Products are almost always combinations of the tangible and intangible. The entire package is...
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Transcript of Products are almost always combinations of the tangible and intangible. The entire package is...
Products are almost always combinations of the tangible and intangible. The entire package is sometimes referred to as the augmented product.
The mix of tangibles and intangibles in the augmented product varies from one product or service to another.
Product is a key element in the market offering. Marketing mix planning begins with formulating an offering to meet target customers’ needs or wants.
The customer will judge the offering by three basic elements : product features and quality, services mix and quality, and price appropriateness.
Value based pricing
Attractiveness of the market offering
Product features and quality
Services mix and quality
In planning its market offering, the marketer needs to think through five levels of the product.
Each level adds more customer value, and the five constitute a customer value hierarchy.
( Contd…. )
(1) CoreProduct
(2) Basic Product
(3) ExpectedProduct(4) Augmented
Product
(5) PotentialProduct
(1) Core Product / Core Benefit : The fundamental service or benefit that the customer is really buying.
(2) Basic Product : At the same level, the marketer has to turn the core benefit into a basic product.
(3) Expected Product : A set of attributes and conditions buyers normally expect when they purchase this product.
(4) Augmented Product : The marketer prepares an augmented product that exceeds customer expectations.
Today’s competition essentially takes place at the product-augmentation level. ( In less developed countries, competition takes place mostly at the expected product level ). ( Contd.….. )
( Augmented Product ) According to Levitt : The new
competition is not between what companies produce in their factories, but between what they add to their factory output in the form of packaging, services, advertising, customer advice, delivery arrangements, warehousing, and other things that people value.
Some things should be noted about product-augmentation strategy :
First, each augmentation adds cost. The marketer has to ask whether customers will pay enough to cover the extra cost.
Second, augmented benefits soon become expected benefits. For gaining competitive advantage one will have to search for still other features and benefits.
( product-augmentation strategy ) Third, as companies raise the price
of their augmented product, some competitors can offer a “ Stripped-down ” version at a much lower price. Thus alongside the growth of fine products we see the emergence of lower-cost products for the clients who simply want the basic product.
(5) Potential Product : encompasses all the possible augmentations and transformations the product might undergo in the future. Companies search for new ways to satisfy customers and distinguish their offer.
( Successful Companies add benefits to their offering that not only satisfy customers but also surprise and delight them. ) “ The best way to hold customers is to constantly figure out how to give them more for less. ”
The challenge before the product marketers is to create relevant and distinctive product differentiation. The product differentiation may be based on :
Physical Differences ( eg., features, performance, conformance, durability, reliability, design, style, packaging )
Availability Differences ( eg., available from stores or orderable by phone, mail, fax, internet )
Service Differences ( eg., delivery, installation, training, consulting, maintenance, repair )
Price Differences ( eg., very high price, very low price )
Image Differences ( eg., symbols, atmosphere, events, media )
Any successful differentiation will tend to draw imitators. The innovator faces three choices :
Lower the price to protect market share and accept lower profits.
Maintain a reasonable price and lose some market share and profits.
Find a new basis to differentiate the product and maintain current price.
ON THE BASIS OF PRODUCT CHARACTERISTICS :DURABILITY, TANGIBILITY AND USE (consumer or industrial )
(1) NON-DURABLE (2) DURABLE (3) SERVICES ( CONTD . )
These are tangible goods normally consumed in one or few uses. Because these goods are consumed quickly and purchased frequently, the appropriate strategy is to make them available at many locations, charge only a small mark up and advertise heavily to induce trial and build preference.
These are tangible goods that normally survive many uses. Normally require more personal selling and service, command a higher margin, and require more seller guarantees.
These are intangible, inseperable, variable and perishable products. Normally require more quality
control, superior credibility, and adaptability.
ON THE BASIS OF CUSTOMER SHOPPING HABITS :
(1) CONVENIENCE GOODS(2) SHOPPING GOODS(3) SPECIALITY GOODS(4) UNSOUGHT GOODS
are goods that the customer usually purchases frequently, immediately, and with a minimum of efforts.
(A) Staples: Consumers purchase on a regular basis.
(B) Impulse Goods: are purchased without any planning or search efforts.
(C) Emergency Goods: are purchased when a need is urgent.
are goods that the customer , in the process of selection and purchase, characteristically compares on such basis as suitability, quality, price and style.
(A) Homogeneous Shopping Goods: are similar in quality but different enough in price to justify shopping comparisons.
(B) Heterogeneous Shopping Goods: differ in product features and services that may be more important than price.
are goods with unique characteristics
or brand identification for which buyer
is willing to make a special purchasing
effort.
are goods the consumer does not know
about or does not normally think of
buying. These goods require
advertising and personal selling
support.
Calls for coordinated decisions on :
(1) Product Mix(2) Product Line(3) Individual Product(4) Service Product
A product mix (also called product assortment) is the set of all products and items that a particular seller offers for sale.
A total group of products that an organization markets.
A company’s product mix has a certain width, length, depth and consistency.
The width of company’s (say HLL’s)
product mix refers to how many
different product lines the company
carries, such as bathing soap,
detergents, shampoos, toothpaste,
food products.
The length of a company’s product mix refers to the total number of items in its product mix. Thus in each of the product line HLL has a number of product items. Eg., in the product line of bathing soaps, HLL has several product items like Lux, Liril, Lifebuoy, Pears.
The depth of a company’s product mix refers to how many variants are offered of each product in the line.
The Consistency of the product mix refers to how closely related the various product lines are in end-use, production requirements, distribution channels, or some other way. HLL’s product lines are consistent insofar as they are consumer goods that go through the same distribution channels.
These four dimensions of the product mix provide the handles for defining the company’s product strategy. The company can expand its business in four ways.
1. The Co. can add new product lines, thus widening its product mix.
2. The Co. can lengthen each product line. 3. The Co. can add more product variants
to each product and deepen its product mix.
4. The Co. can pursue more product-line consistency or less, depending upon whether it wants to acquire a strong reputation in a single field or participate in several fields.
A product line is a group of products that are closely related, because they perform a similar function, are sold to the same customer groups, are marketed through the same channels or fall within the given price ranges.
The product mix may be composed of several product lines.
Product line managers need to know the sales and profits of each item in their line in order to determine which items to build, maintain, harvest,, or divest. They also need to understand each product’s market profile, i.e. how their product line is positioned against competitors’ product lines (The Product Map).
Product Line Length : . Downward Line Stretching . Upward Line Stretching . Two Way Stretching
Present
Product
NewProduct
Low HighLow
High
Price
Quality
Present
New
Present
New
New
(Downward) (Upward) (Two Way)
Filling in the Product Line ( adding
more items within the present range of
line )
Product Line Modernization
Product Line Featuring
Product Line Pruning
Product Attribute Decisions
Brand Decisions
Brand Positioning
Packaging and Labeling
American Management Association defines brand as follows :
“ A brand is a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competitors. ”
Individual Names
Family Names
Company Trade name combined with
individual product names.
First, awareness provides the brand with a sense of familiarity, and people like the familiar.
Second, name awareness can be a signal of presence and commitment. The logic is that if a name is recognized, there must be a reason.
Third, the salience of a brand will determine if it is recalled at a key time in the purchasing process.
First, brand loyalty reduces the marketing costs of doing business, since existing customers are relatively easier to hold.
Second, brand loyalty represents a substantial barrier to competitors. Excessive resources are required when entering a market in which existing customers must be enticed away from an established brand that they are loyal to.
Third, a relatively large, satisfied customer base provides an image of a brand as an accepted, successful, and enduring product.
The inception of Emami Group took place way back in mid seventies when two childhood friends, Mr. R.S. Agarwal and Mr. R.S. Goenka left their high profile jobs with the Birla Group to set up Kemco Chemicals, an Ayurvedic medicine and cosmetic manufacturing unit in Kolkata in 1974. It was an extremely bold step in the early seventies when the Indian FMCG market was still dominated by multinationals
Emami’s FMCG business is currently split into two divisions: personal care and healthcare, and both contribute equally to the total turnover of its FMCG business which is currently about Rs 350 crore. Kolkata-based personal and healthcare major Emami Group is now planning to manufacture and market a range of ayurvedic medicines under their brand name Himani. The move will bring Emami closer to the turf of ayurvedic majors like Dabur India and Himalaya Herbal. Emami’s new foray will include a range of products like digestives, memory booster, cough syrups, blood purifiers and others
. The mid-1990s saw actors Govinda and Rambha endorse the brand (the ‘Thanda Thanda, Cool Cool’ campaigns), which enjoyed a high media presence. However, in 2004, Himani executives decided to lend stature and salience to the brand, and roped in the Big B, in the hope that he would break geographical barriers for them and appeal to the masses. Thus followed a commercial which had Bachchan talking into the camera about how the ‘cool’ oil helped him counter stress and headaches in his days of struggle.
That ad did quite well for us,” says Probal Bhattacharya, senior brand manager, Himani Navratna. So, it came as a surprise to watch actor Shah Rukh Khan endorse the brand next in 2006, cast in an ad. “This was done to make the brand even more relevant and full of life to the younger lot,” Bhattacharya remarks. Sadly, the replica communication didn’t work; King Khan failed to appeal to Himani Navratna’s TG: 25-45 year old males. Having learnt their lesson, the Himani Navratna executives have revived Big B in their communication, as “people still largely associate him with the brand”.
Brand equity is a set of assets and liabilities linked to a brand’s name and symbol that add to or substract from the value provided by a producer or service to a firm and / or that firm’s customers.
Brand equity generates value to the customer that can emerge either as a price premium or enhanced brand loyalty.
Brand
AwarenessBrand Identity
BrandLoyalty
PerceivedQuality
BrandEquity
( Powerful brands have high brand equity, higher brand loyalty.)
Advertising
Sponsorship of games and events
Social Causes
Public Facilities
Founder’s personality
Line Extensions
Brand Extensions
Multibrands
New brands
Co-brands
Product Category
Existing New
BrandName
Existing
New
Line
ExtensionBrand
Extension
Multibrands New Brand
Names
Line extension occurs when a company introduces additional items in the same product category under the same brand name, usually with new flavours, forms, colours, added ingredients, package sizes and so on.
Line extensions generally have a higher chance of survival than new products.
On the down side extensions may lead to the brand name losing its specific meanings; Ries and Trout call this “ Line Extension Trap .”
Brand Extension occurs when a company decides to use an existing brand name to launch a product in the new category.
Brand Extension offers a number of advantages.
-Instant recognition and earlier acceptance
-Saves considerable advertisement costs
Brand Extension also involves risks. - The new product might disappoint
buyers and damage their respect for company’s other products.
- The brand name may loose its special positioning in the consumer’s mind through over extension - a phenomenon called “ brand dilution .”
A company will often introduce additional brands in the same product category.
- One of the motives for multibranding is to establish different features and/or appeal to different buying motives.
When a company launches products in
a new category, it may find that none
of its current brand names are
appropriate.
When the present brand image is not
likely to help the new product,
companies are better off creating new
brand names.
Co-branding occurs when two
different companies pair their
respective brands in a collaborative
marketing effort.
Each brand sponsor expects that
other brand name will strengthen
brand preference or purchase
intention.
Idea Generation and Screening Concept Development and Testing Marketing Strategy Business Analysis Product Development Test Marketing Commercialization
New Product Development ProcessStep 1. Idea Generation
New Product Development ProcessStep 1. Idea Generation
Systematic Search for New Product Ideas
Internal sources
Customers
Competitors
Distributors
Suppliers
Process to spot good ideas and drop poor ones
Criteria◦ Market Size◦ Development Time & Costs◦ Manufacturing Costs◦ Rate of Return
New Product Development ProcessStep 2. Idea Screening
New Product Development ProcessStep 2. Idea Screening
New Product Development ProcessStep 3. Concept Development & Testing
New Product Development ProcessStep 3. Concept Development & Testing
1. Develop Product Ideas into Alternative
Product Concepts
1. Develop Product Ideas into Alternative
Product Concepts
2. Concept Testing - Test theProduct Concepts with focus Groups
2. Concept Testing - Test theProduct Concepts with focus Groups
3. Choose the Best One3. Choose the Best One
New Product Development ProcessStep 4. Marketing Strategy Development
New Product Development ProcessStep 4. Marketing Strategy Development
Part Two - Short-Term:Product’s Planned Price
DistributionMarketing Budget
Part Two - Short-Term:Product’s Planned Price
DistributionMarketing Budget
Part Three - Long-Term:
Sales & Profit GoalsMarketing Mix Strategy
Part Three - Long-Term:
Sales & Profit GoalsMarketing Mix Strategy
Marketing Strategy Statement Formulation
Part One - Overall:Target Market
Planned Product PositioningSales & Profit Goals
Market Share
Part One - Overall:Target Market
Planned Product PositioningSales & Profit Goals
Market Share
New Product Development ProcessStep 5. Business Analysis
Step 6. Product Development
New Product Development ProcessStep 5. Business Analysis
Step 6. Product Development
Business Analysis
Review of Product Sales, Costs, and Profits Projections to See if They Meet Company Objectives
Business Analysis
Review of Product Sales, Costs, and Profits Projections to See if They Meet Company Objectives
If Yes, Move to Product Development
If Yes, Move to Product Development
If No, Eliminate Product ConceptIf No, Eliminate
Product Concept
New Product Development ProcessStep 7. Test Marketing
New Product Development ProcessStep 7. Test Marketing
StandardTest Market
Full marketing campaignin a small number of representative cities.
StandardTest Market
Full marketing campaignin a small number of representative cities.
SimulatedTest Market
Test in a simulated shopping environment
to a sample of consumers.
SimulatedTest Market
Test in a simulated shopping environment
to a sample of consumers.
Controlled Test Market
A few stores that have agreed to carry newproducts for a fee.
Controlled Test Market
A few stores that have agreed to carry newproducts for a fee.
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.
Time
ProductDevelop-
ment
Introduction
Profits
Sales
Growth Maturity Decline
Losses/Investments ($)
Sales andProfits ($)
Any tangible or intangible offerings that is perceived as a bundle of benefits by the customers and attempts to satisfy their unsatisfied needs
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
Low sales Low sales High cost per
customerHigh cost per
customerNegativeNegativeCreate product
awareness and trial
Create product awareness
and trial
Growth Stage of the PLCGrowth Stage of the PLC
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
Rapidly rising sales Rapidly rising sales Average cost per
customerAverage cost per
customerRising profitsRising profits
Maximize market shareMaximize market share
Maturity Stage of the PLCMaturity Stage of the PLC
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
Peak salesPeak sales
Low cost per customerLow cost per customer
High profitsHigh profitsMaximize profit while defending
market share
Maximize profit while defending
market share
Decline Stage of the PLCDecline Stage of the PLC
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
Declining salesDeclining sales
Low cost per customerLow cost per customer
Declining profitsDeclining profitsReduce expenditure and milk the brand
Reduce expenditure and milk the brand
Price is the monetary amount or compensation given by one party to another in return for goods or services.
The concept of value
Profit maximization To achieve ROI To increase sales volume Survival To address the competition
The degree to which the price of a product affects consumers purchasing behaviors.
The degree of price sensitivity varies from product to product and from consumer to consumer.
Price of substitute product
Unique value effect
Switching cost
Price-quality effect
Difficult comparison effect
Corporate objective
Costs
Demand
Competitor
Cost based pricing◦ Mark up or full cost pricing
Competitor based pricing◦ Going rate pricing◦ Sealed bid pricing◦ Pricing below the competition◦ Pricing above the competition
Skimming pricing Penetration pricing Bundle pricing
The packaging of the product is the outer layer that assist an organization to protect the product and make it more attractive for the customers
Primary Packaging: It is the first material that envelops the product. This is the initial packaging of the Product and the smallest unit of Packaging which is in direct contact with the product.
Secondary Packaging: It is outside the primary packaging, which helps in protecting the primary-packed product.
Tertiary Packaging: It is the last Packaging used for bulk handling, warehouse storage and transport shipping. Palletized Unit Load is the most common of the Tertiary Packaging which is used to pack the Secondary-packed products tightly into the containers.
What is a brand? Brand – A brand is a name, term, sign,
symbol, or design which is intended to identify the goods or services of one seller or group of sellers, create value and to differentiate them from those of competitors.
Brand image refers to the perception of the brand in the public's mind.
E Branding is the promotional and branding activities planned by an organization in the internet media
It should be noted that Indian markets are growing in terms of usage of internet. Hence, the organizations spreads awareness through e banners, pop ups, pop unders, viral marketing efforts etc