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What is a product? Products are bundle of benefits that the customer values. Benefits may be tangibles, such as good design and functionality, or intangible, for example image. Meaning of a product A product is a physical good, service, ideas, person or place that is capable of offering tangible and intangible attributes that individuals or organisation regards as s o necessary worthwhile or satisfying that they are prepared to exchange money, patronage or some other unit of value in order to acquire. Product Mix Is the total sum of all the products and variants offered by an organisation. A small company serving a specialist need in an organisational market may have a very small tightly focus product mix. Van Dyck Belgian chocolates for example offer boxed chocolates, chocolate bars, fruit flavoured chocolate. Product Line A product line is a group of products that are closely related to each other. This relationship may be production orientated, in that the products have similar production requirement. A company such as Minolta may define three of its products lines as still camera, video camera Product Item These are the individual products or brands, each with its own features, benefits Product Length The total number of items within the product line is the product length. Product attributes a. Tangible attributes 1 Availability and delivery 2 Performance (usefulness, effectiveness, efficiency) 3 Price 4 Design (appearance, feel etc) 5 Packaging (durability, convenient size, information given) 6 The range of complementary products in a ‘line’ 7 The availability of accessories and suppliers for product use or maintenance b. Intangible attributes 1 Image 2 Perceived value
The first three layers have describe the product as it is now. Product classification Products can be classified as consumer goods or industrial goods.. quality level. The core benefits of any product may be functional of psychological and its definition must provide something for the marketer to work on to develop a differential advantage. reliability Augmented product This represents add-on extras that do not themselves form an intrinsic element of the product. The potential product can be defined in terms of its possible evolution for example new ways of differentiating itself from the competition. but will affect the satisfaction and benefits that gets from the exchange. For a car it will be the level of performance. toiletries. product features. washing machine Speciality goods – items like jewellery or expensive items of clothing . Consumer goods are sold directly to the person who will ultimately use them. None of this affects the actual computer system itself. Potential product The potential product layer acknowledges the dynamic and strategic nature of the product. The tools used to create the product include design specification. Industrial goods are used in the production of other products FMCG – Fast Moving Consumer Goods – items such as packaged food. but may be used by the producer or retailer to increase the product package. branding and packing. Actual/basic product This is essentially the means by which the marketer puts flesh on the core product. Expected product These are the attributes that customers expect when they buy a product/service. making it a real product that clearly represents and communicates the offer of the core benefit. and tobacco. like chocolate and toffees at the supermarket counter. It is also classified as staple goods (eg bread and potatoes) and impulse buys. but marketer also needs to think about what the product could be and should be in the future. beverages.Product level/Anatomy of product Core product Represents the heart of the product the main reason for its existence and purchase. Shopping goods – durable items like furniture. Classification of convenience goods Convenience goods – Weekly groceries are typical example.
2. wood Components. 4. sign. such as office stationery and cleaning materials Packaging Packaging deals with the product design. It is therefore a means of increasing or maintaining sales . It must protect the product before the consumer uses it. BRANDING “Branding is the culmination of a range of activities across the whole marketing mix. it should make the product easy to handle. for example plastic. e. colour etc. It is basically used dot make the product attractive to consumers and also to facilitate handling. Products may be branded for a number of reasons It aids product differentiation. the shape. It must satisfy legal requirement for e. It should facilitate a product use by the consumer for e. term. Functions of packaging 1.g. conveying a lot of information very quickly and concisely. Intel microchip in most PCs Supplies. (2005)p151 A brand is a name. expected performance and status”.Unsought goods – goods you did not realise you need them e. metal. ensuring that there is no damage in transit. symbol or design intended to identify the product of a seller and to differentiate it from those of competitors Objectives of branding The key benefit of branding is product differentiation and recognition. 3. major items of plant and machinery like a factory assembly line Accessories. It should act to inform consumers by providing necessary instruction for usage or display facts about nutritional value. food products must display composition and expiry date. This helps customers readily to identify the goods or services and thereby helps to create a customer loyalty to the brand. e.g. J.g wardrobe organisers Classification of industrial goods Industrial goods Installations.g. leading to a brand image that conveys a whole set of messages to the consumer… about quality. size. such as PCs Raw materials.g. price. For promotional purposes packaging should have the following. Blythe.
This can be used where there is little or no brand loyalty. sizes etc to a brand. However such use is required.g detergents Family branding uses the power of the brand name to assist all products in a range. Its production may or may not be tied to a physical product. by enhancing product recognition BRANDING STRATEGIES Brand extension is the introduction of new flavours. 2002) Characteristics of service marketing Intangibility: services cannot be touched or tasted Inseparable: services cannot be separated from the provider . to capitalise on existing brand loyalty Multi-branding is the introduction of a number of brands that all satisfy very similar product characteristics.) It supports brand extension or stretching. and that are not.’ (Cowell. for example. It eases the task of personal selling. since different brands of similar products may be developed to meet specific needs of categories of uses. in order to pick up buyer who are constantly changing brand e. there is no transfer of title (permanent ownership) to these tangible goods. This strategy is being used more and more by large companies. The more similar a product (whether an industrial good or consumer good) is competing goods. 1995) ‘any activity of benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything. or inextricable from. tied to.It maximises the impact of advertising for product identification and recognition.’(Kotler et al. of necessity. the more branding is necessary to create a separate product identity Branding leads to a readier acceptance of a manufacturer’s goods by wholesalers and retailer It reduces the importance of price differentials between goods It supports market segmentation. (Think of all the cereal brand produced by Kellogg’s. the sale of a product or another service. such as Heinz Service and service marketing Service include: ‘those separately identifiable but intangible activities that provide want-satisfaction. To produce a service may or may not require the use of tangible goods or assets.
g.g. cosmetics including moisturiser. production. and distribution Managing the product portfolio The product mix can be reduce or extended 1 Introducing variations in models or style e. toiletries and health products Depth – average number of items per product line: e. end users. and eyeshadow Consistency – closeness of relationships in product range e. lipstick. a loss maker Growth: Sales rise with acceptance – profits Unit costs fall within increased production Competitors attracted to market Maturity: Sales growth slows – stable profits Increasing competition – prices/profits fall Prolonging life by modification. Growth.g. which are Introduction. toner. Introduction: High initial unit cost of production Takes time to be accepted by consumers Initially. cleanser. grow to reach maturity and then enter old age and decline. repositioning Decline: Profits decline as sales volumes fall Gradual withdrawal of production.g. haircare. Products move through 4 stages. Product mix description Width – number of product lines: e. types and pot sizes 2 Differentiating the quality of product offered at different price levels eg . cosmetics. Maturity and Decline. promotion Product portfolio A company’s product portfolio (or product assortment or mix) is all the product lines and items that the company offers for sale.Heterogeneity: (or lack or ‘sameness’): the standard of service will vary with each delivery Perishability: services cannot be stored for provision ‘later’ Ownership: service purchase does not transfer ownership of property The product life cycle The product life cycle uses a ‘biological’ analogy to suggest that products are born (or introduced). a paint manufacturer introducing different colours.
in which case the product would be ‘harvested’ in the short term. The generic product is clearly popular. It still needs to spend on marketing to ‘maintain’ its position. Problem child (or question mark): A small market share in a high growth industry. use relatively little. unless the cash flow position is strong. but customer support for the particular brand is limited. Because of the SBU position in the market. The decision faced by the company is whether to hold on to the dog for strategic reasons (e. Dog businesses frequently take up more management time than they justify and there is often a case for phasing out the product. Cash Cow: A high market share in a mature slow-growth market. Dog: A low market share in a low-growth market. paint roller and brushes. albeit a minor one. c. It classifies products or brands on the basis of their market share and according the rate of growth in the market as a whole. Star. but if growth and/or share are weakening. then a ‘harvesting strategy may be more sensible: cuts back on marketing expenditure and maximise short-term profit. then the company should consider a ‘build’ strategy to increase market share: increasing the resources available for that product to permit more active marketing. in the expectation the market will grow. currently and in the future. d. This relates to a product’s market share and the rate of growth in the market for that product. . If the market looks good and the product is viable. prior to deletion from the product range. and a new marketing mix. and Dog. to a competitor). economies of scale are often considerable and profit margins high. Product development costs are typically low and the marketing campaign is well established. Cash Cow. or because the product provides an obstacle. The usual strategy would be to consider ‘divestment’. b. paint trays. Typically they generate either a low profit or return a loss.g.3 4 premium paint and value paint e. A small market share implies that competitors are in a strong position and that if the product is to be successful it will require substantial funds. as a way of assessing their role in the product portfolio. If market growth is reasonably strong then ‘holding’ will be appropriate.g. The cash cow will normally make a substantial contribution to overall profitability. The star has potential for generating significant earnings. because of lower rate of growth. colour charts Developing associated items Developing new products with little technical or marketing relationship to the existing range The BCG matrix The BCG matrix divides product into four categories: Problem Child. a. Star: A high market share in a high growth industry. The term cash cow is derived from the fact that it is these products which generate considerable sums of cash for the organisation but which.
by modifying it to maintain interest. pharmaceuticals 9 PEST factor changes. To extend the ‘maturity stage of the PLC for a product. To pace (or outpace) competitors 3. Screening of ideas – This involves first assessing whether they match organisational objectives and resources and then choosing the best ideas for further review. To meet the changing needs/wants of customers 2.New product ideas can come from several sources. a product concept and its benefits can be described or shown to consumers. researchers. it may be necessary to test product concepts. representing new opportunities and threats New product development process The process a product goes through before introduction. At this level more new products ideas are rejected. stimulate re-purchase (because it is ‘new and improved’) and/or target as yet unreached market. Sources new products 1 Licensing 2 Acquire 3 Internal product development – organisations own research and development team coming out with new products 4 Customers – listening to customers and making changes to product 5 External freelance inventors 6 Competition 7 Patent agents 8 Academic institutions e. Several product concepts may be tested to discover which might appeal most to a particular target market. competitors. To respond to environmental threats and opportunities 4. advertising agencies. To extend the product/brand portfolio as part of a product development or diversification growth strategy 5. To screen ideas properly. sales personnel. . 6. Analyse the company’s ability to produce and market the product.New product development Reason why companies should consider extending its product mix with the introduction of new products 1. involve the phases: Stage 1: Conception of ideas . To refresh the product portfolio. management consultant and private research organisation.g. as products go into the decline stage of their life cycle. engineers or other organisational personnel. Sources outside the organisation include customers. They may come from internal sources-marketing mangers.
d.New product development c. One study indicates that only 8 percent of new product projects started by major companies reach this stage. b. supply the specifics needed for estimating potential sales. Early in the commercialisation phase. For example. firms seek market information. distribution mangement etc. During this analysis. a. pricing exercise. alter promotional efforts or change the products price. Maintenance of existing products . This will help them to decide if it is time to make any changes to the range. or part of it.Stage 2: Business analysis – A company’s evaluation of a product idea to determine its potential contribution to the firm’s sales. along with secondary data. Development and introduction of new products . These maps can be used by a manager to compare positioning with the competititon or to show the overall picture of a company's product range. costs and profits? In the business analysis stage. marketing management analyses the results of test marketing to find out what changes in the marketing mix are needed before the product is introduced. Stage 3: Product development/Marketing mix issues – The phase in which the organisation determines if it is technically and financially feasible to produce a new product. costs and profits. PRODUCT MANAGEMENT Product management is concerned with both existing and potential products.using perceptual maps to show positioning. Where there is poor sales revenue then managers can drop or increase promotional activities.product managers must constantly monitor product performance in areas of promotion. evaluators ask a variety of questions: Does the product fit in with the organisation’s existing product mix? Does the company have the right expertise to develop the new product? Is demand strong enough to justify entering the market and will the demand endure? What types of environmental and competitive changes can be expected and how will these changes affect the product’s future sales. Product positioning . Improving customer loyalty . Stage 4: Market testing – The limited introduction of a product into certain geographic areas chosen to represent the intended market. modify the distribution plans to include more retail outlets. costs and profits. the results of test marketing may tell the marketers to change one or more of the product’s physical attributes. The product enters the market during the commercialisation phase. Its aim is to determine the reactions of probable buyers Stage 5: Commercialisation – The process of refining and setting plans for full scale manufacturing and marketing. The results of consumer polls.
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