Product Chapters 7 & 8 PDF

Product – Chapters 7 & 8  Product – Lecture Objectives After today’s lecture, you should be able to: Define ‘product’ & understand various dimensions and classifications of products Explain value of branding & brand management Describe the roles of packaging Describe...

Product – Chapters 7 & 8  Product – Lecture Objectives After today’s lecture, you should be able to: Define ‘product’ & understand various dimensions and classifications of products Explain value of branding & brand management Describe the roles of packaging Describe the product life cycle (Chapter 8)  Marketing Mix - 4 P’s of Marketing Target Price Product Customers Intended ! Position ON SALE Promotion Place What is a product? Should meet customer Remember: needs and wants customers buy want A solution to a satisfaction in the form of product benefits. Problem Provide value Definition “A product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a need or want.” Good: A physical (tangible) offering Service: Intangible offering that does not involve ownership Industrial product (materials, capital items, services) Experience (sporting event, festival) Idea: Concept, issue or philosophy (“Slip, Slop, Slap & Wrap!”) Person, Place, Organisation: Total Product Concept 3 Levels of a Product (bundle of attributes) Core Product Core customer value The key benefit they want from a product 3 Levels of a Product Actual Product Packaging Features Brand Name Design Quality Blend of form & function Attractive, yet easy, safe to use Level Ability to consistently perform function Includes durability, reliability, ease of operation and repair 3 Levels of a Product Augmented Product Support Product Delivery After- & sale Credit Service Symbolic & Warranty Experiential  Definitions  Product Item/Individual Product  Product Line a set of closely related product items  Product Mix all product lines and items that a company offers for sale.  width - refers to the number of product lines  consistency – how closely related the various product lines are.  Extend the mix by adding a new line Product Item Product Line Product Mix  Definitions  Product Line 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. depth - concerns number of alternatives within product lines  A company can expand its product line by: product line filling product line stretching (line extension) Product Line Stretching Consumer Product Classifications (way in which the consumer buys them) Convenience Products Willing to spend only minimal time and effort Inexpensive, frequently purchased, widely available Self-service, packaging important Examples: ?? Shopping Products Purchased relatively infrequently Wishing to compare a few alternatives on a few criteria Examples: ?? Consumer Product Classifications (way in which the consumer buys them) Specialty Products Willing to make a special effort to obtain them Possess one or more unique characteristic Examples: ?? Unsought Products Unaware of needing the product, sudden problem Examples: ??  Table 7.1 Marketing considerations for consumer goods Type of consumer product Marketing Implicatio Convenien Shopping Specialty Unsought ns ce Customer Frequent Less frequent Strong brand Little product purchase, little purchase, much preference and awareness, buying planning, little planning and loyalty, special knowledge (or, if behaviour comparison or shopping effort, purchase effort, aware, little or shopping effort, comparison of little comparison even negative low customer brands on price, of brands, low interest) involvement quality, style price sensitivity Price Low Higher High Varies Distributi Widespread Selective Exclusive Varies distribution, distribution in distribution in on convenient fewer outlets only one or a few locations outlets per market area Promotion Mass promotion Advertising and More carefully Aggressive by the producer personal selling targeted advertising; by both producer promotion by both personal selling and resellers producer and by producer / resellers resellers Business-to-Business Products Equipment Component parts Raw materials Classified according to how organisational customers use them Processed Maintenance, materials repair and Specialised operating (MRO) services products  Branding Brand A collection of symbols such as a name, logo, slogan and design intended to create an image in the customer’s mind that differentiates a product from competitors’ products. Brand image The set of beliefs that a consumer has regarding a particular brand. Consumer’s perception of the brand.  Branding Brand name Part of a brand that can be spoken, including words, letters and numbers. Ideally should be distinctive, recognisable, relevant, suggestive, extendable and can be protected Brand mark The part of a brand not made up of words — it often consists of symbols or designs. Trademark A brand name or brand mark that has been legally registered so as to secure exclusive use of the brand. The Benefits of Brands to Organizations Company value Company hopes to build brand equity Consumer preference and loyalty Barrier to competition High profits Base for brand extensions Coordinate channel behaviour The Benefits of Brands to Consumers Can communicate features and benefits (e.g. Sunkist) Reduces the risk in purchasing Simplifies the purchase decision Symbolic value Assure quality and reliability (promise to customer) The Importance of Branding Brand equity = the value of the brand to an organisation Brand equity creates customer Strong brands build an loyalty, communicates quality, emotional connection helps establish clear, positioning with the consumer and allows for premium prices What Makes a Brand Successful? ls a t deli v eri n g the benefits to It exce truly desire customers that they It is properl y positioned It stays relevant It has a logical It is consistent brand portfolio It uses a variety of It is given ongoing marketing activities to support build equity Branding Decisions Individual branding A branding approach in which each product is branded separately. Family branding A branding approach that uses the same brand for several of the organisation’s products. P&G  Branding Decisions (Brand sponsorship) Manufacturer brands Brands owned by producers and identified with the product at the point of sale. Private label brands (store brand) Brands owned by resellers, such as wholesalers or retailers, and not identified with the manufacturer. Co-brand where two established brand names of different companies are used on the same product. Licensed brand where a company licenses names or symbols previously created by other manufacturers, or names of well- known celebrities Packaging Designed to attract Helps quickly the consumer’s communicate the attention product benefits Provides easy brand reco gnition Designed to physically & brand personality protect the product May provide May help augment the additional benefits, product with information, such as a special lid recipes, warranties & facilitate usage “protect what it sells and sell what it protects”  Quaker Oats “a delicacy for the epicure, a nutritious dainty for the invalid, a delight to the children.” - Synergistic relationship (brand, package, advertising) Developing New ProductsA continuous process of looking for ways to make the existing product range better New product development is becoming increasingly important to companies, due to: Increasing Changing competition in a Rapid changes in consumer global technology lifestyles and marketplace values Product Life Cycle The PLC is the course of a product’s sales and profits during its lifetime. It involves five distinct stages: product development – a period of slow sales, no profits and high investment costs introduction – a period of slow sales growth but with non-existent profits growth – a period of market acceptance and increasing profits maturity – a period of slowdown in sales growth decline – the period when both sales and profits drop. Product life cycle Style, fashion, fads PLC Stages Introduction Usually a single company only produces the product The goal is to get first-time consumers to try the product If the product is successful, competitors will follow Growth The goal is to encourage repeat purchase and to build brand loyalty More product variations are introduced to target more market segments Price competition may develop Maturity Usually the longest stage Companies will try and sell the product through as many outlets as possible Promotion is targeted at reminding customers and reinforcing brand loyalty Decline Competitors start to withdraw Less product variations exist A few companies may remain quite profitable Marketing Mix Strategies in the PLC Extending the PLC Market modifications Current customers consume more (market penetration) Find new domestic customers (market development) Find new foreign customers Product Modifications Feature modification Quality modification Style modification Mix Modifications