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The Marketing Mix. McGraw-Hill/Irwin Marketing Management, 8e. © 2007 The McGraw-Hill Companies, Inc., All Rights Reserved. Chapter Six. Key Words / Outline

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the marketing mix

The Marketing Mix

McGraw-Hill/Irwin

Marketing Management, 8e

© 2007 The McGraw-Hill Companies, Inc., All Rights Reserved.

Chapter Six

Key Words / Outline

Tangible product, Extended product, Generic product, Marketing myopia, Buyer derives, Vertical market, Horizontal market, Quality Value, Product mix, ,line extension, Brand extension, Franchise extension, Dual branding, Multi branding, Fashions, Fads, Innovators, Laggards, Market dimensions

three views of product
Tangible – physical entity or service

Extended – tangible product plus a whole cluster of services that accompany it

Generic – the essential benefits the buyer expects to receive from the product

Three Views Of Product
product definition
A product is the sum of the physical, psychological, physiological, and sociological satisfactions the buyer derives from purchase, ownership and consumptionProduct Definition
product classification
Two basic criteria of product classification

End use or market

Degree of processing or physical transformation

Three categories of products

Agricultural products and raw materials

Organizational goods

Consumer goods

Product Classification
agricultural products and raw materials
Grown or extracted from the land or the sea

Fairly homogeneous

Sold in large volume

Low value per unit

Agricultural Products and Raw Materials
organizational goods
Purchased by firms for the purpose of producing other goods

Raw materials and semi-finished goods

Major and minor equipment

Parts or components needed to complete other finished goods

Supplies or items used to operate the business but not an element of a finished good

Organizational Goods
consumer goods
Convenience goods – such as food which require minimal effort

Shopping goods – such as appliances, which are purchased after some time and energy is spent comparing

Specialty goods – which are unique in some way to the consumer and are characterized by special effort

Consumer Goods
organizational market characteristics
A primary purchasing motive for organizational goods is profit

Organizational markets are concentrated geographically as in the case of steel or auto

Can be categorized into

Vertical market: Limited number of buyers

Horizontal market: Limited number of industries

Organizational Market Characteristics
elements of product strategy
An audit of firm’s actual and potential resources

Approaches to current markets

Approaches to new or potential markets

State of competition

Elements Of Product Strategy
quality and value
Buyers expect . . .

Quality

The degree of excellence or superiority that an organization’s product possesses

Value

What the customer gets in exchange for what the customer gives

Quality and Value
product mix
The full set of products offered for sale by an organization

May consist of several product lines, or groups of products sharing common characteristics, distribution channels, customers, or uses

Product mix exhibits

Width – number of product lines in the organization

Depth – average number of products in each line

Product Mix
branding
A brand identifies one seller’s good or service as distinct from competitors

Brand can be

A name

A term

A design

A symbol

Branding
branding14
Line extension:Uses brand name to facilitate entry into a new market segment

Brand extension: Uses an existing brand to enter a different product class

Family branding: Attaches the corporate name to a product to either enter a new market or a new product class

Dual branding: Concept where two or more branded products are integrated

Multibranding: Assigning different brand names to each product

Branding
advantages of a multi branding strategy
The firm can distance products from other offerings it markets

The image of one product is not associated with other products the company markets

The products can be specifically targeted

If the product fails, the effect on other products is minimized

Advantages of a Multi-branding strategy
packaging
Differentiates relatively homogeneous products

Contributes to “Brand Equity” by creating new attributes or value

Creates urgent salability within a target market

Packaging
product lifecycle
Introduction

High costs, low or no profit

Growth

Reduced costs, profits increase, maximum value

Maturity

Marginal cost, marginal profit, high competition

Decline

Low costs, high profits, competition lessens

Product Lifecycle
product lifecycle limitations
As useful as the product life cycle can be to managers, it does have limitations that require it to be used cautiously

Accuracy pertaining to the longevity of the product can’t be predicted

Variations in life cycle exists

Fashion: These are accepted and popular product styles

Fads: Products which experience high but brief popularity

Product Lifecycle - Limitations
product adoption and diffusion
Adopter categories

Innovators

Early adopters

Early majority

Late majority

Laggards

Diffusion: The spread of the product through the population is known as the diffusion of innovation

Product Adoption And Diffusion
product audit
The product audit is a marketing management technique whereby the company’s current product offerings are reviewed to ascertain whether each product should be continued as is, improved, modified, or deleted Product Audit
deletions
Deletion decisions are difficult because of the potential impact on customers and the firm

Considerations in the deletion decision include

Sales trends: Have sales moved over time? What has happened to market share?

Profit contribution: What has been the profit contribution of the product to the company?

Product life cycle: Has the product reached a level of maturity?

Customer migration patterns: If the product is deleted, will customers switch to another product marketed by our firm?

Deletions
product improvement
Another important objective of the audit is to ascertain whether to alter the product in some way or leave things the way they are

Attributes: Refer to main features of the product such as design, package and so forth

Marketing dimensions: Refer to features like pricing, promotion strategy and distribution channels

Product Improvement
product improvement25
Benchmarking: Continuous process of measuring products, services, and practices against those of the toughest competitors

Advantages of benchmarking include

Boosting product quality

Developing more user-friendly products

Improving customer order processing activities

Shortening delivery lead times

Product Improvement
product rejuvenation
Less risk

Lower costs

Less time

Cheaper market share

Higher profits

Product Rejuvenation
product management
Market management system:One person is responsible for overseeing an entire product line with all of the functional areas of marketing such as research, advertising, sales promotion, sales, and product planning

Brand management system: A manager focuses on a single product or a very small group of new and existing products

Product Management
cross functional teams
Use of cross functional teamshas become an important way to manage the development of new products

Requirements of managing a cross functional team include

Commitment of top management and provision of clear goals

Trust among members

Cross functional cooperation

Time and training

Cross Functional Teams