Download Product Services Marketing

Product Services and Branding
Strategies
• Product
– Anything that can be offered to a market for
attention, acquisition, use, or consumption that
might satisfy a want or need.
• Service:
– Any activity or benefit that one party can offer to
another that is essentially intangible and does
not result in the ownership of anything.
Product
• Levels of Products and Services
Product
Industrial Products:
• Products bought by individuals and
organizations for further processing or for use
in conducting a business.
Services Marketing
• Nature and Characteristics of a Service
Services Marketing
• The Service-Profit Chain
– The chain that links service firm profits with
employee and customer satisfaction
• Consists of:
Branding
• A brand is a name / mark intended to identify the product.
• If a seller has brand in his name that is known as trade mark.
• Two types of brands:
Producer brands & Middlemen brands:
Selecting a good brand name
Desirable characteristics:
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Suggest something about brand
Be easy to pronounce & sell
Be distinctive
Be adoptable to new products that may be added to product line.
McDonald’s is better name than Burger King.
Branding Strategies
• A separate name for each brand
The company name combined with Product name
Product and Service Decisions
• Packaging
– The activities of designing and producing the container or
wrapper for a product
– Primary and secondary
– Labeling
– Traditionally the primary function: contain and protect the
product
– Now: an important marketing tool-from attracting the attention
to making the sale
– Innovative package – another competitive advantage
– Examples of innovative packaging and poor packaging?
– Product safety - packaging has a role to play (tamper-proof
packaging)
– Environmental concerns
Product and Service Decisions
• Labeling:
– Printed information appearing on or with the
package.
– Performs several functions:
• Identifies the product or brand
• Describes several things about the product
• Promotes the product through attractive graphics
Factors of Price Determination
• Estimated Demand
It is easier to do for an established product than a new one
(a) Determine whether there is a price that market expects
(b) Estimate sales volume at different prices.
A producer must also consider middlemen’s reaction to price. Middlemen
are more likely to promote a product if they approve price.
Competitive reactions
Directly similar products
Available substitutes
Marketing Mix
Distribution Channel:
Channels & type of middlemen selected will also
influence price.
A firm selling through both wholesalers & retailers
sets a different factory price for both. The price to
wholesalers is lower because they perform some of
the producer’s services like storing the product in
bulk quantity, granting credit to retailers & selling to
small retailers
Cost of the Product
• Unit cost is made up of fixed & variable cost.
• Marginal cost is the cost of producing an additional unit.
Fixed cost decreases as the no. of units increase.
Pricing by middlemen:
Wholesalers & retailers add markup in factory price.
Break-Even Analysis
• Break-even point is the quantity where total revenue equals total costs.
• Contribution point=
Total Fixed Costs/Selling Priceaverage variable cost.
• Competition: In perfect competition, where differentiation is absent then
competition based pricing is a good option.
Variation in competition based pricing
• Prices below competition:
• It is done by discount retailers which stress low markup , high volume
leading to big customer base. They keep heavily advertised & well known
brands which doesn’t require great promotional effort to sell product.
• Price above competition:
• Where product is highly differentiated.
Pricing Strategies
• Market Skimming:
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Provides healthy profit margin
Covers R & D costs quickly.
Can be used to connote higher quality
Should be used when:
The new product has distinct features.
Demand is highly inelastic.
Product is protected from competition.
It is easier to reduce price at later stage than to increase low price where
customers have got highly attached.
Market Penetration Strategies
• Relatively low price is established for a new product. The price is low in
relation to target market’s range of expected prices.
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Should be used when:
A large mass market exists for the product.
Demand is highly elastic & price sensitive.
Substantial reductions in the unit costs can be achieved through large
scale manufacturing.
• Fierce competition already exists
Distribution Channel
• A middlemen is a business that renders services related directly to
sale/purchase of a product as it moves from producer to consumer.
• Normally middlemen are classified on the basis of whether they own /take
title of products being distributed or not.
• Merchant middlemen take title of product ( Wholesalers & retailers )
• Agent middlemen never actually own the product but do arrange the
transfer of title. Real estate brokers, manufacturers agents ,travel agents.
Factors affecting choice of channel
Market Considerations
• Type of Market.
Reaching ultimate consumers & business users may be different depending
upon their individual characteristics. Wholesaler may be for business &
retailer for ultimate consumer.
Number of potential customers:
For few customers company sales might be used, may be for business users.
More middlemen to reach big number of customers.
Geographic concentration of Market:
Direct sale or lesser no. of middlemen for concentrated market
More channels for dispersed customer base.
Order Size:
Direct sales to for super markets to serve big orders & wholesalers to sell to
grocery stores
Product considerations
Unit Value:
Company can afford to sell caterpillar or nuclear reactor directly to
customer than to reach household to sell ball point.
Perishability:
Quicker pershability requires direct or minimum distribution channel.
Technical nature of product:
Technically complex product may require company sales force to
explain product features & use to business users.
Middlemen Considerations
• Services provided by middlemen:
Each producer should select middlemen offering services which producer
either can’t provide or can’t economically perform. Like promotion &
explaining product features to customers.
Availability of desired middlemen:
Producer’s desired middlemen may not be available so may choose
middlemen having distributed focus among different competing brands.
Producer & Middlemen Policies:
A middlemen may accept products of a brand only after assurance that the
same brand will not be given to other middlemen
Credit dealing may also be a matter of choice.
Company Considerations
• Desire for Channel control:
• Some producers use lesser channel levels to have more control over
product performance in the market.
• Ability of Management:
Some producers lacking marketing expertise may completely rely on
middlemen for distribution & promotion of their products.
Financial resources:
A company with adequate finances may afford direct distribution channel.
Distribution of Consumer Goods
• Producer ______Consumer
Producer______Retailers_______Consumers
Producer______Wholeslaers______Retailers_____Consumers
Producer_______Agents_____Wholesalers_____Consumers
Distribution of Business Goods
• Producer_____User ( For very highly priced goods )
• Producer_________Industrial distributor _________User
For small accessory equipment Printer cartridges
Producer_______Agent_________User
Agent is used in place of company sales force.
Producer________Agent_________Industrial Distributor____User
Similar to last channel but feasible when order size is not big enough to
justify direct sales to distributor.
Distribution of Services
• Producer_____Consumer ( Haircut, weight losing councelling ).
• Producer_______Agent_________Consumer
• ( Insurance Advertising / Entertainment )
A producer may use multiple channels to reach
different market segments
Intensity of Distribution
• Intensive Distribution :
• For convenience goods, making available at every retail store
• Selective :
• Selling to Few Middle men:
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May be due to better control over middlemen
• Exclusive:
• Selling through one distributor
Purpose of Promotion
• Inform
• Persuade
• Remind
Elements of Communication Process for
Promotion
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(1) Message
(2) A communication channel
(3) Receiver
(4) Feedback
Promotional Methods
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Personal Selling:
Advertising:
Sales promotion:
Incentives for boosting sales temporarily:
Trade shows, Contests , lucky draws.
Public Relations:
Sponsorships of charitable institution or civic events
Publicity:
Not paid like advertising, news item / press release, more credible for target
audience