Chapt 7 - Product

8/13/2019 Chapt 7 - Product

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1. Product1. Product1.1 Product1.1 Product

A product is something that satisfies aA product is something that satisfies a

set of wants that customers haveset of wants that customers have..

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1. Product1. Product1.1 Product (contd)1.1 Product (contd)

Attributes:

(a) Tangible attributes(a) Tangible attributesAvailability and delivery

Performance

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Price Design

(b) Intangible attributes(b) Intangible attributes Image

Perceived value

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Levels of a product

1.2 Three Levels of Product1.2 Three Levels of Product

Figure 1 Three levels of product

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ore productore product

problem solving service or core benefits thatconsumers are really buying hen they obtain aproduct!

-

"hree #evels of a Product $ cont%d&

Actual productActual product incorporates the 'uality( features and design( brand

name( pac)aging and other attributes that combine todeliver core product benefits!

Augmented productAugmented product incorporates the consumer services and benefits built

around the core and actual products!*


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1.3 Product classifications: Consumer goods

onsumer goodsonsumer goods- products destined for use by ultimate

consumers

1. Product1. Product

Industrial goods (also called B2BIndustrial goods (also called B2Bproducts)products)- contribute directly or indirectly to the output

of other products for resale

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1.3 Product classifications: Consumer goods (contd)

Consumer goods may be classified as follows:

onvenience goodsonvenience goods- e!g! ee)ly groceries


opp ng goo sopp ng goo s-,!g! urniture or ashing machines! .sually made only after advanceplanning and shopping around

!pecialit" goods!pecialit" goods-,!g! /eellery or more e0pensive items of clothing

#nsought goods#nsought goods

- oods that you did not realie you needed! ,!g ! atalogues that arrive inthe post!


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T"pes of onsumer Products

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T"pes of Industrial $oods

1.4 Industrial goods

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1.4 Industrial goods

These may be classified as follows:

InstallationsInstallations- e!g! ma7or items of plant and machinery

AccessoriesAccessories


- uc as cs

%aw &aterials%aw &aterials- ,!g! Plastic( metal( ood( foodstuffs( chemicals

omponentsomponents- ,!g! 9eadlights in ford cars or the Intel microchip in most Pcs!

!upplies!upplies- ,!g! :ffice stationery( cleaning materials 1;


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'.1 e" factors for consideration

Product &iProduct &i

?

.ni ue sellin ro osition .8P

'. %eviewing the Product'. %eviewing the Product

Differentiation@ - unfulfilled preferences >randing

Pac)aging

alue

Product life cycle =P#? Portfolio anlaysis@ =>oston onsulting roup Batri0?

Directional policy matri0 =Ansoff?


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'.' The product audit

Definition:

A s"stematic appraisal of aA s"stematic appraisal of a


rm s pro uct m rm s pro uct m totoevaluate its strengths andevaluate its strengths and

wea+nesses and to assess thewea+nesses and to assess theavailable opportunitiesavailable opportunities..

httpEE!termi)i!comE,CproductFaudit

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'., -eatures advantages and benefits (-A/)

People do not bu"People do not bu"


pro uc spro uc s ey uyey uywhat products canwhat products can

do for themdo for them..

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Product

"able

/enefit

"ime-saving

Portable

,conomy of

initial outlay

,conomythrough loreplacement

-eature

Plastic

Pine

Advantages

,asier to clean

#ighter

heaper

8turdier

Borefashionable

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fre'uency8tatus

"ime-8aving

#oreplacement

Baintenancecosts

8teel

Bore resistant tostains

Gill carryheavier eights

Figure 2 Features, advantages and benefits (FAB) schedule


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'., -eatures advantages and benefits (-A/)

Advantage statementsAdvantage statements always contain a comparative, thatis: fast; faster (comparative); fastest (superlative); Easier;Lighter; Cheaper; Studier; More fashionable; More resistant;Heavier


Promotional messagesPromotional messages should not dwell on the features ofthe product, but should concentrate on the advantages soas to leave potential customer in no doubt about what the

benefits are.Better for Your Health

Longer Lasting Flavor

More Miles per Gallon1*


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'.0 #niue selling proposition (#!P)

Aspects of a product( service( offering or transaction

hich distinguishes it from all others!- ,!g! core product and its features( pricing( branding distributionoutlets( terms of trading and other factors of the product


'.2 3ifferentiation

"he distinctiveness in the product or service being

offered as perceived by the mar)et by reference to anyaspect of the mar)eting mi0- "he attractive of difference is clear in many aspects of the mar)et

1+


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'.4 Pac+agingPac)aging has five functions and usually

pac)aged in more than one form Ph"sical protection of contents

3istribution helping to transfer products


!elling as the design and labeling serving promotional

ob7ectives

#ser convenience( as an aid to use( storage an carrying(

such as aerosol cans and handy pac)s

"o conform to government regulations especially on

hygiene or content 1


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"his process of hat happens to a product is called the Product #ifeycle! It is usually dran as a graph li)e the one belo!

"he Product #ife ycle =P#? $ cont%d&

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Summary of product life-cycle characteristics, objectives and strategies

Source: Philip Kotler, Marketing Management: Analysis, planning, implementation, and control, 11th edn, 2003, p. 340. Reprinted by permission of Pearson Education, Inc., Upper Saddle River, NJ.


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Ghen a product reaches the maturity or saturation stage of itsproduct life cycle( a business may stop sales starting to fall by

adopting e0tension strategies! "hese are ays that sales may begiven a boost! 8ome possible ays business might e0tend the lifecycle of their products are shon in the diagram belo

,0tending the Product #ife ycle

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If the extension strategies are effective, the maturity phase of the product

life cycle will be prolonged. An example of what might happen is shown in

the diagram below:

,0tending the Product #ife ycle

Businesses will not usually manufacture just one product. They will have arange of products at different stages of the product life cycle. E.g. abusiness will need to have products coming up into the growth phase to

counteract those that are in decline. 22


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0.1 The product range

Definition:

A set of variationsvariations of the

4! Product


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0.' Product portfolio planning

!hould a compan" invest mone" in a declining or a!hould a compan" invest mone" in a declining or a

cash generating product8 Poor balance of productcash generating product8 Poor balance of productrange (colors si9es materials etc) affects cashrange (colors si9es materials etc) affects cash

position.position.

4! Product


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"he > Batri0

Question MarksQuestion Marks (?)(?)((Problem Child)Problem Child)

High growth, low share

Stars (Stars ())

High growth & share

Relative Market ShareHigh Low

Rate

igh

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u n o ars p ase ou

Requires cash to holdmarket share

ro po en a

May need heay inestmentto grow

Cash Cows

!ow growth, high share

"sta#lished, successful SB$%s Produces cash

Dogs

!ow growth & share !ow profit potential

Mark

etGrowth

Low

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0.' Product portfolio planning (contd)

ProblemProblem child (or question mark):child (or question mark): a small market share but in a high growth

industry. The generic product is clearly popular, but customer support for thecompany brand is limited

The star:The star: this is a product with a high market share in a high growth industry. By

4! Product


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The BCG framework provided by theThe BCG framework provided by thematrix can offer guidance in terms ofmatrix can offer guidance in terms of

4! Product


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DefinitionDefinitionThe devicedevice for distinguishing a product or

service from all others. This may be a

*! >randing

name, sym o or any o er ev ce w cis unique to the company and is its legalentitlement. Branding is the practice and

technique of creating, devising andcommunicating such a device.

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A brand is shorthand for all the FAB characteristics whichwe associate with it.

Major brands of today:

*! >randing

croso , e ogg s, a ury s mars, e nz

Brands in industrial sector:

ICI

Brands in retail sector sector: Marks & Spencer, Harrods, Sainsburys

A brand stands for things like qualityquality,, reliability, trust, status,reliability, trust, status, and in

the case of the food brand, wholesomeness, purity, nutrition. 29


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5.1 The5.1 The power of the brandpower of the brand

A brand name increasesincreases the valuethe value of

*! >randing $ cont%d&

e pro uc n e eyes o ecustomers. They associate with thename, symbol, device or packaging,

some other factor of value which abeyond the core product.

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Brand LeadershipBrand LeadershipDefinition:

The brand which consistently holds the largest marketlargest market

shareshare when measured by brand sales. You should note


a ere are some manu ac urers w o ma e a num er

of brands and therefore may be said to hold a largershare of the product market than the brand leader.

The world famous brands have nothave not become so by accident. It takes great dedicationgreat dedication onthe part of the company, who owns a brand to make it a household name.

Famous names which were the brand leaders of 1933: Hovis Bread, Kelloggs CornFlakes; Cadburys Chocolate; Schweppes mineral waters; brooke Bond Tea; ColgateToothpaste; Kodak Film; Heinz Beans; mars bars.

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5.2 Brand5.2 Brand LeadershipLeadership

Brand leaders continually defenddefend the quality of their outputand its relevance to consumers over a long time. It isalso the outcome of consistently putting before the

>randing $ cont%d&

effective communicationeffective communication. Advertising, public relationsand packaging all play their part in ensuring thiscontinuity.

Many customers could be said to buy some of theseproducts instinctively. They are instinctively loyalloyal to thebrand name largely because it has never let them down

in delivering the values that they cherish. 32

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According to the Biggest brands 2000 report,these are the top ten brands in the UK.

!ales Advertising spend:m :m

oca ola 40; '4.4

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>escafe ,0; ''.=!tella Artois '4; 2.4

Persil '02 ',.1

&uller ',2 ?.4

Andre ',; @.;Pampers 1@2 ?.=

Pepsi 1@2 =.2

Ariel 1@; @.4


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5.2 Brand Leadership (Contd)5.2 Brand Leadership (Contd)Brand preference:Brand preference: the degree to which customers express their

inclinationinclination to select the brand of their choice by reference to theirpurchasing habits or by their asking for a given brand


ran oya y:ran oya y: t e extent to w c consumers o a ran ten to rere--

purchasepurchase in the face of continuing availability of alternatives

Brand switching:Brand switching: the disposition to change brands for marginal gainsin price or perceived value

Brand positioning:Brand positioning: the strategy to ensure that the brand, in the eyesof the public, has a distinct positiondistinct position in the market with reference toquality, style, status, price or a combination of these.

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5.3 Brand5.3 Brand PositioningPositioning

Brand positioning is one of the techniquestechniqueswhichis critical in developing a brand leader.


Each brand should have a uniqueunique nicheniche (place),independent of the similarity of the substance of

the products with which it competes. Discoveringa niche in the market can be the first step in

developing an effective brand.

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5.5 Scaling techniques5.5 Scaling techniques

Scaling techniques are derived from psychologypsychology and areused to determine the nature and intensity of anindividuals attitudes towards objects or ideas: thus they


.

used in market research into consumer behaviour are theLikert Scale, where respondents are asked to expresstheir agreement or otherwise with a statement about the

characteristics of a brand, and the Semantic DifferentialScale, where the technique involves respondentsindicating a notional value on a scale between two poles

such as expensive/cheap. Examples are given below.

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The Ansoff matrix is one of the mostell!"no and ell used strategicstrategic

+! "he Ansoff roth Batri0

to achieve growthto achieve growth. #n order to gro,companies ma$ use various

combinations of product and mar"etdecisions.

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Product/ Market Expansion Grid

Developing Growth StrategiesDeveloping Growth Strategies

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Product/ Market Expansion Grid

Developing Growth StrategiesDeveloping Growth Strategies

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Chapt 7 - Product

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