MODULE-IV

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1.Classification of products, Product mix decisions and line management, Length, width and depth of a line, line analysis,

2.New Product development, stages of product development, kinds of consumers depending on stage of adoption. 3.Adoption process & Brand management
4.Marketing of services

What is Marketing??
Selling? Advertising? Promotions? Making products available in stores? Maintaining inventories?

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All of the above, plus much more!

Marketing = ?

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Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, services to create exchanges that satisfy individual and organizational goals American Marketing Association

Marketing = ?

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Marketing management is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value.

The 4 Ps & 4Cs

Marketing Mix Product Customer Solution

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Convenience Place

Price Customer Cost

Promotion Communication

Difference Between - Sales & Marketing ?

Sales

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trying to get the customer to want what the company produces

Marketing
trying to get the company produce what the customer wants

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Amity Business School

Who is a Customer ??

CUSTOMER IS . . . . .
Anyone who is in the market looking at a product / service for attention, acquisition, use or consumption that satisfies a want or a need

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Customer
CUSTOMER has needs, wants, demands and desires Understanding these needs is starting point of the entire marketing These needs, wants arise within a framework or an ecosystem Understanding both the needs and the ecosystem is the starting point of a long term relationship

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Customers - Problem Solution

As a priority , we must bring to our customers WHAT THEY NEED We must be in a position to UNDERSTAND their problems Or in a new situation to give them a chance to AVOID the problems

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Customer looks for Value

Value
Benefit

= Benefit / Cost
= Functional Benefit + Emotional Benefit

Cost

= Monetary Cost + Time Cost + Energy Cost + Psychic Cost

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Product

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Product is . . . . .
Anything that is offered to the market for attention, acquisition, use or consumption that satisfies a want or a need

PRODUCT MANAGEMENT
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Product is a bundle of satisfaction or a solution to a customers problem that a customer buys. Marketing is 4 Ps Technology is becoming almost standardized. Possible differentiation tools are Price & Promotion. Product = Tangible Benefit + Intangible Benefits Levitt believes that future competition will be in the AUGMENTED PRODUCT CATEGORY.

What are Goods and Services?

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Service: intangible task that satisfies consumer or business user needs Goods-services continuum: device that helps marketers to visualize the differences and similarities between goods and services

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Core Product
Guarantees & warranties After sales services Delivery points & systems

Replacement Attributes Styling or returns Colour policy Instructions Core Manual Product Payment options (for high priced prodcts)

Formal Product

Quality

Brand Name Packaging

Installation (for bulky products)

Customer complaint management

Augmented Product

The total product concept

Future Product

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5 Level of PRODUCT
(Customer Values)

Core Benefit
Basic Product Expected Product Augmented product (Consumption System) Potential Product

LEVITTs CLASSIFICATION

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What is a Service? Defining the Essence

An act or performance offered by one party to another (performances are intangible, but may involve use of physical products) An economic activity that does not result in ownership A process that creates benefits by facilitating a desired change in customers themselves, or their physical possessions, or intangible assets

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Characteristics that distinguish services from goods:

Intangibility Inseparability Perishability Difficulty of standardization Frequent requirement of interaction between buyer and Seller Variability

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Major Characteristic of Services

Intangibility Services are intangibility cannot be seen, tasted, felt, heard or smelled before purchase. Inseparability - Services are produced and consumed simultaneously. Variability or Heterogeneity Services are highly variable

Perishability Services cannot be stored.

Non Ownership - Services are rendered but there is no transfer of title

Classification of Services
Banking

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Pure Intangible Service

Good Transportation Major Service with Minor Product Business Hotels Product = Service Computers Major Product with Minor Services Materials / Components

Pure Tangible Product

Classifying Goods and Services for Consumer and Business Markets

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Consumer products: products destined for use by ultimate consumers Business (or B2B) products: those that contribute directly or indirectly to the output of other products for resale also called industrial or organizational products

Types of Consumer Products

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Convenience product: good or service that consumers want to purchase frequently, immediately, and with minimal effort Impulse goods and services are purchased on the spur of the moment. Staples are convenience goods and services that consumers constantly replenish to maintain a ready inventory. Emergency goods and services are bought in response to unexpected and urgent needs.

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Shopping product: good or service purchased only after the customer compares competing offerings from competing vendors on such characteristics as price, quality, style, and color Typically cost more than convenience purchases. Include tangible items. Shopper lacks complete information and gathers information during the buying process. Specialty product: good or service with unique characteristics that cause the buyer to value it and make a special effort to obtain it. Unsought product: good or service marketed to consumers who may not yet recognized in the need for it

Business Products
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Installation: major capital investment by a business buyer that typically involves expensive and relatively long-lived products, such as a new factory or piece of heavy machinery. Accessory equipment: capital product, usually less expensive and shorter-lived that insulation, such as a laptop computer. Component parts and materials: finished business products that become parts of buying firms final products, such as spark plugs for new cars. Raw materials: business product, such as a farm product (wheat, cotton, soybeans) or natural product (coal, lumber, iron ore) that become part of a final product. Supplies: products that represent regular expenses necessary to carry out a firms daily operations but are not part of the final product. Supplies are sometimes called MRO items.

Development of Product Lines

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Product Line: a series of related products. The following situations suggest a sub optimal product mix: a) Excess capacity in a firms manufacturing, warehousing or transportation facilities b) High proportion of profits from a small percentage of product items c) Insufficient use of sales force contacts and skills d) Steadily declining sales or profits Product mix decisions are dictated by the changes occurring in the market place.

The Product Mix

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A companys assortment of product lines and individual offerings Product Width--the number of product lines offered. Product Length--the number of different products a firm sells. Product Depth--variations in each product that a firm markets in its mix.

Product Items, Lines, and Mixes

Product Item

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A specific version of a product that can be designated as a distinct offering among an organizations products.

Product Line

A group of closely-related product items.

Product Mix

All products that an organization sells.

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Product Mix
Width how many product lines a company has Length how many products are there in a product line Depth how many variants of each product exist within a product line Consistency how closely related the product lines are in end use

Gillettes Product Lines & Mix

Depth of the product lines Width of the product mix
Blades and razors
Fusion 5 blade Mach 3 Turbo Mach 3 Sensor Trac II Atra Swivel Double-Edge Lady Gillette Super Speed Twin Injector Techmatic

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Toiletries
Series Adorn Toni Right Guard Silkience Soft and Dri Foamy Dry Look Dry Idea Brush Plus

Writing instruments
Paper Mate Flair S.T. Dupont

Lighters
Cricket S.T. Dupont

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Product Mix Decisions A firm may lengthen or widen its product mix. (Line Stretching) A Company may decide to add variations that will attract new users. (Line Filling) A product may be pruned or altered, and new product may extend the product life cycle Line extension: introduction of a new product that is closely related to other products in the firms existing line

The Product Life Cycle

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Introduction Stage
Firm works to stimulate demand for the new market entry Promotional campaigns stress features Additional promotions to intermediaries attempt to induce them to carry the product Although prices are typically high, financial losses are common due to heavy promotional and research-and-development costs

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Growth Stage
Sales volume rises rapidly Firm usually begins to realize substantial profits Success attracts competitors Firm may need to make improvements to the product Additional spending on promotion and distribution may be necessary

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Maturity Stage
Industry sales continue to grow, but eventually reach a plateau Many competitors have entered the market, and profits began to decline Differences between competing products diminish Available supplies exceed industry demand for the first time Competition intensifies and heavy promotional outlays are common

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Decline Stage
Innovations or shifts in consumer preferences cause an absolute decline in industry sales Industry profits fall -- sometimes become losses Firms cut prices in a bid for the dwindling market Manufacturers gradually drop the declining items from their product lines

Extending the PLC

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Marketers usually try to expand each stage of the life cycle for their products as long as possible Product life cycles can stretch indefinitely as a result of decisions designed to: Increase the frequency of use by current customers Increase the number of users for the product Find new uses Change package sizes, labels, or product quality

Locating Products or Brands in their Life Cycle Amity Business School

a) Analysis of historical sales and growth trends in the brand and industry. b) Analysis of recent trends in the market place. c) Analysis of development of short term tactics of competitors. d) Analysis of historical information regarding life cycles of similar and related products. e) Based on the above analysis, project brand or product sales. f) Estimate probable years remaining for the brand or product. g) Fix brand or products position in the life cycle.

New Product Planning

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Price-Promotion matrix
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H P R I C E
Rapid Penetration Slow Penetration Rapid Skimming Slow Skimming

L
H L Promotion

Product Development Amity Business School Strategies

Product positioning: consumers perceptions of a products attributes, uses, quality, and advantages and disadvantages in relation to those of competing brand. Cannibalization: a loss of sales of the current product due to competition from a new product in the same line

The Consumer Adoption Process

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Adoption process: Stages that consumers go through in learning about a new product, trying it, and deciding whether to purchase it again. Awareness Interest Evaluation Trial Adoption or rejection Consumer innovator: People who purchase new products almost as soon as the products reach the market Diffusion process: Process by which new goods or services are accepted in the marketplace

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Amity Business School

Rate of Adoption Determinants Characteristics of a product innovation that influence its adoption rate include: Relative advantage Compatibility Complexity Possibility of trial use Observability

Six Reasons for New product

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1. New to the world products

2. New product lines

3. Adding to the existing product lines.

4. Improvements & revision of existing products

5. Repositioning

6. Cost reductions
SONY CNG Auto DELL COMPUTERS NOKIA ORACLE ACE

Defining New Products

New to Organization(30%)
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10% new to the world 20% new product lines

26% addition to existing product lines

Changes within existing product line 70%

26% revisions or improvements

11% repositioning
7% cost reductions
11.3

CHALLENGES
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Shortage of important ideas in certain areas Fragmented markets Shorter Product Life Cycle Social & Govt. constraints Cost of Development Capital Shortages Faster required development time

New Product Development Process

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Idea Generation Identifying Prospective Customers/ Defining Target Market Concept Development and Testing Feasibility Analysis Product Development Test Marketing Commercialization
11.5

MANAGING NEW DEVELOPMENT PROCESS

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1. IDEA GENERATION : New product ideas come from many sources including: Sales force Customers Employees R&D specialists The competition Suppliers Retailers Independent inventors

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2. IDEA SCREENING : Screening separates ideas with

commercial potential from those that cannot meet company objectives Promising, Marginal, Rejects Idea Avoid two errors Drop error Go error Absolute product failure Partial product failure Relative product failure

3. Concept Development & Testing:

Concept development Product Testing Category Brand

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4.Testing: Product concept to tgt audience

Rapid prototyping, Virtual testing

Consumers can be assessed on following basis: 1.Communicability & believability 2. Need level 3. Gap level 4. Perceived value 5. Purchase intention 6. User tgt, purchase occasions & frequency

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5. Marketing Strategy Development Target mkt Size, Structure & Behavior Planned product Positioning Sales, Market share & Profit goals

6.Business Analysis
Estimating total Sales Estimating Cost & Profits Estimated Break-Even Analysis

6. Market Testing:
When Adoption Mass Market Approach Where To Whom

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7.Commercialization: Timing, Place & Strategy

Sequential set of activities for launching a new product. Loyalty Heavy user target marketing

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Producers / Company criteria for New Product

1. Adequate demand for the product. 2. Product must satisfy key financial criteria. 3. Product Compatibility with environmental standards. 4. Product must fit into companys present marketing structure.

Middlemens criteria for New Product

1. Good working relationship with producers.
2. Compatible distribution policies & practices. 3. Financial compatibility.

EMERGING ISSUES IN PRODUCT MGT

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1. Adapting products to local conditions. 2. Threat from duplication. 3. Quality Improvement