Marketing Mix Example - 4Ps

7 p’s of marketing
product

Definition
The end result of the manufacturing process, to be offered to the marketplace to satisfy a need or want is recognized as
product.

Product Mix
Product mix is a combination of products manufactured or traded by the same business house to reinforce their presence in the market,
increase market share and increase the turnover for more profitability. Normally the product mix is within the synergy of other
products for a medium size organization. However large groups of Industries may have diversified products within core competency.
Larsen & Toubro Ltd, Godrej, Reliance in India are some of the examples.

One of the realities of business is that most firms deal with multi-products .This helps a firm diffuse its risk across different product
groups/Also it enables the firm to appeal to a much larger group of customers or to different needs of the same customer group .So
when Videocon chose to diversify into other consumer durables like music systems ,washing machines and refrigerators ,it sought to
satisfy the needs of the middle and upper middle income group of consumers.

Likewise , Bajaj Electricals.a household name in India, has almost ninety products in i8ts portfolio ranging from low value items like
bulbs to high priced consumer durables like mixers and luminaires and lighting projects .The number of products carried by a firm at a
given point of time is called its product mix. This product mix contains product lines and product items .In other words it’s a
composite of products offered for sale by a firm.

Product Mix Decisions

Often firms take decisions to change their product mix. These decisions are dictated by the above factors and also by the changes
occurring in the market place. Like the changing life-styles of Indian consumers led BPL-Sanyo to launch an entire range of white
goods like refrigerators , washing machines, and microwave ovens .It also motivate the firm to launch other entertainment electronics.
Rahejas, a well-known builders firm in Bombay, took a major decision to convert one of its theatre buildings in the western suburbs of
Bombay into a large garments and accessories store for men ,women and children, perhaps the first of its kind in India to have almost
all products required by these customer groups Competition from low priced washing powders (mainly Nirma) forced Hindustan
Levers to launch different brands of detergent powder at different price levels positioned at different market segments .Customer
preferences for herbs, mainly shikakai motivated Lever to launch black Sunsilk Shampoo ,which has shikakai .Also ,low purchasing
power. and cultural bias against shampoo market made Hindustan Lever consider smaller packaging mainly sachets , for single use
.So, it is the changes or anticipated changes in the market place that motivates a firm to consider changes in its product mix.

New product development

business and engineering, new product development (NPD) is the term used to describe the complete process of bringing a new
product or service to market. There are two parallel paths involved in the NPD process: one involves the idea generation, product
design, and detail engineering; the other involves market research and marketing analysis. Companies typically see new product
development as the first stage in generating and commercializing new products within the overall strategic process of product life
cycle management used to maintain or grow their market share.

The process

1. Idea Generation is often called the "fuzzy front end" of the NPD process
o Ideas for new products can be obtained from basic research using a SWOT analysis (Strengths, weaknesses,
Opportunities & Threats), Market and consumer trends, company's R&D department, competitors, focus groups,
employees, salespeople, corporate spies, trade shows, or Ethnographic discovery methods (searching for user patterns
and habits) may also be used to get an insight into new product lines or product features.
o Idea Generation or Brainstorming of new product, service, or store concepts - idea generation techniques can begin
when you have done your OPPORTUNITY ANALYSIS to support your ideas in the Idea Screening Phase (shown in
the next development step).
2. Idea Screening
o The object is to eliminate unsound concepts prior to devoting resources to them.
o The screeners must ask at least three questions:
 Will the customer in the target market benefit from the product?
 What is the size and growth forecasts of the market segment/target market?
 What is the current or expected competitive pressure for the product idea?
  What are the industry sales and market trends the product idea is based on?
 Is it technically feasible to manufacture the product?
 Will the product be profitable when manufactured and delivered to the customer at the target price?
3. Concept Development and Testing
o Develop the marketing and engineering details
 Who is the target market and who is the decision maker in the purchasing process?
 What product features must the product incorporate?
 What benefits will the product provide?
 How will consumers react to the product?
 How will the product be produced most cost effectively?
 Prove feasibility through virtual computer aided rendering, and rapid prototyping
 What will it cost to produce it?
o Testing the Concept by asking a sample of prospective customers what they think of the idea. Usually via Choice
Modelling.
4. Business Analysis
o Estimate likely selling price based upon competition and customer feedback
o Estimate sales volume based upon size of market and such tools as the Fourt-Woodlock equation
o Estimate profitability and breakeven point
5. Beta Testing and Market Testing
o Produce a physical prototype or mock-up
o Test the product (and its packaging) in typical usage situations
o Conduct focus group customer interviews or introduce at trade show
o Make adjustments where necessary
o Produce an initial run of the product and sell it in a test market area to determine customer acceptance
6. Technical Implementation
o New program initiation
o Resource estimation
o Requirement publication
o Engineering operations planning
o Department scheduling
 Supplier collaboration
o
Logistics plan
o
Resource plan publication
o
Program review and monitoring
o
Contingencies - what-if planning
o
7. Commercialization (often considered post-NPD)
o Launch the product
o Produce and place advertisements and other promotions
o Fill the distribution pipeline with product
o Critical path analysis is most useful at this stage

These steps may be iterated as needed. Some steps may be eliminated. To reduce the time that the NPD process takes, many
companies are completing several steps at the same time (referred to as concurrent engineering or time to market). Most industry
leaders see new product development as a proactive process where resources are allocated to identify market changes and seize upon
new product opportunities before they occur (in contrast to a reactive strategy in which nothing is done until problems occur or the
competitor introduces an innovation). Many industry leaders see new product development as an ongoing process (referred to as
continuous development) in which the entire organization is always looking for opportunities.

For the more innovative products indicated on the diagram above, great amounts of uncertainty and change may exist, which makes it
difficult or impossible to plan the complete project before starting it. In this case, a more flexible approach may be advisable.

Because the NPD process typically requires both engineering and marketing expertise, cross-functional teams are a common way of
organizing projects. The team is responsible for all aspects of the project, from initial idea generation to final commercialization, and
they usually report to senior management (often to a vice president or Program Manager). In those industries where products are
technically complex, development research is typically expensive, and product life cycles are relatively short, strategic alliances
among several organizations helps to spread the costs, provide access to a wider skill set, and speeds the overall process.

Also, notice that because engineering and marketing expertise are usually both critical to the process, choosing an appropriate blend of
the two is important. Observe (for example, by looking at the See also or References sections below) that this article is slanted more
toward the marketing side. For more of an engineering slant, see the Ulrich and Eppinger, Ullman references below.
Chapter 11: Managing Products And Brands
•
I. PRODUCT LIFE CYCLE
o A way to trace the stages of a product's acceptance from its introduction to its demise.
o One of the most familiar concepts in marketing
o A prevalent marketing management tool
o Refers to the life of the product category
o The time a product category spends in a stage of the product life cycle may vary from a few weeks to decades.
o Does not predict how long a product category will remain in any one stage
o A tool to help marketers understand
 where their product is now
 what may happen

 which strategies are normally appropriate.

•

A. Introduction Stage
Sales grow slowly Profit is minimal or negative
Create awareness Stimulate trial
High production costs Limited product models
Frequent product modification Penetration pricing
Skimming pricing Little competition
High failure rate, High marketing costs
Promotion strategy focuses on primary demand for the product category
developing product awareness Informing about product benefits.
Intensive personal selling to retailers and wholesalers is required.

B. Growth Stage
Characteristics
Sales grow at an increasing rate. Many competitors enter the market.
Large companies may acquire small pioneering firms. Profits are healthy
Promotion emphasis
heavy brand advertising Differences between brands.
Gaining wider distribution is a key goal
Toward the end of this stage
prices normally fall profits reach their peak.
Development costs have been recovered Sales volume has created economies of scale.

•
 C. Maturity Stage
Sales continue to increase but at a decreasing rate
Annual models of many products
Product lines are widened or extended
Heavy promotions to both the dealers and consumers are required.
The marketplace is approaching saturation
An emphasis on product style rather than function
marginal competitors begin dropping out of the market.
Prices and profits begin to fall.

D. Decline Stage
Signaled by a long-run drop in sales. Falling demand forces many competitors out of the market
The rate of decline is governed by

a. how rapidly consumer tastes change or

A few small specialty firms may still manufacture the product.
b. how rapidly substitute products are
adopted.
Strategies
Deletion. Dropping a product from the company’s product line, is the most drastic strategy.
Harvesting Company retains the product but reduces marketing support
To prevent slipping into decline o Promote more frequent use of the product by current customers
o Find new target markets for the product
o Find new uses for the product
o Price the product below the market
o Develop new distribution channels
o Add new ingredients
 o Delete old ingredients

o Make a dramatic new guarantee

E. Some Dimensions of the Product Life Cycle

1. Length of the Product Life Cycle
There is no exact time that a product takes to move through its life consumer products usually have shorter life cycles than business
cycle products
Mass communication shortens life cycles Rate of technological change shortens product life cycles.
2. Shape of the Product Life Cycle
o There are several distinctive life-cycle curves

o Each type suggests different marketing strategies

o Significant education of the customer is required.

o Extended introductory period.

o Sales begin immediately
o Little learning is required by the consumer

o Benefits of purchase are readily understood.

o Most often appear in women’s and men’s clothing
styles.

o Length of the cycles may be years or decades.

 o Rapid sales on introduction
o Equally rapid decline.

o Often novelties and have a short life cycle.

3. The Product Level:

Multiple life cycles (class and form) may exist.
o Entire product category or industry
Product class
o Such as video game consoles and software.
o Variations within the class
Product form
o Such as the computing capability of game consoles.
4. The Life Cycle and Consumers
A product diffuses, or spreads, through the population, a concept called the diffusion of innovation.
 o Eager to try new ideas and products
o Have higher incomes
Innovators 2.5%
o Better educated than noninnovators
o Much more reliant on group norms
o Oriented to the local community
Early Adopters 13.5%
o Tend to be opinion leaders.
o Collect more information
o Evaluate more brands than early adopters.
Early Majority 34%
o Rely on friends, neighbors, and opinion leaders for information and norms.
o Adopt because most of their friends have already done so.
o For them, adoption is the result of pressure to conform.
Late
34% o Are older than the others
Majority
o Tend to be below average in income and education.
o Do not rely on the norms of the group.
o Independent because they are tradition-bound
o Have the lowest socioeconomic status
Laggards 16%
o Are suspicious of new products

o Alienated from an advancing society

Common reasons for resisting a product in the introduction stage are
usage barriers product is incompatible with existing habits
value barriers product provides no incentive to change
risk barriers physical, economic, or social
psychological barriers cultural differences or image.
 Product Characteristics and the Rate of Adoption
o The degree of difficulty involved in understanding and using a new product.
Complexity
o Slows diffusion.
o The degree to which the new product is consistent with existing values and product
knowledge, past experiences, and current needs.
Compatibility
o Incompatibility slows diffusion.
o The degree to which a product is perceived to be superior to existing substitutes.
Relative advantage
o Speeds diffusion
o The degree to which the benefits and other results of using a new product can be
observed by others and communicated to target customers.
Observability
o Speeds diffusion
o is the degree to which a product can be tried on a limited basis.
Trialability
o Speeds diffusion
Marketing Implications of the Adoption Process
o Word-of-mouth communication
Two types of communication aid the
diffusion process
o Marketing to consumers
The effectiveness of different messages and appeals depends on the type of adopter targeted.


II. MANAGING THE PRODUCT LIFE CYCLE
A. Role of a Product Manager
 o Product manager is responsible for marketing products through the successive stages of their life cycles.
o Product (or brand) manager manages the marketing efforts for a close-knit family of products or brands.
o Three ways to manage:
 modify the product
 modify the market

 reposition the product.

B. Modify the Product
o Altering a product’s characteristic to try to increase and extend the product’s sales.
 quality
 performance

 appearance,
C. Modify the Market Market
o Finding new users.
modification strategies o Increasing use among existing users.
involve:
o Creating new use situations.
D. Reposition the Product
Product repositioning o Changing the place a product occupies in a consumer’s mind relative to competitive products.

o Reposition a product by changing one of four marketing mix elements.

Four factors that trigger a repositioning action are:
Reacting to a Competitor’s
o Competitor’s position is adversely affecting sales and market share.
Position.
Reaching a New Market. o Repositioning a product allows it to reach a new market.
Catching a Rising Trend. o Changing consumer trends can also lead to repositioning a product.
 o For example, consumer interest in “functional foods” that offer health and dietary benefits
beyond nutrition inspired repositioning of oatmeal.
o adding value to the product (or line)
o Additional features
Trading up
o Higher quality materials.
Changing the Value o Reducing the number of features
Offered. o Lower quality
Trading o Lower price.
down
o Reducing the content of packages without changing package size and maintaining
the package price.

III. BRANDING AND BRAND MANAGEMENT

Branding Decisions
A name, term, symbol, design, or combination thereof that identifies a seller's products and differentiates them from competitors'
Brand
products.
Brand name That part of the brand that can be spoken..
Brand mark The element of the brand that cannot be spoken, such as symbols
Trade name commercial, legal name under which a company does business.
Trademarks
Legal term indicating the owner's exclusive right to use the brand or part of the brand.
Phrases, Abbreviations, Symbols, Shapes and Color o Failure to protect trademarks may make product names
combinations may also qualify for trademark protection. generic.
The MARK has to be used continuously to be protected o All of the products below were trademarked.
Rights to a trademark continue for as long as it is used.
Others are prohibited from using the brand without permission. o Some still are!
A service mark performs the same functions for service o aspirin
businesses. o formica®
Lanham Act of 1946 protects Trademarks o sheetrock®
o band-aid®
1. Sets severe penalties for trademark infringement. o kerosene
o styrofoam®
2. The injured party can sue for triple damages and o dry ice
recovery of any profit. o magic marker®
Generic product name identifies a product by class or type and o trampoline
cannot be trademarked o dumpster®
o nylon
o vaseline®
o escalator
o ping-pong®

o yo-yo
Benefits of Branding
The brand allows the product to be differentiated from others and serves as an indicator of quality to
Identification
consumers
Encourages repeat sales
Facilitates New Product Introduction Because a familiar brand is more quickly accepted by consumers.
o product counterfeiting has been a growing problem.

o Counterfeit products can steal sales from the original manufacturer or hurt the company’s reputation.
Some Branding Concepts
o The value of company and brand names.
o the added value a given brand name gives to a product beyond the functional benefits provided.
Brand Equity
o Often represented by the premium a consumer will pay for one brand over another when the functional
benefits provided are identical
Brand Loyalty Consistent preference for one brand over all others. Leads to repeat purchases.
Brand Identity important to developing brand loyalty
A brand so dominant in consumers' minds that they think of it immediately when a product category, use situation, product
Master Brand
attribute, or customer benefit is mentioned.
A. Brand Personality and Brand Equity
Brand Equity has two distinct advantages:
1. Brand equity provides a competitive advantage.

2. Consumers are often willing to pay a higher price for a product with brand equity.
1. Creating Brand Equity
o Brand equity is created by marketing programs
o Forge strong, favorable, and unique consumer associations and experiences with a brand

o Sequential four-step building process:

1. Develop positive brand awareness and an association in consumer’s minds with a product class or need to give a brand an
identity.
2. Establish a brand’s meaning in the minds of consumers.
3. Elicit the proper consumer responses to a brand’s identity and meaning.
4. Attention to how consumers think and feel about a brand.

5. Create a consumer-brand resonance evident in an intense, active loyalty relationship between consumers and the brand.
2. Valuing Brand Equity
o Brand equity is a financial advantage for the brand owner.
o Established brands are considered intangible assets.
o Can appreciate in value when effectively managed

o Can lose value when not managed properly.

B. Licensing
o Licensing is a contractual agreement whereby a company allows another firm to use its brand name, patent, trade secret, or
other property for a royalty or a fee...

o Licensing also assists companies in entering global markets with minimal risk.
C. Picking a Good Brand Name
o Describe product benefits.
o Be memorable, distinctive, and positive.
o Fit the company or product image.
o Have no legal or regulatory restrictions.
A good brand name should
o Be simple and emotional.

o Be carefully checked for prior impressions or undesirable

images in different languages and cultures..
D. Branding Strategies
1. Manufacturer Branding.
o Use one name for all its products.
o Called blanket branding strategy
Multiproduct branding
o Called family branding strategy.
o Makes possible line extensions
 o Subbranding combines a family brand with a new brand.
o Allows for brand extension
 Using a current brand name to enter a completely different product class.
 Too many uses for one brand name can dilute the meaning.
o Co-branding
 The use of a combination of brand names to enhance the perceived value of a product
 May be used to identify product ingredients or components.
 May be used when two organizations wish to collaborate to offer a product.

 Adds value to products that are generally perceived to be homogeneous shopping goods.
multibranding o giving each product a distinct name.
o Use when each brand is intended for a different market segment.
o Has become more complex in the global marketplace.
o Promotional costs are higher with multibranding.
o Euro-branding,
 Use the same brand name for the same product across all countries in the European Union.

 Makes Pan-European advertising and promotion programs possible.

2. Private Branding.
o Often called private labeling or reseller branding

o Use the brand name of a wholesaler or retailer.

Manufacturer's Brands vs. Private Brands
Advantages of Advantages of
Manufacturer's Brands Private Brands
to retailers or wholesalers to retailers or wholesalers
o Can enhance retailer's image o Higher gross margin
o can carry lower inventory o Manufacturer can not discontinue
 o ties consumer to dealer
o ties salespeople to dealer
o manufacture gets the blame for problems
o dealer controls marketing mix
Disadvantages (risks) of Disadvantages (risks) of
Manufacturer Brands Private brands to
retailers or wholesalers retailers or wholesalers
o Higher marketing costs
o Must buy in large quantities
o Lower margins o Dealer gets the blame for problems

o risk of lower perceived quality

3. Mixed Branding.
o A compromise between manufacturer and private branding
o A firm markets products under its own name and that of a reseller

o The segment attracted to the reseller is different from the manufacturer’s own market.
4. Generic Branding.
o a no-brand product that competes on price.
o Low cost, no frills
o Popular in late 1970's
o 30%-40% cheaper than national brands
o 20%-25% cheaper than store brands

o good market share in some categories


IV. PACKAGING AND LABELING
Packaging component
Label
o any container in which it is offered for sale and on which label information is conveyed.
o Integral part of the package
o Typically identifies
 the product or brand
 Who made it
 Where and when it was made
 How it is to be used

 Package contents and ingredients.

A. Creating Customer Value through Packaging and Labeling
Packaging Functions
1. spoilage
2. tampering Packaging
Contain and Protect
3. children Promotes
Products
Products
4. Theft
Facilitate Recycling o Convenience and utility of the package can differentiate a product from
Reduce Environmental Damage the competition
Facilitate Storage o Last opportunity to influence shoppers before they buy.

Facilitate Use o Brand Image is often closely linked to packaging

o Are easy to
Wholesalers
 ship
&
 store
Retailers
 stock on shelves.
want
o Protect the product
packages that
o Prevent spoilage or breakage
 o Extend shelf life.
o Easy to handle
Consumers want
o Easy to open
packages
that are
o Easy To reuse
Packaging is often used to segment markets, particularly
by offering different sizes for different segments.
1. Communication Benefits.
o Label information

o Packaging can also have brand equity benefits, as in the case of L’eggs.
2. Functional Benefits.
o Convenience
o Product protection
o Storage.

o Consumer protection
3. Perceptual Benefits.
o Create perception in the consumer’s mind.
o Can connote
 status
 economy

 product quality.
B. Global Trends in Packaging
1. Environmental Sensitivity
 o The amount, composition, and disposal of packaging material continue to receive much attention.
o European countries have been trendsetters in packaging guidelines and environmental sensitivity.
o U.S. firms marketing in the EU have responded to these guidelines and ultimately benefited consumers outside the EU as
well.

o Firms are using life-cycle analysis (LCA) to examine the environmental effects of their packaging at every stage from raw
material sources and production through distribution and disposal.
2. Health and Safety Concerns
o A majority of U.S. and European consumers believe that companies should make sure products and packages are safe,
regardless of the cost.

o New packaging technology to extend shelf life (the time a product can be stored) and prevent spoilage is being developed
with special applications for less-developed countries.
C. Labeling
o Focuses on a promotional theme or logo
Persuasive labeling
o Information for the consumer is secondary.
o
o Helps consumers in making proper product selections
o Helps lower cognitive dissonance
Informational labeling
o May include care and use information

o may explain construction figures

o Introduced in 1974
Universal Product Codes (UPC)
o Many Retailers will not stock products without
Nutrition Labeling and Education Act of 1990
o Requires detailed nutritional information on most food packages
 o Establishes standards for health claims on food packaging.


V. PRODUCT WARRANTY
o A warranty is a statement indicating the liability of the manufacturer for product deficiencies.
o There are various types of product warranties with different implications for manufacturers and customers.
o Warranties are important in light of increasing product liability claims.

o This issue is hotly contested between companies and consumer advocates.

Warranty Strategy
Product Warranties
Warranty
Express Warranty
full warranty
limited-coverage warranty
Implied Warranty
Magnuson-Moss Warranty
Federal Trade
Commission
Improvement Act
o A protection and information device for consumers.
o Guarantees the quality or performance of a good or service.
o made in writing
o has no limits of noncoverage.
o specifically states the bounds of coverage
o areas of noncoverage.
o Unwritten guarantee that a good or service is fit for the purpose for which it was sold.
o All sales have an implied warranty under the Uniform Commercial Code.
o Often assign responsibility for product deficiencies to the manufacturer.
o Manufacturer that promises a full warranty must meet certain minimum standards.
o A limited warranty must be conspicuously promoted by the manufacturer
o Otherwise a full warranty is assumed.