Chapter 6 Marketing Mix I Product and Services PDF

CHAPTER SIX MARKETING MIX STARTEGY 1: PRODUCT AND SERVICES  PRODUCT, SERVICES, AND BRANDING STRATEGY Topic Outline LO1: Level of Consumer Product LO2: Classification of Consumer Product LO...

CHAPTER SIX MARKETING MIX STARTEGY 1: PRODUCT AND SERVICES  PRODUCT, SERVICES, AND BRANDING STRATEGY Topic Outline LO1: Level of Consumer Product LO2: Classification of Consumer Product LO3: Individual Product Decisions LO4: New-Product Development Process LO5: Product Life -Cycle Strategies LO6: Service Marketing Copyright ©2014 by Pearson Education  Products, Services, and Experiences Product is anything that can be offered in a market for attention, acquisition, use, or consumptionthat might satisfy a need or want Service is a product that consists of activities, benefits or satisfactionthat is essentially intangible and does not result in the ownership of anything WHAT IS A PRODUCT? Copyright ©2014 by Pearson Education  WHAT IS A PRODUCT? Products, Services, and Experiences Copyright ©2014 by Pearson Education  Product and Service Classifications Consumer products Industrial products Copyright ©2014 by Pearson Education  LO1: LEVEL OF CONSUMER PRODUCT? Copyright ©2014 by Pearson Education  LO2: CLASSIFICATION OF CONSUMER PRODUCT Consumer products are productsand servicesfor personal consumption Classified byhow consumers buy them Convenience products Shopping products Specialty products Unsought products Copyright ©2014 by Pearson Education Copyright ©2014 by Pearson Education  Convenience products consumer products and services that the customer usuallybuys frequently , immediately, and with aminimum comparisonand buying effort Newspapers Candy Fast food Copyright ©2014 by Pearson Education  Shopping products consumer products and services that the customercompares carefully on suitability, quality, price, and style Furniture Cars Appliances Copyright ©2014 by Pearson Education  Specialty products consumer products and services with unique characteristicsor brand identification for which a significant group of buyers is willing to make special purchase effort Medical services Designer clothes High-end electronics Copyright ©2014 by Pearson Education  Unsought products consumer products that the consumer does not know about or knows about but does not normally think of buying Life insurance Funeral services Blood donations Copyright ©2014 by Pearson Education  LO3: INDIVIDUAL PRODUCT AND SERVICE DECISIONS Copyright ©2014 by Pearson Education 1. Product or service attributes Communicate and deliver the benefits Product Quality(Quality Level and Conformance Quality) Features Style and design Copyright ©2014 by Pearson Education  2. Brand Brand is the name, term, sign, or design —or a combination of these—that identifies the maker or seller of a product or service Copyright ©2014 by Pearson Education  3. Packaging involves designing and producing the container or wrapper for a product 4. Labels identify the product or brand, describe attributes, and provide promotion Copyright ©2014 by Pearson Education  5. Product support services Copyright ©2014 by Pearson Education  LO4: NEW -PRODUCT DEVELOPMENT PROCESS Major Stages in New-Product Development Copyright ©2014 by Pearson Education  NEW -PRODUCT DEVELOPMENT PROCESS Idea Generation Idea generation is the systematic search for new-product ideas Sources of new-product ideas Internal External Copyright ©2014 by Pearson Education  NEW -PRODUCT DEVELOPMENT PROCESS Idea Generation Internal sources refer to the company’s own formal research and development, management and staff, and intrapreneurial programs External sources refer to sources outside the company such as customers, competitors, distributors, suppliers, and outside design firms Copyright ©2014 by Pearson Education NEW -PRODUCT DEVELOPMENT PROCESS Idea Screening Identify good ideas and drop poor ideas R-W-W Screening Framework: Is it real ? Can we win ? Is it worth doing? Copyright ©2014 by Pearson Education  NEW -PRODUCT DEVELOPMENT PROCESS Concept Development and Testing Product idea is an idea for a possible product that the company can see itself offering to the market Product concept is a detailed version of the idea stated in meaningful consumer terms Product image is the way consumers perceive an actual or potential product Copyright ©2014 by Pearson Education NEW -PRODUCT DEVELOPMENT PROCESS Concept Development and Testing Concept testing refers to testing new -product concepts with groups of target consumers Copyright ©2014 by Pearson Education NEW -PRODUCT DEVELOPMENT PROCESS Marketing Strategy Development Marketing strategy development refers to the initial marketing strategy for introducing the product to the market Marketing strategy statement includes: Description of the target market Value proposition Sales and profit goals Copyright ©2014 by Pearson Education  NEW -PRODUCT DEVELOPMENT PROCESS Business Analysis Business analysis involves a review of the sales, costs, and profit projections to find out whether they satisfy the company’s objectives Copyright ©2014 by Pearson Education  NEW -PRODUCT DEVELOPMENT PROCESS Product Development Involves the creation and testing of one or more physical versions by the R&D or engineering departments Requires an increase in investment Shows whether the product idea can be turned into a workable product. Copyright ©2014 by Pearson Education  NEW -PRODUCT DEVELOPMENT PROCESS Test Marketing Test marketing is the stage at which the product and marketing program are introduced into more realistic marketing settings Provides the marketer with experience in testing the product and entire marketing program before full introduction Copyright ©2014 by Pearson Education NEW -PRODUCT DEVELOPMENT PROCESS Types of Test Markets Standard test markets Controlled test markets Simulated test markets Copyright ©2014 by Pearson Education  NEW -PRODUCT DEVELOPMENT PROCESS Advantages of simulated test markets Less expensive than other test methods Faster Restricts access by competitors Disadvantages Not considered as reliable and accurate due to the controlled setting Copyright ©2014 by Pearson Education  NEW -PRODUCT DEVELOPMENT PROCESS Commercialization is the introduction of the new product When to launch Where to launch Copyright ©2014 by Pearson Education  LO5: Product Life -Cycle Strategies Product Life Cycle Copyright ©2014 by Pearson Education  PRODUCT LIFE -CYCLE STRATEGIES Product development Sales are zero and investment costs mount Introduction Slow sales growth and profits are nonexistent Growth Rapid market acceptance and increasing profits. Maturity Slowdown in sales growth and profits level off or decline Decline Sales fall off and profits drop Copyright ©2014 by Pearson Education  PRODUCT LIFE -CYCLE STRATEGIES Copyright ©2014 by Pearson Education Examples of Fashion (Apparel industry) Examples of Style (Apparel industry) Examples of Fad (Apparel industry)  PRODUCT LIFE -CYCLE STRATEGIES Introduction Stage Slow sales growth Little or no profit High distribution and promotion expense Copyright ©2014 by Pearson Education  PRODUCT LIFE -CYCLE STRATEGIES Growth Stage Sales increase New competitors enter the market Price stability or decline to increase volume Consumer education Profits increase Promotion and manufacturing costs gain economies of scale Copyright ©2014 by Pearson Education  PRODUCT LIFE -CYCLE STRATEGIES Maturity Stage Slowdown in sales Many suppliers Substitute products Overcapacity leads to competition Increased promotion and R&D to support sales and profits Copyright ©2014 by Pearson Education  PRODUCT LIFE -CYCLE STRATEGIES Maturity Stage Modifying Strategies Market modifying Product modifying Marketing mix modifying Copyright ©2014 by Pearson Education  PRODUCT LIFE -CYCLE STRATEGIES Decline Stage Maintain the product Harvest the product Drop the product Copyright ©2014 by Pearson Education  LO6: Service Marketing Nature and Characteristics of a Service Copyright ©2014 by Pearson Education  SERVICES MARKETING Marketing Strategies for Service Firms In addition totraditional marketing strategies, service firms often require additional strategies Service-profit chain Internal marketing Interactive marketing Copyright ©2014 by Pearson Education  SERVICES MARKETING Service -profit chain links service firm profits with employeeand customer satisfaction Internal service quality Satisfied and productive service employees Greater service value Satisfied and loyal customers Healthy service profits and growth Copyright ©2014 by Pearson Education  SERVICES MARKETING Internal marketing means that the service firm must orient and motivate its customer contact employee and supporting service people to work as a team to provide customer satisfaction Internal marketing must precede external marketing Copyright ©2014 by Pearson Education  SERVICES MARKETING Interactive marketing means that service quality depends heavily on the quality the of buyer-seller interactionduring the service encounter Service differentiation Service quality Service productivity Copyright ©2014 by Pearson Education  SERVICES MARKETING Marketing Strategies for Service Firms Managing service differentiation createsa competitive advantage from the offer, delivery, and image of the service Offer can includedistinctive features Delivery can includemore able and reliable customer contact people, environment, or process Image caninclude symbols and branding Copyright ©2014 by Pearson Education  SERVICES MARKETING Marketing Strategies for Service Firms Managing service quality provides a competitive advantage by delivering consistently higher qualitythan its competitors Service quality always varies depending on interactions between employees and customers Copyright ©2014 by Pearson Education  SERVICES MARKETING Marketing Strategies for Service Firms Managing service productivity refers to the cost side of marketing strategies for service firms Employeerecruiting, hiring, and training strategies Servicequantity and quality strategies Copyright ©2014 by Pearson Education