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7 p’s of marketing
product
Definition
The end result of the manufacturing process, to be offered to the marketplace to satisfy a need or want is recognized as
product.
Product Mix
Product mix is a combination of products manufactured or traded by the same business house to reinforce their presence in the market,
increase market share and increase the turnover for more profitability. Normally the product mix is within the synergy of other
products for a medium size organization. However large groups of Industries may have diversified products within core competency.
Larsen & Toubro Ltd, Godrej, Reliance in India are some of the examples.
One of the realities of business is that most firms deal with multi-products .This helps a firm diffuse its risk across different product
groups/Also it enables the firm to appeal to a much larger group of customers or to different needs of the same customer group .So
when Videocon chose to diversify into other consumer durables like music systems ,washing machines and refrigerators ,it sought to
satisfy the needs of the middle and upper middle income group of consumers.
Likewise , Bajaj Electricals.a household name in India, has almost ninety products in i8ts portfolio ranging from low value items like
bulbs to high priced consumer durables like mixers and luminaires and lighting projects .The number of products carried by a firm at a
given point of time is called its product mix. This product mix contains product lines and product items .In other words it’s a
composite of products offered for sale by a firm.
Often firms take decisions to change their product mix. These decisions are dictated by the above factors and also by the changes
occurring in the market place. Like the changing life-styles of Indian consumers led BPL-Sanyo to launch an entire range of white
goods like refrigerators , washing machines, and microwave ovens .It also motivate the firm to launch other entertainment electronics.
Rahejas, a well-known builders firm in Bombay, took a major decision to convert one of its theatre buildings in the western suburbs of
Bombay into a large garments and accessories store for men ,women and children, perhaps the first of its kind in India to have almost
all products required by these customer groups Competition from low priced washing powders (mainly Nirma) forced Hindustan
Levers to launch different brands of detergent powder at different price levels positioned at different market segments .Customer
preferences for herbs, mainly shikakai motivated Lever to launch black Sunsilk Shampoo ,which has shikakai .Also ,low purchasing
power. and cultural bias against shampoo market made Hindustan Lever consider smaller packaging mainly sachets , for single use
.So, it is the changes or anticipated changes in the market place that motivates a firm to consider changes in its product mix.
The process
1. Idea Generation is often called the "fuzzy front end" of the NPD process
o Ideas for new products can be obtained from basic research using a SWOT analysis (Strengths, weaknesses,
Opportunities & Threats), Market and consumer trends, company's R&D department, competitors, focus groups,
employees, salespeople, corporate spies, trade shows, or Ethnographic discovery methods (searching for user patterns
and habits) may also be used to get an insight into new product lines or product features.
o Idea Generation or Brainstorming of new product, service, or store concepts - idea generation techniques can begin
when you have done your OPPORTUNITY ANALYSIS to support your ideas in the Idea Screening Phase (shown in
the next development step).
2. Idea Screening
o The object is to eliminate unsound concepts prior to devoting resources to them.
o The screeners must ask at least three questions:
Will the customer in the target market benefit from the product?
What is the size and growth forecasts of the market segment/target market?
What is the current or expected competitive pressure for the product idea?
What are the industry sales and market trends the product idea is based on?
Is it technically feasible to manufacture the product?
Will the product be profitable when manufactured and delivered to the customer at the target price?
3. Concept Development and Testing
o Develop the marketing and engineering details
Who is the target market and who is the decision maker in the purchasing process?
What product features must the product incorporate?
What benefits will the product provide?
How will consumers react to the product?
How will the product be produced most cost effectively?
Prove feasibility through virtual computer aided rendering, and rapid prototyping
What will it cost to produce it?
o Testing the Concept by asking a sample of prospective customers what they think of the idea. Usually via Choice
Modelling.
4. Business Analysis
o Estimate likely selling price based upon competition and customer feedback
o Estimate sales volume based upon size of market and such tools as the Fourt-Woodlock equation
o Estimate profitability and breakeven point
5. Beta Testing and Market Testing
o Produce a physical prototype or mock-up
o Test the product (and its packaging) in typical usage situations
o Conduct focus group customer interviews or introduce at trade show
o Make adjustments where necessary
o Produce an initial run of the product and sell it in a test market area to determine customer acceptance
6. Technical Implementation
o New program initiation
o Resource estimation
o Requirement publication
o Engineering operations planning
o Department scheduling
Supplier collaboration
o
Logistics plan
o
Resource plan publication
o
Program review and monitoring
o
Contingencies - what-if planning
o
7. Commercialization (often considered post-NPD)
o Launch the product
o Produce and place advertisements and other promotions
o Fill the distribution pipeline with product
o Critical path analysis is most useful at this stage
These steps may be iterated as needed. Some steps may be eliminated. To reduce the time that the NPD process takes, many
companies are completing several steps at the same time (referred to as concurrent engineering or time to market). Most industry
leaders see new product development as a proactive process where resources are allocated to identify market changes and seize upon
new product opportunities before they occur (in contrast to a reactive strategy in which nothing is done until problems occur or the
competitor introduces an innovation). Many industry leaders see new product development as an ongoing process (referred to as
continuous development) in which the entire organization is always looking for opportunities.
For the more innovative products indicated on the diagram above, great amounts of uncertainty and change may exist, which makes it
difficult or impossible to plan the complete project before starting it. In this case, a more flexible approach may be advisable.
Because the NPD process typically requires both engineering and marketing expertise, cross-functional teams are a common way of
organizing projects. The team is responsible for all aspects of the project, from initial idea generation to final commercialization, and
they usually report to senior management (often to a vice president or Program Manager). In those industries where products are
technically complex, development research is typically expensive, and product life cycles are relatively short, strategic alliances
among several organizations helps to spread the costs, provide access to a wider skill set, and speeds the overall process.
Also, notice that because engineering and marketing expertise are usually both critical to the process, choosing an appropriate blend of
the two is important. Observe (for example, by looking at the See also or References sections below) that this article is slanted more
toward the marketing side. For more of an engineering slant, see the Ulrich and Eppinger, Ullman references below.
Chapter 11: Managing Products And Brands
•
I. PRODUCT LIFE CYCLE
o A way to trace the stages of a product's acceptance from its introduction to its demise.
o One of the most familiar concepts in marketing
o A prevalent marketing management tool
o Refers to the life of the product category
o The time a product category spends in a stage of the product life cycle may vary from a few weeks to decades.
o Does not predict how long a product category will remain in any one stage
o A tool to help marketers understand
where their product is now
what may happen
A. Introduction Stage
Sales grow slowly Profit is minimal or negative
Create awareness Stimulate trial
High production costs Limited product models
Frequent product modification Penetration pricing
Skimming pricing Little competition
High failure rate, High marketing costs
Promotion strategy focuses on primary demand for the product category
developing product awareness Informing about product benefits.
Intensive personal selling to retailers and wholesalers is required.
B. Growth Stage
Characteristics
Sales grow at an increasing rate. Many competitors enter the market.
Large companies may acquire small pioneering firms. Profits are healthy
Promotion emphasis
heavy brand advertising Differences between brands.
Gaining wider distribution is a key goal
Toward the end of this stage
prices normally fall profits reach their peak.
Development costs have been recovered Sales volume has created economies of scale.
•
C. Maturity Stage
Sales continue to increase but at a decreasing rate The marketplace is approaching saturation
Annual models of many products An emphasis on product style rather than function
Product lines are widened or extended marginal competitors begin dropping out of the market.
Heavy promotions to both the dealers and consumers are required. Prices and profits begin to fall.
D. Decline Stage
Signaled by a long-run drop in sales. Falling demand forces many competitors out of the market
The rate of decline is governed by
II. MANAGING THE PRODUCT LIFE CYCLE
A. Role of a Product Manager
o Product manager is responsible for marketing products through the successive stages of their life cycles.
o Product (or brand) manager manages the marketing efforts for a close-knit family of products or brands.
o Three ways to manage:
modify the product
modify the market
appearance,
C. Modify the Market Market
o Finding new users.
modification strategies o Increasing use among existing users.
involve:
o Creating new use situations.
D. Reposition the Product
Product repositioning o Changing the place a product occupies in a consumer’s mind relative to competitive products.
o yo-yo
Benefits of Branding
The brand allows the product to be differentiated from others and serves as an indicator of quality to
Identification
consumers
Encourages repeat sales
Facilitates New Product Introduction Because a familiar brand is more quickly accepted by consumers.
o product counterfeiting has been a growing problem.
o Counterfeit products can steal sales from the original manufacturer or hurt the company’s reputation.
Some Branding Concepts
o The value of company and brand names.
o the added value a given brand name gives to a product beyond the functional benefits provided.
Brand Equity
o Often represented by the premium a consumer will pay for one brand over another when the functional
benefits provided are identical
Brand Loyalty Consistent preference for one brand over all others. Leads to repeat purchases.
Brand Identity important to developing brand loyalty
A brand so dominant in consumers' minds that they think of it immediately when a product category, use situation, product
Master Brand
attribute, or customer benefit is mentioned.
A. Brand Personality and Brand Equity
Brand Equity has two distinct advantages:
1. Brand equity provides a competitive advantage.
2. Consumers are often willing to pay a higher price for a product with brand equity.
1. Creating Brand Equity
o Brand equity is created by marketing programs
o Forge strong, favorable, and unique consumer associations and experiences with a brand
5. Create a consumer-brand resonance evident in an intense, active loyalty relationship between consumers and the brand.
2. Valuing Brand Equity
o Brand equity is a financial advantage for the brand owner.
o Established brands are considered intangible assets.
o Can appreciate in value when effectively managed
o Licensing also assists companies in entering global markets with minimal risk.
C. Picking a Good Brand Name
o Describe product benefits.
o Be memorable, distinctive, and positive.
o Fit the company or product image.
o Have no legal or regulatory restrictions.
A good brand name should
o Be simple and emotional.
Adds value to products that are generally perceived to be homogeneous shopping goods.
multibranding o giving each product a distinct name.
o Use when each brand is intended for a different market segment.
o Has become more complex in the global marketplace.
o Promotional costs are higher with multibranding.
o Euro-branding,
Use the same brand name for the same product across all countries in the European Union.
o The segment attracted to the reseller is different from the manufacturer’s own market.
4. Generic Branding.
o a no-brand product that competes on price.
o Low cost, no frills
o Popular in late 1970's
o 30%-40% cheaper than national brands
o 20%-25% cheaper than store brands
IV. PACKAGING AND LABELING
Packaging component o any container in which it is offered for sale and on which label information is conveyed.
o Integral part of the package
o Typically identifies
the product or brand
Who made it
Label
Where and when it was made
How it is to be used
o Packaging can also have brand equity benefits, as in the case of L’eggs.
2. Functional Benefits.
o Convenience
o Product protection
o Storage.
o Consumer protection
3. Perceptual Benefits.
o Create perception in the consumer’s mind.
o Can connote
status
economy
product quality.
B. Global Trends in Packaging
1. Environmental Sensitivity
o The amount, composition, and disposal of packaging material continue to receive much attention.
o European countries have been trendsetters in packaging guidelines and environmental sensitivity.
o U.S. firms marketing in the EU have responded to these guidelines and ultimately benefited consumers outside the EU as
well.
o Firms are using life-cycle analysis (LCA) to examine the environmental effects of their packaging at every stage from raw
material sources and production through distribution and disposal.
2. Health and Safety Concerns
o A majority of U.S. and European consumers believe that companies should make sure products and packages are safe,
regardless of the cost.
o New packaging technology to extend shelf life (the time a product can be stored) and prevent spoilage is being developed
with special applications for less-developed countries.
C. Labeling
o Focuses on a promotional theme or logo
Persuasive labeling
o Information for the consumer is secondary.
o
o Helps consumers in making proper product selections
o Helps lower cognitive dissonance
Informational labeling
o May include care and use information
V. PRODUCT WARRANTY
o A warranty is a statement indicating the liability of the manufacturer for product deficiencies.
o There are various types of product warranties with different implications for manufacturers and customers.
o Warranties are important in light of increasing product liability claims.