Comprehensive Guide to Products, Brands, and Pricing Strategies

Product

A good, a service, or an idea received in an exchange.

Good

A tangible, physical entity.

Service

An intangible result of the application of human and mechanical efforts to people or objects.

Idea

A concept, philosophy, image, or issue.

Types of products

Specialty, Shopping, Convenience, Unsought.

Product life cycle

1. Introduction 2. Growth 3. Maturity 4. Saturation 5. Decline 6. Revival (Sometimes).

Breadth

Number of product lines in a mix.

Depth

Number of categories within a product line.

Increase depth

Examples include Bandaids and Nike Basketball shoes.

Increase breadth

Examples include Lululemon and Nike Shoes.

Decrease depth

Example includes McCormick getting rid of spices.

Decrease breadth

Example includes Olay products dropping cosmetics to focus on facial care.

Product differentiation factors

Pricing, Quality, Design, Features, Service, Customization.

Brand

A name term, design symbol, or other features that identifies one seller's product as distinct from those of other sellers.

Brand Name

The part of a brand that can be spoken, including letters, words, and numbers.

Brand mark

The part of a brand that is not made of words, such as a symbol or design.

Trademark

A legal designation of exclusive use of a brand.

Trade name

The full legal name of an organization.

Brand Identity

Values and goals that people can connect with and have a stronger identity.

Brand awareness vs. loyalty

Branding.

Brand value

How much a company is worth from their brand.

Elements of a brand

Name, Logo, Website, Typography, Culture, Employers, Slogans.

Three types of promises

Functional, Economic, Emotional.

Brand process

Establish the brand, Position the brand, Maintain the brand.

Branding

The way you want to be perceived.

Practical considerations for brand building

Authenticity, Consistency, Accuracy, Relevance.

Brand extensions

Same brand name in different product line.

Line extension

Same brand name within the same product line.

Co-Branding

Examples include Taco Bell & KFC coming together.

Brand licensing

Examples include Boston Red Sox or Disney.

Brand repositioning

Can change a brand's focus, boost vitality of old brands, improve the brand's fit with its target segment, but is not without risks.

Bad examples of brand repositioning

Jaguar.

Protecting the brand

Includes being registered, having a brand book, ensuring protection from infringement, preventing the name from becoming a generic term, and differentiating the name.

Product placement in media

Example: KFC in Stranger Things.

Key roles of packaging

Attraction appeal, brand consistency, product description, and label requirements.

Reasons for companies to innovate

Changing customer needs, market saturation, customer expectations, and competition.

Typical corporate roles for product development

Product management, product marketing, and engineering.

Product management vs product marketing

Product management focuses on success in the market and internal roadmap; product marketing focuses on market needs, pricing model, and competitive intelligence.

Levels of difficulty in adding a product to the market

Level 5: New product in a new market; Level 4: New product in existing market (e.g., Bose speakers); Level 3: Existing product into new market (e.g., baking soda); Level 2: Revising an existing product in existing market (e.g., sour cream in new squirt bottles); Level 1: Existing product in an existing market (e.g., Apple iPhone).

Incremental innovation

Represents 70% of innovations and involves small changes.

Sustaining innovation

Involves major advances and represents 20% of innovations.

Disruptive innovation

Represents 10% of innovations and involves breakthroughs.

Diffusion of innovation

Categories include innovators (2.5%), early adopters (13.5%), early majority (34%), late majority (34%), and laggards (16%).

The chasm

A point where most companies tend to land after the release of a product, requiring promotions, giveaways, trials, and focusing on momentum rather than profit.

Product development process

1. An idea; 2. Concept testing; 3. Product development; 4. Market testing; 5. Product launch; 6. Evaluation.

Complexity of services

Services are harder to define, have a personal component, and marketing them is equally complex.

Complexity of customer experience

Involves understanding what the service is, who it is intended for, how to set expectations, what to communicate, and where to communicate it.

Service and marketing relationship

You can't market what you don't do; how you service is just as important as your product.

Importance of services

50% of offerings are services, service employment is expected to grow, and consumer services are a catalyst.

Characteristics of services

Services are intangible (subjective, personal, perception), perishable (expire when used), inseparable (produced and consumed at the same time), and heterogenous (dependent on delivery).

Factors impacting service quality

Customer expectations, quality of the service, and performance of the person delivering it.

Elements of expectations

Functional use and ease of use, empathy and attention, reliability and consistency.

Service model gaps

Gap 1: Between customer and company; Gap 2: Between company delivery and understanding customer needs; Gap 3: Between service delivery and policies; Gap 4: Between service delivery and external communications; Gap 5: Between customer expectations and perceptions.

Consequences of unresolved gaps

Can lead to social media issues, going viral, and lack of customer loyalty.

Net promoter scores (NPS)

Calculated as NPS = (Number of Promoters - Number of Detractors) / Total Respondents. Example: 100 respondents with 28 green, 12 red, and 60 yellow results in NPS = 16.

Heterogenous aspect of the service

The variation in service delivery that can affect customer expectations.

4 p's with service

Product, Place, Promotion, Price, People, Physical service, Process.

3 pricing for value considerations

What does our price say to our competitors, what impact will our price have on our demand, what does our price say about our brand.

High prices

Indicate quality and prestige.

Low prices

Convey cheapness, being inexpensive, or a bargain.

Customer's interpretation

What do they receive (benefits, probable usage, status) and what does it cost them (actual costs, time or resources to procure).

Balancing act

The comparison between perceived benefits and perceived costs.

Two dimensions

Internal and External.

Internal reference price

What they think the product is going to cost, the price of the brand they usually buy, the last price paid.

External reference points

Survey, friends, network, reports.

3 general buying types

Value consciousness, Price consciousness, Prestige sensitivity.

3 basic models

Differentiation, Low cost, Niche.

5 c's that go into pricing

Company objectives, Customers, Costs, Competition, Channel members.

5 C's objective or subjective

Company goals are objective, Customers are subjective, Costs are subjective, Competition are both, Channels are objective.

Possible company objectives

Profit, Sales, Competitor market share, Customer.

Number 2 customers

Make them want to buy, make them satisfied they got a good deal, recommend to others.

Economic theory

Demand vs supply.

Elastic demand

A 5% increase in price causes a 20% decrease in sales.

Inelastic demand

If the price of a product goes up or down more than the demand changes.

Costs of goods sold

The cost for each product you sell, including the cost to buy or produce.

Operational expenses

The costs to run a business, including fixed costs.

Revenue

Revenue - Cost of goods sold = gross profit (Variable).

Gross profit

Gross profit - Operational expenses = net profits (Fixed Costs).

Break-even

The point at which you will make money.

Markup

Selling price - item cost / item cost.

Margin %

Selling price - item cost / selling cost.

Competition

Direct competitors, substitute direct products, doing nothing, what are other people charging.

Margin based pricing

Adding a dollar amount or percentage to achieve a certain amount of gross profit.

Markup pricing

Adding a predetermined percentage of the cost of the product to its cost.

Demand based pricing

Pricing based on the level of demand for the product.

Competition-based pricing

Pricing influenced primarily by competitors' prices.

Shrink flation

Products getting smaller while maintaining the same price.

Premiumization

A company attempting to create a high-quality product.

Everyday low pricing

A pricing strategy that offers consistently low prices without discounts.

High pricing

A pricing strategy that sets prices higher than competitors, often used by brands like Joseph Bank.

Dynamic pricing

Pricing that varies based on availability, timing, projected demand, and forecasted supply.

Market penetration pricing

A strategy where a new product is priced low to attract customers quickly.

Price skimming

A strategy where a new product is priced high initially and then lowered over time.

Price fixing

An agreement among competing firms to raise or lower prices.

Deceptive pricing

The use of false or misleading statements or practices in pricing.

Price discrimination

Employing price differentials for the same product in different markets.

Predatory pricing

Setting a product's price so low that it drives competitors out of the market.

Product breadth

The number of product lines in a product mix.

Product depth

The number of categories within a product line.

Functional promise of a brand

Focusing on the physical performance or benefit of a product.