Chapter 7 and 8: Product (Marketing 301)

Product
anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need
Core Benefit “Value”
Actual Product
Augmented Product
Three Levels of Product
Core Customer Value
what is the buyer really buying; marketers must first define the core, problem-solving benefits or services that consumers seek; most satisfying customer experience
Self- Actualization
Esteem Needs
Social Needs
Safety Needs
Physiological Needs
Maslow’s Hiearchy
Self-actualization Needs
self-development and realization
Esteem Needs
Self-esteem, recognition, status
Social Needs
sense of belonging, love
Safety Needs
security, protection
Physiological Needs
Hunger, Thirst
Actual Product
need to develop product and service features, a design, quality level, a brand name, and packaging
Augmented Product
offering additional consumer services and benefits; includes after-sale service, warranty, installation, delivery and credit
Convenience Product
Shopping Product
Specialty Product
Unsought Product
Types of Consumer Products
Consumer Product
a product bought by final consumers for personal consumption
Convenience Product
a consumer product that customers usually buy frequently, immediately, and with minimal comparisons
Shopping Product
a consumer product that the customer, in the process of selecting and purchasing, usually compares on such attributes as suitability, quality, price, and style
Specialty Product
a consumer product with unique characteristics or brand identification for which significant group of buyers is willing to make a special purchase effort; expensive
Unsought Product
a consumer product that the consumer either does not know about or knows about but does not normally consider buying; donations, funeral arrangements, life insurance
Industrial Products
a product bought by individuals and organizations for further processing or use in conducting a business
Organization Marketing
for-profit business and non-profit; consists of activities undertaken to create, maintain, or change the attitudes and behavior of target consumers toward and organization
People/Persons Marketing
Politicans, entertainers, pro-athletes, doctors, lawyers; consists of activities undertaken to create, maintain, or change attitudes or behavior toward particular people
Place Marketing
tourism, country-of-origin, immigration
Ideas/Social Marketing
Public health campaigns, environmental campaigns, family planning, human rights; commercial marketing concepts and tools in programs designed to influence individuals behavior to improve their well-being and that of society
Individual Products
Product Lines
Product Mix/Product Portfolio
Three Levels of Product Decisions
Labeling
identifies the product or brand; supports the brand’s positioning; adds personality to brand
Product Lines
a group of products that are closely rated 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 ranges
Product Line Length
number of items in a product line
Stretching
when a company lengthens its product line beyond its current range
Filling
adding more items within the present range of the line
Product Mix/Product Portfolio
the set of all product lines and items that a particular seller offers for sale
Length, width, depth, consistency
Product Mix Dimensions/Ways to Increase its Business
Length
total number of items a company carries within its product lines
Width
different number of product lines the company carries
Depth
number of versions offered for each product in the line
Consistency
how closely related the various product lines are in end use, product requirements, distribution channels, or some other way
Market Offering
physical objects, people, and places
Brand
a maker of identification for a product
Brand Equity
the positive effect that knowing the brand name has on customer response to the product
Product Attributes
Benefit
Beliefs and values
Three parts to Brand Positioning
Product Attributes
lowest level, least desirable level because competitors can easily drop attributes customers only interested in what attributes can do for them
Benefit
brand can be better positioned by associating name with desirable benefit; intangible
Beliefs and Values
engage customers on deep, emotional level
Suggests product’s benefits and qualities
Easy to pronounce, recognize, and remember
Distinctive
Extendable, not limited to one particular product
Translate easily into foreign language
Capable of being registered and legally protected
Desired Qualities of Brand Name Selection
Law of Shape “Rise and Ries”
Ideal shape for a logo is horizontal
Line Extension
Brand Extension
Multibrands
New Brands
Brand Development Strategies
Line Extension
extending an existing brand name to new forms, colors, sizes, ingredients, or flavors of an existing product; existing brand name, existing product category
Brand Extension
using a successful brand name to launch a product in a new category; existing brand name, new product category
Multibranding
multiple brands by the same company in the same product category; new brand names, existing product category
New Brands
used when existing brand names are either unsuitable for brand extension or the company doesn’t want to dilute them; new brand name, new product category
Intangibility
Inseparability
Variability
Perishability
Service Marketing Parts
Service Intangibility
services cannot be seen, tasted, felt, heard, or smelled before they are bought
Service Inseparability
services cannot be separated from their providers, whether the providers are people or machines
Service Variability
quality of services depend on who provides them as well as who, when, where, and how they are provided
Service Perishability
services cannot be stored for later use or sale
New Product Development
development of original products, product improvements, product modifications, and new brands through the firm’s own research and development efforts
Why new products?
Bring new solutions and variety to customers’ lives, and the key source of growth for companies
Idea Generation
Idea Screening
Concept Development
Concept Testing
Marketing Strategy Development
Business Analysis
Product Development
Test Marketing
Commercialization
Steps of NPD
Idea Generation
systematic search for new product ideas
Internal Idea Sources
company can find new ideas through form R&D
External Idea Sources
Customers, competitors, distributors, suppliers, outsourcing partners
Idea Screening
screening process to reduce # of ideas by spotting good ones and dropping poor ones
Concept Development
translate your product idea into a detailed concept stated in meaningful consumer terms
Concept Testing
test concepts with a group of target consumers to find out level of appeal
Marketing Strategy Development
designing an initial marketing strategy designed for the new product consisting of target market and initial objectives, launch tactics, and long-term objectives
Business Analysis
a review of the sales, costs, and profit project for a new product to find out whether these factors satisfy the company’s objectives
Product Development
developing the product concept into a physical product
Test Marketing
the stage of NPD in which the product and its proposed marketing program are tested in realistic market settings
Commercialization
must decide when and where to initially introduce the new product into the market
Managing NPD
successful NPD requires a customer centered, team based, and systematic effort
Customer Centerd NPD
focuses on finding new ways to solve customer problems and create more customer satisfying experiences
Team Based NPD
company departments work closely together in cross-functional teams, overlapping steps in product development process to save time and increase effectiveness
Product Life-Cycle
begins when a company finds and develops a new product idea; sales start at 0 and the company’s investment costs mount
Introduction
Growth Stage
Maturity Stage
Decline Stage
Product Life-Cycle Stages
Introduction
a period of slow sales growth as the product is introduced in the market; profits are nonexistent; create product awareness and trial
Growth Stage
if the product gains traction, sales start growing rapidly; objective: maximize market share; growth in sales will lead to a number of competitors entering the market, fighting over initial customers
Maturity Stage
sales level off, many people already have the product; defend market share; try to get customers to switch to your product
modify the market
modify the product
modify the rest of the marketing mix
Ways to Grow during maturity
Decline Stage
sales fall as people do not need to buy the product anymore; reduces expense to stay profitable, mile the and invest elseqhere
Style
a basic and distinctive mode of expression; has a cycle showing periods of renewed interest
Fashion
a currently accepted or popular style in a given field; tend to grow slowly, remain popular for a while, then decline slowly
Fads
a temporary period of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity; a fashion that enters quickly, adopted quickly, and declines fast
Reality is never as clean and clear as the PLC curve
It can be hard to even identify which stage of PLC a product is really in
Hard to forecast length of each stage of the PLC
Strategy is both a result and cause of the PLC
Problems with PLC model
Cannibalization
refers to a reduction in sales volume, sales revenue, or market share of one product as a result of the introduction of a new product by the same producer
Product Quality
affects product or service performance. It is closely linked to customer value and satisfaction.
Product Features
a product can be offered with varying features. There can be the stripped down model and then the company can have higher-level models by adding more features.
Product Style and Design
Style describes the appearance of the product. It doesn’t make the product perform better. Design contributes to a product’s usefulness as well as to its looks.
Overachieving Consumer
consumer is beyond advertising and picks the smart choice
Greater Awareness and Loyalty
Basis for strong, profitable customer relationships
Willingness to buy over competitors and/or willingness to pay a premium
Higher Brand Equity Provides
Co-branding
Occurs when two established brand names of different companies are used on the same product
Launched as a national brand (manufacturer’s brand)
Manufacturer may sell to resellers who give the product a private brand (store brand or distributors brand)
Amost manufacturers create their own brand names, others market licensed brands
Two companies can join forces and co-brand a product
Four Sponsorship Options
Corporate Image Marketing
campaigns market themselves and polish their images
Total Quality Management
an approach in which all of the company’s people are involved in constantly improving the quality of the products, services, and business processes
Performance Quality
the product’s ability to perform its functions
Conformance Quality
freedom from defects and consistency in delivering a targeted level of performance
Packaging
activities of designing and producing the container or wrapper for a product
Product Support Services
a types of services that are an important part of the customers overall brand experience
Differentiation
Relevance
Knowledge
Esteem
Four Consumer Perception Dimensions on Brands
Brand Valuation
process of estimating total financial value of a brand