I would like to thanks to express my gratitude to all those who gave me the possibility to complete the project. I take this opportunity to thanks the University of Mumbai for giving me chance to do this project report.

I am deeply indebted to my project guide Prof. Swati Chiple from L.S. Raheja College of Arts & Commerce whose stimulating suggestions and encouragement helped me all the time of research.

I wish to express my gratitude to Prof. Swati Chiple, Academic Coordinator, and Mr. K. Venkateswarlu, Principal of L.S. Raheja College of Arts & Commerce for their support.

My subject teacher were also of very supportive as they looked closely at the final version of the thesis for English style and grammar, correcting both and offering suggestions for improvement.

Above all, I would like to thank my parents for their patience, love and support enabled me to excel in my studies.

Khan Farah

Table of Contents
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Topics Introduction Marketing – Product Strategies Step Strategy To Improve Consumer Products Profitability Launching A Product Product Classification Price Objectives: Why Customers Think Your Price Is Too High Advertising And Promotion Methodology Methods Recommendation For Consumer Product Companies Product Model Product Distribution Conclusion Bibliography

but a commodity can also be anything widely available in the open market. a product is anything that can be offered to a market that might satisfy a want or need. the policies are considered products offered for sale by the insurance company that created the contract. products are the formal definition of the project deliverables that make up or contribute to delivering the objectives of the project. a secondary but useful result of a production process. products belong to a broader category of goods. China. this growth is expected to continue into the future. consumer electronics. products are bought as raw materials and sold as finished goods. such as toiletries and cosmetics. . In retailing. The economic meaning of product was first used by political economist Adam Smith. A related concept is subproduct. small appliances. and with the rising markets of Russia. Commodities are usually raw materials such as metals and agricultural products. In economics and commerce. In project management. and other household items. The Consumer Products industry is Concentrated. The production in this industry is dominated by a many large firms that are capable of shaping the industry‘s direction and price levels. In insurance.INTRODUCTION The consumer products industry is comprised of a variety of products. and India starting to demand more commodities. products are called merchandise. consumer durables. MEANING OF CONSUMER PRODUCT In marketing. This industry has seen steady growth since the Industrial Revolution. In manufacturing.

PRODUCTS HAVE 3 COMPONENTS : (A) Core product: This is the end benefit for the buyer and answers the question: What is the buyer really buying? For example. Products provided in the framework of a service to consumers are also considered to be consumer it performs over its life. and 2) quality consistency . (B) Formal product: This is the actual physical or perceived characteristics of your product including its level of quality. It encompasses two key elements: 1) quality level . a product is the item(s) or service(s) that you are offering your customers. special features. branding and packaging. a product is anything that can be offered to a market to satisfy a want or need. MARKETING – PRODUCT STRATEGIES WHAT IS A PRODUCT? In marketing terms. even if not intended for them. particularly physical ones. Products incorporate the following characteristics: • Product attributes Quality : The major tool in positioning your product. warranty. In other words. the buyer of a car is buying a means of transport.Dangerous products. (C) Augmented product: The support items that complete your total product offering such as after-sales service. the buyer of an aspirin is buying pain relief and the buyer of financial advice is hoping to buy financial security and peace of mind. styling. Features : The physical or intrinsic characteristics of your product that contribute to the benefits it offers. delivery and installation. that cause injuries to consumers or bystanders may be subject to product it is made or perceived. . a group of equivalent products or a group of goods or services. A product can be a physical object or a service and may refer to a single item or unit. DEFINITION OF CONSUMER PRODUCT Consumer products are defined as items intended for consumers or likely to be used by consumers.

a tie-on tag or a printed piece of packaging. • Labelling Labelling incorporates all the written information about your product and usually takes the form of an adhesive sticker. ensuring it reaches the buyer in good condition and also conveys the personality of your brand and important safety and statutory information. Before expanding through a growth plan. It serves to protect the product. or a combination of these elements that identifies the maker or seller of a product or service. However. you may decide to stretch your creativity and grow your business and profits. Expansion will involve additional risk and will add pressure on your existing business. Growing your business will require planning and preparation. term. your business must have the capacity to supply those additional customers. or get your customers to buy more frequently. the only ways to grow your business are to get more customers. make sure that the fundamentals of your business are sound. The size of your small business is directly proportional to the number of customers you have.Design : A combination of how the product looks and how it performs. Branding is an important part of a product and contributes to its personality and perceived value. . Plan carefully to ensure that you don't grow into new markets to the detriment of your existing loyal customer base. symbol or design. and the number of goods or services you can provide. get your customers to buy more. There are usually two levels of packaging – the primary packaging containing each individual product (eg: a can) and the secondary packaging which contains a quantity of products (eg:a carton). sign. Growing a Business Once you have started your own small business. • Packaging Packaging incorporates the wrapper or container for your product. or have the customers to buy the extra goods or services you can source or provide. • Branding A brand is a name. Essentially. The power of a brand cannot be underestimated – many people buy on the strength of brand alone with no regard for price or performance.

performance. labelling and service all affect the way your product is positioned. STEP STRATEGY TO IMPROVE CONSUMER PRODUCTS PROFITABILITY The rate of change in today‘s business environment is faster than it has ever been . The pressures of today‘s market mean that. and the questions you need to answer to maximise your chances of success. no matter how good a product or . design. but thrive! Product Innovation Listed here are the key stepping stones on the pathway to commercialisation. Your business will not only survive. innovation to develop products to satisfy the needs of a new market segment. For instance a car can be positioned on the basis of style. exploring new markets interstate. Quality. features. safety or economy whilst a computer might be positioned on the basis of speed.and getting faster. and franchising your business in order to open new retail outlet. packaging. Years of experience as a CEO of consumer product companies selling to retailers and consumers have taught me that even very strong demand for your product is not nearly enough. reliability Choosing and implementing your product positioning strategy is an important task. it may be possible to grow the size of your small business. PRODUCT POSITIONING : Product positioning is the way a product or service is seen by consumers and how they view its important attributes in relation to competitor‘s products. By implementing a carefully planned strategy that will increase your customers while maintaining supply. exporting to international markets. decide how to position your offering in the market.Your growth strategy may include any activity along a continuum including: relocating your home based business to a business incubator. branding. You need to determine your product‘s competitive advantages (ie: what sets it apart from its competitors) and then based on this information. capacity.

your focus must be on an ultra-efficient operating model to service your market. These costs include advertising. a highly coordinated process across the supply chain that optimizes the product‘s value and attractiveness to the end consumer. a strategy to improve profitability in customer package goods must have three components: a well-defined product strategy. such as: are you a supplier of unbranded commodity products requiring a lean. to develop and agree with your top team on a wellconceived corporate and product strategy. For example. the CEO. low cost structure? Or are you a supplier of consumer-recognized branded products—that require a more intensive marketing strategy? COMMODITY/PRIVATE LABEL If you are in the former category. It starts with clarity on the basics. There is no alternative to knowing what your consumers are thinking. licensing and marketing staff or outside market research services to gather and analyze consumer data for example via focus groups and branding seminars. and deliver them on-time.service you are selling. A well-oiled supply chain is essential. BRANDED If on the other hand. you sell fashion or branded products. commit to a long-term process of producing them consistently and at progressively lower cost. a forward-looking strategy might mean considering moving manufacturing to Mexico to take advantage of lower costs to get goods to your North and South American markets. Your strategy must address regularly improving your supply chain. With fashion or branded products you likely won‘t have the benefit of highly . Supplying basic commodity or private label items requires that you master product specifications. efficient manufacturing based on long manufacturing runs. profitable revenue growth requires a business model that can accommodate considerably higher marketing costs than is the case with basic commodity products. if you are currently manufacturing in China and your labor costs are rising. and the right balance between bricks and mortar and on-line retailing. to get your products from Point A to Point B at a cost lower than the competition. Success requires investment in high volume. Keeping costs low can mean a strategy to maintain access to raw materials and to minimize transportation costs. DEVELOP COMPELLING PRODUCT STRATEGY The first step is for you.

When carrying out a major launch. Other aspects. are you replenishing store shelves with exactly the same product. long manufacturing runs. the biggest challenge facing a CEO in carrying out a consumer product strategy is to find the time required to make sure that their company stays the course and keeps execution on track. FOCUS IS KEY Whether your strategy is for fashion branded or basic commodity products. however. Shorter runs result in a more costly manufacturing process.efficient. speaking clearly to the consumer about your product and telling its story in a glance? In the next parts of this article. and the need to balance the bricks and mortar and online retail channels. I will discuss the two more facets of a successful strategy to improve profitability in your consumer products business: coordinating across all the functions required to get to products through the supply chain. it makes sense to start in your traditional home . For example. e. LAUNCHING A PRODUCT Multinational organisations like Amway have to consider the best ways of launching products on a global scale. by providing an almost identical product in all markets. for example adhering to precise consistency in color dyes? If you are selling a branded packaged product. Lack of time is often a management team's worst enemy. such as choosing the right sort of media and the language in which videos and commercials are produced. Intense daily operational requirements constantly threaten to distract you from sustained focus on executing. is your packaging catchy. It may be possible to carry out some aspects of the launch in identical ways in a range of countries.g. are you regularly measuring your level of product and packaging quality? If you are in unbranded goods. will be specifically tailored to a local market.

at a time when many consumers are committed to making purchases which support the conservation of the environment. The key areas of strength that needed to be projected to the consumers were:  The uniqueness of the product . Homeflair and Woman and Home. In launching the Super Concentrated System. providing them with a high margin on sales made in the period following the product launch. including Good Housekeeping. A promotional price was set for distributors who attended launch conferences. The press releases and product samples were sent to many national magazines which were relevant to Amway's target market. The UK launch involved a number of conferences for distributors at prime locations up and down the country. no company can survive and prosper if it fails to pay full attention to the developing needs of the customer and to the increasingly insistent needs of the environment.  Environmental positioning . (in this case the United States) before rolling out the launch in stages across the effect.  The advantages of concentration . Lessons can be learnt from the early launches which can then be built into ongoing launches. House Beautiful. Perfect Home. the creation of a short video highlighting key aspects of the product and the production of a wide range of merchandising material. TACTICS OF THE LAUNCH . The new breakthrough product added to the range of choice by breaking from the traditional one litre size product packaging and provided very real benefits to the consumer in terms of convenience and value for money. the new system clearly provides strong competitive advantage. A number of press releases were created which clearly set out the nature and purposes of the product. Amway needed to focus on the competitive advantages that the product would offer when compared with rivals.for the first time. As consumer standards and expectations continue to rise. consumers were now able to purchase 'micro liquids'. consumers would be able to purchase a flexible cleaning system. which they would be able to regulate and control.

One of Amway's best communications vehicles is its regular magazine. or clothing. The strategy relating to the launch of the Super Concentrated Cleaning System involved three stages:    Stage 1: to build excitement Stage 2: to create awareness Stage 3: to build product knowledge. you start to give the public a clearer idea of the product and its attributes. An intangible product is a product that can only be perceived indirectly such as an insurance policy. gadget. Finally. after the launch. Suspense is created by providing very few details of what the product actually is. Building excitement usually involves informing the consumer that a new product will shortly be available. The communications programme devised for the launch of the Super Concentrated Cleaning System began with individual quarter page teaser adverts in Amagram and then built up to a full page spread prior to launch. vehicle. In terms of communications literature Amway created:    a customer brochure to create the contact and build product awareness among customers a solution guide for the proper use of the products a demonstration kit to help distributors create a professional image and effectively demonstrate the performance of the product. A strategy is a plan or practical measure designed to achieve certain objectives. there is an important distinction between strategy and tactics. which provides product details to its distributors.In Business. Nearer the launch. A tangible product is a physical object that can be perceived by touch such as a building. Amagram. you need to carry out a lot of hard work to build up an understanding of the brand and its advantages so that you build up a solid base of consumers. while the tactics are the actions taken to implement the strategy and achieve these objectives. . PRODUCT CLASSIFICATION A product can be classified as tangible or intangible.

A third type in this is services.Intangible Data Products can further be classified into Virtual Digital Goods ("VDG") that are virtually located on a computer OS and accessible to users as conventional file types. The main factor about services as a type of product is that it will not be uniform and will vary according to who is performing. without requiring further application process or transformational work by programmers. and as such the use may be subject to license and/or rights of digital transfer. and you are certain the customer will soon say "yes" to your offer. such as JPG and MP3 files. commonly viewed as 3-D objects or a presentational item subject to user control or virtual transfer within the same visual media program platform. whether it is on the radio while we‘re driving to work. and Real Digital Goods ("RDG") that may exist within the presentational elements of a data program independent of a conventional file type. precision and adaptability. where it is performed and on whom/what it is being performed. or in magazines and . or even Android. ADVERTISING AND PROMOTION Every day we are bombarded with different advertising messages. You've had what you think is a great sales call. on television during our favorite programs. Find out the surprising reason behind most price objection. You feel you've done everything correct. as part of an application process or manufactured service that may be viewed on Personal Data Assistant ("PDA") or other hand-held tangible devices or OS computer. especially when you thought the sale was closed. GNU Linux. Services can be broadly classified under intangible products which can be durable or non durable Services need high quality control. PRICE OBJECTIVES: WHY CUSTOMERS THINK YOUR PRICE IS TOO HIGH Price objections can take you off guard. Open Source Code. may manipulate and/or convert base Virtual Digital Goods ("VDG") into process-oriented Real Digital Goods ("RDG").

It found that Facebook advertising (23%) trails only print newspaper (25%) and direct mail (24%) in terms of small business marketing adoption.newspapers. an ample credit line and no annual fee. We‘re handed flyers while walking down the streets and given tastes of products while walking the aisles of the grocery store. Earlier this year. Advertising has entered every area of our lives. aimed at small businesses. This summer. . would do well not to invest so heavily in Facebook that their website suffersa frequent either/or choice that smaller businesses must make. for the sole purpose of buying search advertising. SMBs. and many of us choose to ignore it on many occasions. ONLINE ADVERTISING Digital Advertising Wins! Increasingly small businesses are focusing more resources on digital advertising and the providers are finally taking notice. can advertising and promotional efforts still be effective if we are so saturated with information? The answer is yes. Twitter Small Business Next year Twitter will be rolling out a self-serve ad product. One of the main rules in advertising has always been to keep your message simple and consistent. It has been shown that people remember advertising if they see it with great frequency. and repeat it often. Facebook offered free $50 advertisingcredits for up to 200. This might cause you to ask. It came with a competitive interest rate. That way the message will stand out in your mind. Google offered a credit card to select small businesses that use AdWords. however. When an ad was clicked.000 small businesses. the advertiser paid a set rate predetermined for that click through. advertising and promotions can be effective if used properly for targeting the right consumer. which explains why while watching two hours of television you may see the same advertisement two or even three times. Facebook is WinningA survey by MerchantCircle now suggests Facebook is winning this SMB tug-of-war.

The importance of providing consumer benefits One of the most important lessons to learn about successful marketing is that consumers do not buy products. .650 of advertising value each year.The Equivalent of a $90K Ad Budget A study by Eden Platform finds that a standard web page can deliver more advertising value than many companies realize. You are. the colour and look of the CD player. you may look for one which:      is stylish gives good value for money has the latest technology will not get broken easily gives the best quality sound reproduction. when you buy a compact CD player. Adding one new page of content to a business website each week can be as effective as having a $90.g. Eden measured pages and visitors for a sample of more than 100 small business websites.00 and $3. e.000 advertising budget. For example. they buy benefits. whilst others relate to convenience.50 of advertising value each month. Small businesses often pay between $2. the study concluded. the price in relation to the quality of the product.g. or $1. therefore. The customer will want cleaning products that:     are easy to use and control have desirable sensory qualities (i. look and smell nice) are easy to store give good value for money. This means that an average website page generates $137. the ease with which the player can be stored or carried around. seeking a CD player which includes a whole range of benefits. The same sorts of considerations can be related to cleaning products.00 per website visitor using other online advertising methods like paid search engine ads and banners. e. Some of these are sensory benefits. The findings showed that each page on a small business website produced an average of 55 unique visitors during the measurement period.e. e.g. some relate to value.

Water bottle  refillable bottle which fits next to the product. 4a) Sprayer Dial    lets you dilute the cleaner to suit the job easy to use settings from 0-5 automatically dilutes the product with water to the concentration required for the job. no waste guaranteed for two years with domestic use. 2. 4b) Spray nozzle  adjusts to spray or stream. 4. 7. 5. Grip  designed for control and comfort. Tote tray    collapsible handle lightweight easy to carry. no fuss. Sprayer   no mess. Lock tab   locks bottles into place allows quick and easy change to another product. 6. Super Concentrated Cleaners    powerful cleaners save shelf space non-spillable bottle plugs. giving lasting durability. Trigger  convenience at your fingertips.Outlined below is a range of benefits provided by the Super Concentrated Cleaning System: 1. 3. METHODOLOGY WORLDVIEW .

limitations such as a lack of depth of understanding can be combated using interpretivist research. the extent to which external variables can affect attitudes directly. Positivist research is focused on presenting simple and deterministic findings based upon causal relationships. general understanding. and the variables included in the conceptual framework. This research used what Creswell (1994. enhance or illustrate the results from one method by using another method. RESEARCH DESIGN The research calls for a deductive approach as it tests an existing theory and looks to prove/disprove hypotheses. however. but they remain relatively independent until the interpretation stage‖. Positivist research stems from the belief that the social and natural worlds ―conform to certain fixed and unalterable laws in an endless chain of causation‖ creating scientific approaches where the ―research is to establish causal laws that enable the prediction and explanation of phenomena. to test theories. however qualitative data ―probe[s] in detail one aspect of the study‖ to ―elaborate. This allows data collected in the form of quantitative methods such as questionnaires and structured observations. By using the Technology Acceptance Model.‖ Niglas. qualitative research presents deeper insights into topics which may not be clear through quantitative research.‖ Developing scientific ―laws‖ enables positivist research to be deductive in nature. the research will be quantifiable and valid – qualitative data will allow the research to meet objective 3. . However. 2 and 4. p177) calls ―dominant-less dominant design‖.There are two main research philosophies in which research can be based upon: positivist or interpretivist. writes this method is where ―qualitative and quantitative approaches are used. allowing deeper understanding of how recommendation systems are perceived by consumers. 2000. dominant paradigm. with one small component of the overall study drawn from the alternative paradigm‖. which establishes a need for positivist research to be reliable (if it can be repeated and produce similar results). upon which individual factors and variables can be later discussed in depth. This research design draws mostly quantitative results. a quantitative approach for the majority of the research will deliver the best reliable results. a mixed-method approach where the study is presented ―within a single. By using quantitative data to meet objectives 1. METHODS This study used both surveys and online focus groups to enable a wide.

response ranges. which reduced instances of sampling error and maintains a high completion rate. (B) Sampling Sampling was carried out using a non-probability self-selection sampling process. 2008). Questionnaires also reduce interviewer bias. The questionnaire generates reliable and valid statistical data for the target population. especially those carried out online. focussing on the variables discussed in the section . Responses ―are limited to the alternatives stated‖ and ―reduces the variability in the results that may be caused by differences in interviewers‖ making the data more useable. and therefore does not require a sampling frame. reducing the time needed to collect results and reach a wide range of respondents. as well as in the last 12 months should answer the questionnaire. practicalities and ethics. and became more specific. asking for attitudes towards online shopping in general. The sample size was a minimum of 100 eligible questionnaire completions. Respondents who did complete the questionnaire but fail to meet those criteria had their responses disregarded. Questionnaires. The questionnaire was distributed through a number of popular internet consumer forums such as Money Saving The questions asked began general. (C) Analysis . and are easy to administer. The pilot (appendix 1) enabled testing in terms of ―reliability. who have bought from Amazon. and data is used to meet objectives (A) Pilot Questionnaire Pilot questionnaires allow researchers to ―improve the internal validity of a questionnaire‖ . However. Likert Scales were used to enable a quantitative reply of statements that aren‘t usually suited to quantitative methods. reducing the possibility of geographic bias. the pre-questionnaire note explained only 16-34‘s living in the UK. are cost and time effective.Questionnaires A questionnaire was distributed online. validity and error testing‖ (Brace. question wording. and collected both descriptive data and statistical data which can be effectively analysed to determine relationships.

There are numerous benefits from using focus groups. gender wage gaps. (D) Online focus groups Focus groups are discussions ―conducted… in a non-structured and natural matter‖ . RECOMMENDATION FOR CONSUMER PRODUCT COMPANIES Robust compliance programs that track for gender inequality. namely that ―group members ‗feed‘ off each other and creatively reveal ideas that the research may not have thought of‖ (ibid). Two focus groups were carried out. such as maternity leave . and keeping the focus groups small enabled more in-depth discussions.Data generated by the questionnaire was analysed using SPSS statistical software using a number of techniques such as frequency distribution allowing simple analysis whilst meeting the research objectives. Both focus groups lasted between 30 minutes and one hour – long enough to extract insightful responses without being too over-demanding . Less than 6 respondents could result in less discussion and negatively affect group dynamics. Holding focus groups online reduces the possibility of intimidation and the need for travel arrangements or a physical venue. Cross tabulation analysis allows the research to better prove or disprove the hypotheses. and improves upon frequency distribution by reflecting ―the joint distribution of two or more variables‖ . both with 6 respondents. at their pace and using their language and logic‖ (ibid). including permanent versus temporary contracting. and legal compliance issues pertaining to women. and participants can ―reflect and … portray their feelings and behaviour. » Technical and management skills trainings for female factory workers » Professional advancement programs for female factory workers » Financial literacy programs » Access to bank accounts—explore partnerships with financial services companies By use . Correlation statistics such as Pearson‘s correlation coefficient will also be used where appropriate.

Buyer goal adjustment (How flexible are the buyers' purchasing habits with regard to this product?) 4. health and medical insurance premiums" and "income from secured consumer loans‖. are sold to the same customer groups. commercial insurance and life insurance. By association A product line is "a group of products that are closely related. The NAFTA signatories are working on a system that classifies products called NAPCS as a companion to North American Industry Classification System (NAICS). The Aspinwall Classification System classifies and rates products based on five variables: 1. The United Nations also classifies products for international economic activity reporting. Sears uses the departments and product groupings with the intention of helping customers browse products by function or brand within a traditional department-store structure. Replacement rate (How frequently is the product repurchased?) 2. are marketed through the same types of outlets." Many businesses offer a range of product lines which may be unique to a single organization or may be common across the business's industry. either because they function in a similar manner. such as auto insurance.[7] The European Union uses a "Classification of Products by Activity" among other product classifications.In its online product catalog. Each product has a Sears item-number and a manufacturer's model-number. retailer Sears. Duration of buyer search behavior (How long will consumers shop for the product?) .Within the insurance industry. Gross margin (How much profit is obtained from each product?) 3. then presents products to potential shoppers according to (1) function or (2) brand. Roebuck and Company divides its products into "departments". product lines are indicated by the type of risk coverage. In 2002 the US Census compiled revenue figures for the finance and insurance industry by various product lines such as "accident. or fall within given price ranges. National and international product classifications Various classification systems for products have been developed for economic statistical purposes. Duration of product satisfaction (How long will the product produce benefits for the user?) 5.

[13] The NIGP Code is used by 33 states within the United States as well as thousands of cities. The variants of a model are built by some additional options like color. For example.The National Institute of Governmental Purchasing (NIGP)[12] developed a commodity and services classification system for use by state and local governments. A model of a car is defined by some basic options like body. a manufacturer of appliances . or model number. there is a special kind of defining a car with options .Applications of the NIGP Code include vendor registration. Options. Brand and model can be used together to identify products in the market. seats. That means. In addition. The model number is not necessarily the same as the manufacturer part number (MPN). Because of the huge amount of similar products in the automotive industry. to generate a master production schedule. trims. This kind of product definition fulfill the requirements of an ideal Boolean Algebra and can be helpful to construct a product configurator. mirrors. contract item management. model variant. an international standardized format. which is necessary to distinguish products with the same product definition. engine. spend analysis and strategic sourcing. PRICE . that exclude each other build an option-family. entertainment and assistant systems etc. In the case of automotive products it's called the Vehicle Identification Number VIN. wheels. 5 digit class-item. Dyson Ltd. that represent the characteristics features of the vehicle. inventory item identification. 7 digit class-item-group and an 11 digit class-item-groupdetail. which is the fundamental for the enterprise resource planning. counties and political subdivisions.requires customers to identify their model in the support section of the website. a specific unit of a product is usually (and has to be) identified by a serial number. that you can choose only one option by each family and you have to choose exactly one option. Sometimes. the NIGP Code. The NIGP Code is a hierarchical schema consisting of a 3 digit class. A consistent car definition is essential for the production planning and control in the automotive industry. gear box and axles. known as a model.raj PRODUCT MODEL A manufacturer usually provides an identifier for each particular type of product they make. a set of options (car features) are combined to an automotive package and are offered by a lower price.

other distribution costs etc.Use value was supposed to give some measure of usefulness.[citation needed] . Neoclassical economists sought to clarify choices open to producers and consumers in market situations. was "brought to the centre of the stage" by marginalist economics. Adam Smith described what is now called the diamond – water paradox: diamonds command a higher price than water. taxes. AUSTRIAN SCHOOL THEORY One solution offered to the paradox of value is through the theory of marginal utility proposed by Carl Menger. When a commodity is for sale at multiple locations. the human subject. In the case of the majority of consumer goods and services. yet water is essential for life and diamonds are merely ornamentation. In practice it may well make economic sense to offer a product or service for sale at a higher price in a wealthy area than in a deprived area as the marginal utility of the asset for purchasers will be higher in the former. This essentially states that the cost difference between the locations cannot be greater than that representing shipping. namely what is now called relative price. In reality. distribution costs are quite a high proportion of the overall price. such as tax and other government regulations. so the law may not be very useful. PRICE AND VALUE The paradox of value was observed and debated by classical economists. as a bargaining tool. later refined as marginal benefit (which is marginal utility counted in common units of value) while exchange value was the measure of how much one good was in terms of another. the price may be distorted by other factors. As William Barber put it. In turn these quantities are determined by the marginal utilityof the asset to different buyers and to different sellers. the law of one price is generally believed to hold. and thus "fears that cleavages in the economic structure might be unbridgeable could be suppressed". human volition. one of the founders of theAustrian School of economics.Price theory Economic theory asserts that in a free market economy the market price reflects interaction between supply and demand: the price is set so as to equate the quantity being supplied and that being demanded.

In fact. and criticism sparked off by thecapital controversy initiated by Piero Sraffa revealed that most of the foundational tenets of the marginalist theory of value either reduced to tautologies. One insight often ignored in the debates about price theory is something that businessmen are keenly aware of: in different markets. within certain contexts of price behavior. but this idea could be extended further to other broad classes of goods and services. for Marx.Without denying the applicability of the Austrian theory of value as subjective only. From the classical political economists to Michal Kalecki it was known that prices for industrial goods behaved differently from prices for agricultural goods. So if the average rate of profit (return on capital investment) is 22% then prices would reflect cost-of-production plus 22%. he admonished the other classical political economists (like Ricardo and Smith) for trying to make this proof. many recent Marxists deny that any problem exists. The perception that there is a transformation problem in Marx stems from the injection of Walrasian equilibrium theory into Marxism where there is no such thing as equilibrium. price equals the cost of production (capital-cost and laborcosts) plus the average rate of profit. This would then result in a much more realistic theory of price and of real behavior in response to prices. However. and the difficulty of the conversion of the mass of values into the actual prices is known as the transformation problem. CONFUSION BETWEEN PRICES AND COSTS OF PRODUCTION . This value does not relate to price in a simple manner. the Polish economist Oskar Lange felt it was necessary to attempt a serious integration of the insights of classical political economy with neo-classical economics. Rather. Marginalist theory lacked anything like a theory of the social framework of real market functioning. Marx was not concerned with proving that prices derive from values. PRICE AS PRODUCTIVE HUMAN LABOUR TIME Marxists assert that value derives from the volume of socially necessary abstract labour time exerted in the creation of an object. prices may not function according to the same principles except in some very abstract (and therefore not very useful) sense. or that the theory was true only if counter-factual conditions applied.

such as charities. Dollar General is a general store or "five and dime" store that sets price points only at even amounts.Price is commonly confused with the notion of cost of production. can be described as setting prices. educational institutions and industry trade groups. Producer price is the amount the producer gets from a buyer for a unit of a good or service produced as . ¥100). five.. the hope is that price will exceed cost of production so that the organization can see financial gain from the transaction. though in some cases this price may purchase more than one of some very small items. while pricing is a topic central to a company's profitability. such as exactly one. OTHER PRICE TERMS Basic price is the price a seller gets after removing any taxes paid by a buyer and adding any subsidy the seller gets for selling. £1. charities seeking to raise money may set different ―target‖ levels for donations that reward donors with increases in status (e. pricing decisions are not limited to for-profit companies. Finally.[clarification needed] PRICE POINT The price of an item is also called the "price point". 100-yen stores. Price is relatively less than the cost price. Price is what a buyer pays to acquire products from a seller. Other stores (such as dollar stores. Other stores will have a policy of setting most of their prices ending in 99 cents or pence. two. three. Cost of production concerns the seller‘s investment (e. These targets can be seen as prices if they are interpreted as specifying a cost that must be paid by buyers (donors) in order to obtain something of value. name in newsletter). For instance. For example. manufacturing expense) in the product being exchanged with a buyer. or ten dollars (among others).g. gifts or other benefits. euro stores. as in ―I paid a high cost for buying my new plasma television‖. For marketing organizations seeking to make a profit.. 1€. The behavior of non-profit organizations.g. pound stores. and so forth) only have a single price point ($1. especially where it refers to stores that set a limited number of price points. but technically these are different concepts.

The chosen position was to be: 'A revolutionary product system that provides the ultimate in customer convenience and control by automatically diluting and delivering the cleaning concentrates with water. providing customised cleaning at your fingertips. If the product was successful. Consumers would benefit from a range of innovative product features and benefits including: . to a certain extent. A strategy is a plan of action designed to achieve the goals of the organisation. The small. In order to make this strategy work. concentrated nature of the product would make it easier to distribute and would yield higher returns.output minus any tax.' The product's success would depend. its distributors and consumers. The following objectives for the brand were set:  to increase distributor profitability and productivity by providing a new and exciting business opportunity  to optimise consumer convenience and value through enhanced product differentiation with this exclusive and revolutionary cleaning system  to provide innovative and unique products to enhance the image of Amway Home Care. on the ability of Amway's marketing department to get this message across to distributors and ultimately to consumers. Amway needed to set out the key objectives it wanted to achieve. Amway would benefit from:   environmental source reduction selling a quality product which would increase revenue and provide an ongoing contribution to business profits  reduced shipping and storage costs with more value added. it was essential to think very carefully about the position that the new product would take in the market-place. In creating a marketing strategy for the Super Concentrated Cleaning System. it excludes any transport charges invoiced separately by the producer. Distributors would benefit from:    selling a winning solution with world-wide exclusivity selling a product with a high return per unit sold repeat orders from satisfied customers. according to the customer's needs. it would create a winning situation for Amway.

unique nature of the product ease of use easy of carrying ease of changing between the different products automatic dilution clear bottles so that the product can be seen. Since the launch of the Super Concentrated Cleaning System. Nelson‘s article builds upon his earlier work in which he suggests that products can be classified as having either ―search‖ or ―experience‖ qualities. 2004. ibid) who found that consumers who are looking to buy a ―search‖ product are more likely to use their own decision making . p160) and Nelson (1974) argue the type of product has direct effects on consumer choices. An example of an experience product would be food – something which the consumer cannot evaluate before purchase. TYPE OF PRODUCTS King and Balasubramanian (1994. Following a product launch. Search products are products where ―the consumer can determine [product choice and quality] … prior to purchase‖ – a digital camera is an example. product recommendations would be relied upon more. cited in Senecal and Nantel. that the multilingual label appears cluttered and that the tote tray is too small. Amway has carried out some detailed research to assess the success of the product and highlight areas for building the brand. The weaknesses identified in the research are that it is difficult to compare usage with the old one-litre bottles.    high value relative to price convenience high performance environmental sustainability. This is supported by King and Balasubramanian (1994. The analysis has found that distributors have identified a number of strengths including:       the innovative. Senecal and Nantel suggest that because experience products are near impossible to evaluate before purchase. it is vitally important for an organisation to assess how well the product has been received by the consumer.

The route taken depends on many variables. PRODUCT DISTRIBUTION The most frustrating decision facing all consumer products marketers is the one they have the least control over distribution. meeting distribution objectives often means the marketer is at the mercy of retailers decision to stock a marketers product. but the discussion may have been more differentiated. For example. If a recipient has no motivation or ability to consider the message content. When it comes to buyers learning about a companys products. they rely on the peripheral route. there was a lack of group dynamics. to guide potential purchasers through all stages of the decision making process. a selling opportunity like this is much more difficult for small companies that have yet to establish a . although it allowed a wider range of participants to engage. Because the sample was those who had selected they would be interested in participating in a focus group. Unlike decisions related to product. this could have created a bias of participants who are more outspoken. where salespeople knock on customers doors. as a persuasion strategy.processes. This problem is especially challenging for marketers selling products in retail stores where they must battle many other companies that are also trying to convince retail store buyers to sell their products. who are more likely to devolve some responsibility in the decision making process to another party. which doesn‘t require much mental exertion. A physical focus group may have meant recruiting local participants. pricing and promotion. While getting a meeting with a retailers buying staff is not hard for well-known companies. instances where participants were not paying attention or had dropped out because of technical difficulties. The central route means that the recipient has the ability and motivation to carefully consider the message. Using online methods was a limitation of the research design. although there were participants who were more reserved. compared to those looking to buy an ―experience‖ product. The ELM is based around the ―central‖ and ―peripheral‖ routes of information processing. The focus groups enabled deeper insight into some of the issues raised in the questionnaire. travel agents exist to persuade and match holidays to consumers need. the most common method is a "push" promotion approach. Tam and Ho (2005) approach web personalisation in terms of the Elaboration Likelihood Model.

Davis says he credits the company's social-media efforts for helping get the tongue cleaner into other retail stores. They soon discover that convincing a buyer just to schedule a meeting is as difficult as convincing them to buy the product. Once enough voices are heard.500 stores. In some cases.created a YouTube video that quickly went viral. While Wal-Mart claims the You-Tube videos did not influence their decision to stock the product. he says store managers approached Orabrush on their own. other retailers did point to consumers' interest in the videos as a key reason for their decision to handle the product. CONCLUSION . the company. For smaller firms. which sells a somewhat unusual product tongue cleaner . After several unsuccessful attempts to obtain distribution through the use of sales calls. a better approach may be to use creative methods that capture the final consumers attention. these strategies are designed to target final consumers with the hope they will then ask for the product at retail stores. citing requests for the product from customers who'd learned about it online. Here is a story of one creative way that a small company used to build up consumer interest. Labeled as "pull" promotion.track record. The interest caught the attention of several retailers including WalMart who agreed to place the product in 3. Orabrush's Mr. it is hoped the retailer will agree to distribute the product.

The launch of any new product poses a number of threats. Amway. research the market and respond to customer demand. therefore. Its success clearly indicates that Amway has started a trend which may well revolutionise the cleaning products market. We all can recall far too many times when we've sat across the table from a customer we're trying to help -. .if they would just provide us information about their needs and goals. For example.and we know we can help -. There's no better way to improve the quality of information you receive from a potential customerthan by asking short questions. Like any successful organisation. is building on the strengths of the Super Concentrated Cleaning System. Amway is continuing to develop the product. there is a good chance that competitors will copy the product and steal a share of the market.

edu https://www.kellogg.strategy-business.BIBLIOGRAPHY .deloitte.northwestern.