U1 Topic 1 Concept of Marketing

Mix: Introduction
 AKTUTHEINTACTONE7 MAR 2019 1 COMMENT
Marketing Mix is a tool which a marketer uses to formulate a product/service offer for
customers. Marketing mix is done using the 4Ps of marketing – Product, Place, Price,
Promotion and 7Ps in case of service- Physical Evidence, People, and Process. The term
Marketing Mix is attributed to Neil Bordon. The term is named marketing mix because it suggest
how a marketer mixes various elements (Product, Price, Place, Promotion etc) in order to make a
relevant/just right offering to the customer. The main objective of marketing mix strategy is to
make the right product at correct price at the right place with right promotion..

Product Marketing Mix

When a company is offering products or goods, it comes under the purview of the product
marketing mix. It talks about the product strategies, pricing strategies, place where the products
are distributed and promotional strategies. Elements of a product marketing mix can be explained
in detail as below:

1. Product
It is the main part of the offering, the product itself. It is most important aspect of the mix.
Product is something which has some functional value and can be used by the customer to
achieve something. A marketer needs to define his product very carefully thinking about its
value, its USP, features, competition etc.

2. Price
 Pricing the second most important element in our marketing mix. This is value we will get in
exchange for our product. This is what the customer will pay in return for the utility of the
product. Pricing is mainly determined by the cost of the product and also how much the customer
would be willing to pay. If we price it too high no one buys, if we price it too low, company
makes losses. So we have to devise the right pricing strategy to make our marketing mix perfect.

3. Place
Also called the Distribution. If we are making a product as the right price, that is not enough, we
need to make it available at the right place too. The customer mostly would not come to you until
and unless our product and price is unbeatable. The product needs to be where customer is likely
to buy. If we are soft drink manufacturer and the product is not available in grocery stores,
supermarkets, restaurants etc then the first two elements of marketing mix are of no use and the
offering fails.

4. Promotion
Also referred to as Communication about the product. This is the 4th element in marketing mix
which means the communication done about the product to the customer. Advertising on TV,
print and digital media would come under promotion.

Thus, the 4Ps or marketing mix is valid for every company, whether it is a product or a service
company

Service Marketing Mix / Extended Marketing Mix

In case of a service brand like a restaurant, telecom service, hospitality etc, there are additional
points apart from the 4Ps. The additional Ps i.e. physical evidence, people and processes are
collectively known as the service marketing mix. These can be described as below:

5. Physical Evidence
A service is intangible but there has to be a reassurance to the customer that service happened. It
can be a receipt of a service or may be an invoice. Physical evidence should be positive meaning
that customer should be assured that service completed as expected.

6. People
These are the employees who help deliver the service e.g. delivery boy or a cab driver. They may
become the face of the service hence are very important that is why very important to choose
right people.

7. Process
The steps taken for the delivery of the service. The process is very crucial. The process should
not only consist of the positive path but should also consider the negative paths to address issues
in the service delivery.

E.g. Complain management, reverse supply chain etc.

All these help in understand the marketing mix for a service based business.

Traditional Marketing Mix 4Ps, & 4 Cs

Traditional Marketing Mix 4Ps
After successful market analysis, planning, and strategy, marketers must design a
marketing mix made up of factors the company can control to influence demand such as,
product, price, place, and promotion (the 4Ps). Marketing mix is defined as the set of
tactical marketing tools (4Ps) that a business blends to produce the response it wants in the
target market (Kotler & Armstrong, 2014). The picture below briefly describes each of the
4Ps.

The 4Ps are used when referring to a business’s point of view, instead of the customer’s
point of view. There is another part to the marketing mix called the 4Cs. Marketers use the
4Cs in the marketing mix to market in a more customer-centric way, rather than looking at
 how each aspect of marketing is seen by a business. Each C correlates with one of the P’s.
The 4Cs are customer solution/value, customer cost, convenience, and communication
(Kotler & Armstrong, 2014).

4C’s of Marketing Mix – Modification of 4P’s

1. Customer.
2. Cost.
3. Convenience.
4. Communication.

1. CUSTOMER
Customer or Consumer is the king in the competitive world. In the competitive environment,
the product will not create its own demand if it isn’t wanted by the consumer.

First, you must need to study the consumer needs and demands and then develop the
product as it satisfies the needs, wants and demands of desired customer or consumer
demand.

2. COST
Price is only a subset of the total cost incurred to satisfy the want or need of customer or
consumer. Cost is the most important element of marketing mix which affects the decision
of the customers.

The marketers must need to give special attention to the cost of a product or services.

3. CONVENIENCE
Convenience is the most important tools for more sales. The convenience of purchase
products helps most of customers or consumers to choose that product.

Take an example heavy machineries products like fridge and air cooler.

If the companies sell these products and do not give you delivery and installation service.

You may not buy the product as you won’t be ready to pick up the machine and install it
yourself. You will be looking for your own convenience product.

4. COMMUNICATION

A marketer should consider the communication instead of promotion.

Promotion is manipulative, it starts from the seller while Communication requires a give and
take between the buyer and seller.

Service Marketing Mix
Services marketing is simply strategizing your marketing for the provision of services both
in the context of a business serving a consumer and as a business serving another
business. These include tax and accounting services, the hotel industry, airlines, telecoms,
hairdressers, tailors, dry cleaners, and so on. It may also include services that are
contained in what is a traditional physical product’s sales environment, such as tech and
customer support.

A service is defined as any economic activity that is not tangible, not stored, and does not
result in the transfer of ownership.The need for extension is due to high degree of direct
contact between the firm and the customer, the highly visible nature of the service
production process,and simultaneous

rproduction and consumption of services.

The 7Ps of Service Marketing

The Service

1. Product

Physical products can be inspected and tried before buying but pure services are intangible.
A customer cannot go to a showroom to see a medical operation that he is considering.
This means that customers of services suffer higher perceived risk in their decision-making
process.

They do not know whether they have purchased the right service until they have used it and
in some cases like medical service and car service, they cannot be sure whether they have
received the right service long after they have consumed the service.

The three elements of the extended marketing mix—people, physical evidence and
processes provide clues about the quality of the service to the customer, and are crucial in
influencing the customers’ perception of service quality.

2. Promotion

The intangible elements of service are difficult to communicate. It may be difficult to

represent courtesy, hard work and customer care in an advertisement. The idea then is to
use tangible cues that will help customers understand and judge the service.

A salesperson can explain details of a personal health plan can answer questions and
provide reassurance. Because of high perceived risk inherent in buying services, sales
people should develop lists of satisfied customers to be used in reference selling. Sales
people need to be trained to ask for referrals.Word-of-mouth publicity is critical to success
because of the experimental and experiential nature of services. Talking to people who
have visited a resort is more convincing than reading holiday brochures.

3. Price

Price is an important tool in marketing of service. Since it is often difficult to evaluate a

service before purchase, price acts as an indicator of perceived quality. For example, a
patient expects a surgeon to charge high fees, otherwise he cannot be good.

Price is also an important tool in managing demand. Bars charge higher rates in the
evenings when they expect a lot of rush. Low prices can also attract new customers who
cannot afford to or do not want to pay the high prices charged in the evenings. The facility is
more evenly utilized throughout the day. Matching demand and supply is critical in services
because services cannot be stored. Price sensitivity is a key segmentation variable in
service sector. Some customers are willing to pay a much higher price than others. Time is
often used to segment price sensitive and insensitive customers. Long-distance phone calls
are cheaper at some part of the day than others.

Some customers may be willing to pay more to get the service early or whenever they want
it. It is often debatable if a patient willing to pay more than the normal fees should be
allowed access to a doctor before another patient who has been waiting for his turn.

4. Place
Distribution channels for services are more direct. There is no storage of services.
Production and consumption is simultaneous, and hence direct contact between customer
and service provider is essential for most services. Growth for many service companies
means opening new facilities in new locations, due to simultaneous production and
consumption. The evaluation of locations is a critical skill for such services.

Expansion often means a multi-point strategy because the whole setup for service
production and marketing has to replicate. Success of many service providers has been due
to their ability to choose profitable new sites and replicating their operations at the new
sites.

New technologies permit service companies to provide services without customers coming
to their facility. Information and financial services are leading this revolution. A customer can
carry out transactions with a bank through ATMs, Internet, or the phone. Information
products can be widely distributed through Internet.

But there are many other services where contact between the provider and the customer is
still essential. But service companies should be looking for an alternative to personal
contact with customers for at least a part of the service.

5. People

Service quality is inseparable from quality of service providers. The company has to set
standards to improve quality of service provided by employees and monitor their
performance. Without training and control, employees tend to be variable in their
performance leading to variable service quality. Training is crucial so that employees
understand the appropriate norms of behavior.

A service provider trains its employees to identify and categorize different personality types
of customers, and to modify their behavior accordingly. Employees need to know how much
discretion they have to talk informally to customers.

They also need to control their own behavior so that they are not intrusive, noisy or
immature. They need to adopt a customer-first attitude rather than putting their own
convenience and enjoyment before those of their customers.

Employees of service organizations have to be adept in multiple roles. They have to be

good in their primary task and they have to be good in interpersonal skills. They also should
have empathy to judge the service requirement and mood of the customer, and modify their
service and behavior accordingly.

A service professional has to have the combined skills of an operations man, a marketer
and a human resource manager. It is not easy to find employees with such diverse skills.
The service facility’s marketing mix should be such that it attracts customers desiring similar
benefits from the provider. The target market has to be very homogeneous and the
positioning very precise.

6. Physical Evidence

Physical evidence is about the environment in which the service is delivered and it includes
any tangible goods that facilitate the performance and communication of the service.
Customers look for cues to have an idea about the likely quality of a service by inspecting
the tangible evidence.

Prospective customers may peep through a restaurant window to check the appearance of
the waiters, the decor and the furnishings. The layout of a service operation has to balance
the operational need for efficiency and marketing desire for effectively serving the customer.

Service providers should research the concerns of the customer regarding the service and
also find out the cues that the customer will be searching to get an idea of that part of the
service which is of concern to him. The service provider should strengthen those cues.

7. Process

These are the procedures, mechanisms and flow of activities by which a service is delivered
to customers. Self-service cafeteria is very different from a restaurant. The company needs
to research the requirements of its customers and set its processes accordingly so that the
required service is delivered. Since requirements of customers vary widely, processes
cannot be standardized.

But if a process is allowed too much flexibility, the efficiency of the facility goes down.
Therefore customer requirements should not be allowed to vary widely. Through targeting
the smaller segment of customers, variations in their requirements can be controlled.

The process is important because in some services, they are visible to customers.
Sometimes the effectiveness of a process can be compromised in the effort to make it look
good to the customer. Some patients feel good when they are extensively examined by the
doctor though it may not be necessary.

Some processes in personal grooming and hair care saloons are not really required but
service professionals have to carry them out because customers have come to expect
them.

U1 Topic 4 Developing of an
Effective Marketing Mix
The marketing mix consists of 4 major elements: product, price, promotion and place.
These ‘4-Ps’ are the key decision areas that marketers must manage so that they satisfy or
exceeded customer needs better than the competition. In other words, decisions regarding
the marketing mix form a major aspect of marketing concept implementation. At this point,
it’s useful to examine each element briefly so that we can understand the essence of
marketing mix decision-making.

Why is the Marketing Mix Important?

In your day-to-day business activities it’s difficult to turn your attention to the big picture,
especially when you’re putting out fires left and right.

Your marketing mix provides a roadmap for your business objectives. It keeps you on track,
while keeping your target market in the forefront of your mind.

Your marketing mix will help you make sure your business is marketing the right product, to
the right people, at the right price and time.

10 Steps to an Effective Marketing Mix

Use these 10 steps to assist you in building your perfect marketing mix for a successful
product offering.

Step 1. Goals and Objectives

To create the right marketing mix you must first clearly define what you want the end result
to be – more customers, brand awareness, higher sales, etc.

Every marketing plan has its own marketing goals. Also ensure you have set a specific time
frame in which to achieve your goals.

Step 2. Establish Your Budget

 How much money are you willing to spend on product innovation, consumer research and
product promotion?

Step 3. Determine Your Unique Selling Proposition (USP)

Describe the benefits users will experience from using your product or service.  What
unique problem are you solving better than anyone else?

For example, Tom Shoes gives a new pair of shoes to a child in need for every pair you
purchase.

Step 4. Who is Your Target Market?

In order to communicate effectively with your audience, you need to know who they are and
how they prefer to be communicated with.

Create an in depth profile of your ideal customer. Make sure you’ve gathered enough
consumer data to develop a complete picture of your ideal buyer.

Step 5. Ask Your Customers Advice

 What do they think of your product?

 How satisfied are they with the quality?
 Are the benefits apparent?
 How is your product effectively or not effectively meeting their needs?

Use their answers and the language they used in your marketing material. You’ll appear
more relatable and approachable to your audience.

Step 6. Define Your Product in Detail

Take your time describing the specific qualities and value of your product. Look for the
unique features that show your product’s worth.

Step 7. Know Your Distribution Channels

Identify the places your product will be marketed – which distribution channels you’ll make
use of.

Your choice of distribution channel will influence your pricing and your promotion decisions.

Depending on your audience and product your main options will be:

 Selling to wholesalers who will sell to retail outlets, who will then sell to the
consumer.
 Selling directly to the retail outlet.
 Selling directly to your customers.

Step 8. Create a Pricing Strategy

You need to discover clever ways of differentiating your product on price. Research your
competitors and make sure you’re not overcharging your customers.

You will also need to consider what your target audience might be willing to pay and what it
costs to actually produce your product.

Step 9. Choose Your Promotional Techniques

Your target audience needs to be made aware of your product offering.

Successful promotion of your product includes various elements, like:

 Direct Marketing: Directly connecting with carefully targeted individuals to cultivate

lasting relationships. For example, catalogues, telephone marketing, and mobile marketing.
Used for direct outreach to prospects in a database or sales list.
 Public relations: Press releases, exhibitions, sponsorship deals and conferences.
Used for getting newsworthy attention.
 Advertising: Television, radio and print media will be your offline focus. Used for
introducing your audience to new products and services.
 Personal selling: Personal presentation by your sales force. Demonstrating how
your product works is key. Used for selling expensive, specialized and technologically
advanced products.
 Sales promotion: Short-term incentives to encourage a purchase. This includes
discounts, promotions, and payment terms. Used for getting people to use your product
more often and to gain new customers.
 Word of mouth: Creating positive word of mouth via your sale staff,
recommendations from buyers and social media. Used for boosting brand awareness.

Step 10. Use Inbound Marketing

The 4Ps of marketing creates the basis of your marketing strategy, but inbound marketing
also plays a vital role in developing your marketing mix.

An effective inbound marketing mix should include:

 Your Website: Customers today want to interact with your brand and newly
developed products. Use your website to fulfil this need for interaction. Make sure your
website is quick loading, impactful and easy to navigate.
 Search Engine Optimization (SEO): In order for customers to interact with your
website, they must be able to find it first. Use descriptive keywords to help search engines,
like Google, direct users to your website.
 Email Marketing: One of the quickest, most direct ways to communicate with leads
and customers. You need to continually collect prospects and customer contact information
to grow your database and follow-up on a regular basis.
 Social Media: Besides having a website, you should use popular social networking
sites to distribute your message and create brand awareness. Twitter and Facebook are
invaluable for describing existing products, introducing new products, offering promotions
and announcing sales.
 Blogging: Blogging will help your business stay top of mind by putting out regular
content. Host the blog on your website and write good content, making sure to respond to
each blog comment.

Conclusion

A well-developed marketing mix will help you develop products and services that better
serve the wants and needs of your target market.

Done right, your market mix will help your customers understand why your product or
service is better than those of you competitors.

Although the 4Ps should remain core to your marketing mix, inbound marketing should also
form part of your overall marketing strategy. Use these 10 steps to help you develop your
perfect marketing mix

Managing and Designing

Marketing Mix
nce a firm has defined its target market and identified its competitive advantage, it can
create the marketing mix, which is based on the 5Ps discussed earlier, that brings a
specific group of consumers a product with superior value. Every target market requires a
unique marketing mix to satisfy the needs of the target customers and meet the firm’s goals.
A strategy must be constructed for each of the 5Ps, and all strategies must be blended with
the strategies of the other elements. Thus, the marketing mix is only as good as its weakest
part. For example, an excellent product with a poor distribution system could be doomed to
failure. An excellent product with an excellent distribution system but an inappropriate price
is also doomed to failure. A successful marketing mix requires careful tailoring.

Product Strategy
Marketing strategy typically starts with the product. Marketers can’t plan a distribution
system or set a price if they don’t know exactly what product will be offered to the market.
Marketers use the term product to refer to goods, services, or even ideas. Examples of
goods would include tires, MP3 players, and clothing. Goods can be divided into business
goods (commercial or industrial) or consumer goods. Examples of services would be hotels,
hair salons, airlines, and engineering and accounting firms. Services can be divided into
consumer services, such as lawn care and hair styling, or professional services, such as
engineering, accounting, or consultancy. In addition, marketing is often used to “market”
ideas that benefit companies or industries, such as the idea to “go green” or to “give blood.”
Businesses often use marketing to improve the long-term viability of their industries, such
as the avocado industry or the milk industry, which run advertising spots and post social
media messages to encourage consumers to view their industries favorably. Thus, the heart
of the marketing mix is the good, service, or idea. Creating a product strategy involves
choosing a brand name, packaging, colors, a warranty, accessories, and a service program.

Marketers view products in a much larger context than is often thought. They include not
only the item itself but also the brand name and the company image. The names Ralph
Lauren and Gucci, for instance, create extra value for everything from cosmetics to bath
towels. That is, products with those names sell at higher prices than identical products
without the names. Consumers buy things not only for what they do, but also for what they
mean.

With their computerized profile-matching capabilities, online dating services are a high-tech
way to make a love connection. Today’s date-seeking singles want more than automated
personals, however. They want advice from experts. At Match.com, popular shrink Dr. Phil
guides subscribers toward healthy relationships. At eHarmony.com, Dr. Neil Clark Warren
helps the lovelorn find a soulmate. How do internet dating services use various elements of
the marketing mix to bolster the effectiveness of their product strategies? (Credit: Bixentro/
Flickr/ Attribution-2.0 Generic (CC BY 2.0))

Pricing Strategy
Pricing strategy is based on demand for the product and the cost of producing that
product. However, price can have a major impact on the success of a product if the price is
not in balance with the other components of the 5Ps. For some products (especially service
products), having a price that is too low may actually hurt sales. In services, a higher price
is often equated with higher value. For some types of specialty products, a high price is
expected, such as prices for designer clothes or luxury cars. Even costume jewelry is often
marked up more than 1000 percent over the cost to produce it because of the image factor
of a higher price. Special considerations can also influence the price. Sometimes an
introductory price is used to get people to try a new product. Some firms enter the market
with low prices and keep them low, such as Carnival Cruise Lines and Suzuki cars.
Others enter a market with very high prices and then lower them over time, such as
producers of high-definition televisions and personal computers.

Place (Distribution) Strategy

Place (distribution) strategy is creating the means (the channel) by which a product flows
from the producer to the consumer. Place includes many parts of the marketing endeavor. It
includes the physical location and physical attributes of the business, as well as inventory
and control systems, transportation, supply chain management, and even presence on the
web. One aspect of distribution strategy is deciding how many stores and which specific
wholesalers and retailers will handle the product in a geographic area. Cosmetics, for
instance, are distributed in many different ways. Avon has a sales force of several hundred
thousand representatives who call directly on consumers. Clinique and Estée Lauder are
distributed through selected department stores. Cover Girl and Cotyuse mostly chain
drugstores and other mass merchandisers. Redken products sell through hair
salons. Revlon uses several of these distribution channels. For services, place often
becomes synonymous with both physical location (and attributes of that location such as
atmospherics) and online presence. Place strategy for services also includes such items as
supply chain management. An example would be that an engineering firm would develop
offices with lush interiors (to denote success) and would also have to manage the supplies
for ongoing operations such as the purchase of computers for computer-aided drafting.

Promotion Strategy
Many people feel that promotion is the most exciting part of the marketing mix. Promotion
strategy covers personal selling, traditional advertising, public relations, sales promotion,
social media, and e-commerce. These elements are called the promotional mix. Each
element is coordinated with the others to create a promotional blend. An advertisement, for
instance, helps a buyer get to know the company and paves the way for a sales call. A good
promotional strategy can dramatically increase a firm’s sales.

Public relations plays a special role in promotion. It is used to create a good image of the
company and its products. Bad publicity costs nothing to send out, but it can cost a firm a
great deal in lost business. Public relations uses many tools, such as publicity, crisis
management strategy, and in-house communication to employees. Good publicity, such as
a television or magazine story about a firm’s new product, may be the result of much time,
money, and effort spent by a public-relations department. Public-relations activities always
cost money—in salaries and supplies. Public-relations efforts are the least “controllable” of
all the tools of promotion, and a great deal of effort and relationship-building is required to
develop the ongoing goodwill and networking that is needed to enhance the image of a
company.

Sales promotion directly stimulates sales. It includes trade shows, catalogs, contests,
games, premiums, coupons, and special offers. It is a direct incentive for the customer to
purchase the product immediately. It takes many forms and must adhere to strict laws and
regulations. For example, some types of contests and giveaways are not allowed in all the
states within the United States. McDonald’s discount coupons and contests offering money
and food prizes are examples of sales promotions.

Social media is a major element of the promotion mix in today’s world. Most businesses
have a corporate website, as well as pages on different social media sites such
as Facebook, Pinterest, and Twitter. Social media is more powerful as a channel for
getting the company’s message out to the target market (or general public) than traditional
advertising, especially for some target markets. Companies (and even individuals) can use
social media to create instant branding. E-commerce is the use of the company website to
support and expand the marketing strategies of the 5Ps. It can include actual “order online”
capabilities, create online communities, and be used to collect data from both existing and
potential customers. Some e-commerce websites offer free games and other interactive
options for their customers. All of this activity helps to build and strengthen the long-term
relationships of customers with the company.

Not-for-Profit Marketing
Profit-oriented companies are not the only ones that analyze the marketing environment,
find a competitive advantage, and create a marketing mix. The application of marketing
principles and techniques is also vital to not-for-profit organizations. Marketing helps not-for-
profit groups identify target markets and develop effective marketing mixes. In some cases,
marketing has kept symphonies, museums, and other cultural groups from having to close
their doors. In other organizations, such as the American Heart Association, marketing
ideas and techniques have helped managers do their jobs better. In the private sector, the
profit motive is both an objective for guiding decisions and a criterion for evaluating results.
Not-for-profit organizations do not seek to make a profit for redistribution to owners or
shareholders. Rather, their focus is often on generating enough funds to cover expenses or
generating enough funds to expand their services to assist more people. For example, the
Methodist Church does not gauge its success by the amount of money left in offering plates.
The Museum of Science and Industry does not base its performance evaluations on the
dollar value of tokens put into the turnstile. An organization such as the American Red
Cross raises funds to provide basic services, but if enough funds are raised (beyond just
the amount to cover expenses), those funds are used to expand services or improve current
services.

Product Management: Introduction

Product Management is an organizational function that guides every step of a product’s
lifecycle: from development, to positioning and pricing, by focusing on the product and its
customers first and foremost. To build the best possible product, product managers
advocate for customers within the organization and make sure the voice of the market is
heard and heeded.

Product Management is the development, marketing and sale of a product to a customer.

Product management starts from when a product is merely just an idea and continues all
the way through the lifecycle of a product, including when the product arrives in the
customer’s home. A product manager drives the strategy for a product or group of
products. Product managers are often responsible for educating the executive staff on the
need for the product in the market.

Phases of Product Management

 A product manager is the product champion, meaning that they are the person who stands
behind all phases of the product from inception to development to release. Although the
roles vary by company the phases are similar for each product manager.

A product manager role starts with an idea that is walked through these product stages:

(I) Define market and customer

(II) Define problem and value proposition

(III) Define requirements

(IV) Research competitors and products

(V) Sales and marketing launch

(VI) Stakeholder communications

(VII) Report and analyze results

Level of Products
According to Philip Kotler, who is an economist and a marketing guru, a product is more
than a tangible ‘thing’. A product meets the needs of a consumer and in addition to a
tangible value this product also has an abstract value. For this reason Philip Kotler states
that there are five product levels that can be identified and developed. In order to shape this
abstract value, Philip Kotler uses five product levels in which a product is located or seen
from the perception of the consumer. These 5 Product Levels indicate the value that
consumers attach to a product. The customer will only be satisfied when the specified value
is identical or higher than the expected value.

 Need: A lack of a basic requirement.

 Want: A specific requirement of products to satisfy a need.
 Demand: A set of wants plus the desire and ability to pay for the product.

Customers will choose a product based on their perceived value of it. Satisfaction is the
degree to which the actual use of a product matches the perceived value at the time of the
purchase. A customer is satisfied only if the actual value is the same or exceeds the
perceived value. Kotler attributed five levels to products:

The five(5) product levels are:

1. Core Benefit
The fundamental need or want that consumers satisfy by consuming the product or service.
For example, the need to process digital images.

2. Generic/Basic Product
A version of the product containing only those attributes or characteristics absolutely
necessary for it to function. For example, the need to process digital images could be
satisfied by a generic, low-end, personal computer using free image processing software or
a processing laboratory.

3. Expected Product
The set of attributes or characteristics that buyers normally expect and agree to when they
purchase a product. For example, the computer is specified to deliver fast image processing
and has a high-resolution, accurate colour screen.

4. Augmented Product
The inclusion of additional features, benefits, attributes or related services that serve to
differentiate the product from its competitors. For example, the computer comes pre-loaded
with a high-end image processing software for no extra cost or at a deeply discounted,
incremental cost.
5. Potential Product
This includes all the augmentations and transformations a product might undergo in the
future. To ensure future customer loyalty, a business must aim to surprise and delight
customers in the future by continuing to augment products. For example, the customer
receives ongoing image processing software upgrades with new and useful features.

Classification of Product
Classifying Products into meaningful categories helps marketers decide which strategies
and methods will help promote a business’s product or service. Many types of classification
exist. For example, marketers might categorize products by how often they are used. One-
time-use products, such as vacation packages, require completely different marketing
strategies than products customers use repeatedly, such as bicycles. Product classification
helps a business design and execute an effective marketing plan.

1. Convenience
Products
Convenience products involve items that don’t require much customer effort or forethought.
Food staples often fall into this category, because customers can buy them nearly
everywhere and at roughly the same prices. Marketing convenience products can be a
challenge if there are many similar products competing for the customer’s attention and
driving down the price.

Following are the main features of Convenience products:

(i) These products are easily available and require minimum time and effort.

(ii) They are available at low prices.

 (iii) These are essential goods; so their demand is regular and continuous.

(iv) They have standardized price.

(v) The supply of these goods is more than the demand; therefore competition for these
products is very high.

(vi) Sales promotion schemes such as discount, free offer, rebate etc. help in marketing of
these products.

2. Shopping Products
Customers are willing to invest time and effort to buy shopping products. For example, a
customer might compare ingredients, prices and safety information for a variety of
deodorants before making a final purchase. Often, the most effective marketing approach is
to use advertising and heavy promotions to develop brand preference and loyalty among
customers, according to the book “Principles of Marketing,” by Ashok Jain

Following are the main features of shopping products:

(i) They are durable in nature

(ii) These goods have high unit price as well as profit margin.

(iii) Before making final purchase, consumer compares the products of different companies.

(iv) Purchases of these products are pre planned.

(v) An important role is played by the retailer in the sale of shopping products.

3. Specialty Products
Specialty products require significant thought or effort. For example, a well-known luxury car
model might be available at just a few local dealerships, meaning an interested customer
has restricted options. Specialty products tend to be expensive, durable goods, often
involving authorized dealerships and personal selling.

Following are the main features of specialty products:

(i) The demand for such products is relatively infrequent.

(ii) These products are very costly.

(iii) These are available for sale only at few places.

 (iv) An aggressive promotion is essential for the sale of such products.

(v) Many of the specialty product require after sales service too.

4. Unsought Products
Unsought products are items customers aren’t aware of or don’t often think about. New
products that have no brand recognition fall under this classification, as do certain types of
insurance. The marketing problems presented by an unsought product are as follows. First,
you must convince customers they need the product or service. Second, you must convince
customers to buy the product or service from you and not your competitor.

Following are some examples of unsought products

 Those innovative and new products you don’t know

 Life Insurance Policy
 Prepaid funeral Services
 Accidental and health insurance
 Smoke detectors
 Survival gears

Definition of Customer Value Hierarchy

Customer value hierarchy is a system of worth that businesses across the country, both
large and small, have turned to as a means of determining customer satisfaction. Businesses
have shifted focus to a customer satisfaction model as a means of winning repeat sales and
a measure of loyalty in a market that provides consumers with many purchasing options.
Customer value hierarchy provides a rubric for companies to achieve that goal. Customer
Value Definition
Customer value is the satisfaction a consumer feels after making a purchase for goods

or services relative to what she must give up to receive them. A consumer doesn't

consider value just in terms of money spent, but can also consider the time it takes to

obtain a purchased product and interactions with customer service personnel. Customer

value has several tiers and is best thought of as a hierarchy, according to Destination

Marketing's website. This hierarchy determines the importance of services in the mind

of the consumer in terms of what the consumer expects and does not expect from the

purchase experience.
Basic and Expected Levels
The first two tiers of customer value hierarchy encompass the basics of value what a

customer expects from the service experience. For a small or large business, the basics

of customer value are all the requirements of doing business -- having a clean retail

location, sufficient stock to provide a wide selection and adequate staff. What a

customer expects from a service experience varies by industry but usually involves

competitive prices dictated by competition in the market and convenient hours of

operation. A business not providing these basic and expected levels of value cannot

build a high-quality service experience or value for the customer.

Desired Customer Value

Desired value is the third tier of customer value hierarchy and involves what the

customer would like to have from the purchase and service experience. According to

Destination Marketing's website, desired value presents the first opportunity for a small

business to move ahead of competitors by giving the customer desirable add-on

features to the purchase and service experience. For example, a retail location may

provide a consistently friendly customer service experience with staff willing to hunt

around the store with the customer to find the right outfit or specific clothing item.

Unanticipated Customer Value

Unanticipated value for the customer is receiving a service or purchase experience that

the customer literally does not expect. These features can help a small business win

consumer loyalty over the competition and generate repeat sales over time. For

example, providing satisfaction guarantees on all purchases or hiring staff with

significant expertise in the business' industry can provide a customer with a service

experience that exceeds both expectation and desire in terms of value.

Product Hierarchy
Product hierarchy is the classification of a product into its essential components. It is
inevitable that a product is related or connected to another. The hierarchy of the products
 stretches from basic fundamental needs to specific items that satiate the particular needs.
Product hierarchy is better understood by viewing the business as a whole as opposed to
looking at a specific product. Product hierarchy is usually mentioned in the same sentence
with product classification and therefore can be viewed as a way of product classification.

Product hierarchy Levels

Product hierarchy is divided into several levels which are best understood using examples.

These product hierarchy levels include:-

 Product need: The product need is the primary reason for the existence of a
product. For example, motor vehicles exist because people have to and want to travel. This
is the core product need, for example, Toyota vehicles.
 Product family: in product family, the core need satisfied by a product is the focus.
This means that the attention should not be on the individual market but rather the entire
business market. For example, if travelling is the core need, then it can be satisfied by
planes, trains or ships. In this particular case, the product family is travel and for Toyota, the
product family is vehicles.
 Product class: product class occurs when categories are drawn from the same
company. It is similar to product family only that product class doesn’t go outside the
company, unlike product family. Personal computers constitute an instance of product class.
 Product line: A product line consists of the entire group of products included in a
class of products and these products are related because they perform a comparable
function, are purchased by the same group of customers or fall within a certain price range.
An example of a product line is a laptop, which is a portable and wireless type of personal
computer.
 Product type: This refers to the various products within a product line. For example,
under Hyundai I20 product line, we have product types such as I20Astana, I20 sportz and
I20 Magna.
 Product unit: This is also referred to as the stock keeping unit (SKU) and it is a
discrete item within a product type of brand that can distinguish itself by size, price or any
other feature. A product becomes an individual product unit if it is independent and no other
product type is dependent on it.

Product Mix Strategies

Product mix, also known as product assortment, is the total number of product lines that a
company offers to its customers. The product lines may range from one to many and the
company may have many products under the same product line as well. All of these product
lines when grouped together form the product mix of the company.

The product mix is a subset of the marketing mix and is an important part of the business
model of a company.

Product Mix depends on many factors like

 Company Age
 Financial Standing
 Area of Operation
 Brand identity, etc.

Many new companies start with a limited width, length, depth and high consistency of the
product mix, while companies with good financial standing have wide, long, deep and less
consistency of the product mix. Area of operation and brand identity also affects its product
mix.

1. Expansion of Product Mix

Expansion of product mix implies increasing the number of product lines. New lines may be
related or unrelated to the present products. For example, Bajaj Company adds car
(unrelated expansion) in its product mix or may add new varieties in two wheelers and three
wheelers. When company finds it difficult to stand in market with existing product lines, it
may decide to expand its product mix.

For example, Hindustan Unilever Limited has various products in its product mix such as:

 Toilet soaps, detergent cakes, washing powders, etc.

 Cosmetic products,
 Edible items,
 Shaving creams and blades,
 Pesticides, etc.

If company adds soft drink as a new product line, it is the example of expansion of product
mix.

2. Contraction of Product Mix

Sometimes, a company contracts its product mix. Contraction consists of dropping or

eliminating one or more product lines or product items. Here, fat product lines are made
thin. Some models or varieties, which are not profitable, are eliminated. This strategy results
into more profits from fewer products. If Hindustan Unilever Limited decides to eliminate
particular brand of toilet shop from the toilet shop product line, it is example of contraction.

3. Deepening Product Mix Depth

Here, a company will not add new product lines, but expands one or more excising product
lines. Here, some product lines become fat from thin. For example, Hindustan Unilever
Limited offering ten varieties in its editable items decides to add four more varieties.

4. Alteration or Changes in Existing Products

Instead of developing completely a new product, marketer may improve one or more
established products. Improvement or alteration can be more profitable and less risky
compared to completely a new product. For example, Maruti Udyog Limited decides to
improve fuel efficiency of existing models. Modification is in forms of improvement of
qualities or features or both.

5. Developing New Uses of Existing Products

This product mix strategy concerns with finding and communicating new uses of products.
No attempts are made to disturb product lines and product items. It is possible in terms of
more occasions, more quantity at a time, or more varied uses of existing product. For
example, Coca Cola may convince to use its soft drink along with lunch.

6. Trading Up

Trading up consists of adding the high-price-prestige products in its existing product line.
The new product is intended to strengthen the prestige and goodwill of the company. New
prestigious product increases popularity of company and improves image in the mind of
customers. By trading up product mix strategy, demand of its cheap and ordinary products
can be encouraged.

7. Trading Down
The trading down product mix strategy is quite opposite to trading up strategy. A company
producing and selling costly, prestigious, and premium quality products decides to add
lower- priced items in its costly and prestigious product lines.

Those who cannot afford the original high-priced products can buy less expensive products
of the same company. Trading down strategy leads to attract price-sensitive customers.
Consumers can buy the high status products of famous company at a low price.

8. Product Differentiation

This is a unique product mix strategy. This strategy involves no change in price, qualities,
features, or varieties. In short, products are not undergone any change. Product
differentiation involves establishing superiority of products over the competitors.

By using rigorous advertising, effective salesmanship, strong sales promotion techniques,

and/or publicity, the company tries to convince consumers that its products can offer more
benefits, services, and superior performance. Company can communicate the people the
distinct benefits of its products.

Product Mix Example

Coca-Cola has product brands like Minute Maid, Sprite, Fanta, Thumbs up, etc. under its
name. These constitute the width of the product mix. There are a total of 3500 products
handled by the Coca-Cola brand. These constitute the length. Minute Maid juice has
different variants like apple juice, mixed fruit, etc. They constitute the depth of the product
line ‘Minute Maid’. Coca-Cola deals majorly with drinking beverage products and hence has
more product mix consistency.

Product Line Strategies

Why New Products Fail
15 Reasons for New Products Failure:
(i) No Product Point-of-Difference
(ii) Limited Retailer Support
(iii) Poor Product Design
(iv) Established Customer Loyalty in the Market
(v) Weak Launch or Poorly Executed Launch
(vi) Adverse Media Attention
(vii) Aggressive Competitor Actions
(viii) Poor Pricing or Cost Structure
(ix) Weak Supporting Brand Equity
(x) Small Target Market
(xi) No Clear Market Need or Perceived Product Benefits
(xii) Poor Internal Marketing
(xiii) Existing Product Cannibalization
(xiv) Weak Sales for Size of Company
(xv) Insufficient Time for Success

Adoption Process
Adoption process is a series of stages by which a consumer might adopt a NEW product
or service. Whether it be Services or Products, in today’s competitive world, a consumer is
faced with a lot of choices. How does he make a decision to ADOPT a new product is the
Adoption process.

There are numerous stages of adoption which a consumer goes through. These stages may
happen before or even after the actual adoption.

Philip Kotler considers five steps in consumer adoption process, such as awareness,
interest, evaluation, trial, and adoption. On the other hand, William Stanton considers six
steps, such as awareness stage, interest and information stage, evaluation stage, trial
stage, adoption stage, and post-adoption stage.

1.Awareness Stage
 2. Interest and Information Stage
3. Evaluation Stage
4. Trial Stage
5. Adoption Stage
6.Post Adoption Behavior Stage

Diffusion of Innovation
The diffusion of innovation is the process by which new products are adopted (or not) by their
intended audiences. It allows designers and marketers to examine why it is that some inferior
products are successful when some superior products are not.

The Process for Diffusion of Innovation

Rogers’ draws on Ryan and Gross’s work to deliver a 5 stage process for the diffusion of
innovation.

1. Knowledge

The first step in the diffusion of innovation is knowledge. This is the point at which the
would-be adopter is first exposed to the innovation itself. They do not have enough
information to make a decision to purchase on and have not yet been sufficiently inspired to
find out more.

At this stage marketers will be looking to increase awareness of the product and provide
enough education that the prospective adopter moves to the 2nd stage.
 As it was once said (by whom we’re not sure); “If the user can’t find it, it doesn’t exist.”

2. Persuasion

Persuasion is the point at which the prospective adopter is open to the idea of purchase.
They are actively seeking information which will inform their eventual decision.

This is the point at which marketers will be seeking to convey the benefits of the product in
detail. There will be a conscious effort to sell the product to someone at this stage of the
diffusion of innovation.

3. Decision

Eventually the would-be adopter must make a decision. They will weigh up the pros and
cons of adoption and either accept the innovation or reject it.

It is worth noting that this is the most opaque part of the process. Rogers cites this as the
most difficult phase on which to acquire intelligence. This is, at least in part, due to the fact
that people do not make rational decisions in many instances. They make a decision based
on their underlying perceptions and feelings and following the decision they attempt to
rationalize that decision. Thus, obtaining an understanding of the decision making process
is challenging – the reasons given following a decision are not likely to be representative of
the actual reasons that a decision was made.

4. Implementation

Once a decision to adopt a product has been made the product will, in most cases, be used
by the purchaser. This stage is when the adopter makes a decision as to whether or not the
product is actually useful to them. They may also seek out further information to either
support the use of the product or to better understand the product in context.

This phase is interesting because it suggests that designers and marketers alike need to
consider the ownership process in detail. How can a user obtain useful information in the
post-sale environment? The quality of the implementation experience is going to be
determined, to a lesser or greater extent, by the ease of access to information and the
quality of that information.

5. Confirmation

This is the point at which the user evaluates their decision and decides whether they will
keep using the product or abandon use of the product. This phase can only be ended by
abandonment of a product otherwise it is continual. (For example, you may buy a new car
today – you are highly likely to keep using the car for a number of years – eventually,
however, you will probably sell the car and buy a new one).
This phase will normally involve a personal examination of the product and also a social one
(the user will seek confirmation from their peers, colleagues, friends, etc.)

Packaging and Labeling

PACKAGING
Packaging is the science, art and technology of enclosing or protecting products for
distribution, storage, sale, and use. Packaging also refers to the process of designing,
evaluating, and producing packages. Packaging can be described as a coordinated system
of preparing goods for transport, warehousing, logistics, sale, and end use. Packaging
contains, protects, preserves, transports, informs, and sells. In many countries it is fully
integrated into government, business, institutional, industrial, and personal use.

Packaging Types
Packaging consists of several different types. For example, a transport package or
distribution package is the package form used to ship, store, and handle the product or
inner packages.

It is sometimes convenient to categorize packages by layer or function: “Primary,”

“secondary,” etc.

(i) Primary packaging is the material that first envelops the product and holds it. This
usually is the smallest unit of distribution or use and is the package that is in direct contact
with the contents. Primary packaging examples- Aerosol spray can, Bags-In-Boxes,
Beverage can, Wine box, Bottle, Blister pack, Carton, Cushioning, Envelope, Plastic bag,
Plastic bottle.

(ii) Secondary packaging is outside the primary packaging—perhaps used to group

primary packages together. Secondary packaging examples– Box, Carton, Shrink wrap

(iii) Tertiary packaging is used for bulk handling and shipping. Tertiary packaging

examples– Bale, Barrel, Crate, Container, Edge protector, Intermediate bulk, container,
Pallet, Slip sheet, Stretch wrap.

LABELING
Your product’s label delivers your sales message. You can explain what benefits you offer
that competitors don’t, for example, or promote a prize or discount. You also can develop
brand goodwill by showing customers you share their values. For instance, images of happy
families, healthy athletes and green pastures each speak to different types of consumers.

Labels also must fulfill your legal obligations. Food manufacturers, for example, must
publish detailed nutritional information in a specific format and employ marketing terms —
such as “low-fat” or “reduced cholesterol” — that conform to federal regulations. Finally,
your product might need a UPC, or universal product code, especially if it will be sold in
high-volume retail outlets.

The objectives of packaging and package labeling

(i) Physical Protection
(ii) Barrier Protection
(iii) Information Transmission
(iv) Marketing
(v) Security
(vi) Convenience
(vii) Portion Control