Page 361 - Introduction to Business

CHAPTER 9 Developing the Product and Pricing Mixes 335

cerned. Expressed another way, the resulting price does not recognize demand.
Retailers tend to price on the basis of standard markups because it is easy and sim-
plifies record keeping and inventory control.
Very frequently retailers realize that they have put too high a price on some mer-
chandise or they find that seasonal products like toys have not sold by the end of
the season. In either case, the retailer marks down the items, lowers their prices,
and hopes to move them.
A markdown is usually expressed as a percentage of the selling price. All of us at markdown A reduction in price used by
one time or another have been in stores and have seen signs advertising 20 percent retailers to sell products that have not
already sold
off or 50 percent off, and so on. Most retailers do not have an effective markdown
policy. They tend to start off with a low markdown and then increase it even more
later if the product does not sell. But this is a mistake because it jeopardizes the sell-
ing of the item, and even if the item is sold, it may take a long time to sell it. The best
policy is to make the first markdown high enough to move the merchandise quickly.

Careers in Brand Management

Many manufacturers of packaged consumer goods, such as Procter & Gamble (Tide,
Crisco, Pampers, etc.), Lever Brothers, Pillsbury, and General Mills, are organized on a
brand management basis. Brand managers develop the entire marketing program for
a specific brand or group of brands. Sometimes called product managers, they will
establish goals for their products and the strategies for achieving them. They will
decide on product quality and the product’s package and guarantees. Advertising,
sales promotion, channels of distribution, and logistics decisions will have to be set for
each product. Prices are established for each product and then adjusted according to
market conditions, the state of the economy, and the prices competitors are charging.
In order to effectively manage their products, brand managers must work closely
with various areas of marketing, especially sales, marketing research, and advertising.
Production, finance, and research and development are nonmarketing areas with
which they also need to interface. Customers, advertising agencies, and channels of
distribution are external constituencies that receive a lot of brand managers’ attention.
Before becoming a brand manager, it is normal that four to five years would
have been spent as an assistant brand manager. It is common for brand managers
to be earning about $75,000 a year.

Summary

LEARNING OBJECTIVE 1 design, quality, brand name, package, and warranty, as
Explain how a marketing mix is developed. well as how many product lines will be offered (product
width) and the number of brands or products in each
A company’s marketing mix—its products or services
line (product depth).
and their prices, promotion, and distribution—must
recognize the type of product or service involved and
the markets to which they are directed. Marketing mixes LEARNING OBJECTIVE 3
need to be different for different products and must be Describe the differences between standardization
modified over time. and adaptation strategies.
In marketing products overseas, a standardization
LEARNING OBJECTIVE 2
(same marketing mix as that used domestically) can be
Describe the basic elements of a product.
employed, or an adaptation approach (different
In developing a product, companies must decide on its marketing mix in foreign market).
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