class 9 Flashcards
what is a product
Product is anything you can get from the seller
A product is anything of value that can be offered to consumers in an exchange
Product includes: core benefit, actual good/ service, package/ label, brand
Product has different layers: at the cnetre is the core benefit
how can you classify products
by tangibility, by end users or consumer products , consumer products, business products
what are the four common categories of products
Convenience products → what you buy frequently without putting too much thought (ex: toothpaste)
Shopping products→ more thought, dont pay attention to need recognition, Are products or services like furniture, apparel fragrances, appliances for which consumers will spend a fair amount of time comparing alternatives
Specialty products→ Items that consumers make special effort to search for but less effort to compare due to unique characteristics or brand loyalty. Products or services toward which customers show a strong preference that they will expend considerable effort to search for the best supplier .ex: rolex–> great quality, looking for it specially so don’t weigh the alternatives
Unsought products→ Items that consumers either do not know about or know about but do not initially want, not on our radar, need to build awareness
product life cycle stages
inrtdocution, growth, maturity and decline
what is the introduction phase
A product is first introduced in the market Sales, costs and profit. – Sales start at zero and grow slowly
– Large sunk investment in R&D, high costs on promotions
– Profit is minimal (often negative)
- not many competitors
- marketing obkective: create awareness, educate consumers
what is the price like in the intro phase
Skimming strategy: high price
Capitalize on the price insensitivity of early adopters
Recover the costs at the initial stage
Penetration strategy: low price
Products that can signal exclusivity, e.g., Tesla’s electric car
what is promotion like in the intro phase
– Heavy advertising, providing free trials
what is place like in the intro phase
Limited distribution channels
Large volume, accelerate growth
Products that rely on large consumer base or network effects, e.g., Netflix, Amazon Prime membership, free trials, etc.
Some products in the introduction phase rely on building a large consumer base or leveraging network effects to drive growth.
what is the growth stage
A product succeeds in satisfying the market
Sales costs and profit→ sales grows rapidly, profit increases and peaks
Customers and competitions → majority, more competitors enter the market
Marketing objective→ sustain the growth and stimulate selective demand for the brand, maximize market share
what is the product in the growth stage
improved version with unique features
what is the price in the growth stage
lower price to penetrate the market
what is the promotion in the growth stage
emphasizing product/ brand uniqueness
what is the place in the growth stage
build extensive distribution channels
what is the maturity stage
Most products we seee daily are in the maturity stage
Sales cost and profit→ sales growth soles down, average cost decreases, profit growth slows down
Customers and competitors→ repeat purchasers and or late majorities, intense competition and weak competitors exit the market
Marketing objective → prevent profit from declining, defend market share
what is the product in the maturity stage
create new versions, modify the product characteristics such as features, style or packaging to inspire more usage
what s the price in the maturity stage
beat competitors
what is the promotion in the maturity stage
advertising to remind consumers with frequent sales promotions, new advertising on modified products to regain consumer attention
what is place in the maturity stage
maintaining current distribution channels and expand to new markets if possible (ex: foreign market)
what is the decline phase
Many mature products continue to be useful but for others, the decline is unpreventable..
Sales cost and profit
Sales drop and profit continues to decline
Reduce the cists
Customers and competitors
Laggards
More competitors leave the market
Marketing objective
Product deletion
Retain the product by minimizing the costs and harvesting the residual sales
Maintain the product without incurring further costs until other competitors leave
Product, price promotion remain unchanged
Place: close down unprofitable channels
Ex: doves bar soaps
Completely redefine the product
Treat as a new product and redesign marketing mix accordingly
what is product mix
They are essentially all of the different products and products lines a company has. the complete set of all products offered by a firm
Has various product lines
product ;line
: groups of associated items, sich as ite,s that consumers use otgteher or think of as part of a group of similar products
ex; nike sells shoes. they have many different lines like for dunks, air forces….
what is width
number of different product lines they have
what is depth
the number of products in each line
what is a brand
Formally; a proprietary trademark for a specific product or service
Conceptually: a “contract” between the company and its customers; a promise of specific benefits, quality, value, and experiences; a relationship…
brand name could give hints to what the brand is about or not
what is brand equity
Brand equity is the added value that a given brand name gives to a product beyond the functional benefits provide
what are the four brand strategies
Line extension
Category extension
Mutlibranidng
New branding
what is line extension
new products in the same general category that closely resemble successful products.
keeping an existing product line but making changes to it. same brand name and same product category
For example, if a company produces a popular shampoo, they might introduce a line extension by launching new versions of the shampoo, such as one for dry hair, one for oily hair, and one for colored hair. These variations maintain the core essence of the original product but cater to different customer needs or preferences.
same brand same product category
what ae the two types of line extension
Horizontal extensions: keeping price and quality consistent, but changing factors like flavor, color or format to differentiate the product
Vertical extensions: increasing and or decreasing quality and price to create lower priced, middle priced, and higher priced options
what is cannibalization
When the new extension product takes sales away from the old product
what are category extensions
using the same brand name to launch new products in different categories
new product same brand name
syarvbcuks starts selling cds in its stores
ex: Colgate doing beef lasgna. same brand but dif product
what are brand extension advantages and Risks
Advantages:-
Enable a company to enter new categories at
significantly lower cost and risk Reinforce positioning of parent brand
Risks:
Could dilute or disrupt brand image A managerial bias
since established brand is strong, why should we spend money and effort promote the brand extension?
Purchasers can be divided into 5 groups according to how soon they buy the product after it has been introduced
innovators (want to buy everything first, enjoy risks, not price sensitive ), early adopters (wait for more review spread word, not as much risk), early majority (wait until any issues r sorted when market is at its peak), late majority (last group of buyers product has reached full potential, and laggards (dont get new products )
increase breadth
Firms often add new product lines to capture new or evolving markets, increase sales and compete in new venues
Ex: via ready brew was created by starbcuks and changed the way people thought about instant coffee
decrease breadth
Someitmes it is necessary to delete entire product lines to address changing market conditions or meet internal strategies priorities
Ex: SC johnson sold off many products in its skin care line. The firm no longer competes in the skin care business but still is a strong rband in its original product lines
increase depth
Firms may add new products within a line to address changing consumer preferences or preempt competitors while boosting sales
Ex: haagen daz added new flavours which helps appeal to more people. The product is still the same ( ice cream) but has a lot more flabours
decrease depth
From time to time, it is necessary to delete product categories to realign resources
Not taken lightly
Firms will eliminate unprofiatbel items and focus more on the ones making profit
multi branding
new brand, existing category
new branding
new brand new category product
