MARKETING MIX PRODUCT What will we learn? n What is product in marketing? n What are the characteristics of products and how can they be classified? n How can companies differentiate products? n How can a company build and manage its product mix and product lines? n What is a brand and how can companies manage brand? n How can companies use packaging, labeling, warranties, and guarantees as marketing tools? 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. Levels of product - hierarchy ¨ Levitt (1983) suggested that the offer can be viewed at four levels: 1. core or generic product = basic physical product, for instance a video cassette recorder 2. expected product is the core product together with minimal purchase conditions, for instance a manual and a one-year warranty when buying electronic equipment. 3. the augmented level is where the company has a chance of differentiating itself from the competitors. The aim is to improve the customer-perceived value by adding services and benefits which are preferred by target customers. 4. potential product, namely all the augmentations and tranformations this product might ultimately undergo in the future. It refers to the product’s possible evolution over time as the company searches creatively for new ways to satisfy consumers and distinguish its offer. Five Product Levels Levels of a Product Product classification schemes Durability Durable goods 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 Classification of Consumer Products 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. Hierarchy of products Company Product Mix Individual Product Decisions Product and Service Attributes PRODUCT DIFFERENTIATION n Product form n Features n Performance n Conformance n Durability n Reliability n Reparability n Style n Design n Ordering ease n Delivery n Installation n Customer training n Customer consulting n Maintenance Product Line Decisions 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 ¨ Create barriers to entry ¨ Serve as a competitive advantage ¨ Secure price premium BRAND KNOWLEDGE n Thoughts n Beliefs n Feelings n Images n Experiences 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 ASSET VALUATOR (BAV) n Differentiation n Relevance n Esteem n Knowledge 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 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. Brand Equity An Overview of Branding Decisions Brand Strategies Good Brand Names: 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 ¨ Distribution Why Package is 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 Goods-Services Continuum 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 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.