university of guyana marketing 1101…..product module 6
DESCRIPTION
UNIVERSITY OF GUYANA MARKETING 1101…..PRODUCT MODULE 6. ERIC M. PHILLIPS (MBA, CTP, BSc. Eng.) SEPT-DECEMBER 2013. MODULE OUTLINE. What is a product? Product versus Brand Product Life cycle Product Management. WHAT IS A PRODUCT ?. - PowerPoint PPT PresentationTRANSCRIPT
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UNIVERSITY OF GUYANAMARKETING 1101…..PRODUCT
MODULE 6
ERIC M. PHILLIPS (MBA,
CTP, BSc. Eng.)
SEPT-DECEMBER 2013
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MODULE OUTLINE
What is a product?
Product versus Brand
Product Life cycle
Product Management
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A product is anything that can offered to market for attention, acquisition , use , consumption that might satisfy a want or need.
WHAT IS A PRODUCT ?
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WHAT IS A PRODUCT?
Goods (physical and tangible things)
Ideas (Say no to drugs)
Services (intangible, airlines, hotels)
Information (universities)
Organizations (favorable image)
Experiences (Theme Parks)
Properties (real estate)
Places (Tourism, Guyana)
Events (Shows, Olympics)
Persons (Celebrities)
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PRODUCTS
GOODS SEVICES
Tangible products
Intangible products
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FEATURES OF PRODUCT
Features of product
Associated attributes
Intangible attributes
Tangibility
Exchange value
Customer satisfaction
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LEVELS OF A PRODUCT
Unexpected features
Luxury features
Expected features
Basic features
Basic product
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CONSUMER ADOPTION PROCESS
Adopt
Trail
Evaluation
Interest
Awareness
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CONSUMER ADOPTION PROCESS
Potential product
Augmented product
Expected Product
Generic product
Core Benefit
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CLASSIFYING PRODUCTS
Durable products
Consumer products
Business products
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DURABLE PRODUCTS
Durable
Non-durable
Services
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CONSUMER PRODUCTS
ConvenienceProducts
ShoppingProducts
SpecialtyProducts
. . To satisfy information needs & buying motives
Unsought
Products
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CONVENIENCE GOODS
Staples
Emergency goods
Impulse purchases
CONVENIENCE GOODS – CONSUMERS USE MINIMAL EFFORT FOR FREQUENTLY PURCHASED LOW COST
ITEMS
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SHOPPING PRODUCTS
SHOPPING GOODSSHOPPING GOODS - CONSUMERS MAKE A CONSIDERABLE - CONSUMERS MAKE A CONSIDERABLE EFFORT TO EVALUATEEFFORT TO EVALUATE
Consumers make product comparison(s),
They seek information before purchase, they are not impulsive
Moderate substitutions are made
Product’s last a considerable time
Monetary & social costs may be highigh
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BUSINESS PRODUCTS
Materials and parts Raw materials and parts Manufactured materials and parts
Capitals items Equipment
Suppliers and business services Maintenance and repair items Operating supplies
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RAW MATERIALS
Farm products
Natural products
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MANUFACTURED MATERIALS AND PARTS
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PRODUCT MIX
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PRODUCT MIX
THE ASSORTMENT OF PRODUCTS THAT A COMPANY OFFERS TO A MARKET
Width – how many different product lines?
Length – the number of items in the product mix
Depth – The number of variants offered in a product line
Consistency – how closely the product lines are related in usage
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LAMPSLAMPS•TableTable
•CeilingCeiling
•TrackTrack
•DeskDesk
Product Line
PRODUCT LINE & PRODUCT MIX
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Product Product Line 1Line 1
Product Product Line 2Line 2
Product Product Line 3Line 3
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
PRODUCT MIX
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Product vs. Brand
A product is something that is made in a factory
A brand is something that is bought by a customer.
A product can be copied by a competitor.
A brand is unique.
A product can be quickly outdated.
A successful brand is timeless.
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WHAT IS A BRAND?
A set of product perceptions by the consumer.
It is a personality developed over time.
A brand signifies a relationship with the customer. It is the company’s most valuable asset. It’s also the main differentiator, the best defense against price competition, and the key to customer loyalty.
Competitors can copy your features and benefits, but they can’t steal your brand. It’s a promise. But it must be backed up by performance.
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WHAT IS A BRAND ?
It’s the company’s definition of what they have to offer.
A brand is a product that has a personality.
A promise to the customer.
What the customer knows about your specific product. It’s your image.
How the company or product is perceived?
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BRAND
A name becomes a brand when consumers associate it with a set of tangible and intangible benefits that they obtain from the product or service
It is the seller’s promise to deliver the same bundle of benefits/services consistently to buyers
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BRAND EQUITY
When a commodity becomes a brand, it is said to have equity.
The premium a brand can command in the market
The difference between the perceived value and the intrinsic value
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BRAND EQUITY – COMPETITIVE ADVANTAGES
Reduced marketing costs
Trade leverage
Can charge a higher price
Can easily launch brand extensions
Can take some price competition
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BRAND POWER
Customer will change brands for price reasons
Customer is satisfied. No reason to change.
Customer is satisfied and would take pains to get the brand
Customer values the brand and sees it as a friend
Customer is devoted to the brand
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UMBRELLA BRAND
Products from different categories under one brand
Dangerous to the brand if the principal brand fails
Sometimes the company name is prefixed to the brand. In such cases the company name gives it legitimacy. The product name individualizes it.
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BRAND IDENTIFICATION
Batteries: DieHard contains a promise of long use. Sears has Craftsman, DieHard, Homart and Kenmore.
2. Mercedes promises well-built, prestigious, safety, performance.
3. Co branding/Dual branding: "Intel inside."
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WHAT IS A BRAND? & BRAND IDENTIFICATION
More Examples:
4. Need to keep it fresh. Look at Coca-Cola. Its image is as fresh today as when it started. It’s not luck. It’s careful nurturing and development of the brand.Can exploit brand equity with brand extensions, if there is value.
5. Look at licensing. Need control over who uses your brand. Sunkist.
Why? Lowers marketing costs, greater trade leverage, can charge Why? Lowers marketing costs, greater trade leverage, can charge higher price, defense against price competition, more easily launch higher price, defense against price competition, more easily launch line extensions.line extensions.
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WHAT IS A BRAND? & BRAND IDENTIFICATION
Salt is in bright-colored packages. Oranges are marked. Labeled. A guarantee of quality.
BMW paid $60 million for the Rolls Royce name. Nothing else.
A brand can convey: Attributes + Benefits + Values + Culture + Personality
Seller’s promise to deliver a specific set of features.
Brand equity is the value a brand adds to the product.
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BRAND REPOSITIONING
This may be required after a few years to face
new competition and changing customer
preferences
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7 - 34
Porsche is positioned on the basis of performance and freedom.
PORSHE VERSUS LEXUS
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35
MARKET SEGMENTATION
Levels Of Marketing Segmentation
Segmentmarketing Niche Marketing Micro-marketingMass Marketing
No SegmentationComplete
segmentation
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PACKAGING
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PACKAGING
Includes the activities of designing and producing the container for a product
Packaging is done at three levels
- primary
- secondary
- shipping
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PACKAGING AS A MARKETING TOOL
Self service
Consumer affluence
Company and brand image
innovation
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DESIGNING PACKAGING
Packaging concepts
Technical specifications
Engineering tests
Visual tests
Dealer tests
Consumer tests
Packaging innovations
Environmental considerations
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LABELS
Identification
Grade classification
Description of product
Manufacturer identity
Date of mfg., batch no.
Instructions for use
Promotion
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LABELS AS A MARKETING TOOL
Labels need to change with time
or packaging changes
to give it a contemporary
and
fresh look
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PRODUCT
LIFE CYCLE
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PRODUCT LIFE CYCLES AND THE BOSTON MATRIX
The Stages of the Product Life Cycle:– Development– Introduction/Launch– Growth– Maturity– Saturation– Decline– Withdrawal
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PRODUCT LIFE CYCLES AND THE BOSTON MATRIX
Sales
Time
Development Introduction Growth Maturity Saturation Decline
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PRODUCT LIFE CYCLES AND THE BOSTON MATRIX
Introduction/Launch
– Advertising and promotion campaigns
– Target campaign at specific audience?– – Monitor initial sales
– Maximise publicity
– High cost/low sales
– Length of time – type of product
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Product Life Cycles and the Boston Matrix
Growth:
– Increased consumer awareness
– Sales rise
– Revenues increase
– Costs - fixed costs/variable costs, profits may be made
– Monitor market – competitors reaction?
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PRODUCT LIFE CYCLES AND THE BOSTON MATRIX
Maturity:– Sales reach peak
– Cost of supporting the product declines
– Ratio of revenue to cost high
– Sales growth likely to be low
– Market share may be high
– Competition likely to be greater
– Price elasticity of demand?
– Monitor market – changes/amendments/new strategies?
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PRODUCT LIFE CYCLES AND THE BOSTON MATRIX
Saturation:
New entrants likely to mean market is ‘flooded’
Necessity to develop new strategies becomes more pressing:
– Searching out new markets: Linking to changing fashions Seeking new or exploiting market segments Linking to joint ventures – media/music, etc.
– Developing new uses
– Focus on adapting the product
– Re-packaging or format
– Improving the standard or quality
– Developing the product range
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PRODUCT LIFE CYCLES AND THE BOSTON MATRIX
Decline and Withdrawal:
– Product outlives/outgrows its usefulness/value
– Fashions change
– Technology changes
– Sales decline
– Cost of supporting starts to rise too far
– Decision to withdraw may be dependent on availability of new products and whether fashions/trends will come around again?
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THE BOSTON MATRIX
Problem Children Stars
Dogs Cash Cows
Market Growth
Market Share
High
Low High
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THE BOSTON MATRIX
Problem Child:
- Products having a low market share in a high growth market
- Need money spent to develop them
- May produce negative cash flow
- Potential for the future?
Problem children – worth spending good money on?
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THE BOSTON MATRIX
STARS – products in markets experiencing high growth rates with a high or increasing
share of the market
- Potential for high revenue growth
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THE BOSTON MATRIX
Dogs:– Products in a low growth market
– Have low or declining market share
(decline stage of PLC)
– Associated with negative cash flow
– May require large sums of money to support
Is your product starting to embarrass your company?
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THE BOSTON MATRIX
Cash Cows:– High market share
– Low growth markets – maturity stage of PLC
– Low cost support
– High cash revenue – positive cash flows
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Product Life Cycles and the Boston Matrix
Sales
Time
Effects of ExtensionStrategies
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PRODUCT LIFE CYCLES AND THE BOSTON MATRIX
Sales/Profits
Time
PLC and Profits
PLC
Losses
Break Even
Profits
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THE PRODUCT LIFE CYCLE AND THE BOSTON MATRIX
Sales
Time
AB
C
D
The product portfolio – four products in the portfolio
(1)
(1) ‘A’ is at maturity stage – cash cow. Generates funds for the development of ‘D’
(2)
(2) Cash from ‘B’ used to support ‘C’ through growth stage and to launch ‘D’. ‘A’ now possibly a dog?
(3)
(3) Cash from ‘C’ used to support growth of ‘D’ and possibly to finance extension strategy for ‘B’?
Importance of maintaining a balance of products in the portfolio at different stages of the PLC – Boston Matrix helps with the analysis
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WHAT IS PRODUCT MANAGEMENT ?
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WHAT IS PRODUCT MANAGEMENT?
What is product management?
Who does product management?
What do product managers do?
How does one become a product manager?
The following questions need to be answered
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THE ROLE OF PRODUCT MANAGEMENT
The role of Product Management is to define, develop, deploy and maintain products and services that:
Provide more value than the competition.
Help build a sustainable competitive advantage.
Deliver financial benefit to the business.
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THE ACCIDENTAL PROFESSION
It’s a pretty safe bet to say that few –if any –product managers have a Bachelor degree in Product Management
“Everyone comes from somewhere else”.. Steven Haines –The Product Managers Desk Reference
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MOST PRODUCT MANAGERS HAVE ROOTS IN OTHER PROFESSIONS
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WHAT DO PRODUCT MANAGERS DO?
Product managers spend time understanding what customers need and want
Then develop solutions that solve these problems and satisfy needs & wants
Product managers have a duty to deliver and maintain financial benefit to the business
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PRODUCT MANAGERS SEE THINGS DIFFERENTLY
The carpenter doesn’t want a drill. He wants a hole HOW DOES A PRODUCT MANAGER SEE THIS PROBLEM
The carpenter has a problem.
He needs a hole in the wall. A drill can solve this problem, but there’s much more to it than just creating a hole.
The carpenter is concerned with multiple factors:
• The speed at which the hole is made.
• The accuracy of the cut
• The safety of the device that makes the hole
• The ease of using the device
• The reliability of the device
• Where the device can be purchased or accessed
• The price of the device
• After sales support of the device
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PRODUCT MANAGERS HAVE TO SEE THE HOLISTIC SOLUTION
Product managers define the problem using
criteria such as these before working on
possible solutions
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THE PRODUCT MANAGEMENT DOMAIN
PRODUCT PRODUCT PLANNINGPRODUCT MARKETING
BUYER FOCUS USER FOCUS
STRATEGIC PRODUCT MANAGEMENT
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THERE ARE MANY ROLES IN PRODUCT MANAGEMENT
Marketcommunications
Product Architect/Design
ProductOperations
ProjectManager
ProjectManager
Engineering
Product Planning
Salesmanager
Product marketing
strategic
Tactical/operational
Marketing/Sales
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A PRODUCT MANAGER IS AN ALL-ROUNDER
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PRODUCT DELIVERY CYCLE
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STAGE 1: IDEA STAGE
Key stage actions
• Ideation and innovation workshops
• Interviews and discussions with customers
• Market analysis including foreign markets
Key stage deliverables
• Market Problem
• Market Opportunity Discussion Report
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STAGE 2 – PRODUCT STRATEGY
Key stage actions
• Investigate idea concept
• Contrast market problems, needs and wants with organizational capabilities and competitive threats
• Conduct due diligence to determine if idea presents a feasible opportunity
Key stage deliverables
• Business case
• Competitive analysis
• Product comparison documents (of existing products)
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STAGE 3 –PRODUCT PLANNING
Key stage actions
• Articulate the market problem
• Develop and define market requirement • Identity and understand customers including buyers, users and influencers
Key stage deliverables
• Market segmentation and targeting
• Personas
• Use cases
• Market requirements document
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STAGE 4 –PRODUCT DEFINITION
Key stage actions
• Articulate the solution that will solve the market problem and satisfy needs/wants
• Provide inputs for development and other teams that will build and deliver the solution
Key stage deliverables
• Product requirements document
• Product comparison document
• Deliver prototype
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STAGE 5–LAUNCH PLANNING
Key stage actions
• Prepare customer facing messaging
• Prepare customer facing teams including sales, support and marketing communications
Key stage deliverables
• Value proposition
• Product-Solution-Feature-Benefit table
• Sales collateral
• Marketing plan
• Launch plan
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STAGE 6 -LAUNCH
Key stage actions
• Manage product launch and maintain velocity
• Coordinate internal and external parties involved – ad agencies, support teams, sales teams
• Act on feedback immediately
Key stage deliverables
• Marketing communications materials
• Sales materials
• Be available to colleagues as required
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STAGE 7 –DAY-TO-DAY PRODUCT MANAGEMENT
Key stage actions
• Continue to refine and improve product
• Assist marketing, support and sales teams in selling and maintaining the product
Key stage deliverables
• Product in-life reports
• Product roadmap
• Product profile and collateral
• Product marketing plans