Product classifications

1.Consumer goods

Durable Non durable

- Survive many uses - One or few uses
- Require more personal selling and services - Purchased frequently
- Higher margins - Available in many locations
- More seller guarantees - Small margins and need huge advertisements
- Ex.: Refrigerator -Ex.: Shampoo
Convenience Shopping Speciality Unsought
- Frequently purchased - Not frequently ,but - With unique features - Doesn’t think of
with minimal efforts needed some efforts - Need special research purchasing or do not
- Staples are CG - Bit costlier efforts known
,purchases on regular - Demands premium
basis(Toothpaste)
- Impulse goods
purchased without
planning
2.Industrial goods
Raw materials
- Materials ( Farms products and natural products )
- Manufacturing materials and parts
Capital goods
- Long lasting goods to facilitate developing and managing the finished
products
- Installations and equipment
Supplies and business services
Product line and mix
• Product mix(product assortment) : Set of all products( and services )
offered by a company ( or set of product classes)

• Product line: A group of products within a product class, are closely

related ,perform similar function

• https://www.apple.com/
Mac iPad iPhone Watch TV Music
MB air iPad
MB pro iPad mini
IMac iPad pro
Mac pro iPad air

Line 1 Line 2 Line 3 Line 4 Line 5

Product mix = All product lines

Product line stretching
Downward
Upward
Two-way

Line filling ( Adding more items within the present range)

Line Modernization, featuring ,and pruning
- Packaging
- Labelling
- Warranties
- Guarantees
Product levels
Core :The fundamental need or want that consumers satisfy by
consuming the product or service.

Basic:A version of the product containing only those attributes or

characteristics absolutely necessary for it to function.

Expected :The set of attributes or characteristics that buyers

normally expect and agree to when they purchase a product.

Augmented :The inclusion of additional features, benefits,

attributes or related services that serve to differentiate the
product from its competitors.
Potential :This includes all the augmentations and transformations
a product might undergo in the future.
Pricing
• Firms devise their branding strategies to help convey the price-quality
tiers of their products or services to consumers.
- Big bazaar

- Brand factory

- Central
Setting price
1.Objectives -Survival
-Maximum current profit
-Maximum market share
-Leadership
2.Determining Demand -----------
3.Estimating costs -Fixed costs(overhead costs)
-Variable costs
-Average cost(cost /unit production)
4.Analysing Costs, Prices, and Offers of -------------------
Competitors
5.Selecting a Pricing Method
6.Selecting a final Price
Selecting pricing methods
-Penetration
-Skimming
-Competition based
-Product line pricing
-Bundle pricing
-Premium pricing
-Psychological pricing
-Optional pricing
-Cost plus pricing
-Value based pricing
-EDLP(every day low price)
-Promotional pricing (loss leader, special event, cash rebates,..etc.)
Price discrimination

• Companies often adjust their prices to accommodate differences

among customers, products ,locations ,and so on.
• PD: Selling a product or service at two or more prices that do not
reflect a proportional difference in costs
• Price cuts (Down)
• Increases (Up)
• Responding to CP

• Reference price
Break Even Analysis
Revenue (Q*N)> Total cost( Variable +Fixed) -----Profit
Revenue (Q*N)=Total cost( Variable +Fixed) -----BE
Revenue (Q*N)<Total cost( Variable +Fixed) -----Loss

SU * Q = (Vc * Q) + FC
BEA
Revenue

Total revenue

BE Total cost
point Variable
cost

Fixed cost

Sales Volume