Transcript What is a Product?

Topic 7
product
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
6-2
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
learning objectives_2
• 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
6-3
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
learning objectives_3
• Define the role and responsibilities
of the product or brand manager
6-4
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
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.
6-5
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
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?
6-7
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
Figure 6.1
The Anatomy of a Product
6-8
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
Levels of Product
Augmented
Product
Installation
Packaging
Brand
Name
Delivery
& Credit
Quality
Level
Core
Benefit
or
Service
Features
AfterSale
Service
Design
Warranty
Actual
Product
Core
Product
Product-based Classification
Durable
Nondurable
6-10
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
Service
Consumer User-based
Classification
Convenience
Shopping
6-11
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
Specialty
Product Classifications
Consumer Products
Convenience Products
Shopping Products
> Buy frequently & immediately
> Low priced
> Mass advertising
> Many purchase locations
> Buy less frequently
> Higher price
> Fewer purchase locations
> Comparison shop
Fast Food, Candy, Newspapers
Clothing, cars, appliances
Specialty Products
Unsought Products
> Special purchase efforts
> High price
> Unique characteristics
> Brand identification
> Few purchase locations
> New innovations
> Products consumers don’t
want to think about
> Require much advertising &
personal selling
Lamborghini, Rolex
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
6-13
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
Unsought Goods
6-14
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
B2B User-based Classifications
Capital goods
Supplies
and services
Accessory
goods
Components
and parts
Raw materials
Semi-finished
goods
6-15
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
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
6-17
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
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
6-18
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
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
6-19
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
The concepts of width of product
mix and depth of product line
Lynx offers a deep line of
fragrances
Source: The Advertising Archives.
6-21
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
Individual Product Decisions
Product
Attributes
Branding
Packaging
Labeling
Product Support
Services
Product Attribute
Decisions
Quality
Features
Design
6-23
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
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)
6-24
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
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
6-25
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
Aspects of Design, Quality, and
Guarantees
Quality
Performance
Durability
Reliability
and maintenance
Design
and style
Corporate name
and reputation
Guarantees
6-26
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
Branding
Branding seeks to create and
communicate a three-dimensional
character for a product that is not
easily copied or damaged by
competitors’ efforts.
6-27
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
Brand Defined
A name, term, sign, symbol
or design, or a combination of them,
intended to identify the goods
or services of one seller or group
of sellers and to differentiate
them from those of competitors
6-28
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
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
• More elastic
response to price
decreases
• Greater trade
cooperation
• Larger margins
• Increased marketing
communications
• More inelastic
response to price
increases
• Possible licensing
opportunities
• Brand extension
opportunities
Trade Mark
Trades Marks Act of 1994 enables registration of
• Smells
• Sounds
• Product shapes
• Packaging
• Brand names
• Logos
6-31
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
DISTINCTIVE VISUAL
IDENTITY
• Logos can be very powerful - these
designs convey meaning, even with
the “wrong name”
6-32
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
Figure 6.3 The Benefits
of Branding
The consumer
The manufacturer
Branding
The retailer
6-33
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
Benefits of Branding
for the Consumer
• Easier product identification
• Communicates features and benefits
• Helps product evaluation
• Establishes product’s position
• Reduces risk
• Creates interest
6-34
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
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
6-35
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
Types of Brands
• Manufacturer brands
• Retailer and wholesaler brands
– Own-label brands
6-36
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
Selecting a Brand Name
Distinctive
Supportive
Acceptable
Available
6-37
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
Figure 6.4 The Brand Name
Spectrum
Descriptive
Associative
Freestanding
Bitter Lemon
Walkman
Kodak
Dairy Milk
Chocolate
Natrel
Esso
Bold
Pantene
Sensodyne
Mars Bar
Shredded
Wheat
6-38
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
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 profitability
that the brand commands for the firm
6-39
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
Major elements of brand
equity
6-40
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
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.
6-41
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
Functions of Packaging
• Protect product
• Keep product
ready for use
• Dispense product
• Present brand
imagery
6-42
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
• Provide
information
• Make product
attractive
• Make product use
convenient
Packaging Issues
• Labelling
• Design
– Warnings
– Aesthetic appeal
– Instructions
– Ergonomic
properties
– Regulated
information
– Functionality
– Size
– Reliability
– Contact
information
– Life span
6-43
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
Functions of Labels
• Identifies
• Grades
• Describes
• Promotes
6-44
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
Product Range Management
Extending the product line
Filling the product range
6-45
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
eg Heinz and the
Monolithic Approach
6-46
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
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
6-47
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
eg Volkswagen
Overextended
6-48
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
Ethical Issues Concerning
Products
Product safety
Planned obsolescence
Deceptive packaging
6-49
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
Deleting Products
• Phase out
• Run out
• Drop or sell
eg Low Carb KitKat
6-50
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
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
6-51
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
Figure 6.5 The Product Lifecycle
6-52
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
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
6-53
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
PATTERNS OF PRODUCT LIFE
CYCLES
• There is
no
universal
pattern of
PLC
6-54
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
Introduction Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Low sales
Costs
High cost per customer
Profits
Negative or low
Marketing Objectives
Create product awareness and trial
Product
Offer a basic product
Price
Usually is high; use cost-plus formula
Distribution
High distribution expenses
Advertising
Build product awareness among early
adopters and dealers
Growth Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Rapidly rising sales
Costs
Average cost per customer
Profits
Rising profits
Marketing Objectives
Maximize market share
Product
Offer new product features, extensions,
service, and warranty
Price
Price to penetrate market
Distribution
Increase number of distribution outlets
Advertising
Build awareness and interest in the mass
market
Maturity Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Peak sales
Costs
Low cost per customer
Profits
High profits, then lower profits
Marketing Objectives
Maximize profits while defending market
share
Product
Diversify brand and models
Price
Price to match or best competitors
Distribution
Build more intensive distribution
Advertising
Stress brand differences and benefits
Decline Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Declining sales
Costs
Low cost per customer
Profits
Declining profits
Marketing Objectives
Reduce expenditure and maintain, reposition,
harvest or drop the product
Product
Phase out weak items
Price
Cut price
Distribution
Go selective: phase out unprofitable outlets
Advertising
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
6-59
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
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
6-60
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
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
6-61
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
New Product Development :
Idea Generation
Idea Generation is the Systematic Search for
New Product Ideas Obtained Internally From
Employees and Also From:
Customers
Competitors
Distributors
Suppliers
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
6-63
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
Causes 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
6-65
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
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.
6-66
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007
Figure 6.7
Diffusion of Innovation
6-67
Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007