Download 1) Core Product

PRODUCT
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 A Product is anything that can be offered to a market
for attention, acquisition, use, or consumption and that
might satisfy a want or need.
 Includes:
1. Physical Objects
2. Services
3. Events
4. Persons
5. Places
6. Organizations
7. Ideas
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Levels in creating
Product
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There are 3 levels in creating products
1) Core Product
 Marketers must first define what the core BENEFITS the
product will provide the customer.
Facilitating Products
 must be present for the guest to use the core service
Supporting Products
 Add value to the core product
Augmented Product
 physical environment, accessibility, interactions, physical
environment
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2) Actual Product
 Marketer must then build the actual product around the core
product. May have as many as four characteristics:
1. Quality level
2. Features
3. Brand name
4. Packaging
 all combined to carefully deliver the core benefit(s).
3) Augmented Product
 offer additional consumer benefits and services.
1. Warranty
2. Customer training
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EXAMPLE; SONY CAMCORDER:
1) Core
 the ability to take video pictures conveniently
2) Actual
 Sony Handycam (brand name), packaged, convenient design so you
can hold it, play back features etc. that provide the desired benefits,
high quality etc.
3) Augmented
 receive more than just the camcorder. Give buyers a warranty on
parts and workmanship, free lessons on how to use the camcorder,
quick repair service when needed and toll free telephone number
when needed.
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CLASSIFYING
PRODUCTS
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 Products can be classified depending on who is the final
customer.
 Components of the marketing mix will need to be changed
depending on the final purchaser.
 There are 2 types of product that able to product by company.
1) Consumer products
 Destined for the final consumer for personal, family and
household use.
 Involve in consumer market
2) Business to business products
 Are to satisfy the goals of the organization.
 Involve in business market
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CONSUMER PRODUCTS:
Consumer product had been classified into 4 product;
1. Convenience product
2. Shopping product
3. Specialty product
4. Unsought product
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1) CONVENIENCE PRODUCTS
 Packaging is important to sell the product.
 Consumers will accept a substitute.
 Marketers focus on intense distribution, time utility.
 Convenience products can be categorized into main
product, impulse (not intended prior to shopping trip).
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2) SHOPPING PRODUCTS
 Consumers spend considerable effort planning and making
purchase decisions.
 Consumers are not particularly brand loyal.
 Need producer intermediary cooperation, high margins, less
outlets than convenience goods. Use of sales personnel,
communication of competitive advantage, branding, advertising,
customer service
 Attribute based (Non Price Competition), product with the best
set of characteristics is bought.
 If product attributes are judged to be similar, then priced based.
 Examples: clothes, cameras.
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3) SPECIALTY PRODUCTS
 Buyer knows what they want and will not accept a substitute,
Example, Mercedes.
 Do not compare alternatives. Brand, store and person loyal.
 Will pay a premium if necessary.
 Need reminder advertising.
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4) UNSOUGHT PRODUCTS
 Sudden product to resolve the problem
 products to which consumers are unaware, products that
people do not necessary think of purchasing.
 Example, Umbrellas, Funeral Plots
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BUSINESS TO BUSINESS PRODUCTS
1) Production Goods
1. Raw Materials:
2. Component parts: becomes part of the physical product
3. Process materials: not readily identifiable part of the
production of other products
2) Support/ Processed Goods
1. Major Equipment:
2. Accessory Equipment: Type writers and tools
3. Consumable Supplies: IE Paper, pencils or oils
4. Business to Business services: Financial, legal marketing
research etc
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BRANDING
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Brands are most valuable assets to the company
A Brand represents what the company is and what it
stands for
A Brand implies trust , consistency, and a defined set of
expectations
The strongest brands, own a place in the customer’s
mind
There are approach in branding the product.
1. Individual Product Branding
2. Family Branding
3. Co-Branding
4. Private or Store Branding
5. No-Name or Generic Branding
6. Brand Licensing
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 Individual Product Branding
Under this branding approach new products are assigned new
names with no obvious connection to existing brands offered by
the company. Under individual product branding the marketing
organization must work hard to establish the brand in the market
since it cannot ride the coattails of previously introduced brands.
 Family Branding
Under this branding approach new products are placed under the
umbrella of an existing brand. The principle advantage of this
approach is that it enables the organization to rapidly build market
awareness and acceptance since the brand is already established
and known to the market.
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 Co-Branding
This approach takes the idea of individual and family branding a
step further. With co-branding a marketer seeks to partner with
another firm, which has an established brand, in hopes synergy of
two brands on a product is even more powerful than a single
brand. The partnership often has both firms sharing costs but also
sharing the gains.
 Private or Store Branding
Some suppliers are in the business of producing products for
other companies. They are placing another company’s brand name
on the product. This is most often seen in the retail industry
where stores or online sellers contract with suppliers to
manufacture the retailer’s own branded products.
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 No-Name or Generic Branding
Certain suppliers supply products that are intentionally “brand less.”
These products are mostly basic commodity -type products that
consumer or business customers purchase as low price alternatives
to branded products.
 Brand Licensing
Under brand licensing a contractual arrangement is created in which
a company owning a brand name allows others to produce and
supply products carrying the brand name. This is often seen when a
brand is not directly connected with a product category. For
instance, several famous children’s characters, such as Sesame
Street’s Elmo, have been licensed to toy and food manufacturers
who market products using the branded character’s name and
image.
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Consistency
Quality & Value
Attributes
Advantages
of
Brand Names
Identification
High Brand
Loyalty
Brand
Equity
Strong Brand
Association
Perceived Quality
Name Awareness
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PRODUCT
LIFE
CYCLE
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Product Portfolio
the range of products a company has in development or
available for consumers at any one time
Managing product portfolio is important for cash flow
Product Life Cycle
shows the stages that products go through from
development to withdrawal from the market
Each product may have a different life cycle
PLC determines revenue earned
Contributes to strategic marketing planning
May help the firm to identify when
a product needs support, redesign,
reinvigorating, withdrawal, etc.
May help in new product development planning
May help in forecasting and managing cash flow
The Stages of the
Product Life Cycle:
Development
2. Introduction/Launch
3. Growth
4. Maturity
1.
Saturation
6. Decline
7. Withdrawal
5.
1) The Development Stage:
 Initial Ideas – possibly large number
 May come from any of the following –
Market research – identifies gaps in the market
2. Monitoring competitors
3. Planned research and development (R&D)
4. Creative thinking
1.
 Product Development Stages
1. New ideas/possible inventions
2. Product Development and refinement
3. Test Marketing – possibly local/regional
4. Analysis of test marketing results and amendment of
product/production process
5. Preparations for launch – publicity, marketing campaign
2) Introduction/Launch:
 Advertising and promotion campaigns
 Monitor initial sales
 Maximise publicity
 High cost/low sales
 Length of time – type of product
3) Growth:
 Increased consumer awareness
 Sales rise, Revenues increase
 Costs - fixed costs/variable costs, profits may be made
 Monitor market – competitors reaction?
4) Maturity:
 Sales reach peak
 Cost of supporting the product declines
 Ratio of revenue to cost high
 Sales growth likely to be low
 Market share may be high
 Competition likely to be greater
 Monitor market – changes/amendments/new strategies?
5) Saturation:
 New entrants likely to mean market is ‘flooded’
 Necessity to develop new strategies becomes more pressing:
 Searching out new markets:
 Linking to changing fashions
 Seeking new or exploiting market segments
 Linking to joint ventures – media/music, etc.
 Developing new uses
 Focus on adapting the product
 Re-packaging or format
 Improving the standard or quality
 Developing the product range
6) Decline and Withdrawal:
 Product outlives/outgrows its usefulness/value
 Fashions change
 Technology changes
 Sales decline
 Cost of supporting starts to rise too far
 Decision to withdraw may be dependent on availability of new
products and whether fashions/trends will come around again?
PRODUCT LIFE CYCLES
Sales
Development
Introduction
Growth
Maturity
Saturation
Decline
Time
Sales and Profits Over the Product’s Life From
Inception to Demise
Sales and
Profits
Sales
Profits
Time
Product
Development
Introduction
Growth
Losses/
Investments
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Maturity
Decline
END OF
CHAPTER 7
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