Marketing Mix Example - 4Ps

7 p’s of marketing

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

Product Mix
Product mix is a combination of products manufactured or traded by the same business house to reinforce their presence in the market, increase market share and increase the turnover for more profitability. Normally the product mix is within the synergy of other products for a medium size organization. However large groups of Industries may have diversified products within core competency. Larsen & Toubro Ltd, Godrej, Reliance in India are some of the examples. One of the realities of business is that most firms deal with multi-products .This helps a firm diffuse its risk across different product groups/Also it enables the firm to appeal to a much larger group of customers or to different needs of the same customer group .So when Videocon chose to diversify into other consumer durables like music systems ,washing machines and refrigerators ,it sought to satisfy the needs of the middle and upper middle income group of consumers. Likewise , Bajaj Electricals.a household name in India, has almost ninety products in i8ts portfolio ranging from low value items like bulbs to high priced consumer durables like mixers and luminaires and lighting projects .The number of products carried by a firm at a given point of time is called its product mix. This product mix contains product lines and product items .In other words it’s a composite of products offered for sale by a firm. Product Mix Decisions Often firms take decisions to change their product mix. These decisions are dictated by the above factors and also by the changes occurring in the market place. Like the changing life-styles of Indian consumers led BPL-Sanyo to launch an entire range of white goods like refrigerators , washing machines, and microwave ovens .It also motivate the firm to launch other entertainment electronics. Rahejas, a well-known builders firm in Bombay, took a major decision to convert one of its theatre buildings in the western suburbs of

Bombay into a large garments and accessories store for men ,women and children, perhaps the first of its kind in India to have almost all products required by these customer groups Competition from low priced washing powders (mainly Nirma) forced Hindustan Levers to launch different brands of detergent powder at different price levels positioned at different market segments .Customer preferences for herbs, mainly shikakai motivated Lever to launch black Sunsilk Shampoo ,which has shikakai .Also ,low purchasing power. and cultural bias against shampoo market made Hindustan Lever consider smaller packaging mainly sachets , for single use .So, it is the changes or anticipated changes in the market place that motivates a firm to consider changes in its product mix.

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

The process
1. Idea Generation is often called the "fuzzy front end" of the NPD process o Ideas for new products can be obtained from basic research using a SWOT analysis (Strengths, weaknesses, Opportunities & Threats), Market and consumer trends, company's R&D department, competitors, focus groups, employees, salespeople, corporate spies, trade shows, or Ethnographic discovery methods (searching for user patterns and habits) may also be used to get an insight into new product lines or product features. o Idea Generation or Brainstorming of new product, service, or store concepts - idea generation techniques can begin when you have done your OPPORTUNITY ANALYSIS to support your ideas in the Idea Screening Phase (shown in the next development step). 2. Idea Screening o The object is to eliminate unsound concepts prior to devoting resources to them. o The screeners must ask at least three questions:  Will the customer in the target market benefit from the product?  What is the size and growth forecasts of the market segment/target market?  What is the current or expected competitive pressure for the product idea?





What are the industry sales and market trends the product idea is based on? Is it technically feasible to manufacture the product? Will the product be profitable when manufactured and delivered to the customer at the target price? Concept Development and Testing o Develop the marketing and engineering details  Who is the target market and who is the decision maker in the purchasing process?  What product features must the product incorporate?  What benefits will the product provide?  How will consumers react to the product?  How will the product be produced most cost effectively?  Prove feasibility through virtual computer aided rendering, and rapid prototyping  What will it cost to produce it? o Testing the Concept by asking a sample of prospective customers what they think of the idea. Usually via Choice Modelling. Business Analysis o Estimate likely selling price based upon competition and customer feedback o Estimate sales volume based upon size of market and such tools as the Fourt-Woodlock equation o Estimate profitability and breakeven point Beta Testing and Market Testing o Produce a physical prototype or mock-up o Test the product (and its packaging) in typical usage situations o Conduct focus group customer interviews or introduce at trade show o Make adjustments where necessary o Produce an initial run of the product and sell it in a test market area to determine customer acceptance Technical Implementation o New program initiation o Resource estimation o Requirement publication o Engineering operations planning o Department scheduling
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Supplier collaboration Logistics plan Resource plan publication Program review and monitoring Contingencies - what-if planning 7. Commercialization (often considered post-NPD) o Launch the product o Produce and place advertisements and other promotions o Fill the distribution pipeline with product o Critical path analysis is most useful at this stage
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These steps may be iterated as needed. Some steps may be eliminated. To reduce the time that the NPD process takes, many companies are completing several steps at the same time (referred to as concurrent engineering or time to market). Most industry leaders see new product development as a proactive process where resources are allocated to identify market changes and seize upon new product opportunities before they occur (in contrast to a reactive strategy in which nothing is done until problems occur or the competitor introduces an innovation). Many industry leaders see new product development as an ongoing process (referred to as continuous development) in which the entire organization is always looking for opportunities. For the more innovative products indicated on the diagram above, great amounts of uncertainty and change may exist, which makes it difficult or impossible to plan the complete project before starting it. In this case, a more flexible approach may be advisable. Because the NPD process typically requires both engineering and marketing expertise, cross-functional teams are a common way of organizing projects. The team is responsible for all aspects of the project, from initial idea generation to final commercialization, and they usually report to senior management (often to a vice president or Program Manager). In those industries where products are technically complex, development research is typically expensive, and product life cycles are relatively short, strategic alliances among several organizations helps to spread the costs, provide access to a wider skill set, and speeds the overall process. Also, notice that because engineering and marketing expertise are usually both critical to the process, choosing an appropriate blend of the two is important. Observe (for example, by looking at the See also or References sections below) that this article is slanted more toward the marketing side. For more of an engineering slant, see the Ulrich and Eppinger, Ullman references below.

Chapter 11: Managing Products And Brands

I. PRODUCT LIFE CYCLE o A way to trace the stages of a product's acceptance from its introduction to its demise. o One of the most familiar concepts in marketing o A prevalent marketing management tool o Refers to the life of the product category o The time a product category spends in a stage of the product life cycle may vary from a few weeks to decades. o Does not predict how long a product category will remain in any one stage o A tool to help marketers understand  where their product is now  what may happen

which strategies are normally appropriate.

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

B. Growth Stage
Characteristics Sales grow at an increasing rate. Large companies may acquire small pioneering firms. Promotion emphasis heavy brand advertising Gaining wider distribution is a key goal Toward the end of this stage prices normally fall Development costs have been recovered

Many competitors enter the market. Profits are healthy Differences between brands.

profits reach their peak. Sales volume has created economies of scale.

C. Maturity Stage
Sales continue to increase but at a decreasing rate Annual models of many products Product lines are widened or extended Heavy promotions to both the dealers and consumers are required.

The marketplace is approaching saturation An emphasis on product style rather than function marginal competitors begin dropping out of the market. Prices and profits begin to fall.


Decline Stage
Falling demand forces many competitors out of the market

Signaled by a long-run drop in sales. The rate of decline is governed by
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how rapidly consumer tastes change or

A few small specialty firms may still manufacture the product.

how rapidly substitute products are adopted. Strategies Deletion. Harvesting To prevent slipping into decline

Dropping a product from the company’s product line, is the most drastic strategy. Company retains the product but reduces marketing support o Promote more frequent use of the product by current customers o Find new target markets for the product o Find new uses for the product o Price the product below the market o Develop new distribution channels o Add new ingredients

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Delete old ingredients Make a dramatic new guarantee

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

Each type suggests different marketing strategies

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Significant education of the customer is required. Extended introductory period.

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Sales begin immediately Little learning is required by the consumer Benefits of purchase are readily understood.


Most often appear in women’s and men’s clothing Length of the cycles may be years or decades.


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Rapid sales on introduction Equally rapid decline. Often novelties and have a short life cycle.

3. The Product Level: Multiple life cycles (class and form) may exist.

Entire product category or industry Such as video game consoles and software. Variations within the class Such as the computing capability of game consoles.

Product class
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Product form

4. The Life Cycle and Consumers A product diffuses, or spreads, through the population, a concept called the diffusion of innovation.



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Eager to try new ideas and products Have higher incomes Better educated than noninnovators Much more reliant on group norms Oriented to the local community Tend to be opinion leaders. Collect more information Evaluate more brands than early adopters. Rely on friends, neighbors, and opinion leaders for information and norms. Adopt because most of their friends have already done so. For them, adoption is the result of pressure to conform. Are older than the others Tend to be below average in income and education. Do not rely on the norms of the group. Independent because they are tradition-bound Have the lowest socioeconomic status Are suspicious of new products Alienated from an advancing society

Early Adopters 13.5%

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Early Majority 34%

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Late Majority


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Common reasons for resisting a product in the introduction stage are usage barriers product is incompatible with existing habits value barriers product provides no incentive to change risk barriers physical, economic, or social psychological barriers cultural differences or image.

Product Characteristics and the Rate of Adoption o The degree of difficulty involved in understanding and using a new product. Complexity o Slows diffusion. o The degree to which the new product is consistent with existing values and product knowledge, past experiences, and current needs. Compatibility
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Incompatibility slows diffusion. The degree to which a product is perceived to be superior to existing substitutes.

Relative advantage Speeds diffusion o The degree to which the benefits and other results of using a new product can be observed by others and communicated to target customers.
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Speeds diffusion is the degree to which a product can be tried on a limited basis. Speeds diffusion Word-of-mouth communication


Marketing Implications of the Adoption Process Two types of communication aid the diffusion process
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Marketing to consumers The effectiveness of different messages and appeals depends on the type of adopter targeted.


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Product manager is responsible for marketing products through the successive stages of their life cycles. Product (or brand) manager manages the marketing efforts for a close-knit family of products or brands. Three ways to manage:  modify the product  modify the market

reposition the product.

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

modification strategies involve: D. Reposition the Product Product repositioning

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Finding new users. Increasing use among existing users. Creating new use situations. Changing the place a product occupies in a consumer’s mind relative to competitive products. Reposition a product by changing one of four marketing mix elements.

Four factors that trigger a repositioning action are: Reacting to a Competitor’s o Competitor’s position is adversely affecting sales and market share. Position. o Repositioning a product allows it to reach a new market. Reaching a New Market. Catching a Rising Trend.

Changing consumer trends can also lead to repositioning a product.

For example, consumer interest in “functional foods” that offer health and dietary benefits beyond nutrition inspired repositioning of oatmeal. o adding value to the product (or line) o Additional features Trading up
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Higher quality materials. Reducing the number of features Lower quality Lower price.

Changing the Value Offered. Trading down

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Reducing the content of packages without changing package size and maintaining the package price.

III. BRANDING AND BRAND MANAGEMENT Branding Decisions A name, term, symbol, design, or combination thereof that identifies a seller's products and differentiates them from competitors' Brand products. Brand name That part of the brand that can be spoken.. Brand mark The element of the brand that cannot be spoken, such as symbols Trade name commercial, legal name under which a company does business. Trademarks Legal term indicating the owner's exclusive right to use the brand or part of the brand. Phrases, Abbreviations, Symbols, Shapes and Color o Failure to protect trademarks may make product names

combinations may also qualify for trademark protection. The MARK has to be used continuously to be protected Rights to a trademark continue for as long as it is used. Others are prohibited from using the brand without permission. A service mark performs the same functions for service businesses. Lanham Act of 1946 protects Trademarks
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generic. o All of the products below were trademarked.
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Sets severe penalties for trademark infringement.

The injured party can sue for triple damages and recovery of any profit. Generic product name identifies a product by class or type and cannot be trademarked

Some still are! aspirin formica® sheetrock® band-aid® kerosene styrofoam® dry ice magic marker® trampoline dumpster® nylon vaseline® escalator ping-pong® yo-yo

Benefits of Branding Identification The brand allows the product to be differentiated from others and serves as an indicator of quality to consumers

Encourages repeat sales Facilitates New Product Introduction Because a familiar brand is more quickly accepted by consumers.
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product counterfeiting has been a growing problem. Counterfeit products can steal sales from the original manufacturer or hurt the company’s reputation.

Some Branding Concepts
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The value of company and brand names. the added value a given brand name gives to a product beyond the functional benefits provided.

Brand Equity Often represented by the premium a consumer will pay for one brand over another when the functional benefits provided are identical Brand Loyalty Consistent preference for one brand over all others. Leads to repeat purchases. Brand Identity important to developing brand loyalty A brand so dominant in consumers' minds that they think of it immediately when a product category, use situation, product Master Brand attribute, or customer benefit is mentioned.

A. Brand Personality and Brand Equity Brand Equity has two distinct advantages: 1. Brand equity provides a competitive advantage. Consumers are often willing to pay a higher price for a product with brand equity. 1. Creating Brand Equity o Brand equity is created by marketing programs o Forge strong, favorable, and unique consumer associations and experiences with a brand

Sequential four-step building process: 1. Develop positive brand awareness and an association in consumer’s minds with a product class or need to give a brand an identity. 2. Establish a brand’s meaning in the minds of consumers. 3. Elicit the proper consumer responses to a brand’s identity and meaning. 4. Attention to how consumers think and feel about a brand.
o 5.

Create a consumer-brand resonance evident in an intense, active loyalty relationship between consumers and the brand.

2. Valuing Brand Equity o Brand equity is a financial advantage for the brand owner. o Established brands are considered intangible assets. o Can appreciate in value when effectively managed

Can lose value when not managed properly.

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

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

Be carefully checked for prior impressions or undesirable images in different languages and cultures..

D. Branding Strategies

1. Manufacturer Branding. Multiproduct branding
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Use one name for all its products. Called blanket branding strategy Called family branding strategy.

Makes possible line extensions

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Subbranding combines a family brand with a new brand. Allows for brand extension  Using a current brand name to enter a completely different product class.  Too many uses for one brand name can dilute the meaning. Co-branding  The use of a combination of brand names to enhance the perceived value of a product  May be used to identify product ingredients or components.  May be used when two organizations wish to collaborate to offer a product.

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

Makes Pan-European advertising and promotion programs possible.

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

Use the brand name of a wholesaler or retailer. Advantages of Private Brands to retailers or wholesalers o Higher gross margin o Manufacturer can not discontinue

Manufacturer's Brands vs. Private Brands Advantages of Manufacturer's Brands to retailers or wholesalers o Can enhance retailer's image o can carry lower inventory

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ties consumer to dealer ties salespeople to dealer

manufacture gets the blame for problems dealer controls marketing mix Disadvantages (risks) of Private brands to retailers or wholesalers o Higher marketing costs o Must buy in large quantities o Dealer gets the blame for problems
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Disadvantages (risks) of Manufacturer Brands retailers or wholesalers


Lower margins

risk of lower perceived quality

3. Mixed Branding. o A compromise between manufacturer and private branding o A firm markets products under its own name and that of a reseller The segment attracted to the reseller is different from the manufacturer’s own market. 4. Generic Branding. o a no-brand product that competes on price. o Low cost, no frills o Popular in late 1970's o 30%-40% cheaper than national brands o 20%-25% cheaper than store brands
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good market share in some categories

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


Package contents and ingredients. A. Creating Customer Value through Packaging and Labeling Packaging Functions Contain and Protect Products
1. 2. 3. 4.

spoilage tampering children Theft

Packaging Promotes Products Convenience and utility of the package can differentiate a product from the competition o Last opportunity to influence shoppers before they buy.
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Facilitate Recycling Reduce Environmental Damage Facilitate Storage Facilitate Use Wholesalers & Retailers want packages that

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Brand Image is often closely linked to packaging Are easy to  ship  store  stock on shelves. Protect the product Prevent spoilage or breakage


Consumers want packages that are Packaging is often used to segment markets, particularly by offering different sizes for different segments. 1. Communication Benefits. o Label information

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Extend shelf life. Easy to handle Easy to open Easy To reuse

Packaging can also have brand equity benefits, as in the case of L’eggs.

2. Functional Benefits. o Convenience o Product protection o Storage.

Consumer protection

3. Perceptual Benefits. o Create perception in the consumer’s mind. o Can connote  status  economy product quality. B. Global Trends in Packaging 1. Environmental Sensitivity

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The amount, composition, and disposal of packaging material continue to receive much attention. European countries have been trendsetters in packaging guidelines and environmental sensitivity. U.S. firms marketing in the EU have responded to these guidelines and ultimately benefited consumers outside the EU as

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

New packaging technology to extend shelf life (the time a product can be stored) and prevent spoilage is being developed with special applications for less-developed countries.

C. Labeling

Focuses on a promotional theme or logo Information for the consumer is secondary. Helps consumers in making proper product selections Helps lower cognitive dissonance May include care and use information may explain construction figures Introduced in 1974 Many Retailers will not stock products without

Persuasive labeling
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Informational labeling

Universal Product Codes (UPC)

Nutrition Labeling and Education Act of 1990 o Requires detailed nutritional information on most food packages

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Establishes standards for health claims on food packaging.

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

This issue is hotly contested between companies and consumer advocates.
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Warranty Strategy Product Warranties Warranty Express Warranty full warranty limited-coverage warranty

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


Implied Warranty Magnuson-Moss Warranty Federal Trade Commission Improvement Act

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Otherwise a full warranty is assumed.

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