Marketing Elements: Product, Brand and Pricing Strategies
The Elements of Marketing — The Product
The product
Product is an essential element of marketing, since it is the object through which the company is able to influence the market. The product is everything you want to buy.
You can define a product as a unit or property with a high degree of substitution between them.
Companies seek to create monopolies with their products to differentiate them from other competitors.
Packaging and presentation
The packaging and how to present the product are very important; a good presentation can become the stimulus that leads to purchase. It should be borne in mind that a consumer will often choose the product that is best presented even if it is just a little bit more expensive. The package, besides being attractive, must be practical.
The company also uses the trademark to differentiate their products from competitors’ products.
Brand
The brand is a combination of factors used to identify the goods and services that the company manufactures. If the consumer has a need for security, they may become loyal to a brand. The brand has to be legally protected by registration in the official record.
The brand name must be short and easy to remember.
Life cycle of a product
Products have a life cycle. The duration of a product’s life varies greatly according to its nature.
Features and stages
- Launching stage: consists of introducing a new product to the market.
- Growth stage: the product begins to be known.
- Maturity stage: sales start to stabilize and are maintained more or less for some time.
- Saturation/Decline stage: sales fall during this stage. The company must consider a product relaunch.
The study of the life of a product is very important for defining an adequate marketing policy. Launching a product to market involves many important costs, especially promotion costs. At the growth stage, products can become profitable and attract competition; at maturity, profits are relatively stable; in the saturation or decline stage, profits decrease or disappear.
Prices
Price is the amount of money the buyer of a specific good delivers to the seller in exchange for it. Price is the marketing variable that can change most rapidly and has a strong influence on decisions. The price of a product depends not only on the company’s objectives but also on market conditions and demand.
Pricing based on economic theory
According to economic theory, a company may set price with the objective of maximizing revenue. Lowering some prices can lead to higher sales, and if demand is relatively inelastic, raising price may increase revenue.
Price elasticity of demand measures the quantity demanded and the percentage variation experienced when price changes. If elasticity is greater than one, demand is elastic; if the value is less than one, demand is inelastic.
Cost-based pricing
Cost-based pricing consists of setting the price by adding a certain profit margin to the product cost, regardless of demand.
Competition-based pricing
Competition-based pricing watches the market and may follow several approaches:
- Fix a price similar to the competition — when the product is little different from that of the competition.
- Below competition — intended to compensate for a lower price with more customers.
- Above the competition — when the customer believes that the product is better than the competition.
- Follow guidelines of the market leader — set similar pricing to the leading company.
- Independent or smaller firms that lack resources to set prices strategically may get into a price war, which is detrimental to small and medium enterprises (SMEs).
Other pricing techniques
Other techniques include setting the product price by quantity (bulk discounts) or using psychological pricing, suggesting that a price is less than it really is (for example, $9.99 instead of $10.00).