Product, Branding, and Pricing Strategies for Businesses

Posted on Jan 14, 2025 in Business Administration and Management (BAM)

Product and Branding Strategies

What is a Product?

A product is anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or a need. Products include more than just tangible objects. Broadly defined, products also include:

  • Services
  • Events
  • Persons
  • Places
  • Organizations
  • Ideas
  • Or mixtures of these

Products, Services, and Experiences

Marketing-mix planning begins with building an offering that brings value to target customers. A company’s market offering often includes both tangible goods and services. Five categories of offerings can be distinguished:

  1. Pure tangible good
  2. Tangible with accompanying services
  3. Hybrid
  4. Major service with accompanying minor goods and services
  5. Pure service

Product Classifications (Consumer Products)

Consumer products are products bought by final customers for personal use. They include:

  1. Convenience products: Products that consumers buy frequently and with minimal buying effort. Examples: Household cleaning products, candies, magazines
  2. Shopping products: Less frequently purchased products that consumers compare carefully, devoting more time and effort to the purchase. Examples: Furniture, clothing, major appliances, tourism services
  3. Specialty products: Products with unique characteristics or brand identifications for which a significant group of buyers is willing to make a special purchase effort. Examples: Specific brands of cars, high-priced photography equipment, designer clothes, gourmet foods, medical specialist services
  4. Unsought products: Products that consumers either do not know about or know about but normally do not consider buying. Examples: New innovations, life insurance, blood donations

An organization with several product lines has a product mix. A product mix consists of all the product lines and items that a particular seller offers for sale.

Product Life-Cycle Strategies

Product development – Introduction – Growth – Maturity – Decline

Pricing Strategy

New-Product Pricing Strategies

  1. Market-skimming pricing: Many companies that invent new products set high initial prices to “skim” revenues layer by layer. Example: iPhone by Apple ($599; $499; $399). Conditions:
    1. The product quality and image must support the higher cost
    2. Enough low-price-sensitive consumers
    3. The costs of producing a smaller volume cannot be so high that they cancel the advantage of charging more
    4. Competitors should not be able to enter the market easily
  2. Market-penetration strategy: Companies set a low initial price to penetrate the market quickly and deeply to attract a large number of buyers quickly and win a large market share. Example: Ikea to boost its success in the Chinese market. Conditions:
    1. The market must be highly price-sensitive
    2. Production and distribution costs must decrease as sales volumes increase
    3. The low price must help keep out the competition (entry barrier)

Product Mix Pricing Strategies

  1. Product line pricing: Management must determine the price steps to set between the various products in a line, considering the costs of each product of the line and the perceived value. Example: Rossignol offers seven different collections of alpine skis of all designs and sizes, at prices that range from $150 for its junior skis to more than $1,100.