7/29/2019 5 Marketing Planning

1/4

5 Marketing planning

Marketing planning begins by formulating an offering to meet the needs and wants of the

target customers.

6 Figure 12.1

As shown in Figure 12.1 the customer will judge the offerings: product features and quality,

services mix and quality, and price.

7 Product Characteristics/Classifications

a product is anything that can be marketed to satisfy a want or need, including physical goods,

services, experiences, events, persons, places, properties, organizations, information, and

ideas.

8 Figure 12.2 shows the five levels of a product. Each of these will be illustrated in more depth

on the next slide.

9 Products are comprised of 5 levels. Each level adds more customer value. Here are the

product levels using a hotel as an example.

Core benefit: service or benefit the customer is really buying.

Basic product: marketers turn core benefit into a basic product at this level.

Expected product: attributes and conditions buyers expect when they purchase this product.

Competition takes place at this level in developing countries.

Augmented product: : attributes and conditions exceed customer expectations. Competition

takes place at this level in developed countries..

Potential product: various augmentations that could be incorporated in the future. Here is

where companies search for new ways to satisfy customers and distinguish their offering.

10 Durability, tangibility, and use (consumer or industrial).

next

11 Consumers purchase convenience goods frequently, immediately, and with minimal effort.

7/29/2019 5 Marketing Planning

2/4

Consumers compare shopping goodsbased on suitability, quality, price, and style.Consumer make special purchasing effort to buy specialty goods due to their unique

characteristics or brand identification.

Consumer does not normally know or buy unsought goods. As such these goods requireadvertising and personal-selling support.

12 Materials and parts are goods that enter the manufacturers product completely.

Capital items are long-lasting goods that facilitate developing or managing the finished product.

Supplies and business services are short-term goods and services that facilitate developing or

managing the finished product.

13 For a product to be branded it must be differentiated from competitors.

14 Products can be differentiated in many ways including: Form, features, customization, performance

quality, conformance quality, durability, reliability, repairability, and style.

15 The main service differentiators are ordering ease, delivery, installation, customer training, customer

consulting, and maintenance and repair.

The key to competitive success may lie in adding valued services and improving product quality.

16 Design is the totality of features that affect how a product looks, feels, and functions to a consumer.

Design is often an important aspect of luxury products.

17 Theproduct hierarchystretches from basic needs to particular items that satisfy those needs.

Aproduct system is a group of diverse but related items that function in a compatible manner.A

product mixis the set of all products and items a particular seller offers for sale.

Product line analysis: companies develop a basic platform and modules of a product line that can be

added to meet different customer requirements and lower production costs. Managers need to know

the sales and profits of each item in their line to determine which items to build, maintain, harvest, or

divest, as well as each product lines market profile.

Product line length is influenced by company objectives and tend to lengthen over time.

Inproduct-mix pricing, the firm searches for a set of prices that maximizes profits on the total mix.

In Co-branding: two or more well known brands are combined into a joint product or marketed together

in some fashion.

18 The product hierarchy stretches from basic needs to particular items that satisfy those needs. E.g.,

life insurance.

7/29/2019 5 Marketing Planning

3/4

19 A product system is a group of diverse but related items that function in a compatible manner.

A product mix is the set of all products and items a particular seller offers for sale. A companys product

mix has a certain width, length, depth, and consistency. These concepts are illustrated in Table 12.2 for

selected Procter & Gamble consumer products.

20 Table 12.2 shows the product mix for P&G.

21 In conducting product line analysis managers must examine each product in terms of how it

contributes to overall sales and profits. Products that are responsible for a large percentage of sales and

profits must be carefully monitored and protected. Products that deliver on a small percentage may be

candidates for being dropped, unless strong growth potential is possible. Figure 12.3 highlights

A product line manager must examine how the line is positioned against competitors. One tool that

managers can employ is a product map, which shows competitors items in relation to firms items. This

also allows for identifying market segments.

Product line analysis is helpful in two key decision areas product line length and product mix pricing.

22 Line stretching company lengthens its product line beyond its current range.

Line filling company lengthens its product line by adding more items within the present range.

Line modernization, featuring, and pruning Companies continuous modernize product lines to

encourage customer migration to higher-valued, higher-priced items; boost demand for certain product

lines by featuring them; and optimize their brand portfolios by focusing on core brand growth and

concentrating resources on the biggest and most established brands.

23 In product-mix pricing, the firm searches for a set of prices that maximizes profits on the total mix.

Product line pricing develop product lines rather than single products and introduce price steps.

Optional-feature pricing offer optional products, features, and services with their main product.

Captive-product pricing price the main products low and set high markups on the aftermarket

products.

Two-part pricing consists of a fixed fee plus a variable usage fee.

By-product pricing charge low price for the main products and earn income on the by-products .

Product-bundling pricing offer goods as a bundles and charges less for the bundle than if the items

were purchased separately.

24 Co-branding - Brand bundling or Dual branding

Same-company- When brands owned by the same company are used together. Example, General Mills

launched a Trix branded Yoplait yogurt.

7/29/2019 5 Marketing Planning

4/4

Joint venture co-branding Where brands owned by different companies are combined. Example,

American Airlines and Citibank launching the Citibank AAdvantage credit card.

Multi-sponsor An alliance between three or more partners.

Retail co-branding Where two retail establishments use the same location to optimize space and

profits. Pizza Hut, KFC, and Taco Bell often share the same retail space.

Ingredient branding is a special case of co-branding and involves the linking of one brand with another.

KC Masterpiece barbecue sauce was combined with Lays potato chips is an example.

25 The package is the customers first encounter with the product and a good package draws the

customer in, encouraging product choice. Packaging also influences customers when they go to open

and use the product at home. Distinctive packaging, Altoids mints and Absolut vodka serve as an

important part of a brands equity.

Labeling FDA requires that labels on all processed foods contain nutritional information.

Warranties and guarantees A warranty is a formal statement of expected product performance, and

are legally enforceable. Guarantees help reduce a buyers perceive risk by suggesting that the product is

high quality and that the manufacturer is dependable.