Product Planning

What is Marketing Mix?

 Marketing Mix is defined as a set of marketing tools
that the firm uses to pursue its marketing objectives in
the target market.

 The marketing mix is an essential part of the

formulation of a firm's marketing strategy.

 Traditionally, the marketing mix consisted of four broad

categories of variables known as the 4 P's of
Marketing: product, price, place, and promotion.
 Basic concepts of a product
Meaning of a Product
A “product” is a good, a service, or an idea
received in an exchange.
A good is a tangible physical entity.

A service is an intangible result of the application

of human and mechanical efforts to people or
objects.

An idea is a concept, philosophy, image, or issue.

It can be either tangible or intangible and includes
functional, social, and psychological utilities or
benefits.

It also includes supporting services, such as

installation, guarantees, product information, and
promises of repair or maintenance.

In general, product is anything that can be offered to

a market for attention, acquisition, use or
consumption that might satisfy a want and need.
 Three Levels of product
 Consumers often think that a product is simply the
physical item that he or she buys.
 Product has three different levels.
1. Core product,
2. Actual product, and
3. Augmented product.
The core product is the benefit of the product that
makes it valuable to consumers.
The ACTUAL product is the tangible, physical product.
The AUGMENTED product is the non-physical part of
the product. It usually consists of lots of added value,
for which you may or may not pay a premium.
 Therefore, a product is more than a simple set of
tangible features.
 Consumers tend to see products as complex
bundles of benefits that satisfy their needs.
When developing products, marketers must:
1). Identify the core consumer needs that the
product will satisfy.
2). Design the actual product and finally
3). Find ways to augment the product in order to
create the bundle of benefits that will best satisfy
consumer’s desires for an experience.
 Classification of a product
 Marketers classify products on the basis of durability,
tangibility, and use.
 On the basis of durability and tangibility, products fall
into three groups.
1. Nondurable goods: are tangible goods normally
consumed in one or a few uses, such as beer and
shampoo.
2. Durable goods: are tangible goods that normally survive
many uses: refrigerators, machine tools, and clothing.
3. Services: are intangible, inseparable, variable, and
perishable products that normally require more quality
control, supplier credibility, and adaptability.
 Products fall into two general categories on the basis of
use.
1. Consumer Products: are purchased to satisfy personal and
family needs; they are categorized according to how buyers
generally behave when purchasing a specific item.

 There are four groups of consumer products.

A. Convenience Products: are relatively inexpensive, frequently
purchased items for which buyers exert only minimal
purchasing effort.

B. Shopping Products: are items for which buyers are willing to

expend considerable effort in planning and making the
purchase.
C. Specialty Products: have one or more unique
characteristics, and buyers are willing to expend
considerable effort to obtain them.

D. Unsought Products: are products purchased to solve a

sudden problem, products of which customers are
unaware, and products that people do not necessarily
think about buying.
2. Business Products
 Business products are purchased to use in a firm’s
operations, to resell, or to use in the manufacture of other
products.
 They are classified according to their characteristics and
intended uses in an organization.
A. Installations: Installations include facilities, such as office
buildings, factories, and warehouses, and major equipment that
are non portable.

B. Accessory Equipment: Accessory equipment does not become a

part of the final physical product but is used in production or
office activities.
 Treated as expense items rather than as capital items because
they are not expected to last as long.

C. Raw Materials: Raw materials are basic materials that become

part of a physical product.
 Raw materials consist of farm products (wheat, cotton, livestock,
fruits, vegetables) and natural products (fish, lumber, crude
petroleum, iron ore).
D. Component Parts: Component parts become a part of
the physical product and are either finished items ready
for assembly or products that need little processing
before assembly.
E. Process Materials: Process materials are used directly in
the production of other products.
F. MRO Supplies: MRO supplies are maintenance, repair,
and operating items that facilitate an organization’s
production and operations but do not become part of
the finished product.
G. Business Services: Business services are the intangible
products that many organizations use in their operations
and include financial, legal, marketing research,
information technology, and janitorial services.
 Product mix and product line decisions
 A product item is a specific version of a product that can
be designated as a distinct offering among an
organization’s products.
 A product line is a group of closely related product items
that are considered a unit because of marketing, technical,
or end-use considerations.

 Specific items in a product line usually reflect the desires

of different target markets or different consumer needs.

 A product mix is the composite, or total, group of products

that an organization makes available to customers.
 Product Life Cycle

 Products pass through stages as they age—just like

people.
 Successful products progress through four basic stages:
introduction, growth, maturity, and decline.
 This progression is known as the product life cycle, a
concept that explains the progression of a product
through introduction, growth, maturity and decline.
 The product life cycle concept applies to products or
product categories within an industry—not to
individual brands.
 Some products may move rapidly through the product
life cycle, while others pass slowly through the four
stages.
The Product Life Cycle
a) Product development begins when the company finds and develops
a new-product idea.
 During product development, sales are zero and the company's
investment costs mount.
b) Introduction stage
 The introduction stage starts when the new product is first launched.
 Introduction takes time, and sales growth is apt to be slow.
 In this stage, as compared to other stages, profits are negative or low
because of the low sales and high distribution and promotion
expenses.
 Much money is needed to attract distributors and build their
inventories.
 Promotion spending is relatively high to inform consumers of the
new product and get them to try it.
 It has the best chance of building and retaining market leadership if
it plays its cards correctly from the start.
c) Growth Stage
 If the new product satisfies the market, it will enter a
growth stage, in which sales will start climbing
quickly.
 The early adopters will continue to buy, and later
buyers will start following their lead, especially if
they hear favorable word of mouth.
 Attracted by the opportunities for profit, new
competitors will enter the market. They will
introduce new product features, and the market will
expand.
 In the growth stage, the firm faces a trade-off
between high market share and high current profit.
d) Maturity Stage
 The maturity stage normally lasts longer than the
previous stages, and it poses strong challenges to
marketing management.
 Most products are in the maturity stage of the
life cycle, and therefore most of marketing
management deals with the mature product.
 Competitors begin marking down prices,
increasing their advertising and sales
promotions, and upping their R&D budgets to
find better versions of the product.
e) Decline Stage
 The sales of most product forms and brands
eventually dip.
 The decline may be slow or rapid.
 Sales decline for many reasons, including
technological advances, shifts in consumer tastes,
and increased competition.
 As sales and profits decline, some firms withdraw
from the market.
• The Product Life Cycle can be extended by two ways
either by modifying the target market by finding and
adding new users etc or by modifying the product
adding new features, variations,
 New product development, innovation and diffusion

 A firm develops new products as a means of

enhancing its product mix and adding depth to a
product line.

 Developing and introducing new products is

frequently risky and expensive; failure to
introduce new products is also risky.

 A new product can be an innovative product

that has never been sold by any organization.
 Before a product is introduced, it goes through
the seven phases of the new-product
development process.
1. Idea Generation
 The first step in the development process,
occurs when firms seek product ideas to
achieve organizational objectives.

 New ideas may be generated internally or

externally.
2. Idea Screening
 In phase two, screening, the most promising ideas are
selected for further review.
 Ideas are analyzed to determine whether they match the
organization’s objectives, resources, and abilities.
3. Concept Testing
 Stage three is concept testing, in which a sample of
potential buyers is presented with a product idea to
determine their attitudes and initial buying intentions
regarding the product.

 A firm can test more than one concept for the same product
before it invests considerable resources in research and
development.
4. Business Analysis
 During stage four, business analysis, the product idea is
evaluated to determine its potential contribution to the
firm’s sales, costs, and profits.
 For many product ideas, this analysis is challenging because
forecasting accurately is difficult, especially for completely
new products.

5. Product Development:
 In stage five, product development, the firm finds out if it is
technically feasible to produce the product and if it can be
produced at costs low enough to make the final price
reasonable.
 This phase can be lengthy and expensive; thus a relatively
small number of product ideas are put into development.
6. Test Marketing: Stage six, test marketing, is the limited
introduction of the product in geographic areas chosen
to represent the intended market to gauge the extent to
which potential customers will actually buy it.

7. Commercialization
 Stage seven, commercialization, is the phase of
planning for full-scale manufacturing and marketing and
preparing budgets.
 Marketing management analyzes the results of test
marketing to find out what changes in the marketing mix
are needed before the product is introduced.
 What is Innovation and diffusion?
 Innovation is any new idea, new behavior, new product,
new message i.e., a new thing that one brings to you
for your adoption.
 Diffusion is the process by which an innovation is
communicated through certain channels over time
among the members of a social system.

Product Adoption Process

 The product adoption process includes the stages the buyers
go through in accepting a product.
 The five stages of the adoption process are awareness,
interest, evaluation, trial, and adoption.
 First stage: Awareness is when a buyer becomes aware of
the product’s existence.
 Second stage: Interest is when the buyer seeks information
and is receptive to learning about the product.
 Third stage: Evaluation is when the buyer considers the
product’s benefits and decides whether to try it.
 Fourth stage: Trial is when the buyer examines, tests, or
tries the product to determine if it meets his or her needs.
 Fifth stage: Adoption is when the buyer purchases the
product and can be expected to use it again whenever the
need for this general type of product arises.
 Entering the adoption process does not mean the person
will eventually adopt the product—rejection can occur at
any stage.
 Innovators are the first adopters of new products. They
enjoy trying new things and tend to be venturesome.
 Early adopters are the careful choosers of new
products. They are viewed as the people to check with
by people in the remaining adopter categories.
 Early majority are those people adopting new products
just before the average person. They are deliberate
and cautious in trying new products.
 Late majority includes skeptics who adopt new
products when they feel it is necessary.
 Laggards are the last adopters. They distrust new
products, and when they finally adopt the innovation,
it may have been replaced by a new product.
 Branding, Packaging and Labeling
 Marketers recognize the powerful influence on
customer behavior that creating and protecting a
strong identity for products and product lines has.
 Branding is the process of creating that identify.

 A brand is a name, a term, a symbol, a design, or

any other unique element of a product that
identifies one firm’s product(s) and sets them apart
from the competition.
 Branding is an extremely important element of
product strategy.
 A brand name is the part of a brand consisting of words
or letters that form a name that identifies and
distinguishes a firm’s offerings from those of its
competitors.
 A brand name is probably the most used and recognized
form of branding.
 The brand name should be: easy to say, easy to spell,
easy to read, and easy to remember.
 A trademark is a brand for which the owner claims
exclusive legal protection.
 Trademark protection confers the exclusive legal right to
use a brand name, brand mark, and any slogan or
product name abbreviation.
Brand equity
 Is the value of a brand, based on the extent to which it
has high brand loyalty, name awareness, perceived
quality, strong brand associations, and other assets such
as patents, trademarks, and channel relationships.
 Powerful brand names command strong consumer
preference and are powerful assets.

 Perhaps the most distinctive skill of professional

marketers is their ability to create, maintain, protect, and
enhance brands.
 Measuring the actual equity of a brand name is difficult.
However, the advantages of having it include:
1). High consumer awareness and loyalty.
2). Easier to launch brand extensions because of
high brand credibility.
3). A good defense against fierce price competition.
4). It is believed to be the company’s most enduring
asset.

 Brand equity tends to aid marketing planning in

assuring loyal customer lifetime value.
Benefits of Branding
Provides benefits to buyers and sellers
TO BUYER:
 Help buyers identify the product that they
like/dislike.
 Identify marketer
 Helps reduce the time needed for purchase.
 Helps buyers evaluate quality of products especially
if unable to judge a products characteristics.
 Helps reduce buyers perceived risk of purchase.
 Buyer may derive a psychological reward from
owning the brand, like Apple
TO SELLER:
 Differentiate product offering from competitors
 Helps segment market by creating tailored images
 Brand identifies the companies products making repeat
purchases easier for customers.
 Reduce price comparisons
 Brand helps firm introduce a new product that carries the
name of one or more of its existing products
 Easier cooperation with intermediaries with well known
brands
 Facilitates promotional efforts.
 Helps foster brand loyalty helping to stabilize market share.
 Firms may be able to charge a premium for the brand.
 Packaging
 A package is the covering or container for a product that
provides product protection, facilitates product use and
storage, and supplies important marketing communication.

 Increasingly, environmental aspects are coming into play.

 Packaging which is non-degradable - plastic, for example - is

less in demanded.

 Bio-degradable, recyclable, reusable packaging is now the

order of the day.
 Primary, secondary and shipping packages
Packaging Functions include the following
 Protect product and maintain functional form,
milk.
 Offer convenience, Usage
 Promote product by communicating features
 Develop reusable package for alternative use.
 Segmentation, tailored to a specific group
 Packaging can be a major component of the
marketing strategy--giving a product a
competitive advantage.
 Need to reevaluate packaging periodically
Major Packaging Considerations
 Packaging decision serve the channel members and the
final consumer.
 Cost--how much are customers willing to pay for the
packaging?
 Must comply with the legal packaging regulations.
 Need to consider consistency among package designs
 Need to inform potential buyers of new products
content, features, uses, advantages and hazards.
 Need to create a desirable image through color etc.
 Must meet the needs of resellers--transportation,
storage and handling.
 Environmental responsibility.
 Labeling
 Labeling may range from simple tags attached to
products to complex graphics that are part of the
package.

 It facilitates ID of a product, descriptive

function, indicate the grade of the product,
describe source of product, its content and major
features, how to use the product, label can be a
promotional tool, needs to fulfill legal obligations
and universal product code for inventory and
information.
 Basics of services Marketing

 A service is the diametrically opposed non-

material counter piece of a physical good.
 A service provision comprises a sequence of
activities that does not result in ownership of
the outcome.

Service characteristics
 Services can be paraphrased in terms of their
generic key characteristics.
1. Intangibility
 Services are intangible: they cannot be touched,
gripped, handled, looked at, smelled, tasted.
 A service cannot be (re)sold or owned by somebody,
neither can it be turned over from the service provider
to the service consumer nor returned from the service
consumer to the service provider
2. Perishability: Cannot be stored for later use.

3. Inseparability
 The service provider is indispensable for service
delivery as he must promptly generate and render the
service to the requesting service consumer.
4. Simultaneity
 Services are rendered and consumed during the
same period of time.

5. Variability
 Each service is unique.
 Many services are regarded as heterogeneous
or lacking homogeneity and are typically
modified for each service consumer or each new
situation.
 Services marketing is marketing based on relationship
and value.
 It may be used to market a service or a product.
 Marketing a service-base business is different from
marketing a goods-base business. There are several
major differences, including:
 The buyer purchases are intangible
 The service may be based on the reputation of a single
person
 It's more difficult to compare the quality of similar
services
 The buyer cannot return the service
 Service Marketing mix adds 3 more p's, i.e.
people, physical evidence and process service.

 Service Marketing has been relatively gaining

ground in the overall spectrum of educational
marketing as developed economies move further
away from industrial importance to service
oriented economies.

 Demanded additional decisions of marketing.

THANK YOU
FOR YOUR
ATTENTION.