MCV - Product.pdf

Module 5 Product Introduction Product is what marketer takes to market for consumers to buy or engage with Products change to suit new technology Gods, Services and Ideas Product is a good service or idea offered to market for exchange Goods; Physical, tangible offerings, capable of being delivered...

Module 5 Product Introduction Product is what marketer takes to market for consumers to buy or engage with Products change to suit new technology Gods, Services and Ideas Product is a good service or idea offered to market for exchange Goods; Physical, tangible offerings, capable of being delivered Services; Intangible offerings Idea; Concept, issue, philosophy Total Product Concept Total reduction concept is way of viewing product as the totality of value and benefits it provides to customers. Crucial for marketers too understand that when consumers choose a produce, they buy a solution to a problem - Core Product; Fundamental benefit that responds to the customer’s problem of an unsatisfied needs - Expected Product; Attributes that actually deliver the benefit that forms the core product - Augmented Product; A bundle of benefits consumer may not require as basic fulfilment of their needs. - Potential Product; All possibilities part of expected or augmented product. Fundamental features - make calls -communication Expected features -Mobile Phone Touch screen sounds /MUSIC - -charging Games form Photo company can specifically differential features camera charging What Offer ADD ACCESS Potential features to Add or remove from phone editing Product differentiation takes place in the augmented layer as this is where the company wants to differentiate themselves from their competitors. Product Relationships Many orgs produce multiple products or products of different styles Relationship between brand products include; - Product Item; Just one item - Product Line; Different types of same item e.g. socks but different types for men and women, different colours - Product Mix; Everything bonds makes, e.g. undergarments for all genders, mix of clothing etc. Product Classification Consumer products are products purchased by households and individuals for their own private consumption Consumer products are classified into; - Shopping Products; - Moderate to high engagement in decision making process - Expected to last long time - Infrequent purchase - Small number of retail outlets - Low volumes - Large profit margins - E.g. Electrical appliances, furniture, cameras, clothing - Convenience Products (Staple, Impulse, Emergency); - Frequent purchase - Stocked up large number of retail outlets e.g. woolies - Sell in high volumes - Low profit margins - E.g. Groceries - Specialty Products; - Unique characteristics desired by buyers - Consumers know exactly what they want & is preselected - No close substitutes - Limited outlets - Infrequent - Low volumes - High profit - E.g. Tesla - Unsought Products; - Unknown or unconsidered - Challenge of making customers aware - Marketing is crucial - E.g. Coffins Business to Business Products are products purchased by individuals and orgs for use in production of daily business operations Business to business products classified into; - Parts and Materials - Raw Materials - Components - Equipment - Services and Supplies Product Life Cycle Products must be effectively managed to ensure ongoing profitability. Consider environmental changes; - Technological Changes - Changes in Fashion - Actions of Competitors Way product progresses through lifestyle varies with product and marketing environment Product Life Cycle Stages; 1 New Product Development - NPD has eight phases 1 Idea generation 2 Screening 3 Concept Evaluation 4 Marketing strategy 5 Business analysis 6 Product Development 7 Test Marketing 8 Commercialisation - Product Adoption Process - Marketers need to understand how consumer perceives a new product, learns about it and decides to adopt it - Typically entails 5 stages of product adoption 1 Awareness - Consumer becomes aware of product through promotion, word of mouth, incidental exposure - Consumers knows little about product, how it works and benefits. 2 Interest - Consumer experiences interest in product and seeks information to learn more 3 Evaluation - Consumer evaluates info and decides whether to try product 4 Trial - Consumer examines and tries product and decides whether product can satisfy need/want 5 Adoption - Consumer decides to purchase, evaluates and considers whether to repurchase. 2 Introduction - Considerable investment required - Goal to build awareness and self interest - Lag in building sales - Sales recoup research and development costs - Minor profits at end 3 Growth - Increase in popularity, sales profit - Dependent on welcomes by market - Competitors begin to enter market with similar products 4 Maturity - Novelty wears off - Competitors more established - Sales peak and profitability falls - Decision to determine future of product by changing mktg mix or leaving market and allowing decline 5 Decline - Sales and profits fall - New products entering - Little interest - Drop or change product Diffusion of Innovation Diffusion of innovation describes how innovations are adopted by market over time. Suggests influence of social groups on decision made by individual and how new products and ideas are adopted Speed and matter of market penetration is dependent on market type/segment Categories of product adopted are defined by adoption behaviour; - Innovators - Early Adopters - Early Majority - Late Majority - Laggards Product Differentiation Product differentiation is creation of products and product attribute that distinguish products from another (design/brand/image/quality) Mostly apart of augmented product layer Not a static concept Marketers usually modify, upgrade, reposition products during their life cycle, to maintain or improve competitive advantage. Branding Brand refers to collection of symbols creating image in customer’s mind that differentiates a product from competitors It comprises; - Name - Slogan - Logo - Design Brand Image is customer’s set beliefs of brand Customers make decision based on brand and brand image Brand Name is the component of brand that is spoken including words, letters, numbers. Brand Mark is part of brand not made up of words e.g. symbols, designs Trade Mark Can register as trade mark to protect brand through IP Australia Brand Equity is the added financial and non financial value of a brand A brand identifies to marketers; - Organisation’s products - Differentiates organisation’s products from competing products - Attracts consumers - Helps introduce new products - facilitates promotion for same brand products Brand Loyalty is when customer shows favourable attitude towards brands Brand Equity Metrics is measuring the value of brands. - High brand equity can be valuable asset and provide competitive advantage - Metrics used; - Brand assets (trade marks, patents) - Stock price analysis - Replacement cost - Brand attributes - Brand loyalty - Willingness to pay analysis Brand Strategies When developing brands in a product mix, can pursue the following strategies; - Individual Branding; Use a different brand on each product to give specific identity - Family Branding; Use same brand on several org’s products - Brand Extension; Gives existing brand name to new product in a different category. Brand Ownership Manufacturer Brands; Owned by producers and are most common Private Label Brands; Owned by resellers e.g. wholesalers, retailers, not identified with manufacturer. Generic Brands; Products that only indicate the product category Licensing Agreement; Uses names and symbols of other brands for a fee Franchising; Parallels with licensing Co-Branding; Use of two or more brand names on same product e.g. Oreo McFlurry - Capitalises brand equity of multiple brands - Improve product’s perceived value - Maintain existing branding after another org’s brands are acquired. Packaging Important for consumer identification, like a brand Effect of packaging includes, express a change in the product, update style to broaden customer appeal, emphasise elements to differentiate from competitors. Labelling - Forms part of packaging - Identifies product, brand name, provides useful product info - Some info is compulsory. Managing Products The product strategy is complex part of marketing mix Multiple decisions that need to be managed throughout the product life cycle Includes ongoing evaluation and responses to evolving marketing environment. Approaches to Management Requires coordination across different departments Product managers may be employed to manage products or product lines or brand managers to manage a particular brand within the org’s portfolio of brands. Managing Products Through the Life Cycle Marketers determine which life cycle product is in anf make appropriate.decisions in response. Line extensions are most common form of new product - derivatives of existing products added to product line, rather than superseding initial product May be need to change asepct of marketing mix to reposition the product Product obsolescence; May be planned or unplanned