Transcript Principles of Marketing

Product Policy
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Recognise the central importance of "The Product" within the Marketing
Mix.
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Explain how the nature of a product in marketing comprises four levels:
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Core product (defining category and benefit)
Actual product (the physical reality)
Augmented product (that delivers differentiation)
Potential product (how the product may be developed in future)
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Develop an appreciation of four consumer product
classifications: convenience, shopping, specialty and unsought
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Develop an appreciation of three industrial product classifications:
input materials, capital items, and supplies and services.
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Understand the generic new product development process.
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Explain the Product Life Cycle as a concept and the practical issues
associated with each stage therein.
Extended Product Concept
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Core Product – Defines and classifies itself in
terms of the benefits it provides.
◦ The tangible product
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Augmented Product – Service and image
benefits that differentiate it.
Potential Product- Ideas and concepts that
could be used at a future time to strengthen
or revitalise the product’s tangible and
augmented attributes
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This is the cornerstone of the Marketing Mix
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The primary importance is the business’s
Sustainable Competitive Advantage (SCA)
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What needs to be considered is the
environment as it constantly changing:
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Limiting commitments
Technologies
Competitors
Regulations
Economic Conditions
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"There is only one boss, the customer, and
he can fire everybody in the company,
from the chairman down, simply by
spending his money somewhere else."
Sam Walton (1918- 1992) Founder of WaiMart
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"It's the first company to build a mental
position that has the upper hand, not the
first company to make the product. IBM
didn't invent the computer; Sperry Rand
did. But IBM was the first to build the
computer position in the prospect's mind."
AI Ries (1929 -) Former Chairman Trout &
Ries, Inc Advertising Agency
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1.CORE BENEFIT: Fundamental service/benefit
consumer buys. (e.g. transportation
entertainment rest and sleep 'Life Choices!4
inch holes.....
2.GENERIC PRODUCT: Basic version of the
product that consumer buys/uses/consumes
(e.g. Commerce degree, hotel room, drill bit,
burger, tour bus....etc.
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3.EXPECTED PRODUCT: Set of attributes
features conditions - consumers normally
expect/agree to in relation to 1-2 above
(e.g.) clean bed, telephone, Tv, decent
bathroom...etc. REPRESENTS THE MINIMUM
PRICE OF MARKET ENTRY.
4.AUGMENTED PRODUCT: Additional
services/benefits that provide sources of
COMPETITIVE ADVANTAGE- Unique Selling
Propositions/Points(USPs)
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5.DON'T SELL THE STEAK, SELL THE SIZZLE.
• Major point of Marketing focus.
.• Augmenting a physical "Product"?
• Augmenting an intangible "Service"?
6. POTENTIAL PRODUCT: Potential for future .
augmentation in this product. The amount of
stretch that is possible.
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Durable Goods
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Non-Durable Goods/Consumption
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Convenience Goods/Services
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Shopping Goods/Services
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Specialty Goods/Services
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These aren’t bought as ends but means to an
end.
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Input Materials and Parts
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Capital Items
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Supplies and Services
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Functionality; Benefits and Reliability
◦ Works as advertised
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Assurance
◦ Dependable on time, on specification, every time
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SAVING TIME
SAVING MONEY
CO-DESTINY ("Win-Win") RELATIONSHIP
BASED
KEY ACCOUNTS
RISK MANAGEMENT
GROUP PURCHASE DECISION MAKING
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Offers their customers something that is
essentially intangible: the interaction does
not result in the ownership of anything that
endures
How many services do you think are currently
in NZ?
What is their typical business structure?
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Intangibility of Service: Almost pure services,
like a haircut, may be distinguished from
almost pure physical products, like coffee, in
that there is no physical element.
High Involvement & Personal Nature of
Services: strong relationships can develop.
Dentist, Doctor, Accountant, Lawyer etc
versus say low involvement items like grocery
items
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Variability of Service Encounters: Almost pure
services, such as a restaurant or cruise
experience, involve interaction between
patron/guest & customer service staff.
There is the potential for service variability
in what have been termed 'moments of truth'.
Synchronous Delivery of Service: The service
is in real time, being delivered and consumed
together e.g. driving lessons.
Intangibility, inseparability, perishability,
variability
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Perishability of Service: often once a service is
completed there is
no tangible evidence of its existence only
memories e.g. rock concert
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Product Quality:
◦ The ability of a product to perform its functions; it
includes the products overall durability, reliability,
precision, ease of operation & repair, and other valued
attributes.
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Product Features:
◦ Start with the stripped down version then add features
is often a starting point. Features can be a competitive
tool for differentiating the company's product.
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Product Design:
◦ The process of designing the product's style & function:
creating a product that is attractive; easy, safe, and
inexpensive to use & service; and simple & economical
to produce and distribute.
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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 given price ranges.
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Consistently high, all-round level of professionalism.
Clearly defined target market.
Detailed assessment of financial viability.
Cost-volume-profit projections are realistic and based on good data and sound
thinking.
Pricing policy is accurate.
Close tie-in with Business Strategy, Core
C)
Competencies and Competitive Advantages.. Close similarity with existing
products & markets
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good insights and knowledge.
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(Experience and strong track record.)
Sound fit between marketing, sales, distribution, production, suppliers and
design.
No gambles are taken on Quality. Technology is effective and fits the market.
The timing is right. (Goldilocks - not too early nor too late)
Attention to detail is paid.
"You've done this ·before, haven't you?"
Detailed Research & Development - front-loaded investment.
"Try it once, try it twice, then try something else."
Strong business case exists. ("Investment in managerial ego")
Synergy with existing
and potential
product- markets. (Strategic Fit)
Not a BIG PROJECT- "You gamble the family farm."
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The ultimate expression of the augmented
product concept.
Consider what is uniquely identified in the
mind of the consumer.
Branding is used to help consumers choose
what product and is used to establish
competitive marketing positioning.
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1. Attributes: a brand brings certain attributes to
mind e.g. Mercedes
2. Benefits: Customers do not buy attributes, they
buy benefits. Therefore attributes must
be
translated into functional and emotional benefits.
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3. Values: A brand says something about the buyers
values
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4. Personality: A brand also projects personality
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The challenge of branding is to develop a deep
set of meanings for the brand.
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The value of the brand, based on the extent
to which it has a high brand loyalty, name
awareness, perceived quality, strong
brand associations and other assets such as
patents, trademarks and channel
relationships.