01. pcm 7 8 9

THARAKA DIASDirector – My Media Network/

Solutions.comMBA(USA), BBA(USA), Dip in Mgt, ACIM(UK), FAEA(Dip in AEA-UK),

FinstSMM(UK), CPM(Asia), MSLIM, PM(Sri-Lanka)

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Definition of a product As anything that can be offered to a market for attention,

acquisition, use, or consumption that might satisfy a want or need (Philip Kotler)

A product could be any of the following A physical good – Car , Home, Phone, TV Person Place Organization Idea Service Experience


Product features – the physical attributes that are seen in the product.

Product Benefits – refers to the benefit the consumer would experience in consuming the product.


This means product assortment, and its consist of all the products or services that a company offers to its customers .

Length of product mix – the length of a companies product mix is the total number of individual products of services in the entire product mix- 3M has over 60,000 products

Width of product mix – the breadth of width of a companies product mix relates to the number of product lines the company process – Unilevers

Depth of product mix – it’s the number of products in each product line – Personal care range consist of , Soaps , toothpaste, colognes etc.

Product mix consistency – this refers to how closely related the various product lines are in terms of use- channels of distribution, promotion AOT - THARAKA DIAS 9

Product Product Line 1Line 1



TABLESTABLES•KitchenKitchen•Dining RoomDining Room•EndEnd•CoffeeCoffee•OutdoorOutdoor•ConferenceConference•ComputerComputer

CHAIRSCHAIRS•Dining RoomDining Room•Living RoomLiving Room•BedroomBedroom•OutdoorOutdoor•DeskDesk

LAMPSLAMPS•TableTable•CeilingCeiling•TrackTrack•DeskDesk

• Width of Product Mix

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Capital equipment – consist of all the buildings and fixed equipment that have to be in place for production. – plants, machinery, computer installations, generators etc.

Accessory equipment – equipment that does not become a part of the final physical product but is used in production or office activities. – office equipment's, and factory equipment's

Raw materials – are the basic materials that become part of the physical product

Components and parts – are finished goods in their own right, which simply have to be incorporated into the assembly of the final product with no further processing- Intel microchip , Goodyear tyres and head lamp units.

Supplies and services – include office stationery, cleaning materials and services include financial, janitorial, legal, equipment maintenance and printing


Convenience

Unsought

Shopping

Specialty


Convenience products- relatively inexpensive and frequently purchased

1. Staple goods- bread, milk, toothpaste2. Impulse goods – chocolates, perfumes, mags3. Emergency products – umbrella, medicine, battery

Shopping products – less frequent purchased products ( Appliances, bicycle, cameras, furniture, clothing, airline

etc) Specialty products - products with unique characteristics or

brand identification ( Cars, watches, designer clothes, medical advisory, legal)

Unsought products – normally does not plan to buy ( catalogues, insurance, encyclopedia, blood donation

etc)


4.1. What is a Brand – A brand is 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. ( American Marketing Association)


The Consumer Easier product identification Communicates features and benefits Helps product evaluation Establishes products position in the market Reduces risk in purchasing Creates interest/ character for product

The Marketers Helps to created loyalty Defends against competition Creates differential advantage Allows premium pricing Helps targeting Increases power over retailers.


The Retailers Benefits from brand marketing support Attracts customers


Brand recognition – the first step would be to make the consumer to identify a brand

Brand acceptance – how you should make them accept your brand

Brand Preference – consumers desire for your brand over competitors

Brand loyalty – ultimate dream of marketer. To make consumer loyal to your brand


Individual product branding – Lux, Anchor Blanket family branding – Damro , Sony,

Phillips Combination brand names – Microsoft

Office, Microsoft Windows


Packaging is defined as all the activities of designing and producing the containers or wrapper for a product – Kotler

5.1 functions of packaging Protection of contents from damage, deterioration or tempering As a promotional tool- by packaging attractively a marketer can get

the attention and interest of the customer Acts as a silent salesman in self service shops Instant recognition of the brand Innovative packaging creates competitive advantage User convenience –storage and carrying Provides information Compliance with government regulations Must be hygienic and environmental friendly Management information as bar codes can be used to track sales


The PLC emphasize the fact nothing lasts forever. Warn against the dangers of assuming that growth will

continue forever It is an important tool for forecasting and strategic

planning It shows the trend in sales and profitability PLC emphasizes the need to review marketing

objectives and strategies as the product passes through the various stages.

Identify the key decision points where strategies and tactics must change


There is no way that any of the decisions points can be predicted with accuracy- it is for each manager to use his best judgment

Not all product follow the classic S shaped curve.

The PLC ignore the application of the marketing mix

Strategic decision can change a PLC by repositioning a product in the market its life can be extended.


A service is any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything- Kotler


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Marketing

Objectives

SurvivalLow Prices Hoping to Increase Demand.

Current Profit Maximizat ion

Choose the Price that Produces the Maximum Current Profit, Etc.

Market Share LeadershipLow as Possible Prices to Become

the Market Share Leader.

Product Quality LeadershipHigh Prices to Cover Higher

Performance Quality and R&D.

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Four Seasons uses the product quality leadership strategy.

It starts with very high quality service, then charges a price to match.

http://www.fourseasons.com

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http://www.fourseasons.com/

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Price

Product Design

Distribution

Promotion

Non pricePositions

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Total CostsSum of the Fixed and Variable Costs for Any Given

Level of Production

Total CostsSum of the Fixed and Variable Costs for Any Given

Level of Production

Variable Costs

Costs that do varydirectly with the

level of productionRaw materials

Fixed Costs(Overhead)

Costs that don’tvary with sales or production levels

Executive Salaries, Rent

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Market andDemand

Competitors’ Costs, Prices, and Offers

Other External FactorsEconomic ConditionsReseller Reactions

Government ActionsSocial Concerns

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Pure CompetitionPure CompetitionMany Buyers and Sellers

Who Have Little Effect on the Price

Pure CompetitionPure CompetitionMany Buyers and Sellers

Who Have Little Effect on the Price

Monopolistic Monopolistic CompetitionCompetition

Many Buyers and Sellers Who Trade Over a

Range of Prices

Monopolistic Monopolistic CompetitionCompetition

Many Buyers and Sellers Who Trade Over a

Range of Prices

Pricing in Different Types of Markets

Oligopolistic Oligopolistic CompetitionCompetition

Few Sellers Who AreSensitive to Each Other’s

Pricing/ Marketing Strategies

Oligopolistic Oligopolistic CompetitionCompetition

Few Sellers Who AreSensitive to Each Other’s

Pricing/ Marketing Strategies

Pure MonopolyPure MonopolySingle Seller

Pure MonopolyPure MonopolySingle Seller

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Pric

e

Quantity Demanded per Period

A. Inelastic Demand - Demand Hardly Changes Witha Small Change in Price.

P2

P1

Q1Q2

Pric

e

Quantity Demanded per Period

P’2P’1

Q1Q2

B. Elastic Demand -Demand Changes Greatly Witha Small Change in Price.

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Certainty About

Costs

Pricing is Simplified

Price Competition

Is Minimized

UnexpectedSituational Factors

Attitudes of

Others

Ethical

Ignores Current Demand &

Competition

Cost-Plus Pricing is an Approach That Adds a Standard

Markup to the Cost of the Product

Simplest Pricing Method

Fairer to Buyers

& SellersAOT - THARAKA DIAS

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2468

1012

200 400 600 800 1,000

Total Revenue

Total Cost

Fixed Cost

Target Profit($2 million)

Sales Volume in Units (thousands)Cos

t in

Dol

lars

(milli

ons)

Tries to Determine the Price at Which a Firm Will Break Even or Make a Certain Target Profit.

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Methods for Setting Prices

Going-Rate Company Sets Prices Based on What

Competitors Are Charging

Sealed-BidCompany Sets Prices Based on What They Think Competitors

Will Charge??

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Market-Skimming

Setting a High Price for a New Product to “Skim” Maximum Revenues from the Target Market.

Results in Fewer, But More Profitable Sales.

I.e. Intel

Use Under These Conditions: Product’s Quality and Image

Must Support Its Higher Price. Costs Can’t be so High that

They Cancel the Advantage of Charging More.

Competitors Shouldn’t be Able to Enter Market Easily and Undercut the High Price.

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Market Penetration

Setting a Low Price for a New Product in Order to “Penetrate” the Market Quickly and Deeply.

Attract a Large Number of Buyers and Win a Larger Market Share.

I.e. Dell

Use Under These Conditions: Market Must be Highly Price-

Sensitive so a Low Price Produces More Market Growth.

Production/Distribution Costs Must Fall as Sales Volume Increases.

Must Keep Out Competition & Maintain Its Low Price Position or Benefits May Only be Temporary.

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Optional-Product Pricing optional or

accessory products sold with the main product. i.e camera bag.

Captive-Product Pricing products that

must be used with the main product. i.e. film.

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C a s h D i s c o u n t S e a s o n a l D i s c o u n t

Q u a n t i t y D i s c o u n t T r a d e - I n A l l o w a n c e

F u n c t i o n a l D i s c o u n t P r o m o t i o n a l A l l o w a n c e

A d j u s t i n g B a s i c P r i c e t o R e w a r d C u s t o m e r sF o r C e r t a i n R e s p o n s e s

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Considers the psychology of prices and not simply the economics.

Customers use price less when they can judge quality of a product.

Price becomes an important quality signal when customers can’t judge quality; price is used to say something about a product.

Retail $100.00Cost $3.00

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Temporarily Pricing Products Below List Price

Through:Special-Event PricingSpecial-Event Pricing

Cash RebatesCash Rebates

Low-Interest FinancingLow-Interest Financing

Longer WarrantiesLonger Warranties

Free MaintenanceFree Maintenance

DiscountsDiscounts

Loss LeadersLoss Leaders

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•Pricing products for customers located in different parts of the country or world.• i.e. FOB-Origin, Uniform- Delivered, Zone, Basing- Point, & Freight-Absorption.

• Adjusting prices for customers in different counties.• Price Depends on Costs, Consumers, Economic Conditions, Competitive Situations, & Other Factors.

Geographical Pricing

International Pricing

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Why?

Excess Capacity

Falling Market Share

Dominate Market Through Lower Costs

Why?

Cost Inflation

Overdemand: Company Can’t Supply All Customers’ Needs

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Distribution involves all the activities that a marketer does in order for the consumer to buy the product

at the right time at the right place in the right condition It includes: selecting channels, transporting,

storage, loading, breaking bulk packs, display etc.


Provision of information Storage Physical possession Promotion Order taking Credit After sales service


Distributors –handle all the activities of the distribution and not deal with competitive products

Stockists- Usually order goods with consultation of the manufacturer and sales reps of the manufacturer will sell products collection of money is done by the stokists

Wholesale – sell it to small retailers Retail- sell it to end user Modern trade ( Super markets)- sell it to end users Authorised dealers- supply the retailers with company

prices and replenish stocks Franchises – use the name and technology of the principle Department stores ( garments to personal care- usually not

handle groceries) eg. ODEL

•Company own sales team

•Distributors, dealers, stockists, value-added re-sellers

•Agents and brokers

•Franchisees

•Electronic channels

•Wholesalers

•Retailers AOT - THARAKA DIAS 61

•Intensive: distribution through every reasonable outlet available

•Selective: multiple, but not all outlets in the market – pharma, frozen food

•Exclusive: may be only one outlet in a market - car dealers


The distribution strategy also needs the support and encouragement of top management to succeed

Some of the CSFs could be: Clear, transparent and unambiguous policy and procedure Serious commitment of the channel partners Fairness in dealings Clearly defined customer service policy High level of integrity Equitable distribution at times of shortage Timely compensation of channel partners


Consumer ( let consumer buy at convenience- wider geographical area)

Industrial/business( generally in a concentrated area)

Service markets ( no intermediaries much but their could be agents )

Physical Supply goods moving from supplier to manufacturer “inbound”

Physical Distribution goods moving from manufacturer to

customers “outbound”


1. Total Cost Concept2. Customer Service Concept

a. Timeb. Dependabilityc. Communicationd. Conveniencee. Accuracy


3. Distribution Cost-Service trade offsa. Achieve right balance between them b. Flexibility is important in balancing the cost

and service


Have a proper order processing system Have a good inventory control system – have

realistic lead times, Minimum order levels, Overstock levels, Optimum levels

Plan and schedule movement of goods Use shorter distribution channels Use technology such as online stock ordering

and control systems Consolidate small lots in one lorry Out source when profitable


a. Verifying Customers’ Credibilityb. Checking for any outstanding paymentc. Monitoring stock leveld. Preparing invoicee. Arranging transporterf. Sending the consignment and information


i. Suitability or nature of productii. Affordabilityiii. Availabilityiv. Customers’ specificationsv. Competitor’s transportation model


Developed in 1980s. SCM is the process of planning,

implementing, and controlling the operation of the supply chain as possible

The primary objective of supply chain management is to fulfill customer demand through the most efficient use of resources


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01. pcm 7 8 9

Marketing

aot tharaka diasproduct

aot tharaka diasdefinition

promotion aot tharaka

tharaka diasdirector

printingaot tharaka

length of product

final product

product benefits