LESSON 4

THE OFFERING PORTFOLIO

Offering benefits or satisfaction provided to target markets by an
organization.

Tangible offering
A physical entity

Intangible offering
Services delivery. Brand name, warranties, guarantees, packaging etc
THE OFFERING PORTFOLIO (CONT.)
Offering mix the totality of an organizations offerings

Normally consist of distinct offering lines:
Offerings similar to usage
Buyers marketed to
Technical characteristics


THE OFFERING PORTFOLIO (CONT.)
Bundling the marketing of two or more product or service items in a
single package that creates a new offering.

Based on the idea that consumers value the package more than the
individual items.
MODIFYING THE OFFERING MIX
Additions to the offering mix
Consistency
Resources
Market
CONSISTENCY
Demand interrelationships offering substitutes or complements must be
considered when evaluating the consistency of the new offerings.

To avoid cannibalism

Will the new offering satisfy the target markets currently being served by
the existing offering mix?
RESOURCES
Evaluate the financial strength of the organization
New offerings normally require large cash outlays for all marketing
activities
MARKET
Determine whether a market exists for the new offering
Does the new offering have a relative advantage over competitive offerings
at a price buyers are willing and able to pay?
Is there a distinct buyer group or segment for which no present offering is
satisfactory?
NEW-OFFERING DEVELOPMENT - THE PROCESS
The process
The idea normally came from employees, suppliers, buyers and
competitors.
Formal marketing research
Informal means
Success of new offerings rely on
A fit with market needs
A fit with the organizational strengths and resources
BUSINESS ANALYSIS AND MARKET TESTING
Sales and profit analysis
Profitability analysis related to investment requirements, break-even
procedures, payback periods.
Break-even procedures is to determine the estimates of the number of units
that must be sold to cover the fixed and variable costs.
Payback period refers to the number of years required for an organization
to recapture its initial offering investment.

The shorter the payback period, the sooner an offering will prove profitable.
Calculation of Return on investment (ROI) does not always distinguish
among offering alternatives according to their riskiness.
MARKET TESTING
Test marketing is a major consideration in the development and testing
stage.
A scaled down implementation of one or more alternative marketing
strategies for introducing the new offerings.

BENEFITS OF TEST MARKETING
Generate benchmark data for assessing sales volume when the product is
introduced over a wider area
If alternative strategies are tested, the relative impacts of the two programs
can be examined under the actual market conditions.
Allow the manager to assess the incidence of offering trial by potential
buyers, repeat-purchasing behavior and quantity purchased.
LIFE-CYCLE CONCEPT
A life-cycle plots sales of an offering or a product class over a period of
time.
Four stages : introduction, growth, maturity and decline.
Sales volume (number of triers X average purchase amount X price) +
(number of repeaters X average purchase amount X price).

Introduction stage
Simulating trial through advertising, free samples, adequate distribution
Growth stage
Majority of sales volumes come from trial purchases.
An increased of sales volume that follows the life cycle comes from repeat
purchases from satisfied customers
Maturity stage
Increase of repeat purchases
Increase in the standardization of production operations and product-service
offerings
Increase of aggressive pricing by competitors
Focus on finding new buyers
Improves the offering
Increase the usage rate


Declining stage
Modify, harvest and eliminate offerings
MODIFYING, HARVESTING AND ELIMINATING
OFFERINGS
Trading up a conscious decision to improve an offering
By adding new features and higher-quality materials
By augmenting the offering with attendant services
By raising the price

Trading down the process of reducing the number of features or quality of
an offering and lowering the price
HARVESTING
Reducing the investment in a business entity in the hope of cutting the
costs and improving the cash flow.
Should be considered:
The market for the offering is stable
The offering is not producing good profits
The offering has a small or respectable market share that is becomingly difficult
or costly
ELIMINATION
The offering is dropped from the mix of organizational offerings either
outright or through sale to another organization.
What is the sales potential of the offering?
How much is the offering contributing to the offering mix profitability?
How much is the offering contributing to the sale of other offerings in the mix?
How much could be gained by modifying the offering?
POSITIONING
Positioning is the act of designing an organizations offering and image so
that it occupies a distinct and valued place I the target customers mind
relative to competitive offerings.
POSITIONING APPROACHES
Positioning by attributes
Use or application
Product or brand user
Product or service class
Price and quality
POSITIONING BY ATTRIBUTES
Most frequently used
Requires determining which attributes are important to target markets
Determining which attributes are being emphasized by competitors
How the offering can be fitted into this target market environment
Requires developing attribute matrix that will be offered to the target
market
REPOSITIONING
When the initial positioning of a product, service, brand or organization is
no longer competitively sustainable or profitable or when better
positioning opportunities arise.
Involve costs, time and efforts.
MAKING THE POSITIONING DECISION
What position do we want to own?
What competitors must be outperformed if we are to establish the position?
Do we have the marketing resources to occupy and hold the position?