Transcript Lecture 23- Marketing Mix

MGT-519
STRATEGIC MARKETING
AAMER SIDDIQI
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LECTURE 23
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RECAP
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Objective of distribution
Channels of distribution
Functions of a distributor channel
Channel strategy decisions
Direct and indirect channels
Determining the best structure
Logistics
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PRODUCT
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The Core
The Basic product
The Augmented product
The Perceived product
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LEVELS OF PRODUCT
• Level 1: Core Product
• What is the core benefit your product offers?
– For example customers who purchase a camera are buying more
than just a camera, they are purchasing memories.
• Level 2: Actual Product
– All cameras capture memories, therefore aim is to persuade them
to capture memories with the camera.
– The strategy at this level is to add branding, features and benefits
which offer a differential advantage over competitors.
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LEVELS OF PRODUCT (CONT’D)
• Level 3: Augmented Product
• This level is about exploring if there are any additional nontangible benefits.
• Competition at this level is based around after sales service,
warranties, delivery and so on.
• For example, a retail department store offers a free five year
guarantee with television purchases. A five year guarantee
offers their customers peace of mind that their television will
be repaired or replaced should a fault develop.
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PRODUCT – BUNDLE OF BENEFITS
• Marketing is fundamentally
about providing the correct bundle
of benefits to the end user, hence
the saying
‘Marketing is not about
providing products or services it is
essentially about providing
changing benefits to the changing
needs and demands of the customer’ (P.Tailor 7/00)
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QUESTIONS FOR INTRODUCTION OF A PRODUCT
• When an organisation introduces a product into a market they
must ask themselves a number of questions.
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Who is the product aimed at?
What benefit will customers expect?
How does the firm plan to position the product within the market?
What differential advantage will the product offer over their
competitors?
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FORMS OF PRODUCT
• Products come in several forms.
• Consumer products can be categorized as
• Convenience goods, for which consumers are willing to invest very
limited shopping efforts.
• Thus, it is essential to have these products readily available and
have the brand name well known.
• Shopping goods, in contrast, are goods in which the consumer is
willing to invest a great deal of time and effort.
• For example, consumers will spend a great deal of time looking
for a new car or a medical procedure.
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FORMS OF PRODUCT (CONT’D)
• Specialty goods are those that are of interest only to a narrow
segment of the population
• —e.g., drilling machines.
• Industrial goods can also be broken down into subgroups,
depending on their uses.
• It should also be noted that, within the context of marketing
decisions, the term product refers to more than tangible
goods—a service can be a product, too.
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PRODUCT LINE
• A firm’s product line(s) refers to the assortment of similar
things that the firm holds.
Brother, for example, has both a line of laser printers and one
of typewriters.
• In contrast, the firm’s product mix describes the combination
of different product lines that the firm holds.
Boeing, for example, has both a commercial aircraft and a
defense line of products that each take advantage of some of
the same core competencies and technologies of the firm.
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PRODUCT LINE (CONT’D)
• Some firms have one very focused or narrow product line
(e.g., KFC does only chicken right) while others maintain
numerous lines that hopefully all have some common theme
• This represents a wide product mix
3M, for example, makes a large assortment of goods that are
thought to be related in the sense that they use the firm’s
ability to bond surfaces together.
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PRODUCT DEPTH
• Depth refers to the variety that is offered within each product
line. Maybelline offers a great deal of depth in lipsticks with
subtle differences in shades while Morton Salt offers few
varieties of its product.
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DIFFERENTIATION OF PRODUCTS
• Products may be differentiated in several ways.
• Some may be represented as being of superior quality (e.g.,
Maytag), or
• in terms of styles—some people like one style better than another,
while there is no real consensus on which one is the superior one.
• Finally, products can be differentiated in terms of offering different
levels of service—for example, Volvo offers a guarantee of free,
reliable towing anywhere should the vehicle break down.
• American Express offers services not offered by many other charge
cards.
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NEW PRODUCT DEVELOLOPMENT
• New product development tends to happen in stages.
• Firms often go back and forth between these idealized stages, the
following is a sequence of the development of a new product:
• New product strategy development: Different firms will have
different strategies on how to approach new products.
• Some firms have stockholders who want to minimize risk and avoid
investing in too many new innovations.
• Some firms can only survive if they innovate frequently and have
stockholders who are willing to take this risk.
• For example, Hewlett-Packard has to constantly invent new products since
competitors learn to work around its patents and will be able to manufacture the
products at a lower cost.
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NEW PRODUCT DEVELOLOPMENT (CONT’D)
• Idea generation. Firms solicit ideas as to new products it can
make.
• Ideas might come from customers, employees, consultants, or
engineers.
• Many firms receive a large number of ideas each year and can
only invest in some of them.
• Screening and evaluation: Some products that after some
analysis are clearly not feasible or are not consistent with the
core competencies of the firm are eliminated.
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NEW PRODUCT DEVELOLOPMENT (CONT’D)
• Business analysis. Ideas are now exposed to more rigorous
analysis.
• Profit projections, risks, market size, and competitive
response are considered.
• If promising, market research may be done.
• Development: The product is designed and manufacturing
facilities are planned.
• Market testing: Frequently, firms will try to “test” a product in
one region to see if it will sell in reality before it is released.
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NEW PRODUCT DEVELOLOPMENT (CONT’D)
• There is a lesser risk if the firm only commits money to
advertising and other marketing efforts in one region.
• Retailers will also be more receptive in other parts of the
country and world if it has been demonstrated that the
product sold well in one region.
• The firm may also experiment with different prices for the
product.
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NEW PRODUCT DEVELOLOPMENT (CONT’D)
• Commercialization: Facilities to manufacture the product on a
larger scale are now put into operation
• The firm starts a national marketing campaign and
distribution effort.
• When placing a product within a market many factors and
decisions have to be taken into consideration.
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PRODUCT DECISIONS
• Product design: Will the design be
the selling point for the
organisation as we have seen
with the iPad
• Product quality: Quality has to be
consistent with other elements of
the marketing mix.
• A premium based pricing strategy has to
reflect the quality a product offers
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PRODUCT DECISIONS
• Product features: What features will you add that may
increase the benefit offered to the target market?
• Will the organisation use a discriminatory pricing policy for
offering these additional benefits
• Product branding; One of the most important decisions a
marketing manager can make is about branding.
• The value of brands in today’s environment is phenomenal.
• Brands have the power of instant sales, they convey a
message of confidence, quality and reliability to their target
market.
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SUMMARY
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Product
Levels of Product
Introduction of a Product
Product form
Product line
Product depth
Differentiation of Product
New Product development
Product decision
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THANKYOU
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