MGT301 Final Term Subjective

Lesson – 23 N ew-product developm ent The development of original products, product improvements, product modifications, and new brands through the firm's own R&D efforts. Idea generation The systematic search for new-product ideas. Idea screening Screening new-product ideas in order to spot good ideas and drop poor ones as soon as possible. Product concept A detailed version of the new-product idea stated in meaningful consumer terms. Concept testing Testing new-product concepts with a group of target consumers to find out if the concepts have strong consumer appeal. Business analysis A review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the company's objectives. Product developm ent A strategy for company growth by offering modified or new products to current market segments. Com m ercialization Introducing a new product into the market. Test m arketing The stage of new-product development in which the product and marketing program are tested in more realistic market settings. Sequential product developm ent A new-product development approach in which one company department works to complete its stage of the process before passing the new product along to the next department and stage. Introduction stage The product life-cycle stage in which the new product is first distr ibuted and made available for purchase. Growth stage The product life-cycle stage in which a product's sales start climbing quickly. M aturity stage The stage in the product life cycle in which sales growth slows or levels off. Decline stage The product life-cycle stage in which a product's sales decline. Innovators Innovators help get the product exposure but are not often perceived by the majority of potential buyers as typical consumers. Early Adopters This group serves as opinion leaders to the rest of the market. Laggards

This group is suspicious of change and adopts only after the product is no longer considered an innovation.

Early M ajority Some 34% of the market that is the "typical consumer" but likely to adopt innovations a little sooner. Late M ajority This group is skeptical and adopts innovations only after cost of the market has accepted the product. Core product Is the core, problem solving benefits that consumers are really buying when they obtain a product or service. Actual product M ay have as many as five characteristics that combine to deliver core product benefits. Augm ented product Includes any additional consumer services and benefits built round the core and actual products.

LESSON – 24

Price the 2nd P of M arketing M ix. A. Introduction All profit and nonprofit organizations must set prices on their products and services. Price goes by many names (rent, tuition, fee, fare, rate, interest, toll, premium, et cetera). Price is the amount of money charged for a product or service or the sum of the values that consumers exchange for the benefits of having or using the product or ser vice. Com m on m istakes that Companies make are: 1. Pricing is too cost-oriented. 2. Prices are not revised often enough to reflect market changes. 3. Prices do not take into account the other elements of the marketing mix.

Q4. Prices are not varied for different products, market segments, and purchase occasions.

1. Factors to Consider W hen Setting Prices

A company's racing decisions are affected by both internal company factors and external environmental factors

a) IN TERN AL FACTO RS Affecting Pricing Decision Internal factors affecting pricing include the company's marketing objectives, marketing mix strategy, costs, and organizational considerations. I. M arketing Objectives Before setting price, the company must decide on its strategy for the product. If the company has selected its target market and positioning carefully, then its marketing mix strategy, including price, will be fairly straightforward.

II. Costs Costs set the floor for the price that the company can charge for its product. The company wants to charge a price that both covers all its costs for producing, distributing, and selling the product and de livers a fair rate of return for its effort and risk.

• Types of Costs A company's costs take two forms, fixed and variable. Fixed costs (also known as overhead) are costs that do not vary with production or sales level.

• Costs at Different Levels of Production To price wisely, manage ment needs to know how its costs var y with different levels of production. III. O rganizational Considerations M anagement must decide who within the organization should set prices.

b) EXTERN AL FACTORS Affecting Pricing Decisions External factors that affect pricing decisions include the nature of the market and demand, competition, and other environmental elements. I. The M arket and Dem and W hereas costs set the lower limit of prices, the market and demand set the upper limit. • Pricing in Different Types of M arkets The seller's pricing freedom varies with different types of markets. Economists recognize four types of markets, each presenting a different pricing challenge. • Consumer Perceptions of Price and Value In the end, the consumer will decide whether a product's price is right. Pricing decisions, like other marketing mix decisions, must be buyer oriented. • Analyzing the Price–Demand Relationship Each price the company might charge will lead to a different level of demand. The relationship between the price charged and the resulting demand level is shown in the demand curve in Figure.

The price elasticity of demand is given by the following formula: Price Elasticity of Dem and= % change in Quantity demanded / % change in Price

II. Com petitors' Costs, Prices, and O ffers Another external factor affecting the company's pricing decisions is