Amity Business School AMITY SCHOOL OF BUSINESS BBA, II Sem PRINCIPLES OF MARKETING II Ruchika Jeswal

PRODUCT AMITY SCHOOL OF BUSINESS Anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need. A bundle of attributes,offering for use/ consumption by the final consumer.

Products that can be marketed include: Physical goods Services Experiences Events Persons Places Properties Organization Information Ideas

Three levels of Product: AMITY SCHOOL OF BUSINESS Three levels of Product: Core Customer value Actual Product Augmented Product

Levels of product

What is the buyer really buying? AMITY SCHOOL OF BUSINESS Core Customer Value What is the buyer really buying? Marketer must define the core, problem-solving benefits or services that consumers seek. E.g. Revlon lipstick, smart phone.

Actual Product -turn the core benefits into an actual product. -develop product and service features, design, a quality level, a brand name, and packaging.

Augmented Products Build around core benefits and actual product by offering additional consumer services and benefits. Intangible component of the product along with formal and core components.

Product and service classification Two broad classes based on the types of consumers who use them: - Consumer products - Industrial products

Consumer products – are products and services bought by final consumer for personal consumption. Further classified as: Convenience Shopping Specialty Unsought

Convenience Product

Shopping Products are less frequently purchased. Customer compare carefully on suitability, quality, price, and style. Spend much time and effort in gathering information. E.g. furniture, clothing, used cars, jewelery etc.

Specialty Products Are products with unique characteristics or brand identification. Willing to make a special purchase effort. Less frequent purchase. E.g.designer clothes, TVs , refrigerator, services of medical and legal professional.

Unsought products Consumer does not know about or knows but does not think of buying. E.g. life-insurance policies, blood donations, charity donations.

Amity Business School Industrial Products Are those purchased for further processing or for use in conducting a business. e.g. lown mover. Three groups of Industrial Products: I) Materials and parts II) Capital items III) Supplies and services.

I) Materials and parts Raw materials and parts: -Farm products (wheat, cotton, livestock) Natural Products ( fish, crude petroleum, iron ore. ii) Manufactured materials and parts: Components materials ( iron, yarn, cement, wires) Component parts ( small motors, tires, castings)

II) Capital Items Aid in buyer’s production or operations. Installations -buildings ( factories, offices) - Fixed equipment's ( generators, drill presses, elevators, computer systems. ii) Accessory equipment Portable factory equipment and tools( hand tools , lift trucks) Office equipment ( computers, fax machines, desks)

III) Supplies and Services are convenience products i) Operating supplies(lubricants, coal, paper, pencils) ii) Repair and maintenance items ( paints, nails, brooms) Business services include maintenance and repair services and business advisory services.

Product and service decisions. Marketers make product and service decisions at three levels: Individual product decisions, Product line decisions and Product Mix Decisions

Individual Product and Service Decisions Product Attributes. Branding Packaging Labeling Product support services

Individual Product and Service Decisions

Product and service attributes: Quality-”freedom from defects” Features- Style and design.

BRANDING Brand helps consumers: Brand: a name, term, sign, symbol, design, or a combination of these that identifies the products or services of one seller or groups of sellers and differentiates them from the competitors. Brand helps consumers: Identify products Product quality and consistency Brand helps sellers: Trademark provides legal protection Helps to segment the market.

PACKAGING It involves designing and producing the container or wrapper for a product. It performs many sales tasks- from attracting attention, to describing the product, to making the sale. Cos are using environmentally responsible packaging.

LABELING Labels range from simple tags attached to complex graphics that are a part of the pack. Functions: Describes things Promotion Positioning Connect with the customers.

Product Support Services Support services which can be a minor or a major part of the total offering. Services would be able to delight customers and add more profits. Mixture of phone, email, fax, internet and interactive voice and data technologies are now used.

PRODUCT LINE DECISIONS 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 range. Major Product line decisions are: Product line length Line filling Line stretching

Product line filling – involves adding more items within the present range of the line. Product line stretching- occurs when a company lengthens its product line beyond its current range. Downward stretching Upward stretching Both ways

Product Mix Decisions The set of all product lines and items that a particular seller offers for sale. Four important dimensions: Width Length Depth Consistency

PRODUCT LIFE CYCLE STAGES

PLC- The course that a product’s sales and profits take over a life time. Not all products follow this PLC. Some products are introduced and die quickly, others stay in the mature stage for a long time. Some enter decline stage and are cycled back into the growth stage.

Four Stages Product Development Introduction Growth Maturity Decline

Introduction A period of slow sales growth as the product is introduced in the market. New product is first launched. Sale growth is slow. Profits are negative or low because of low sales and high distribution and promotion expenses. Promotion spending high. Few basic versions are introduced.

GROWTH A period of rapid market acceptance and substantial profit improvement. Sales start climbing. Early adopters continue buying, later buyers follow. New competitors enter. Market expands as new features are introduced. Profits increase as promotion costs are spread over a large volume.

MATURITY A period of slow down in sales growth because the product has achieved acceptance by most potential buyers. Sales growth slows down or levels off. Greater competition. Competitors mark down the prices, increasing advertising and sales promotions, product development increases to find better versions of the product.

Marketers can do any of the following : Modifying the market.e.g.Moov Modifying the product.e.g.cars Modifying the market mix. changes in any Ps.

DECLINE PLC stage in which a product’s sales decline. e.g. cassette , VHS tapes. Many reasons: Technological advances Shifts in consumer tastes. Increased competition.

New Product Development The development of original products, product improvements, product modifications, and new brands through the firm’s own product development efforts. 90% of new products fail why? Poorly designed Incorrectly positioned Launched at a wrong time. Priced too high. Poorly advertised.

Steps of New Product Development Lay Future Plans yes yes yes yes yes yes yes yes 1. Idea Generation 2. Idea Screening 3. Concept Development & Testing 4. Marketing Strategy Development 5. Business Analysis 6. Product Development 7. Market Testing 8. Commercial ization yes yes No No Send the idea Back for Pdt. Devt. Modify the Product or marketing program? No No No No No No No No Drop

Idea Generation The systematic search of new product ideas. Internal sources: formal R&D, employees. External sources: Distributors and suppliers,Competitors,customers.

Idea Screening Screening new product ideas in order to spot good ideas and drop poor ones as soon as possible. -company wants only those ideas which will turn into profitable products.

Concept Development and Testing A product idea must be developed into a product concept. Product concept – A detailed version of the new-product idea stated in meaningful consumer terms. e.g. battery powered all-electric car Concept Testing – It calls for testing-new product concepts with groups of target consumer.

Marketing Strategy Development Designing an initial marketing strategy for a new product based on the product concept. Three parts: Target market Planned value proposition. Sales, market share and profit goals.

Business Analysis A review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the company’s objectives. Look at the sales history of similar products. Conduct market surveys.

Product Development Developing the product concept into a physical product in order to ensure that the product idea can be turned into a viable option.

Test Marketing The stage of new-product development in which the product and marketing program are tested in realistic market settings. Three approaches: Standard Test Markets Controlled Test Markets Simulated Test Markets.

Commercialization Introducing a new product in the market. Introduction timing Where to launch the product? Planned market roll out.