TOPIC 5 PRODUCT DECISIONS

Product Defined Product Levels Product Classifications Product Mix, Product Line & Product Item Branding Decisions Packaging Other Product Attributes New Product Development PLC

PRODUCT DEFINED
Product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or a need .

PRODUCT LEVELS
Core Product Tangible Product Augmented Product

Characteristics of physical products

Augmented Product Tangible Product

Core Benefit
What is made Core need Turning a core product/need into something we really want Additional services and benefits Ways of enhancing the product

Physical products - example car sale

Augmented Product Brand name
Core Benefit transport Quality/

Tangible Product

Credit Features

After sales

Capabilities

Colour Warranty

Design/ styling

durability

Personnel

Delivery speed

PRODUCT CLASSIFICATION
Industrial goods: Purchased for the sake of using them to produce other goods. They include convenience goods, shopping goods and Specialty goods Consumer goods: Purchased by ultimate consumers. They include raw materials, Capital items and industrial services.

PRODUCT MIX, PRODUCT LINE AND PRODUCT ITEM

Definitions of Product Mix, Product Line and Product Item Product Mix Dimensions Product Mix Determinants Product Mix Strategies

DEFINITIONS OF PRODUCT MIX, PRODUCT LINE AND PRODUCT ITEM

Product Mix is the set of all product lines and items that a particular seller offers for sale to buyers A product line is a group of products that are closely related, because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges. A product item is a specific version of a product that can be designated as a distinct offering among an organizations products.

PRODUCT MIX DIMENSIONS

Width: Number of different product lines carried. Length: Total number of items in the product mix. Depth: Number of variants of each product in the line. Consistency: Closeness of various product lines in end use, production requirements, distribution channels or some other way.

2 - The product mix

PRODUCT LINE Group of products related in terms of functions/benefits PRODUCT MIX WIDTH Number of different product lines

PRODUCT MIX

PRODUCT LENGTH Total number of items in product mix

PRODUCT MIX DETERMINANTS

Market Demand Competitive Actions and Reactions Marketing influences Production influences Financial influences Desire to change company image

PRODUCT MIX STRATEGIES

Expansion of the product mix Contraction of the product mix Alteration of existing products Developing of new uses for existing products Positioning the product Trading up and down Product differentiation

BRANDING DECISIONS
Definition of a brand and branding Parts of a brand Benefits of branding Characteristics of a good brand

DEFINITION OF A BRAND AND BRANDING

A brand is a name, term, symbol, design, or a combination thereof, that identifies a sellers products and differentiates them from competitors products. Branding constitute the activities involved in giving a name to a product item.

Brand the outer circle

Augmented Product Tangible Product Customer service Brand name Capabilities Packaging After sales Instillation Design/ styling Features

Core Benefit

Quality/ durability

Potential Brand

Personnel

Warranty Delivery/ credit

PARTS OF A BRAND
Brand name Brand mark Trade Mark Trade Name

Why brand?
Customer perspective
Helps with ever growing choice Reduces search costs Reduces psychological risks Gives customers confidence heritage/reputation Therefore allows for easier choice one more decision you dont have to

Company perspective
Can obtain premium prices Or sell at market price to increase volume And then benefit from economies of scale Reduces new product risks Distinctive identity difficult to copy Good products/brands add value Builds internal pride

BENEFITS OF BRANDING
Identification of the products Evaluation of the quality of the products Symbolization of the quality perception Easier to process orders Legal protection of unique product features Opportunity to attract loyal customers Help to segment markets Build the corporate image Facilitates promotional efforts

CHARACTERISTICS OF A GOOD BRAND

It should suggest something about products benefits Easy to pronounce, to spell and to remember Sufficiently versatile to be applicable to new products added to the product line Distinctive Capable of being registered and legally protected.

Why brands are so important

customer perceptions Coke V Pepsi

Blind (%) Prefer Pepsi Prefer Coke Equal/Dont Know 51 44 5

Branded (%) 23 65 12

Why brands are so important

% of users who are loyal to one brand

Why brands are so important Durability of brands (USA example)

PRODUCT LEADING BRAND 1923 Cameras Kodak Canned fruit Del Monte Chewing Wrigleys gum Crackers Nabisco Razors Gillette Soft drinks Coca-Cola Soup Campbells Soap Ivory Toothpaste Colgate RANK 1991

1 1 1 1 1 1 1 1 2

PACKAGING
Definition: Activities concerned with designing and producing the container or wrapper for a product. Functions: Protection, Storage, Promotion, Use facilitation, Transportation and Competitiveness.

 Product Service include: delivery reliability, prompt quotation, technical advice, discounts, after sales service, sales representation, easy of contact, replacement guarantee, credit, warranties and repairs Product quality include: high quality, moderate quality and low quality.

PRODUCT SERVICE AND PRODUCT QUALITY ATTRIBUTES

NEW PRODUCT DEVELOPMENT

New Product Defined Reasons for Developing New Products Considerations in Developing New Products Stages of New Product Development New Product Adoption Process

NEW PRODUCT DEFINED

Innovative Product Imitative Product Modified Product Repositioned Product

STAGES OF NEW PRODUCT DEVELOPMENT

Idea generation Idea screening Business analysis Product development Market testing Commercialization

NEW PRODUCT ADOPTION PROCESS

Awareness Interest Evaluation Trial Adoption

THE FIVE MAJOR ADOPTER CATEGORIES

Innovators (2.5%): Venturesome, try new ideas at some risk Early adopters (13.5%):Guided by respect, they are opinion leaders, attempt new idea early but carefully. Early majority (34%): Deliberate, accept new idea before the average person. Late majority (34%): Accept innovation after a majority of people have tried it. Laggards (16%): Tradition bound, adopt innovation b/se it has now taken on a measure of tradition itself.

PRODUCT LIFE CYCLE

Product Life Cycle Defined Product Life Cycle Stages Characteristics of Different Stages of the Product Life Cycle Marketing Strategies in Different Stages of the Product Life Cycle. The relevance of PLC concept to the marketer Critique of the PLC Concept

1 - The Product Life Cycle

Stages of a products life
sales
Revenue (sales/ profit)
Time

Profit

Introduction Growth

Maturity

Decline

Saturation

1 - The Product Life Cycle

Product: New Basic Market: Innovators Sales: Low s Comp: Little Profit: None Revenue (sales/ profit) Few Differentd EAs/M Fast More Grows Many Differentd LMs Peaks Much Reduces Reducing Standard Replacement Reduce Reduces Reduces Less Rationalise Laggards Less Less Reducing

Sales
Profit

Time

Intro

Growth

Maturity

Saturation

Decline

3 Evaluating the product portfolio

Brings all PLCs together Helps set broad strategic objectives (Build, Hold, Harvest or Divest) Checks for balanced portfolio Allows comparison of strengths v. competitors Guides flow of resources A simple and effective presentational method

3 3 - The Boston Consulting Group Matrix - evaluating the portfolio

Market Growth Rate

High

A 50%
Stars Cash Cows
B 25%

Question Marks
C 15%

Dogs
D 10%

Low

High

Low

Relative Market Share