What is a Product ? Products, Services, and Experiences Market offerings, pure tangible goods, pure services, experiences
Product Definitions Whatever is offered for “sale” in a marketing exchange Product Anything tangible offered to a market for attention, acquisition, use, or consumption that might satisfy a need or w want. ant. Service Any activity or benefit that one party can offer to another that is essentially intangible and does not result in ownership of anything. a nything.
Goods
Services
Tangible
Intangible
Produced Then Sold
Sold Then Produced and/ or Consumed Same Time
Can Store and Transport
Perishable
Often Produced Separate From Consumer
Often Produced In Consumer's Presence
Augmented Augmented Product Product
Products Installation Packaging Brand Name Delivery & Credit
Quality Level
Core Core Benefit Benefit or or Service Service
Features
Design
Warranty
Actual Actual
Core Core
AfterSale Service
Classification of Products How Long the Products Will Last
High Involvement Decisions
Low Involvement Decisions
Durable Durable Goods Goods
Provide Provide Long-Term Long-Term Benefits Benefits (cars, (cars, furniture, furniture, home home appliances) appliances)
Nondurable Nondurable Goods Goods
Provide Provide Short-Term Short-Term Benefits Benefits (newspapers, (newspapers, food) food)
Product Classificat Classifications ions Classificatio ns
Consumer products
Industrial products
Types of Types Consumer Products Convenience Shopping Specialty Unsought
Frequent purchases bought with minimal buying effort and little comparison shopping
Low price
Widespread distribution
Mass promotion by producer
Examples: toothpaste, tea, laundry detergents etc.
Types of Consumer Products Convenience Shop Shopping ping Specialty Unsought
Less frequent purchases purchases requiring more shopping effort and price, quality, and style comparisons.
Higher pricing
Selective distribution in fewer outlets
Advertising Advertising and personal selling/representation by producer and reseller
Examples: television, geyser, cooking stove, furniture etc.
Types of Consumer Products Convenience Shopping Sp Specialty ecialty Unsought
Strong brand preference and loyalty, requires special purchase effort, little brand comparisons, and low price sensitivity
High price
Exclusive distribution
Carefully targeted promotion by producers and resellers
Examples: Rolex watches, ARY gold Etc.
Types of Consumer Products Convenience Shopping Specialty Unsought
Little product awareness and knowledge (or if aware, sometimes negative interest)
Pricing varies
Distribution varies
Aggressive advertising and personal selling by producers and resellers
Examples: life insurance, blood donations etc.
Industrial products products
Materials and parts
Capital items
Supplies and services
Individual Product/Service Decisions Product Attributes Branding Packaging Labeling Product Support Services
Product Attributes Developing a Product or Service Involves Defining the Benefits that it Will Offer
Quality Quality
Features Features
Style Style & & Design Design
Product Product Quality Quality
Ability Ability of of aa Product Product to to Perform Perform Its Its Functions; Functions; Includes Includes Level Level & & Consistency Consistency
Product Product Features Features
Help Help to to Differentiate Differentiate the the Product Product from from Those Those in in the the Competition Competition
Product Product Style Style & & Design Design
Process Process of of Designing Designing aa Product’s Product’s Style Style & & Function Function
Branding
Individual Product/Service Decisions Product Attributes
Branding Packaging Labeling Product Support Services
Brand A name, term, sign, symbol, or design, or a combination of these, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those competitors
What is a Brand?
It’s who you are...and what you stand for.
BET
Anthropology P&E P& E
on J azz
Children’s
Arena Classical Music
Noggin Knowledge TV
Ovation
Animal P la lane nett
Cable Net
New S cien Network
KIDS CIVILIZATION
Classic Arts Showcase
ooknet
C-SPAN
DIY DI YArts & Antiques Museum Channel
SCIENCE
E OP
Theater Channel
BLOOMBERG NEWS INFORMATION
Travel Channel
Why?
Because...A Strong Brand is the Heart and “Soul” of an Organization!
What Branding Is?
A clear identity in the consumer's mind Who you are: Product/service quality What you stand for: Values/promise - Can be registered and legally protected A set of associations and feelings - market segmentation
To Brand or Not to Brand?
Branding strategies: i) Brand Positioning
Product attributes (lowest level) Benefits Beliefs and values
Branding strategies: ii) Brand Name Selection
A A Good Good Brand Brand Name Name Is... Is...
• • • • •
Short and simple Suggestive of product benefits Legally available No negative imagery Easy to spell, read, and pronounce • Adaptable for international markets • Adaptable to packaging/labeling needs • Adaptable to any advertising medium
Generic name: A brand name that has become a generally descriptive term “for a class of products”.
If this occurs, the original owner loses exclusive right to the brand name (which is very bad for marketers). Examples: nylon, aspirin, escalator, kerosene, etc.
Branding strategies: iii) Brand Sponsorship
Manufacturer brands Private (store) brands Licensed brands Co-branding
Branding strategies: iv) Brand Development Product Category Existing
New
Existing a N d n ar B
e m
Line Extension
Brand Extension
Multibrands
New Brands
New
Branding Rejection
Non-recognition
Recognition
Preference
Insistence
Focus:
Change Position Focus:
Increase Awareness Focus:
Continue Education Focus :
Maintain Availability Focus :
Develop High Brand Equity
Individual Product/Service Decisions Product Attributes Branding
Packaging Labeling Product Support Services
Packaging
Activity of designing and producing the container or wrapper for a product.
Packaging used to contain and protect the product.
Goals of Packaging Protection against damage, spoilage, tampering etc.
Assistance in marketing the product
Cost effectiveness (and good for the environment)
Labeling
Individual Product/Service Decisions Product Attributes Branding Packaging
Labeling Product Support Services
Labeling
Labeling Printed information appearing on or with the package. Performs several functions:
Identifies product or brand
Describes several things about the product
Promotes the product through attractive graphics.
Universal Product Code (UPC)
A bar code on a product’s package that provides information read by optical scanners. UPC codes provide several advantages: labor saving, improve inventory control, and help with marketing research.
79400 80740
Functions of packaging & labeling
Sales Tasks
Competitive Advantages Packaging Packaging
Product Safety
Labeling Labeling Identifies
Describes
Promotes
Individual Product Decisions
Product Attributes Branding Packaging Labeling
Product Support Services
Product - Support Services Companies should design its support services to profitably meet the needs of target customers and gain competitive advantage.
How? Step 1. Survey customers to assess the value of current services and to obtain ideas for new new services. Step 2. Assess costs of providing desired services. Step 3. Develop a package of services to delight customers and yield profits to the company.
How?
Service marketing
Product Line Strategies
Product Product Line Line Extensions Extensions Stretching
Filling
Adding new items to line
Adding sizes or styles
Downward
Upward Two-way
Contracting Contractingaa Product ProductLine Line Dropping Droppingitems items
New Product Development The development of original products, product improvements, product modifications, and new brands through the firm’s own R&D efforts.
Major Stages in New-Product Development Marketing Strategy
Concept Development and Testing
Idea Screening
Idea Generation
Business Analysis
Product Development
Test Marketing
Commercializatio n
Sources of New-Product Ideas
Employees Customers Resellers Suppliers/ vendors Competitors Advertising agencies
Marketing research firms Other manufacturers International
Stage 2: Idea Screening
Ideas are evaluated against criteria; most are eliminated.
It is done to avoid:
Product development costs increase substantially in later stages.
Stage 3: Concept Development and Testing
Concept tests ask target consumers to evaluate product concepts.
Because:
Product concepts provide detailed versions of new product ideas.
Stage 4: Marketing Strategy Development
Strategy statements describe: sales, – The target market, product positioning, and sales, share, and profit goals for the first few few years. – Product price, distribution, and marketing budget for the first year. – Long-run sales and profit goals and the marketing mix strategy.
Stage 7: Test Marketing Standard test markets Controlled test markets Simulated test markets
Standard Standard Test TestMarket Market
Controlled Controlled Test TestMarket Market
Full Fullmarketing marketingcampaign campaign in inaasmall smallnumber numberof of representative representativecities. cities.
A Afew fewstores storesthat thathave have agreed agreedto tocarry carrynew new products productsfor foraafee. fee.
Simulated Simulated Test TestMarket Market Test Testin inaasimulated simulated shopping shoppingenvironment environment to toaasample sampleof of consumers. consumers.
Stage 8 Commercialization
New-Product Development Management Top Level Support Authority Key Issues
Market-Guided R&D Integration & Coordination
New Product Development Marketing Strategy Concept Development and Testing Idea Screening Idea Generation
Business Analysis Product Development
Test Marketing
Commercializa tion
Types of New Products Include New-To-The New-To-The World World
Repositionings Repositionings New New Category Category Entries Entries Product Product Improvements Improvements Product Product Line Line Additions Additions
Consumer Adoption Process Awareness Awareness
Interest Interest
Evaluation Evaluation
Trial Trial
Adoption Adoption
Strategy Communicate CommunicateAvailability Availability
Strategy Communicate CommunicateBenefits Benefits
Strategy Emphasize EmphasizeAdvantages Advantages
Strategy Motivate MotivateConsumers Consumers
Strategy
Product Life-Cycle (PLC) Sales and Profits ($) Sales
Profits
Time Product Development Stage
Introduction
Growth
Maturity
Decline
Sales and Profits Over the Product’s Life From Inception to Demise
The Typical Product Life Cycle (PLC) Has Five Stages
Product Development, Introduction, Growth, Maturity, Decline
Not all products follow this cycle
Some products move rapidly through the product life cycle, while others pass through those stages over long time periods.
Product Life-Cycle Strategies
Product Development Stage Sales and Profits ($)
Sales
Profits
Time Product Introduction Development Stage
Growth
Maturity
Decline
Sales and Profits Over the Product’s Life From Inception to Demise
PLC Stages
Product development
Introduction Growth Maturity Decline
Begins when the company develops a new-product idea Sales are zero Investment costs are high Profits are negative
Introduction Stage
PLC Stages
Product development
Introduction
Growth Maturity Decline
Low sales High cost per customer acquired Negative profits Innovators are targeted Little competition
Sales Sales
Low Low sales sales
Costs Costs
High High cost cost per per customer customer
Profits Profits
Negative Negative
Marketing Marketing Objectives Objectives
Create Create product product awareness awareness and and trial trial
Product Product
Offer Offer aa basic basic product product
Price Price
Use Use cost-plus cost-plus
Distribution Distribution
Build Build selective selective distribution distribution
Advertising Advertising
Build Build product product awareness awareness among among early early adopters adopters and and dealers dealers
Growth Stage
Sales and Profits ($)
Sales
Profits
Time Product Development Stage
Introduction
Growth
Maturity
Decline
Sales and Profits Over the Product’s Life From Inception to Demise
PLC Stages
Product development Introduction
Growth
Maturity Decline
Rapidly rising sales Average cost per customer Rising profits Early adopters are targeted Growing competition
Sales Sales
Rapidly Rapidly rising rising sales sales
Costs Costs
Average Average cost cost per per customer customer
Profits Profits
Rising Rising profits profits
Marketing Marketing Objectives Objectives
Maximize Maximize market market share share
Product Product
Offer Offer product product extensions, extensions, service, service, warranty warranty
Price Price
Price Price to to penetrate penetrate market market
Distribution Distribution
Build Build intensive intensive distribution distribution
Advertising Advertising
Build Build awareness awareness and and interest interest in in the the mass market mass market
Maturity Stage Sales and Profits ($)
Sales
Profits
Time Product Development Stage
Introduction
Growth
Maturity
Decline
Sales and Profits Over the Product’s Life From
PLC Stages
Product development Introduction Growth
Maturity
Decline
Sales peak Low cost per customer High profits Middle majority are targeted Competition begins to decline
Sales Sales
Peak Peak sales sales
Costs Costs
Low Low cost cost per per customer customer
Profits Profits
High High profits profits
Marketing Marketing Objectives Objectives
Maximize Maximize profit profit while while defending defending market market share share
Product Product
Diversify Diversify brand brand and and models models
Price Price Distribution Distribution Advertising Advertising
Price Price to to match match or or best best competitors competitors Build Build more more intensive intensive distribution distribution Stress Stress brand brand differences differences and and benefits benefits
Decline Stage
Sales and Profits ($) Sales
Profits
Time Product Development Stage
Introduction
Growth
Maturity
Decline
Sales and Profits Over the Product’s Life From Inception to Demise
PLC Stages Declining sales
Product development Introduction Growth Maturity
Decline
Low cost per customer Declining profits Laggards are targeted Declining competition
Sales Sales
Declining Declining sales sales
Costs Costs
Low Low cost cost per per customer customer
Profits Profits
Declining Declining profits profits
Marketing Marketing Objectives Objectives
Reduce Reduce expenditure expenditure and and milk milk the the brand brand
Product Product Price Price Distribution Distribution
Advertising Advertising
Phase Phase out out weak weak items items Cut Cut price price Go Go selective: selective: phase phase out out unprofitable unprofitable outlets outlets Reduce Reduce to to level level needed needed to to retain retain hard-core hard-core loyal loyal customers customers
Overlap of Life Cycle for Products A and B
WINDOWS 3.1
WINDOWS 95
1991
1995
1996
1997
Extending the Product Life Cycle
Market Modification 1. Increase frequency of use by present customers 2. Add new users 3. Find new uses 4. Change product quality or packaging
Product Modification
To prevent the product going into decline you modify the product Adding new features, variations, model varieties will change the consumer reaction - create more demand therefore you attract more users
