1. 1 PRODUCT

2. Product  A Product is anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or need.  Includes: 1. Physical Objects 2. Services 3. Events 4. Persons 5. Places 6. Organizations 7. Ideas 2

3. Levels in creating Product 3

4. There are 3 levels in creating products 1) Core Product  Marketers must first define what the core BENEFITS the product will provide the customer. Facilitating Products  must be present for the guest to use the core service Supporting Products  Add value to the core product Augmented Product  physical environment, accessibility, interactions, physical environment 4

5. 2) Actual Product  Marketer must then build the actual product around the core product. May have as many as four characteristics: 1. Quality level 2. Features 3. Brand name 4. Packaging  all combined to carefully deliver the core benefit(s). 3) Augmented Product  offer additional consumer benefits and services. 1. Warranty 2. Customer training 5

6. EXAMPLE; SONY CAMCORDER: 1) Core  the ability to take video pictures conveniently 2) Actual  Sony Handycam (brand name), packaged, convenient design so you can hold it, play back features etc. that provide the desired benefits, high quality etc. 3) Augmented  receive more than just the camcorder. Give buyers a warranty on parts and workmanship, free lessons on how to use the camcorder, quick repair service when needed and toll free telephone number when needed. 6

7. CLASSIFYING PRODUCTS 7

8.  Products can be classified depending on who is the final customer.  Components of the marketing mix will need to be changed depending on the final purchaser.  There are 2 types of product that able to product by company. 1) Consumer products  Destined for the final consumer for personal, family and household use.  Involve in consumer market 2) Business to business products  Are to satisfy the goals of the organization.  Involve in business market 8

9. CONSUMER PRODUCTS: Consumer product had been classified into 4 product; 1. Convenience product 2. Shopping product 3. Specialty product 4. Unsought product 9

10. 1) CONVENIENCE PRODUCTS  Packaging is important to sell the product.  Consumers will accept a substitute.  Marketers focus on intense distribution, time utility.  Convenience products can be categorized into main product, impulse (not intended prior to shopping trip). 10

11. 2) SHOPPING PRODUCTS  Consumers spend considerable effort planning and making purchase decisions.  Consumers are not particularly brand loyal.  Need producer intermediary cooperation, high margins, less outlets than convenience goods. Use of sales personnel, communication of competitive advantage, branding, advertising, customer service  Attribute based (Non Price Competition), product with the best set of characteristics is bought.  If product attributes are judged to be similar, then priced based.  Examples: clothes, cameras. 11

12. 3) SPECIALTY PRODUCTS  Buyer knows what they want and will not accept a substitute, Example, Mercedes.  Do not compare alternatives. Brand, store and person loyal.  Will pay a premium if necessary.  Need reminder advertising. 12

13. 4) UNSOUGHT PRODUCTS  Sudden product to resolve the problem  products to which consumers are unaware, products that people do not necessary think of purchasing.  Example, Umbrellas, Funeral Plots 13

14. BUSINESS TO BUSINESS PRODUCTS 1) Production Goods 1. Raw Materials: 2. Component parts: becomes part of the physical product 3. Process materials: not readily identifiable part of the production of other products 2) Support/ Processed Goods 1. Major Equipment: 2. Accessory Equipment: Type writers and tools 3. Consumable Supplies: IE Paper, pencils or oils 4. Business to Business services: Financial, legal marketing research etc 14

15. BRANDING 15

16.  Brands are most valuable assets to the company  A Brand represents what the company is and what it stands for  A Brand implies trust, consistency, and a defined set of expectations  The strongest brands, own a place in the customer’s mind  There are approach in branding the product. 1. Individual Product Branding 2. Family Branding 3. Co-Branding 4. Private or Store Branding 5. No-Name or Generic Branding 6. Brand Licensing 16

17.  Individual Product Branding Under this branding approach new products are assigned new names with no obvious connection to existing brands offered by the company. Under individual product branding the marketing organization must work hard to establish the brand in the market since it cannot ride the coattails of previously introduced brands.  Family Branding Under this branding approach new products are placed under the umbrella of an existing brand. The principle advantage of this approach is that it enables the organization to rapidly build market awareness and acceptance since the brand is already established and known to the market. 17

18.  Co-Branding This approach takes the idea of individual and family branding a step further. With co-branding a marketer seeks to partner with another firm, which has an established brand, in hopes synergy of two brands on a product is even more powerful than a single brand. The partnership often has both firms sharing costs but also sharing the gains.  Private or Store Branding Some suppliers are in the business of producing products for other companies. They are placing another company’s brand name on the product. This is most often seen in the retail industry where stores or online sellers contract with suppliers to manufacture the retailer’s own branded products. 18

19.  No-Name or Generic Branding Certain suppliers supply products that are intentionally “brand less.” These products are mostly basic commodity -type products that consumer or business customers purchase as low price alternatives to branded products.  Brand Licensing Under brand licensing a contractual arrangement is created in which a company owning a brand name allows others to produce and supply products carrying the brand name. This is often seen when a brand is not directly connected with a product category. For instance, several famous children’s characters, such as Sesame Street’s Elmo, have been licensed to toy and food manufacturers who market products using the branded character’s name and image. 19

20. 20 Advantages of Brand Names Brand Equity Advantages of Brand Names Brand Equity Strong Brand Association Strong Brand Association Attributes Quality & Value Consistency Identification Perceived Quality Name Awareness High Brand Loyalty High Brand Loyalty

21. PRODUCT LIFE CYCLE 21

22. Product Portfolio  the range of products a company has in development or available for consumers at any one time  Managing product portfolio is important for cash flow Product Life Cycle  shows the stages that products go through from development to withdrawal from the market

23.  Each product may have a different life cycle  PLC determines revenue earned  Contributes to strategic marketing planning  May help the firm to identify when a product needs support, redesign, reinvigorating, withdrawal, etc.  May help in new product development planning  May help in forecasting and managing cash flow

24.  The Stages of the Product Life Cycle: 1. Development 2. Introduction/Launch 3. Growth 4. Maturity 5. Saturation 6. Decline 7. Withdrawal

25. 1) The Development Stage:  Initial Ideas – possibly large number  May come from any of the following – 1. Market research – identifies gaps in the market 2. Monitoring competitors 3. Planned research and development (R&D) 4. Creative thinking  Product Development Stages 1. New ideas/possible inventions 2. Product Development and refinement 3. Test Marketing – possibly local/regional 4. Analysis of test marketing results and amendment of product/production process 5. Preparations for launch – publicity, marketing campaign

26. 2) Introduction/Launch:  Advertising and promotion campaigns  Monitor initial sales  Maximise publicity  High cost/low sales  Length of time – type of product 3) Growth:  Increased consumer awareness  Sales rise, Revenues increase  Costs - fixed costs/variable costs, profits may be made  Monitor market – competitors reaction?

27. 4) Maturity:  Sales reach peak  Cost of supporting the product declines  Ratio of revenue to cost high  Sales growth likely to be low  Market share may be high  Competition likely to be greater  Monitor market – changes/amendments/new strategies?

28. 5) Saturation:  New entrants likely to mean market is ‘flooded’  Necessity to develop new strategies becomes more pressing:  Searching out new markets:  Linking to changing fashions  Seeking new or exploiting market segments  Linking to joint ventures – media/music, etc.  Developing new uses  Focus on adapting the product  Re-packaging or format  Improving the standard or quality  Developing the product range

29. 6) Decline and Withdrawal:  Product outlives/outgrows its usefulness/value  Fashions change  Technology changes  Sales decline  Cost of supporting starts to rise too far  Decision to withdraw may be dependent on availability of new products and whether fashions/trends will come around again?

30. PRODUCT LIFE CYCLES Sales Time DevelopmentIntroductionGrowthMaturitySaturationDecline

31. 31 Time Product Develop- ment Introduction Profits Sales GrowthMaturityDecline Losses/ Investments Sales and Profits Sales and Profits Over the Product’s Life From Inception to Demise

32. END OF CHAPTER 7 32