Skimming Pricing Skimming Pricing Is the Strategy of Establishing a High Initial Price for a Product with a View to “Skimming the Cream Off the Market” at the Upper End of the Demand Curve. It Is Accompanied by Heavy

1318 Words May 17th, 2009 6 Pages
ICU: INTRODUCTION TO MARKETING
Vladimir V. Bulatov. bbe@voliacable.com
We, Fr 8:30

LECTURE 12. PRODUCT DEVELOPMENT II.
Reading: Ch. 11, 12, addendum sent onto your e-mails.

Three product levels in marketing:
1.Core product: “what the buyer is really buying?” (E.g. Charels Revson [Revlon] recognizes that: “In the factory we make cosmetics; in the store – we sell hope”). Product concept is the idea about benefits, not features.
2.Tangible product – a ready-to-use product that has certain level of quality, features, styling, brand name, and a package.
3.Augment product additionally possesses such benefits as installation, delivery, credit, warranty, after-sale servicing, etc.

Warranty – a statement about manufacturer’s
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These groups actually exist due to different types of barriers as incompatibility with existing habits, value barriers, risk barriers (physical, economical, social, etc.), product’s image, etc.
Companies attempt to overcome these barriers in numerous ways to increase the amount of initial sales and shorten the learning (introduction) period of a product.

Strategies to manage a product during its life.
Modifying a product – altering its characteristics to postpone the beginning of a decline stage or to get greater market coverage by new segments.
Modifying a market.
a.Increasing use of a product (e.g. stimulating purchase of a product during stagnation periods [like fertilizers during winter or promotion of Cambell soup during hot periods, when soup consumption usually declines]).
b.Creating new use situations (M&M’s being promoted as a new fill for bakery).
c.Finding new users. (e.g. shifting from industrial consumers to final [if possible] – like Nautilus, which originally made sales only to gyms, but later made offers to individuals).
Repositioning a product.
a.Reacting to competitor’s position.
b.Reaching new market. (e.g. changing the image of liquid yogurt into a soft-drink for health-conscious users).
c.Catching the rising trend. (a trend to consume fat-free products lead to changing images of many products).
d.Changing the value offered: trading up (Toyota  Lexus); trading down (cheap airtrips on airplanes

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