Chapter 11 - Penetration

In chapter 11, Professor Featherman discusses product pricing and the various pricing strategies. One must consider several factors when setting the price including competition, fixed costs, variable costs, and demand. One strategic approach to setting the price of a new product is called price penetration. Professor Featherman defines price penetration as a "pricing strategy in which a firm introduces a new product at a very low price to encourage more customers to purchase it". The combination of a new product and the fact that it is offered at a cheap price provides consumers with more of an incentive habitually purchase the product with little or no cognitive reasoning. One recent example of a price penetration is Taco Bell's new value menu. Amongst the midst of other fast food dollar menus (offering their products for $1.00), Taco Bell recently introduced several new items on their value menu offered at 79, 89, 99 cents. Again, the combination of new items on their value menu and the cheap price they sell for makes Taco Bell's value menu a perfect example of price penetration.

Chapter 10 - Service Scape

In chapter 10, Featherman describes the concept of services, in comparison to products, and explains how services are often a combination of many services in unison. For example, he states that services are consist of core and augmented services. Core services refer to the initial service sought out by a consumer and augmented services refer to the additional provided services that enhance the value of the core service. In addition, Featherman states that a company's service scape is also crucial in maintaining a desired rate of consumption and keep consumers returning to receive the services you provide. A service scape can be defined as "the actual physical facility where the service is performed, delivered, and consumed" and is often foolishly overlooked by service providers. It is important to consider that while receiving or waiting for a service, consumers want to remain calm and comfortable. Ensuring this assumption will no doubt result in the return of previous consumers. A hospital lobby is an excellent example of what it means to have an effective service scape, and can be seen above. The unfortunate truth is that behind locked hospital doors there is a lot of blood, panic, and hysteria. In order to hinder this realization, hospital lobby's are often very elegant, play soothing music, and have dim lighting in order to help comfort already anxious patients. The combination of the core service at hospitals (treatment) and the augmented services provided by the service scape make it easy to see why so many people turn to hospitals each day.

Chapter 8 - Prototyping

In Chapter 8, Professor Featherman discusses the process of introducing new products into the marketplace. After brainstorming and researching a potential product, most innovative companies choose to develope a prototype prior to the product's release. Professor Featherman states that prototypes are simply "test versions of a proposed product" evaluated by potential investors and consumers. Prototyping has proved time and time again to be an accurate forecast as to how consumers will react to the product. Often used in focus groups, prototypes give potential consumers the opportunity to phsyically hold or experience a product and, in turn, praise or critique it. The picture above depicts a protoype of Aptera's Electric Hybrid Car which was no doubt tested and evaluated by investors and consumers alike. By allowing potential consumers to handle a new, innovative product, market researchers can gain more insight as to how to product will do in the future. In fact, the insight gained from Aptera's Electric Hybrid Car prototype must have been significant, considering the fact that these environmentally friendly vehicles have entered production!

Chapter 9 - Packaging

The concept of product line management is outlined in Chapter 9. Product line management is a general term used to describe the life of a product, licensing and co-branding, and the potential consequences of maintaining a product line. Perhaps of the most important aspect of product line management is developing a product's package. In some cases, while out shopping consumers purchase products that simply catch their eye and spark their interest. However, poor packaging can negate this possibility if the consumer does not know who created the product they are looking at, what its primary function is, and detailed instructions on how to use it. I posted a picture of Kraft Macaroni and Cheese which clearly displays how to properly package a product. The brand of Macaroni (Kraft) placed at the top of the box, an image of what the intended meal will look like is located in the center, and detailed instructions on how to prepare the macaroni is given on the side. Without properly communicating to your intended customer base, poor packaging will lead to forgone revenue allocated elsewhere due to frustrated and confused consumers.

Chapter 8 - Product Complexity

The introduction of new products and innovation is the primary topic of Chapter 8. Whenever a new product reaches the market it must undergo several tests of profitability, one of which is complexity. Featherman describes complexity as "the degree to which consumers find a new innovation or its use difficult to understand, learn and use". A product's complexity is a huge factor to consider when preparing to enter your product into the market. If a product is too complex, it may leave many consumers frustrated and unsatisfied with their purchase, something all organizations obviously try to avoid. However, over time, the complexity of a product may decrease as individuals become more exposed to similar products and more familiar with the complexity level assoicated with recieving the desired benefit/need from a product or service. Consider, for instance, the complexity of the world's first computers, as seen above. Early computers had to be housed in entire rooms and run by several people, clearly indicating the complexity of such a product. Therefore, it is not hard to see why computer popularity did not begin to increase until after the promotion and release of the personal desktop computer, a modernized computer that was much easier to operate than eariler models.

Chapter 7 - Demographics

Perhaps one of the most important aspects of marketing is covered in Chapter 7. Of the course of this chapter, Professor Featherman discusses the concept of target marketing, which he defines as "the market segments on which an organization focuses its marketing plan and toward which it directs its marketing efforts". By specifically "targeting" a certain type of individual, companies can create products/services that appeal to their target market and can generally assume the same purchasing habits amongst the entire target market. In order to gain enough information about a desired target market, market researchers often turn to demographics in order to propell themselves into deeper, more extensive, target market research. Featherman defines demographics as "statistics that measure observably aspects of a population, including size, age, gender, ethnic group, income, education, occupation, and family structure". When a market researcher acquires the demographics of a certain area, they can predict how their product/service will do considering the amount of individuals in the area that can be classified as a target market. Demographics can reveal a small target market in a previous assumed profitable area and discover a large target market in a region they least expected. An extremely general example of demographics can be seen in the picture above, classifying Facebook use per country during January 2008. If, for example, a company wanted to promote a product in February via an online networking website, this graph indicates that the target market would most likely be located in the U.S., U.K., and Canada, the top three countries with the most Facebook use in January 2008.

Chapter 6 - Inelastic Demand

Business to Business relations is the primary focus of Chapter 6. Throughout the chapter, Professor Featherman discusses the various forms of business to business relations such as B2B e-commerce, B2B markets, and purchase/selling techniques frequently used between partnering organiztions. In Business to Business markets, companies supply one another with essential parts, ingredients, and materials needed to run their organization. Often times, these Business to Business relations reflect the concept of inelastic demand. Featherman states that inelastic demand occurs when there is a "demand in which changes in price have little or no effect on the amount demanded". Many organizations simply cannot bounce around from one supplier to the next, thus creating inelastic demand for many business to business relations in which organizations are willing to pay for the product being supplied despite flucuations in price. The graph above depicts an inelastic demand. With quantity demanded on the X axis and price on the Y axis, it is easy to see that reasonable variations in price have little effect on the actual quantity demanded.