Product mix


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Product mix

  1. 1. Product MixUnit- 9 & 10
  2. 2. What is a Product?A product is defined as anything that can be offeredin the market for attention, acquisition, use orconsumption that might satisfy a want or need ofcustomers.A product can be goods, services, ideas, experiences,events, persons, places, properties, organizations,information etc.Eg. mobile, computer, pen , noodles, vehicles, clothes,service of doctor, haircutting etc.
  3. 3. Components of ProductQualityVarietywarrantyDesignServicesBrandingPackaging
  4. 4. Level of ProductBenefits andsatisfactionAfter-Sales ServicesInstillationWarrantyDeliveryandCreditPackagingBrandnameFeaturesQuality StylingAugmented ProductActual ProductCore Product
  5. 5. Level of ProductCore Products- a part of the total product thatthe consumer is actually buying i.e. benefitand satisfaction.Actual Product- this includes the productsname, label, packaging, features, and a qualitylevel.Augmented Product- is the part where the sellerprovides additional services and privileges toconsumers who bought the product.
  6. 6. Classification Of Product1. Consumer Product• Convenience product : pen,noodles, cigarette, tea etc.• Shopping Product : clothes, shoes, mobile, electronicsetc.• Specialty product: car,motorbike, Rolex watch,gold , land and building etc.• Unsought Product : giftitems, decorative items etc.2. Industrial Product• Raw materials: agriculturalproducts, minerals, timberetc .• Capital items : plant andmachinery, equipments,land and building• Service , parts andaccessories : fuel, parts,repairing service etc.
  7. 7. • Branding is a part ofproduct mix which conveysthe features , image, values,and benefits of product.Branding
  8. 8. Brand is a name, term,design, symbol, or anyfeature identities onesseller’s good or servicesas distinct from those ofother seller. A brand mayIdentify one item, afamily of items, or allitems of that seller.Brand name is that partof a brand which can bespoken- including letters,words and number.
  9. 9. Brand mark is the elementof a brand that is not made up ofwords, but is often a symbol ordesign.Trademark is a legal designationindicating that the owner hasexclusive use of a brand andthose others are prohibited bylaw from using it.Trade name is a full and legalname of an organization such asToyota Company, rather than thename of a specific product.
  10. 10. Packaging and LabelingPackage is a container used to protect,promote, transport, and/or identify a product.Packaging is that part of product planning, inwhich company researches, designs, andproduces its package(s).Label indicates the products’ brand name, thecompany logo, ingredients, promotionalmessages, inventory, manufacturing and expirydate, instructions for use.
  11. 11. New Product Development ProcessNew Product : If customer consider it to besignificantly different from competitiveproducts in some relevant characteristics ,then it is indeed a new product. ---WJ stantonTypes of new product:1. Innovative product :original or uniqueproducts which satisfy the unsatisfied needs.They are costly and risky .
  12. 12. 2.Modified product : products are modified andimproved in terms of quality, performance, design ,capacity etc.3.Imitated Product : They are new to the organizationbut are old to the market. They are similar to thecompetitors ‘ product.Types of newproductInnovative Modified imitated
  13. 13. Stages inNew-Product Development
  14. 14. Stage 1: Idea Generation• Internal idea sources:– R & D• External idea sources:– Customers,– competitors,– distributors,– Suppliers, agents– Company staffs, sales force– Consultants, researcher, universities etc.New Product Development Process
  15. 15. New Product Development processStage 2: Idea Screening• Ideas are evaluatedin terms of resources capability,Policies, objectives etc.• Ideas can be promising,marginal and rejected .
  16. 16. Stage 3: Concept Development and Testing• Product concepts providedetailed versions of newproduct with its uses andbenefits.• Physical prototype or drawingsare prepared.• Concept testing: Customer areasked to evaluate the pictureor description of product .Theconcept clarity, uniquenessand attractiveness of conceptis measured through thepotential customer feedback.New Product Development Process
  17. 17. Stage 4: Marketing Strategy Development• Strategy statements are described in terms of– The target market, product positioning, sales, marketshare and profit for the first few years.– Product price, distribution and promotion budget andactivities for the first year.– Long-run sales and profit goals and the marketing mixstrategy.New Product Development Process
  18. 18. Stage 5: Business Analysis• Business attractiveness of product concept isevaluated.• Sales, cost, and profitprojections• Competitors analysis• Demand forecasting• Break-even analysisNew Product Development Process
  19. 19. Stage 6: Product Development• Product Concept is converted into physicalproducts (prototype)• Lab. Tests are conductedNew Product Development Process
  20. 20. Stage 7: Test Marketing– Sample production in limited scale– Branding , packaging and labeling– Customer’s preference(Likes and dislikes to the product)– Trial purchase, adoptionand frequency of purchase isobserved.New Product Development Process
  21. 21. Stage 8: Commercialization• full scale production• Commercially launched in the target market• Implementation of Pricing ,distribution and promotionstrategyNew Product Development Process
  22. 22. Product Life Cycle• The sales history of a product from its birth todeath is called product life cycle.• All products born, live and die with in a certainperiod of time .• Due to the changes in technology, changes in lifestyle and preferences of customer, competition ,recession etc. may limit the life of product.• Sales and profit rise and fall at different stages oflife cycle.• Marketing strategies should be different indifferent stages of product life.
  23. 23. Sales and ProfitsOver A Product’s Life
  24. 24. Product Life-Cycle Strategies• Productdevelopment• Introduction• Growth• Maturity• Decline• Begins when thecompany develops anew-product idea• Sales are zero• Investment costs arehigh• Profits are negativePLC Stages
  25. 25. Product Life-Cycle Strategies• Productdevelopment• Introduction• Growth• Maturity• Decline• Begins when thecompany develops anew-product idea• Sales are zero• Investment costs arehigh• Profits are negativePLC Stages
  26. 26. Product Life-Cycle Strategies• Productdevelopment• Introduction• Growth• Maturity• Decline• Low sales• High cost percustomer acquired• Negative profits• Innovative customersare targeted• Little competition• High pricePLC Stages
  27. 27. • Product – Offer a basic product• Price – Use cost-plus basis to set, marketskimming or penetration strategy• Distribution – Build selective distribution• Promotion : Advertising – Build awarenessamong early adopters and dealers/resellersSales Promotion – Heavy expenditures to createtrialMarketing Strategies: IntroductionStage
  28. 28. Product Life-Cycle Strategies• Productdevelopment• Introduction• Growth• Maturity• Decline• Rapidly rising sales• Average cost percustomer• Rising profits• Early adopters aretargeted• Growing competition• Slightly lower pricePLC Stages
  29. 29. • Product – Offer product extensions, improvedquality, service, warranty• Price – Penetration pricing• Distribution – Build intensive distribution• Promotion : – Build awareness and interest inthe mass market, focus on increasing brandloyalty, reduce sales promotion expenditureMarketing Strategies:Growth Stage
  30. 30. Product Life-Cycle Strategies• Productdevelopment• Introduction• Growth• Maturity• Decline• Sales peak, constantgrowth or slows down• Low cost per customer• High and stable profits• Middle majority aretargeted• Competition begins todecline• Low pricePLC Stages
  31. 31. • Product – Diversify brand and models• Price – Set to match or beat competition• Distribution – Build more intensive distributionwith new channel• Promotion: Advertising – Stress brand differencesand benefits, focus on brand loyaltySales Promotion – Increase to encourage brandswitchingMarketing Strategies:Maturity Stage
  32. 32. Product Life-Cycle Strategies• Productdevelopment• Introduction• Growth• Maturity• Decline• Declining sales• Low cost percustomer• Declining profits• laggards are targeted• Decliningcompetition• Lower pricePLC Stages
  33. 33. • Product – Phase out weak items• Price – Cut price• Distribution – Use selective distribution: phaseout unprofitable outlets• Promotion: Advertising – Reduce to levelneeded to retain loyal customerSales Promotion – Reduce to minimal levelMarketing Strategies: Decline Stage
  34. 34. Limitations of product life cycle• Its only theoretical concept and can not beapplied in all product in the same way.• The patterns of life cycle are various indifferent product .• The duration of each stage can not beforecasted.
  35. 35. Product Life Cycle ofStyles, Fashions, and Fads
  36. 36. Product life cycle (Exception)• Product life cycle vary from product toproduct. It is affected by style, fashion andfad.• Style: may remain last long –going in and outof trend• Fashion: grow slowly, remain popular for awhile and decline slowly .• Fad: rapidly grow and decline