Product Design and Quality

[Student’s Name]

[Institution Title]

[Date of Submission]

Product Design and Quality

Introduction

Advertising is a venue for businesses to communicate with the consumers, particularly their target market (Arens, Weigold, & Arens, 2012). Thus, organizations have invested enormous amount of money to ensure that the advertisements they produce effectively communicate their message to the consumer and it is able to reach the right target market. There are, in fact, several factors that contribute to organization’s building quality into its products. In an article published in 2013, author Beth Ambruch wrote about the forces that transform how products are general made these day and age. This paper would like to discuss these factors that helps build product quality and how it benefits both the organization and the consumers.

Transforming How Products Are Made

One way of transforming and building product quality is through personalization (Ambruch, 2013). There are several ways to personalize products. One is by making products specifically designed for a particular target market. However, another way of personalizing products is developing a unique pricing strategy. There are different types of pricing strategy employed by businesses. Among these include: (a) market-penetration pricing, (b) market-skimming pricing, and (c) product bundle pricing.

Market-Penetration Pricing

  A market-penetration pricing strategy assumes to generate a maximum share of the market. It is employed by businesses believing that by offering the lowest possible price in the market would yield a bigger market share. They assume that a bigger market share would equate to large volume of sales, which would eventually create greater long-run profit. In the book entitled “Marketing Management”, authors Philip Kotler and Kevin Lane Keller defined market-penetration pricing as “…pricing strategy employed in marketing where businesses begin with offering their prices at a very low price to initiate a greater volume in sales believing that consumers are price-sensitive because this approach is perceived to bring greater productivity gains” (2012, p. G5). One company that employs this pricing strategy is Wal-Mart. In 1994, a new slogan was adapted by Wal-Mart, which was the general theme of the business— “Always the low price. Always” (Elliott, 1994). While many critics feel that it will not work for any company, Wal-Mart has proven them wrong with a total sales revenue of US$ 473 billion in 2013 (University of San Francisco, 2015, p.4). According to the authors of the report, Wal-Mart has been successful at employing this pricing strategy because of four elements in the company’s supply chain process.

Market-Skimming Pricing

A marketing and management book defined market-skimming pricing, as “another type of pricing strategy where businesses start by offering their product at a very high price and gradually lowering down their introductory price over time because these companies would like to maximize their profit as derived from consumers who are less price-sensitive” (Kotler & Keller, 2012, p.G5). One perfect example of a company who does this is Apple, Inc. Although te said practice has boomeranged once (Krazit, 2007), Apple continues to launch their latest products at a very high price. Nevertheless, gradually the prices of Apple products would significantly lessen as new models are launched. Despite suggesting that this can be fatal for an organization especially if the competitors decided to sell at a low price, Apple, Inc. does not seem to worry about it considering that the comapany has already secured a loyal market-base who will patronize their product at any given price.

Product Bundle Pricing

            Bundle pricing is a pricing strategy where sellers package products and/or features together and market the said product at a reduced cost compared to when consumers would buy two products separately (Martin, 2014). While there had been very limited literature that discusses this marketing strategy, this is no less evident in the market. Supermarkets typically employs this strategy especially with slow-moving products. Usually, sellers bundle slow-moving product with fast-moving product and offer it a slightly lower price. While consumers think they are saving money from buying bundles they are not aware that the sellers are selling them an item they don’t exactly need. This is a common practice now for smart-phone manufacturers. They bundle the features of a camera, an MP3 player, a gaming console, among other things on a mobile phone unit and market the product as having to have everything one needs in one small, portable package.

References

Ambruch, B. (2013, October 21). Forbes’ BrandVoice: The Forces That Are Transforming How Products Are Made. Retrieved from Forbes Website: http://www.forbes.com/sites/ptc/2013/10/21/the-six-things-that-are-transforming-how-products-are-made/#1acbc8856155

Arens, W., Weigold, M., & Arens, C. (2012). Contemporary Advertising: And Integrated Marketing Communications. New York, NY: McGraw-Hill Education.

Elliott, S. (1994, May 26). The Business Media Advertising: Wal-Mart to Change Its ‘Always’ Slogan. Retrieved from The New York Times Website: http://www.nytimes.com/1994/05/26/business/the-media-business-advertising-addenda-wal-mart-to-change-its-always-slogan.html

Krazit, T. (2007, September 7). Apple to offer $100 store credit to iPhone customers. Retrieved from CNET Website: http://www.cnet.com/news/apple-to-offer-100-store-credit-to-iphone-customers/

Martin. (2014, August 7). Pricing: Marketing Mix, Pricing in 4P’s. Retrieved from Cleverism Website: http://www.cleverism.com/pricing-four-ps-marketing-mix/