Week 5 Flashcards
Product
A productas anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or a need Products are more than just tangible objects
Products also include
– Services – Events – Personal – Places – Organisations – Ideas
Services
A service is an activity, benefit or satisfaction offered for sale that is essentially intangibleand does not result in the ownership of anything.
Market offerings
Products are key elements in the overall market offering.
Market offerings often include bothtangible goods and services.
Pure tangible goods
•Little or no service accompany the product
Example: soap, toothpaste etc
Pure services
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All service –no or little product accompany the service
Example: doctors consultation
Creating & Manage Experiences
- A new level of in creating value for customers
* Tapping into what the offer will “do”for the customer
Three levels of products
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At the most basic level, the company asks,
“what is the customer really buying?”
Example: people who are buying be HTC one smart phone are buying more than a wireless communication device. They are buying freedom and on the go, activity. Each additional product level helps to build this core value
Broad product classification
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Types of Consumer Products
Consumer products are products and services bought by final consumers for personal consumption.
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Marketers usually classify these products and services further based on how consumers go about buying them:
Types of Consumer Products
Consumer products are products and services bought by final consumers for personal consumption.
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Marketers usually classify these products and
– Convenience goods – Shopping goods – Specialty goods – Unsought goods
Broad Product Classification
Types of consumer products
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Other types of products
Marketers have broadened the concept of a product to include other market offerings:
• Organisations • Persons • Places • Events and experiences • Ideas
Organisations
Organisations often carry out activities to ‘sell’ the organisation itself.
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Organisation marketing consists of activities undertaken to create, maintain or change the attitudes and behaviour of target consumers towards an organisation.
Person marketing
Person marketing consists of activities undertaken to create, maintain or change attitudes or behaviour towards particular people
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Businesses, charities and other organisations usewell-known personalities to help sell their products or causes
Place marketing
Place marketing involves activities undertaken to create, maintain or change attitudes or behaviour towards particular places.
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Cities, states, regions and even entire nations compete to attract tourists, new residents, conventions, company offices and factories.
Ideas MarketingIdeas Marketing
Ideas can also be marketed. In one sense, all marketing is the marketing of an idea.
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A more narrow focus to ideas marketing is social marketing
Social marketing
The use of commercial marketing concepts and tools to ‘influence behaviours that benefit individuals and communities for the greater social good’
Product Decisions
Individual product decisions
Product mix decisions
Product line decisions
Individual Product Decisions
The focus of all these decisions is to create core customer value:
Product attributes
Branding
Packaging
Labelling
Product support services
Product & Service Attributes
Quality
Features
Style & Design
Product Quality
The characteristics of a product or service that has the ability to satisfy stated or implied customer needs.
One of the main positioning tools
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Quality has a direct impact on product performance
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It is closely linked to customer value and satisfaction.
Product Features
Features are one of the competitive tools used for differentiating the company’s product from competitor products. Companies will survey buyers to identify new features and decide which ones to add to its product.
Product Style & Design
Style describes the appearance of a product
Design contributes to a product’s usefulness as well as its look
TQM)
Total quality management (TQM) –constantly improving the quality of products, services and business process
Style
Style describes the appearance of a product. It can be:
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‘eye-catching’ or ‘yawn-producing’.
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grab attention and produce pleasing aesthetics
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BUT, style does not necessarily make the product perform better.
Design
Design is more than skin deep –it goes to the very heart of a product.
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Good design contributes to a product’s usefulness as well as to its looks.
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Design is a larger concept than style
Branding
A name, term, sign, symbol, design, or a combination that identifies the product or service and differentiates it from competitors
Brand
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is viewed as an important part of the product
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can add value to a product
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customers attach meanings to brands, and develop brand relationships
Packaging
Packaging involves designing and producing the container or wrapper for a product Importance of packaging: • Attracting attention • Describing the product • Helping make the sale • Part of a brand’s identity
Poorly designed packaging
Can cause frustration for customers and lost sales for companies
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“Wrap-rage” is the frustration we all feel when were trying to free a product from nearly impenetrable packaging
Well designed packaging
Functional and provides value.
Labelling
Labels range from simple tags attached to products to complex graphics that are part of the package.
Importance of labels
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Identifies the product or brand
• Describe several things about the product – who made it – where it was made – when it was made – its contents – how it is to be used – how to recycle safely
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Help to promote the brand, support its positioning and connect with customers
Labelling concerns:
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Fail to describe important ingredients
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Fail to include needed safety warnings.
As a result, several federal and state laws regulate labelling.
Product support services
A company’s offer usually includes some support services, which can be a minor or a major part of the total offering.
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Support services are an important part of the customer’s overall brand experience.
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It can augment the actual product
Product line
A product line is a group of products that are closely related because they • function in a similar manner • are sold to the same customer groups • are marketed through the same types of outlets, or • fall within a given price range.
Product line decisions include:
Lengthening the line
Expanding the line
Lengthening the line
Key product line decision is length(the number of products in the product line)
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If the line is too short, then you can add items
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If the line is too long, you can remove items
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Marketers analyse their product lines periodically to assess each item’s contribution to the organisation’s performance
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Length is influenced by the company objectivesand resources
Expanding the line
Product line filling:
Product line stretching:
Product line filling:
Product line filling is adding more items within the current line. • It can assist in: – achieving extra profit – Satisfies intermediaries – Using excess capacity – Improving competitive position • blocking competitors or • being seen to be the leading full-line company
Product line stretching:
Product line stretching is where a company can stretch its line downward, upward or both ways.
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Product Mix
A product mix (or product portfolio) consists of all the product lines and items that a particular seller offers for sale.
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An organisation with several product lines has a product mix.
Four (4) product mix dimensions
Depth
Consistency
Width
Length
Depth
Number of versions offeredof each product in the line
Consistency
How closely related the various product lines are in terms of: • end use • production requirements • distribution channels or • some other way
Width
Number of different product lines the company carries
Length
Totalnumber of items the company carries within its product lines
Service Characteristics
Intangibility
Inseparability
Variability
Perishability
Intangibility
Services can not been seen, tasted, felt, heard or smelled before they are bought
Inseparability
Services can not be separated from their providers
Variability
Quality of services depends on who provides them and when, where and how
Perishability
Services can not be store for later sale or use
Brand equity
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Brands are more than just names and symbols.
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They are a key element in the company’s relationships with consumers.
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Brands represent consumers’ perceptions and feelings about a product and its performance –everything that the product or service means to consumers.
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Brands exist in the heads of consumers.
High brand equity and the differential effect
The differential effect that knowing the brand name has on customer responseto the product and its marketing.
High brand equity provides a company with many competitive advantages.
One measure of brand equity uses four consumer perception dimensions:
Differentiation
Relevance
Knowledge
Esteem
Differentiation
What makes the brand stand out
Relevance
How consumers feel it meets their needs
Knowledge
How much consumers know about the brand
Esteem
How highly consumers regard and respect the brand
Brand strategy decisions
Positioning
Name selection
Sponsorship
Development
Brand Positioning
Brands can position at three levels:
Beliefs and values
Benefits Position
Product attributes / features position
Brand Name Selection
The brand name should:
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Suggest something about the product’s benefits and quality
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Should be easy to pronounce, recogniseand remember
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Should be distinctive
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Should be extendable (stretch to other categories and products)
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Translate easily into other languages
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Capable of registration and legal protection
Brand Name Sponsorship
4 Sponsorship options
National Brands (manufacturer brand)
Store Brand
(Private label, store brand or distributor brand)
Licensing
Co-branding
National Brands (manufacturer brand)
Brands ownedand marketed, by the manufacturer
Store Brand
Private label, store brand or distributor brand
Brands ownedby the reseller
retailer or wholesaler
Licensing
Brandsthat are supplied under license for a fee to a company other than the brand owner.
Co-branding
Use of a brand name by two or more different companies on the same product.
Brand development
4 options:
Line extension
Brand extension
Multibrands
New brands
Line extension
Extending an existing brand name to new forms, colours, sizes, ingredients or flavours of an existing product category.
Brand extension
Extending an existing brand name to new product categories.
Multibrands
Market many different brands in a given product category.
New brands
A company might believe that the power of its existing brand name is waning and a new brand name is needed. Or it may create a new brand name for a new product category.
Managing brands
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Companies must manage their brands carefully.
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The brand’s positioning and values must be carefully communicated.
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The brand’s positioning will not take hold fully unless everyone in the company lives the brand.
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Brands are not maintained by advertising but by the customers’ brand experiences.
New product development strategy
A business can obtain new products in two ways.
Acquisition
New-product development
Acquisition
buying a whole company, a patent or a licenceto produce someone else’s product.
New-product development
Firm’s own product development efforts
What are new products?
New products refer to a variety of products that the business develops through its own research and development (R&D) efforts.
Includes: Original products Product improvements Product modifications New brands
New-product development strategy
The stats…
60% of all new consumer packaged products introduced by established companies fail
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2/3 of new-product concepts are never even launched.
New-product development strategy
Somereasons for failure:
• Overestimates of market size • Production cost blow-outs • Poor product design • Incorrect positioning • Poor launch timing • Incorrect marketing program • Competitor reactions
Product development process
Idea generation
Idea screening
Concept development and testing
Marketing strategy development
Business analysis
Product development
Test marketing
Commercialisation
Idea generation
Interna lidea sources – R & D – Employees •
External idea sources – Distributors/ Suppliers – Competitors – Customers – Crowdsourcing
Idea screening
Goal of screening:
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to spot good ideas and drop poor ones as soon as possible in order to reduce investment in product development with little potential.
Some issues to consider in screening:
• Is it real? • Is there a real desire or need? • Will customers buy it? • Can we win? • Does it offer a sustainable competitive advantage? • Does the company have the resources to develop it? • Is it worth doing? • Does it fit the company’s growth strategy? • Does it offer adequate profit potential?
Concept development and testing
Product idea, concept and image
Product idea
An idea for a possible product that the company can see itself offering to the market.
Product concept
A detailed version of the idea stated in meaningful consumer terms.
Product image
The way consumers perceive a potential or actual product.
Concept testing
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Market strategy development
The process of designing an initial marketing strategy for a new product based on the product concept.
The marketing strategy is in three parts:
1.
The target market; the planned value proposition; and the sales, market share and profit goals for the first few years
2.
The product’s planned price, distribution and marketing budget for the first year
3.
The planned long-run sales, profit goals and marketing mix strategy.
Business analysis
Assessment of the product’s financial attractiveness.
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Business analysis might include such things as:
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Sales, costs and profit projections
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Review sales for similar products
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Estimates of maximum and minimum sales (for risk assessment purposes)
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Scenarios for alternative product development and product growth possibilities
Product development
Developing the product concept into a physical product in order to ensure that the product idea can be turned into a workable market offering.
Test marketing
The stage of new-product development where the product and marketing program are introduced into more realistic market settings.
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May involve consumers testing prototypes
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The amount of test marketing varies according to product
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Often involves marketing in a small region such as NZ or Newcastle
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Simple line extensions and ‘me-too’ products are not normally test marketed
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Simulated test-marketing is widely used
Commercialisation
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Full scale introduction of a production into the marketplace.
• Some issues to consider in commercialisation: – Timing? – When to launch? – Where to launch? – Planned rollout in specific locations over defined timelines.
3 Approaches to new-product management
Customer centred
Team based
Systematic
Customer centred
Focuses on finding new ways to solve customer problems and create more customer satisfying experiences
spending time with the customer to understand what consumers want
Team based
Company departments work together and cross functional teams, overlapping the steps in the product development process to save time and increase effectiveness
Systematic
The use of innovation management systems to collect, review, evaluate and manage new product ideas
Product life cycle and strategies
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Product life cycle and strategies explanation
After launching a product, the company wants to earn a decent profit to cover all the effort and risk that went it went through in launching.
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Management is aware that each product will have a life cycle, although its exact shape and length is not known in advance.
The product life cycle is a helpful concept and can describe:
the product class – the product form; or – a brand
The product life cycle has 5 distinct stages:
Product development
Introduction
Growth
Maturity
Decline
Product development
A period of:
•slow sales
•no profits
•high investment costs.
Introduction
A period of slow sales growth but non-existent profits due to expense of introduction.
Growth
A period of market acceptance and increasing profits
Maturity
A period of
•slowdown in sales growth
•a levelling off or decline in profits
Decline
Both sales and profits fall off
Product life cycles: Objectives and strategies
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Other considerations: Product development
Product decisions & social responsibility
Product decisions & social responsibility
Product decisions & social responsibility
• Consumer protection laws • Anti-competitive laws • Risks of product liability
Product decisions & social responsibility
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Standardization vs. adaptation
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Translating brand names and packaging for offshore markets
