Unit-3

Marketing Programme

What is a product?
A product is any offering by a company to a market that serves to satisfy customer needs and wants. It can be an object, service, idea,etc.

Product Classifications

Consumer Products Industrial Products

Consumer goods classification

Convenience goods Shopping goods Specialty goods Unsought goods

Consumer Products
Convenience Products
> Buy frequently & immediately > Low priced > Many purchase locations > Includes: Staple goods Impulse goods Emergency goods

9- 5

Shopping Products
> Buy less frequently > Gather product information > Fewer purchase locations > Compare for: Suitability & Quality Price & Style

Specialty Products
> Special purchase efforts > Unique characteristics > Brand identification > Few purchase locations

Unsought Products
> New innovations > Products consumers dont want to think about > Require much advertising & personal selling

Three Levels of Product

Product Levels
Customer value hierarchy Core benefit Basic product Expected product Augmented product Potential product

Industrial goods classification

Materials and Parts - raw materials - manufactured materials and parts Capital items Supplies and business services

9- 9

Industrial Products
Materials and Parts

Capital Items

Supplies and Business Services

Brand
A name becomes a brand when consumers associate it with a set of tangible and intangible benefits that they obtain from the product or service It is the sellers promise to deliver the same bundle of benefits/services consistently to buyers

Brand Equity
When a commodity becomes a brand, it is said to have equity. The premium a brand can command in the market The difference between the perceived value and the intrinsic value

Levels of meaning
Attributes Benefits Values Culture Personality Users

Brand Power
Customer will change brands for price reasons Customer is satisfied. No reason to change. Customer is satisfied and would take pains to get the brand Customer values the brand and sees it as a friend Customer is devoted to the brand

Brand Equity Competitive Advantages

Reduced marketing costs Trade leverage Can charge a higher price Can easily launch brand extensions Can take some price competition

Managing Brand Equity

Brand Equity needs to be nourished and replenished. We must not flog the brand for equity to be diluted or dissipated Store brands

Advantages of branding
Easy for the seller to track down problems and process orders Provide legal protection of unique product features Branding gives an opportunity to attract loyal and profitable set of customers It helps to give a product category at different segments, having separate bundle of benefits It helps build corporate image It minimises harm to company reputation if the brand fails

Naming the Brand

Product benefits Product qualities Easy to pronounce Should be distinctive Should not have poor meanings in other languages and countries

Brand strategy
Line extension existing brand name extended to new sizes in the existing product category Brand extension brand name extended to new product categories Multibrands new brands in the same product category New brands new product in a different product category Cobrands brands bearing two or more well known brand names

Brand Repositioning
This may be required after a few years to face new competition and changing customer preferences

Product Planning
Product Planning: The decisions made about what features should be used in selling of a businesss products. These decisions relate to:
packaging labeling warranties guarantees branding product mix

Product Planning (cont.)

Product Mix: All the different products that a company makes or sells. Product Line: A group of closely related products manufactured or sold by a business. Product Item: A specific model, brand, or size of a product within a product line. Product Width: The number of different product lines a business manufactures or sells. Product Depth: The number of product items in a product line.

Packaging

Packaging
Includes the activities of designing and producing the container for a product Packaging is done at three levels - primary - secondary - shipping

Packaging as a marketing tool

Self service Consumer affluence Company and brand image innovation

Designing packaging
Packaging concepts Technical specifications Engineering tests Visual tests Dealer tests Consumer tests Packaging innovations Environmental considerations

Labels
Identification Grade classification Description of product Manufacturer identity Date of mfg., batch no. Instructions for use Promotion

Labels as a marketing tool

Labels need to change with time or packaging changes to give it a contemporary and fresh look

Product line

product mix

decisions

Product Mix and Product Line

PRODUCT MIX The set of all products offered for sale by a company

PRODUCT LINE A broad group of products for similar uses and with similar characteristics

Product Mix
Includes all the different products that a company makes or sells.

Product Mix
The assortment of products that a company offers to a market Width how many different product lines? Length the number of items in the product mix Depth The no. of variants offered in a product line Consistency how closely the product lines are related in usage

PRODUCT MIX
= all the types of products a company makes or sells. The particular assortment of goods and services that a business offers to meet the needs of its market(s) and its company goals.

Product Line decisions

Product rationalization Market rationalization Product line length too long when profits increase by dropping a product in the line too short when profits increase by adding products to the product line Line pruning capacity restrictions to decide

Product Line Decisions

Product Line Length
Number of Items in the Product Line

Stretching
Lengthen beyond current range

Filling
Lengthen within current range

Downward

Upward

Product Mix Decisions

Width - number of different product lines

9- 45

Consistency

Length - total number of items within the lines

Product Mix all the product lines offered

Depth - number of versions of each product

Identify ways in which product lines can be organized.

Product Line = group of closely related products manufactured by a business Product Item = specific model, brand, or size of a product within a line
Ex: P&G has over 250 products within 21 product lines Dish care is a product line Cascade, Dawn, Joy, & Ivory are product items

Describe product mix dimensions.

Some companies have different brands for different markets
Coca-Cola has different drinks for sparkling beverages, water, juice, performance, coffee, tea, and international flavors.

Product Line
A group of closely related products manufactured and/or sold by a business.

Product Item
A specific model, brand, or size of a product within a product line.

DIMENSIONS
WIDTH = number of product lines carried by a company. NARROW = offering a limited number of product lines BROAD = many different product lines carried

DEPTH = number of products and the assortment of sizes, colors, and models offered in a product line SHALLOW = limited variety within a product line DEEP = extensive variety within a product line

Product Mix
PRODUCT MIX
DEPTH
Variety of sizes, colors, models within a product line

BREADTH The number of product lines carried

Product Width
The number of different product lines a business manufactures or sells. Width of the Gillette Product Mix
Oral Care Blades & Razors Personal Care Batteries Appliances

Product Depth
The number of product items offered within each product line.
Oral Care Blades & Razors Personal Care Batteries Appliances

NARROW PRODUCT MIX

= Limited product lines carried, typically very specialized. A description of the width of a business's product mix offering a limited number of product lines.

Broad Product Mix

= Many different product lines carried. A description of the width of a business's product mix offering many product lines.

Shallow Product Mix

= Limited variety within a product line. A description of the depth of a business's product mix offering few items in the product line.

Deep Product Mix

= Extensive variety within a product line. A description of the depth of a business's product mix offering a great many items in the product line.

Identify reasons that a business would offer a narrow product mix.

Product Width number of different product lines CONTRACTING - Pruning weak brands can strengthen the remaining brands in the line.
Ease on management Cost effective Simplicity Consistency

Identify reasons that a business would offer a broad product mix.

Product Width number of different product lines EXPANDING Reach all markets Competitive advantage Ex: Red Lobster specializes in seafood, but offers chicken and steak to broaden their product mix.

Identify reasons that a business would offer a deep product mix.

Product Depth number of items offered within each product line

EXPANDING Variety Quantity Ex: Kohls carries various quantities of sizes, colors, & styles of Levi Jeans.

Individual Product Decisions

Product Attributes

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Branding

Packaging

Labeling

Product Support Services

NEW PRODUCT DEVELOPMENT $ PRODUCT LIFE CYCLE

New-Product Development Strategies

Strategies for Obtaining New Product Ideas
Acquired Companies Acquired Patents Acquired Licenses Original Products Product Improvements Product Modifications New Brands

Causes of New Product Failures

Overestimation of Market Size Product Design Problems Product Incorrectly Positioned, Priced or Advertised Costs of Product Development Competitive Actions To create successful new products, the company must:
understand its customers, markets and competitors develop products that deliver superior value to customers.

New Product Development Process

Marketing Strategy Concept Development and Testing Idea Screening Idea Generation Business Analysis

Product Development

Test Marketing Commercialization

New Product Development Process

Step 1. Idea Generation

Idea Generation is the Systematic Search for New Product Ideas Obtained Internally and From:
C U S T O M E R S C O M P E T I T O R S

D I S T R I B U T O R S

S U P P L I E R S

New Product Development Process

Step 2. Idea Screening Process to spot good ideas and drop poor ones as soon as possible. Many companies have systems for rating and screening ideas which estimate:
Market Size Product Price Development Time & Costs Manufacturing Costs Rate of Return

Then, the idea is evaluated against a set of general company criteria.

New Product Development Process

Step 3. Concept Development & Testing
1. Develop Product Ideas into Alternative Product Concepts

2. Concept Testing - Test the Product Concepts with Groups of Target Customers

3. Choose the Best One

New Product Development Process

Step 4. Marketing Strategy Development Marketing Strategy Statement Formulation
Part One Describes Overall:
Target Market Planned Product Positioning Sales & Profit Goals Market Share

Part Two Describes ShortTerm:

Products Planned Price Distribution Marketing Budget

Part Three Describes LongTerm:

Sales & Profit Goals Marketing Mix Strategy

New Product Development Process

Step 5. Business Analysis Step 6. Product Development
Business Analysis Review of Product Sales, Costs, and Profits Projections to See if They Meet Company Objectives

If No, Eliminate Product Concept

If Yes, Move to Product Development

New Product Development Process

Step 7. Test Marketing
Standard Test Market
Full marketing campaign in a small number of representative cities.

Controlled Test Market

A few stores that have agreed to carry new products for a fee.

Simulated Test Market

Test in a simulated shopping environment to a sample of consumers.

New Product Development Process

Step 8. Commercialization

Commercialization is the Introduction of the New Product into the Marketplace.

When?

Where?

To Whom?

How?

Speeding Up Development Sequential

Step 1

Simultaneous

Step 1
Step 3 Step 4 Step 2

Step 2

Step 3

Step 4

Product Life Cycle

Sales and Profits Over the Products Life From Introduction to Decline
Sales and Profits ($)
Sales

Profits Time

Product Development
Losses/ Investments ($)

Introduction

Growth

Maturity

Decline

Introduction Stage of the PLC

Summary of Characteristics, Objectives, & Strategies

Sales
Costs Profits
Marketing Objectives

Low sales High cost per customer Negative Create product awareness and trial Offer a basic product Use cost-plus Build selective distribution Build product awareness among early adopters and dealers

Product Price Distribution Advertising

Growth Stage of the PLC

Summary of Characteristics, Objectives, & Strategies
Sales Costs Profits
Marketing Objectives

Rapidly rising sales Average cost per customer Rising profits Maximize market share Offer product extensions, service, warranty Price to penetrate market Build intensive distribution Build awareness and interest in the mass market

Product Price Distribution Advertising

Maturity Stage of the PLC

Summary of Characteristics, Objectives, & Strategies
Sales Costs Profits
Marketing Objectives

Peak sales Low cost per customer High profits Maximize profit while defending market share Diversify brand and models

Product Price Distribution Advertising

Price to match or best competitors

Build more intensive distribution Stress brand differences and benefits

Decline Stage of the PLC

Summary of Characteristics, Objectives, & Strategies
Sales Costs Profits
Marketing Objectives

Declining sales Low cost per customer Declining profits Reduce expenditure and milk the brand Phase out weak items

Product Price Distribution Advertising

Cut price Go selective: phase out unprofitable outlets Reduce to level needed to retain hard-core loyal customers