Unit 3 ~ marketing

Product Decisions: Concept, Characteristics, and Levels

3.1 Concept of a Product

A product is any item developed and refined for sale in the market to fulfill customer needs and wants. It can be
categorized into two concepts:
1. Narrow Concept: A product is a combination of physical or chemical characteristics with utility, such as a
fan, table, or pen.
2. Wide Concept: A product is more than just a physical object; it includes variety in color, design, packaging,
and branding, making each variation a distinct product.

Definitions of a Product
• W. Alderson: “A product is a bundle of utilities consisting of various features and accompanying services.”
• Philip Kotler: “A product is a bundle of physical services and symbolic particulars expected to yield
satisfaction or benefits to the buyer.”

Product Management

Product management includes planning, forecasting, and marketing at all stages of the product lifecycle to ensure
the product’s success in the market.

3.1.2 Characteristics of a Product

1. Tangibility:
• A product can be seen, touched, and felt (e.g., cars, clothing, electronics).
2. Intangible Attributes:
• Some products lack physical form (e.g., insurance, repairs, consulting services).
• Tangible products may also have intangible attributes (e.g., after-sales service for a refrigerator).
3. Associated Attributes:
• Packaging, branding, and warranties add to a product’s identity.
• Example: Dalda Ghee is recognized by its brand name and packaging.
4. Exchange Value:
• A product must have a value that customers are willing to pay for.
5. Consumer Satisfaction:
• A product should satisfy customer needs and desires.
• Example: Buying cosmetics also means buying beauty and confidence.

3.1.3 Levels of a Product (Customer Value Hierarchy)

A product has five levels, each adding more value for customers.

1) Core Benefit
• The fundamental need that the product fulfills.
• Example: A hotel provides rest and sleep.

2) Basic Product
• The essential components of the product.
 • Example: A hotel room includes a bed, bathroom, chair, and towels.

3) Expected Product
• The features that customers expect from the product.
• Example: A restaurant should have clean tables, good food, and quick service.

4) Augmented Product
• Additional features that differentiate a product from competitors.
• Example: A hotel offering fine dining, 24/7 service, fresh flowers, and express check-out.

5) Potential Product
• Future modifications and innovations to improve the product.
• Example: A hotel introducing all-suite rooms or smart technology for guests.

[28/02/25, 5:23:46 PM] .: Classification of Products

Products can be classified based on different factors and methods. The major classifications include:
1. Based on Nature
2. Based on Consumer’s Intentions
3. Based on Social Benefits

1) Based on Nature

Products can be divided into ten types based on their nature:

1. Goods
• Physical, tangible items that can be possessed and owned.
• Example: Bicycles, wheat, clothing

2. Services
• Intangible products consumed at the time of production.
• Example: Banking, insurance, healthcare services

3. Ideas
• Products based on an idea or concept developed by a marketer.
• Example: Consulting services, advertising agencies

4. Experiences
• Products that create an experience by combining goods and services.
• Example: Science parks, amusement parks

5. Events
• Time-based products associated with a company’s branding and marketing.
• Example: Olympics, award functions, business conferences

6. Persons
• Personalities marketed as brands through endorsements and publicity.
• Example: Celebrity marketing (film stars, sportspersons)
7. Places
• Locations marketed to attract visitors or businesses.
• Example: Tourism in Kerala (marketed as “God’s Own Country”)

8. Properties
• Personal or financial assets that hold value.
• Example: Real estate (Amby Valley project), IPO campaigns (Maruti, TCS)

9. Organizations
• Companies working on building brand image.
• Example: Philips (“Let’s Make Things Better”)

10. Information
• Knowledge-based products that can be marketed.
• Example: Dictionaries, encyclopedias, research reports

2) Based on Consumer’s Intentions

Products are divided into consumer products and industrial products based on who buys them and for what purpose.

A) Consumer Products
• Purchased for personal use.
• Classified based on consumer buying behavior:

1. Convenience Products
• Frequently purchased, easily available, and require little effort.
• Example: Wheat, vegetables, medicines, newspapers

2. Shopping Products
• Purchased based on quality, price, and style; consumers compare before buying.
• Example: Laptops, home appliances, furniture, cars

3. Specialty Products
• Unique characteristics, available only at specific stores.
• Example: Luxury cars, designer clothes, prescription medicines

4. Unsought Products
• Not actively sought by consumers, either because they are unknown or not immediately needed.
• Example:
• Regularly Unsought Products (Life insurance, medical check-ups)
• New Unsought Products (New technology that requires awareness marketing)

B) Industrial Products
• Purchased for business purposes, such as production, resale, or company operations.
• Classified based on their use:

1. Raw Materials
 • Basic materials used in production.
• Example: Agricultural products (grains, fruits), natural resources (minerals, timber)

2. Capital Equipment
• Expensive, long-lasting machines used in production.
• Example: Cranes, lathe machines, heavy machinery

3. Accessory Equipment
• Lower-cost tools used in production but not part of the final product.
• Example: Printers, calculators, hand tools

4. Component Parts
• Pre-manufactured parts that become part of the final product.
• Example: Engines, batteries, tires (for automobiles)

5. Process Materials
• Used in production but not easily identifiable in the final product.
• Example: Alcohol in perfumes, chemicals in cosmetics

6. Supplies
• Low-cost, non-durable items used in daily business operations.
• Example: Office stationery, lubricants, cleaning materials

7. Industrial Services
• Intangible services that help businesses operate.
• Example: Marketing, legal services, financial consulting

3) Based on Social Benefits

Products can also be categorized based on their long-term and short-term impact on society:

1. Pleasing Products
• Provide immediate satisfaction but have a negative long-term effect.
• Example: Alcohol, cigarettes, junk food

2. Deficient Products
• Neither provide immediate satisfaction nor long-term benefits.
• Example: Obsolete products (pagers, typewriters)

3. Salutary Products
• Offer long-term benefits but lack immediate appeal.
• Example: Diet products, healthy snacks (soybean chips)

4. Desirable Products
• Provide both immediate satisfaction and long-term benefits.
• Example: Nutritional food, exercise equipment

[28/02/25, 5:26:21 PM] .: Product Line Decisions & Strategies

A product line is a group of related products offered by a company, sharing common features like usage, price range,
or target customers. Managing a product line involves key decisions:

1) Product Line Length Decisions

Companies must decide whether to expand or reduce their product line based on profitability.
• Too short: Adding products increases profit.
• Too long: Removing products has no negative impact.

Ways to expand:

i) Product Line Stretching (Extending beyond the current range)

• Downward Stretch: High-end brands introduce budget-friendly options (e.g., TATA Nano).
• Upward Stretch: Budget brands enter the premium market (e.g., Maruti Suzuki’s luxury models).
• Two-Way Stretch: Expanding both ways to serve all market segments.

ii) Product Line Filling (Adding new products within the existing range)
• Helps increase sales, block competitors, and utilize resources effectively.
• Risk: Over-filling may confuse customers.

2) Product Line Modernization

Companies revamp products with new technology, design, or features to stay relevant.
• Examples: Intel’s new PC chips, Hero Honda’s Splendor Plus, Maruti Suzuki’s upgraded cars.

3) Product Line Featuring

Companies highlight flagship products to boost overall demand.

• Example: Honda’s Dream Service campaign.

4) Product Line Pruning

Removing low-performing products to improve profitability.

• Example: Smartphone brands discontinuing slow-selling models.

Conclusion

Effective product line management expands market reach, enhances brand value, and maximizes profitability.

[28/02/25, 5:27:26 PM] .: Product Mix Strategies & Branding

1) Product Mix Strategies

i) Product Line Expansion/Contraction

• Expansion: Adding new products to the existing product mix (e.g., an audio equipment company starts
making TVs).
• Contraction: Removing unprofitable products from the product line.
 • Contraction: Removing unprofitable products from the product line.

ii) Product Modification

• Altering product features like size, shape, color, style, or cost to boost demand.
• Example: Pan Parag introduced small packets at different prices to target various market segments.

iii) Product Elimination

• Removing low-demand or unprofitable products that do not align with market trends.
• Eliminating outdated products helps maintain brand reputation and profitability.

2) Branding

Definition: A brand includes a name, logo, colors, fonts, and symbols that differentiate a company’s products.

Purpose: Branding is more than a name—it represents a company’s promise of quality and customer satisfaction.

Key Branding Elements:

• Who the product is.
• What it does.
• Why consumers should choose it.

Importance of Branding:
• Builds a unique market position.
• Creates customer loyalty.
• Enhances recognition & value.

Conclusion:
A strong product mix strategy, combined with effective branding, helps businesses expand, innovate, and maintain a
competitive edge in the market.

[28/02/25, 5:28:41 PM] .: Branding Strategies & Decisions

1) Branding Strategies

i) Product Branding
• A brand can be an object, word, symbol, or concept.
• Each product or product line has a unique brand name.
• Example: Different brand names within a company’s portfolio.

ii) Line Branding

• Products based on one theme are grouped under a single brand.
• Example: Lakme (beauty products like body lotion, makeup, etc.).

iii) Range Branding

• Different non-complementary products under the same brand concept.
• Example: Himalaya Drug Company (skincare, body care, healthcare).

iv) Endorsement Branding

• Product brands are more prominent than the company name.
 • Example: Cadbury Dairy Milk, where Cadbury is subtly highlighted.

v) Umbrella Branding
• A single brand name is used for all products.
• Example: Philips (all products carry the Philips name).
• Also called family branding.

vi) Source Branding

• Similar to umbrella branding, but each product has a distinct name.
• Example: TATA Nano, TATA Indica, TATA Sky, TATA Docomo.

2) Branding Decisions

Goal: Develop a brand image that makes the product/service unique.

Key Branding Strategies:

i) Individual Brand Names

• Different names for different products within a company.
• Example: P&G (Tide, Ariel, Vicks, Whisper, Pampers, Pantene, etc.).
• Protects company reputation if a product fails.

ii) Blanket Family Name

• A single name across various product categories.
• Example: TATA (tea, salt, automobiles, etc.).
• Lower branding costs; leverages corporate trust.

iii) Different Family Names for Each Product

• Separate brand names for diverse product lines.
• Example: Aditya Birla Group (Hindalco for aluminum, Ultratech for cement, etc.).
• Ideal for diverse businesses.

iv) Corporate Name + Individual Product Name

• Combines the company and product name.
• Example: Kellogg’s Corn Flakes, Honda Civic, Sony Xperia.
• Strengthens corporate legitimacy while differentiating products.

Conclusion:
Selecting the right branding strategy helps businesses build trust, recognition, and long-term success in the market.

[28/02/25, 5:30:27 PM] .: Advantages of Branding & Packaging

Advantages of Branding

1) Benefits to Consumers
1. Easy to Recognize:
• Unique brand elements like logo, color, and design help consumers identify products easily.
2. Assurance of Quality:
 • Brands maintain product quality and invest in R&D to meet customer expectations.
3. Stable Prices:
• Branded products do not have frequent price fluctuations, ensuring predictable costs for consumers.
4. Better Packaging:
• Branded products often come with attractive and functional packaging, improving user experience.
5. Mental Satisfaction & Prestige:
• Owning branded products (e.g., Mercedes, Harley-Davidson) gives consumers a sense of pride and status.

2) Benefits to Producers
1. Ease of Advertising:
• A strong brand simplifies advertising by establishing a clear vision, target audience, and value proposition.
2. Better Market Recognition:
• Brands make it easier to identify products and create a unique market presence.
3. Higher Pricing Power:
• Strong brands build customer loyalty, allowing companies to charge premium prices.
4. Expansion Opportunities:
• A well-established brand makes it easier to introduce new products under the same brand umbrella.
5. Direct Consumer Interaction:
• Branding helps reduce dependence on middlemen, leading to better profit margins and stronger customer
relationships.

Packaging

Definition
• Packaging refers to designing and producing containers or wrappers for a product.
• Packing is the act of wrapping or enclosing products for protection during transport.

Example:
• A plastic container for chocolates = Packaging.
• Placing multiple plastic containers in a cardboard box for transport = Packing.

Types of Packaging
1. Consumer Packaging:
• Used for household items like toothpaste, talcum powder, and cosmetics.
2. Family Packaging:
• Similar packaging style for different but related products.
• Example: Nivea’s skincare range.
3. Re-Use Packaging (Dual Packaging):
• Packages that can be reused after the product is consumed.
• Example: Coffee jars, pickle glass jars, airtight chocolate containers.
4. Multiple Packaging:
• Bundling multiple units of a product in one package.
• Example: Johnson & Johnson baby care set, Synergy skincare set.

Roles of Packaging

1) Utilitarian Role
• Enhances usability (easy to identify, clean, and store).
 • Protects products from damage, spoilage, and spillage.
• Facilitates easy handling in retail stores.

2) Profit Role
• Prevents damage-related losses, reducing costs.
• Attractive packaging can justify higher prices.

3) Communication Role
1. Product Identification & Differentiation:
• Packaging helps distinguish brands, e.g., different soap brands with unique wrappers.
2. Communicates Product Message:
• Displays important details (e.g., ingredients, usage instructions, nutrition facts).
3. Supports Repositioning Strategy:
• Packaging redesign can change brand perception (e.g., rebranded baby soaps).
4. Reinforces Sales Message:
• Printed slogans on packaging remind customers about the brand every time they use the product.
5. Aids in Product Promotion:
• Attractive packaging influences buying decisions at the store.
• Example: Ferrero Rocher, Kinder Joy, KitKat’s unique wrappers.
6. Enhances Product Attractiveness:
• Visually appealing packaging grabs attention in stores.
• Example: Pond’s talcum powder, Lux soap, Hide & Seek biscuits.

4) Buying & Marketing Role

• Integral to marketing strategy; impacts sales and brand perception.
• Plays a role in enhancing brand value and influencing purchase decisions.

Conclusion

Branding and packaging are essential for product differentiation, customer satisfaction, and business growth. A
strong brand combined with attractive packaging creates customer loyalty, increases sales, and enhances market
presence.

[28/02/25, 5:34:01 PM] .: Requirements of Good Packaging & Labelling

Requirements of Good Packaging

1) Package Design
• The shape, size, color, and material of the package influence consumer perception.
• An attractive design enhances brand reputation and sales.

2) Packaging Materials
• The right material ensures product protection and durability.
• Common materials: Plastic, glass, paperboard, cellophane, metal, Styrofoam.
• Trade-offs:
• Paperboard is cheap but difficult to open.
• Cellophane is visually appealing but fragile.
3) Placement of Label
• Labels should display: Brand name, organization details, legal information.
• Poor label design may confuse regular customers and impact sales.

4) Convenience of Usage
• The package should be easy to handle and use for all stakeholders (producers, distributors, consumers).

5) Guarantee of Economy
• Packaging costs should be justified and not burden the company.
• Efficient packaging can reduce per-unit costs.

6) Assurance of Adjustability
• A good package should accommodate both solid and liquid products.

7) Pollution-Free Packaging
• Companies should consider eco-friendly packaging (e.g., biodegradable materials).
• Some metallic inks are non-biodegradable and harmful to the environment.
• Green packaging is a growing trend to reduce pollution.

Labelling

Definition
• A label provides details about the product and seller.
• It includes information like brand name, logo, ingredients, usage instructions, and promotional messages.

Examples:
• Sunkist prints its name on oranges.
• Coca-Cola redesigned its label to include opening date, price, and nutritional value.

Purpose of Labelling

1) Brand Identification
• Labeling identifies the product manufacturer and distributor.
• It provides details about where the product was produced or processed.

2) Product Description
• Labels provide important details like:
• Contents
• Expiry date
• Price
• User manuals
• Nutritional value (for food items)

3) Product Promotion
• Attractive label graphics help in advertising and brand building.
• Helps differentiate products in highly competitive markets.

4) Other Purposes
 • Helps consumers compare products and make informed choices.
• Creates trust by providing product standards and quality assurance.

Conclusion

Both packaging and labelling are crucial for brand identity, consumer trust, and sales growth. While packaging
ensures protection and attractiveness, labelling provides essential product information and influences buying
decisions.

[28/02/25, 5:38:07 PM] .: This content provides a detailed explanation of the Product Life Cycle (PLC) concept,
covering its definition, characteristics, and stages. Below is a structured summary of the key points:

Product Life Cycle (PLC)

Introduction
• Every product has a finite lifespan, similar to human life.
• The product starts at the concept and development stage, followed by introduction, growth, maturity, and
decline.
• Philip Kotler’s definition: “The product life-cycle is an attempt to recognize distinct stages in the sales
history of the product.”
• Arch Patton’s analogy: A product is born, grows, matures, and eventually declines.
• William J. Stanton’s perspective: A product exists in different competitive environments throughout its life.
• PLC helps marketers develop strategies for each stage to maximize profitability.

Characteristics of Product Life Cycle

1. Not all products complete every stage—some fail early.
2. Time spent in each stage varies by product.
3. Some products have a very short life cycle (e.g., fashion trends, tech gadgets).
4. Repositioning can extend a product’s life cycle.
5. Profitability changes across the stages—high in growth, stable in maturity, declines in the end.
6. Each stage presents different risks and opportunities requiring unique strategies.
7. Different business functions are critical at different stages:
• R&D in development
• Marketing in growth
• Cost control in decline
8. Product life can be extended by:
• Finding new uses for the product.
• Reaching new markets.
• Encouraging existing customers to use more.

Stages of Product Life Cycle

The PLC curve follows a bell-shaped pattern with four key stages:

1) Introduction Stage
• Product is launched in the market.
• Slow sales growth; profits are negative or low due to high costs.
• Heavy investment in R&D, market testing, promotions, and distribution.
 • High risk of failure due to uncertainty.

2) Growth Stage
• Sales increase rapidly, and the product gains market acceptance.
• Profits start increasing as economies of scale are achieved.
• Firms invest more in advertising and expansion.
• Competition begins to rise.

3) Maturity Stage
• Sales stabilize as the product reaches market saturation.
• Profit levels off or starts declining due to competitive pressures.
• Focus on maintaining market share through product modifications, branding, and cost efficiency.
• Competition is at its peak, leading to price wars and aggressive marketing.

4) Decline Stage
• Sales and profits drop significantly.
• Reasons:
• Market saturation—most consumers already own the product.
• Newer alternatives replace the product.
• Businesses may:
• Reduce costs (low-cost production, cheaper markets).
• Discontinue the product or reposition it.

Conclusion
• Understanding PLC helps businesses create strategies to maximize a product’s success.
• Timely decision-making at each stage can extend profitability and market relevance.

Would you like a graph or visual representation of the PLC?

[28/02/25, 5:41:16 PM] .: Strategic Implications of Different Stages of the Product Life Cycle (PLC)

1) Introduction Phase
• High Costs & Low Sales – Companies incur high costs for product development, marketing, and
distribution, while sales remain low initially.
• Customer Awareness & Adoption – Marketers focus on creating awareness and encouraging product trials
through promotions and advertising.

Strategies:
1. Rapid Skimming – High price + high promotion to recover costs quickly.
2. Slow Skimming – High price + low promotion for exclusive or niche products.
3. Rapid Penetration – Low price + high promotion to gain market share quickly.
4. Slow Penetration – Low price + low promotion for price-sensitive markets.

2) Growth Phase
• Increasing Sales & Profits – Customer demand grows, leading to higher revenues and expanding market
share.
• Intensifying Competition – More competitors enter the market, offering variations of the product.
Strategies:
1. Product Improvements – Enhancing quality, features, and packaging.
2. Market Expansion – Targeting new customer segments and geographical regions.
3. Pricing Adjustments – Lowering prices to attract more buyers.
4. Stronger Brand Positioning – Investing in advertising and promotions to differentiate from competitors.

3) Maturity Phase
• Peak Sales & Declining Growth – The product reaches its maximum market penetration, and sales stabilize.
• Price & Promotion Wars – Companies compete aggressively through discounts, advertising, and loyalty
programs.

Strategies:
1. Brand Differentiation – Creating unique features and brand positioning.
2. Product Line Extensions – Launching variations, upgrades, or complementary products.
3. Cost Efficiency – Reducing production and marketing expenses to maintain profitability.
4. New Market Development – Encouraging new uses or targeting untapped customer segments.

4) Decline Phase
• Falling Sales & Profits – Market demand decreases due to changing customer preferences, technological
advancements, or better alternatives.
• Competitor Exit – Many firms withdraw from the market, leaving only a few players.

Strategies:
1. Product Revitalization – Updating or modifying the product to match market needs.
2. Selective Marketing – Focusing on a niche customer base and reducing widespread distribution.
3. Cost Cutting – Minimizing production, marketing, and operational costs.
4. Product Discontinuation – Phasing out the product when it’s no longer profitable.

Would you like a detailed breakdown of any particular stage?

[28/02/25, 5:44:33 PM] .: Pricing Decisions

1. Introduction to Price and Pricing

• Price is the only element in the marketing mix that generates revenue; others generate costs.
• It is the most flexible component as it can be changed easily.
• For manufacturers, price is the money received from buyers; for customers, it represents the value
sacrificed for the product.
• Formula for price:
Price = Money received by seller / Goods & services received by buyer

2. Pricing Process
1. Selecting Pricing Objectives
• Survival: When facing intense competition or low demand, pricing is aimed at covering costs.
• Profit Maximization: Setting prices to achieve maximum short-term profits.
• Market Share Growth: Lowering prices to increase sales volume and long-term profits.
• Market Skimming: Setting high prices for new or innovative products to maximize initial profits (e.g., Sony).
2. Determining Demand
• Demand usually decreases as price increases, but for prestige products, higher prices may increase
demand.
• Factors affecting price sensitivity:
• Unique value, substitute awareness, difficulty in comparison, total expenditure, end-benefit, shared-cost,
sunk investment, price-quality perception, inventory storage.
• Methods to estimate demand curves:
• Analyzing past sales data.
• Price experiments.
• Customer surveys.
3. Estimating Costs
• Fixed Costs: Do not change with production (e.g., rent, salaries).
• Variable Costs: Change with production levels (e.g., raw materials).
• Total Cost: Sum of fixed and variable costs.
• Activity-Based Costing (ABC): Allocates costs based on activities to determine actual profitability.
4. Analyzing Competitors’ Pricing
• Competitors’ pricing and customer perception must be studied.
• Similar products are priced close to competitors; inferior products are priced lower.
• Competitors may adjust their prices in response.
5. Selecting Pricing Method (3 Cs Approach)
• Cost-Based Pricing: Sets a price floor.
• Competitor-Based Pricing: Provides a market benchmark.
• Customer Demand-Based Pricing: Sets a price ceiling based on what customers are willing to pay.
6. Selecting the Final Price
• Psychological Pricing: Customers associate price with quality (e.g., luxury cars).
• Company’s Pricing Policies: Prices should align with company policies and profitability goals.
• Impact on Other Parties: Consider reactions from distributors, sales teams, competitors, and government
regulations.
• Influence of Marketing Mix Elements: Price should align with product quality, advertising, and brand
positioning.

[28/02/25, 5:48:38 PM] .: Here’s a concise summary of the pricing policies and methods:

Pricing Policies
1. Cost-Based Pricing – Price based on production costs.
2. Customer Demand-Based Pricing – Price set according to consumer willingness to pay.
3. Market/Competitor-Based Pricing – Price determined by analyzing competitors’ pricing.
4. Value-Based Pricing – Price based on perceived product value.

Cost-Based Pricing Methods

1. Mark-up/Cost-plus Pricing – Adds a percentage profit margin to total cost.
2. Full Cost/Absorption Pricing – Covers all fixed and variable costs.
3. Marginal Cost Pricing – Prices just above variable costs to compete in tough markets.
4. Break-even Pricing – Sets price where revenue equals cost (no profit, no loss).
5. Target Pricing – Price set to achieve a specific return on investment.

Customer Demand-Based Pricing Methods

1. What the Traffic Can Bear Pricing – Charges the highest price consumers are willing to pay.
2. Skimming Pricing – High initial price for premium products (e.g., luxury goods, tech products).
3. Penetration Pricing – Low price to attract customers and gain market share.
Market/Competitor-Based Pricing Methods
1. Going Rate Pricing – Price similar to competitors.
2. Discount Pricing – Prices lower than competitors to attract price-sensitive buyers.
3. Premium Pricing – Prices higher than competitors to signal superior quality.
4. Tender/Sealed Bid Pricing – Competitive bidding for contracts or projects.

This keeps it simple and to the point. Let me know if you need further refinements!

[28/02/25, 5:53:16 PM] .: Simplified New Product Pricing Strategies

When launching a new product, companies choose a pricing strategy based on market conditions, competition, and
customer behavior. The two main strategies are:

1. Price Skimming
• High initial price, gradually lowered over time.
• Targets early adopters who are willing to pay more.
• Helps recover development costs quickly.
• Used for innovative or premium products (e.g., iPhones, 3D TVs).
• Risk: Competitors may offer similar products at lower prices.
• Best for companies investing in continuous R&D.

2. Penetration Pricing
• Low initial price to attract customers and gain market share.
• Encourages mass adoption quickly.
• Works well in price-sensitive markets.
• Used when the product has minor variations from competitors (e.g., new detergent brands).
• Requires strong financial backup as initial profits may be low.
• Best for companies aiming for high sales volume and long-term market presence.

Both strategies have their pros and cons, and companies choose based on their goals, competition, and product
uniqueness. Let me know if you need more details!

[28/02/25, 5:54:34 PM] .: Product-Mix Pricing Strategies (Simplified)

Companies use product-mix pricing to set prices for related products in their product portfolio. These strategies
help balance demand, cost, and competition.

1. Product Line Pricing

• Different products in a line are priced at varying levels (low, medium, high).
• Example: A clothing store selling suits at ₹7,800, ₹15,000, and ₹24,500 to indicate different quality levels.

2. Optional-Product Pricing
• The base product is priced separately, and additional features cost extra.
• Example: Buying a car with optional add-ons like warranty extension, electric windows, or defoggers.

3. Captive-Product Pricing
• The main product is priced lower, but necessary complementary products cost more.
 • Example: Razors are cheap, but razor blades are expensive; printers are affordable, but ink cartridges are
costly.

4. Two-Part Pricing
• A fixed fee + variable charge based on usage.
• Example: A gym charges a monthly fee + extra fees for personal training sessions; amusement parks
charge an entry fee + extra for specific rides.

5. By-Product Pricing
• Selling by-products to reduce the main product’s price.
• Example: Sugar mills selling leftover molasses to create biofuel, reducing sugar costs.

6. Product Bundling Pricing

• Selling multiple products together at a discount.
• Pure bundling: Sold only as a package.
• Mixed bundling: Sold individually or as a package at a lower price.
• Example: Fast-food combo meals, software suites like Microsoft Office.

7. Premium Pricing
• Higher pricing for advanced or exclusive versions of a product.
• Example: HD televisions are priced higher than regular ones.

8. Image Pricing
• Pricing based on brand perception and competitor pricing.
• Example: Perfumes, designer clothing, or luxury cosmetics being priced higher to indicate exclusivity.

Each strategy helps businesses optimize revenue, cater to different customers, and compete effectively. Let me
know if you need more details!