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Marketing mix - product Prepared by Jude A
THE MARKETING MIX (Product)PRODUCT MANAGEMENT
Learning objectives/outcomeAfter completing this chapter, you should be able to do the following:1. Define a product2. Explain the various levels of a product3. Define a product including the core, actual and augmented product.4. Explain the main classifications of consumer and industrial products5. Describe the decisions companies make regarding individual products, product lines and
product mixes.6. Explain the meaning of product packaging, labelling, branding, quality.Discuss branding strategy in relation to the decisions that companies make in building and
managing brands.7. Discuss additional branding issues with respect to socially responsible brand decisions and
international marketing.8. Understand the various levels of a product9. Discuss the Product packaging and labelling standards and legislations10.Understand what Product lines are.11.Explain the concept of the Product life cycle and its practical applicability and importance in
marketing. Explain the various levels of a product life cycle, its importance, and its usefulness
12. Explain the process of New product development
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Marketing mix - product Prepared by Jude A
Marketing mix - product Prepared by Jude A
Marketing fundamentalsThe tools of the marketing management:
THE MARKETING MIX - definition
• It is the strategic blending of product, price, place, promotion, people, physical evidence and processes in order to achieve marketing objectives
• It is a combination of 7p’s which marketers use in order to satisfy the market.
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Marketing mix - product Prepared by Jude A
Marketing fundamentalsThe tools of the marketing management:
THE MARKETING MIX – definition Continues
• Marketing mix is the tactical toolkit of the 7’ps ; namely product, price , place, promotion, people, physical evidence and processes.
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Marketing mix - product Prepared by Jude A
THE MARKETING MIX - PRODUCT
We will examine the following issues under product:
1. Product Definition
2. Product Classification
3. Various levels of a product
4. The Product Life cycle
5. Product Packaging
6. Product Labeling
7. Product quality
8. Product lines
9. Branding
10. New Product Development Process
11. The importance of New Product Development
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Marketing mix - product Prepared by Jude A
MARKETING MIX (PRODUCT)Definition
• A product is anything that can be offered to the market for attention, acquisition, use or consumption that might satisfy a want or need. It includes physical objects, services, persons, places, organisations and ideas.
•In marketing, a product is anything that can be offered to a market that might satisfy a want or need.
•A product item is a distinct unit that is distinguishable by size, price, appearance or some other attribute. An item is sometimes called a stock keeping unit or product variant.
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Marketing mix - product Prepared by Jude A
PRODUCT
• However it is much more than just a physical object. It is the complete bundle of benefits or satisfactions that buyers perceive they will obtain if they purchase the product. It is the sum of all physical, psychological, symbolic, and service attributes.
• A product is similar to goods. In accounting, goods are physical objects that are available in the marketplace. This differentiates them from a service, which is a non-material product. The term goods is used primarily by those that wish to abstract from the details of a given product. As such it is useful in accounting and economic models. The term product is used primarily by those that wish to examine the details and richness of a specific market offering. As such it is useful to marketers, managers, and quality control specialists.
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Marketing mix - product Prepared by Jude A
• A service is a non-material or intangible product - such as professional consultancy, waitressing, or an entertainment experience.
Marketing mix - product Prepared by Jude A
PRODUCT CLASSIFICATION SCHEMES
• Nondurable goods: Nondurable goods are tangible goods normally consumed in one or few uses
• Examples include: beer, soap, toilet tissue, bread, milk, newspaper and salt. Since these goods are consumed fast and purchased frequently, the appropriate strategy is to make them available in many locations, charge only a small mark-up and advertise heavily to induce trial and build preference. Some of the nondurables are perishables. Nondurables are conveniently located.
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Marketing mix - product Prepared by Jude A
• DURABLE GOODS: Durable goods are tangible goods that normally survive many uses. Examples include refrigerators, machine tools and clothing. Durable goods normally require more personal selling and service and they command a higher margin and require more seller guarantees.
• SERVICES: Services are activities, benefits or satisfaction that are offered for sale. Examples include hair cut, repairs, education, health etc. Services are intangible, inseparable, variable, heterogeneous, non transferable and perishable.
• As a result, they normally require more quality control , supplier credibility and adaptability.
Marketing mix - product Prepared by Jude A
CONSUMER GOODS CLASSIFICATION• Consumer goods are those which are bought by final consumers for
personal consumption. Marketers usually classify these goods on the basis of consumer shopping habits because the way consumers shop for products has direct implications for marketing strategy.
• We can distinguish among convenience, shopping, speciality, and unsought goods.
Key definitions
Shopping product- A Consumer product that the customer, in the process of selection and purchase, characteristically compares with others on such bases as suitability, quality, price and style.
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Marketing mix - product Prepared by Jude A
SPECIALITY PRODUCT – A consumer product with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort.
UNSOUGHT PRODUCT - A consumer product that the consumer either does not know about or knows about but does not normally think of buying.
Non-Durable Product – A consumer product that is normally consumed in one or few uses.
Durable Product – A consumer product that is usually used over an extended period of time and that normally survives many uses.
Consumer Product – A product bought by final consumers for personal consumption.
Convenience Product- A consumer product that the customer usually buys frequently, immediately, and with a minimum of comparison and buying effort.
Services – Activities, benefits or satisfactions that are offered for sale.Core product – The problem solving services or core benefits that
consumers are really buying when they obtain a product.
Marketing mix - product Prepared by Jude A
Key definitionsActual product- A product’s parts, quality level, features, design, brand name,
packaging and other attributes that combine to deliver core product benefits.
Augmented Product- Additional consumer services and benefits built around the core and actual products.
Industrial Product – A product bought by individuals and organisations for further processing or for use in conducting a business.
Materials and parts- Industrial products that enter the manufacturer’s product completely, including raw materials and manufactured materials and parts.
Capital items – industrial goods that partly enter the finished product, including installations and accessory equipment.
Supplies and services – industrial products that do not enter the finished product at all.
Product quality – The ability of a product to perform its functions; it includes the product’s overall durability, reliability, precision, ease of operation and repair, and other valued attributes.
Marketing mix - product Prepared by Jude A
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 of competitors.
Packaging – The activities of designing and producing the container or wrapper for a product.
Packaging concept- What the package should be or do for the product.
Product-support services- Services that augment actual products.
Marketing mix - product Prepared by Jude A
THE MARKETING MIX - PRODUCTPRODUCT CLASSIFICATION:CONSUMER GOODS CLASSIFICATIONConsumer Products1. Convenience goods: e.g. bread, milk, toilet tissue, cigarette,
newspapers, toothpaste, sweets, meat, fish, butter etc. These are mostly Perishable goods: goods that will deteriorate quickly even without use. There are also Non durable/consumption/consumable goods: goods that are used up in one occasion. Convenience goods are conveniently located. They are not expensive and are consumed regularly. The buyer most often have a good knowledge of the price for such products and less time is spend in the purchase decision because of product and price awareness. Convenience goods are needed almost on a daily basis (demanded regularly). Most of these products have a short shelf life. The distribution of these products is more intensive because of the demand and the necessity for such products. Consumers can’t do without these products.
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Marketing mix - product Prepared by Jude A
2. Shopping goods: e.g. television, cloths, shoes, watch & cameras. They are more expensive than convenience goods. They are selectively located. They are non perishables and can be kept for very long time. Consumers often compare prices and quality before making their purchase decision. These products are available at selective locations.
3. Speciality goods: designer goods for e.g. designer suit, watch, shoes, cars, etc. There are more expensive than convenience and shopping goods. Most of them are exclusively located and some are selectively located. There are non perishables and durable consumer goods. Most of the products are targeted at wealthy consumers (high income earners). There is also comparison of prices and quality before the purchase decision is made.
4. Unsought goods: e.g life assurance, grave stones,grave yard; these are goods which consumers know they exist but are not thinking of consuming such products at the moment.
Producer products classification1. Materials : goods that go into a finished product: e.g. cocoa, rubber, banana,
iron ore, copper, gold, diamond, etc.2. Machinery/Capital goods: installations, equipment, and buildings3. Parts: Accessories needed to complete the production process: e.g to produce
car, you need parts such as bulbs, engine, wheels, tyre, screen etc 4. Services: Business services such as financial, transportation, consultancy,
insurance, etc.
Marketing mix - product Prepared by Jude A
Types of consumer product - Marketing considerations for consumer productsMarketing consideration
Convenience Shopping Speciality Unsought
Customer buying behaviour
Frequent purchase, little planning, little comparison or shopping effort, low customer involvement
Less frequent purchase, much planning and shopping effort, comparison of brands on price, quality, style
Strong brand preference and loyalty, special purchase effort, little comparison of brands, low price sensitivity.
Little product awareness or knowledge; if aware, little or even negative interest.
Price Low price Higher price Highest price Varies
Distribution Widespread distribution, convenient locations
Selective distribution in fewer outlets
Exclusive distribution in only one or a few outlets per market area
Varies
Promotion Mass promotion by the producer
Advertising and personal selling by both producer and resellers
More carefully targeted promotion by both producer and resellers.
Aggressive advertising and personal selling by producer and resellers
Examples Toothpaste, magazines, laundry detergent
Location: Convenience stores, supermarkets
Major appliances, televisions, furniture, clothing.
Location: supermarkets and high street stores e.g Primark
Luxury goods, such as Rolex watches or fine crystal.
Location: House of Fraser, Next
Life insurance, blood donations, grave stones etc.
Marketing mix - product Prepared by Jude A
Unsought goods
Unsought goods: e.g., cemetery plots, insurance. These are products that we need but
which we do not actively seek out to buy. They usually require a hard sell approach by
the seller. Example "what will happen to your family if you die and do not have life
assurance?". The fear of leaving the family destitute makes us buy almost against our
will, even though we know that it is the intelligent thing to do. Certain legal services such
As drawing up a will, will also fall into this category.
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Marketing mix - product Prepared by Jude A
THE MARKETING MIX - PRODUCT
THE VARIOUS LEVELS OF A PRODUCT: - (Adapted from the Chattered Institute of Marketing (CIM) -
Core product
Actual/Basic product
Expected product
Augmented product
Potential product
PackagingLabellingBrandingStylingQuality
After sales services e.g. Advise, guaranteeRepairs, installation
Any future augmentation
Intangible product: ideas
Tangible product
What customers Expect to find from The product
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Marketing mix - product Prepared by Jude A
Levels of a product – Adpapted from Philiip Kotler – Principles of marketing – 4th European Edition
An alternative way of looking at the levels of a product.
Core Productbenefit or
service
Packaging
DeliveryAnd credit
After saleservice
Quality
Brandname
features
Styling
Installation
Guarantee/Warranty
Core product
Tangible/actual product
Augmentedproduct
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Marketing mix - product Prepared by Jude A
Product packaging and labelling
• Packaging is the activities of designing and producing the container or wrapper for a product. The container or wrapper is called the package.
• Packaging is the enclosing of a physical object, typically a product that requires protection from tampering.
• Labeling refers to any written or graphic communications on the packaging or on a separate but associated label.
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Marketing mix - product Prepared by Jude A
PRODUCT PACKAGING AND LABELLING
NUMEROUS FACTORS HAVE CONTRIBUTED TO THE INCREASED USE OF
PACKAGING AS AN IMPORTANT MARKETING TOOL:
• Self service• Consumer affluence: Rising consumer affluence means that consumers
are willing to pay a little more for the convenience, appearance, dependability and prestige of better packages.
• Company and brand image• Innovational opportunity
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The purpose of packaging and labelling
Packaging and labeling have seven objectives:
1. Protection against physical impact on object - The objects enclosed in the
package may require protection from, among other things, damage caused by
physical force, rain, heat, cold, sunlight, pressure, airborne contamination,automated handling devices, or any combination of one or more of these.
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2. Protection against dust and dirt - In a modern supply chain products are subject
to different environments. They are packed in boxes and stacked on a pallet. Inabout 80% the products end up in a distribution center for commissioning and
finedistribution to the store where the product will be sold. During this period thephysical protection also applies to dust and dirt that can easily settle on theconsumer packaging. Especially products packed in plastic containers likeshampoos, detergents and ketchups due to static charging easily attract dust
anddirt. As a consumer we don't want to get dirty hands when picking up a product
fromthe shelf. Transportation packaging keeps our products clean and neat till the
shelfand so helps cut cleaning costs on the shop floor.
Marketing mix - product Prepared by Jude A
The purpose of packaging and labelling
3. Agglomeration - Small objects are typically grouped together in one package for reasons of efficiency. For example, a single box of 1000 pencils requires less physical handling than 1000 single pencils. Alternatively, bulk commodities (such as salt) can be divided into packages that are a more suitable size for individual households.
4. Information transmission - Information on how to use, transport, or dispose of the product is often contained on the package or label. An example is pharmaceutical products, where some types of information are required by governments.
5. Marketing - The packaging and labels can be used by marketers to encourage potential buyers to purchase the product. Package design has been an important and constantly evolving phenomenon for dozens of years.
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Marketing mix - product Prepared by Jude A
6. Reducing theft - Some packages are made larger than they need to be so as to make theft more difficult. An example is software packages that typically contain only a single disc even though they are large enough to contain dozens of discs. These packages may also be deliberately difficult to open, to hamper thieves from removing their contents without drawing notice. Packages also provide opportunities to include anti-theft devices, such as dye-packs or electronic article surveillance tags, that can be activated or detected by devices at exit points and require specialized tools to deactivate. Using packaging in this way is a common tactic for loss prevention.
Marketing mix - product Prepared by Jude A
The purpose of packaging and labelling
7. Prevention of pilferage and tampering - Products are exposed to many contacts in the supply chain. Persons handling could steal products (pilferage), replace full products with empty ones or add constituents to the contents (tampering). Packaging that cannot be reclosed or gets physically damaged (shows signs of opening) is very helpfull in the prevention of these acts. The flaps of corrugated and cardboard boxes are therefore glued in such a way that illegal opening becomes visible.
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Marketing mix - product Prepared by Jude A
Product packaging and labelling
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Marketing mix - product Prepared by Jude A
Product packaging and labelling
Packaging typesAseptic packages Bags Bales Blister packs Bottles Boxes Cans Cartons Envelopes Molded Pulp Pallets Wrappers There are also special containers that combine different technologies for maximum durability:Bags-In-Boxes (used for soft drink syrup and other liquid *Wine box (used for wine) products) PN C
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Product labelling
Information found on the packaging material include the following
1. Product name2. Production/expiry date3. Country of origin4. Ingredients/ composition of the product5. Nutritional information6. Logos, trademark or and company name7. Advise on how to use the product and any precaution to take
when using the product.8. Bar code9. Price tag10. Graphic design/product description11. Contact details of the company / helpline.12. Promotional material – slogans etc.
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Marketing mix - product Prepared by Jude A
PRODUCT LABELLING
• The law in the UK on food labelling is multifaceted and is spread over many reforms and parliamentary acts, making the subject complex. However, there are general laws which should be implied on any food product:
• Name – This must also inform the customer the nature of the product. It may also be necessary to attach a description to the product name. However, there are certain generic names which must be only used for their conventional uses, for example: Muesli, Coffee, prawns.
•
• Ingredients – All ingredients of the food must be stated under the heading Ingredients and must be stated in descending weight. Moreover, certain ingredients must be identified by a specific name, such as preservatives must be identified as ‘Preservatives’, and then identified by its standardised European serial number, e.g. sodium nitrate or E250.
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• Nutritional Information – Although it is not a legal requirement to declare Nutritional Information on the product, if the manufacturer makes claims that the product is ‘Low in Sugar’, it must be supported with nutritional information (normally in tabulated form). However, as a rule it is recommended to declare nutritional information as consumers more than ever are investgating this information before making a purchase. Moreover, there are two European nutritional labelling standards which must be adhered to if nutritional information is shown.
• Medicinal or Nutritional Claims – Medicinal and Nutritional claims are tightly regulated, some are only allowed under certain conditions while others are not authorised at all. For example, presenting claims the food product can treat, prevent or cure diseases or other ‘adverse conditions’ are prohibited. While claiming the food is reduced in fat or rich in vitamins require the food to meet compulsory standards and grades, in addition, the terms must be used in a form specified in regulations.
Marketing mix - product Prepared by Jude A
PRODUCT LABELLING
• Date Tagging – There are two types of date tagging: • Use by Date – ‘Use by Date’ must be followed by a day or/and month which
the product must be consumed by. To be employed on perishable foods that usually would be kept cold, for example, fish, meat, dairy products and ‘ready to eat’ salads.
• Best Before Date – 'Best Before Date is used as an indicator of when the product will begin to degrade from optimal quality: this includes when the food becomes stale, begins to taste ‘off’ or decays, rots or goes mouldy. There are also regulations on which type of best before date must be applied: – Best before + Day for foods with a shelf life of up to 3 months. – Best before end + Month for foods with more than a 3 month shelf life. – Best before end + Year for food with more than an 18 month shelf life.
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• Storage Conditions – If there are any particular storage conditions for the product to maintain its shelf life, these must be pointed out. However, as a rule it is recommended to always describe the necessary storage conditions for a food product.
• Business Name and Address – In addition to the business name and address, it is necessary to indicate the manufacturer or packager, if independent to the main business and the seller established within the European Union.
• Place of Origin – The food is required to specify its place of origin, especially if the name or trademark is misleading - such as if the product is called ‘English Brie Cheese’ when the it is produced in France.
• Instruction for Use – This is only necessary if it is not obvious how to use or prepare the product, in which case the consumer's own initiative must be used.
• Presentation – The label must be legible and easy to read, also it must be written in English, however, the manufacturer may also include other languages.
Marketing mix - product Prepared by Jude A
PRODUCT LABELLLING- LEGISLATION
• Lot Mark or Batch Code – It must be possible to identify individual batches with a lot mark or batch code - the code must be prefixed with the letter ‘L’ if it can not be distinguish from other codes, however, the date mark can be used as a lot mark. Manufacturers must bear in mind that the smaller the size of a batch, the smaller financial consequences in the case of a product recall.
• Sectioning – All of the following must be in the same field of vision: – Product name – Date mark – Weight – Quantity – Alcohol strength (if applicable).
•However, there are many other Laws and European regulations for different types of food products.
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Marketing mix - product Prepared by Jude A
Branding
• A brand is a collection of feelings toward an economic producer; more specifically, it refers to the concrete symbols for the brand, such as a name and design scheme.
• Feelings are created by the accumulation of experiences with the brand, both directly relating to its use, and through the influence of advertising, design, and media commentary. A brand is a symbolic embodiment of all the information connected to a company, product or service.
• A brand serves to create associations and expectations among products made by a producer. A brand often includes an explicit logo, fonts, color schemes, symbols, which are developed to represent implicit values, ideas, and even personality.The brand, and "branding" and brand equity have become increasingly massive components of culture and the economy, now being described as "cultural accessories and personal philosophies"
NNOB
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Marketing mix - product Prepared by Jude A
Examples of brands
Introduction to marketing Prepared by Jude A
TRADE MARK / LOGO
Marketing mix - product Prepared by Jude A
Branding
• Some marketers distinguish the psychological aspect of a brand from the experiential aspect. The experiential aspect consists of the sum of all points of contact with the brand and is known as the brand experience. The psychological aspect, sometimes referred to as the brand image, is a symbolic construct created within the minds of people and consists of all the information and expectations associated with a product or service.
•Marketers seek to develop or align the expectations comprising the brand experience through branding, so that a brand carries the "promise" that a product or service has a certain quality or characteristic which make it special or unique. A brand image may be developed by attributing a "personality" to or associating an "image" with a product or service, whereby the personality or image is "branded" into the consciousness of consumers. A brand is therefore one of the most valuable elements in an advertising theme, as it demonstrates what the brand owner is able to offer in the marketplace. The art of creating and maintaining a brand is called brand management. You're creating the story.
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Branding• A brand which is widely known in the marketplace acquires brand
recognition. Where brand recognition builds up to a point where a brand enjoys a mass of positive sentiment in the marketplace, it is said to have achieved brand franchise. One goal in brand recognition is the identification of a brand without the name of the company present. Disney has been successful at branding with their particular script font (originally Walt Disney's signature, but later translated to go.com).
• Brand equity measures the total value of the brand to the brand owner, and reflects the extent of brand franchise. The term brand name is often used interchangeably with "brand", although it is more correctly used to specifically denote written or spoken linguistic elements of a brand. In this context a "brand name" constitutes a type of trademark, if the brand name exclusively identifies the brand owner as the commercial source of products or services. A brand owner may seek to protect proprietary rights in relation to a brand name through trademark registration.
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• The act of associating a product or service with a brand has become part of pop culture. Most products have some kind of brand identity, from common table salt to designer clothes. In non-commercial contexts, the marketing of entities which supply ideas or promises rather than product and services (eg. political parties or religious organizations) may also be known as "branding".
• Consumers may look on branding as an important value added aspect of products or services, as it often serves to denote a certain attractive quality or characteristic. From the perspective of brand owners, branded products or services also command higher prices. Where two products resemble each other, but one of the products has no associated branding (such as a generic, store-branded product), people may often select the more expensive branded product on the basis of the quality of the brand or the reputation of the brand owner.
• Advertising spokespersons have also become part of some brands, for example: Mr. Whipple of Charmin toilet tissue and Tony the Tiger of Kellogg’s.
Marketing mix - product Prepared by Jude A
Brand monopoly
• Brand Monopoly
In economic terms the "brand" is, in effect, a device to create a
"monopoly" - or at least some form of "imperfect competition" –
so that the brand owner can obtain some of the benefits which
accrue to a monopoly, particularly those related to decreased
price competition. In thiscontext, most "branding" is
established by promotional means. However,
there is also a legal dimension, for it is essential that the brand
names and trademarks are protected by all means available.
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Marketing mix - product Prepared by Jude A
The monopoly may also be extended, or even created, by patent, copyright and
other sui generis intellectual property regimes (eg: Plant Varieties Act, Design Act, confidential
means of manufacture (secret recipe) etc).
In all these contexts, retailers' "own label" brands can be just as powerful. The "brand",
whatever its derivation, is a very important investment for any organization. RHM (Rank Hovis
McDougall), for example, have valued their international brands at anything up to twenty times
their annual earnings.
Marketing mix - product Prepared by Jude A
Branding policies
• There are a number of possible policies.
Company name• Often, especially in the industrial sector, it is just the company's name
which is promoted (leading to one of the most powerful statements of "branding"; the saying, before the company's downgrading, "No-one ever got fired for buying IBM").
• Family branding is a marketing strategy that involves selling several related products under one brand name. It is contrasted with individual branding in which each product in a portfolio is given a unique identity and brand name.
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• There are often economies of scope associated with family branding since several products can efficiently be promoted with a single advertisement or campaign. Family branding facilitates new product introductions by providing a 'foot-in-the-door' in potential customers' evoked set. When considering purchasing a new type of product, potential customers will tend to evoke in their minds a product with a familiar brand name. Being a part of this evoked set could lead to trial purchase, product acceptance, or other advantages.
• Family branding imposes on the brand owner a greater burden to maintain consistent quality and brand equity. If the quality of one product in the brand family is compromised, it could reduce sales of all the others. Family branding should only be done when a product line consists of products of similar quality.
Marketing mix - product Prepared by Jude A
An umbrella brand/FAMILY BRAND
• Umbrella brandAn umbrella brand is a brand that covers diverse kinds of products which
are more or less related.• It applies also to any company that is identified only by its brand and
history. Such a company now only acts as designer and distributor.• A company under the umbrella brand designation no longer
manufactures its own product, but its licenses and designs are sold to other manufacturers. The most common products to be rebranded are televisions, video cassette recorders, DVD players/recorders, and portable CD players.
• Along similar lines, an umbrella place brand is a brand used by a locality to attract the attention of different kinds of audiences, e.g. incoming tourists, investors, students or settlers.
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Individual branding
Individual branding, also called MultiBranding is the marketing strategy ofgiving each product in a product portfolio its own unique brand name. This iscontrasted with family branding in which the products in a product line are giventhe same brand name. The advantage of individual branding is that eachproduct has an image and identity that isunique. This facilitates the positioning process. That means that there are lessHalo effects and one can position all products differently without making tradeoffs.
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Derived brands
• Derived Brands
In this case the supplier of a key component, used by a number of suppliers
of the end-product, may wish to guarantee its own position by promoting that
component as a brand in its own right. The most frequently quoted example
is Intel (in the PC market, with the slogan 'Intel Inside'), but the sweetener
Aspartame used much the same approach (to lock in the soft drinks
manufacturers who represented a major market for the product).
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Brand development
• Brand Development• In terms of existing products, brands may be developed in a number of
ways:• Brand extensionThe existing strong brand name can be used as a vehicle for new or modified
products;for example, after many years of running just one brand, Coca-Cola launched
"Diet Coke“and "Cherry Coke"; although its subsequent change to its main brand and theretrenchment to 'Classic Coke' demonstrated some of the problems this may
cause!Procter & Gamble (P&G), in particular, has made regular use of this device,
extending itsstrongest brand names (such as Fairy Soap) into new markets (the very
successful FairyLiquid, and more recently Fairy Automatic).
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Multi brands
• Multibrands• Alternatively, in a market that is fragmented amongst a number of
brands a supplier can choose deliberately to launch totally new brands in apparent competition with its own existing strong brand (and often with identical product characteristics); simply to soak up some of the share of the market which will in any case go to minor brands. The rationale is that having 3 out of 12 brands in such a market will give a greater overall share than having 1 out of 10 (even if much of the share of these new brands is taken from the existing one). In its most extreme manifestation, a supplier pioneering a new market which it believes will be particularly attractive may choose immediately to launch a second brand in competition with its first, in order to pre-empt others entering the market.
• Individual brand names naturally allow greater flexibility by permitting a variety of different products, of differing quality, to be sold without confusing the consumer's perception of what business the company is in or diluting higher quality products.
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Branding
• Once again, Procter & Gamble is a leading exponent of this philosophy, running as many as ten detergent brands in the US market. This also increases the total number of "facings" it receives on supermarket shelves. Sara Lee, on the other hand, uses it to keep the very different parts of the business separate --from Sara Lee cakes through Kiwi polishes to L'Eggs pantyhose. In the hotel business, Marriott uses the name Fairfield Inns for its budget chain (and Ramada uses Rodeway for its own cheaper hotels).
• Cannibalism is a particular problem of a "multibrand" approach, in which the new brand takes business away from an established one which the organization also owns. This may be acceptable (indeed to be expected) if there is a net gain overall. Alternatively, it may be the price the organization is willing to pay for shifting its position in the market; the new product being one stage in this process.
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PRODUCT QUALITY
WHAT IS QUALITYQuality refers to the distinctive characteristics or properties of a person,
object, process or other thing .
• ISO 9000 defines quality as “the degree to which a set of inherent characteristic fulfils requirements".
• For Six Sigma quality is the value added by a productive endeavor. Quality comes in two flavors: potential quality and actual quality.
Potential quality is the knownmaximum possible value added per unit of input. Actual quality is the
current value added per unit ofinput. The difference between potential and actual quality is waste.
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Marketing mix - product Prepared by Jude A
WHAT IS PRODUCT QUALITYProduct Quality refers to the distinctive characteristics of a product.Such characteristics may enhance a subject's distinctiveness, or may denotesome degree of achievement or excellence. When used in relation to people,
theterm may also signify a personal character or trait. When used in relation tomanagement, the term may be easily defined as "reduction of variability" or"compliance with specifications".
QUALITY CIRCLE• A quality circle is a volunteer group composed of workers who meet
together to discuss workplace improvement, and make presentations to management with their ideas. Typical topics are improving safety, improving product design, and improvement in manufacturing process. Quality circles have the advantage of continuity, the circle remains intact from project to project. (For a comparison to Quality Improvement Teams see Juran's Quality by Design, referenced below).
• Quality Circles were started in Japan in 1962 ( Kaoru Ishikawa has been credited for creating Quality Circles) as another method of improving quality. The movement in Japan was coordinated by the Japanese Union of Scientists and Engineers (JUSE).
Marketing mix - product Prepared by Jude A
PRODUCT QUALITY
• Many different techniques and concepts have evolved to improve product or service quality, including SPC, Zero Defects, Six Sigma, quality circles, TQM, Quality Management Systems(A quality management system (QMS) is a system that outlines the policies and procedures necessary to improve and control the various processes that will ultimately lead to improved business performance. One of their purposes is quality control in manufacturing. (ISO 9001 and others) and continuous improvement.
• The meaning for the term quality has developed over time. Seven distinctive interpretations:
• "Conformance to specifications" (Phil Crosby in the 1980s). The difficulty with this is that the specifications may not be what the customer wants; Crosby treats this as a separate problem.
• "Fitness for use" (Joseph M. Juran). Fitness is defined by the customer.
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Marketing mix - product Prepared by Jude A
• A two-dimensional model of quality (Noriaki Kano and others). The quality has two dimensions: "must-be quality" and "attractive quality". The former is near to the "fitness for use" and the latter is what the customer would love, but has not yet thought about. Supporters characterise this model more succinctly as: "Products and services that meet or exceed customers' expectations". One writer believes (without citation) that this is today the most used interpretation for the term quality.
• The concept of quality evolved from inspection, measurement, and testing, which had been in practice for many, many years. Long ago, an artist or a sculptor took pride in his work and as a result always tried to excel in what was created. Mass production systems brought the concept of inspection by someone other than the craftsman in the first half of the 20th century.
Marketing mix - product Prepared by Jude A
PRODUCT QUALITY
• "Value to some person" (Gerald M. Weinberg) • (W. Edwards Deming), "Costs go down and productivity goes up, as
improvement of quality is accomplished by better management of design, engineering, testing and by improvement of processes. Better quality at lower price has a chance to capture a market. Cutting costs without improvement of quality is futile." "Quality and the Required Style of Management" 1988 See http://www.deming.org/
• "The loss a product imposes on society after it is shipped" (Genichi Taguchi). Taguchi?s definition of quality is based on a more comprehensive view of the production system.
• Energy quality, associated with both the energy engineering of industrial systems and the qualitative differences in the trophic levels of an ecosystem.
• However, the American Society for Quality defines "quality" as "a subjective term for which each person has his or her own definition." Source: http://www.asq.org/glossary/q.html
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Marketing mix - product Prepared by Jude A
PRODUCT QUALITY
• Six Sigma is a methodology to manage process variations that cause defects, defined as unacceptable deviation from the mean or target; and to systematically work towards managing variation to eliminate those defects[1]. The objective of Six Sigma is to deliver high performance, reliability, and value to the end customer. It was pioneered by Bill Smith at Motorola in 1986[2] and was originally defined[3] as a metric for measuring defects and improving quality; and a methodology to reduce defect levels below 3.4 Defects Per (one) Million Opportunities (DPMO). Six Sigma has now grown beyond defect control.
• Six Sigma is a registered service mark and trademark of Motorola, Inc
Every organisation should therefore ensure that the product quality is improvedUpon. Product quality is also very important in so far as marketing is concerned.Quality can affect the demand for a product. When product quality is very low, May also decrease for that product and vice-versa.Management should ensure the quality of its products:
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Marketing mix - product Prepared by Jude A
PRODUCT QUALITY
Six Sigma has two key methodologies[16] – DMAIC and DMADV. DMAIC is used to
improve an existing business process. DMADV is used to create new product designs or
process designs in such a way that it results in a more predictable, mature and defect
free performance. Sometimes a DMAIC project may turn into a DFSS project because
the process in question requires complete redesign to bring about the desired degree of
improvement.
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Marketing mix - product Prepared by Jude A
• DMAIC1. Basic methodology consists of the following five phases:2. Define formally define the process improvement goals that are
consistent with customer demands and enterprise strategy. 3. Measure to define baseline measurements on current process for
future comparison. Map and measure process in question and collect required process data.
4. Analyze to verify relationship and causality of factors. What is the relationship? Are there other factors that have not been considered?
5. Improve optimize the process based upon the analysis using techniques like Design of Experiments.
6. Control setup pilot runs to establish process capability, transition to production and thereafter continuously measure the process and institute control mechanisms to ensure that variances are corrected before they result in defects.
Marketing mix - product Prepared by Jude A
PRODUCT QUALITY
• DMADV1. Basic methodology consists of the following five phases:2. Define formally define the goals of the design activity that are consistent
with customer demands and enterprise strategy. 3. Measure identify CTQs, product capabilities, production process capability,
risk assessment, etc. 4. Analyze develop and design alternatives, create high-level design and
evaluate design capability to select the best design. 5. Design develop detail design, optimize design, and plan for design
verification. This phase may require simulations. 6. Verify design, setup pilot runs, implement production process and
handover to process owners. 7. Also see Design for Six Sigma quality.8. Some people have used DMAICR (realize). Others contend that focusing
on the financial gains realized through Six Sigma is counter-productive and that said financial gains are simply byproducts of a good process improvement.
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Marketing mix - product Prepared by Jude A
PRODUCT QUALITY
WHAT CAN AFFECT PRODUCT QUALITY• The use of say the wrong ingredients in producing a product, can affect its
quality• Wrong procedures can affect the product quality• Failure to clean hands and production areas can affect product quality• Failure to follow the quality procedure in an organisation• Unhygienic and unsanitary conditions can affect product quality.
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Marketing mix - product Prepared by Jude A
Quality can be a big issue of concern in companies, because it can have serious
implications on demand.
QUALITY IMPLEMENTATION management and implementation is very vital to
ensure that products are of the right quality. There should be quality policies,
objectives, standards, measurement, control and implementation and
documentation.
Marketing mix - product Prepared by Jude A
DESIGNING PRODUCTS
NEW PRODUCT DEVELOPMENT STRATEGY
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Marketing mix - product Prepared by Jude A
The New Product Development Process - NPD
1. Idea generation:
2. Idea screening
3. Concept development and testing
4. Outlining Marketing strategies
5. Business Analysis
6. Product development
7. Test marketing
8. Commercialisation
9. MonitoringControlling
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Marketing mix - product Prepared by Jude A
Idea generation
• ideas for new products obtained from customers, the R&D department, competitors, focus groups, employees, or trade shows
• formal idea generating techniques include attribute listing, forced relationships, brainstorming, morphological analysis, problem analysis, virtual prototyping, and rapid prototyping
IDEA SCREENING• eliminate unsound concepts • must ask three questions: • will the target market benefit from the product • is it technically feasible to manufacture the product • will the product be profitable
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Marketing mix - product Prepared by Jude A
NPD
Concept development and testing• develop the marketing and engineering details • who is the target market • what benefits will the product provide • how will consumers react to the product • how will the product be produced • what will it cost to produce it • test the concept by asking a sample of prospective customers what they
think of the idea BUSINESS ANALYSIS• estimate likely selling price • estimate sales volume • estimate profitability and breakeven point
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Marketing mix - product Prepared by Jude A
TEST MARKETING• produce a physical prototype or mock-up • test the product in typical usage situations • make adjustments where necessary • produce an initial run of the product and sell it in a test
market area to determine customer acceptance COMMERCIALISATION• launch the product • produce and place advertisements and other promotions • fill the distribution pipeline with product • critical path analysis is useful at this stage
Marketing mix - product Prepared by Jude A
PRODUCT LINE DECISION
• A product line is a group of products that are closely related, either because they function in a similar manner, are sold to the same customer group, are marketed through the same types of outlets or fall within given price ranges.
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Marketing mix - product Prepared by Jude A
PRODUCT LINE
Television Laptops Cars Mobile WatchesPanasonicSharpSonyLGTechnicsSamsung
HPPackard bellMicrosoftDellPC worldSony
NokiaMotorolaSamsungLGSiemensSargemSony E
RolexSeikoSeconda
ProductLine length
Product line width
JaguarMercedesRoverVauxhallCorollaNissanAudiFerrariOpelBMWHondaPajeroToyotaCamri
ProductLine Length
A B C D E
6 6
14
7
3
RadioToothpaste
McCleansCrest
SamsungSonyPanasonicLG
42
Digital Cameras
SonySamsungPhilipsLGPanasonicSharp
6
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Marketing mix - product Prepared by Jude A
PRODUCT LINE
• PRODUCT LINE FEATURING DECISION
PRODUCT MIX DECISION
An organisation with several product lines has a product mix. Philip Kotler defines product mix as follows
A product mix also called product assortment) is the set of all product lines and
items that a particular seller offers for sale to buyers
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Marketing mix - product Prepared by Jude A
PRODUCT LIFE CYCLE
Introduction Growth Maturity Decline
Profit
Loss Loss
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Sales & profit
Time (period)
Marketing mix - product Prepared by Jude A
PRODUCT LIFE CYCLE
Time
Sales
Marketing mix - product Prepared by Jude A
PRODUCT LIFE CYCLE
Marketing mix - product Prepared by Jude A
PRODUCT LIFE CYCLE
Marketing mix - product Prepared by Jude A
PRODUCT LIFE CYCLE
Marketing mix - product Prepared by Jude A
PRODUCT LIFE CYCLE
• The Product Life Cycle refers to the succession of stages a product goes
through. Product Life Cycle Management is the succession of strategies used
by management as a product goes through its life cycle. C
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•The product lifecycle goes though many phases and involves many professional disciplines and requires many skills, tools and processes. Product life cycle management (PLC) is to do with the life of a product in the market with respect to business/commercial costs and sales measures; whereas Product Lifecycle Management (PLM) is more to do with managing descriptions and properties of a product through its development and useful life, mainly from a business/engineering point of view.
Marketing mix - product Prepared by Jude A
PRODUCT LIFE CYCLE
New product development stage • very expensive • no sales revenue • losses Introduction stage • cost high • sales volume low • no/little competition - competitive manufacturers watch for acceptance/
segmentgrowth• losses • Price skimming is possible for some companies, others may decide to
use penetration pricing. • Promotion is informative. Businesses use television, radio, newspapers
etc to inform customers about the product.
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Marketing mix - product Prepared by Jude A
Growth stage • costs reduced due to economies of scale • sales volume increases significantly • profitability • public awareness • competition begins to increase with a few new players in
establishing market
prices to maximize market share • Price increases due to increase in demand.
Marketing mix - product Prepared by Jude A
PRODUCT LIFE CYCLE
Maturity stage • costs are very low as businesses are well established in market • sales volume peaks • increase in competitive offerings (increase in competitive activities).• prices tend to drop due to the proliferation of competing products • brand differentiation, feature diversification, as each player seeks to
differentiate from competition with "how much product" is offered • very profitable, but profitability starts to decline due to more
competition and price reduction.Decline stage • costs become counter-optimal • sales volume decline or stabilize • prices, profitability diminish (very low)• profit becomes more a challenge of production/distribution efficiency
than increased sales. • Profits drop significantly. C
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Marketing mix - product Prepared by Jude A
MARKETING MIX and the PRODUCT LIFE CYCLE
In this section, we are going to examine how the marketing mix changesthroughout the different stages of the product life cycle
INTRODUCTION• Price: Price skimming or penetration • Product: New products being introduced• Place: Selective distribution • Promotion: informative promotion to inform customers about new products
over radio, television, newspapers, internet & outdoor.• People: Satisfaction of employees is very important.• Physical evidence: The product needs to be more attractive, appealing and
should include all product features to attract the market.• Process: Customers needs to get access to the products. Therefore
accessibility is very vital. The goods needs to be produced following the right production process and it should be made available to the market after production, following the distribution network.
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Marketing mix - product Prepared by Jude A
GROWTH• Price: Price depends on the market situation: at this stage it will tend to increase
because of growing demand.• Product: The product at this stage should be a topmost priority for businesses. The
quality should be improved upon because of competitors entering the market.• Place: Distribution tends to be intensive, due to growing demand. Distribution will
depend on the kind of products. For convenience products it will be more intensive and for shopping products, it will be selective and for Speciality goods, it will be selective.
• Promotion: More aggressive promotion to inform and persuade customers about the products. Due to more competition, promotion tends to be more intensive.
• People: At this stage employee satisfaction and customer satisfaction is vital.• Physical evidence: Products should be made to be more attractive to customers.• Process: Customers should know where the products are and they should have
access to these products through the channel of distribution.
Marketing mix - product Prepared by Jude A
MARKETING MIX AND THE PRODUCT LIFE CYCLE
MATURITY• Price: Price will tend to reduce at this stage because of growing
competition.• Product: Product adjustment in terms of design, quality etc because of
more competitive activities.• Place: Distribution will depend on the product. But it tends to be more
intensive.• Promotion: More aggressive promotion due to high competition. More
sales promotion such as BOGOG, BOG2F, price and quantity discounts, coupons, vouchers, money off, games and competitions, free samples etc.
• People: Employee satisfaction becomes a major priority because the more employees are satisfied, the more services they will perform and the more products they will produce.
• Physical evidence: Product attractiveness becomes a major issue. • Process: Products are made available to customers. Accessibility of the
products is very important.
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Marketing mix - product Prepared by Jude A
DECLINE• Price: More price reductions due to fall in demand.• Product: Product redesign and rebranding are possible. Product
quality may be improved, new products may be introduced and products may be repackaged because of total fall in demand.
• Place: Intensive distribution – again distribution will depend on the type of product.
• Promotion – more sales promotion in order to cover up the loss due to fall in demand.
• People – The satisfaction of staff is vital in the production of goods and services
• Physical evidence – Products are remodified and quality is improved upon to make the product more attractive and to offer value for money.
• Process – Goods should be made available to customers.
Marketing mix - product Prepared by Jude A
THE PRODUCT LIFECYCLE CHARACTERISTICSCHARCTERISTICS INTRODUCTION GROWTH MATURITY DECLINE
Sales Low Increasing High Declining
Profits Loss Peaking High Low to Zero
Cash flow Negative Moderate High Low
Customers Innovative Mass Market Mass Market Laggards
Strategic focus Expanding market Market penetration Defensive marketing Productivity
Marketing
expenditure
High High-declining Falling Low
Product plan Market to innovators, early adopters; high product failure rate; basic- developing
Expand for early and late majority; less product distinctiveness; improve models.
Widen product lines, rationalize brand; less competition; differentiate.
Niche marketing; reinforce brand loyalty; rationalize
Competitor reaction No reaction Maximum new entrants - high
Marginal competitors exit
Competition declines
Pricing plan High skimming Differentiated for each segment
Lowest - competitive Price cutting rises for niches
Distribution plan Unstable pattern – widen channels, seize shelf space.
Increasing pattern – competitor activity increasing.
Control passing to fewer firms
Segmented, fragmented and localized.
Promotional plan Push for awareness Create ‘pull’ Withdraw Cease
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Marketing mix - product Prepared by Jude A
IMPORTANCE OF THE PRODUCT LIFE CYCLE
1. The product life cycle is important in planning and control
2. Strategic formulation, implementation and analysis
3. Advertising strategy
4. Product management
5. Targeting and positioning
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