4PS Flashcards
Define product
A product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need
Define services
A form of product that consists of activities, benefits or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything
What are the three levels of products? And what do they mean?
- Core customer value
- What is the buyer really buying? Problem-solving benefits or services that consumers seek
○ For Koala it is the good nights sleep their customers get, seeking comfort and convenience
- What is the buyer really buying? Problem-solving benefits or services that consumers seek
- Actual product
- Product and service features, design, quality level, brand name and packaging
○ Designed with high quality materials, including Kloudcell foam, Lyocell material to help enhance comfort, promotes spine alignment, easy transport and set up
- Product and service features, design, quality level, brand name and packaging
- Augmented product
- Additional consumer services and benefits
○ 120 night trial period
○ Donations for every purchase
- Additional consumer services and benefits
What type of product is Koala? and why is it not the others? (Convenience, shopping, specialty, unsought)
Koala Mattresses would be a shopping product.
The reasons why it is not another product:
- It is not a convenience as it isn’t a frequent purchase with little decision, it is certainly not cheap or habitual and is not in convenient locations, like any local supermarket
- It is not a specialty as mattress customers have a certain amount of brand loyalty but will not overshadow their choices in choosing products, as in because specialty customers generally purchase their products no matter what, but mattress customers will undoubtedly look for the qualities of comfort and convenience, and support, and not disregard that because of a brand. It is not high price enough to be a luxury brand
- It is finally not unsought, this is because mattress buyers have much knowledge and interest in choosing the right mattress, it isn’t just a onetime thing but a forever thing
It is a shopping product due to it’s nature of being a less frequent purchase. Mattress purchasing is undoubtedly planned, and even if it wasn’t planned the right thing to do would be to gather knowledge on the mattress, either from taking a quiz online to see which one fits you, researching how each mattress is different and its various benefits, going in-store and testing out the comfort etc. It is definitely a higher price as they can range from 500-1500 dollars, it is not a widespread distribution but it is selective sort of distribution
What are the types of industrial products? And how do they relate to Koala?
Capital items - long-lasting goods that help in developing the finished product
○ Koala could be office equipment, manufacturing equipment, automated production lines
Materials and parts - the raw materials and manufactured parts that are used in the production of the product
○ Koala could be the foam, fabric and other components that help build the mattress
Supplies and services - short-term good and services that facilitate the company’s operations but do not become the final product
○ Koala could be business services, having the experts analyze the best comfort the in the mattresses, the people who help source for the materials
What are the service characteristics? And how does it relate to Koala?
Service intangibility - services that can’t be seen, felt, heard or smelled before they are purchased
○ Koala’s would be intangible services like 120-night trial period, or customer reviews as customers can’t experience these things before purchase
Service inseparability - services that can’t be separated from their providers
○ Such as the direct interaction with Koala staff that deliver the mattress, an inseparable part of the experience
Service variability - service quality can vary depending on who provides them, when where and how
○ Koala can be based off efficiency of the delivery
Service perishability - Services that cannot be stored for later sale or use
Koala can be customer support, warranty and trial periods are stored for a limited amount of time, the service will be lost of certain time has passed
What are the two product and service decisions? How does it relate to Koala?
Packaging - the activities of designing and producing the container or wrapper for a product
○ Koala’s packaging is quite efficient, a simple cardboard wrap up, it is compact and easy to carry as the mattress isn’t in its full form, after taking the roll of foam out it is left to decompress, making the whole progress really simple.
Labelling - range from simple tags attached to products to complex graphics that are part of the package
Labelling their cardboard package nice and plain and simple, with only a large font of koala and a little logo, no overload of information which can make the consumer realize that this package speaks for itself and is easy to set up, the mattress has a simple little tag attached that mentions “1% for the planet” showing its eco-friendly quality and certified.
Define product line decisions, and relate it to Koala
Refers to a group of closely related product items viewed as a unit because of marketing, technical or end-use considerations
- For Koala this could be their mattress line, they have different types of mattress that they sell, including standard mattresses, their plus mattress, their lux mattress etc. ○ The also have different sizes offered in each line, from single to super king
Define product mix decisions, and relate it to Koala
The total group of products that an organization makes available to customers (product mix)
- Width of product mix: number of product lines a company has
- Depth of product mix: average no. of different product items offered in each product line
Koala furniture has 5 main product lines, mattresses, beds, living room, office and dining furniture
Within each line has many items offered, for mattresses for e.g. they have different types of mattresses offered, some enhance more comfort and some enhance more technology, and after picking out the mattress, then they offer various sizes, all these added up would be the depth of the product mix
What is the value of branding to sellers and buyers? Relate to Koala
To sellers:
- Helps market differentiation, giving Koala and competitive edge, which helps it define itself from other mattress brands, with a strong focus on sustainability, ease of purchase etc.
- Koala fosters a form of brand loyalty through their transparency etc.
- Pricing power is strong as Customers may be willing to pay more for Koala as they perceive their products to be reliable and high
To buyers:
- Koala’s transparency helps build trust and reliability for customers
- Koala also has a simple process of buying and delivery, which makes the customers life easier
- Their customer service helps reassure customers and gives enhanced experience
Define brand
A name, term, sign, symbol or design, or combination of these that identifies the products or services of one seller or group of sellers and differentiates them from those of competitors
What are some brand strategy decisions that Koala use?
Brand position
Koala truly believes that they are doing much greater for the world of mattresses, which they also push onto their customers. Similar to their competitors they have come up with the focus on comfort for their mattresses, but they are also taking the difficult way out, with being environmentally firendly, putting this hard work transparency as their image
Brand name selection
Koala’s name is simple, just an animal, and since it’s located primarily in Australia, this is an native Australian name, hard to forget, easy to spell, and relates with the locals.
Brand sponsorship
Koala is sponsored by multiple brands, they are B corp certified, and has partnerships with WWF where they are a member of the 1% for the planet
Brand development
Koala offers diverse types of mattresses, and product lines, Koala enforces sustainability and ethical guidelines to their manufacturing processes, they present strong online presence and put customers first such as seen through the 120 night trial
What is Koala’s new product development process
- Idea generation
Koala likely gathered ideas from various sources, from research to feedback to designing their packaging and industry trends, also thinking of a quality that other mattress companies don’t and which consumers would appreciate, such as sustainability- Idea screening
Koala would test their ideas to see if it aligned with their core values of being eco-friendly and ethical, if any sort of product got in the way of that, then they would most likely disregard it - Concept development and testing
Koala would most likely put together different designs of mattresses which have different purposes, then test out how well their special materials work with the mattresses, by conducting tests with all different sorts of people - Marketing strategy development
Koala would design marketing strategies for their mattresses, such as thinking of differentiating and positioning strategies and how they would advertise that - Business analysis
Koala would look into the mattress market, conducting research and analysis on how much they should sell their product for, what would be the right way to promote it etc. - Product development
Koala would create prototypes of new mattress designs, focus on perfecting materials, comfort etc. - Test marketing
Launch mattresses and seek for customer reviews for improvement - Commercialization
Subsequent to test marketing and receiving feedback, the final products would get pushed out to full-scale production
- Idea screening
What is Koala’s product life cycle?
Koala’s product life cycle would most likely steadily increase continuously if left unchanged. This is because through the beginning as they introduced this product, people may be skeptical about the whole eco-friendly value, or may just not think they could be better than other brands. But as Koala grows its reputation more people would become aware of their brand and reliability, thus increasing sales. And as more people are aware of sleep health now, they might be more willing to invest in mattresses like Koala’s, but as demand increases Koala’s profit does as well, which might influence them to sell for a higher price, this higher price can cause a maturity stage in their product, and may very well lead to a decline, as the price doesn’t match the quality anymore, or if another competitor betters Koala, and is on their growth stage that could also be a threat.
Define price
The amount charged for a product or service, or sum of values consumers exchange for benefits
What are Koala’s considerations in price setting? (floor/ceiling)
Koala finds the balance of price, while looking at competition and other external factors. Koala makes sure to not sell their product below the price floor (product cost) otherwise they won’t make a profit, since they are a higher-end product they can’t sell for too cheap. They also don’t sell too high as it will surpass the consumer perceptions of value (price ceiling), “is a mattress worth this much even worth it? Other brands sell it for cheaper”
What type of pricing strategy does Koala use? And why not the others?
Value- based
Refers to the process of setting the price based of buyer’ perception of value
○ Koala’s value based pricing obviously isn’t cut down to meet competitors as they are more expensive than some, instead they add value onto their products to match its price and differentiate from competitors
- Koala may have used cost-based pricing early on, but definitely leans more towards customer value as they are putting the customers first - It doesn't use competitor based pricing as they are more expensive than others
What are Koala’s prices and marketing objectives?
Koala’s price is set in the middle of the mattress spectrum, meaning not cheap but not expensive either. This is enough to prove the transparency of their company, while also allowing their product to survive in the market. They even offer trial periods, even if that means having a sale returned and losing money, but this just goes to show their reliability, which will overall make them meet their objectives either way of making money in the long-term and also supporting the environment
What is Koala’s marketing pricing strategy and mix?
It seems that Koala uses their pricing strategy’s to mainly attract new customers while also retain existing ones, shown through their excellent customer support and convenience, which also leads to retaining loyalty as the ultimate goal
What type of market competition do Koala price in? why is it not the other competitions
Koala is Monopolistic competition:
- This is because they are part of the “many sellers” offering differentiated products, who hold some control over the market, As Koala is selling the same product (mattresses) as other companies, while offering things like 120-night trials and free delivery this makes it a monopolgy
- It is not pure competition, as these sellers do have some control over the market and their products aren't exactly identical - It is not oligopolistic as there are many mattress brands, not just a couple that dominate the market such as the phone industry has (iphone and samsung) - It is not pure monopoly either as it is not a single seller that controls the entire market
What integrated marketing communications does Koala use?
Koala mattress uses combination of:
- Digital marketing (social media, SEM, content)
- Email marketing
- PR (press releases, media kits, partnerships)
- Influencer
- TV commercials etc.
Define promotion (market communication)
The creation and maintenance of communication with target markets
What is Price elasticity and how does it relate to Koala’s market?
Price elasticity is a measure of the sensitivity of demand to changes in price
The mattress market has lots of elasticity as there are many substitutes and competitors, this could mean for a lot of companies that one false move could ruin their reputation and sales. However Koala can mitigate that through unique selling points like 120-night trial, making it less sensitive to elasticity
What are some price adjustment strategies that Koala use?
Koala uses:
- Psychological pricing (setting at $999 instead of $1000)
- Promotional pricing (often run promotional campaigns and offers, seasonal sales etc.)
What are the two ways to price new products? And which one does Koala primarily use?
Market skimming and penetration
Koala would most likely use price skimming, this is due to various reasons. Price skimming refers to initially setting a higher price, then gradually decreasing it overtime. Allowing Koala to recover marketing costs quickly. Their initial high price is justified through their environmentally sustainable products and extra efforts.
If they use penetration pricing (setting a price low at the beginning) this could create a false image of Koala. Making consumers think that their sustainability and ethical sourcing ways are only worth that much, and when they increase the price they could think Koala is just doing it for profit.
What are the product mix pricing strategies that Koala uses?
Koala does multiple pricing strategies
1. Product line pricing (Koala sets different prices based on various types of mattresses) 2. Optional product pricing (Koala sells optional accessories like pillows and bedding, which can be purchased alongside the main mattress) 3. Captive product pricing (setting a price for products that must be used along with the mattress - Koala DOESN'T DO THIS STRATEGY) 4. Product bundle pricing (Koala does do this by offering packaged bundles for a cheaper price) 5. By-product pricing (Koala does not set any lower prices for products they want to discard)
What is integrated marketing communications?
Refers to the careful integration of a company’s many communication channels to deliver adequate messages about their brands
Define promotion mix
Also known as marketing communication mix:
Blend of everything (ads, PR, sales) to communicate customer value and build relationships
What are the overarching promotion mix strategies? and how does Koala use them?
Push strategy: use salesforce and trade promotions to push the product through marketing channels, reaching the final consumer
Pull strategy: Producer directs marketing activities (primary ads, consumer promotion) towards final consumers to influence them
Koala focuses on the pull strategy, as they want to communicate to their consumers directly, through things like social media engagement, influencer partnerships, online reviews, informative content etc. Though they do use some push’s like sales promo or partnership with retailers, their goal is to build awareness and loyalty, thus communicating directly with their customers
