The Marketing Mix

2. 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

3. 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

4. A product is the sum of the physical, psychological, physiological, and sociological satisfactions the buyer derives from purchase, ownership and consumption Product Definition

5. 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

6. Grown or extracted from the land or the sea Fairly homogeneous Sold in large volume Low value per unit Agricultural Products and Raw Materials

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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

16. Brand Equity

17. Differentiates relatively homogeneous products Contributes to “Brand Equity” by creating new attributes or value Creates urgent salability within a target market Packaging

18. 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

19. 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

20. Product Lifecycle and Strategy

21. 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

22. 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

23. 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

24. 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

25. 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

26. Less risk Lower costs Less time Cheaper market share Higher profits Product Rejuvenation

27. 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

28. 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