Unit 3: Product & pricing decisions
Marketing Management notes · PTU syllabus (BBA 302-18)
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Unit summary
Product and price are the heart of the marketing mix. This unit covers what a product is, the new product development process, the product life cycle, positioning, branding, packaging and labelling, and pricing objectives, strategies and techniques.
After this unit you can
- Define a product and its levels
- Explain the new product development process and the PLC
- Explain positioning, branding, packaging and labelling decisions
- Explain pricing objectives, strategies and methods
PTU syllabus topics
- Product definition
- new product development process
- product life cycle
- positioning
- branding
- packaging and labelling decisions
- pricing objectives
- strategies and techniques
- 1. Introduction: Low sales, high cost
- 2. Growth: Sales and profits rise fast
- 3. Maturity: Sales peak, competition heavy
- 4. Decline: Sales fall; harvest or drop
Topic 1
Product and new product development
A product is anything offered to a market for attention, acquisition, use or consumption that satisfies a want or need. Levels: core benefit, actual product (features, design, brand, packaging) and augmented product (installation, warranty, after-sales service).
- 1
Idea generation
- 2
Idea screening
- 3
Concept development and testing
- 4
Marketing strategy development
- 5
Business analysis
- 6
Product development
- 7
Test marketing
- 8
Commercialisation
Topic 2
Product life cycle (PLC)
- 1. Introduction: Low sales, high costs, build awareness
- 2. Growth: Rapid sales growth, profits rise
- 3. Maturity: Sales peak, competition intense
- 4. Decline: Sales fall; modify, harvest or drop
| Stage | Strategy |
|---|---|
| Introduction | Build awareness, skimming or penetration pricing, selective distribution |
| Growth | Improve quality, add features, wider distribution |
| Maturity | Modify market, product or mix; price competition |
| Decline | Cut costs, harvest, or discontinue |
Topic 3
Positioning, branding, packaging and labelling
- Positioning: the place a product occupies in consumers' minds relative to competitors (Volvo = safety; Patanjali = natural/Ayurvedic).
- Branding: a brand is a name, term, sign, symbol or design identifying a seller's goods. Decisions: brand name, brand sponsor (manufacturer or private label), and brand strategy (line extension, brand extension, multibrands, new brands). Brand equity is the added value a brand gives a product.
- Packaging: protects the product, provides convenience, promotes and differentiates it.
- Labelling: identifies the product and gives information — in India the Legal Metrology rules require details such as MRP, net quantity, manufacturer, date of manufacture and expiry where applicable.
Topic 4
Pricing objectives, strategies and techniques
Objectives: survival, profit maximisation, market-share leadership, quality leadership and return on investment.
Cost-based
Cost-plus, mark-up, target return
Demand/value-based
Perceived value, what customers will pay
Competition-based
Going-rate, sealed-bid
New product strategies
Skimming (high) or penetration (low)
Product-mix pricing
Product line, optional, captive, bundle pricing
Adjustment strategies
Discounts, psychological (₹999), promotional, geographical pricing
Key terms
- Product
- Anything offered to satisfy a want or need
- Product life cycle
- The sales history of a product from introduction to decline
- Brand equity
- The value a brand adds to a product
- Skimming pricing
- Setting a high initial price
- Penetration pricing
- Setting a low initial price to gain share
Quick revision
- Product levels: core, actual, augmented.
- NPD: idea generation → … → commercialisation.
- PLC: introduction, growth, maturity, decline.
- Pricing: cost-, value- and competition-based; skimming vs penetration.
Important exam questions
Practice questions written to the PTU exam pattern for this unit's syllabus: short answers (Section A style) and long answers (Sections B and C style).
Short-answer questions
- Q1.What are the three levels of a product?
- Q2.List the stages of new product development.
- Q3.What is positioning?
- Q4.Define brand equity.
- Q5.Differentiate between skimming and penetration pricing.
- Q6.State two functions of packaging.
Long-answer questions
- Q1.Explain the new product development process.
- Q2.Explain the product life cycle and the marketing strategies at each stage.
- Q3.Discuss branding, packaging and labelling decisions.
- Q4.Explain pricing objectives and pricing strategies.
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