222 ENTREPRENEURSHIP
- Sellers can charge different prices in different markets, when the market is defined
as the circumstances of location and cost. - If the costs of serving a market are variable, then the prices charged in those mar-
kets may also vary, as, for example, trade discounts and volume discounts. - Lower prices are legal if they are necessary to meet the competition—e.g., dis-
counts for children and senior citizens, and group rates on travel and insurance.
Arbitrary and capricious pricing is bad business and may be against the law. It is bad
business because it affects the value relationship in unanticipated ways. Customers who
receive products or services with unpredictable value are not likely to be happy or sat-
isfied.
Product and Service Decisions. Product decisions determine the bundle of physical
and psychological attributes that form or are associated with the core benefit to be
delivered. A productcan be defined as “anything that can be offered to a market for
attention, acquisition, or consumption.”^21 In the case of a physical product, entrepre-
neurs make decisions about style, packaging, colors, sizes, and extras that can be pur-
chased separately. The product decision also includes the desired product image, the
likelihood that the product can be branded, and whether warranty and after-sale serv-
ice will be provided.
The product mix of a new venture may consist of a single product of a single design.
However, because many companies are launched with more than one product, we dis-
cuss a product mixwith three attributes. Product widthmeans the number of differ-
ent product lines the company offers. Product depthrefers to the average number of
items offered by the company within each product line. Product consistencyrefers to
how closely related the various products are in terms of end use, production and distri-
bution requirements, target markets, or segment appeal.
Service-related decisions parallel product-related decisions with a few important dif-
ferences. Services usually incorporate some degree of customer involvement and partic-
ipation. Part of the service design decision involves the extent of this cooperation. For
example, in the design and delivery of educational services, the customer’s involvement
can range from passive listener to active “hands-on” learner. Restaurants can be
designed with various levels of involvement, from traditional table service to self-serv-
ice salad bars to cafeteria-style self-service and table clearing. The three major service-
related decisions are:- Service Intensity—the degree of depth and development the customer experiences.
Roller-coasters provide an intense experience within a narrow—literally confined to
the track—service range. Package delivery services are less intense, but extensive. - Service Extensiveness—the range or scope of the services. The package-delivery
service can deliver a wide variety of parcels just about anywhere in the world. The
more subservices or variations provided, the more extensive the service. - Service Time—the pervasive decision for service design. When will the service be
available and how long will it take? Will services be provided continuously or will
interruptions be acceptable and appropriate? How frequently can the service be pro-
vided while maintaining server quality and customer interest?