Creating Products and Pricing Strategies to Meet Customers’ Needs
After reading this chapter, you should be able to answer these questions:
- What is the marketing concept and relationship-building?
- How do managers create a marketing strategy?
- What is the marketing mix?
- How do consumers and organizations make buying decisions?
- What are the five basic forms of consumer and business market segmentation?
- What is a product, and how is it classified?
- How do organizations create new products?
- What are the stages of the product life cycle?
- What strategies are used for pricing products, and what are the future trends?
- What trends are occurring in products and pricing?
Rachel Kuhr is the product innovation and development specialist for Mark Cuban’s investments in the ABC show Shark Tank. Two years ago, after watching an episode, Kuhr e-mailed Mark Cuban and attached a resume that highlighted her mechanical engineering and product development expertise. Her approach appealed to Cuban, and she was contacted the next day by Abe Minkara, head of Cuban’s business development team. After a Skype interview in which Minkara was impressed with Kuhr’s skill set of both creativity and attention to process, she was hired to fill that role and work with several start-ups that Cuban acquired an investment in through the show.
Kuhr now coaches and collaborates with over 60 companies that reside in Cuban’s business portfolio. Rather than start out with detailed plans and building sophisticated prototypes, Kuhr favors using things like a whiteboard, Post-it notes, colored pens, and highlighters to sketch out the ideas. Such an approach uses the best practices from brainstorming that allow fatal flaws to steer the direction of product development before spending lots of resources, both human and financial, on a single idea for too long. This approach also allows the product development team to incorporate the user experience, which is sometimes overlooked when the focus is squarely on the product.
One of the companies that Kuhr works with created Chapul Cricket Bars. Chapul Cricket Bars was the first company to use insect-based “flour” in the manufacture of high- energy protein bars. After the deal on Shark Tank, company founder Pat Crowley and Kuhr decided to take the flying insect logo off the product design and renamed the bars with names such as Aztec, Matcha, and Chaco instead of the “Cricket Bar” name.
Another Cuban investment was the Austin, Texas–based BeatBox Beverages. To better understand how typical consumers would relate to boxed flavored cocktails, Kuhr attended several fraternity parties at Southern Methodist University and off-campus bars. She asked questions that addressed how a variety of consumers decide on what to drink on different occasions and in different settings. Since securing a $1 million dollar investment from Cuban, and working with Rachel Kuhr, online and distribution sales through stores has skyrocketed according to Justin Fenchel, BeatBox Beverages’ CEO.
Sources: Cheryl Hall, “Why Rachel Kuhr Is the Innovator for Mark Cuban’s Shark Tank Startups,” Dallas News, https://www.dallasnews.com, accessed October 1, 2017; “About Us,” https://chapul.com, accessed October 1, 2017; “The Story,” https://www.beatboxbeverages.com, accessed October 1, 2017; Teddy Nykiel, “Shark Tank’s Biggest Deals and How They Panned Out,” NerdWallet, https://www.nerdwallet.com, January 9, 2015.
Marketing plays a key role in the success of businesses. It is the task of marketing to generate sales for the firm. Sales revenue, in turn, pays workers’ salaries, buys supplies, covers the costs of new buildings and equipment, and hopefully enables the company to earn a profit. This chapter looks at the nature of marketing and the creation of product and pricing strategies to meet customers’ needs. In this chapter, you will learn about the marketing concept, marketing strategies, and consumer and business buying decisions. You will also see how the marketing mix is used to create sales opportunities. We discuss how new products are created and how they go through periods of sales growth and then decline. Next you will discover how managers set prices to reach organizational goals.