Product and Price (19)

Question 1

Typical Product Life Cycle Chart-

Answer 1

Intro, Growth, Maturity, Decline

Question 2

Branding Decisions factors

Answer 2

1. name
2. package
3. extensions
4. other decisions

Question 3

Branding decision: Name

Answer 3

PNA Experiment:

• people thought that stock with simpler names would perform better than stocks with complex names
• archival analysis showed that IPO’s with pronounceable ticker codes performed better than those with unpronounceable ticker codes

Question 4

Branding decision: Packaging

Answer 4

Basic component:

1. Packing itself
2. logo (starbucks)
3. label

Question 5

Four Brand Strategies (Chart)

Answer 5

brand name: Existing/product category (brand) (ie Ben & Jerrys)

1. Line extension (new ice cream flavor)
2. Brand extension (ben & jerrys milk)

brand name: New/ Product category (Co.)

1. Multibrand (Vegan Joes by B&J)
2. New Brand

Question 6

What is a brand?

Answer 6

(Psychological value to consumer
a name, term sign, symbol, or design, or a combination of them intended to identify the goods and services of one seller or group of sellers to differentiate them form those of the competition

and a promise that a firm makes to its customer

Question 7

How to measure brand equity

Answer 7

perceptual Approaches:

• blind tests
• young and rubicam brand assest valuator (BAV)

asset evaluation Approach:
- interbrands S-Curve method-

Question 8

Young & Rubicam’s BAV (chart)

Answer 8

• Useful for across country analysis- how well a brand is doing across the country in diff places
• link with operating variables

Brand Asset Valuator (BAV)
x axis: Brand Strength
- concrete brand positioning
- differentiation + relevance

y axis: Brand Stature

• abstract brand positioning
• knowledge + Esteem

Question 9

Growth In differentiation & relevance=>margin?

Answer 9

? 19 page 6

Question 10

Interbrand’s S-Curve Method

Answer 10

Assest Evaluation Approach

Brand Basic Requirements:

• separately identifiable
• legally protected
• transferable

Brand Value:

• a multiple (discounted rate) reflecting the brands strenghth
• “the brand is valued at”

Question 11

Dimensions of Brand Personality- US

Answer 11

Brand Personalities: ECSSR

1. Excitement -mtv
2. competence- ibm
3. sincerity- campbells
4. sophistication- guess
5. ruggedness- nike

Question 12

Customer Value?

Answer 12

customer value is a measure of how much a customer is willing to pay for a product or a service (reservation price)

• percieved value (PV)
• Price
• Cost

3 Cases:
PV-> price-> cost (mazda miati)
PRice-> PV-> cost (mistake adjustments)
Price-> cost-> pv (failure- product sinks)

Question 13

Measuring Customer Value: Price Elasticity

Answer 13

PE (E)= % change in quantity demanded/ % change in price

Question 14

Elastic Demand

Answer 14

Elastic Demand:

• Price Elasticity> 1
• a small change in price produces a large change in demand

Question 15

Inelastic Demand

Answer 15

• Price Elasticity< 1

- a small change in price produces a smaller change in demand

Question 16

Unitary Elastic Demand

Answer 16

• Price Elasticity= 1

- change in price produces an equivalent change in demand

Question 17

Some factor affection price elasticity

Answer 17

• Availability of substitutes
• Uniqueness
• difficult of comparisons
• importance
• ability to stockpile

Question 18

Measuring Customer Value Methods

Answer 18

1. Price elasticity
2. economic value to consumer
3. survey methods

Question 19

Measuring Customer Value: Survey Method

Answer 19

1. willingness-to-pay for Branded Vs Generic
2. dollarmetric method
3. gabor-grainger method
   - single product, random exposure to multiples price points
   - would you buy the product as $ X ?
   - plot no. of affirmatives on each price point to obtain demand curve.
4. Brand Price Trade-Off (BPTO)
   - creates competitive context
   - useful for price oriented markets
5. Van Westendorp Price Sensitivity Meter
   - four questions regarding a product- each question yields acurve

Question 20

Measuring Customer Value: Survey Based Methods

Answer 20

Survey Based Methods: (WDGB)

1. Willingness to pay for branded vs. generic
2. Dollarmetric Method
3. Gabor-Grainger Method*
4. Brand Price Trade-off (BPTO)*
5. Van Westendorp Price Sensitivity Meter*

Question 21

Gabor-Grainger Method

Answer 21

Survey based method to measure customer value
Gabor-Grainger Method:
- single product, random exposure to multiple price points
- would you buy product at $(x)?
- Plot number of affirmatives on each price point to obtain demand curve

Question 22

Brand Price Trade-Off (BPTO) Method

Answer 22

Survey based method to measure customer value
BPTO:
- creates competitive context
- useful for price oriented markets
- a matrix of brands and prices
- prices re-ajusted after each choice
- chosen brand increased, non-chosen brands decreased
- switching points recorded

Question 23

Van Westendorp Price Sensitivity Meter

Answer 23

4 questions regarding a product/ concept
Q 1-4:  at what price on the scale would you consider this product to be..
Q1: ...a Bargain? (IDP)
Q2: ... too cheaply priced? (IPP)
Q3: ... priced expensively? (IDP)
Q4: ... priced too expensively? (IPP)

• Each question yields a curve
• Intersections yield input for pricing decisions

Question 24

Optimun Pricing Point (OPP)

Answer 24

Intersection on VanWestendorp Price Sensitivity Meter.

• OPP is the “recommended price”from manufacturer
• point where number of respondents who see the product as too cheap = ppl who see as too expensive

Question 25

Indifference Price Point (IDP)

Answer 25

(Intersection on Van Westendorp Price Sensitivity - IDP is the median price actually paid by consumers - point where # of people who see price as a bargain= ppl who see price as expensive