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Principles of
Marketing
Lecture-23
Summary
of
Lecture-22
Consumer Adoption
Process
Awareness
Strategy
Communicate Availability
Interest
Strategy
Communicate Benefits
Evaluation
Strategy
Emphasize Advantages
Trial
Strategy
Motivate Consumers
Adoption
Strategy
Ensure Satisfaction
Product Life-Cycle
(PLC)
Sales and
Profits ($)
Sales
Profits
Time
Product
Development
Stage
Introduction
Growth
Maturity
Decline
Sales and Profits Over
the Product’s Life From
Inception to Demise
Today’s Topics
Product
Value-Driven Marketing
Value
– A customer’s subjective assessment of benefits relative
to the costs in determining the worth of a product
• Customer value = customer benefits – customer costs
– Customer benefits
• Anything desired by the customer that is received in
an exchange
– Customer costs
• Anything a customer gives up in an exchange for
benefits
–Monetary price of the benefit
–Search costs (time and effort) to locate the product
–Risks associated with the exchange
Benefits
Consumers don’t buy products;
they buy benefits
Functional benefits: relating to
the practical purpose a product
serves
Psychological benefits: relating
to how a product makes one
feel
Segmentation
Market
Segmentation
1. Identify
segmentation
variables and
segment the
market
2. Develop
profiles of
resulting
segments
Market
Targeting
3. Evaluate
attractiveness
of each
segment
4. Select the
target
segment(s)
Market
Positioning
5. Identify
possible
positioning
concepts for
each target
segment
6. Select,
develop, and
communicate
the chosen
positioning
concept
Question: Why
do you buy a
product?
Marketing Mix
4 Ps
Marketing is the involved
process of determining the 4
P’s of the Marketing Mix
–Product
–Price
–Promotion
–Place (Distribution)
The Marketing Mix
–Four marketing activities—product, Price,
Place and Promotion—that a firm can
control to meet the needs of customers
within its target market
Product
Price
Place
Promotion
Target
Market
Definitions
Product
– Anything offered to a market for attention,
acquisition, use, or consumption that
might satisfy a need or want.
Service
– Any activity or benefit that one party can
offer to another that is essentially
intangible and does not result in
ownership of anything.
Goods
Services
Goods
Services
Tangible
Intangible
Produced Then Sold
Sold Then Produced and/
or Consumed Same Time
Goods
Services
Tangible
Intangible
Produced Then Sold
Sold Then Produced and/
or Consumed Same Time
Can Store and Transport
Perishable
Produced Separate
From Consumer
Often Produced In
Consumer's Presence
Levels of Products
Augmented
Product
Installation
Packaging
Brand
Name
Delivery
& Credit
Quality
Level
Features
Core
Benefit or
Service
AfterSale
Service
Design
Warranty
Actual
Product
Core
Product
Product
Classifications
Individual Product
Decisions
Product Attributes
Branding
Labeling
Packaging
Product Support
Services
Product Attributes
Developing a Product or
Service Involves
Defining the Benefits
that it Will Offer
Quality
Features
Design
Branding
Brand
A name, term, sign, symbol, or
design, or a combination of
these, intended to identify the
goods or services of one seller
or group of sellers and to
differentiate them from those
competitors
To Brand or
Not to Brand?
Why Incur the
Cost & Efforts
to Brand?
Brand Name
Selection
A Good
Brand Name
Is...
• Short and simple
• Suggestive of product
benefits
• Legally available
• No negative imagery
• Easy to spell, read, and
pronounce
• Adaptable for international
markets
• Adaptable to
packaging/labeling needs
• Adaptable to any
advertising medium
Brand
Development
Four Brand Strategies
Product Category
Brand Name
Existing
Existing
New
New
Line Extension
Brand Extension
Multibrands
New Brands
Packaging
Goals of Packaging
Protection against damage,
spoilage, tampering etc.
Assistance in marketing
the product
Cost effectiveness (and
good for the environment)
Labeling
Competitive
Advantages
Sales
Tasks
Identifies
Packaging
Labeling
Describes
Product
Safety
Promotes
Universal Product Code (UPC)
 A bar code on a product’s package that
provides information read by optical
scanners.
 UPC codes provide several advantages:
labor saving, improve inventory control,
and help with marketing research.
79400 80740
Product - Support
Services
Product Line
Strategies
Product Line Extensions
Stretching
Filling
Adding new
items to line
Adding sizes or
styles
Downward
Upward
Two-way
Contracting a
Product Line
Dropping items
New Product
Development
Major Stages in
New-Product
Development
Marketing
Strategy
Concept
Development
and Testing
Idea
Screening
Idea
Generation
Business
Analysis
Product
Development
Test
Marketing
Commercialization
Consumer Adoption
Process
Awareness
Strategy
Communicate Availability
Interest
Strategy
Communicate Benefits
Evaluation
Strategy
Emphasize Advantages
Trial
Strategy
Motivate Consumers
Adoption
Strategy
Ensure Satisfaction
Product Life-Cycle
(PLC)
Sales and
Profits ($)
Sales
Profits
Time
Product
Development
Stage
Introduction
Growth
Maturity
Decline
Sales and Profits Over
the Product’s Life From
Inception to Demise
Product Life-Cycle
Strategies
Product
Development Stage
Sales and
Profits ($)
Sales
Profits
Time
Product
Development
Stage
Introduction
Growth
Maturity
Decline
Sales and Profits Over
the Product’s Life From
Inception to Demise
PLC Stages
Product
development
Introduction
Growth
Maturity
Decline
Begins when the
company
develops a newproduct idea
Sales are zero
Investment costs
are high
Profits are
negative
Introduction Stage
Sales and
Profits ($)
Sales
Profits
Time
Product
Development
Stage
Introduction
Growth
Maturity
Decline
Sales and Profits Over
the Product’s Life From
Inception to Demise
Sales
Low sales
Costs
High cost per customer
Profits
Negative
Marketing Objectives
Create product awareness
and trial
Product
Offer a basic product
Price
Use cost-plus
Distribution
Build selective distribution
Advertising
Build product awareness among early
adopters and dealers
Growth Stage
Sales and
Profits ($)
Sales
Profits
Time
Product
Development
Stage
Introduction
Growth
Maturity
Decline
Sales and Profits Over
the Product’s Life From
Inception to Demise
Sales
Rapidly rising sales
Costs
Average cost per customer
Profits
Rising profits
Marketing Objectives
Maximize market share
Product
Offer product extensions,
service, warranty
Price
Price to penetrate market
Distribution
Build intensive distribution
Advertising
Build awareness and interest in
the mass market
Maturity Stage
Sales and
Profits ($)
Sales
Profits
Time
Product
Development
Stage
Introduction
Growth
Maturity
Decline
Sales and Profits Over
the Product’s Life From
Inception to Demise
Sales
Peak sales
Costs
Low cost per customer
Profits
High profits
Marketing Objectives
Maximize profit while defending
market share
Product
Diversify brand and models
Price
Price to match or best
competitors
Distribution
Advertising
Build more intensive distribution
Stress brand differences and
benefits
Decline Stage
Sales and
Profits ($)
Sales
Profits
Time
Product
Development
Stage
Introduction
Growth
Maturity
Decline
Sales and Profits Over
the Product’s Life From
Inception to Demise
Sales
Declining sales
Costs
Profits
Low cost per customer
Marketing Objectives
Declining profits
Reduce expenditure and milk
the brand
Product
Price
Phase out weak items
Distribution
Go selective: phase out
unprofitable outlets
Advertising
Reduce to level needed to retain
hard-core loyal customers
Cut price
Extending the Product
Life Cycle
To prevent the product
going into decline you
modify the product
Adding new features, variations,
model varieties will change the
consumer reaction - create more
demand therefore you attract more
users
Enough for
today. . .
Summary
Product
Next….
4-P’s
Price
Principles of
Marketing
Lecture-23