Burcu Akgül - 20204012033

Q.1 Consumer products can be classified as convenience, shopping and specialty good.
Pick two of them and convert them into the other types. How would you do that? What
would you change? Please give examples.
Q.2 Assume you will launch a new shampoo brand into the market and you can choose
between two broad strategies: market-skimming pricing and market-penetration pricing.
Please mention of your company objectives first and accordingly choose one of the above.
What are the necessary conditions to choose one of two alternatives? Explain why?
Q.3 A company has four choices when it comes to developing brands: line extensions,
brand extensions, multi-brands, or entirely new brands. Describe what they are in detail
with examples. Assume you produce either milk, or yogurt or butter or ayran. Please give
your examples about your product.
Q.4 Assume you are in the business of travel services by bus. Identify three major pricing
strategies based on customer value perceptions, competitor pricing and company cost
structure for your bus tickets. Examples should come from from business.

Q1.

Shopping goods are perceived by consumers in terms of their price, qualities, and mainly
styles. They have some basic characteristics like purchased less frequently, at a medium
price point and commonly compared among other products. We can give airline tickets,
furniture, phones, clothes as the examples. Specialty goods have unique features with high
unique characteristics and their special brand identifications. They also have some basic
characteristics like purchased less frequently with their unique characteristics or brand
perception at a high price point, limited comparation among their competitors, you cannot
sell them ordinary places, you need to state special places to present/sell them. Sports cars,
exotic perfumes, luxury watches, etc. can be given as examples for this category.

We pick exotic perfumes as specialty goods and clothes as shopping goods. When exotic
perfumes are put into mass production and their prices are adjusted according to average
perfume prices and they are offered for retail sale, we convert them from the specialty
goods category to the shopping goods group. On the other hand, the ordinary clothes can
be turned into designer clothing. When classic clothes are designed and branded according
to order, we can perceive them as specialty goods. For example, there are shops that make
designer dresses in Nişantaşı and these dresses are far above average prices. But both the
designs belong to famous fashion designers and the materials and fabrics used are specially
processed.
Q2.

My company launch the new shampoo brand which is called Strawberry’s Girl. The company
choose the market-penetration pricing strategy to set the expected price. As a result, we
prefer to set low prices in order to attract a wide range of customers and market share
rather than setting a high price to skim off high profitable segment. In shampoo market,
there are really important powerful competitors such as Loreal, Kerastase, Pantene, Elidor,
etc. With our pricing strategy we need to wait their new product launching. When they
launch new product, they will definitely position their initial price very high. Because their
customers want these products really at high price with their quality and cool, image. At the
same time, we will launch our new shampoo brand with low prices. After a while (maybe in
3 months) they will start to reduce their prices. During this time, we were able to penetrate
the market and introduce our new brand.
Q3.

Line extension means that companies prefer to add new products under the same product
categories. For example, Colgate has lots of different products under toothpastes like
Colgate Max Fresh, Colgate White Now, Colgate Max Clean etc. Also, we can say that it is
popular in automotive industry, they produce various product line extensions in order to
reach widest range of customers such as Audi with A series.

Brand extensions, we can define it basically companies’ a new product or new product
category with under the same brand. For example, Colgate has Colgate Plax and Colgate
toothbrush near its wide range of toothpaste category.

A company with Multi-brands strategy has several brands under the same roof. For
example, Unilever consists of Dove, Lipton, Magnum brands under itself. Companies uses
this multi brands strategy because they want to gain power against their competitors and
increase their product volumes in order to dominate shelf space and finally, they target to
win the high volume of market share. Of course, this strategy has some disadvantages such
as cost and time for developing new successful brand name in the market.
A company with entirely new brands strategy develops a new product line that they haven’t
not offered before.

Assume you produce either milk, or yogurt or butter or ayran. Please give your examples
about your product.
My company produces the yogurt:
For line extension, we have already produced fruit yogurt, strained yogurt, light yogurt
under same product category which is yogurt.
For Brand extension, we have already different products such as produced cream, different
type of cheese, etc. under same brand.
For Multi-brands strategy, DIXY which is a brand for cleaner family. GREENESTEA which is
brand produces different kinds of tea, and my yogurt company are belong the Worldy
Company (All the brands are given by myself; they are not real).
For new brand strategy, we will launch egg product as entirely new category.

Q4.

1. Consumer value-based pricing consists of five pricing strategies which are value
based, good value, high low and value added, everyday low.

As travel services, we prefer to use high low pricing strategy for Consumer value-based
pricing. Because our tickets involve high prices for everyday basis with comfortable travel
experience. However, at the same time, it can include lots of promotions and discounts in
order to attract the passengers. Especially we prefer to implement discount during Eid
times.

2. Cost based pricing consists of three basic pricing strategies which are cost-based,
cost-plus and break-even pricing.

As travel services, we prefer to use Cost-plus pricing strategy for Consumer value-based
pricing. Cost-plus pricing adds a standard markup to the cost of the product.

As travel services, we can assume that total variable costs (this variable cost per unit comes
from the cost which are gasoline, food) for one ticket are $20. Also, we estimate that fixed
costs per unit are $5(this fixed cost per unit comes from the cost which are facility rent,
vehicle taxes, depreciation). To cover the fixed costs and leave a profit per unit of $2, so we
will price our tickets at $27. Now we feel fair for our prices, but we all ignore ticket prices of
our competitor.

3. Competition based pricing is based on making prices according to the prices of the
competitors’ product.
For Competition based pricing, we set our ticket prices according to our competitor. Our
ticket prices (our and our competitor’s) will be almost at the same prices.