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
 New Product Development Process

 Idea Generation and Screening

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

Systematic Search for New Product

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

External idea sources:

Customers
Competitors
Distributors
Suppliers
New
New Product
Product Development
Development Process
Process
Step
Step 2.
2. Idea
Idea Screening
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
New Product
Product Development
Development Process
Process
Step
Step 3.
3. Concept
Concept Development
Development &
& Testing
Testing

1.
1. Develop
DevelopProduct
ProductIdeas
Ideasinto
into
Alternative idea for a possible product that the
Alternative
Product company can see itself offering.
ProductConcepts
Concepts

2.
2. Concept
ConceptTesting
Testing--Test
Testthe
the
Product
ProductConcepts
Conceptswith
withGroups
Groups detailed version of the idea stated in
of
ofTarget
TargetCustomers
Customers meaningful consumer terms.

3.
3. Choose
Choosethe
theBest
BestOne
One
New
New Product
Product Development
Development Process
Process
Step
Step 4.
4. Marketing
Marketing Strategy
Strategy Development
Development
Marketing Strategy Statement Formulation

Part
Part One
One -- Overall:
Overall:
Describes
Describes the target market,
the target market, planned
planned
product
product positions,
positions, sales,
sales, market
market share,
share,
and
and profit
profit goals.
goals.

Part
Part Two
Two -- Short-Term:
Short-Term:
Outlines
Outlines the
the product’s
product’s planned
planned price,
price,
distribution,
distribution, and
and marketing
marketing budget.
budget.

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

Standard
Standard Controlled
Test Controlled
Test Market
Market Test
Test Market
Market
Full
Fullmarketing
marketingcampaign AAfew
in
campaign fewstores
storesthat
thathave
have
in a small numberof
a small number of agreed
agreedto
tocarry
carrynew
new
representative cities. products
representative cities. productsfor
foraafee.
fee.

Simulated
Simulated
Test
Test Market
Market
Test
Testin
inaasimulated
simulated
shopping
shoppingenvironment
environment
to
toaasample
sampleofof
consumers.
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
Identify the
the maker
maker

Simplify
Simplify product
product handling
handling

Organize
Organize accounting
accounting

Offer
Offer legal
legal protection
protection
The Role of Brands

Signify
Signify quality
quality

Create
Create barriers
barriers to
to entry
entry

Serve
Serve as
as aa competitive
competitive
advantage
advantage

Secure
Secure price
price premium
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
New Product
Product Development
Development Process
Process
Step
Step 5.
5. Business
Business Analysis
Analysis
Step
Step 6.
6. Product
Product Development
Development

Business
Business Analysis
Analysis
Review
Reviewof
ofProduct
ProductSales,
Sales,Costs,
Costs,
and
andProfits
ProfitsProjections
Projectionsto
toSee
Seeifif
They
TheyMeet
MeetCompany
CompanyObjectives
Objectives

IfIfNo,
No,Eliminate
Eliminate
Product
ProductConcept
Concept

IfIfYes,
Yes,Move
Moveto
to
Product
ProductDevelopment
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