MARKETINGMARKETING MANAGEMENTMANAGEMENT

MARKETING MANAGEMENTMARKETING MANAGEMENTPRODUCT:PRODUCT:

MeaningMeaning

Goods & ServicesGoods & Services

Product Mix Product Mix

Levels of Product Levels of Product

PLC- Managing PLCPLC- Managing PLC

MARKETING MANAGEMENTMARKETING MANAGEMENT NEW PRODUCT DEVELOPMENTNEW PRODUCT DEVELOPMENT

Types of new productTypes of new product

Test marketing a new productTest marketing a new product

Portfolio analysisPortfolio analysis

Branding- Definition, Branding- Definition, Purpose & significancePurpose & significance and and Branding DecisionsBranding Decisions

Packaging and labeling- Packaging and labeling- Purpose ,types and new trends Purpose ,types and new trends in packagingin packaging

MARKETING MANAGEMENTMARKETING MANAGEMENT

PRICEPRICE

MeaningMeaning

ImportanceImportance

Pricing ObjectivesPricing Objectives

Factors influencing Pricing Factors influencing Pricing decisionsdecisions

Approaches to PricingApproaches to Pricing

Setting the price and managing Setting the price and managing the the price changesprice changes

MARKETING MANAGEMENTMARKETING MANAGEMENT

PLACEPLACEImportanceImportanceFunctions of Distribution ChannelsFunctions of Distribution ChannelsIntroduction to various channels of Introduction to various channels of distributionsdistributionsDesigning of Marketing ChannelsDesigning of Marketing ChannelsIntroduction of Wholesaling, Introduction of Wholesaling, Retailing, FranchisingRetailing, FranchisingDirect MarketingDirect MarketingImpact of technology & internet on Impact of technology & internet on DistributionDistribution

MARKETING MANAGEMENTMARKETING MANAGEMENT

PROMOTIONPROMOTION

Concept and role in MarketingConcept and role in Marketing

Promotional Mix-Advertising, Promotional Mix-Advertising, Sales Promotion , Personal Sales Promotion , Personal

Selling, Selling, Public RelationsPublic Relations

Impact of technology internet on Impact of technology internet on PromotionPromotion

EXTENDED P’S OF MARKETINGEXTENDED P’S OF MARKETING

People, Process & Physical EvidencePeople, Process & Physical Evidence

PRODUCTPRODUCT

PRODUCT:PRODUCT:

Anything that can be offered to market for Anything that can be offered to market for attention ,acquisition use ,or consumption attention ,acquisition use ,or consumption that might satisfy a want or needthat might satisfy a want or need

Bundle of physical ,Service and symbolic Bundle of physical ,Service and symbolic attributes designed to satisfy a customer’s attributes designed to satisfy a customer’s wants and needs.wants and needs.

PRODUCTPRODUCT ClassificationClassification

Consumer Products(B2C)Consumer Products(B2C)

Products, which are purchased by Products, which are purchased by the ultimate consumers or users for satisfying their the ultimate consumers or users for satisfying their personal needs and desires are referred to as personal needs and desires are referred to as consumer products. For example, soap, edible oil, consumer products. For example, soap, edible oil, eatables, textiles, toothpaste, fans, etc. which we use eatables, textiles, toothpaste, fans, etc. which we use for our personal and non business use are consumer for our personal and non business use are consumer goods.goods.

Destined for use by ultimate consumerDestined for use by ultimate consumer

INDUSTRIAL/ORGANIZATIONAL/B2B PRODUCTSINDUSTRIAL/ORGANIZATIONAL/B2B PRODUCTS

Industrial products are those products, which are used Industrial products are those products, which are used as inputs in producing other products. The examples as inputs in producing other products. The examples of such products are raw materials, engines, of such products are raw materials, engines, lubricants, machines, tools, etc. lubricants, machines, tools, etc.

Industrial products are meant for non personal and Industrial products are meant for non personal and business use for producing other products.business use for producing other products.

The market for industrial products consists of The market for industrial products consists of manufacturers, transport agencies, banks and manufacturers, transport agencies, banks and insurance companies, mining companies and public insurance companies, mining companies and public utilities.utilities.

Consumer Products(B2C)Consumer Products(B2C)

Depending upon shopping efforts Consumer Depending upon shopping efforts Consumer products are further classified asproducts are further classified as

1.Convenience Products1.Convenience Products

2. Shopping Products2. Shopping Products

3. Specialty Products3. Specialty Products

4. Unsought Products4. Unsought Products

Consumer Products(B2C)Consumer Products(B2C)

Convenience ProductsConvenience Products

Goods and services that Goods and services that consumer wants to purchase consumer wants to purchase frequently immediately and frequently immediately and with minimal effort. Easily with minimal effort. Easily availableavailable

e.g Toothpaste, Magazines,e.g Toothpaste, Magazines,

Shopping ProductsShopping Products

After comparing competing After comparing competing offerings on price, quality offerings on price, quality and styleand style

e.g Television, Furniture e.g Television, Furniture ClothingClothing

Specialty ProductsSpecialty Products

Strong brand preference and Strong brand preference and loyalty, special purchase loyalty, special purchase efforts, little comparison of efforts, little comparison of brands, low price sensitivitybrands, low price sensitivity

e.g luxury cars, Tax Attorney e.g luxury cars, Tax Attorney

Unsought productsUnsought products

Little product knowledge or if Little product knowledge or if aware little or even negative aware little or even negative interestinterest

e.g Pre-needed Funeral planse.g Pre-needed Funeral plans

Convenience ProductsConvenience Products CHARCTERISTICSCHARCTERISTICS

a) a) These products are purchased at convenient locations, with least These products are purchased at convenient locations, with least efforts and timeefforts and time

(b) (b) Convenience products have a regular and continuous demand,as Convenience products have a regular and continuous demand,as these generally come under the category of essential productsthese generally come under the category of essential products

(c) (c) These products have small unit of purchase and low prices. For These products have small unit of purchase and low prices. For example the eggs are sold at Rs.28 per dozen and the customers purchase them example the eggs are sold at Rs.28 per dozen and the customers purchase them in small numbersin small numbers

(d) (d) Convenience products have standardised price as most of these Convenience products have standardised price as most of these products are branded products;products are branded products;

(e) (e) The competition in these products is high as the supply is greater The competition in these products is high as the supply is greater than the demand. The marketers have, therefore, to heavily advertise for than the demand. The marketers have, therefore, to heavily advertise for these productsthese products

f) f) Sales promotion schemes or short term incentives such as sales Sales promotion schemes or short term incentives such as sales contests, discount offers, etc play an important role in the marketing of such contests, discount offers, etc play an important role in the marketing of such productsproducts

Convenience ProductsConvenience Products Classification:Classification:

(a) Staples(a) StaplesMost frequent and most routinely purchased e.g Most frequent and most routinely purchased e.g

Milk, Dry cleaning Milk, Dry cleaning (b) Impulse(b) Impulse

Totally unplanned .Exposure to the product triggers Totally unplanned .Exposure to the product triggers want e.g Savvy magazines and chocolateswant e.g Savvy magazines and chocolates

(c) Emergency(c) EmergencyPurchases result from urgent and compelling needsPurchases result from urgent and compelling needse.g Emergency room visit, Asthma inhalerse.g Emergency room visit, Asthma inhalers

Shopping ProductsShopping Products CharacteristicsCharacteristics

((aa) ) The shopping products are generally of durable nature, i.e., The shopping products are generally of durable nature, i.e., they normally survive many usesthey normally survive many uses

(b) (b) The unit price as well as profit margin of shopping products The unit price as well as profit margin of shopping products is generally high;is generally high;

(c) (c) As these products have high unitprice, customers compare As these products have high unitprice, customers compare the products of different companies before making selection;the products of different companies before making selection;

(d) (d) Purchases of shopping products are generally pre-planned Purchases of shopping products are generally pre-planned and there is little degree of impulse buying in these productsand there is little degree of impulse buying in these products

(e) (e) Retailers generally play an important role in the sale of Retailers generally play an important role in the sale of shopping products as lot of persuasive effort is needed to shopping products as lot of persuasive effort is needed to convince the buyers to purchase them.convince the buyers to purchase them.

Shopping ProductsShopping Products

ClassificationClassification

(a) Homogeneous: All products are (a) Homogeneous: All products are considered similarconsidered similar

Shopping focus mainly on price Shopping focus mainly on price comparisons e.g Airplane flights/T.Vcomparisons e.g Airplane flights/T.V

(b) Heterogeneous: Shopping focus on (b) Heterogeneous: Shopping focus on quality comparisons e.g Child Care, Selection quality comparisons e.g Child Care, Selection of flat/Apptof flat/Appt

Specialty ProductsSpecialty Products CharacteristicsCharacteristics

(a) (a) The demand for speciality products is limited as The demand for speciality products is limited as relatively small number of people buy these relatively small number of people buy these

products;products;(b) (b) These products are generally costly and their These products are generally costly and their

unit price is unit price is very high;very high;(c) (c) These products are available for sale at few These products are available for sale at few

places as the places as the number of customers is small and are willing number of customers is small and are willing to take extra to take extra efforts in the purchase of these products;efforts in the purchase of these products;

(d) (d) An aggressive promotion is required for the sale An aggressive promotion is required for the sale of speciality of speciality products, in order to inform people about products, in order to inform people about their availability, their availability, features, etc.features, etc.

(e) (e) After sales services are very important for many After sales services are very important for many of the speciality products.of the speciality products.

Durability of ProductsDurability of Products

On the basis of their durability, the consumer On the basis of their durability, the consumer products have been classified into three products have been classified into three categories”categories”

(a)(a) Durable Durable ProductsProducts

(b)(b) Non-durable Non-durable ProductsProducts

(c)(c) Services.Services.

Durable Durable ProductsProducts

These goods are generally used for a These goods are generally used for a longer period, command a higher per longer period, command a higher per unit margin, require greater personal-unit margin, require greater personal-selling efforts, guarantees and after selling efforts, guarantees and after sales services, on the part of the sales services, on the part of the seller.seller.

E.g Refrigerator, Radio, Bicycle, E.g Refrigerator, Radio, Bicycle, Sewing machine and kitchen gadgetsSewing machine and kitchen gadgets

Non-durable Non-durable ProductsProducts

The consumer products which are The consumer products which are normally consumed in one or few usesnormally consumed in one or few uses

e.g Toothpaste, Detergents, Bathing soap e.g Toothpaste, Detergents, Bathing soap and Stationary products etcand Stationary products etc

From the marketing point of view, these From the marketing point of view, these products generally command a small products generally command a small margin, should be made available in margin, should be made available in many locations and need to be heavily many locations and need to be heavily advertised.advertised.

ServicesServices The durable and nondurable goods are tangible The durable and nondurable goods are tangible

in the sense that these have a physical in the sense that these have a physical existence and can be seen and touched.existence and can be seen and touched.

Services are intangible in form. By services we Services are intangible in form. By services we mean those activities, benefits or satisfactions, mean those activities, benefits or satisfactions, which are offered for sale, e.g., dry cleaning, which are offered for sale, e.g., dry cleaning, watch repairs, hair cutting, postal services, watch repairs, hair cutting, postal services, services offered by a doctor, an architect and a services offered by a doctor, an architect and a lawyer.lawyer.

Distinguishing characteristics of servicesDistinguishing characteristics of services

::(a) (a) By their very nature, services are intangible, i.e., we By their very nature, services are intangible, i.e., we

can not see, feel or touch them;can not see, feel or touch them;(b) (b) A service is inseparable from its source. That means A service is inseparable from its source. That means

we cannot separate the service from the person we cannot separate the service from the person providing the service;providing the service;

(c) (c) The services cannot be stored. They are highly The services cannot be stored. They are highly perishable. For example, if a tailor does not work for perishable. For example, if a tailor does not work for one week, the services he would have provided one week, the services he would have provided during such period go waste;during such period go waste;

(d) (d) Services are highly variable as their type and quality Services are highly variable as their type and quality depends on the person providing them. That is why, depends on the person providing them. That is why, there is a difference in the extent of satisfaction we there is a difference in the extent of satisfaction we get from the services provided by different people.get from the services provided by different people.

Classification of Product

shopping efforts involved

Depending upon

Durability basis

Durable Non durable Service

ConvenienceProduct

Shoppingproduct

Specialtyproduct

UnsoughtProduct

Homogeneous Heterogonous

Staples Impulsive Eonegency

INDUSTRIAL/ORGANIZATIONAL/B2B PRODUCTSINDUSTRIAL/ORGANIZATIONAL/B2B PRODUCTS

The important characteristics of industrial products are given below:The important characteristics of industrial products are given below:

1.1. Number of Buyers: Number of Buyers: As compared to the consumer products, As compared to the consumer products, the numbers of buyers of industrial products are limited. For the numbers of buyers of industrial products are limited. For example, sugarcane is purchased by few producers of sugar, example, sugarcane is purchased by few producers of sugar, but sugar, which is a consumer product, is purchased by crores but sugar, which is a consumer product, is purchased by crores of people in our country.of people in our country.

2. Channel Levels: 2. Channel Levels: Because of limited number of buyers, the Because of limited number of buyers, the sale of industrial products is generally made with the help of sale of industrial products is generally made with the help of shorter channels of distribution, i.e., direct selling or one level shorter channels of distribution, i.e., direct selling or one level channel.channel.

3. Geographic Concentration: 3. Geographic Concentration: Because of location of industries Because of location of industries at certain points or regions, industrial markets are highly at certain points or regions, industrial markets are highly concentrated, geographically. For instance, the demand for concentrated, geographically. For instance, the demand for power loom comes from Bombay, Sholapur, Bangalore, etc power loom comes from Bombay, Sholapur, Bangalore, etc where the textile industry is concentrated in our country.where the textile industry is concentrated in our country.

characteristics of industrial productscharacteristics of industrial products 4.4.Derived Demand: Derived Demand: The demand for industrial products is The demand for industrial products is derived from the demand for consumer products. For example, derived from the demand for consumer products. For example, the demand for leather will be derived from demand for shoes the demand for leather will be derived from demand for shoes and other leather products in the market.and other leather products in the market.5. Role of Technical Considerations:5. Role of Technical Considerations:Technical considerations assume greater significance in the Technical considerations assume greater significance in the purchase of industrial products because these products are purchase of industrial products because these products are complex products, bought for use in business operations.complex products, bought for use in business operations.6. Reciprocal Buying: 6. Reciprocal Buying: Some big companies from basic Some big companies from basic industries like oil, steel, rubber, and medicines resort to the industries like oil, steel, rubber, and medicines resort to the practice of reciprocal buying. For example, Ashok Leyland practice of reciprocal buying. For example, Ashok Leyland may buy tyres and tubes from MRF, which in turn may buy may buy tyres and tubes from MRF, which in turn may buy trucks from Leyland, whenever it feels the need for the same.trucks from Leyland, whenever it feels the need for the same.7. Leasing Out: 7. Leasing Out: A growing trend in industrial product market A growing trend in industrial product market is to lease out rather than to purchase the products on outright is to lease out rather than to purchase the products on outright basis because of the heavy price of these products.basis because of the heavy price of these products.

CLASSIFICATION OF INDUSTRIAL GOODSCLASSIFICATION OF INDUSTRIAL GOODS

Materials and PartsMaterials and Parts

Capital ItemsCapital Items

Supplies and Business ServicesSupplies and Business Services

Materials and PartsMaterials and Parts

These include goods that enter the manufacture’s These include goods that enter the manufacture’s products completelyproducts completely

(a)(a) Raw materialRaw material:: Farm products like cotton, sugar cane, oil seed and Farm products like cotton, sugar cane, oil seed and

natural products such as minerals (say crude petroleum, natural products such as minerals (say crude petroleum, iron ore), fish and lumberiron ore), fish and lumber

(b) (b) Manufactured material and partsManufactured material and parts. . These are again of two types – These are again of two types – (I) Component materials : glass, iron, plastic and (I) Component materials : glass, iron, plastic and

component parts such as tyre, electric bulb, steering, and component parts such as tyre, electric bulb, steering, and batterybattery

CAPITAL ITEMSCAPITAL ITEMS

(II)Capital Items(II)Capital Items: : These are such goods that These are such goods that are used in the production of finished goodsare used in the production of finished goods

These include:These include:

(a) (a) InstallationsInstallations like elevators, mainframe like elevators, mainframe Computers, Computers,

(b)(b)EquipmentsEquipments like Hand Tools,Personal like Hand Tools,Personal Computer, Fax Machines, etc.Computer, Fax Machines, etc.

Supplies and Business ServicesSupplies and Business Services

These are short lasting goods and services that These are short lasting goods and services that facilitate developing or managing the finished facilitate developing or managing the finished product.product.

(a) Maintenance and repair items: Paint,(a) Maintenance and repair items: Paint, Nails, etcNails, etc

(b) O(b) Operating supplies : Lubricant, Computer perating supplies : Lubricant, Computer Stationary, Writing Paper, etc.Stationary, Writing Paper, etc.

BUSINESS SERVICESBUSINESS SERVICES

(a)(a) Maintenance & Repair ServicesMaintenance & Repair Services Usually supplied under contract by Usually supplied under contract by

small producerssmall producers Available from the manufacturer of Available from the manufacturer of

original equipmentoriginal equipment

e.g.e.g. Window cleaning, Copier repairWindow cleaning, Copier repair

(b)(b) Business advisory Services:Business advisory Services:

e.g. Legal ,Management Consultancy, e.g. Legal ,Management Consultancy, advertisingadvertising

Industrial Goods

Material & parts Capital items Supplier & Business Services

Raw material Manufacturedmaterial & parts

Installation Equipment Maintenance & repairitems

Operating & Suppliers

Formproduct

Naturalproducts

Componentmaterial

Componentmaterial

Product mix/Product AssortmentProduct mix/Product Assortment

Complete set of all Products offered for sale Complete set of all Products offered for sale by a companyby a company

The number of products carried by the firm at The number of products carried by the firm at a given point of time a given point of time

HUL Product LineHUL Product Line

    HUL  

Food Brands Home care Brands Personal Care Brand Water

Red Label Active Wheel Aviance Pure it

Brooke Bond Cif Axe

Taj Mahal Domex Clinic Plus  

Lipton Rin Close up  

Bru Sunlight Pepsodent  

Annapurna Surf Excel Sunsilk  

Knorr Vim Vaseline  

Kwality Walls   Ayush  

  Breeze  

    Dove  

    Hamam  

    Lifebuoy  

    Pears  

    Rexsona  

Dabur

Health Care Personal Care Foods

Health Supplements Hair Care Real Fruit JuicesDabur Chyawanprash Real Activ (No Added Sugar)Dabur Chyawanprakash Hair oil Burrst(Light and Refreshing Fruit Beverage)Dabur Chywan Junior Dabur Amla Hommade Glucose-D Dabur Amla Flower Magic Cooking PasteHoney Vatika Enriched Coconut oil Tomato Puree

Vatika Enriched Almond Hair oil Coconut MilkOral CareDabur Red Tooth Paste ShampooBabool tooth Paste Vatika Smooth And SilkyMeswak Tooth paste Vatika Root StrengtheningPromise tooth Paste Black ShineLal Dant Manjan Vatika Danddruff ControlBaboolMint Fresh Gel Dabur Total Protect

Digestives ConditionerHajmola Tablets  Vatika Smooth And Silky ConditionerHajmola Candy Vatika Root Strengthening Conditioner

Skin Care

UvedaRangeComplete Fairness RangeMoisturiser Face WashClarifiying Face Wash

Dabur Gulabari

       

       

Health Care  Personal Care Foods       Health Supplements  Hair Care Real Fruit JuicesDabur Chyawanprash      Real Activ (No Added Sugar)

Dabur Chyawanprakash   Hair oilBurrst(Light and Refreshing Fruit Beverage)

Dabur Chywan Junior  Dabur Amla  Hommade Glucose-D  Dabur Amla Flower Magic Cooking PasteHoney  Vatika Enriched Coconut oil Tomato Puree   Vatika Enriched Almond Hair oil Coconut MilkOral Care      Dabur Red Tooth Paste  Shampoo  Babool tooth Paste  Vatika Smooth And Silky  Meswak Tooth paste  Vatika Root Strengthening  Promise tooth Paste  Black Shine  Lal Dant Manjan  Vatika Danddruff Control  Babool Mint Fresh Gel  Dabur Total Protect         Digestives  Conditioner  Hajmola Tablets   Vatika Smooth And Silky Conditioner  Hajmola Candy  Vatika Root Strengthening Conditioner            Skin Care            Uveda Range     Complete Fairness Range     Moisturiser Face Wash     Clarifiying Face Wash            Dabur Gulabari  

Product LineProduct Line A group of products clubbed A group of products clubbed

together by virtue of satisfying a together by virtue of satisfying a particular class of needs ,being used particular class of needs ,being used together or distributed through the together or distributed through the same channel or possessing same channel or possessing common physical or technical common physical or technical characteristicscharacteristics

A group of closely related products A group of closely related products constitute a product lineconstitute a product line

Some termsSome terms Width/Breadth of product mixWidth/Breadth of product mix

The number of Product line it carriesThe number of Product line it carries Length/Depth of Product lineLength/Depth of Product line

Number of items or brand in lineNumber of items or brand in line Depth of Product lineDepth of Product line

Total number of items under each Total number of items under each brand in line, in brand in line, in terms of variants, terms of variants, shades models packs sizeshades models packs size

Product Mix For HULProduct Mix For HUL

HUL PRODUCT MIX

HOME & PERSONAL CARE FOODS HINDUSTAN UNILEVER NETWORK

EXPORTSWATER

Product Mix Product Mix DecisionsDecisions

Adding /Stretching Product line Adding /Stretching Product line upwards /downwardsupwards /downwards

Line fillingLine filling

Line PruningLine Pruning

Adding /StretchingAdding /Stretching

Is done due to structural changes in Is done due to structural changes in the market place- the most important the market place- the most important being the customer lifestyles and being the customer lifestyles and demographic characteristics like rising demographic characteristics like rising income and lower proportion of income and lower proportion of income being spent on food and other income being spent on food and other essential items .essential items .Two types:Two types:

(a)(a) Stretching downStretching down(b)(b) Stretching upStretching up

Stretching downStretching down

Initially taken its position in high price Initially taken its position in high price slot ,stretches the line downwards by slot ,stretches the line downwards by offering the products in the same line offering the products in the same line for lower end marketsfor lower end markets

HUL HUL

Surf- 40/K.g NirmaSurf- 40/K.g Nirma

Sunlight-26/k.gSunlight-26/k.g

Wheel- 10/k.g Wheel- 10/k.g

Stretching upStretching up The firm moves up the line from The firm moves up the line from

its original posture and makes its original posture and makes higher priced offers from its higher priced offers from its stablestable

Philips-Philips-

Line fillingLine filling The firm introduces more items to the line to plug The firm introduces more items to the line to plug

certain gaps in its current range of offers.certain gaps in its current range of offers. Intention: Full line company, customers do not go Intention: Full line company, customers do not go

to competitors for offers/models in particular price to competitors for offers/models in particular price slotslot

Videocon co lour T.V: Initially on launch target was Videocon co lour T.V: Initially on launch target was elite market segment hence introduced premium elite market segment hence introduced premium rangerangewithin three years launched 14 ” Private-Yupiee, within three years launched 14 ” Private-Yupiee, Bazooka-Top end, Turbo tough – MI, Budget line-Bazooka-Top end, Turbo tough – MI, Budget line-LMILMI1995- 11 new offers- 03-14 inch Models, 02-20, 4-1995- 11 new offers- 03-14 inch Models, 02-20, 4-21,1-25,1-29.21,1-25,1-29.

Line pruningLine pruning Conscious decision to reduce the Conscious decision to reduce the

number of items in the product number of items in the product line ,the company is trying to line ,the company is trying to save the cost and maximize the save the cost and maximize the efficiencies in production and efficiencies in production and distribution and promotiondistribution and promotion

Marketing is not about Marketing is not about providing products or providing products or services it is essentially services it is essentially about providing changing about providing changing benefits to the changing benefits to the changing needs and demands of the needs and demands of the customer’customer’

When an organization When an organization introduces a product into a introduces a product into a market they must ask market they must ask themselves a number of themselves a number of questions.questions.

Who is the product aimed Who is the product aimed at? at? What benefit will they What benefit will they expect? expect? How do they plan to How do they plan to position the product within position the product within the market? the market? What differential What differential advantage will the product advantage will the product offer over their offer over their competitors?competitors?

Kotler suggested that a product should be viewed in three levels.Kotler suggested that a product should be viewed in three levels.

Level 1: Core ProductLevel 1: Core Product. What is the core benefit your product offers?. . What is the core benefit your product offers?. Customers who purchase a camera are buying more then just a camera Customers who purchase a camera are buying more then just a camera

they are purchasing memoriesthey are purchasing memories..

Level 2 Actual ProductLevel 2 Actual Product: All cameras capture memories. The aim is to : All cameras capture memories. The aim is to ensure that your potential customers purchase your one. The strategy at ensure that your potential customers purchase your one. The strategy at this level involves organizations this level involves organizations branding,branding, adding featuresadding features and benefits to and benefits to ensure that their product offers a differential advantage from their ensure that their product offers a differential advantage from their competitors.competitors.

Level 3: Augmented product: Level 3: Augmented product: What additional non-tangible benefits can What additional non-tangible benefits can you offer? Competition at this level is based around after sales service, you offer? Competition at this level is based around after sales service, warranties, delivery and so on. warranties, delivery and so on.

Levels of productLevels of product

The Core ProductThe Core Product

Every product provides a basic function that Every product provides a basic function that solves a customer problemsolves a customer problem

The core benefits or service consist of the The core benefits or service consist of the benefits provided with when they purchase benefits provided with when they purchase and use a good or serviceand use a good or service

The core product refers to the use , the benefit The core product refers to the use , the benefit or problem solving services the consumer is or problem solving services the consumer is really buying when purchasing the productreally buying when purchasing the product

The problem solving services or The problem solving services or core benefits that consumers are core benefits that consumers are really buying when they obtain a really buying when they obtain a productproduct

Locks and alarm provide Locks and alarm provide securitysecurityCars provide transportationCars provide transportation

The Actual ProductThe Actual Product

That the customer buysThat the customer buys The specific offering aimed at the marketThe specific offering aimed at the market Tangible features associated with the productTangible features associated with the product Five elementsFive elements

-Design-Design-Style-Style-Feature-Feature-Quality-Quality-Packaging-Packaging

5 elements of Actual Product5 elements of Actual Product

QualityQuality BrandBrand FeaturesFeatures StylingStyling PackagingPackaging

Product PerformanceProduct Performance Helps the customer Helps the customer

positionposition and identify and identify the customerthe customer

Combination of product Combination of product attributesattributes

Aesthetic aspectsAesthetic aspects Protects and promotes Protects and promotes

the productthe product

Why is it important?Why is it important?

This the way firms have traditionally This the way firms have traditionally differentiated from rivalsdifferentiated from rivals

Differentiation permits premium pricing and Differentiation permits premium pricing and build customer loyaltybuild customer loyalty

Important in segmentation ,targeting & Important in segmentation ,targeting & position (STP)position (STP)

The Augmented ProductThe Augmented Product

The additional bundle of benefits purchased The additional bundle of benefits purchased with actual productwith actual product

Additional Consumer services or benefitsAdditional Consumer services or benefits The term covers bothThe term covers both

- tangible Features: After Sales, Warranties- tangible Features: After Sales, Warranties

-Intangible Features: Brand values -Intangible Features: Brand values

The Augmented ProductThe Augmented Product

After SalesAfter Sales DeliveryDelivery GuaranteeGuarantee CreditCredit RepairsRepairs Spare PartsSpare Parts AdviceAdvice Money back GuaranteeMoney back Guarantee

Why is it important?Why is it important?

It offers psychological benefits that enhances It offers psychological benefits that enhances the value of core and actual productthe value of core and actual product

Enhances the attractiveness of the product and Enhances the attractiveness of the product and is source of competitive advantageis source of competitive advantage

Firms are adding values to the productFirms are adding values to the product Companies wrap additional benefits around Companies wrap additional benefits around

their product in order to differentiate their product in order to differentiate themselves from rivalsthemselves from rivals

Product life CycleProduct life Cycle

This describes the stages of new product goes This describes the stages of new product goes through from beginning to endthrough from beginning to end

Every product passes through certain Every product passes through certain identifiable stagesidentifiable stages

A theoretical model which describes the stages A theoretical model which describes the stages a product goes througha product goes through

Stages of a Product Life CycleStages of a Product Life Cycle

IntroductionIntroduction GrowthGrowth MaturityMaturity DeclineDecline

Stages in a Life CycleStages in a Life Cycle

IntroductionIntroduction GrowthGrowth MaturityMaturity DeclineDecline

SALES

PROFITS

IntroductionIntroduction

competing against older, established competing against older, established productsproducts

Low level of salesLow level of sales Low capacity utilizationLow capacity utilization not widely distributed because reluctance to not widely distributed because reluctance to

take an unproven producttake an unproven product price usually highprice usually high promotion needs to inform the customer promotion needs to inform the customer

Strategies at the introductionStrategies at the introduction

Objective to attract trend settersObjective to attract trend setters High Promotional spending to create awreness High Promotional spending to create awreness

and inform peopleand inform people Either Skimming or penetration strategiesEither Skimming or penetration strategies Bought by innovators /trend settersBought by innovators /trend setters

GrowthGrowth

Expanding market but arrivals of competitorsExpanding market but arrivals of competitors features and options must be addedfeatures and options must be added Cash flow becomes positiveCash flow becomes positive The market grows, profits rise but attracts the entry of The market grows, profits rise but attracts the entry of

new competitorsnew competitors wider distributionwider distribution adjustment in pricingadjustment in pricing promotion must attract customers, advantages of the promotion must attract customers, advantages of the

productproduct

Strategies in Growth stageStrategies in Growth stage

Advertising to promote brand awarenessAdvertising to promote brand awareness Increase in distribution outlets-intensive Increase in distribution outlets-intensive

distributiondistribution Improvements in product- New features , Improvements in product- New features ,

improved stylingimproved styling Go for market penetration and if possible price Go for market penetration and if possible price

leadershipleadership

MaturityMaturity

sales peak, profit begin to decline, customers have the sales peak, profit begin to decline, customers have the product and there are many companies in the market, product and there are many companies in the market, competition becomes very intensecompetition becomes very intense

all products features, option, guarantees/warranties are all products features, option, guarantees/warranties are similar (so customer service options could be added)similar (so customer service options could be added)

pricing become very competitivepricing become very competitive increase availability of the product becomes widerincrease availability of the product becomes wider promotion promotion –– why their product is better why their product is better

Strategies for mature stageStrategies for mature stage

Need to defend positionNeed to defend position Competitor based pricingCompetitor based pricing Enter new segmentsEnter new segments Attract new usersAttract new users RepositioningRepositioning Develop New usesDevelop New uses

DeclineDecline

product is no longer satisfying or they discover product is no longer satisfying or they discover new and better products, sales drop, little or no new and better products, sales drop, little or no profitprofit

try to identify other usestry to identify other uses distribution is reducedistribution is reduce price is usually reducedprice is usually reduced more selective and less promotionsmore selective and less promotions

Strategies for the decline phaseStrategies for the decline phase

Maintain the market shareMaintain the market share Harvest by spending little on marketing the Harvest by spending little on marketing the

productproduct Promotion to retain loyal customersPromotion to retain loyal customers

SUMMARY OF PRODUCT LIFE CYCLESUMMARY OF PRODUCT LIFE CYCLE(CHARACTERISTICS)(CHARACTERISTICS)

CharacteristicsCharacteristics IntroductionIntroduction GrowthGrowth MaturityMaturity DeclineDecline

SalesSales LowLow Rapidly rising Rapidly rising salessales

Peak SalesPeak Sales DeclineDecline

Cost/customerCost/customer High costHigh cost AverageAverage LowLow LowLow

ProfitsProfits NegativeNegative RisingRising HighHigh DeclineDecline

CustomersCustomers InnovatorsInnovators Early adaptorsEarly adaptors Middle MajorityMiddle Majority LaggardsLaggards

CompetitorsCompetitors FewFew GrowingGrowing Stable begins to Stable begins to declinedecline

Declining Number Declining Number increasesincreases

SUMMARY OF PRODUCT LIFE CYCLESUMMARY OF PRODUCT LIFE CYCLE(Marketing Objective)(Marketing Objective)

Marketing Marketing ObjectiveObjective

IntroductionIntroduction GrowthGrowth MaturityMaturity DeclineDecline

Create Create Product Product awareness awareness & Trial& Trial

Maximize Maximize market market shareshare

Maximize Maximize profit profit

While While defending defending market market shareshare

Reduce the Reduce the expenditure expenditure and milk and milk the brandthe brand

SUMMARY OF PRODUCT LIFE CYCLESUMMARY OF PRODUCT LIFE CYCLE(strategies)(strategies)

StrategiesStrategies IntroductionIntroduction GrowthGrowth MaturityMaturity DeclineDecline

ProductProduct Offer a basic Offer a basic ProductProduct

ProductProductExtensionExtensionserviceservice

Diversify brandDiversify brandand modelsand models

Phase out weakPhase out weakitemsitems

PricePrice Use cost plusUse cost plus Price toPrice topenetrate thepenetrate themarketmarket

Price to matchPrice to matchor beator beatcompetitorscompetitors

Cut priceCut price

PlacePlace Build selectiveBuild selectivedistributiondistribution

IntensiveIntensivedistributiondistribution

Build moreBuild moreintensiveintensive

Go selectiveGo selectivephase outphase outUnprofitableUnprofitableoutletsoutlets

AdvertisingAdvertising Build productBuild productAwarenessAwarenessamong earlyamong earlyadopters adopters

BuildBuildawarenessawareness& interest in& interest inTheThemass marketmass market

Stress BrandStress Branddifferences &differences &benefitsbenefits

Reduce to levelReduce to levelneeded toneeded toRetainRetainHard coreHard coreLoyalLoyal

SalesSalesPromotionPromotion

Heavy Heavy ReduceReduce Increase toIncrease toencourage brand encourage brand switchingswitching

Reduce toReduce tominimal levelminimal level

Boston MatrixBoston Matrix

The Boston Matrix consulting group The Boston Matrix consulting group developed this as a tool of portfolio Analysisdeveloped this as a tool of portfolio Analysis

It can be applied to the portfolio of products It can be applied to the portfolio of products produced by a firm or the portfolio of business produced by a firm or the portfolio of business owned by the companyowned by the company

Portfolio is the collection of businesses or Portfolio is the collection of businesses or products that make up a businessproducts that make up a business

The axes of the MatrixThe axes of the Matrix Relative Market ShareRelative Market Share

-This is expressed not as % but share in -This is expressed not as % but share in relation to other firms in marketrelation to other firms in market-This is the measure of the firms /Product’s -This is the measure of the firms /Product’s strength in marketstrength in market

Market GrowthMarket Growth-% rate of growth of sales in the market-% rate of growth of sales in the market-A measure of market atrractiveness-A measure of market atrractivenessFrom this we derive four cells as a means of From this we derive four cells as a means of

analyzing the productanalyzing the product

Assumptions underlying BMAssumptions underlying BM

Market share can be gained by investment in Market share can be gained by investment in marketingmarketing

Market share gains will always generate cash Market share gains will always generate cash surplusessurpluses

Cash surpluses can be generated when the Cash surpluses can be generated when the product is in the mature stageproduct is in the mature stage

The best opportunity to build a dominant The best opportunity to build a dominant market position is during the growth phasemarket position is during the growth phase

Growth-Share MatrixBoston Consulting Matrix

Question MarkQuestion Mark

Low share of rapidly growing Low share of rapidly growing marketmarket

Cash flow is negativeCash flow is negative Has potential but the future is Has potential but the future is

uncertainuncertain It could either be a star or a dogIt could either be a star or a dog

Strategy for Question MarkStrategy for Question Mark

Invest to increase the market shareInvest to increase the market share Substantial investment to achieve Substantial investment to achieve

growth at the expense of powerful growth at the expense of powerful competitorscompetitors

Invest in promotionsInvest in promotions Build selectivelyBuild selectively

StarsStars High Share of rapidly growing marketHigh Share of rapidly growing market Position of leadership in a high growth Position of leadership in a high growth

marketmarket The product/business is relatively strong The product/business is relatively strong

and the market is growingand the market is growing Although the product generates income it Although the product generates income it

is countered by high spendingis countered by high spending Net cash flow is neutralNet cash flow is neutral

Strategy for starsStrategy for stars

Investment to sustain growthInvestment to sustain growth Build sales and market shareBuild sales and market share Spend to keep competitors at baySpend to keep competitors at bay Invest to maintain or increase Invest to maintain or increase

leadership positionleadership position Repel challenges from competitorsRepel challenges from competitors

Cash CowsCash Cows

High share of slowly growing High share of slowly growing MarketMarket

Mature stage in PLCMature stage in PLC Little potential for growthLittle potential for growth Large positive cash inflowLarge positive cash inflow

Strategy for Cash CowsStrategy for Cash Cows HarvestHarvest Defend market shareDefend market share Aim for short term profitsAim for short term profits Little need of investmentLittle need of investment Little potential for further growthLittle potential for further growth Reduce investment in order to maximize short Reduce investment in order to maximize short

term cash flow and profitsterm cash flow and profits Use profits from cash cows to invest in new Use profits from cash cows to invest in new

productsproducts

DogsDogs

Means unattractiveMeans unattractive Low share of a slowly growing MarketLow share of a slowly growing Market No real potentialNo real potential Dogs are eitherDogs are either

- Products that have failed- Products that have failed

-Products that are in decline phase-Products that are in decline phase

Strategy for DogsStrategy for Dogs

Phase out or sell off (Divest)Phase out or sell off (Divest) Not worth investing inNot worth investing in Any profit made has to be re invested Any profit made has to be re invested

just to maintain market sharejust to maintain market share

Boston Matrix Summary Boston Matrix Summary

StarStar

-High market growth-High market growth

-High market share-High market share

Cash neutralCash neutral

HOLDHOLD

Question MarkQuestion Mark

-High market growth-High market growth

- Low market share- Low market share

Cash AbsorbingCash Absorbing

BUILDBUILD

--

Cash CowCash Cow

-Low market growth-Low market growth

-High market share-High market share

Cash GeneratingCash Generating

Harvest or milkHarvest or milk

DogDog

-Low market growth-Low market growth

-Low market share-Low market share

Cash NeutralCash Neutral

DIVESTDIVEST

--

Criticism Criticism

Market growth is inadequate measure of a Market growth is inadequate measure of a markets attractivenessmarkets attractiveness

Market share is an adequate measure of Market share is an adequate measure of products ability to generate cashproducts ability to generate cash

The focous on market share and market The focous on market share and market growth ignores issues such as developing a growth ignores issues such as developing a sustainable competitive advantagesustainable competitive advantage

The product life cycle variesThe product life cycle varies

BCG Matrix for Bharti BCG Matrix for Bharti AirtelAirtel

LOWHIGH

HIG

HLO

W

Mobile Services

DTH & IPTV

Broad Band