Production and Pricing Aspects Production or manufacturing a product need not be a major concern of entrepreneurs when subcontractors or other parties can do it better. -Dr. N. A. Orcullo, Jr. 9,1 The concept of production Too often, engaging in small business or going into entrepreneurship is associated with small manufacturing concern thus insinuating the notion that going into entrepreneurship means investing in a production or manufacturing- based venture. This view redounds to a perception that to be in the business, one needs to have skills in production, fabrication or manufacturing hence one tus to have money to be able to buy the necessary equipment to put up a small production facility or manufacturing plant. This perception is by itself a constraint or stumbling block to entrepreneurship. This is not the perception & Bill Gates when he started his business simply because IBM and NCR were already corporate giants. MICROSOFT outfaced them in the 1990s and Bill Gates a billionaire not by engaging in manufacturing a computer unit as an entry point for his business. All that is being pointed out above is that entrepreneurship or businessmanship is not really all about hardware production.or physical goods manufacturing. Production in contemporary times really refers to creation of Products or services and conversion or transformation of resources into a finished physical product (goods ) or services needed by the market or consumers, This context of production should be enough message to entrepreneurs that there is such a thing as production or creation of services — and not purely production or manufacturing of physical goods or prodticts. As an ‘xample, super entrepreneur Bill Gates took an entrepreneurial route not by Competing with hardware manufacturers (e. g., IBM, NCR, etc.) but by veloping the software market to support the hardware manufacturers and he dup the winner.~ ind-setting is important in going into a sap buses Tis minting age mee Cit AONE ODE CR oo whether the entrepreneur has to take the 100 ing where the onion it ty Context of what technical production/manufé have to take the route vig iCg products or goods. Or, the entrepreneur may a very challenging op} Of services. Production or creating services 1s ative mind is really °°" fe entrepreneurs as this is where an innovative and creativ® © compared ty gtd the limits. Fortunately, there is where real See — it out in a manufacturing plant to eam a little p 9.2 What product to produce? market-oriented entrepreneur, the question of what to pi fecruneee boils pana the Siesta of what to sell. What product to produce or what service to render to meet the needs of the market is by itself the bias ¢ the entrepreneur. Even before ascertaining in writing or doing the business pln (if indeed this has to be done ), a prospective entrepreneur already has in ming the kind of product or services to be handled. For the doubting Thomases who are anxious to establish a self-owne business or simply be involved into it as a capitalist but do not exactly ot clearly knows what is in the business, Gordon Baty’s production identification matrix shown on Table 9.1 could be of help. The information shown on Table 9.1 are broad options to consider when a prospective entrepreneur Teally likes to have an honest-to-goodness evaluation to respond to the question of whit product to produce or what types of services to be rendered by the business to be organized.Tabl Product ident le 9.1 ntificati : ‘Adopted from Gonios aye Modification of Totally Disposable hospital Laser surgical "4 surgical bedding instrument Laptop computers Spanish language News-only TV Computerized home instrusion To appreciate the Televance of Table 9.1, try placing the product ideas not the pigeonholes then consider the following observations: a) The closer you are to the northwest corner, the safer and easier-to- finance your product will be. This is often a winning combination for the first product, even though the potential payoff may be higher for future products. b) The further toward the southeast comer you get, the harder it will be to find financing and develop a profitable enterprise. ©) In general, a new company is better off in the northeast corner, where the market is at least known, than in the southwest where it * may never make the first sale. This is true because new companies usually have less marketing competence than product development ability. @ Since high rate of return nearly always involve high risk, you ought to consider reserving riskier, higher-potential ideas for second or third products. By then, you’ll have a company going and, hopefully, some modest first-product success.9.3 In-house production ing actual production or manufacturing operations as part and partiay of the tise rome is by itself an inherent bias of every buses if only to control the entire process and in the end rake all the profits he ee In some cases, doing the actual production, creation or manufacturing of a product even be the main bias of the entrepreneur’s business giving less attention to critical business functions like marketing and research. This option is a pit expensive route for the entrepreneur simply because of the need to budget funds for the procurement of capital items and other infrastructure need for a production or manufacturing-based business concern. If at all the idea of having production or manufacturing is necessity that is inherent to achieving substantial profits for the business, then this is a matter for the entrepreneur to seriously look into. Each production processes demands a detailed study both from technical, economic and financial aspects as well. Inthe business plans, specific study and analysis of every minor detail of the Production processes have to be carefully made as this is where cost minimization aspects can be addressed. By using the appropriate production ° technology, the entrepreneur should be able to hire the appropriate personnel well qualified and motivated to operate the machines and deliver the right quality of product. This book is not really meant to encourage or induce entrepreneurs to invest into manufacturing or production business but to address entrepreneurship in a broader context hence the author dispensed the idea of discussion production aspects in full details. Besides, there are many existing literatures and documents on the detailed aspects of producing or manufacturing something that should be of better value to entrepreneurs. Moreover, there are a number of various skills training centers and agencies of the government who offers specific courses and modules on how to produce something and how to do it best. These sources of skills on production aspects provide handouts and written materials which are easy to comprehend and implement. Furthermor, equipment and machinery suppliers for any production business generally provide manuals and training on how to efficiently use a particular machine or equipment and get the best out of it. It is inherent upon the entrepreneur to research on production processes and deal with equipment/machinery suppliers to be well familiar with processes involved in a production process as well as in the efficient use of the machines itself for him to come up with a fini products that he or she should be proud of.94 Full sub-contractin, 2 Producing somethi she conception stage of the part, 2ot be really an in-house concer though at eur himself has to immass, Vetlwe dealing with a product, the rocesses. Entrepreneur need tse himself with details of production Production equipment or a buildine °Yt* latee piece of land to house his i ility. ig of his own to provide a space for production or manufacturing facility Ina typi f wurden of bays nat bcontracting scheme, the entrepreneur avoids the cost pun ractor. The Subcontrasien ond, cduipment as this is the concem of the sub- oe of a product (ine undertakes the actual production or manufacturing Prvehalf of the entrepre its component parts or in finished product form ) for and nde ntrepre: Thi Buided by the design and specifications provided for by Se eater his is a common arrangement in the Philippine’s svhand with thee Sector where a number of subcontractor exist working band-ine exporters, usually large companies. In a subcontracting arangements in the garments sector of the Philippines, the main product producer (usually the exporter who holds a garments export quota or in collaboration with foreign companies carrying brand names ), the subcontractor receives or pick up the pre-cut materials for sewing assembly in the subcontractor’s houschold where they own a single or a few high speed machines. After sewing/assembling the contracted out job in the form of component part or a finished product, the exporter picks up the goods/products or the subcontractor delivers the finished products to the main producer or exporter. In a typical subcontracting scheme as in the case of garments, all materials and supplies are provided for by the main producer/exporter to ensure product quality. And to further ensure adherence to quality standards expected from garment producers/exporters, the subcontractors are subject to strict quality control measures with subcontractors threatened with penalties and sanctions when turning in underquality finished products. The concept of contracting does not only enable the entrepreneur to evade or avoid the high cost of investments in machineries and equipment. The ‘ntepreneur is also spared with labor-related problem and dealing with Production personnel who can not meet management/owner’s expectations. This Scheme also allows the entrepreneur to focus his efforts on products design and Innovation as well as marketing functions which are really the critical and shallenging aspects of entrepreneurship.9.5 Partial subcontracting ntrepreneur can ‘There are certain parts of 8 product te ut also for some 0 ‘to anyone not only due 10 quality sons could range from something i wrens cuca ong ts) Sy that has fo Jo ith protecting te conden ey and formulation. Under such consideration oF yok preneit can go ing as well as economically justified, the cnt Pill be subcontracted ; subcontracting wherein certain components parts or production, In ths, With the rest to be done through in-house iad of component the entrepreneur simply collects the partly asse by the citocpreness tt fing the subcontractor with final assembly undertaken DY | ay his, Subsequently, packaging and shipping ie: Y te entrepreneur. 9.6 Tool manufacturing In some ways, tool manufacturing is similar to sub-contracting in thy the entrepreneur may not invest in fixed physical equipment like machineries and buildings. To produce or manufacture his goods, the entrepreneur hires a « tool manufacturer” to produce or manufacture a product for an in his beba The entrepreneur simply provides the formula. In this scheme, the enti production facility is owned by the tool manufacturer and the finished products will be delivered by tool manufacturer to the entrepreneur’s storage area a display center. The tool manufacturing agreement generally includes both production and packaging (like the drug manufacturing sector). Depending o the arrangement, the name of the tool manufacturer is indicated on the label of the product though the entrepreneur may opt for hiding the name of the tool manufacturer. Tool manufacturing scheme are generally or commonly used inthe drug and chemical products manufacturing concerns. 9.7 Pricing products and services After producing or fabricating a product, the next major task is pridié the product or services. Some entrepreneurs do not take the pricing males seriously, meaning, not taking into-account the various factors that goes wi pricing a product or services. The price that the entrepreneurs charge for | product or service has direct impact on the ultimate success of the business. your product or service is priced too high, customers may be driven 0 14 from the competitors. If priced at lower cost, it may be perceived to b¢ ofgg: [ 5 | st od expansion Finding a Dede Profit margin and stall ia rofit market that i appeals the buyers and still gt Sosa thats the key to ulate succes. eon ae of tne aed cttepreneus, pricing is often neglected for lak of onde affairs. Quite fia ean independent nature of business SR gssily OF st and pricin te often, small or home-based business owners tend tO eee oo a ereaae OF their products or services unmindful of human effons ie etreprensty amd Oller inputs of other partes (¢. g., family members ) jie ime chara ginvolved in running the business (i. ¢., willy costs are offer is change against home expenses ), This results to arbitrary figures oe ees or services and one that violates cost accounting pocoises and other financial considerations as well. - This also leads ‘0 Tproper pricing. A home-based or small-scale entrepreneur may have an advantage when jg comes 10 pricing simply because of overhead costs deemed lesser than its | competitors with high overhead expenses, Indeed, this can be a hidden pavantage and selling point of home-based entrepreneurs, however, products and services should not be priced so low so as not to undercut the profitability ahjectives. For home-based businesses, it is a must that product or services icing should include such parameters as overhead or fixed cost, material costs, fit margin, and the costs of the time of all parties involved in the business depreciation or other charges brought about by the use of household items ind other home furnishing used in the operations of tle business. While it is fomehow difficult to segregate the costs involved, services of professional scountants can handle the matter. While it is logical to use the pricing policy applied for provision of a service in the case of pricing a product, there are specific differences which can have direct bearing on the profitability of business operations. To determine the price of a product, entrepreneurs must be completely familiar with pricing smuctures, including differences between margin and markup. Every product should be priced to cover production cost, freight charges, proportionate share of overhead cost (i. e., fixed and variable operating expenses), and reasonable profit. Moreover, factors like insurance coverage, seasonality of demand, freight costs, sales discounts, rebates, etc. will all affect the final pricing. 48 The concept of fair pricing _ Fair pricing is not all about what is good for the buyers or consumers. fit picng does not also mean making it cheaper. Take note that low price is indication of low quality product or services. Fair pricing is one that isay attractive to potential clienteles or market with reasonable retumg entrepreneur, In the case of products or services which are really ‘ou te highly creative and innovative thinking, price may be perceived as high enous Or even exhorbitant, however, markets for these kinds of entrepreneurs Usuaty gd not Complain as what matters is the value added to their kinds of busing needs. Besides, there is really a premium to intellectual properties (j e, in Product of creativity or innovative thinking ) and this is what Cntrepreneu, Should really realize or ought to know. In order to make profit, the entrepreneur must set the price and no, salesmen or the aakatiae eens Employees or staffers of ane business can cur determine parameters for pricing within the framework of what is discusseq in the book unmindful of the substantial investments of entrepreneurs in Seeing the business through. While entrepreneurs have to be compassionate to the Marke, in developing his pricing policy, the entrepreneur has to be decisive and firm in Position on matters of pricing. Fear of charging enough may be a display of lack of self-confidence ( an attitude that contradicts entrepreneurship ). It Could also be viewed as an indication or result of a lack of confidence in the quality of the Product, merchandise or service rendered. If so, better improve the Product quality, switch product or brand. If you don’t have confidence in it as if you don’t, then who will? Fair pricing also means looking at the competitors prices. Difficulty in setting a fair price could be a result of strong competitive pressure, If the company down the street can price it lower than you do, then there must be a reason. Search it out. If your competitor charges less, making little or no profit at all, you may have to drop near his level for a while and outsell them later, 9.9 The framework on pricing Quite often, traditional concepts of accounting limits itself to the production of the product or services unmindful of the other Parameters or factors that can be imputed unto the price of a Product, which in the long term, could mean a lot of advantages to the entrepreneur. Other than cost accounting factors, the following concepts and consideration should go into the pricing strategies especially so if the product is relatively new or one of its kind in the market: a) The product or service Offered - This aspect can be easily addressed by applying Cost accounting Principles, It is plain and simple identification of specific direct and indirect costs matters caine part of producing and marketing the hardware or software items,b) Reputation — The reputation or presti je of the company or the entrepreneur may be exploited ao te Prices that it charges. Reputations may have been based on customers’ collective Opinion that prices were right, about Tight or just right. A reputation that provides the opportunity to adjust prices in favor of the firm should be tured to account at every opportunity. 9.10 Costing your time The labor Component of the entrepreneur is often one of the neglected or overlooked aspect in the business for many entrepreneurs. While it is relatively easy to figure out how much of the overhead expenses incurred by the business, deciding how much your own time is worth, time is far more subjective. Whether you sell a Product or a service, you must set a value for your time. It has to be so as the entrepreneur’s input to the business is a form of labor or employee’s inputs (which must be rewarded with a salary ) and this has to be distinguished with profits and dividends ( which is the return or reward for the use of the capital resources ). To set a value on your time, consider your work experience, expertise, education, and professional Teputation on top of the need to give value on your creativity and innovativeness as well as other intangible factors. If it is difficult or should there be a problem dealing with costing the entrepreneur’s inputs, employees-tumed-entrepreneurs can use their former position and salary as a benchmark or reference. This may not be the best formula as your employer business can not afford to give at least for now. 9.11 Pricing means cost accounting Before thinking about the various theories and Principles of product/services pricing or pricing strategies itself, entrepreneurs must realize that essentially, pricing means cost accounting. Cost accounting in pricing a product or service is important as it tells what activities to cary on and which to discontinue — which are profitable and which are not. Everyone knows what his own discount or mark up is. But a number of businessmen or entrepreneurs have no conception of the overall breakdown of the product’s selling price or the various components involved in the production process. Cost accounting enables the entrepreneur to identify all the costs involved in the pre- and post production processes before mark up, margin, profit or discounts are added to come up with the selling price or cost of the service to be rendered.The point here is that, producer's profit, as well as the profit op level of distribution, has been carefully computed into real or end ser eit Price. If you do not do likewise with every item you make or handle, and wit every service you offer, chances are you may be working for nothing not y, Your efforts, Ort 9.12 Basie pricing principles . As earlier mentio: the price you charge to your custome, Clienteles will have dies bane on ee ecole of the business hence i ems Siven due diligence and care. In pricing a product or services, the following will serve as a fundamental guideline: : @ All prices must cover costs. : b) The best and most effective way of lower sales price is lowering Costs, © Prices must be regularly upgraded to reflect market developments @) Prices must be established to ensure sales. © Product utility, longevity, maintenance, and end use must be judged continually, and target prices should then be adjusteg accordingly. § Prices must be set to preserve order in the marketplace 8) Prices must be fixed to support an overall corporate goal 9.13 Pricing methods and tactics Pricing a prodyct or service is probably the most familiar aspect marketing - and probably the most important. The magnitude of price can influence the buying process and thus affect sales. Sales in tur affect costs, depending on the efficiency of the production process and the efficiency of the production system. Guided by the basic ideas about principles on pricing discussed earlier, the following pricing methods addresses the operation aspects of pricing itself. Pricing could be either done on a cost-plus basis, demand driven, market competition driven, or based on preset mark-up. Following at the basic description of each pricing method. 9.13.1 Demand-based pricing Demand-based pricing is influenced by the optimum combination & fit as well as a number of downside factors. For instance, a yee ha variety of sources at different prices - such as those soldee, ee er ee, or ee ee ysilers, discount retailers/chains, lesalers, direct mail marketers, jpoberss favored customers or Cale am examples of foods which oe jpased or influenced by demand-related factors. In this case, buyers of big volume quantities will get privilege prices over those who buy lesser quantities and good paying clienteles can likely enjoy a privilege price over those buyers with ack record of issuing bad c! Demand-based pricing focuses on consumers and aims to base the price of the product or service on their taste and preferences. Some way to do this are: a b) 9 Skimming — 1n this scheme, the entrepreneur sets the price high initially, then lower it later. This allows the entrepreneur to take advantage of initial high interest in the product. When you have ‘skimmed” the group of interested buyers, you lower the price somewhat to attract another tier of customers who may not be willing to pay the highest price, but will be interested when the Price moves down somewhat. Penetration - This is the opposite of skimming. In this scheme, the entrepreneur sets the price low in order to attract as many new buyers as possible. Penetrate the market. A low price may discourage competitors and may allow you to increase production levels (and therefore lower costs). The low price is used to penetrate the market especially for new OTC never-heard products. Prestige pricing - This pricing scheme means setting the price high for people who are willing to pay for the status. Price lining — This entails offering a line of goods with special prices within the line. An example might be a line of clothing with a range of prices. Odd-even pricing - This scheme puts prices at odd numbers, right below even ones such as P20.95 instead of P21.00 or P19.99 instead of P20.00. This is a psychological trick to have customers perceive that the price is closer to P19.00 than P21.00 or P20.00. ‘Demand-backward pricing — This is a more complicated pricing option but a useful strategy in pricing. In this scheme, you start with a final price you want to charge, then work backward through the margins you have to pay to retailers and wholesalers. When you have the price for each of this, then you have to adjust thecosts to be able to get the price you require. The drawback i that adjusting costs may mean sacrificing quality. here ig Bundle pricing — this pricing scheme is a strategy LN) custome to buy a group of related items ina single package, 8 example would be a computer package consisting Of the monitg and a central processing unit (CPU), software such as Operating system and word processing, a service contract, and Pethape accessories like a mouse, modem, or printer. 9.13.2 Competition-based pricing Competitive pricing considers the market forces as the benchmark j pricing a product or service. Competitive pricing is used most often withi markets where it is difficult to differentiate one product from another. If a maj - Player in the market act as the market leader, that company will often set the price that other, smaller companies within the same market Category will have no choice but to follow. To employ competitive Pricing properly and effectively it is imperative that the entrepreneur know exactly what prices each of yo. competitors has established. In a competition-based pricing, the entreper a sets a price based on the prices of the competing products assuming that they oe more or less similar or in the same competitive category. The following tacteg can be used in competition-based pricing: a) Customary prices — Under this scheme, prices for the product is based on those established by traditional Products or those prices earlier used by your competitors which are often distributed in a standard way. The way to get around such Pricing is to change the product content instead of the price: For example, a candy bar might be smaller or contain fewer nuts. b) Above, at, or below market - This refer to a method based on looking at the competitor’s prices and then Pricing your product accordingly. If you want consumers to buy your product because of the high price — and, therefore, a perceived higher quality - you would set the price above that charged by your competitors. If your product is about the same as the competitors, you would price it the same and try to win customer using a strategy other than Pricing. If you want to undercut the competition, you would price your product below the competitor’s price. ©) Loss leader - A loss leader is a product for which the price is purposely set below cost, with the hope that it will attract buyers to the store who will then purchase other products as well.CO nC RT ee eee Tt ee Supermarkets use this method all the time. They offer either a Sean: ora very low price on one item to lure customers into re. @) Sealed bids — A sealed bid pricing scheme is usually used by the goverment agencies to provide a level playing field among competing products or services suppliers and in order to promote transparency. This scheme is done by requiring everyone competing for the sale submits a bid and the lowest bidder usually bags the contract though the bidding committee overrule the lowest bid in favor of someone else based on a criteria set for under the bud documents. 9.13.3 Mark up pricing This pricing strategy is usually done by manufacturers, wholesalers, and retailers and done by simply adding a set of amount to the cost of the product to arrive at a price. A fixed mark up is usually used by the company as a percentage of product acquisition or production cost. For example, if the product cost is P100.00 and the selling price is P140.00, the mark up would be 40,00. The percentage mark-up is 40 percent and this is determined by dividing the mark-up amount and the base product cost (i.e., % mark-up — P140.00 — P100.00 + 100 x 100%). 9.13.4 Cost-based pricing This mode of pricing is to consider the production costs and other related costs including marketing costs. This option means adding all costs covering all expenses both fixed and variable costs. There are a number of different ways to use the cost-based methods as follows: a) Standard mark up pricing - This is done by determining all the costs involved and adding a fix or standard percentage to the costs of all the items in a product class. This is sometimes called absorption costing. This approach sets the price equal to the total cost plus profit markup. This method covers all costs and is a good one to use when pricing new products. b) Cost plus percentage pricing — This is generally used ina business venture where a fixed percentage to the production costs is used as a guide in pricing. This pricing method is generally used or adapted by the construction and manufacturing sector. The keyRE eee os rn sce Teel ae ‘ i ing that the ph is icing effectively is ensuring Plug inet at Shel et Percentage ell, In using a cost] i a the eater aie ear that all overhead and. operating coat are duly accounted for including those post jr mail oa: costs involved. For instance, entrepreneurs ing, shippi marketing strategy must see to it that mailing, ian an, Comat ing, and delivery costs as well as insurance premium 4 So that the product is considered sold even if it is lost or damaged in transit. icis is prici heme is done by ©) Cost plus fixed fee icing — This pricing sc by adding ‘ied fi to the pre-identified costs (¢. g., prodvction Cost). This method generally used in the seve sect or wise the costs are covered — whatever they may be — and then a fixed fie is added. 4) Experience curve pricing scheme - This scheme means changing the pricing the fint's experience grow. This approach is based on the concept that the unit cost declines by 10 to 30 per cent each time a firm’s experience at producing and selling them doubles, Thus as your experience grows, you can expect costs to come down somewhat. 9.13.5 Profit-based Profit-based pricing focuses on annual Profit target, either a specific peso volume of profit or a percentage of sales or investment. This pricing tactics can be expressed in either of the following: a) Target return on sales — This scheme involves setting prices such that the firm can expect a firm profit that is a specified percentage (e. g., one per cent) of the sales volume. b) Annual return on investment (RO) — This approach uses a specific percentage of ROI as minimum expected return or hurdle ate of return. For instance, the firm can use the banking rate or market interest rate as the reference benchmark plus certain premium. After deciding on a particular Pricing tactic or Strategy to be adopted, the entrepreneur should provide room for flexibility making available on the shelf other pricing tactic as option when necessary, For instance, a combinationce, 8 particular pricing rt and sed for a particular season or period. For jem policy, however, a particular mrt ted #8 @ matter of broad and long- seasons like christmas holi Pricing scheme can be adopted for certain period of the year (c. g, come, S, Summer/acation seasons or during specific be introduce not only to get rid Y holiday) where a special promotion sale may more sales. unnecessary inventory or simply to generate 9.14 Pricing a service tin ne, & Product where everyting can be quantified to arive at a factors of prod ndering services involves human efforts and other parameters or factors of production which are quite difficult to quantify. For instance, human Deval beeen and ingenuity involved expenses incurred in the past whi applied only now. Moreover, there are other issues involving use of human resources whose actual contribution to product development may be also difficult to quantify. Nevertheless, among service providers, pricing for a services rendered vary with the type of business, but the same three element are present in every situation. The three elements include: a) Labor cost — Labor cost includes salaries, wages and benefits paid to the employees as well as contractors/subcontractors who performed, supervised, or manage the service business. If you as the owner are even partly involved in executing the business operations, then the cost of your labor, proportionate to your input must be costed as part of the labor charge, and to which, you are supposed to receive the amount as salary or wage. b) Overhead expenses - These items include indirect expenses required to operationalize the business. This expenses include insurance premiums, equipment depreciation, business forms, rentals, office supplies, dues, membership payments, etc. Vehicle maintenance, and all those intangible costs associated with the manufacture of product or rendering of services from part of these costs. This refers to the amount of income eared after all costs of producing and providing the service have been met. When calculating the price of a service, profit is applied in the same manner as markup on the cost of the product. If you're just starting out, you obviously won’t have the skill of a quote is too low, you will either rob yourself of some seasoned pro. If your p Profit or Fe forced to lower the quality of work to meet the price. If your 9estimate is too high, you may lose the contract altogether especially if yoy in the competitive bidding situation, Make it your business to learn hoy, estimate labor time accurately and how to calculate your overhead property that when you quote a price, you can be competitive and still make the ts you need. Zecs 9.15 Packaging : While it is true that production end up with the completion of finished product that is considered ready for display or product demonstration, contemporary management theories postulate otherwise. True enough, some concerned companies or corporate citizens do consider packaging and shipping until delivery to customers or end users as part of the production process. In this instance then, packaging do make sense. : The package — a displayed product can be as important as the product itself. In the case of products sold in supermarkets and mall areas, the only selling tool you have once the product is sitting on the shelf of a store is the product packaging itself next to all the brand-name products your potential customers will already be familiar with. Remember that you only have seconds or more of it to make a strong message to passers by to encourage those customers to examine the product more closely by picking up the product itself, reading the product label and at best, taking the product to the counter to consummate the buying process. Products which are all well-packaged lured customers into buying the products. Sometimes customers are deceived into buying a neatly-packed product only to find out at home that the product is not worth it. Sad or ridiculous as it is, at least the packaging strategy worked to the favor of the entrepreneur. If the product is to be sold through the mail, either through a order catalog or on your own, your packaging should be designed to keep product clean and protected while being shipped. There is no need to ty “sell” the customer with the packaging because the sale has already completed. Tsek