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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
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 ?
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)
PRODUCTS
GOODS SEVICES
Tangible
products
Intangible
products
FEATURES OF PRODUCT
Features of
product
Associated
attributes
Intangible
attributes
Tangibility
Exchange
value
Customer
satisfaction
Potential product
Augmented product
Expected product
Generic product
Core benefit
LEVELS OF A PRODUCT
Unexpected features
Luxury features
Expected features
Basic features
Basic product
CONSUMER ADOPTION PROCESS
Adopt
Trail
Evaluation
Interest
Awareness
CONSUMER ADOPTION PROCESS
Potential product
Augmented product
Expected Product
Generic product
Core Benefit
CLASSIFYING PRODUCTS
Durable products
Consumer products
Business products
DURABLE PRODUCTS
Durable
Non-durable
Services
CONSUMER PRODUCTS
Convenience Products
Shopping Products
Specialty Products
. . To satisfy information needs & buying motives
Unsought Products
CONVENIENCE GOODS
Staples
Emergency goods
Impulse purchases
CONVENIENCE GOODS – CONSUMERS USE MINIMAL
EFFORT FOR FREQUENTLY PURCHASED LOW COST
ITEMS
SHOPPING PRODUCTS
SHOPPING GOODS - CONSUMERS MAKE A CONSIDERABLE EFFORT 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
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
RAW MATERIALS
Farm products
Natural products
MANUFACTURED MATERIALS AND PARTS
PRODUCT MIX
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
LAMPS
•Table
•Ceiling
•Track
•Desk
Product Line
PRODUCT LINE & PRODUCT MIX
Product
Line 1
Product
Line 2
Product
Line 3
TABLES
•Kitchen
•Dining Room
•End
•Coffee
•Outdoor
•Conference
•Computer
CHAIRS
•Dining Room
•Living Room
•Bedroom
•Outdoor
•Desk
LAMPS
•Table
•Ceiling
•Track
•Desk
PRODUCT MIX
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.
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.
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?
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
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
BRAND EQUITY – COMPETITIVE ADVANTAGES
Reduced marketing costs
Trade leverage
Can charge a higher price
Can easily launch brand extensions
Can take some price competition
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
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.
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."
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
higher price, defense against price competition, more easily launch
line extensions.
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.
BRAND REPOSITIONING
This may be required after a few years to face
new competition and changing customer
preferences
7 - 34
Porsche is positioned on the basis of
performance and freedom.
PORSHE VERSUS LEXUS
35
MARKET SEGMENTATION
Levels Of Marketing Segmentation
Segment
marketing Niche Marketing Micro-marketing Mass Marketing
No Segmentation Complete
segmentation
PACKAGING
PACKAGING
Includes the activities of designing and producing the container for a product
Packaging is done at three levels
- primary
- secondary
- shipping
PACKAGING AS A MARKETING TOOL
Self service
Consumer affluence
Company and brand image
innovation
DESIGNING PACKAGING
Packaging concepts
Technical specifications
Engineering tests
Visual tests
Dealer tests
Consumer tests
Packaging innovations
Environmental considerations
LABELS
Identification
Grade classification
Description of product
Manufacturer identity
Date of mfg., batch no.
Instructions for use
Promotion
LABELS AS A MARKETING TOOL
Labels need to change with time
or packaging changes
to give it a contemporary
and
fresh look
PRODUCT
LIFE CYCLE
PRODUCT LIFE CYCLES AND THE BOSTON MATRIX
The Stages of the Product Life Cycle:
– Development
– Introduction/Launch
– Growth
– Maturity
– Saturation
– Decline
– Withdrawal
PRODUCT LIFE CYCLES AND THE BOSTON MATRIX
Sales
Time
Development Introduction Growth Maturity Saturation Decline
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
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?
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?
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
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?
THE BOSTON MATRIX
Problem Children Stars
Dogs Cash Cows
Market Growth
Market Share
High
Low High
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?
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
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?
THE BOSTON MATRIX
Cash Cows: – High market share
– Low growth markets – maturity
stage of PLC
– Low cost support
– High cash revenue – positive
cash flows
Product Life Cycles and the Boston
Matrix
Sales
Time
Effects of Extension Strategies
PRODUCT LIFE CYCLES AND THE
BOSTON MATRIX Sales/Profits
Time
PLC and Profits
PLC
Losses
Break Even
Profits
THE PRODUCT LIFE CYCLE AND THE BOSTON MATRIX
Sales
Time
A B
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
WHAT IS PRODUCT MANAGEMENT ?
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
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.
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
MOST PRODUCT MANAGERS HAVE ROOTS IN OTHER PROFESSIONS
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
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
PRODUCT MANAGERS HAVE TO SEE THE HOLISTIC SOLUTION
Product managers define the problem using
criteria such as these before working on
possible solutions
THE PRODUCT MANAGEMENT DOMAIN
PRODUCT
PRODUCT PLANNING
PRODUCT MARKETING
BUYER FOCUS
USER FOCUS
STRATEGIC PRODUCT MANAGEMENT
THERE ARE MANY ROLES IN PRODUCT MANAGEMENT
Market
communications
Product Architect/
Design
Product
Operations
Project
Manager
Project
Manager
Engineering
Product Planning
Sales
manager
Product marketing
strategic
Tactical/operational
Marketing/Sales
A PRODUCT MANAGER IS AN ALL-ROUNDER
PRODUCT DELIVERY CYCLE
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
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)
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
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
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
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
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