Topic 7 product 1 learning objectives1 Define and

Topic 7 product 1 -

learning objectives_1 • Define and classify products and the key terms associated with them • Understand the nature, benefits and implementation of product and brand development 6 -2 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

learning objectives_2 • Understand the product lifecycle concept, its influence on marketing strategies and its limitations • Appreciate the importance of product positioning and how it both affects and is affected by marketing strategies 6 -3 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

learning objectives_3 • Define the role and responsibilities of the product or brand manager 6 -4 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Product Defined A product is a physical good, service, idea, person, or place that is capable of offering tangible and intangible attributes that individuals or organisations regard as so necessary, worthwhile or satisfying that they are prepared to exchange money, patronage or some other unit of value to acquire it. 6 -5 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

What is a Product? –Physical Objects –Services –Persons –Places –Organizations –Ideas –Combinations of the above 6 -6 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

WHO ARE THE COMPETITORS FOR A PARKER PEN? • Another pen company? • Other writing implements? • Other gifts? 6 -7 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Figure 6. 1 The Anatomy of a Product 6 -8 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Levels of Product Augmented Product Installation Packaging Brand Name Delivery & Credit Quality Level Core Benefit or Service Features Design Warranty 6 -9 Actual Product Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007 Core Product After. Sale Service

Product-based Classification Durable Nondurable 6 -10 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007 Service

Consumer User-based Classification Convenience Shopping 6 -11 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007 Specialty

Product Classifications Consumer Products Convenience Products Shopping Products > Buy frequently & immediately > Low priced > Mass advertising > Many purchase locations > Buy less frequently > Higher price > Fewer purchase locations > Comparison shop Fast Food, Candy, Newspapers Clothing, cars, appliances Specialty Products Unsought Products > Special purchase efforts > High price > Unique characteristics > Brand identification > Few purchase locations > New innovations > Products consumers don’t want to think about > Require much advertising & personal selling Lamborghini, Rolex Life insurance, blood donation 6 -12 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

What type of product is the Dualit toaster? If you want a toaster that oozes class, then treat yourself to a Dualit. It’s built to last a lifetime. Source: © Dualit 01293 652500 http: //www. dualit. com 6 -13 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Unsought Goods 6 -14 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

B 2 B User-based Classifications Capital goods Supplies and services Accessory goods Components and parts Raw materials Semi-finished goods 6 -15 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

THE PRODUCT MIX • The total range of products that a company offers to satisfy customers’ needs • Defined by its breadth and width 6 -16 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Figure 6. 2 Bosch DIY Power Tools Product Line 6 -17 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Understanding the Product Range • Product mix – total sum of all products and variants offered • Product line – group of closely related products • Product item – individual products within lines 6 -18 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Understanding the Product Range • Product line length – total number of items in line • Product line depth – number of different variants within line • Product mix width – number of lines offered 6 -19 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

The concepts of width of product mix and depth of product line 6 -20 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Lynx offers a deep line of fragrances Source: The Advertising Archives. 6 -21 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Individual Product Decisions Product Attributes Branding Packaging Labeling 6 -22 Product Support Services Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Product Attribute Decisions Quality Features Design 6 -23 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

QUALITY • An important product attribute • Essentially about meeting buyers’ expectations • Conceptual and practical problems of measurement • Numerous means of providing reassurance about quality (e. g. ISO 9000 series) 6 -24 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

DISTINCTIVE DESIGN • Provides differentiation from competition – e. g. Toblerone chocolate • But remember - distinctive design in itself is not enough - it must meet customers’ needs and expectations 6 -25 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Aspects of Design, Quality, and Guarantees Quality Performance Durability Reliability and maintenance Design and style Corporate name and reputation Guarantees 6 -26 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Branding seeks to create and communicate a three-dimensional character for a product that is not easily copied or damaged by competitors’ efforts. 6 -27 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Brand Defined A name, term, sign, symbol or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors 6 -28 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

The Role of Brands • Identify the maker • Signify quality • Create barriers to entry • Serve as competitive advantage • Secure price premium • Offer legal protection 6 -29 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Marketing Advantages of Strong Brands • Improved perceptions • More elastic response to price decreases • Greater loyalty • Greater trade cooperation • Less vulnerable to competition • Larger margins • More inelastic response to price increases 6 -30 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007 • Increased marketing communications • Possible licensing opportunities • Brand extension opportunities

Trade Mark Trades Marks Act of 1994 enables registration of • Smells • Sounds • Product shapes • Packaging • Brand names • Logos 6 -31 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

DISTINCTIVE VISUAL IDENTITY • Logos can be very powerful - these designs convey meaning, even with the “wrong name” 6 -32 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Figure 6. 3 The Benefits of Branding The consumer The manufacturer Branding The retailer 6 -33 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Benefits of Branding for the Consumer • Easier product identification • Communicates features and benefits • Helps product evaluation • Establishes product’s position • Reduces risk • Creates interest 6 -34 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Benefits of Branding for the Manufacturer • Helps create loyalty • Defends against competition • Creates differential advantage • Allows premium pricing • Helps targeting/ positioning • Increases power over retailer 6 -35 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Types of Brands • Manufacturer brands • Retailer and wholesaler brands – Own-label brands 6 -36 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Selecting a Brand Name Distinctive Supportive Acceptable Available 6 -37 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Figure 6. 4 The Brand Name Spectrum Descriptive Associative Freestanding Bitter Lemon Walkman Kodak Dairy Milk Chocolate Natrel Esso Bold Pantene Sensodyne Mars Bar Shredded Wheat 6 -38 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Brand Equity The added value endowed to products, reflected in how consumers think, feel, and act with respect to the brand, as well as the prices, market share, and profitability that the brand commands for the firm 6 -39 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Major elements of brand equity 6 -40 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Packaging Defined Packaging is any container or wrapping in which the product is offered for sale and can consist of a variety of materials such as glass, paper, metal or plastic. 6 -41 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Functions of Packaging • Protect product • Keep product ready for use • Dispense product • Present brand imagery 6 -42 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007 • Provide information • Make product attractive • Make product use convenient

Packaging Issues • Labelling • Design – Warnings – Aesthetic appeal – Instructions – Ergonomic properties – Regulated information – Functionality – Size – Reliability – Contact information – Life span 6 -43 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Functions of Labels • Identifies • Grades • Describes • Promotes 6 -44 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Product Range Management Extending the product line Filling the product range 6 -45 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

eg Heinz and the Monolithic Approach 6 -46 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Mars Utilizes Brand Extension When it’s hot and you want something sweet, sticky and firm, a MARS® ice cream should hit the spot. ® MARS is a registered trademark of Masterfoods. Source: © Masterfoods 2006 http: //www. mars. co. uk 6 -47 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

eg Volkswagen Overextended 6 -48 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Ethical Issues Concerning Products ØProduct safety ØPlanned obsolescence ØDeceptive packaging 6 -49 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Deleting Products • Phase out • Run out • Drop or sell eg Low Carb Kit. Kat 6 -50 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Product Lifecycle (PLC) Defined The Product Lifecycle is a concept suggesting that a product goes through various stages in the course of it’s life: introduction, growth, maturity and decline 6 -51 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Figure 6. 5 The Product Lifecycle 6 -52 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

THE PRODUCT LIFE CYCLE • A reminder that most products do not live for ever • A conceptual framework only • Difficult to measure where a product is in its life cycle 6 -53 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

PATTERNS OF PRODUCT LIFE CYCLES • There is no universal pattern of PLC 6 -54 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Introduction Stage of the PLC Summary of Characteristics, Objectives, & Strategies Sales Low sales Costs High cost per customer Profits Negative or low Marketing Objectives Create product awareness and trial Product Offer a basic product Price Usually is high; use cost-plus formula Distribution High distribution expenses Advertising Build product awareness among early adopters and dealers 6 -55 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Growth Stage of the PLC Summary of Characteristics, Objectives, & Strategies Sales Rapidly rising sales Costs Average cost per customer Profits Rising profits Marketing Objectives Maximize market share Product Offer new product features, extensions, service, and warranty Price to penetrate market Distribution Increase number of distribution outlets Advertising Build awareness and interest in the mass market 6 -56 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Maturity Stage of the PLC Summary of Characteristics, Objectives, & Strategies Sales Peak sales Costs Low cost per customer Profits High profits, then lower profits Marketing Objectives Maximize profits while defending market share Product Diversify brand models Price to match or best competitors Distribution Build more intensive distribution Advertising Stress brand differences and benefits 6 -57 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Decline Stage of the PLC Summary of Characteristics, Objectives, & Strategies Sales Declining sales Costs Low cost per customer Profits Declining profits Marketing Objectives Reduce expenditure and maintain, reposition, harvest or drop the product Phase out weak items Price Cut price Distribution Go selective: phase out unprofitable outlets Advertising Reduce to level needed to retain hard-core loyal customers 6 -58 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

INNOVATION AND NEW PRODUCT DEVELOPMENT • Changing consumer preferences • New technologies • New government regulations Innovation is needed: changing attitudes to Mc. Donalds fast food 6 -59 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

WHAT IS INNOVATION? • Innovation has often been identified as a source of a company's long-term competitive advantage • Some nations as a whole can be described as more innovators than others • Innovation applies to the whole of the marketing process 6 -60 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

FEW FIRMS CAN AVOID INNOVATION • Tea is a fairly generic product • Competition can be fierce • PG Tips is an example of innovation - tea for cafetieres 6 -61 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

New Product Development : Idea Generation is the Systematic Search for New Product Ideas Obtained Internally From Employees and Also From: Customers Competitors 6 -62 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007 Distributors Suppliers

WHAT ARE NEW PRODUCTS? – Improvements/revisions to existing products – Additions to existing lines – New to the world products (relatively rare) – New product lines – Repositioning (existing products in new segments/markets) – Cost reductions 6 -63 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Causes of New Product Failures • Overestimation of Market Size • Product Design Problems • Product Incorrectly Positioned, Priced or Advertised • Costs of Product Development • Competitive Actions 6 -64 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

eg Active Health Drinks Market 6 -65 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Diffusion of Innovation Defined The Diffusion of Innovation is a concept suggesting that customers first enter a market at different times, depending on their attitude to innovation and new products, and their willingness to take risks. Customers can thus be classified as innovators, early adopters, early majority, late majority and laggards. 6 -66 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Figure 6. 7 Diffusion of Innovation 6 -67 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007