MARKETING MIX PRODUCT WHAT IS A PRODUCT? Product: n bundle of physical, service, and symbolic attributes designed to enhance buyers’ want satisfaction n anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or need. ¨ Includes: physical objects, services, events, persons, places, organizations, ideas, or some combination thereof. Five Product Levels Levels of a Product What is a Service? n A form of product that consists of activities, benefits, or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything. ¨ Examples: banking, hotel, airline, retail, tax preparation, home repairs. Consumer-Goods Classification Figure 11.5: Classification of Consumer Products Table 11.1: Marketing Impact of the Consumer Products and Services Classification System Industrial Products + commodities n Those purchased for further processing or for use in conducting business. Industrial Products Other Market Offerings n Organizations: Profit (businesses) and nonprofit (schools and churches). n Persons: Politicians, entertainers, sports figures, doctors, and lawyers. n Places: create, maintain, or change attitudes or behavior toward particular places (e.g., tourism). n Ideas (social marketing): Public health campaigns, environmental campaigns, family planning, or human rights. Individual Product Decisions Product and Service Attributes Product Mix Product Mix Decisions n Product Mix: all of the product lines and items that a particular seller offers for sale. n Width: the number of different product lines the company carries. # product lines an organization offers n increase width to: ¨ diversify risk ¨ capitalize on established reputations n Depth: the number of versions offered of each product in the line. n # product items in a product line n increase depth to: ¨ attract buyers with different preferences ¨ increase sales & profits by further segmenting market ¨ capitalize on economies of scale ¨ even out seasonal sales patterns n Consistency: how closely related the various lines are. n http://www.henkel.com/cps/rde/xchg/henkel_com/hs.xsl/index.htm Product Line Decisions Two-Way Product-Line Stretch: Marriott Hotels What is a Brand? A brand is a name, term, sign, symbol, or design, or a combination of these, that identifies the maker or seller of a product or service. Branding n Advantages to buyers: ¨ Product identification ¨ Product quality n Advantages to sellers: ¨ Basis for product’s quality story ¨ Provides legal protection ¨ Helps to segment markets Brand Equity n The positive differential effect that knowing the brand name has on customer response to the product or service. n Provides: ¨ More brand awareness and loyalty ¨ Basis for strong, profitable customer relationships Brand Equity Major Brand Strategy Decisions Brand Positioning n Can position brands at any of three levels. Brand Name Selection n Desirable qualities for a brand name include: – It should suggest product’s benefits and qualities – It should be easy to pronounce, recognize, and remember – It should be distinctive – It should be extendable – It should translate easily into foreign languages – It should be capable of registration and legal protection Good Brand Names: Brand Sponsorship Brand Development n Line Extension: introduction of additional items in a given product category under the same brand name (e.g., new flavors, forms, colors, ingredients, or package sizes). n Brand Extension: using a successful brand name to launch a new or modified product in a new category. Brand Development n Multibranding: offers a way to establish different features and appeal to different buying motives. n New Brands: developed based on belief that the power of its existing brand is waning and a new brand name is needed. Also used for products in new product category. An Overview of Branding Decisions Brand Strategies Packaging n Designing and producing the container or wrapper for a product. n Developing a good package: ¨Packaging concept ¨Package elements ¨Product safety ¨Environmental concerns Why Package Crucial as a Marketing Tool n Self-service n Consumer affluence n Company & brand image n Opportunity for innovation Labeling n Printed information appearing on or with the package. n Performs several functions: ¨Identifies product or brand ¨Describes several things about the product ¨Promotes the product through attractive graphics Labels THE PRODUCT LIFE CYCLE n Product life cycle: progression of products through introduction, growth, maturity, and decline stages The Product Life Cycle n Firm works to stimulate demand for the new market entry n Promotional campaigns stress features and attempts to generate awareness, interest, and trial n Additional promotions to intermediaries attempt to induce them to carry the product n Although prices are typically high, financial losses are common due to heavy promotional and research-and-development costs The Product Life Cycle n Sales volume rises rapidly n Firm usually begins to realize substantial profits n Success attracts competitors n Firm may need to make improvements to the product n Additional spending on promotion and distribution may be necessary The Product Life Cycle n Industry sales continue to grow, but eventually reach a plateau n Many competitors have entered the market, sales and profits begin to decline n Differences between competing products diminish n Available supplies exceed industry demand for the first time n Must manage competition and look to extend PLC The Product Life Cycle n Innovations or shifts in consumer preferences cause an absolute decline in industry sales n Industry profits continue to fall -- sometimes become losses n Firms cut prices in a bid for the dwindling market n Manufacturers gradually drop the declining items from their product lines Product Mix Decisions n During the growth stage, a firm may lengthen or widen its product mix n In maturity, the Company may decide to ad variations that will attract new users n In decline, a product may be pruned or altered, and new product may extend the product life cycle n Line extension: introduction of a new product that is closely related to other products in the firm’s existing line STRATEGIC IMPLICATIONS OF THE PRODUCT LIFE CYCLE CONCEPT n Marketers usually try to expand each stage of the life cycle for their products as long as possible n Marketers seek to extend product life cycles through strategies to: ¨ Figure 11.14: A New Application for a Mature Product Figure 11.1: Goods-Services Continuum Nature and Characteristics of a Service Major Service Marketing Tasks n Managing Service Differentiation: ¨ Develop a differentiated offer, delivery, and image. n Managing Service Quality: ¨ Be customer obsessed, set high service quality standards, have good service recovery, empower front-line employees. n Managing Service Productivity: ¨ Train current employees or hire new ones, increase quantity and sacrifice quality, harness technology. The Service Package n Supporting Facility: The physical resources that must be in place before a service can be sold. Examples are golf course, ski lift, hospital, airplane. n Facilitating Goods: The material consumed by the buyer or items provided by the consumer. Examples are food items, legal documents, golf clubs, medical history. n Information: Operations data or information that is provided by the customer to enable efficient and customized service. Examples are patient medical records, seats available on a flight, customer preferences, location of customer to dispatch a taxi. n Explicit Services: Benefits readily observable by the senses. The essential or intrinsic features. Examples are quality of meal, attitude of the waiter, on-time departure. n Implicit Services: Psychological benefits or extrinsic features which the consumer may sense only vaguely. Examples are privacy of loan office, security of a well lighted parking lot. n http://www.smartwings.com/home.php?lang=en