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PRODUCT

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  1. PRODUCT PRODUCT

  2. Marketing mix and product management. At the end of this module the learning actuates are. • What is a product? • Various levels of product. • How products are classified? • What is the concept of product life cycle? PRODUCT

  3. Marketing mix and product management. Suggested readings. • Marketing management, Millennium edition by Kotler chapter1,10 and 13 . PRODUCT

  4. Marketing mix and product management. What is product? Product is anything that can be offered to a market to satisfy a want or need. PRODUCT

  5. Goods Services Experiences Events Persons Places Properties Organizations Information Ideas What is a Product? PRODUCT

  6. The Product and Product Mix Five Product Levels PRODUCT

  7. Marketing mix and product management. PRODUCT LEVELS • Core product • Basic product • Expected product • Augmented product • Potential product PRODUCT

  8. Marketing mix and product management. • Core product • Most fundamental benefit customer is buying. • Heart of the system. Refrigerator • Basic purpose. Preservation. • To preserve you need a compressor and cooling system. • This is core. PRODUCT

  9. Marketing mix and product management. 2. Basic product • Do you buy compressor? • You buy a basic product? • Formal Refrigerator • Compressor is mounted on a body /cabinet. • There is a door, shelves, trays. • This is basic product. PRODUCT

  10. Marketing mix and product management. EXPECTED PRODUCT • A set of attributes and conditions customers expect • This is expected from a marketer. Refrigerator • Freezer. • Bulb. • Thermostat. • Quiet not noisy. • Different types of shelves. • Antirust system. This is expected product. PRODUCT

  11. Marketing mix and product management. AUGMENTED PRODUCT • Prepare a product that exceeds customer expectation • Add further attributes • Each attribute adds cost • Will customer pay enough to cover the extra cost? Refrigerators • Easy financing scheme • Four year warranty on compressor • Free rice – cooker with every refrigerator purchased. PRODUCT

  12. Marketing mix and product management. POTENTIAL PRODUCT • Companies search for new ways to satisfy customers and distinguish their offer. • The future! Refrigerator Smart Refrigerator PRODUCT

  13. Marketing mix and product management. WHAT DO WE OBSERVE? • Most competition at augmentation level. • Constant innovation. • Understand how customers use their product. • As new features add cost. • Marketers have to find out that whether customers are willing to pay extra cost. • What is augmentation for one set of customers may be expected for the other. PRODUCT

  14. Marketing mix and product management. PRODUCT CLASSIFICATION • Durability and tangibility • Nondurable goods. • Durable goods • Services. B.  Consumer –goods classification • Convenience good. • Shopping goods • Speciality goods • Unsought goods. PRODUCT

  15. Marketing mix and product management. • Durability & Tangibility • Non-durable goods • Consumed in one or few uses • Consumed quickly • Frequent purchase • Need to make them available in many locations • Heavy promotion • Induce trial Example Coke, Modern bread, Lux Soap, Mother Diary Milk PRODUCT

  16. Marketing mix and product management. 2. Durable goods • Used many times • More personal selling/service • Seller’s assurance about product longevity Example • Refrigerators • Mixer • Car • Higher priced than non-durable • Consumer involvement is high as they are high priced PRODUCT

  17. Marketing mix and product management. 3. Services • Intangible • Inseparable • Variable • Perishable Example • Beauty parlour • Education Services • A Surgery • Listening to concert • Airlines PRODUCT

  18. Marketing mix and product management. Therefore • Products which are predominantly tangible are called goods • Products, which are predominantly intangible, are called services. PRODUCT

  19. Marketing mix and product management. B. Consumer – Goods classification Based on shopping habits • Convenience goods Goods purchased • Frequently • Immediately • Minimum effort Example • Newspapers • Bread • Milk Distributed at shops very near to households PRODUCT

  20. Marketing mix and product management. 2. Shopping goods • Goods that the customer in the process of selection and purchase • Characteristically compares on such basis as suitability, quality, price and style Examples • Cars • Clothing • Appliances PRODUCT

  21. Marketing mix and product management. 3. Speciality goods • Unique characteristics • Unique brand values • Buyers willing to make extra efforts Example • Arrow shirts Very few outlets, exclusive • Honda showrooms One in Badarpur, Udyog Nagar Customers willing to travel that far to buy their choice of goods PRODUCT

  22. Marketing mix and product management. 4. Unsought goods • Goods the consumer does not know about or does not normally think of buying • Consumers made aware through advertising Examples • Life insurance • Security equipments • Fitness equipment PRODUCT

  23. Marketing mix and product management. PRODUCT MIX • Set of all products and items that a particular seller offers for sale Example: • Nestle • Chocolates, Coffee, milk powder, baby foods, soups, instant noodles etc. PRODUCT

  24. Marketing mix and product management. Product Mix-concepts 1.   Width • How many different product lines are carried by the organization P & G • Five lines • Detergents, Toothpaste, Bar soap, diapers, paper tissue PRODUCT

  25. Marketing mix and product management. 2. Length • Total number of items in the mix • Total items 25 • Average length of a line is 25/5 = 5 • Depth • How many variants are offered of each product in the line Proctor and Gamble • Crest Toothpaste •   Comes in five sizes • Two formulations • Mint • Regular Total Depth = 5 X 2 = 10 PRODUCT

  26. Marketing mix and product management. 4. Consistency How closely related the various product lines are in end use, production requirements, distribution channels or some other way. Proctor and Gamble • Very consistent • Why • Products are available through the same distribution channels GE •   Products • Refrigerators • Aircraft Engine’s • Electricity equipments PRODUCT

  27. Marketing mix and product management. GE • Very inconsistent • Are Refrigerators, Aircraft engines and Electricity equipment available from same places • No ? • Refrigerators • Shops • Aircraft Engine’s • Direct PRODUCT

  28. The Product and the Product Mix • Product-line length • Line Stretching • Downmarket Stretch • The company may notice strong growth opportunities as mass retailers attract a growing number of shoppers • The company may wish to tie up lower-end competitors who might otherwise try to move upmarket • The company may find that the middle market is stagnating or declining • Upmarket Stretch • Two-Way Stretch PRODUCT

  29. Marketing mix and product management. PRODUCT LIFE CYCLE Four stages • Introduction • Growth • Maturity • Decline PRODUCT

  30. Marketing Through the Product Life Cycle Sales and Profit Life Cycles PRODUCT

  31. PLC Stages Introduction Growth Maturity Decline Low sales High costs per customer Negative profits Innovator customers Few competitors Stages of the Product Life Cycle PRODUCT

  32. PLC Stages Introduction Growth Maturity Decline Rising sales Average costs Rising profits Early adopters customers Growing competition Stages of the Product Life Cycle PRODUCT

  33. PLC Stages Introduction Growth Maturity Decline Peak sales Low costs High profits Middle majority customers Stable/declining competition Stages of the Product Life Cycle PRODUCT

  34. PLC Stages Introduction Growth Maturity Decline Declining sales Low costs Declining profits Laggard customers Declining competition Stages of the Product Life Cycle PRODUCT

  35. PLC Stages Introduction Growth Maturity Decline Objective: to create awareness and trial Offer a basic product Price at cost-plus Selective distribution Awareness – dealers and early adopters Induce trial via heavy sales promotion Objectives and Strategies for the Product Life Cycle PRODUCT

  36. PLC Stages Introduction Growth Maturity Decline Objective: maximize market share Offer service, product extensions, warranty Price to penetrate Intensive distribution Awareness and interest – mass market Reduce promotions due to heavy demand Objectives and Strategies for the Product Life Cycle PRODUCT

  37. PLC Stages Introduction Growth Maturity Decline Objective: maximize profit while defending market share Diversify brands/items Price to match or beat competition Intensive distribution Stress brand differences and benefits Increase promotions to encourage switching Objectives and Strategies for the Product Life Cycle PRODUCT

  38. PLC Stages Introduction Growth Maturity Decline Objective: reduce costs and milk the brand Phase out weak models Cut price Selective distribution Reduce advertising to levels needed to retain hard-core loyalists Reduce promotions to minimal levels Objectives and Strategies for the Product Life Cycle PRODUCT

  39. Marketing mix and product management. Why four stages in Product lifecycle? Marketers deploy different marketing strategies in different stages of product life-cycle . PRODUCT