MARKETING MANAGEMENT

UNIT – III

The product – Classification of products -

Product Life Cycle (PLC) – New product
planning - Product Modification - Elimination
– Product failure – Branding – Features –
Types of brands – Packaging – Functions -
Kinds.
 What is a product?

 A product is any offering by a company to a

market that serves to satisfy customer needs
and wants.

 It can be an object, service, idea, etc.

Product Classification Schemes

Durability

Tangibility

Use
Durability and Tangibility

Nondurable
goods

Durable
Services
goods
Consumer Goods Classification
Convenience Shopping

Specialty Unsought

Consumer Product Classifications

 Convenience Products
 Shopping Products
 Specialty Products
 Unsought Products
(1) Products of which consumers are unaware
(2) Products that consumers do not consider
purchasing until a need or emergency arises
 Product classifications

 Consumer products
 Industrial product
 Organizations, persons, places, and ideas
 Consumer-Goods Classification
Convenience Products Shopping Products
Buy frequently & immediately Buy less frequently
> Low priced > Gather product information
> Many purchase locations > Fewer purchase locations
> Includes: > Compare for:
• Staple goods • Suitability & Quality
• Impulse goods • Price & Style
• Emergency goods

Specialty Products Unsought Products

Special purchase efforts
> Unique characteristics
> Brand identification
> Few purchase locations
New innovations
> Products consumers don’t
want to think about.
>Require much advertising &
personal selling
Industrial Goods Classification

Materials and parts

Supplies/
Installations
business services
 Product Life-Cycle Strategies
 The course of a product’s sale and profit
over it lifetime.
 It involves four distinct stages:
Introduction,
Growth,
Maturity,
And decline.

 Not all products follow this cycle

Sales & profits ($)
Sales & Profit Life Cycles

Introduction Growth Maturity Decline

Time
 Introduction stage

 The product life-cycle stage in which the

new product is first distributed and made
available for purchase.
 Growth stage

 The product life-cycle stage in which a

product’s sales start climbing quickly.
 Maturity stage

 The stage in the product life cycle in which

sales growth slows or levels off.
 Modify the market,the product,and the
marketing mix.
 Decline Stage

 The product life cycle stage in which a

product’s sales decline
 Definition

 New Product Development

 Development of original products,
product improvements, product
modifications, and new brands
through the firm’s own R & D
efforts.
New Product Development Strategy

 New products can be obtained via

acquisition or development.
 New products suffer from high failure
rates.
 Several reasons account for failure.
Causes of New Product Failures
 Only 10% of new consumer products are still on the
market and profitable after 3 years.
 Industrial products failure rate as high as 30%.

 Overestimation of Market Size

 Product Design Problems
 Product Incorrectly Positioned, Priced or Advertised
 Costs of Product Development
 Competitive Actions

 To create successful new products, the company

must:
 understand it’s customers, markets and competitors
 develop products that deliver superior value to customers.
 New Product Development Process

 Idea Generation and Screening

 Concept Development and Testing
 Marketing Strategy
 Business Analysis
 Product Development
 Test Marketing
 Commercialization
New Product Development Process
Step 1. Idea Generation

Systematic Search for New Product

Ideas
Internal sources: Company employees at all levels,
R&D

External idea sources:

Customers
Competitors
Distributors
Suppliers
New Product Development Process
Step 2. Idea Screening

 Process to spot good ideas and drop poor ones

 Criteria
 Market Size, Product Price, Development Time &
Costs, Manufacturing Costs, Rate of Return

 Executives provide a description of the product

along with estimates of market size, product price,
development time and costs, manufacturing costs,
and rate of return.
 Evaluated against a set of company criteria for new
products.
 New Product Development Process
Step 3. Concept Development & Testing

1. Develop Product Ideas into

Alternative idea for a possible product that the
Product Concepts company can see itself offering.

2. Concept Testing - Test the

Product Concepts with Groups detailed version of the idea stated in
of Target Customers meaningful consumer terms.

3. Choose the Best One

New Product Development Process
Step 4. Marketing Strategy Development

Marketing Strategy Statement Formulation

Part One - Overall:

Describes the target market, planned
product positions, sales, market share,
and profit goals.

Part Two - Short-Term:

Outlines the product’s planned price,
distribution, and marketing budget.

Part Three - Long-Term:

Describes the long-run sales and profit
goals, marketing mix strategy.
New Product Development Process
Step 7. Test Marketing

Standard Controlled
Test Market Test Market
Full marketing campaign A few stores that have
in a small number of agreed to carry new
representative cities. products for a fee.

Simulated
Test Market
Test in a simulated
shopping environment
to a sample of
consumers.
 Brand

A name, term, sign, symbol

or design, or a combination of them,
intended to identify the goods
or services of one seller or group
of sellers and to differentiate
them from those of competitors.
The Role of Brands

Identify the maker

Simplify product handling

Organize accounting

Offer legal protection

The Role of Brands

Signify quality

Create barriers to entry

Serve as a competitive
advantage

Secure price premium

 Advantages of branding
 Easy for the seller to track down problems and
process orders
 Provide legal protection of unique product features
 Branding gives an opportunity to attract loyal and
profitable set of customers
 It helps to give a product category at different
segments, having separate bundle of benefits
 It helps build corporate image
 It minimises harm to company reputation if the
brand fails
 Brand Strategy

Key Decisions  Three levels of

positioning:
 Brand Positioning  Product attributes
 Brand Name Selection  Least effective
 Brand Sponsorship  Benefits
 Brand Development  Beliefs and values
 Taps into
emotions
 Brand Strategy
Good Brand Names:
Key Decisions

 Brand Positioning
 Brand Name Selection
 Brand Sponsorship
 Brand Development
 Suggest something about
the product or its benefits
 Are easy to say, recognize
and remember
 Are distinctive
 Are extendable
 Translate well into other
languages
 Can be registered and
legally protected
 Brand Strategy

Key Decisions  Manufacturer brands

 Private (store) brands
 Brand Positioning  Costly to establish and
promote
 Brand Name Selection  Higher profit margins
 Brand Sponsorship  Licensed brands
 Brand Development  Name and character
licensing has grown
 Co-branding
 Advantages /
disadvantages
New Product Development Process
Step 5. Business Analysis
Step 6. Product Development

Business Analysis
Review of Product Sales, Costs,
and Profits Projections to See if
They Meet Company Objectives

If No, Eliminate
Product Concept

If Yes, Move to
Product Development
 Commercialization
 Must decide on timing (i.e., when to introduce
the product).
 Must decide on where to introduce the product
(e.g., single location, state, region, nationally,
internationally).
 Must develop a market rollout plan.
 Packaging: The 5 P th

All the activities of designing and producing

the container for a product.
 What is the Fifth P?
Packaging, sometimes called the
fifth P, is all the activities of
designing and producing the
container for a product.
 Packaging
 Includes the activities of designing and
producing the container for a product
 Packaging is done at three levels

- primary
- secondary
- shipping
 Designing packaging
 Packaging concepts
 Technical specifications
 Engineering tests
 Visual tests
 Dealer tests
 Consumer tests
 Packaging innovations
 Environmental considerations
Packaging has been influenced
by…
Self-service

Consumer affluence

Company/brand image

Innovation opportunity