Wednesday, 20 February 2013

Starting a business – products and pricing

When developing your business, marketing, and operations plans, it is essential to understand your product and its positioning in the market, and to develop a pricing strategy that aligns to this positioning and will be profitable.  Key items you need to consider include:
  • Product components and attributes
  • Product positioning
  • Incorporating service
  • Pricing strategy
Product components and attributes

In basic terms, your product is the item(s) or service(s) that you are offering your customers.  Marketers refer to a product as anything that can be offered to a market to satisfy a want or need. 

Products have three main components:
  • Formal product – This is the actual or perceived physical characteristics of your product including its design, packaging, styling, level of quality, special features, and branding.
  • Core product – This is the intrinsic benefit for the buyer, as opposed to the physical look-and-feel of the goods.  For example, the buyer of a bicycle is really buying a means of transport, the buyer of an anti-aging cream is buying hope, and the buyer of insurance is buying peace of mind.
  • Augmented product – This includes the support items that complete your offering such as delivery, installation, after-sales service, and warranty.