what is a product? multidimensional, sum of all its features, bundle of utility

What is a Product?

• Multidimensional, sum of all its features, bundle of utility

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Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Product Component Model

Repair and maintenance

SUPPORT SERVICESCOMPONENT

CORECOMPONENT

Installation

Instructions

Other related services

Deliveries

Warranty

Spare parts

Legal

Trademark

Brand name

Legal

Product platform

Design features

Functional features

Legal

PACKAGINGCOMPONENT

Price

Quality

Package

Styling

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Product Marketing Decisions

• Numerous

• Affected by Environmental Factors

• Affected by internal Strengths and Weaknesses

Types of Product Decisions (1) Product Positioning

• Positioning refers to the act of locating a brand in customers’ minds relative to competitive products in terms of product attributes and benefits

Positioning Map: Automobiles For Generation Yers

More “Edgy”

Less “Edgy”

ExpensiveInexpensive

Scion

Kia Sorrento

$13k

Cube

Civic$20K

Types of Product Decisions: (2) Product Mix Decisions

• Def.: Set of all products and items that a particular seller offers to buyers.

• Decisions include selection of width, length, depth, and consistency

Product Mix / Assortment E.g. P&G

Detergents Toothpaste

Ivory Soap Crest

Dreft Gleam

Tide

Cheer

Oxydol

Dash

Gain

Bold

Era

(3) Product Line Decisions

• A product line is a group of products that are closely related because they perform a similar function, are sold to the same customer groups, are marketed through the same channels

• Decisions include Product Line length, modernization, featuring, pruning

(4) Brand Name

A company’s unique designation or

trademark, which distinguishes its

offering from other product category

entries

(5)The Logo

• Graphic design element that is related to the brand name

• Companies use logos with or without brand names

• Not all brand names possess a distinct logo but many do

• e.g., the Nike swoosh, Ralph Lauren’s Polo

(6) Packaging DecisionsColor

Design and ShapePhysical Materials

Product Information

on Package

What is a Service?

• “Any act that one party can offer to another that is essentially intangible and does not result in the ownership of anything. May or may not be tied to a physical product”

Major Categories U.S. Exports of Services

Category Percentage

Services Total 28.5

Travel (hotels, etc) 8.7

Transportation (fares, freight, and port services) 7.5

Commercial, professional, and technical services (advertising,

accounting, legal, construction, engineering) 1.7

Financial services (banking and insurance) 1.5

Education and training services (most foreign student tuition) 1.0

Entertainment (movies, books, records) 0.8

Other categories (telecommunications, information, health care) 7.3

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Source: U.S. Department of Commerce, http://www.doc.gov. 2001

Service Marketing Decisions

• Product Mix

• Product Line

• Brand Name

• Logo

• Store Layout

Types of Service Marketing Decisions

Product Positioning

Montevideo, Uruguay

What is an Industrial Product?

• Goods intended for industrial use, i.e. creating other goods & services– Materials & parts (enter manufacturer’s product

completely, e.g. oil, lumber, tires, small motors)– Capital Items (long lasting, facilitate developing

finished product, e.g. buildings, generators, lift trucks)– Supplies & business services (short lasting, e.g. pens,

brooms, maintenance & repair services)

Major Categories U.S. ExportsIndustrial

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Irwin/McGraw-Hill Source: U.S. Department of Commerce, http://www.doc.gov. 2001

Category Percentage

Merchandise Total 71.5

Food, feeds, and beverages (wheat, fruit, meat) 4.8

Industrial supplies (crude oil, plastics, chemicals, metals) 15.1

Capital goods (construction equipment, aircraft, computers

telecommunication) 32.1

Automotive vehicles, engines, and part 7.7

Consumer goods (pharmaceuticals, tobacco, toys, clothing) 8.2

Other categories 3.6

To Standardize or Adapt Product/Service?

That is the Question.

Products & Services for Consumers

• Two Approaches for International Product Development– Adaptation – The strategy of altering products

to meet the needs of local markets– Global Standardization – The standardization

of products across markets & ultimately the standardization of the marketing mix worldwide

Global Standardization vs. Local Adaptation – “Continuum”

• Continuum not “One or the other”

• Global Standardization - “Ideal, theoretical”

• Regional Standardization – uniform marketing within a particular region, EU

• Globalize components, e.g. Brand Name, Logo, Image, Positioning, physical product,

Globalization

“A little boy from Japan flies to the United States with his parents, and on the way in from the airport they pass the "miracle mile" most places have now. The little boy turns to his parents and says, "Hurray! They have McDonald's here in America too!"

Globalization

• Braun (Gillette) sells kitchen appliances using same marketing mix across continents with minor mandatory adaptations (voltage, cycles)

Pro Globalization Arguments

• Global Consumers – Needs of consumers are becoming more homogenous world wide

• Global Brand Awareness facilitated by travel, communication, internet

• Results in lower price due to standardized product research, economies of scale, promotion

Adaptation - Love Hotels in Japan

• You'll find "Love Hotels" all over Japan, places designed for folks to get together. The rooms offer a fantasy of luxury and escape from crowded tiny apartments where families or neighbors might spy on licit or illicit physical pleasures. You can tell the love hotels by their bright-lit neon signs with funny names, often English inflected: Hotel Elmer, Hotel Carrot, Hotel Charm, Hotel Princess, Hotel Chrystal. And the signs out front will list two or three prices: short stays, long stays, overnight stays.

• In the lobby, you won't see any people. Only a large room menu on the wall. If a photo of a room is lit up, the room is available. You like that room, press a button next to the photo. A faceless person behind dark glass hands you a key after you hand them your cash.

LLove Hotelove Hotel

LLove Hotelove Hotel

Price InformationStay ¥ 4500 ($40)-- OPENRest ¥ 3600 ($30)-- CLOSE

AM 10:00-PM 5:00PM 3:00-PM 6:00 ¥ 2600AM 10:00-PM 4:00 ($20)

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Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Which Components of the Product May Require Adaptation?

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● Core Component

▶ Physical Product Features▶

▶ Design

*Positioning “Psychological”

● Packaging Component

▶ Style Brand Name▶

▶ Packaging Quality▶

▶ Labeling Price▶

▶ Trademarks

● Support Services Component

▶ Repair Warranties▶

▶ Maintenance Deliveries▶

▶ Instructions Spare Parts▶

▶ Installation

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Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Alu-Fanny: French Foil wrap

Crapsy Fruit: French cereal

Kum Onit: German pencil sharpeners

Plopp: Scandinavian chocolate

Pschitt: French lemonade

Atum Bom: Portuguese tuna

Kack: Danish sweets

Mukk: Italian yogurt

Pocari Sweat: Japanese sport drink

Poo: Argentine curry powder

Would They Sell in the United States?

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Detergent Powder                  (Hand laundry detergent)Strong cleaner,well-known in international marketspackaged in 150, 480 gram and 20 kilogram sizes

Shampoo

Makes hair shiny, for normal hair,packaged in 400 gram size

Adapt or Standardize?

How could this product be adapted to U.S.?

• Product?

• Package?

• Support Services?

Services

• Adaptation important because it involves people to people contact

Industrial Products

• Industrial Products Require Less Adaptation– Industrial goods share

similar buying motives worldwide

• Industrial Products main U.S. export