1 Types of Consumer Products Unsought Products Unsought Products Specialty Products Specialty Products Shopping Products Shopping Products Convenience Products Convenience Products Consumer Products Consumer Products Business Products Business Products PRODUCTS

2 Product Items, Lines, and Mixes Product Item Product Line Product Mix A specific version of a product that can be designated as a distinct offering among an organization’s products. A group of closely-related product items. All products that an organization sells.

Product mix(assortment) The set of all products and items that a particular seller offers for sale. A company ’ s product mix has a certain width,length,depth, and consistency.

4 Gillette’s Product Lines and Mix Blades andWriting razorsToiletriesinstrumentsLighters Mach 3 Series Paper Mate Cricket SensorAdorn Flair S.T. Dupont Trac IIToni Atra Right Guard Swivel Silkience Double-Edge Soft and Dri Lady Gillette Foamy Super Speed Dry Look Twin Injector Dry Idea Techmatic Brush Plus Width of the product mix Depth of the product lines

compare position of our company using a BCG chart Product lineM1M2M3M4M5 Our Company Competitor Competitor Competitor Total for Forecast X axis (relative share) Y axis (market growth) 6% 29%17%22%

BCG Matrix

product-line decisions Product mix analysis Product-line analysis Product – line length

8 Adjustments Product Modification Product Repositioning Product Line Extension or Contraction Product Line Extension or Contraction Adjustments to Product Items, Lines, and Mixes Line stretching - Downmarket stretch, Upmarket stretch Two-way stretch Line filling - Quality — price analysis

Product Development

Types of New Product Introductions High Low New product lines 20% Improvements to existing products 26% Additions to existing product lines 26% Repositionings 7% Cost reductions 11% New-to-world products 10% High Newness to market Newness to company Size of circle denotes number of introductions relative to total.

Idea Generation Screening Concept Develop- ment & Testing Concept Develop- ment & Testing Marketing Strategy Business Analysis Product Development Commercialization Test Marketing The New Product Development Process

Product Development u Create (engineer) prototype versions of the physical product. u Test for performance (lab) u Test prototypes with convenience samples for functional, aesthetic, psychological performance (taste, use, feel, appearance). u Actual or projected product comparison tests (blind/not blind) with users/experts or influencers.

Test Marketing u Completed “offering bundles” designed and prepared for marketing response u Sales wave studies -- selected sample, free trial, offered repeat brand options. u Simulated Test Marketing u Controlled Test Marketing u Test Marketing Test marketing should take full advantage of information gathering -- well beyond sales projections

Commercialization Scope Timing Location Operational Plan

Awareness Interest Evaluation Trial Adoption New Product Adoption Process Loyalty?

Time of Adoption of Innovations Laggards 16% Late Majority 34% Early Majority 34% Early Adopters 13.5% Innovators 2.5% Adopter Categories Adopter Categorization on the Basis of Relative Time of Adoption of Innovations

PLC and Boston matrix

Five product characteristics influence the rate of adoption: Degree of relative advantage Degree of compatibility Degree of complexity Degree of divisibility or trial-ability or risk Degree of communicability

SOME REASONS FOR NEW PRODUCT FAILURES 1.Market too small 2.Poor match or fit with company 3.Not new / Not different 4.No real benefit 5.Poor positioning Vs competition 6.Forecasting errors 7.Poor Timing 8.Competitive Response too good 9.Changes in Customer tastes 10.Poor after sales service 11.Insufficient return on investment 12.Lack of coordination in functions 13.Inadequate support 14.Poor recovery strategies

Place, Distribution, Channels, Logistics, Order fulfillment, Supply Chain, Route-to-Market … …

Concepts –Importance of distribution –Players in distribution –Objectives of distribution Channels of distribution –Channel system – flows and costs –Channel structure for consumer products –Channel structure for services –Channel structure for industrial products

Channel Management Goals Efficiency vs Effectiveness Control vs. Flexibility Learning and Knowledge

Marketing Flows in a Channel 4. Information Flow 5. Promotion Flow Customer Advertising Agency Suppliers 1. Physical Flow 2. Title Flow 3. Payment Flow Customer Transporters Warehouses Manufacturer Transporters Warehouses DealersTransporters ManufacturerDealers BanksManufacturerBanksDealersBanks Transporters Warehouses Banks Manufacturer Transporters Warehouses Banks DealersTransporters Banks Manufacturer Advertising Agency Dealers Activation Agency

Costs Associated with channel functions Physical Possession: Breaking bulk, Storage and delivery/installation cost Ownership: inventory carrying cost Promotion: personal selling, advertising, sales promo, PR Negotiation: time and legal cost Financing: credit terms, terms and conditions of sale Risk Taking: warranty, insurance, repair, damage, Ordering: order-processing cost Payment: collection, bad debt cost

Traditional Distribution Model: Disadvantages Distribution Costs High As % of Cost Price Distributor margins do not Represent The Activity Cost No Visibility of Stock in The Supply Chain End Customer Knowledge Limited No Control Over End User Pricing Concerns Over Product ‘Diversion’ & Cross Border Trade

Channel Management Decision areas 1.Channel tasks 2.Channel Structure 3.Channel Goals 4.Channel Design 5.Channel Configuration 6.Channel Conflicts

Channel Design Process 1.Recognize the need for channel design decision 1.Recognize the need for channel design decision 7. Select channel members 7. Select channel members 5. Evaluate relevant variables 5. Evaluate relevant variables 6. Choose the “best” channel structure 6. Choose the “best” channel structure 2. Set & coordinate distribution objectives 2. Set & coordinate distribution objectives 3. Specify distribution tasks 3. Specify distribution tasks 4. Develop alternative channel structures 4. Develop alternative channel structures

Retailing Formats and Types of Retailing Emerging Retail Scenario in India; Size, Growth Rate etc.. Complexity of The Indian Retail Market

Traditional Formats Itinerant Salesman Haats Melas Mandis Established formats Kirana shops Convenience/ department stores PDS/ fair price shops Pan/ Beedi shops Emerging Formats Exclusive retail outlets Hypermarket Discount Stores Seconds Stores Malls / Specialty Malls Multiplexes Shop-in-shops Service galleries The Evolution of retail in India

What are CSFs for Retail? Merchandising Financing and other services Branding and Private Labels SCM – Inventory Turnover Data Analytics and Decisions REAL ESTATE MANAGEMENT STORE DESIGN STORE OPERATIONS

Services Marketing How are Services different from Products? The Marketing Challenges Posed by Services The Expanded Marketing Mix Required for Services

Value Added by Physical, Intangible Elements Helps Distinguish Goods and Services Physical Elements High Low Intangible ElementsHigh Salt Detergents CD Player Wine Golf Clubs New Car Tailored clothing Fast-Food Restaurant Plumbing Repair Health Club Airline Flight Landscape Maintenance Consulting Life Insurance Internet Banking

The Four I’s of Service Intangibility Services cannot be held, touched, or seen before the purchase decision. Inconsistency Service quality varies with the capabilities of the people who provide the service. Inseparability The consumer cannot separate the deliverer of the service from the service itself. Inventory The inventory cost of a service is the cost of paying the person used to provide the service along with the cost of any needed equipment.

Services are Different

Services Pose Distinctive Marketing Challenges Marketing management tasks in the service sector differ from those in the manufacturing sector The eight common differences are: 1.Most service products cannot be inventoried 2.Intangible elements usually dominate value creation 3.Services are often difficult to visualize and understand 4.Customers may be involved in co-production 5.People may be part of the service experience 6.Operational inputs and outputs tend to vary more widely 7.The time factor often assumes great importance 8.Distribution may take place through nonphysical channels What are marketing implications?

Key Concept A Service is delivered (not made), experienced (not used), availed (not owned) and highly personal. (not replicable)

The 8Ps of Services Marketing Product Elements Place and Time Price and Other User Outlays Promotion and Education Process Physical Environment People Productivity and Quality

Marketing of causes (ideas), persons, events and places

A distinction between causes (ideas), persons, events and places marketing and marketing of products/services

1. Person Marketing – to cultivate attention, interest, & preference of a target market toward a person 2. Place Marketing – attract visitors to a particular area

3.Event Marketing – mkt of sporting, cultural, & charitable activities to selected target markets 4. Organization Marketing – seek to influence others to accept the goods of, receive the services of, or contribute in some way to an organization

Cause marketing or Idea marketing “A strategic positioning and marketing tool that links a company or brand to a relevant social cause or issue, for mutual benefit.” “A commercial activity by which businesses and charities or causes form a partnership with each other to market an image, product or service for mutual benefit.”

Issues and target audience Funds and volunteers raising Identifying three target audiences – The first target audience – decision makers – The second – people: social marketing – The third – firms

Who is the target audience? TargetExampleCommunications People Stop smokingAll Legal system No smoking in public places Voters Firms Do not close a factory Boycott

Social marketing What is the difference between Cause marketing and Social Marketing? Social marketing is the use of marketing principles and techniques to influence a target audience to voluntarily accept, reject, modify or abandon a behavior for the benefit of individuals, groups, or society as a whole Affecting people

Social arena: Social issue Health: Birth Defects Safety: Drowning Environment: water supply and quality Community involvement: voting Target audiencePregnant womenParents of toddlersHomeowners who live in the suburbs College students living out of state Accept a new behavior Take a multivitamin… Put a life vest on your toddler at the beach Replace your lawn with native plants and ground cover Apply for an absentee ballot Reject a potential behavior Do not drink alcohol Never leave your toddler alone in the bathtub Do not use fertilizers that contain toxic chemicals Do not submit an application if you have a permanent absentee ballot Modify current behavior Drink at least eight glasses of water a day To model the behavior, parent should always wear life vests when boating Water deeply but slowly, so it penetrates and reaches roots Read details about candidates and issue Abandon an old behavior If you smoke, quitDo not use “water wings” as a substitute for a life vest Do not water your lawn if it’s going to rain Mail your ballot before deadline 4PsPromotion: messages on coasters at bars Product: retail displays of coast- guard-approved life vest Price: $50 rebate on electric mulching movers Place: absentee ballots online BenefitHealthier babiesSafer toddlersWater availability for the community and lower rates Youths experience having a voice Source: Kotler, Roberto, Lee 2002