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Marketing Mix 1 VARUN KALSE Marketing mix It is sole vehicle for creating and delivering value. Consists of four elements Marketing mix enhances positioning and differentiating strategies Four elements of marketing mix are Product 2. Price 3. Promotion 4. Place 1. 2 VARUN KALSE Marketing Mix Marketing mix Product Product variety Quality Design Features Brand name Packaging Sizes Services Warranties 3 VARUN KALSE Target market Price List price Discounts Allowances Payment period Credit terms Promotion Sales promotion Advertising Sales force Public relations Direct marketing Distribution Channels Coverage Assortments Locations Inventory Transport Product The major component of marketing mix Includes decision making on Product design, features, brand name, models, styles, appearance Product quality Package: design type, material, size appearance and labeling Services: pre-sale and after-sale, service standards, service charges. 4 VARUN KALSE Definition Product is anything that can be offered to a market to satisfy a want or a need. These include physical goods, services, experiences, events, persons, places, properties, organisations, information and ideas. Product time to time gain identity and personality of its own. 5 VARUN KALSE Components of Product Personality The core or the basic constituent The associated features the brand name and logo The package and label 6 VARUN KALSE Product levels: Customer Value Hierarchy Expected product Basic product Core benefits Augmented product VARUN KALSE 7 Potential product Product classification Product classification on the basis of durability and tangibility Non durable goods- these goods are tangible and normally consumed in one or few uses. For e.g. soft drinks 2. Durable goods- these goods are tangible but survive many uses. For e.g. refrigerators, automobiles 3. Services- intangible, inseparable, variable and perishable For e.g. haircut, legal advice 1. 8 VARUN KALSE Product classification Consumer good classification on the basis of shopping habits 1. Convenience goods- frequently and immediately bought with minimum effort For e.g. soap, toothpaste, ketchup etc. 2. Impulse goods- purchased without planning or search effort. For e.g. ice-cream, soft drinks 3. Emergency goods- purchased when need is urgent For e.g. umbrella, insecticide spray 9 VARUN KALSE Product classification Consumer good classification on the basis of shopping habits 4. Shopping goods- consumer uses the process of selection, characteristically compares on the suitability, quality, price and style. For e.g. furniture, home appliances 5. Specialty goods- have unique characteristics or brand identification for which a sufficient number of buyers are willing to make a special purchasing effort. For e.g. Mercedes Benz, Rolls Royce 10 VARUN KALSE Product Classification Consumer good classification on the basis of shopping habits 6. Unsought goods- those products which either consumer does not know about or does not normally think of buying For e.g. encyclopedias, insurance policies 11 VARUN KALSE Product classification Industrial goods classification- Raw material- further classified into farm products and natural products Farm products- include products like wheat, corm livestock, fruits, vegetable etc . These products are supplied by many producers, who turn them over to marketing intermediaries For e.g. dairy products like milk, curd, cheese etc. 1. 12 VARUN KALSE Product classification Industrial goods-Raw material Natural products- these products include iron ore, fish crude petroleum, etc. These products are limited in supply, and since the users usually are dependent upon such products long term contracts happen. By large the prices are regulated by the government. For e.g. natural salt 13 VARUN KALSE Product Classification • Industrial goods- Manufactured materials and parts- further classified into component materials and component parts. Component materials- these products are once processed from mostly natural products and are further required for processing for final goods Price, quality and reliability of the suppliers are the key factors. For e.g. iron, yarn, wires etc.. 2. 14 VARUN KALSE Product Classification • Industrial goods- manufactured materials and parts Component parts- these products directly enter the finished products with no further change in form. These products are usually directly sold to the industry user without any in intermediaries. For e.g. motors in vacuum cleaner, nuts and bolts and tyres in automobile. 15 VARUN KALSE Product Classification • Industrial goods classification 3. Capital items- these products are long lasting that facilitate developing or managing the finished product. These are further classified into installations and equipment. Installations are major purchases and require long negotiation period before decision making. For e.g. factories, offices, generators, elevators 16 VARUN KALSE Product Classification Industrial goods classification Equipment comprises portable factory equipment and tools as well as office equipment. These goods just facilitate or help in production of finished products. For e.g. desk, PCs, coffee machine etc. 17 VARUN KALSE Product- the first P of marketing mix The differentiation strategy starts with product. The differentiation can be done in various ways. Form- most of the products are differentiated in form. Form relates to the size, shape or physical structure. For e.g. parachute name is synonymous with coconut oil. But the brand differentiates itself by the unique shape and different sizes of product and unique locking system of the bottle. 18 VARUN KALSE Product Features- products can be offered in varying features that supplements its basic function. Usually the features should be such that the competitors will not be able to imitate or match with it. For e.g. LG offers unique feature of Golden eye in its television for better visibility. Performance quality-it is the level at which the product’s primary characteristics operate. The organization should design a performance level which is appropriate to the target audience and competitors’ performance level. 19 VARUN KALSE Product Conformance quality- degree to which all the produced unit are identical and meet the promised specifications. Buyers expect the product to have high conformance quality. For e.g. Honda Activa, it is designed has conformance quality to accelerate to 40 kmph within 6 sec. Durability-a measure of the product’s expected operating life under natural or stressful conditions. Buyers generally pay more for products which have reputation for being long lasting. For e.g. NOKIA cell phones. 20 VARUN KALSE Product Reliability – it is the measure of the probability that a product will not malfunction or fail within a specified time period. Reliability is the major factor which helps in building a positive brand image. For e.g. NOKIA, CEAT Reparability- it is the measure of the ease of fixing a product when it malfunctions or fails. Ideal reparability would be when user could fix the product themselves. For e.g CISCO who maintains a big list of FAQs for its consumers so that they can repair the hardware by themselves. Every day a new query comes then it is added as FAQ in the website which helps co save $240 million on services. 21 VARUN KALSE Product Style- it describes the product looks and feel to the buyer. Aesthetics play a key role in building a brand image as well as differentiating the product from the market. Style has the advantage of creating distinctiveness that is difficult to copy. For e.g. Harley Davidson, Apple Computers DESIGN- design is the totality of features that effect how a product looks and functions in terms of customer requiremments. 22 VARUN KALSE Product- service differentiation When physical product cannot be easily differentiated then the key to competitive success may lie in adding value services and improving service quality. The main service differentiators are: Ordering ease- refers to how easy it is for the customers to place an order with the company. The ease of ordering helps organization in identifying lateral needs of the customers. For e.g. Wockhardt has made tie up with Apollo pharmacy shops for stocking and delivering the sugar testing stripes for the diabetic patients, now customers just need to call the pharmacy and order the stripes which are delivered at home 23 VARUN KALSE Product- service differentiation Delivery – refers to how well the product or service is delivered to the customer. It also includes speed, accuracy and care attending the delivery process. For e.g. Domino pizza promises to deliver the pizza in 30 minutes other wise the pizza is free for the customer. Installation – refers to work done to make a product operational its planned location. Differentiating at this point in the consumption chain is particularly important for the companies with complex products. For e.g. Tata sky installation are done by the trained staff within a day of purchase of the services 24 VARUN KALSE Product- service differentiation Customer training- refers to training the customers to use the equipment properly and efficiently. This particular aspect especially is for industrial goods but it is more or less applicable to customer goods also. For e.g. demo of how to use microwave, Training certain employees in an organization on how to use the elevators. Customer consulting- refers to data, information system and advice services that the sellers offers to buyers. for e.g. Share khan provides online services as well as send sms to the customers who register themselves for stock market advice 25 VARUN KALSE Packaging All the activities of designing and producing a container for a product. There are three levels of packaging Primary package- the container containing the product Secondary package- the cardboard or the paper cover Shipping package- usually used for transportation of goods from one place to another. Packaging depends on the kind of product and the durability of the product. 26 VARUN KALSE Packaging as a marketing tool Packaging helps differentiate the product. the various reason behind using packaging as a differentiating tools are: Self service- earlier Indian consumers depended on small retailers who bought the product from the wholesalers in bulk and them further use to give customer a loose pack as the retailer used to get a single bulk packing. With shift in consumer preferences and behavior towards owning a personal but sealed pack has made the difference. 27 VARUN KALSE Packaging as a marketing tool Consumer affluence- consumer are willing to pay a little more for the convenience, appearance, dependability and prestige of better packages. Company and brand images- package contributes to instant recognition of the company or the brand. Innovation opportunity- 28 VARUN KALSE Packaging as a marketing tool Effective packaging must achieve a number of objectives like: 1. 2. 3. 4. 5. 29 Identify the brand Convey descriptive and persuasive information. Facilitate product transportation and protection. Assist at-home storage Aid product consumption VARUN KALSE Labeling, warranties and guarantees Label identifies, grades, describes and promote the product. Warranties are formal statements of expected product performance by producer. Products under warranty can be returned to the manufacturer or designated repair center for repair, replacement or refund. Guarantees reduce the customers’ perceived risk. Guarantees suggests that the products are of high quality and that the company and its service performance are dependable. 30 VARUN KALSE Product life cycle A company’s positioning and differntiation strategy must change as the product, market, market demand and competitors change. These changes occur because product also has a life cycle which asserts following points: 1. Products have limited life. 2. Product sales pass through distinct stages, each posing different challenges, opportunities and problems to the sellers. 3. Profits rise and fall at different stages of life cycle. 4. Products require different strategies in each life cycle stage. 31 VARUN KALSE Product life cycle S A L E S & P R O F I T INTRODUCTION 32 GROWTH VARUN KALSE MATURITY TIME DECLINE Product life cycle-introduction stage Introduction – the stage where the product is introduced into the market. In this stage the organization uses heavy promotions to position the product in the minds of target market. The sales growth is slow and profits are non existent because of the heavy expenses of product introduction. Sales growth is also slow because it takes time to roll out the product, workout the technical problems, complete the supply chain and gain consumer acceptance. 33 VARUN KALSE Product life cycle-introduction stage Promotional expenditure are at their highest ratio to sales because of the need to 1. Inform potential customers 2. Induce product trial 3. Secure distribution in retail outlets Companies must plan when to enter the market. Usually it is feasible to enter early and be the first to enter the market as early pioneers like coca cola and amazon.com have got the advantage of positive and strong positioning in the target consumer’s mind. Prices are initially high to encounter the cost 34 VARUN KALSE Product life cycle-introduction stage Early pioneers have risk as well as more expenses to deal with. Another strategy is to enter late into the market only when, when the organization can bring superior technology, quality and brand strength. The product should be introduced in one segment rather than targeting all the segments at once. This reduces the risk of “not meeting to the customer expectation” 35 VARUN KALSE Product life cycle- growth stage Growth - this stage is of rapid growth in terms of sales of the product and profit. Early adopters like the product and additional potential customer start buying the product. New competition enters the market looking into the market growth of the existing company. Prices either remain same all they fall slightly. Promotional expenditures are high but now the target is to counter the competition. As the sales rise so the sales- promotion ratio reduces 36 VARUN KALSE Product life cycle- maturity stage Maturity stage- it is the stage where the sales growth slow down. The product moves to the stage of relative maturity. The maturity stage is divided in to three stages: 1. Growth- the sales start to decline. There are no new distribution channel to fill 2. Stable- sales flatten on per capita basis because of market saturation. 3. Decaying maturity- the absolute level of sales start to decline and customers begin to switch to another product. 37 VARUN KALSE Product life cycle- decline stage 38 VARUN KALSE