Ittakes a chain of inter-connected decisions to provide a product tothe market. These decisions range from product brand, price,distribution/ place and promotion decisions amongst others. In eachof this decisions, the management must seek to consider factorswithin the organization as well as the surroundings to ensure thatthe best decision is adopted. The goal is to increase sales andimprove the organization’s profitability. As such, each of thesedecisions must be made carefully and strategically. Which productdecision would be better (market-wise) than the other form orfunction? Which pricing decision would achieve more sales than theother value or cost pricing?
PartA: With Products, Is It Form or Function?
Productdesign is also known as brand form. These are the discreet propertiesor characteristics of a product. Product design includes activitieslike packaging. Packaging is very important in that it is the firstthing that customers look at when faced with a situation where manyproducts are available. A good product design will communicate to thecustomer effectively. The survey indicates that most purchases,more than half, are made from emotions. This means that the customerswill associate the packaging color or advertisements to certainelements in their minds. A good example is the coca cola companywhich associates its product design to sharing love.
Productfunctionalities, on the other hand, are the activities that a producthas been set to perform. It is suited to provide for the needs of theconsumer by performing specific activities. This is important tobrand success because the key driver for a consumer’s intention topurchase is the product’s use. With the market saturated,organizations are laying down strategies to retain the number ofloyal customers. This makes product functionality a key factor. Agood example is the skull candy earphones they do not have anappealing look like the beats earphones, but some customers preferthe sound quality of the skull candy.Despitethe fact that both have individual benefits, product functionality ismore important than product design. Consumers buy products to satisfyspecific needs. The extent to which product will satisfy the specificneeds plays a major role in determining the consumer’s futurepurchasing decisions and pattern. As pointed out earlier, the mostimportant thing in marketing through products is customer retention.Product functionality is perfect on customer retention than itsdesign. The design is only good for attracting first-time customersbut not retaining them. Besides, you have to keep coming up with newideas to attract customers as there are many different products outthere. How will you maintain these customers with the high rate ofcompetition? The target here is getting the loyalty from thecustomers. This can only be done by producing products which performto their satisfaction (Ziamou & Ratneshwar, 2011). It can also bedone by providing the best customer care services for customers whichare perceived as part of the product. The significance of productfunctionality over its design is, however, dependent on the type ofthe product. For instance, the performance level of a high price andhigh use product should satisfy the customer more than that of a lowprice and low use. PartB: Is the Right Price a Fair Price?Pricesshould be set depending on the customer’s willingness to pay forthe products. This is because, consumer price a product depending onthe perceived quality. Unlike the in the past, today customers arewell aware of the range within which the price of commodities shouldfall. The market has information symmetry. For brands consideredprestigious, consumers are willing to pay more. They know that forthem to enjoy a certain level of luxury they have to pay a certainprice range for a product. Consumers also use price to make anestimate of the value of a product in the market. Like forprestigious commodities, consumers are willing to pay more forproducts or services perceived to be of a high value (Ziamou &Ratneshwar, 2011). Pricesshould also reflect the cost involved in making the product. This isbecause to make profit one has to factor in all costs involvedincluding, overhead costs like shipping and rent and variable costslike labor cost and raw materials. This is the most used strategy ofpricing. After the costs are calculated, then prices arepre-determined. If the prices set do not cover all cost, then therewill be continuous resource allocation that, will, in the long run,lead to the collapse of the business. For successful pricing, profitsshould also be included in the total cost.Pricingshould be based on what consumers are willing to pay for as opposedto the cost. The value of the product is very important because itdefines the worth of the product. Many organizations fail to capturetheir consumers’ willingness to pay for a product. A good exampleis the BMW. This organization created a high perceived value fortheir products to the customers. They, however, failed to utilize thehigh perceived value to adjust prices. Organizations may not make alot of profit if they price their products based on the cost because,in most cases, the value of a product is considerably higher than itscost of manufacturing (Monroe, 2010). After a firm realizes the valuefor its product they then provide incentives to the customers. Anexample is the Netflix Company which increased its payment packagesbut allowed already registered clients to pay using old rates for twoyears. This implies that the value of a product is arrived at bylooking at the consumers’ needs, pains, and gains (Ziamou &Ratneshwar, 2011). By so doing, the pricing rates reached lead to awin- win situation for both the organizations and the consumer asopposed to a win-lose.Conclusion Fromthe above discussion, it is well evident that focusing on theproduct’s function is more important than focusing on its form(design). This does not mean that the organization should entirelyignore the product’s design. The best decision is to focus on boththe design and the performance so that the organization can attractand retain both categories of customers. It is also evident thatpricing based on value is more profitable to the organization thanpricing based on the cost of the product. However, this does not meanthat the organization should entirely ignore the cost of the productwhen making pricing decisions. An ideal combination of the twoconsiderations should be made in an attempt to ameliorate the risk ofsuffering loss. References
Ziamou,P., &Ratneshwar, S. (2011). Innovations in product functionality:When and why are explicit comparisons effective?.Journalof Marketing,67(2),49-61.