Declslons : Concept of Product

Product and Pricing

p.
Classification, Produ oduct Life Cye
uc Lie g.8.A
strategies, Product
(PLC), PLC marketing neDe
UNIT
ngDecek
Product Mix
Decislon, Prlclng Decislons: Concept of Pele
V and Pricing Strategles
Metneh
customers' needs and wants. The Coneor
4.1 CoNCEPT OF PRODUuc can be categorised into
fwo, ie.,
Q1. Define Product.
and wide concept. Inits narrowr
narrow contept
is a combination of
physical or
characteristics which has sorne
Ans Concept of product is the understanding of a non-living object or a physicalutirties.
substhtance
hemie
in order to showcase
the dynamics of the product
A product
also has other
the best qualities of the product. Marketers spend a utility like satistying customer needs and wan functions
their
lot of time and research in order to target fan, table, pen, cooler, chair, etc. its wider ts, 2
In
look into a produ
aftended audience. Marketers will a product having a varity of co
a product towards their packaging and brand is said to be a desic
colours
concept before marketing
Customers. product. For example; it a
shampoo is
diferert
The product is the most tangible, and available in three different variants and smels,
mad
important single component of
the marketing these are three products, as they axe fulGiling o
programme: The product policy
and strategy is the of customers with varied choices. Hence,
prodt
cornerstone of a marketing mix. Without a product, defined as a completè package of benefits receve
there is nohing to distribute, nothing to promote, by a consumer.
nothing to price. If. the product fais. to satisfy Def
Definitions of Product
on any of
consumer demand, no additional cost
the other ingredients of the marketing mix will According to George Fisk, "Product is
improve the product performance in the cluster of psychological satisfactions"
marketplace. According W. Alderson, "A product i a
To the marketer,products are the building bundle of utilities consisting of various features and
blodks of a marketing plan. Good producds are key accompanying services'.
to market success. Product decisions are taken first
According to Rustom S. Davar, "A prod
by the marketers and these decisions are centril to
may beregarded from the marketing point of viv
all other. marketing decisions such as price,
as a bundle of benefits which are being olerad
promotion and distributlon. Product is the vehicle
by which a company provides consuner consumer".
satisfactions. It is the engine that pulls the rest of the According to Philip Kotler, "A produts
marketing programme. Products fill in the needs of a bundle of physical services and symbolicparticulbs nange
society. They represent a bundle of expectations to expected to yield satisfactions or benefits tothena
consumers and society.
hereb
buyer". pecia
Product Characteristics of Product Kotler,
hdivic
A product is the item that th
is developed and The important characteristics ofa productavant
refined for sale in the market. I aims to meet alue
the -
as follows:
71 Rakul Publlcatio Rahul
 B.8.A YEAR 1SEMESTER UNIT 1V
BASICS OF MARKETING)
Tangibilty For him, aproduct is more
than physical. A Augmented Product requirements. For exampte helping a
J should be perceptible tbythe touch. An item product is
anything that can de offered to a marke ncusion of additional feakures, benefts, austomer who lals sick ahen staying in the
to be called a product should have a or
atention, aquisition, or use, or hotel.
tangiblity character touch, seen or leeling.| can satisty a ned or want.
somethingthat attributes or velated services that serve to
Forexample, car, shirt, book, etc. can be
Therefore, a product dferentiate the product from its competitors. 3.
Assurance
a
physical good, a service, a cetail store, a 5. Potential Product
Intangible Atributes person, The extent to hich the service povider and
an
organisation, a place or even an idela)
The product may be intangible, in the form Products are the means to an All the augmentations and transformations a ; hestaff isable to inspiretrust and confidence.
end whereinthe end product might undergo in the future.
of services, for instance, banking insurance ne satislaction of customer needs or wants. for exampBe the customer dining in a
roduct repairing, etc. It is Kotler noted that much competition takes restaurant may not-be able to directly judge
oncept services, an assocaated Kotler distinguished three components:
feature. For example, scooter is a tangible place at the Augmented Product level rather than the Hevel of hygiene maindained by the
roducdt product, and when free servicing is offered need: a lack of basic at the Core Benefit level or, as Levitt put it: New estaurants. Hexe it is not only important to
mical by the seller, then the product is not only a
a
requirement, competition is not between what companies produce actualy provide hygienicfood but alsoto
ot just want: a specific requirement for products or
tangible item but also an intangible one. intheirfactories, but between what they add to their inspire confidence that the food is hygienic.
services to match a need;
3. Associated Attributes factory output in the fom of packaging, services, Theassurance is regarding givingthesustomer
an its demand: a set of wants plus the desire advertising, customer advice, financing, deliveryy peace of mind that everything will be taken
Such attributes may be brand, package, and arangements, warehousing, and other things that care of as required, rather than just actually
, eg., ability to pay for the exchange.
warranty, etc. For example, Hindustan people value. taking care uhenthe need arises. For example
Cept, Lever's "vanaspathi ghee" has a brand name Customers will choose a product based on a doctor with MD degee may inspire move
signs, Kotler's model provides a tool to assess how
DALDA and with its package it can be | their perceived value of it. Satisfaction is the degree assurance than a doctor with just an MBBS
erent the theorganisation and their customers vièw their
identified by consumers. It has developed to which the actual use of a
product matches the degree, although the basic treatment
nade an image that all kinds of vanaspathi
ghee| perceived value at the time. of the purchase. A relationshipand which aspects create value. provided by #hem may be of same quality.
then sold are being refemed to as DALDA ghee. Customer is satisfied only if the actual value is the Q3. What are the Dimensions of Product?
eeds Exchange Value same or exceeds the perceived value. Kotler defined Empathy
uct is toa product: tus This is being able to understand the needs of
Whether the product is tangible orintangible,ive.levels
eived it should have exchange value and must be The 5 levels of the product
In busines and marketing products are the customer as an individual and meet the
capable of being exchanged between seller marketed by a company may be classified broadly special Tequirements of the customer. This is
and buyer for mutually agreed price. as goods and services. The quality of goods is more about customizing the service and the
1. Core beneit
generally defined in terms of the physical general service provider behavior kor each
. Consumer Satisfaction 2, Basie product characteristics of the product or the goods marketed. customer, rather than providing a uniform
a
Products should have the abilitytooffer value However, it is not possible to define, quality of high qualitytreatment to all. Many companies
3.Expected product"
satisfaction to the consumer. The satisfaction services in terms of physical characteristics alone. try to create this sense of empathy by
a may be both real or/and psychological 4. Augmented product Quality of service is judged by the customers on emptoying tacties like addressing each
and rhany different dimensions in addition to the physical customer by nama However, true empathy
For example, when we buy SNOW we also S. Potential product

buy beauty a product with a bundle of characteristics associated with the service. There are means understanding the special characterizes
five aspects or dimensions of service which are found and needs of individual customer, and
utilities. Core Benefit
luct to be very important in determining customer modaying service to them accordingly.
ew
Q2. Define product level ? Explain the five The fundamental need or want that consumers perception of service quality. These are:
levels of product? satisty by consuming the product or service. 5. Tangibles
to
1. Reliability
Aus: 2. Generic/ Basic Product The extent to which the service perfomed This is the paralel,of physical characteristics
in the 1960's, the economist Philip Kotler of quality of go0ds. This refers to the physical
t is . matches implicit or explicit promises made by.
Aversion of the product containing only those characteristics -of facilities, equipments,
ars change the perceplion of marketing. He described attributes or characteristics
the service provider regarding the nature of
cosumable goods and personnel used in or
he
what marketing is rather than what marketers do, absolutely service. for example, the basic quality of associated with the service provided.
thereby'changing marketing from a departmental necessary for itto function. room decor, food, and facilities provided in
specialisation into a corporate wide doctrine. For a hotel.
However here also the quality is judged not
Expected Product
Kotler, marketing social process by which
was a by some uniform specifications in terras of
individuals and groups oblain what they need and The set of attributes or characteristics that 2. Responsiveness physical character istic, but by the impact these
re physical characteristics have on customer
want through creating and exchanging products and buyers nomally expect and agree to when The wtllingness to help the customer prompty
value with others they purchase a product. in case of special and unforce seen assessment.of the service quality:

Ralhul Publicatlons {72 73 Rahul Publicatious

 B.8.A IYEAR ISEMESTER UNIT IV
BASIC OF MARKETINC.
Q4. Define Product Attributes.
Stages of Product Life
Cycle
Ans : (c) Maturity Stage
The different Markelers can seldom tell
A product atribute is a chàracteristic that stages in a product life cycle are: At maturity, the strong growth in sales
: product is in. wha
hat stage he
defines particular product and will.affect a
a

consumer's purchase decision. Product

a)Introducion stage diminishes. Competition may appear with
similar products. The primary objective at
A product may
appear to
attributes can be tangible {or physical in nature) or b) Growth stage
point is to defend market share whide 1
this actually it has reached a be.mahure u
intangible (or not physical in nature). another upsurge. plateau p
1. Tangible Attributes
c)Mature ptage demagnetizing profit.
d) Decline or Product features may be enhanced to
in reality very few products
Tangible atributes can include such product Stability stage prescriptive cycle. follow sich
uch a
charaderistics as size, color, weight, volume, (a) Introduction Stage differentiate the product from thaB of The length of each stage
smell, taste, touch, quantity, or material In the competitors. vanes
composition. introduction stage, the fim seeks to
Pricing may be lower because of the The decisions of marketers can enormouly
build produçt change the
2 Intangible Attributes market for the awareness and develop a new compétition. stage, for example trom
maturity decline
Intangible attributes may include such product. The impact on the by price-cutüng.
to
marketing mix is as follows: >Distribution becomes more inkersive
characteristics as price, quality, reliability, and incentives may be offered Not all products go
beauty and aesthetics, (an indefinable, elusive Product branding and quality to through each
pleasing quality).
level is
established and intellectual property encourage preference over competing go from introduction to decline.stage. Some
protection such ás patents and products. 4.2.1 PLC Marketing
Strategies
4.2 PRODUCT LIFE CYCLE
(PLC) trademarks are obtained. Promotion emphasizes. product| Q6. Explain
the various marketing
Pricing may be low penetration differentiation. for product life strategies
Q6 Discuss the stages of product life cycle.
cycle ?
to buíld
skim
market share rapidly, pricing
high
or
(d) Decline Stage
Ans
costs.
pricing; to recover
development
In the Decline
Stage, the market is'shrinking, i

reducing the overall amount of protit Product passes through four stages of its
A product progresses through a setquence
new be that can
shared amongst the. remaining cUle. Every stage lfe
ofstages from introduction to growth, maturity, and Distribution is, selective' until competitors. At this stage, great care has to
cle. stage poses different
different opportunities
opportunities and
decline. This sequence is known as the consumers show acceptance of the be the 'unique or s demands
product life product. taken to manage the product carefully distinguished set of marketing
cycde and is associated uith changes in the As sales strategies. marketer should watch on its sales and
A
situation, thus impacting the marketing
marketing Promotion is aimed at dedine, the fim has several options: market situations to identify
the marketing mix. strategy and early adopters. Marketinginnovators and
communica- >Maintain the
product, possibly
the stage in which the
product is passing through, and accordingly, he
tions seeks to rejuvenating it.by adding
The product life cycle goes through many and to educate
build product awareness and finding.new uses.
new
features should design appropriate
marketing strategies.
phases and involves many professional disciplines potential consumers Here, strategy basically involves four elements -
about. the product. Harvest the product reduce costs and product, pYice, promotion, and distribulion.
and requires many skiHs, tools and processes. (b) Growth Stage
Produc life cycle (PLC) has to do with continue to offer it, possibly to a toyal By appropriate combination of these four
the life ofa niche segment.
product in the market with respect to In the growth stage, the'fim seeks to build
elements, the strategy
can be fomulated for
each
commercial business/
costs and sales measures. brand
preference and increase market share. Discontinue the product, liquidating stage of. the PLC. Every stage gives
varying
importance to these elements of marketing mix. Let
Unit Sales Product quality is maintained remaining inventory or selling t to
and another fim that is
us
analyze basic stralegies used in each of the stages
additional features and support services the product willing to continu of the PLC, as described by Philip Kotler.
may be added.
The marketing
mix decisions in the (A) Marketing Strategies for Introductlon
Pricing is maintained as the fim enjoys phase will depend on the selected
decline Stage
For
increasing demand, with little example, product may be changedstrategy.
the if it is being introduction stage is marked with slow grouwth
competition. rejuvenated, left unchanged if it is being harvested
or in sales and a very little or no
profit. Note that
or liquidated. The price may be product has been newly introduced, and a sales
Distribution channels are added as product is
maintained if the
demand increases and harvested, or reduced drastically if volume is limited; product and distribution are not
IV
Time the product. customers accept liquidated given more emphasis: Basic constituents of
Introduction Growh Malurily Decline Criticisms for marketing strategies for the stage include price and
Product Life Cycle
Figure: Stages of the Product Life Cycle Promotion is aimed at a
broader promotion. Price, promotion or both may be kept
audience. The life-cycle patterms are too variable in high or low depending upon market situation and
shape and duration. management approach. Observe Figure 3.
Rahul Publicatlons
74 75- Rahul Publicatlons
8.6.A YEAR ISEMESTER UNIT IV BASICS OF MARKETINGO
Following are the poasible strategies during the first
stage: c) Rossibiliky of competition is kow. decine in the sales ia certain. Marketer tries
Promotion to conserve money, which can be later on
High d) Buyes axe priceeensibveaprceeestic,;
LOw invested in new profitable products. t
High Rapid Skimming and aot promotion-dastic.
Price Strategy Slow Skimning Strakegy Marketing Strategies for Growth Stage
continues only routine efforts, and starts
Low Rapid Penetration Strategy Slow 3)
fig.: Marketing
Penetralion Strategyy This is thestage of rapid market acceptance
planning for new products.
Strategles for Introduction Stage 2 Market Modification
Rapld Skimming Strategy The strategies are aimed at sustaining market growth
This strategy consists of introducing a new product at high price and
aslong as possible. Here, the aim isnot to inaeases. This strategy s aimed at increasing sales by
high awateness, but to gét trial of the product. Company
The purpose of high price is to recover protit per unit as much as posstble.promotional
The
expenses.
tries &o enter the new segments. Compelitors have
raising the number of brand users and the
eDenses are aimed at convincing the market the product merits even at a high price.high promotional
the market. The company tries to
usage rate per user. Sales volume is the

ccelerates the rate ot market penetration, in

all, the strategy is
High promotion entered product (or outoome) of number of users and
prefered to skim the cream (high sttengthen competitive positäon in the market. t may
profits) from market. usage rate per users. So, sales canbe increased
maximum curent profits to ean stll greater
This strategy makes a sense in following assumption[
fongo either by increasing the number of users -or
profits in the future.
by naeasing the usage rate per user or by
a) Major part of market is not aware of the product. Several possible strategies for the stage | both. Number of users can be imareased by
(b) Customers are ready to pay the asking price. are as under:
variety.of ways.
c) There possibility of competition and the firm wants to build up the brand 1. Product.quatities and eatures
preference. There are three ways to expand the
improvement
(d) Market is limited in size. number of users:
2. Adding new models and improving
2. Slow Skimming Strategy Convert non-users into users by
This strategy involves
styling
launching product
a at a
high price
and low promotion. The purpose
of high 3. Entering new market segments
convincing them regarding uses of
price is to recover as much as gross profitas possible. And, low promotion keeps marketing expenses
products
low. This combination enables to skim the maximum profit from the market. Designing, improving and
4. widening i) Entering new market segments
This strategy can be used under following assumptions: distribution netuwork
Winning competilors' consumers
a) Marketis limited in size. 5. Shifting advertising and other
{b) Most of consumers are aware of product. promotional efforts from increasing Sales volume can also be increased by
product awareness o product increasing the usage rate per user.
(c) Consumers are ready to pay high price. conviction
(d) There is less posibility of competition. This is possible by following ways:
6. Reducing price at the right timeto attract
3. Rapid Penetration price-sensitive consumers i)More frequent use of product
The strategy consists of launching the product at a low price and high promotion. The purpose is 7. Preventing competitors to enter the iMore usage per occasion
thefaster market penetration to get larger market share. Marketer tries to expand market by market by low price and high
)New and more vaied uses of product
increasing the number of buyers. promotional efforts
Product Modification
It is based on following assumptions: C)Marketing Strategies for Maturity Stage 3.
(a) Market is large. In this stage, competitors have entered the Product modification involves improving
product qualities and modilying product
(6) Most buyers are price-sensitive. They prefer the low-priced products. market. There is severe fight among them for more
characteristics to attract new users and/or
c) There is strong potential for competition. market share. The company adopts offensive
aggressive marketing strategies to defeat the
more usage rate per user.

(d) Market is not much aware. of the product. They need to be informed and convinced.
low price. competitors. Product modification can take several
e) Per unit cost can be reduced due to more production, and possibly more profits
at
Following possible strategies are
torms:
Slow Penetration followed:
with low price and low-evel promotion. Low price i) Strategy for Quality Improvement:
The strategy consists ofintroducing a product To Do Nothing Quality improvement includes
will encourage product acceptance, and low promotion can help realization of more profits, even at
To do nothing can be an eflective manketing improving safety, efficiency, reliability,
a low price. other
strategy in lhe maturity stage. New strategies durability, speed, taste, and
Assumptions of this strategy: oler
it is qualities. Quality improvementcan
are not fommulated. Company believes
a) Market s large. advisable to do nothing. Earier or tater, the more satisiaction.
46) Market is aware ol product.
7 Rahul Publicallons

D-L..i DuJimtinus
76
 B.8.A
YEAR 1SEMESTER UNIT IV
i) Strategy for FeatureImprovement: This includes improving features, such as
weight, accessories, form, get-up, materials, size, colour
BASICS OF MARKETIN
and so foth. Feature
convenience, versatilily, and attractiveness. Many improvement leads to
firms opt product Improvement to sustain
for
4.3 PRoDuCT CLASSIFICATION
maturity stage Q7. What are the
Product improvement is beneficlal different.types of Product Classificatlon?
in several ways like:
()t builds company's image as P Products
(i) Product modification can be made
progresstveness, dynamic, and leadership,
at very
little expense,
(i) It can win loyalty of certain Based on the
segments of the market, Based on Consumers
Based on Soclal
(iv) It is also a source of free Nature Intentlons
publicity, and Benefit
(v) lt encourages sales force and Goods
distributors. Scrvice
4 Marketing Mix Modification Consumer Lndustrial Pleasing products
ldeas Product Produci/ Goods Deficient produxc
This is the
last optional strategy for the Experience Salutary products
changing elements of marketing mix. maturity
the stage. Modification of marketing mix involves Events Convenience products F Raw Material
This may
stimulate sales. Desirable products
modify one or more elements of
marketing mix (4Ps) to attract buyersCompany
should reasonably Persons Shopping products Capital Equipment
Marketing mix modification should ánd to fight with -Places - Specialty produc
Accessory Equipment
be made carefully as it is easily imitated competitors.
D) Marketing Strategiés for
Decline Stage Properies Unsought products Component Pans
Organisation . Process Materials Supplies
Company
formulates various
Information
deteci the poor products. Ater strategies manage the decline stage. The first inportant task is
to Industrial Services
detecting the poor products, a to A)Based on the Nature
products should be dropped. Some company should decide whether poor
Produt Review Committee. The committeecompanies fomulate a special committee the task known as
for There are ten types of products which can be
products. On the basis the report collects data from intemal and extemal sourcés and evaluates
clasified on the basis of their nature:
1.. Goods
submitted by the committee, _uitabl decisions are taken.
Company may foliow any of the following Goods are physical and
tangible materials which can be possessed and owned,
1 Continue with the Original Products
strategies etc. eg, wheat, bicydes,
This
Z. Services
strategy is folowed with the expectations that competitors will leave
promotional costs are reduced. the Seling and market. Services are intangible in nature and their production and
segments and from
Many times, company continues its producis
a
only in effective time. It cannot-be owned but consumption process occurs at the same
they are profitable.
remaining segments they are dropped. Such products
are continued as
* services, etc. can be possessed after being paid, e.g., banking and
insurance
i

. long as
2. 3.
Continue Products with
Improvements Tdeas
Qualities and features are improved for developing
to
accelerate sales. Products undergo minor changes to
a
product,'every
caried-out Like, Charles Reasonmarketer
has
an idea on the basis of
which production process is
buyers. attract of Revlon stated that
stores they are seling hope, e.g, although in
cosmetics, but thelr factory they
3. Drop the Product
in, their produce
adverisement agency, con_ultancy firm.
When it is not
.
Experiences
possible to continue the products either in original íom
company finally decides to drop the
or with improvemernt, the Acompany can create a market
products experience for their customers by organising varibus goods
services at one place, e.g., Science and
city. Water World, etc.
Product may be dropped in following ways: 5. Events
i) Sell the production and sales to other
companies Event also acts as a product for marketers. Events are strongly connected with the
ü) Stop production gradually to divert resources to other people attending it. The experience of
companies realise the power of events and seek to associate heir
products with the event. Thus, event sponsorship is a big business as products
ii) Drop product immediately. many companies try to leverage their
products in the event. These events are time-based which are held in a of
like Award functions, Olympics, etc. gap one or more years

Rahul Publications 78
Rahul Publications
 B.B.A 1 YEAR SEMESTER
8ASICS OF MARKETIN
Persons
residence, a UNIT I
otherwise, or school,
6. in
marketers work as a publicity and recreation, or
Many for film stars
endorsement agent d sports 2. for the Fuenlture, dothing, used cars, major 2. Capital Equipment
ersons. Here, a film star or a sports person personal use,
for the marketer. This type of enjoyment of çonsumerconsumption
a
in around
or appiliances and hotel and imotel services. Capital equipments are different tools and.
is a product or a
) Specialty Products machines used by the fím in the producion
parketing is commonly krown as celebrity permanent or
temporary household or
resldence, a school, and operations process. They are refered as
markeluing otherwise; but such in.recreation,
term
does
or
not incude
Consumerproduct withaunique charaterisics
brand identification kor which a
installations. They are long-lasting, durable
Places (1) any article which is not
or
significant and expensive machines, e.g., cranes, lathe,
Different places-can be marketed to promote produced or distributed for sale
customarily group of buyers is wling to make a special
machineries, etc.
to,
or use or purchase effort. e.g. Specific brands end types
ourism business. For example, tourism in consumption by, or enjoyment of, aa of cars, high-priced photographic equipment,
consumer. 3. Accessory Equipment
Kerala was promoted by campaigníng it as designer clothes etc.
God's Own Country. On the basis of Equipments like printers, calculators, word
can be
consumer's intentions product iv) Unsought Products
8. Properties
classified into two categories: processors, hand tools, meters, etc., are all
A) Consumer Product Unsought products ae consumer products accessories which are used during the
Properties are personal assets which are the consumer either does not knows production process. But, they are not a part
intangible in nature. It can be in fom of real B) Industrial Product that
about or knows about butdoes not normaly of final manufactured product.
estate property (e.g., Amby Valley project) A) Consumer Product think of buying
or financial property i.e., shares and bonds Component Parts
"Product bought Most major.new inventions are unsought
(e.g, Maruti or TCS IPO Campaign ) by final consumer for
until the consumer become aware of These are items or parts, which when
personal consumption" Its includes or
çonsumer
them processed, become a component of the final
9. Organisations products divided into four classes. through aduvertising. Classes example of know
product. They are a part of large product
In order to create a positive and dynamic i) Convenience product but unsought products and services are life being manufactured and are easily
company image, the organisations work
insurance and blood donations to the Red
i) Shopping Product Cross. distinguishable from the final product, e.g,
actively. For example, Philips uses a tagline
B) Industrial Products engine gear boxes, batteries, rims, tyres and
"Let's Make things Better". i) Specialy Products tubes are all the component parts of an
10. Information iv) Unsought Product A product purchased for use primarily in the automobile.
Information also acts as a product, when ) Convenience Product production goods
of other is referred as
goods'. These products can be intended for vesale,
'industrial
5. Process Materials
produced and marketed. Useful, infomation for commencing a business or for producing other
Consumer product that the customer The process materials are directly used for
can be provided as a produçtin different usually products.
buyers frequently, immediately, and with a producing another product. These products
foms like dictionaries, encycdopaedias, etc. are difficult to identify. For example, a
minimum of comparison and buying effort American Marketing Association has defined
B) Based on Consumer Types consumer products can be divided further the industrial goods as "Goods which are destined cosmetics company might use alcohol in
into staples, impulse products, and emergency manufacturing make-up o, perfume.
Consumer products/goods are those bought
products.
to be primarily for use in
sold producing
other goods
or renderihg services as contrasted with goods
by final consumers for personal consumption. 5. Supplies
Staples Products are those product that destined to be sold primarily to the ultimate
Marketers usually classify these products further consumers". These are non-durable, low-cost, essential
based on how consumers go about buying them. consumers buy on a regular basis, such as items which are used on daily basis. They are
Consumer products include convenience products, ketchup, tooth path etc., impuls products Industrial or busines products can be
used to assist and accelerate fim's operations
are those product that purchased with litle
shoppingproducts, specialty products, unsought planning or search effort, such as Candy bar,
categorised on the basis of their uses:
but are not a part of the final product, e.g.
products. These products differ in the ways
and magazine, emergency product is those 1. Raw Materials office stationaries, paints, cleaning material,
consumes buy them, and therefore in how they
are marketed. when consumer need is urgent, e.g. umbrellas The production or manufacturing process lubricating oils, maintenance items, etc.
during a rainstorm etc. requires material input. Such inputs are called . Industrial Services
According to United States Consumer raw materials. These raw materials are used
Product Safety Act, The term "consumer product" ii) Shopping Product directly in the production process and arethe Industrial services are intangible in nature and
means any
article, or component part thereof, Consumer good that the consumer, in the part of final pro Raw materials can be are used for performing firm's operations.
produced or distributed process of selection and purchase, of two types, yiz., agricukural products These services indude marketing, financial
characteristically compares as such bases as and grain) and natural and legal services. The production process of
1. or sale to a consumer for use in or around a (livestock, fruits
suitablity, quality, price, and style. Example: products (products of the seas and forests, a firm cannot be caried qut without these
permanent or temporary Bhousehod or
land and minerals). services.

Rakul Publicgtions 80 Rahul Pudlications

 B.B.A

I YEAR 1SEMESTER UNIT IV

C) Based on Social Benefits ASICS OF MARKETING
Based on the social a)Down ward Stretch : Many1
short-tem
characteristics, produds can be dassified on the basis of Line Featuring
benefits, such as: long-tem benefits and Companies start with high end products,
1. Pleaslng Products but later stretch down wards by adding One or á lew B.B
low, priced products. 1he the product lineproduct îtems
are
selectod
These products ofler immediate satisfadion to the down-end managers for featuring
products are advertised heavily so as to imes low end products e 3.
run, e.g, consumption of akcohol, igaretes, pan consumer but are injurious to them in the long- pull customers to the whole line on the builders.
are
featureddasa halie
.2. Deficlent Products etc.masala,
basis of price.
Deficient producls neither
provide
Example Videocon has selected its Rs
fim. These are immediale satisfaction nior give
any Ex: P&:Gs Ariel began at Premiumn 8,000 worth colour V or
non-profitable long-term benefits to the attracts customers inside the featuring. k
them, eg, pager or typewriter. products, therefore companies are least interested in level and then the down
market Ariel shop. Ils hieh
Salutary Products
producing bar was introduced to tap the lower end product Bazooka
is, however priced at
segment. Rs. 2400. Sometimes, a
These products have longtem benefits but do not selected for featuring to givehigh-end pice
Ice iis

provide immediate b).Upward Stretch:

Thus, companies are by and
large impasive towards these products. satisfaction to consumers. Here a company
operates in the lower end of the market.
enter product line. Some imesprestige
weak
to the
marketing strategies, such products can bè made However, by applying different are selected for featuring. items 5.
atractive for the By upward Strelch, it
soyabean chips (diet chips). consumers in the long-run, e.g., proposes to enteri
the higher end. It is motivated Product Elimination
Desirable Products by higher
Desirable products offer both
margin of profils, higher growth rate or In many
organizations
position of full range weak products are
long-term as well
immediate satisfaction and consumer as short-term benefits to the
a
marketer. This allowed to be continued in the
product line
Ethical organisations try to make welfare, e.g., healthy, tasty ánd consumers, i.e., division has its own risk. Example: simply because of
it a point to manufacture desirable ready- made food products. Lifeboy bath soap stretched to Lifebuoy reasons. 1hese emotiona('sentimental Q1
their prolits as well as products gold. products become drains
carry ouf their responsibilities towards so
that they can eam managerial tine and other resources.
on
An=
society. 2. Line Filling Product line néeds pruning A
to eliminate low
4.4 PRobuCT LIN DECISION With in the present profit products,
Q8. Explain briely about range more product items part
various decision of can be added. This is called line flling. Some times entire
product line. should not be a There eliminated
on
product line is Pro-
missing link in the line. It. proe
A producd line is a may result in lost
group of sáles.. LUne filing may help Ex XEROX dropped its line of
at the same customer prodkcs
that are closely to fill up excess
targeted Gllette its line of digital watches.computers
and
group and marketed through related
because they perfom a similar function, capacity Line pruning offe
Decislons of Product Line the same channel. Reasons.Filling is aiso resorted to when
there is shortage of
: Raw materials and
To Reach for Incremental profits energy. It is difficult to
offe-
Product To Satisty dealers
maintain production capacity. diffe
Line Q9. What are the benefits of
To Uilize excess capacity product line Mix
N To offer a full ine a product.
decision.
Ano: offe
Ex Cinthol in 1. Advertising economies
different variants like old The
Line cinthol, cinthol lime, cinthol international etc. Product lines provide economies of scale in
bas
Stretching Line Fillingg Line Product 3. Line Modemi~ation
advertising. Several products canbe mas
Modemization Eliminatión advertised under the umbrella of the line.
Modification and modemizalion of existing Maggi can talk about its sauce being "its
product line
is
another key concem of the
product manager. In sóme cases the product diferent and promote the entire line. ma
Downward Upward 2.
1. Line Stretching
line length may
adequate but some of the Package uniformity pro

product may has lost competitive edge, A product line benefil from package
can
Line Stretching consists in because of technological or fashion or
going beyond the curent range of
producds. unilormity. All packages in the line may have dire
upwards and downwards or in both the directions.
The Strength can occur addilional features, which in tum would be un
a
common look and still keep their individual
rellected in the overall product identities. Maggi soup is a good example.
retums
illus
Rahul Publieations 82
83 Rahul Publications
Ra.
NG
8ASKCS OF MARKETING
YEAR ISEMESTER UNNT IV
B.8.A
y
3. Standardized components Produet Mix Width
ne
fic Product Hines allow fims to standadie componends, thus reducing manufackuring and inventory
costs. For example, General Motors uses the same sparts on many aulomoule makes and models. hampoos1 Bath
Soups
RS 4. Eficient sales and distribution
t
h- A product line enables sales personnel for companies tike Procter & Gamble to provide a full zange Clinic Vi igongen
Acive wbecl DomezRed label
Pepsoden Label
of choices to customers. Distributors and retailers are oken more inclined to stock the company's plus Closc up1Su
at gCkar internationa ]Surfeaeel Comsort]
is products if it offers a full line. Tránsporlation and warehousing costs are likely to be lower. for a Dove Lifcbuoy Rin Supreme Sunlighr gMa
Sonsilk Pean CF aza
he product line than lor a collection of individual items Liril 2000 Super d

Dove Brooke boa

Roes
5. Equivalent quality Brook bond Taa
KExOna Brook bond Taj
Purchasers usually expect and beleve that all products in aline are about equal in quality. Consumers |Hamam
Ayush Mahal
Brook bond
expect that all Maggi sauces and all Gilette razors will be of similar quality.
Sehacnand

4.5 PRoDucr Mix DEcIsiON Fig.: HUL Product Mix

Q10. Define Product Mix? Explain characteristic of a prodcuct mix.
n L. Product Mix Length
Ans The length of a product mix refers to the total number of iterns in the mix. HUL typically caries
A product mix (also called product assortment) is the of all many brands within each line. For example, it sells six laundry detergets, ten soaps, four shampoos,
set product
lines and items that a
particular seller offers lor sale to buyers". An organisation with several product lines has a product mix. and two toothpastes, etc.
Product mix need not consist of related products. In other words,
product mix is "the of composite Product Mix Width
products offered for sale by a fin"
The width of a product mix refers to how many different product lines the company carries. For
It is a collection of products manufactured or distributed
by a fim. It is the full list of all products example, HUL markes a fairly wide product mix consisting of many product lines, including paper,
offered by a firm. For example, a firm manufactures watches, machinery items, electric
lamp, etc. food, househokd deaning, medicinal, cosmetics, and personal care products.Figuze shous a product
According to American Marketing Association, "Product Mix is the mix width of the five lines. (ln fact, HUL produces many additional lines).
offered for sale by a firm or a busiaess composite of products
unit". For example, if an enterprise manufactures or deals with 3. Product Mix Depth
different varieties of soap, oil, toothpaste, toothbrush, etc., the
group of all these products is called 'Product The depth of a product mix refers to how many varands are offered of each product in the line. In
Mix'.
other words, product mixin depth of .cach product in the
refers to the nurmber of versions oferedClose
A product mix is the combination of line. If Close up
products that a company
offers. The greater the number of comes sizes and three formulation (red,
5 blue, gueen), has of up a depth
offerings drives the greater the chance of satistying customer. Many companies offer only one
a 15. The average depth of HUL product mix can be calculated by aueraging the number of variants
The company may have expertise in this one product. within the brand groups.
product and completely salisfy the needs of its customer
base. If customers' needs warant and the
company capabilities are available, the original product, or
4. Product Mix Consistency
masker byand, may be expanded into
additional offerings. The consistency of the
Companies can evolve and grow by enhancing their product mix refers to how closely relate the various product lines are in end
product mix to meet additional needs of the use, production requirements, distribution channels, or some other way. HUL product lines are
customer orneeds of dilferent
customers. However, when companies offer more products, a larger consistent in so far as they arè consumer goods that go through the same distrbution channels.
marketing budget required and may lead to some overlap of
is
product competition in the marketplace. marketing
efforts and same
company Q11. Explain Various Product Mix Strategies
For example, the Dodge Challenger Key product mix strategies that
are important to be undertaken are;
and the Ford Mustang each fill à consumer need yet
directy against each other. Most companies have compete . Product Line Expansion/Contraction
grown-up behind a single product concept
running shoe, Pepsi Cola, and State Farm lnsurance. the Nike Product line concentration is also called concentration of
is thinnad-out to reduce the
product mix. A fat and long poduct line -

A company's unprolitable products. Produtline expansion is

product mix has a certain width, length, depth, and atsocaled, diversiication.
ilustrated in figure for selected Hindustan Unilever consisiency. hese concapts are A lim1 may utilize the
marketing opportunities by expanding its product mix, breadth-wise
Limited products: and
depth-wise.
Rahul Publications 84
Rahul Publications
 B.B.A
YEAR ISEMESTER UNIT 1V
For example, manufacturers of audio|
adjustments. These products could also be. BASICS OF MARKETNG
equipment may commence the production
of T.V. Sets and tape recorders. A
firm may consuming exressive management time not 4.6 4.6 PRICING DeCIsiONS Objectives of Pricing
add new product justilied by thel1 profit oontribution. At
items or delete existing ones these times, 4.6.1 Concept of Price The fim's
or do both in its
existing product-lines. products. are
detract from the outdated, and therefore in pricingthe
order to determine objecdives must
Further, a fim may go-up in its technology be
and use state of the
company's image. In bries,
these products have Q13.Define Pricing. What are the objectivebjecives incdlude the optimal pricina idenit
art technology or decide either lived their life or of pricing? follwing:gCom
to stretch the are unproitable. Curent Profit Maximizatíon
product-line
toward a more simple
technology.
downaras
Q12. Explaln' the Factors
2. Product Modification In Product Mix. Influencing Change Seeks to maximize current
Price is the marketing-mix element that account revenue and profit, takinoi
Product modification relers to
any substantal
Ams produces revenue thè others produce costs. Price
also one of the most is maximization may not costs.
be the Cunent profit
change made to the attributes (size, flexible elements: it can be if it results in best ohie
colour, style, price, etc.) of a shape, Change in the Market Demand changed quickly, unlike product features lower fong-term profits. ojedive
modification of a product is product, The change on demand of a channel commitments. and| Current Revenue Maximization
usually
undertaken in an attempt to revitalise change in habits, fashion, product due to Seeks to maximize current
it
in
.income, attitudes and purchasing power, Pricing is the art of translating into quantitative
order to increase
demand. "Sometimes just terns regard to profit margins. revenue ith no
consumers affects the declsionpreferences of . (rupees and paisa) the value of. the The
objective often is to maximize underlvina
unit of a service to customers at a point product
a cosmeic
modification
may be required in of product mix. or a
If the
the existing product-ine or product item. demand ofa new product is in time. iongtem
profits by increasing market share
in the market
and the increasing The pricing decision a
is critical for most lowering costs. and
product is beneficial fo.production marketers, yet the amount of attentionone
These changesmay be
of that new
intangible, tangible or
and may be achieved the company given to this Maximize quantity
key area is often much less than is
fomulation, redesign, changing unitby re-| 2. Cost of Production
marketing decisions. One reason forgiventhe tolack of
other
removing features. Pan sizes,
and adding or
If the company can
Seeks to mdximize the number of units
attention is that many believe
the famous pan masala, introducedParag', or the number of customers sold
with the help of the develop new product
a

sachet packs of different sizes new same labor form,

plant, "mechanical process réquiring the price setting is
marketer to
a to decrease served in order
long-term costs as
and at different
prices. This helped it to penetrate machinery, and techniques, it can decide financial tools, such utilize the experience curve. predicted by
and expand start the
production of that at lower
to
case for
as
spreadsheets, to build their
the market
When the fim
decided to'
cost. seting price levels:While financial tools are Maximize Profit Margin
tobacco (zarda) to the add3. Quantity of Production
pan ma_àla, the effect widely to ássist in seting price, marketers must
used
was a manifold
increase in its market share. If tie consider many other factors when Attempts to maximize the unit profit margin,
Most often these production of the new product is price for which their ariving at the recognizing that quantities will be low.
changes are dictated by a considered to be at
large- scale and. the
a product will sel.
fim's long-tem goals, customer
..

preferences, company can add one

more item to its Meaning of Pricing Quality Leadership
and competitive developmenls in productline just to get the economies
product market.
a
particular| scale production. of large- Pricing is the process.of determining what a Use price to signal high quality in an
3. Product Deletion/Elimination . company will recelve in
to position the product as the quality attempt
Change exchange for its products. leader.
'in'
Purchasing Power or
Pricing factors are manufacturing cost, market place, Partial Cost Recovery
There are some producdswhich
Behaviour of the Customer competition, market condition, Quality
improvéd or modified to suit thecannot be If the numbers of customers are The effective price is the
price
of product. An organizatión that has other revenue
Here, the profitable alternative wouldmarket.to with the increase in their increased after
accounting
the company
for discounts, promotions,receives sources may seek only þartial
withdraw the product from the be or with the purchasing power other incentives. and cost-recovery.
market. The change in their buying habits, Survival
process-of withdrawal is technically called fashion etc. Definition of Pricing In
product elimination. This situations such as market
overcapacity, the goal may be to decline
and
involves.
discontinuing or deleting either the Goodwill of the Company According to Prof. K.C. Kite, "Pricing is selecta price
product or the entire product-line. individual
that will cover costs and
Af the
company is of
repute, it
managerial that involves establishing
task remain in the permit the fim to
any new product in the market
can market objectives, identifying the factors pricing market. In this case, survival
Generally, products that are abandoned withouf much price, ascertaining their goverrning the may take a
priority profits,
over this
are those for difficulty. It may take relevance and significance, objective is considered temporary.
so
which demand is low
product without any decisions
of adding
uneconomical short productionleading
to
hitch because
new detemining the product value in monetary terms
runs or that customers will accept any it knows and fomulation of price policies and the Status quo
frequent uneconomical price and inventory product by the strategies,
firm. implementing
best results".
them and controlling them for the The fim may seek price stabilization in order
toavoid price wars and
Rahul Publications maintain a moderale
(86 but stable level of
profit.
87
Rahul Publications
 UNH 1V -BASICS OF MARKETING
8.8A 1 HEAR 1SEMESTER
the Process of Pricing.
014. Explaln IFmproving-o, maintaining market Q17.Explain dilerent types of prcing Taakats when a new range, such as DVD
senskiye indicakor of austomers
share- a plasyers, aee firstly dispakched into the market
The foowing is a general sequence of steps acceplance. and
teade at a high price. This stategy is often used to
Priding for products or services enconpass target "earty adapters" of a produator service.
solouw d for devcdaping the pricing 3. Profit Level
that might be thee main ways to improve proflits. These ase hat i Early adopters generally have a relatively
new
product: ower pricesensitivity - this can-be atributed
of a the business owner can cut costs or sed moe, or
Develop marketing strategy
Retum-on investment say 15 to20 percent is Tind snore profit with a better pricingstrategy. When to: their need for the product outweighing
1. a commondecision in marketing, pricing costs are alteady' at their lowest and sales are hard their need to economize; a greaBer
Aerform marketing analysis, segmentaion, profit is the most logicalof all for understanding of the product's value; or
targeting, and positioning. pricing.objectives. to find, adapting a betterpricing stategy is a key
simply having a higher disposatble income.
mix decisions
Perfect Competition option to stay viable.
2. Make marketing
Define the product, distribution, and Much firm desire
the stabilization. of price
Merely raising prices is not always the answer, This strategy is employedmost
only for a
levels and operating margins
especially in a poor economy. oo many businesses limitedduration to recover of the
promotional tactics. investmerd made to build the product. Togain
important then the maintenances of a
as more have been lost because they priced themsehues out further market share, a seller mist use other
of the marketplace. On the other hand, too many
3. Estimate the demand curve

level of short run profit certain business and sales staff leave "money onthetable". pricing tactics such as econoay or
Understand how quantity demanded varies One penetration. This method can have some.
Q16. Explain the strategy daes not fit all, so adopting a pricing
with price Importance of Pricing. strategy is a learming curve when sBudying the needs setbacks as it.could leave the product ala
4. Calculate cost Ans : and behaviors of customers and clients high price against the competition.

and variable costs associated There are various ways of setting prics as3. Limit Pricing
Include fixed The importance of
price is self-evident. The outined in the following
with the product process of setting an adequate price is not an exact A limit price is the price set by a monopolist
1. Cost-plus Pricing to
5. Understand environmental factors science. The importance of
pricing .can be and
discourage.economic enay into a market,
Evaluate likely competitor actions, understandsumnarized as follows:
Cost-plus pricing is the simplest pricing isillegel in manycountres. The limitpa
is the price that iheenäant would face upon
legal constraints, etc.
i)Pricing leads to maximize short tem and .
method. The firm calculates the cost of entering as long as the incumbent fim did
producing the product and adds on a
not decrease output. The limit price is oken
6. Set pricing objectives long-run profit. percentage (profit) to that price to give the kower than the average cost of production-or
selling price. This method although simple has
For example, profit maximization, revenue i) It helps to increase sales volume. just law enough to make entering not
tuo flaws; k takes no account of demand and
maximization, or price stabilization (status peofitable. The quantity próduced by the
ii) It helps to increase monetary sáles. there is no way. of detemining if potential
quo). incumbent fim to act as adeterent to entry
customers will purchase the productat the
-

is usually larger and would be optirmal for á

Determine pricing: Using information
colerded in the above steps, select a pricing method
develbp the pricing siructure, and definediscounts.
Q15,Explain the Need of Pricing.
The different needs of pricing are as follows:
1. Sales Increase
A low price can achieve the objectiveof
increase in sale volume. A low price is not
always necessary. A right price can stimulate
the desired sales increase. In
practice price
and non-price objectives are
co-ordination
o prodkice the desired increase in sales.
2.
Increasing the Market Slhare
Pice is typically one of ihose factors that
carries he heaviest tesponsibility for
-
Rahul Publicatioas 88
iv) It supports to an organization for calculated price. monopolist, but might still produce higher
increasing market share. This appears in two forms, Full cost economic profits than would be eamed under
v) It helps to obtain a target rate of retum pricing which takes into consideration both perfect competition.
variable and fixed costs and adds a % markup.
on investment. The problem with limit pricing as a
The other is direct cost pricing' which, are
strategy is that once the entrant has entered
vi) It assista to obtain a target rate ofreturn variable costs plus a % markup, the latter is
the market, the quantity used as.a threat to
only usad in periods of high competition as
on sales deker entry is no longer the incumbent firm's
this method usually leads to a loss in the long
best response. This means that foriimit pricing
vii) It helps to stabilize market or stabilize run.
tobe an effective deterentto entry, thetheeat
market price. 2. Creaming or Skimming mustin some way be made credible. A way
to achieve this is for the incumbent firm to
vili) It desensitizes customers to product n most skimming, goods 'are sold at higher
prices so thatfewer sales are needed to break constrain itselí to produce a certain quantity
price. even. Setling a product at a high price,| whether entry occur_ or not. An example of
this would be if the ficm signed a union
ix) It discourages new entrants into the sacrilicing high sales to gain a high profit is
theelore "skimming" the markel. Skimming contractto employ a certain thigh) level of
industry. labor for a long period.of time. In this stralegy
x) Pricig encourages the exit of marginal
is usually employed to reimburse,the cost of price 'of the product become limit accouding
Inuestment of the original vesearch into the
product: commonty used in elecronic to budget.
firms from the industry.
Rahul Publcations
 B.B.A
YEAR 1 SEMESTER UNIT IV
. Loss leader
10. ASICS Of MA
Aloss leader or leader is a product sokd ata
Contribution margin-based Pricing 14. Target Pricing
low Contribution margin-based producing an extra unit.
price {i.e. at cost or below cost) to the pricing maximizes
profit derived from an individual produd, Pricing method whereby the selling price of a policy, a producer
simulate other profitable sales. This would based on product is calculated to produce a particular unit sold, only thecharges, lot e B.B
help the companies to expand its market share the difference between the addition to t
as a whole. product's price and variable costs (the rate of retum on investment
for a specific resulting from maBerials
produc's contribution margin per unilt), and, vokume of production. The target pricing Businesses oflen set prices and ditect
5. Market-oriented Pricing
on one's assumptions regarding method is used most offen by public utilities, cost during
periods
of
close too marg
Setting a price based upon alysis and relationship between the produc's price the like electric and gas
companies, and example, an item poor
, sale
research compiled from the trget the number of units that and companies whose capital investment is high, 49 and normal has a marginal cont ei 20.
market. can be sold at
that like automobile manufacturers.
seling price is Rs. , the lea
This means that marketers will set price. The product's contribution to total fim selling theitem might wish to 53,t
prices lower
depending on the results from
the research. profit (ie. to operating income) is maximized Target pricing is not useful lor companies
to Rs. 50. The
business would thene sprre
For instance if the when a, price is chosen that maximizes approach because the incrementalchoose
competitors are pricing their whose capital investment is low because,
producis at a lower price, then i's up to them following: (contribution margin per unit)theX according to his formula, the selling price will 1 rupee from thé tprolit
to either price their goods (number of units sold). no sale at all.
transaction is beterter tha
at be understated. Also the target pricing
or below, depending on whatantheabove price 11..
company Psychological Pricing method is not keyed to the demand for the | 18. 21:
wants to achieve . Value-based Pricing
product, and if the entire volume is not sold,
Pricing designed to have a
6. Penetration Pricing
psychological impact. For example, selling a positive a
company mighi sustain an overall budgetary Pricing a product based on the value
Setting the price low in order to atract product at Rs. 3.95 or Rs. 3.99,
loss on the product. product has for the customer and het
customers and gain market share. The Rs.4.00.
rather than
14. Absorption Pricing costs of production or any other not on
factor. au.
price based pricing sells
will be raised later once
this market share is 12. Dynamic Pricing Method of
the productpa
at the
gained. pricing in which all costs are based on the customer's
A flexible recovered. The price of th product perceived value o 22-
pricing mechanlsm made includes the product. A
good
Price discrimination by advances In information possible. the variable cost of example
where such
technology, and eachitem plus a priclng system i_ used is on
luxury
Setüing a different price for the samé employed mostly by Internet based proportionate amount of the fixed costs and where the actual value is quite different
itemg
in different product companies. By responding to is a fom of cost- plus pricing the
fon
segments to the market. For
fluctuations or large amounts ofmarket perceived value. For example, a luxury
example, this can be for. different such data 15. High-low Priclng item may not actually cost nearly as much to
as ages,
dasses, or for different opening times. gathered from customers-ranging from where make as what
they tive what they buy to how much they.
to Method of pricing for people are prepared to
8. Premlum Pricing an
organization where for it. ft is important to note that this pay
have spent on past purchases the goods or services offered method
Premium pricing is the practice of pricing allows online companles dynamic
to adjust the orgánization are regularly priced higher than
by the of pricing is based on a sound
understanding
price of a produt or service keeping
the prices of identical goods to of how customers
judge value and may only
artificially high. corespond to a competitors, but through promotions, be possible after a
in order
to encourage favorable perceptions customer's willingness to pay. The airlihe advertisements, and or coupons, lower prices product has a slrong
among buyers, based solely on the price. industry is often cited as dynamic
a
pricing
are offered
on key items. The lower reputation.
The
practice is intended to exploit the (not success story. fact, it
In employs the technique promotional prices are designed to bring19. Pay what you want
necessarily justifñable) tendency for buyers
so
artfully that most of the passengers customers to the
to given airplane have paid different ticket any
on
organization where the
customer is offered the Pay what you want is a pricing system where
assume that expensive prices promotional product 23.
exceptional reputation, areitems enjoy an for the same buyers pay any desired amount for a
more reliable or
fight. as well as the
regular higher priced products. given
desirable, or represent exceptional 13. Price leadership 16. Premium decoy Pricing
commodity, sometimes incduding zero. In
distinction. quality and some cases, a minimum {floor) price may be
An observation made of oligopolistic business Method of pricing where an organization set, and/ or a suggested price may be
Predatory Pricing behavior in which one indicated as guidance for the buyer. The
company, artificially sets one product price high, in order
dominant competitor among usualyleads
the
buyer can also select an amount higher than
the way in detemining prices, theseveral,
Aggressive pricing (also to boost sales of a
known
as lowerpriced produc. the standard price for the
24.
"undercutting") intended to drive out following. The context is
others soon
state of limited
a
17. Marinal-cost Pricing commodity
competitors from market. It is ilegal in
a
some competition, in which a Giving buyers the freedom to pay what
countries. market is shared by In business, the practice of setting the price
a small number they want may seem to not make much sense
of producers or
sellers. of a product to equal the extra cost of
for a seller, but in some situations it can be
Rahul Publications 90
Rahul Publications
Rah
 B.6A
I YEAR 1SEMESTER
WAhde most uses of pay what
UNIT IV
very sucoesstul.
you want have 8ASICS OF MARKETING
special promotions, 1there axe been at the
or lor emerging astorts to
expand ts
margins of the economy, 4.6.2 Pricing Methods
regular use.
utlity to broader and more Q18.Explainthe dikenent pricing methods.. Competition orientad metbod
20. freemium

husiness
freemium is a bus model that works by Ans
digital offerings such as software, offering
product or service free of
a
Pricing Methods Going rate or Sealed bid
agadvanded content, games, web services charge 4typically Fotow the cowd
or
other) while charging pricing
l combiningfuncionality,
or features, or
related products and services. Cost Oriented Method
the two The
a
premium
aspeds of the business model: "free" and word "freemium" is a 2. Sealed Bid Pricing
I. Full Cost of Mark Up
a highly popular model, with notable success.
"premium", k has become Pricing Sealed bid pricing is one of the method of
This method ts cost
oriented where in the | competition oriented If the
market detemines the-complete cost associated with in large number of pricing.then fim is engaged
21. 0dd Pricing
paojacts, the suppliers have
la this type of
pricing, the seller
tends tO manufacturing or producing and then adds a mark | to submit their quotations
orive the buyers/consumers no gap1Ixtfor price whose last digits are odd numbers. This is donee
a as a' part
as tog
up or the margin as per the fim's tender.
wish/desire. This Submitted tender helps in knowing the lir's-cost
actual sense are too high. A
good example of bargaining as the
this can be prices seem be less and yet in an
to is considered as an elements any pricing method
and in understanding competitive market. f thefim
doad of pricing at $10; it would be written as $9.99. This noticed in
most supermarkets where and most of the time services and products are priced
offers the quoted price at cost level, it will be
using the free market policy. pricing policy is common
in economies based on this method. considered as a lowest
.a bidder. Under such
22 Mark-up Pricing
Mark up price (1-1) circumstances the fim can get
not be able to eam huge
only-contract but wi
Where, profits. A fim is
able to
Mark-up is the difference between the costs of
eam profits if it quotes a
price by considering
ueaiable costs) and the market selling price of producing It selling a product (fixed costs plus
and a - Unit cost (fixed cost +variable cost) expected profis at different price levels,
the product. is the
spend to produce the product and what the customer spends to difference between what you T-Expected retum-on sales expressed as a. III. Customer-oriented or
perceived Value
purchase it, per cent. Pricing
kis calculated as follows:
In this type of pricing method the
'product is
Fixed Cost per unit Total Fixed Cost / Units Produced Cost oriented method priced depending upon value which the cuskomers
perceives about the product in their minds. There
Variable Cost per unit =
Totat Variable Costs/ Units Produced are two
important consituents of pereeived value
Full cost or Marginal cost or of a product. They are acquisition value and
Seling Price = Fixed Cost per unit Variable Cost per unit Desired Profit Margin L mark up pricing contribution pricing transactions value.
Desired profit margin is the amount of 2. Marginal Cost or Contribution Pricing
profit you would like your business to make above The acquisition value refers to peceive the
your production costs. It can be expressed as a
percentage of the total costs. This method is based' on the principle of advantages and sacrifices made by the cusBomer to
23. get the products.is determinéd.
Target return Pricing reçovering "marginal cost and getting the
contribution spent on the overheads 4indirect In transaction value both the prices of seller
Using this strategy, a business first determines what levei of demand there is for expenses). This method is best suited for the giant and buyer, are compared to arrive at a common
then identifies the desired the product and
profit the business would like to, make from the firms characterized by intense competition in the price at which t should be sold
calculted by dividing the total desired product. The price is
profit by the expected level of sales. Therefore, by meeting market. For measuring perceived value
the level of expected a
makeerj
sales, a certain amount of profit will be
received. IL. Competitlon Oriented Method must consider the following methods.
24. Golng-rate Pricing
1. Going Rate or Follow the Crowd Direct price rating method
inthe situation where the business is in a competitive market, the business charges the This is competition oriented method. This (i) Direct perceived value rating
average
pR ol what its competikors are charging for a similar or the same product. This may be the case
method.iscomnonly found in oligopolistic market.
were here is only a small amount of competition and the pipduct s a necessity. It is sometimes in (ii) Diagnostic method
a
Under this method' the peodut's prces are similar
busines's best interest to not to that of the compelikors prioe in the market. (iv) Economic value to the cuskomer.
compete by undercutting their competition.

Rahul Pubtications
32 93 Rahul Pubtications
 B.B.A
4.63Aricing Strategies
19. Explain different types of Pricing
Strategies.
Ans
1. Value based Prcing
Pricing a product based on the value the
product has for the customer and not on its costs of
production or any other factor. Value-based pricing
sells the product at the price based on the customer's
perceived value of the product. A good example
where such a pricing system is used is on luxury
itens where the actual value is quite different from
the perceived value. For example, a luxury item
may not actually cost nearly as much to make as Advantages of Skimming Pricing
what people are prepared to pay for it. It is
Where a highly innpvative product, is
imporant to note that this method of pricing is
based on a sound understanding of how customers launched, research and development costs
judge value and may onBy be possible after a are likely to be high, as are the costs of
product has a strong reputation. introducing the product to, the market via
2. Cost,based Pricing
This involves setting a
price by adding a fixed
amount percentage to the cost
or
of making or i
buying the product. In some ways this is quite an
old-fashioned and
somewhat discredited pricing
strategy, although it is still widely used. After all,
customers are not too bothered what it cost to make
the produd they are interested in what value the
product provides them:
Cost-plus (or "mark-up") pricing,is widely |
used in retailing, where the retailer wants to know
with some certainty what the gross profit
margin of
each sale will be. An advantage of this approach
is
that the business will know that ils costs are
being
covere. The main disadvantage is that cost-plus
pricing may lead to products that are priced un-
competitively.
The main advantage of cost-based pricing is
that selling prices are relatively easy to calculate. If
the mark-up percentage is applied consistently across
product ranges, then the business can also predict
more reliably what the overall profit margin will be.
3. Customer-based Pricing
(a) Skimming pricing strategy
Skimming pricing is a pricing strategy in which
a marketer sets a relatively high price for a
n -.. D..Llinntinnr 94
I YEAR ISEMESTER
productor service at first then lowers the prlce
over time. This strategy is often used to
target
"early, adopters" of a product or service.
These early adopters are relatively less price
sensitive because either thelr need for the
product is more than others orthey
understand the value of the product better
than others. In market skimming goods are
sold at higher prices so that fewer sales are
needed to break even.
The practicè of skimming pricing
involves charging a relatively high price for a -
short time where a new, innovative, or much-
improved product is launched onto a market.
promotion, advertising etc. in such cases, the
practice of price-skimming allows for some
retum on the set-up costs.
By charging high prices initially, a company
can build a
high-quality image for its product.
Charging initial high prices allows the firm the
luxury of reducing them when the threat of
competition arrives. By contrast, a lower initial
price would be difficult to increase without
risk in the loss of sales volume.
Skimming can be an effective strategy in
segmenting the market. A fim can divide the
market into a number of segments and reduce
the price at different stages in each, thus
acquiring maximum profit from each
segment
Disadvantages of Skimming Pricing
It is effective only when the fim is facing an
inelastic demand. curve. If the long run.
demand schedule is elastic market equilibrium
will be achieved by quantity changes
father
than price changes. Dominant market share
will typically be obtained by a tow cost
producer that pursues a penetration strategy.
A price skimmer must be careful with the law.
Price
discrimination- is illegal in many.
jurisdictions, but yield management is not.
UNIT IV BASICS OF MARKETIMG
Price skimming can be considered either a implementation during the
fom of pricediscrimination or a form of yield mature phases of the cycle willintrodid
management. Price discrimination uses ofcompetition driving lead to o
market characteristics to adjust prices, lower and causing a drop prices
in profitscontinu
whereas yield management uses product
While often profitable,
major drawbackspenetration
characteristics. Marketers see this legal some pricin b
distinction as quaint since in almost al cases including
dissatisfaction, and false loyalty uslomer
market characteristics correlate highly with
product characteristics. lf using a skimming (c) Loss leaders
atrategy, a marketer must speak and think in The use of loss n
terms of product characteristics to stay on the
leaders is a method ofl
right side of the law.
promotion. A loss leader is produt salo
a
below cost-price in order to attract phced p
The inventory turn rate can be very low for into a shop or online
consume ch
store. Ihe purpase
bu
skimmed' products. This could cause making a product a loss leader is to encOUof
problems for the manufacturer's distribution customers to make further
purchases of
chain. It may be necessary to give retailers profitable goods while they are in the shon de
higher margins to convince them to handle
Pricing key competitive weapon and
is a
the product enthusiastically. tha
a very flexible part of the
marketing mix. la
(b) Penetration Pricing business undercuts its competitors on price shc
new customers may attracted and existing
be pro
Penetration pricing is the pricing technique
of setting a relatively low initial entry price, customers may become more loyal. Sa, using to
loss leader can help drive customer
often lower than the eventual market price,
a
loyalty
One risk of using a loss leader is that customes
toC
ort
to attract new customers. The strategy works
may take the opportunity to "bulk-buy'. I
on the expectation that customers will switch
the price discouht is sufficiently deep, then it Q2
to the new brand because of the lówer
price.
Penetration pricing is most commonly makes sense for customers to buy as much
as they can (assuming the product is not
associated with a marketing objective of Au
perishable.
increasing market share or sales volume,
rather than to make profit in the short term.
(d) Predatory Pricing dete
Advantages of Penetration Pricing
With predatory pricing, prices are deliberately four
set very low by a dominant competitor in the
The advantages af penetration prícing to the
fim are: market in.order to restrict or prevent
competition. The price set might even be
It can result in fast
diffusion and adoption. free, or lead to losses by the predator.
This can achievehigh market
penetration Whatever the approach, predatory pricing is
rates quickly. This can take the competition
illegal under competition law.
by surpris, not giving them time to react
(e) Psychological Pricing
i). It can create goodwill among the early
adopters segment. This can create more trade The aim of psychological pricing ls to make
the customer believe the product is cheaper
through word' of mouth.
than it really is. Pricing in this way is intended
lt creates cost control and cost reduction to attract customers who are looking for
pressures from the start, leading to greater value"
efficiency.
4. Competitor-based priclng
Disadvantages of Penetration Pricing
If there is strong competition in a market,
Penetration pricing is limited to the growth customers are faced with a wide choice of who to
and declining phases of the product because buy from. They may buy from the cheapest provider
95 Rahul Publications
Rahul
 BASICS OF MARKETING
YEAR SEMESTER UNIT 1VV
B.6.A
which ofers the best
from the
one chosen price needs to te
very carefully
will certainly be
Short Question & Answers
0s

oreT Service.
But
customes

price in
considered relative to those of cdose
reasonabe o r normai
austo
m i n d t u l - o
what is a
h a t
a
r e a s o n a b

Gompetidors.
t h e m a r k e t .
.
Customers a product having a variety of coours, designs,
market do not 1. Define Product. said be a different
competihve to
dot firms
in a
to set prices above Consideration of customer packaging and brand isif is made
Suicient power
toe
able
price must be addressed. expeatations about Aus product. for example, a shampoo
availabte in three dferent variants and smells, then
should attempt to quantifytdeally, busines
use"going-rate"
have
Theythat
ir competitos, price toline with the
tendis in a
Concept of product is the understanding of needs
prices
product in order. to showcase.hese arethree
products, as they a r e fulfilling
its.demand curve
n e r

a
seting
pricing ie. direct competitors. In effect such
:to estimate
what volume of sales will the dynanics of thethe with uaried choices. Hence, product
is
be of product. Marketers spend aoaustoners
charged
byy
"price-takers they must accept the achieved at given prices. the best quailities research in order to target their etined as a complete padkage of benefits
eceived

by the forces of ot of time and Marketers wl look inio a product by a onsumer

g market price
gosng r
as deiemined
Business Objectives attended audience.
demand and supply.
Possible pricing
concept before marketing a producttouaeds their Definikions of Product
ot using competitive pricing is objectives include customers. According to George Fisk, "Product is a
An aduantage
prices should be
line with rivals, so price To maximise profits The product is the most tangible and custer of psychological satisfactions".
het seling The main important single component of the marketing3 According w. Alderson, "A product is a
a competitive disadvantage. >To achieve a
shoutd not be needs some other way target return-on investment progranme. The product policy and-stategy is the bundle of utilities consisting of various features and
business
oblem is that the comerstone of a marketing mix. Without a product,
It has to use non-price methods To
achieve a
target sales figure accompanying services"
battract customers. there is nothing to distribute, nothing to promote,
According to Rustom S. Davar, "A product
distinct customer.service nothing to príce. If the product fails to satishy
Dcompete eg. providing T o achieve a target market share may be regarded from the marketing pointof view
arbetter avaiability. con[umer demand, no additional cost on any of
To match the other ingredients of the marketing mix will as a bundle of benefits which are being offered to
Factors Influencing Pricing the competition, rather than
Q20. Explain lead the market. improve the product performance in the consumer
Decision.
marketplace. According to Philip Kotler, "A praduct is
To the marketer products are the building a bundie af phýsical services and symbolic particulars
to yield satisfactions benefits to the
blocks of amarketing plan. Good products are key expected or

The factors that businesses must consider in to market

delermining pricing policy can be summarised in
success. Produict decisions
are taken first buyer"
by the marketers and these decisions are central to , 2. Explain the five levels of product.
all other mark ing decisions such as price,
four categories promotion and distribution. Product is the vehideA:
Costs
by. which a company provides çonsumer Core Benefit
In.order to nake a profit, a business should satisfactions. It is the engine that puls the rest of the The fundamertal need or want that consumers
ensure that its products are priced above their marketing programme. Products fiH in the needs of satisfy by consuming the product or service.
society. They repr sent a bundle of expectations to
total average cost. In the short-tem, it
may consumers and society. . Generic/ Basic Product
be acceptable to below total cost
price if this Product A version of the product containing only those
price exceeds the marginal cost of production
A product is the item that is developed and attributes or characteristics absolutely
-so that the sale still produces a positive necessary for it to function.
contribution to fixed costs. refined for sale in the market. lt aims to meet the
customers' needs and wants. The concept of 3. Expected Product
Competitors product can be categorised into tuo, i,e., narrow
The set of attributes or characteristics that
f the concept and wide concept. In its namow concept, a
business is a
monopolist, then it can set product is a combination of physical or chemical buyers normaly expect and agree to when
they purchase a product.
any price. At the other characteristies which has some utilities. It is not just
extreme, if a firm
operates under a non-livinig object or a physical substance. 4. Augmented Product
of perfect conditions
0Onpetition, it has no choice and must accept A product also has other functions than its nclusion of additional features, benefits,
the market
price. The reality is utility like satisíying customer needs and wants, e.g. attributes or related services that serve to
Somewhere in between. In such usualy fan, tabie, pen, cooler, chair, etc. In its wider concept, differentiate theproduct from its competikors.
cases the

Kohul Publications
96 97- Rahul Publications
 B.A
YEAR ISEMESTER
UNIT IV
5. Potential Product
5. Industrial Products.
ASICS OF MARKE
All the
augmentations and transfomations
product might undergo In the future. aAns:
belng manufactured and are easily | 7.
distingulshable from the final product, eg
Define Product Mix RETING
Kotler noted that much A product engine gear boxes, batteries, rims, tyres and na B . 8 . A

competition takes purchased for use

place Augmented Product level rather than production of other goods is referedprimarily
at the In the tubes àre all the component parts of an
A
product
at the Core Benefit as
"Industrial. mix
level or, as Levitt put it:
competition is not between what companies produce New900ds. hese products can be Intended for resale, aulomobile.
assortment) is the set of all.(also called prok i n t a r g

in their factories, but

for commencing a business or for
producing other What are the benefits of product line product
1. that a paricular seller offers for lines pidotemg
duc r e d e s

between what add to their products for sale

factory output in the fom of they declsion. s
organisation withsseveral to
product lines buyers".An
r e m o

advertising, customer advice, packaging, services,

financing, delivery
American Marketing
Association has defined Ans mix. Product mix need has masa

amangements, warehousing, and other things the industial

goods as "Goods which
not
consist of Produn
people value
that to be sold
primarily for use in
are destined 1. Advertising economies products.In other
words, product relate
s i z e s

or
rendering services
producing other goods composite of products offered for sale mixby pene

3. Define Product Attributes. contrasted with goods

as
Product lines provide economis of scale in aim, decid

destined to b sold
Consumers".
primarily to the ultimate ,advertising. Severál products can be It is a colledtion of products thees

Ans: advertised under the umbrella of the line. distrbuted by a fim. It is the ful istofa manulacturetdo Most

A product Industrial business

or Maggi can talk about its sauce
being "its offered by
afirm. For example, a firm mand kong

categorised on the basis of their products

attribute is a characteristic that can be
defines a
particular product and will affect uses: different" and promote the entire line. watches, machinery items, electric anutactures c o m p

consumer's 1. Raw Materials lamp, etc.

purchase decision. Product 2. mark

attributes can be tangible (or

physical in nature) or
Packageuniformity According to American
intangible (or physical in nature).
not The production or manufacturing A product line can benefit from package Marketina
Association, "Product Mix is the Com 9.
requires material input. process
. Tangible Attributes Such inputs are called uniformity. All packages in the line may have producs offered for sale by a fim or a
raw materials. These raw materials are a common look and stll business
Tangiblè attributes can indude such product directly in the production used keep their individual| unif". For example, if an enterprise manufach
characteristics as size, color, weight, part of final product. process and are the identities. Maggi soup is a good example. or deals with different varieties of achires
smell, taste, touch, quantity, volume, of two Raw materials can be 3. Standardized components toothpaste, toothbrush,
soap, o GomE

or material types, viz., agricultural etc., the group of all

these Prici
composition. (livestock, fruits and grain) andproducts products is called Product Mix'.
natural Product.lines allow firms to standardize com
Intangible Attributes products (próducts of the seas and
land and minerals). forests, components, thus reducing manufacturing A product mix is the combination of The
product
Intangible attributes may include such 2.
Capital Equipment
and inventory costs. For example, General that a company offers. The greater the number of after
characteristics price, Motors uses the same parts on mahy| offerings drives the greater the chance of othe
as
qualityf reliability,
beauty aiid aesthetics, (an indefinable, elusive automobile makes and models. satistying
Capital equipments'are different tools and a
customer, Many companies offer only one Defi
pleasing quality). machines used by the fim in the production 4. product. The company may have expertise in this
4. Convenience Product and operations Efficient sales and distribution
process. They are one product and completely satisíy the needs of is
installations. They are long-lasting,refered
as
A product line
durable enables sales personnel for caustomer base. lf customers' needs warrant and the man-

and expensive companies like Procter && Gamble to provide company

machines, e.g., cranes, lathe, obje-
a full range of choices to customers. product, orcapabilities
are available, the
Consumer product that machineries, etc. original priça
the master brand, may be expanded into
buyers,frequently, immediately,customer usually
and with a3. Accessory Equipment Distributors and retailers are often more deter

minimum of comparison and iniclined to stock the company's products if it additional offerings and
buying effort
consumer products can be divided further into Equipments like printers, calculators, word offers a full line.
Transportation and Product Modification imp
staples, impulse products, and emergency processors, hand tools, meters, etc., are all warehousing costs àre likely to þe lower for a best
products. Ans:
Staples Products are those product that accessories which are used during the product line than for a collection of individual
consumers buy on a regular basis, such as ketchup, production process. But, they are not a part items. Product modification refers to any substantial
0.
of final manufactured.
tooth path etc., impulse products are product. change made to the attributes (size, shape, colour,
purchased with litle planning orthose
searchproauct Equivalentquality
that .
4.
such as effort, Component Parts style, price, etc.) of a product, modification of a
Candy bar, and magazine, emergency Purchasers usually expect and believe
that all
product is
those when consumer need is urgent,
These are items or parts, product is usually undertaken in an attempt to
which when products in a line are about equal in quality.| revitalise it in order to
e.g. umbrelas during a rainstorm etc. processed, become a component of the final increase demand. "Sometimes
product. They are a part of large Consumers expect that all Maggi sauces and just a cosmetic modification may be required in the
product all Gillette razors will be of similar
quality. existing product-ine or product item.
Rahul Publications 98
Rahul Publications
Ral
 6.8.A YEAR ISEMESTER UNT IV
BASICS OF MARKETING

These changes may be tangible or Current Revenue Maximlzation 4. Rerfect Competiuion

intangible, and may be adhieved by re4omulation,
Seeks to maximize curent vevenue with no Much fim desice the stabikizztion.of price levels and operating margins as imore important then the
redesign, changing unit sizes, and adding or
removing leatures. Pan Parag, the famous pan regard to profit margins. The underlying maintenances of acertain level of short run profit
. masala, introduoed new sachet packs of diflerent objective often is to maximize long-term 12. Importance of Pricing.
sizes and at difserent prices. This helped it
profits by increasing market share and
to lowering costs.
penetrate and expand the market. When the fim
.decided to add tobacco (zarda) to the pan masala, Maximize quantity Pricing leads to maximize short tem and long-run profk.
the effect was a manifold increase in its market share. Seeks to maximize the number of unis sold i) It helps to increase sales volume.
9
Most often these changes are dictated by a fim's or the nunmber of customers served in order
tong-term goals, customer preferences, and iü) It helps to increase monetary sales.
toderease long-term costs as pedicted by
competitive developments în a particular product the experience curve. iv) t supports lo an organizetion for increasing marketshare
market.
Maximize Profit Margin v It helps to obtain a target rate of retum on investment
9. Define Pricing. Attempts to maximize the unit piofit margin, vi) t assists to obtain a target rate of retum on sales.
Aus : recognizing that quantities will be low vi) It helps to stabilize market or stabilize market price.
Pricing is the process of determining what.a
>
Quality Leadership Vil) It desernsitizes customers to product price
company will receive in exchange for ils products Use price to signal high quality in an attempt
Pricing factors are manufacturing cost, market place, to position the product as the quality leader.
competition, market condiion, Quality of product. 11. Need of Pricing.
The eflective price is the price the companyreceives
after accounting for discounts, promotions, and
Ans:
other incentives. The different needs of pricing are as follows:
Definition of Pricing
. Sales Increase
A low price can achieve the objective of
According to Prof. K.C. Kite, "Pricing is a increase in sale volume. A low price is not
managerial task that involves establishing pricing
always necessary. A right price can stimulate
objectives, identilying the faclors gpveming the the desired sales increase. In practice price
priçe, iscestaining their relevance and significance, and non-price objectives are co-ordination
determining the product value in monetary tems to produce the desired increase in sales
and fomulation of price policies and the stategies,
2, Increasing the Market Share
implementing them and controlling them for the.
best results". Price is typically one of those factors that

10. 0bjectives of Pricing.

carries the heaviest responsibility for
improving or mintaining market share- a
sensitive indicator of customers and trade
Aus:
acceptance.
Current Profit Maximization
5. Profit Level
Seeks lo maximize curent profit, taking into Retum on investment say 1S to 20 percent is
accolunt revenue and costs. Curent profit a common decision in marketing, pricing for
maximization may not be the best objective profit is the most logical of all pricing
if it resuks in tower long4erm profsts. objectives.

100 101 Rahul Publicat

Rahul Publications
 B.B.A
IYEAR 1SEMESTER UNIT
BASICS Of AARKEfiNG
Choose the Correct Answers 9 Customers who are community group leaders and caretully adopt new ideas YEAR ISEMESTER
(a) innovators
are
called
In product He
cyde maurity stage, marketng objeçthe is to
(6) Early majorlty
Fitl in the Blanks
Ic (c) laggard {d) Early adopter
(a) Create product awarenes
(6) Maximze the market share 10. Category of products that come with wamanty offered at time of
me of
product buying
product sa duster of psychologicalsatislactions.
(d) Delend market chare and profts c) Reduce expenditure
some specific date is an example o. and
expites at
PLC stands t o r
la
Buying of products sudh Iast food' is (a) Augmented product (b) Actual product with slow growth in sales and
as an
examplc of
fd] Stage
is marked a
very little or no
(a) Difficut products (c) actual ownership (d) Tangible products profit.
(b) Sought services nvolves launching
a product at a high price and low
promotion.
c) Sought products (d) Convenient products are
intangible in
nature.

3. the consumer eithe

Pdcdng strategy in which products are differentiated on basis of value added featuress are consumer producs that not knows about
cassified es nornally
think ot buying. or
knows abaut
but does not
well as
Q1
ducts offer both long-ter+m as
short-termbenefits to the
(a) Differentiated pricing (b) Competitive pricing nsists in going beyond the curent range of producs.
consumers,
(c) Value added pricing (d) of products offered for sale by a firm or a
Quality added pricing the composité business unit.
4. In "decline stage ol t h e marketing-mix element that produces r
produca le cyde" per austomer cost is venue
b) .
(a) High (b) Low
(c) Average (d) Moderate ANSWERS
5. Products that Product pr
consuner doses not really consider buying is classified as

(a) 2. Product life cyele

Unsought cosumer produas (b) Sought services
(c) Sought industral 3. Introduction
producd (d) Unsought augmented produd
Industrial products are classilied on basis of 4. Slow skimming strategy
fal 5. Services
(a) types of customers (D ypes of usage

fe) vpes of quantity (d) Types of position ing

6 Unsought products
7. Desirable
7. Stralegy of launching new product in new market is known as
d) 8. Line Stretching
(o) Market penetration (b) Product development 9. Product Mix
(c) Market development (d) Diversilication 10. Price
Product quality level is considered as part of

(a) Actual product (b) Augmented product

(c) de-augmented product (d) Customer value

102
Publlcations 103)- Rahul Publicalons
Rahul Publicatlons
104
tiuiti