.
2. Ask students if they’re surprised these all-
American products aren’t actually “American” an-
ymore or if they know of other products that can be
placed on this list.
PPT 14-43
Test Prep
TEST PREP
14-43
• What functions does packaging now perform?
• What’s the difference between a brand name and
a trademark?
• Explain the difference between a manufacturers’
brand, a dealer brand, and a generic brand.
• What are the key elements of brand equity?
1. The functions packaging performs include (1) at-
tract the buyer’s attention; (2) protect the goods in-
side; (3) be easy to open; (4) describe and give in-
formation; (5) explain the benefits of the good in-
side; (6) provide information on warranties, warn-
ings and other consumer matters; and (7) give some
indication of price, value, and uses.
2. Brand names consist of a word, letter, or group of
words or letters that set it apart from other goods
and services. A trademark is a brand that has exclu-
sive legal protection for both its brand name and
design.
3. A manufacturers’ brand represents manufacturers
that distribute their products nationally such as
Xerox or Dell. A dealer brand is often referred to
as a private label and will not carry the manufac-
turer’s name, but rather carries the name of the dis-
tributor instead. For example, Kenmore is a dealer
brand sold via Sears. A generic brand is the name
of an entire product category.
4. Brand equity is the value of the brand name and as-
sociated symbols. The elements of brand equity in-
clude brand loyalty, brand awareness, and brand
association.
Chapter 14 - Developing and Pricing Goods And Services
14-60
PPT 14-44
Bringing New Products to the Market
BRINGING NEW PRODUCTS
to the MARKET
14-44
LO 14-5
• Product Screening -- Reduces the number of new
products a firm is working on to focus on the most
promising.
• Product Analysis -- Focuses on the cost estimates
and sales forecasts to get an idea of potential
profitability.
PPT 14-45
The New-Products Development Pro-
cess
The NEW-PRODUCT
DEVELOPMENT PROCESS
14-45
LO 14-5
PPT 14-46
How to Bring New Products to Market
HOW to BRING NEW
PRODUCTS to MARKET
14-46
Source: Fast Company, www.fastcompany.com, accessed November 2014.
LO 14-5
1. Build up slowly - When starting up, don’t go too
fast.
2. Design for a single function - Pick one function
and make it the best you can.
3. Package it perfectly - “Unboxing” your new buy
is the best part. Make it exciting to open.
4. Become a status symbol - Make it something to
show off.
1. This list was created by Tony Fadell, developer of
the iPod, and touches on what he learned while at
Apple.
2. Ask students: Why are elements like building up
slowly and designing for a single function im-
portant? Do you want your products to be multi-
functional or do one thing?
