Topic 7 product. 6-2 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007 learning objectives_1 Define and classify products and

Topic 7

product

6-2Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

learning objectives_1

• Define and classify products and the key terms associated with them

• Understand the nature, benefits and implementation of product and brand development



• Understand the product lifecycle concept, its influence on marketing strategies and its limitations

• Appreciate the importance of product positioning and how it both affects and is affected by marketing strategies



• Define the role and responsibilities of the product or brand manager


Product Defined

A product is a physical good, service, idea, person, or place that is capable of

offering tangible and intangible attributes that individuals or organisations regard as so necessary, worthwhile or satisfying that

they are prepared to exchange money, patronage or some other unit of value

to acquire it.

What is a Product?What is a Product?–Physical Objects

–Services

–Persons

–Places

–Organizations

–Ideas

–Combinations of the above


WHO ARE THE COMPETITORS FOR A PARKER PEN?

• Another pen company?

• Other writing implements?

• Other gifts?


Figure 6.1 The Anatomy of a Product

Levels of ProductLevels of Product

BrandName

QualityLevel

Packaging

Design

Features

Delivery& Credit

Installation

Warranty

After-Sale

Service

CoreBenefit

orService

CoreBenefit

orService

ActualProduct

ActualProduct

CoreProduct

CoreProduct

AugmentedProduct

AugmentedProduct


Product-based Classification

DurableNon-

durableService


Consumer User-based Classification

Convenience Shopping Specialty

Product ClassificationsConsumer Products

Product ClassificationsConsumer Products

Shopping ProductsShopping Products

> Buy less frequently> Higher price> Fewer purchase locations> Comparison shop

Clothing, cars, appliances

Convenience ProductsConvenience Products

> Buy frequently & immediately> Low priced> Mass advertising> Many purchase locations

Fast Food, Candy, Newspapers

Specialty ProductsSpecialty Products

> Special purchase efforts> High price> Unique characteristics> Brand identification> Few purchase locations

Lamborghini, Rolex

Unsought ProductsUnsought Products

> New innovations> Products consumers don’t want to think about> Require much advertising & personal selling

Life insurance, blood donation


What type of product is the Dualit toaster?

If you want a toaster that oozes class, then treat yourself to a Dualit. It’s built to last a lifetime.

Source: © Dualit 01293 652500 http://www.dualit.com

http://www.dualit.com/

http://www.dualit.com/


Unsought Goods


B2B User-based Classifications

Capital goods

Accessory goods

Supplies and services

Components and parts

Raw materials

Semi-finished goods

THE PRODUCT MIX

• The total range of products that a company offers to satisfy customers’ needs

• Defined by its breadth and width


Figure 6.2 Bosch DIY Power Tools Product Line


Understanding the Product Range

• Product mix – total sum of all products and variants offered

• Product line – group of closely related products

• Product item – individual products within lines


Understanding the Product Range

• Product line length – total number of items in line

• Product line depth – number of different variants within line

• Product mix width – number of lines offered

The concepts of width of product mix and depth of product line


Lynx offers a deep line of fragrances

Source: The Advertising Archives.

Individual Product DecisionsIndividual Product DecisionsProduct

Attributes

ProductAttributes

BrandingBranding

PackagingPackaging

LabelingLabeling

Product SupportServices

Product SupportServices


Product Attribute DecisionsProduct Attribute Decisions

QualityQualityQualityQualityFeaturesFeaturesFeaturesFeatures

DesignDesignDesignDesign


QUALITY

• An important product attribute

• Essentially about meeting buyers’ expectations

• Conceptual and practical problems of measurement

• Numerous means of providing reassurance about quality (e.g. ISO9000 series)


DISTINCTIVE DESIGN

• Provides differentiation from competition

– e.g. Toblerone chocolate

• But remember - distinctive design in itself is not enough - it must meet customers’ needs and expectations


Aspects of Design, Quality, and Guarantees

Performance Durability

Corporate nameand reputation

Design and style

Reliability and maintenance

Quality

Guarantees


Branding

Branding seeks to create and communicate a three-dimensional character for a product that is not

easily copied or damaged by competitors’ efforts.


Brand Defined

A name, term, sign, symbolor design, or a combination of them,

intended to identify the goodsor services of one seller or group

of sellers and to differentiatethem from those of competitors

The Role of Brands

• Identify the maker

• Signify quality

• Create barriers to entry

• Serve as competitive advantage

• Secure price premium

• Offer legal protection

Marketing Advantages of Strong Brands

• Improved perceptions

• Greater loyalty

• Less vulnerable to competition

• Larger margins

• More inelastic response to price increases

• More elastic response to price decreases

• Greater trade cooperation

• Increased marketing communications

• Possible licensing opportunities

• Brand extension opportunities


Trade Mark

Trades Marks Act of 1994 enables registration of

• Smells

• Sounds

• Product shapes

• Packaging

• Brand names

• Logos


DISTINCTIVE VISUAL IDENTITY

• Logos can be very powerful - these designs convey meaning, even with the “wrong name”


Figure 6.3 The Benefits of Branding

Branding

The consumer

The retailer

The manufacturer


Benefits of Branding for the Consumer

• Easier product identification

• Communicates features and benefits

• Helps product evaluation

• Establishes product’s position

• Reduces risk

• Creates interest


Benefits of Branding for the Manufacturer

• Helps create loyalty

• Defends against competition

• Creates differential advantage

• Allows premium pricing

• Helps targeting/ positioning

• Increases power over retailer


Types of Brands

• Manufacturer brands

• Retailer and wholesaler brands

– Own-label brands


Selecting a Brand Name

Distinctive

Acceptable

Available

Supportive


Figure 6.4 The Brand Name Spectrum

Descriptive Associative Freestanding

Bitter Lemon

Dairy Milk Chocolate

Shredded Wheat

Walkman

Natrel

Bold

Sensodyne

Kodak

Esso

Pantene

Mars Bar


Brand Equity

The added value endowed to products, reflected in how consumers

think, feel, and act with respect to the brand,

as well as the prices, market share, and profitabilitythat the brand commands for the firm


Major elements of brand equity


Packaging Defined

Packaging is any container or wrapping in which the product is

offered for sale and can consist of a variety of materials such as glass,

paper, metal or plastic.


Functions of Packaging

• Protect product

• Keep product ready for use

• Dispense product

• Present brand imagery

• Provide information

• Make product attractive

• Make product use convenient


Packaging Issues

• Labelling

– Warnings

– Instructions

– Regulated information

– Size

– Contact information

• Design

– Aesthetic appeal

– Ergonomic properties

– Functionality

– Reliability

– Life span


Functions of Labels

• Identifies

• Grades

• Describes

• Promotes


Product Range Management

Extending the product line

Filling the product range


eg Heinz and the Monolithic Approach


Mars Utilizes Brand Extension

When it’s hot and you want something sweet, sticky and firm,a MARS® ice cream should hit the spot.® MARS is a registered trademark of Masterfoods.Source: © Masterfoods 2006 http://www.mars.co.uk

http://www.mars.co.uk/

http://www.mars.co.uk/


eg Volkswagen Overextended


Ethical Issues Concerning Products

Product safety

Planned obsolescence

Deceptive packaging


Deleting Products

• Phase out

• Run out

• Drop or sell

eg Low Carb KitKat


Product Lifecycle (PLC) Defined

The Product Lifecycle is a concept suggesting that a

product goes through various stages in the course of it’s life: introduction, growth, maturity

and decline


Figure 6.5 The Product Lifecycle


THE PRODUCT LIFE CYCLE

• A reminder that most products do not live for ever

• A conceptual framework only

• Difficult to measure where a product is in its life cycle


PATTERNS OF PRODUCT LIFE CYCLES

• There is no universal pattern of PLC

Introduction Stage of the PLCIntroduction Stage of the PLC

Summary of Characteristics, Objectives, & Strategies

SalesSales

CostsCosts

ProfitsProfits

Marketing ObjectivesMarketing Objectives

ProductProduct

PricePrice

Low sales Low sales

High cost per customerHigh cost per customer

Negative or lowNegative or low

Create product awareness and trialCreate product awareness and trial

Offer a basic productOffer a basic product

Usually is high; use cost-plus formulaUsually is high; use cost-plus formula

DistributionDistribution High distribution expensesHigh distribution expenses

AdvertisingAdvertising Build product awareness among early adopters and dealers

Build product awareness among early adopters and dealers

Growth Stage of the PLCGrowth Stage of the PLC


SalesSales

CostsCosts

ProfitsProfits


ProductProduct

PricePrice

Rapidly rising sales Rapidly rising sales

Average cost per customerAverage cost per customer

Rising profitsRising profits

Maximize market shareMaximize market share

Offer new product features, extensions, service, and warranty

Offer new product features, extensions, service, and warranty

Price to penetrate marketPrice to penetrate market

DistributionDistribution Increase number of distribution outletsIncrease number of distribution outlets

AdvertisingAdvertising Build awareness and interest in the mass market

Build awareness and interest in the mass market

Maturity Stage of the PLCMaturity Stage of the PLC


SalesSales

CostsCosts

ProfitsProfits


ProductProduct

PricePrice

Peak salesPeak sales

Low cost per customerLow cost per customer

High profits, then lower profitsHigh profits, then lower profits

Maximize profits while defending market share

Maximize profits while defending market share

Diversify brand and modelsDiversify brand and models

Price to match or best competitorsPrice to match or best competitors

DistributionDistribution Build more intensive distributionBuild more intensive distribution

AdvertisingAdvertising Stress brand differences and benefitsStress brand differences and benefits

Decline Stage of the PLCDecline Stage of the PLC


SalesSales

CostsCosts

ProfitsProfits


ProductProduct

PricePrice

Declining salesDeclining sales

Low cost per customerLow cost per customer

Declining profitsDeclining profits

Reduce expenditure and maintain, reposition, harvest or drop the product

Reduce expenditure and maintain, reposition, harvest or drop the product

Phase out weak itemsPhase out weak items

Cut priceCut price

DistributionDistribution Go selective: phase out unprofitable outletsGo selective: phase out unprofitable outlets

AdvertisingAdvertising Reduce to level needed to retain hard-core loyal customers

Reduce to level needed to retain hard-core loyal customers


INNOVATION AND NEW PRODUCT DEVELOPMENT

• Changing consumer preferences

• New technologies

• New government regulations

Innovation is needed: changing attitudes to McDonalds fast food


WHAT IS INNOVATION?

• Innovation has often been identified as a source of a company's long-term competitive advantage

• Some nations as a whole can be described as more innovators than others

• Innovation applies to the whole of the marketing process


FEW FIRMS CAN AVOID INNOVATION

• Tea is a fairly generic product

• Competition can be fierce

• PG Tips is an example of innovation - tea for cafetieres

CustomersCustomers CompetitorsCompetitors DistributorsDistributors SuppliersSuppliers

New Product Development :Idea Generation

New Product Development :Idea Generation

Idea Generation is the Systematic Search for New Product Ideas Obtained Internally From

Employees and Also From:


WHAT ARE NEW PRODUCTS?

– Improvements/revisions to existing products

– Additions to existing lines

– New to the world products (relatively rare)

– New product lines

– Repositioning (existing products in new segments/markets)

– Cost reductions

Causes of New Product FailuresCauses of New Product Failures

• Overestimation of Market Size

• Product Design Problems

• Product Incorrectly Positioned, Priced or Advertised

• Costs of Product Development

• Competitive Actions


eg Active Health Drinks Market


Diffusion of Innovation Defined

The Diffusion of Innovation is a concept suggesting that customers first enter a market at different times, depending on

their attitude to innovation and new products, and their willingness to take

risks. Customers can thus be classified as innovators, early adopters, early majority,

late majority and laggards.


Figure 6.7 Diffusion of Innovation

Documents

Topic 7 product. 6-2 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007 learning objectives_1 Define and classify products and