Transcript Principles of Marketing

Principles of
Marketing
Lecture-7
Today’s Topics
Product Strategies and Features
Product Mix and Product Line
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Product Mix
The set of all product offered for sale by a company
is called a product mix.
 Breadth and Depth
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Breadth = the number of product lines carried
 Depth = variety of sizes, colors and models within each
product line.
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Product Line
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A group of products similar in usage and physical
characteristics.
Product Mix – Kraft Foods
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Beverages
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Cheese & Dairy
Snacks
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Coffee
Refreshment Beverages
Confectionery
Salty snacks
Biscuits
Convenient Meals
Grocery
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Desserts
Enhancers (dressings and spreads)
Cereals
Kraft –Beverages
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Beverages > Coffee
Kraft –Beverages
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Beverages > Coffee
Kraft –Beverages
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Beverages > Coffee
Kraft –Beverages
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Beverages > Refreshment Beverages
Kraft –Beverages
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Beverages > Refreshment Beverages
Kraft –Beverages
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Beverages > Coffee
Kraft – Cheese and Dairy
Kraft – Cheese and Dairy
Product Mix – Kraft Foods
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Snacks
Confectionery
 Salty snacks
 Biscuits
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Convenient Meals
Grocery
Desserts
 Enhancers (dressings and spreads)
 Cereals
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Positioning the Product
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Management's ability to:
bring attention to a product
 differentiate it in a favorable way from similar products
goes a long way toward determining that product’s revenues
and the company’s profits.
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Thus management engages in positioning the
product
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Developing the image that a product projects in relation to
competitive products and to the firm’s other products.
Marketing executives can choose from a variety of
positioning strategies. Sometimes they decide to use
more than one for a particular product.
Positioning Strategies
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Positioning in Relation to Competitor
Positioning in Relation to a product Class or Attribute
Positioning by Price and Quality
Positioning in Relation to Competitor
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This strategy is especially suitable for a firm:
Has a solid differential advantage
 Trying to solidify such an advantage.
Example.
 Intel launched a campaign to convince buyers that its product is superior
to competitors. The company even paid computer makers to include the
slogan, “Intel Inside,” in their ads.
 Coca-Cola and Pepsi-Cola compete directly with each other in virtually
every element of the marketing mix (even celebrity endorsers).
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For other products, head-to-head positioning is exactly what not
to do, especially when a competitor has strong market position.
Positioning in Relation to a Product Class or Attribute
Positioning strategy entails associating its
product with (or dissociation it from) a product
class or attribute.
 Promoting products as being in a desirable class,
such as “Made in America,” or having an
attractive attribute, such as “low energy
consumption” or “environmentally friendly.”
 Widely used for food products.
For example, Libby’s, Del Monte, Campbell’s,
Kellogg’s
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No (or very little) salt.
 Low calories, Low cholesterol and fat (frozen foods)
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Positioning by Price and Quality
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Certain producers and retailers are known for
their high-quality products and high prices.
Saks Fifth Avenue, Neiman-Marcus
 Target, Kmart are at the other.
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Saks Fifth Avenue
Saks Fifth Avenue
Saks Fifth Avenue
Kmart
Kmart
Kmart
Think …..
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Will celebrities endorse Kmart or Saks?
Which magazines will Kmart advertise in?
Which magazines will Saks advertise in?
Others?
The Product Life Cycle
The Product Life Cycle
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Management must be able to recognize what
part of the life cycle its product is in at any
given time.
The competitive environment and marketing
strategies that should be used depends on the
particular life-cycle stage.
The Product Life Cycle
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Introduction Stage:During the introduction stage, product is launched into the
market in a full-scale marketing program.
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Growth Stage:In the growth stage, or market-acceptance stage, sales and profits
rise, often at a rapid rate. Competitors enter the market, often in
large numbers if the profit outlook is particularly attractive.
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Maturity:During the first part of the maturity stage, sales continue to
increase, but at a decreasing rate. When sales level off, profits of
both producers and middlemen decline.
The Product Life Cycle
 Decline
Stage:-
For most products, a decline stage, as gauged by
sales volume for the total category, is inevitable for
one of the following reasons:
The need for the product disappears.
A better or less expensive product is developed to fill
the same need.
People simply grow tired of a product (a clothing style,
for instance), so it disappears from the market.
Characteristics and implication of different PLC Stages
Stage
Introduction Growth
Maturity
Decline
Loyal customers
Characteristics
Customers
Innovators
Mass market
Mass market
Competition
Sales
Little if any
Low levels, then
rising
Increasing
Rapid growth
Intense
Decreasing
Slow/no annual Declining
growth
Profits
None
Strong, then at a
peak
Declining
annually
Low/none
Overall strategy
Market development
Market
penetration
Defensive
positioning
Efficiency or exit
Costs
High per unit
Declining
Stable or
increasing
Low
Product strategy
Undifferentiated
Improved items
Differentiated
Pruned line
Pricing strategy
Most likely high
Lower over time
Lowest
Increasing
Distribution strategy
Scattered
Intensive
Intensive
Selective
Promotion strategy
Category awareness
Brand preference
Brand loyalty
Reinforcement
Marketing implication
Brands
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Brand
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A name and/or mark intended to identify the product and
differentiate from competitors.
Brand name
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Brands
Words, letters, and/or numbers that can be vocalized.
Brand mark
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Part of the brand that appears in the form of a symbol, design, or
distinctive color or lettering.
 Trademark
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A brand that has been adopted by a seller and given legal
protection. Includes brand mark brand name.
One method of classifying brands is on the basis of
who owns them thus we have producers’ brands and
middlemen’s brands, the latter being owned by
retailers or wholesalers.
Reasons for Branding
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For consumers, brands make it easy to identify
goods or services. They aid shoppers in moving
quickly through a supermarket, discount house,
or other retail store and in making purchase
decisions. Brands also help assure consumers
that they will get consistent quality when they
reorder.
Reasons for not Branding
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Two responsibilities come with brand ownership:
(1) promoting the brand and
(2) maintaining a consistent quality of output.
Many firms do not brand their products because
they are unable or unwilling to assume these
responsibilities.
Desirable Characteristics
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Five characteristics determine the desirability of
brand name for either a good or service.
Suggest something about the product, particularly its
benefits and use. Example Mr. Goowrench, Holiday
Inn, Minute Rice, and—perhaps best of all—
DieHard. Product use is suggested by Dustbuster,
La-Z-Boy chairs etc.
 Be easy to pronounce, spell, and remember.
Examples of simple, short, one-syllable names such
as Tide, Surf etc.
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Desirable Characteristics
Be distinctive. Examples National, United, Allied, or
Standard. But are these really distinctive?
 Be adaptable to new products that may be added to
the product line. Example Kellogg, Lipton, or Ford
may serve the purpose better than a highly
distinctive name suggesting product benefits.
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Branding Strategies
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Both producers and middlemen face strategic
decisions regarding the branding of their goods
or services.
Branding within a Product Mix
At lest three different strategies are used by firms
that sell more than one product:
 A separate name for each product.
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This strategy is employed by Unilever and Procter &
Gamble.
Branding within a Product Mix
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The company name combined with a
product name.
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Examples include Johnson’s Pledge and Johnson’s
Glo-Coat, and Kellogg’s Rice Krispies and Kellogg’s
Corn Pops.
The company name alone.
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Nowadays few companies rely exclusively on this
policy. Examples Heinz in the food field, and
General Electric in various industries.
Packaging & Product Features
Packaging
 Packaging
 Activities
of designing and producing the container or
wrapper for a product.
 Package
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The actual container or wrapper.
Advantages of Packaging
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Protect the product on its way to the consumer.
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Provide protection after the product is purchased.
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Cleaner, spilling, spoilage
Be part of the company’s trade marketing program.
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Shipment, tampering (food, meds)
Display and stacking
Be part of the company’s consumer marketing
program.
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Identify, “silent sales person”
Packaging Strategies
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Packaging the Product Line
Create resemblance
 Family packaging uses highly similar packages for all
products
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Multiple Packaging
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Placing several units of the same product in one
container e.g. tennis balls, candy bars, towels etc
Changing the Packaging
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Correct a poor feature of a package or new packaging
material.
Labeling
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Label
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A label is the part of a product that carries information about the
product & the seller.
Types of Labels
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Brand Label
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Descriptive Label
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Simple brand name as label e.g. mangoes
Gives objective info about product use, care, performance e.g. bottle of
tomato ketchup
Grade Label
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Gives info about product quality with a letter, number or symbol e.g. motor oil
etc
Labeling Laws
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The Federal Trade Commission Act (1914)
False or deceptive labels are illegal
Consumer satisfaction with labeling is low
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Labels contain incomplete or misleading info
Fair Packaging and Labeling Act (1966)
Food and Drug Act (1906)
Food, Drug and Cosmetic Act (1938)
Nutrition Labeling and Education Act (1990)
Label Example
Other features
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Design and Color
Quality
Warranties
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Assures buyers that they will be compensated in case
the product does not perform up to reasonable
expectations
Warning labels (meds, chemicals, washing)
Post-sale service
An example IAA
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IAA at IUB
IAA Logo
IAA Slogan
IAA Website
End of Lecture -7