What is Marketing? Marketing is a process in a social system by which the demand pattern for product and services can be anticipated, enlarged, created and satisfied through the conception, production, promotion and physical distribution of goods and services in an exchange process. Marketing is an ongoing process of discovering and translating consumer needs and desires in to products and services, creating demands for these products and services, serving the consumer and its demand through a network of marketing channels and expanding the market base in the face of competition
Production concept It is one of the earliest marketing concepts where goods were just produced on the belief that they will be sold because consumers need them. Production Concept is a concept where goods are produced without taking into consideration the choices or tastes of your customers. The basic proposition is that customers will choose products and services that are widely available and are of low cost.
Product Concept Consumers will favor those products that offer the most attributes like quality, performance and other innovative features. “Technology Push Model” - The innovations in the scientific laboratory are commercialized and the consumers get an opportunity to know and use these products
Selling Concept Customers, be individual or organizations will not buy enough of the organisation's products unless they are persuaded to do so through selling effort. This approach is applicable in the cases of unsought goods like life insurance, vacuum cleaner, fire fighting equipments including fire extinguishers
Marketing Concept The marketing concept is about matching a company's capabilities with customer wants.
Societal Concept The enterprise's task is to determine the needs, wants and intentions of the target market and to deliver the expected satisfaction more effectively and efficiently than the competitors in a way to preserve or enhance the consumer’s and society's well being.
What is Product? Product is a combination of physical, economic and psychological benefits. It is applicable to any offering to a market for possible purchase or use. It encompasses physical objects (e.g., a television), services (e.g., airlines), places (e.g.. lourislresorts), organibations (e.g., Red Cross), persons (e.g., an athlete) and ideas (e.g., flood relief aid). It also includes supporting services e.g., design, brand, package, label, price, etc.
Essential Attributes of a Product Tangible or Intangible Associated Attributes - colour, package, brand name, accessories, installation, instructions to use, manufacturer’s prestige, retailer's prestige, after sale service, etc Exchange Value Satisfaction
Product Classification I ) On the basis of the user status, products may be classified as consumer goods and industrial goods. 2) On the basis of the extent of durability, products may be classified as durable goods and non-durable goods. 3) On the basis of tangibility, products may be classified as tangible goods and non tangible goods. These non-tangible goods are referred to as services.
CONSUMER GOODS CLASSIFICATION ON THE BASIS OF CUSTOMER SHOPPING HABITS : (1) CONVENIENCE GOODS (2) SHOPPING GOODS (3) SPECIALITY GOODS (4) UNSOUGHT GOODS
(1) CONVENIENCE GOODS are goods that the customer usually purchases frequently, immediately, and with a minimum of efforts. (A) Staples: Consumers purchase on a regular basis. (B) Impulse Goods: are purchased without any planning or search efforts. (C) Emergency Goods: are purchased when a need is urgent.
(2) SHOPPING GOODS are goods that the customer , in the process of selection and purchase, characteristically compares on such basis as suitability, quality, price and style. (A) Homogeneous Shopping Goods: are similar in quality but different enough in price to justify shopping comparisons. (B) Heterogeneous Shopping Goods: differ in product features and services that may be more important than price.
PRODUCT CLASSIFICATION ON THE BASIS OF PRODUCT CHARACTERISTICS :DURABILITY, TANGIBILITY AND USE (consumer or industrial ) (1) NON-DURABLE (2) DURABLE (3) SERVICES ( CONTD . )
(1) NON-DURABLES These are tangible goods normally consumed in one or few uses. Because these goods are consumed quickly and purchased frequently, the appropriate strategy is to make them available at many locations, charge only a small mark up and advertise heavily to induce trial and build preference.
(2) DURABLES These are tangible goods that normally survive many uses. Normally require more personal selling and service, command a higher margin, and require more seller guarantees.
Q & A I) Distinguish between consumer goods and industrial goods. ...................................................................................................................... 2) Distinguish between durable and non-durable goods. ...................................................................................................................... 3) What is a service? ...................................................................................................................... 4) Which one of the following are durable goods and which are non-durable goods? i) Television ii) Tooth Paste iii) Bath Soap iv) Refrigerator V) Desert Cooler vi) Hair Oil
PRODUCT MIX A product mix is the set of all products and items that a particular seller offers forsale. It is also termed as product assortment. Product mix consists of product lines. For example, the product mix of ITC consists of product lines like hotels, cigarettes, ready-made garments, grocery, and paper.
A company's product mix consisting of different product lines, has a certain width, length, depth and consistency.
DIMENSIONS OF PRODUCT MIX The width of company’s (say HLL’s) product mix refers to how many different product lines the company carries, such as bathing soap, detergents, shampoos, toothpaste, food products.
DIMENSIONS OF PRODUCT MIX The length of a company’s product mix refers to the total number of items in its product mix. Thus in each of the product line HLL has a number of product items. Eg., in the product line of bathing soaps, HLL has several product items like Lux, Liril, Lifebuoy, Pears.
DIMENSIONS OF PRODUCT MIX The depth of a company’s product mix refers to how many variants are offered of each product in the line. Thus if close up toothpaste comes in three formulations and in three sizes, Close up has a depth of nine (3x3). The average depth of HLL product mix can be calculated by averaging the number of variants within the brand groups.
DIMENSIONS OF PRODUCT MIX The Consistency of the product mix refers to how closely related the various product lines are in end-use, production requirements, distribution channels, or some other way. HLL’s product lines are consistent insofar as they are consumer goods that go through the same distribution channels.
DIMENSIONS OF PRODUCT MIX These four dimensions of the product mix provide the handles for defining the company’s product strategy. The company can expand its business in four ways. 1. The Co. can add new product lines, thus widening its product mix. 2. The Co. can lengthen each product line. 3. The Co. can add more product variants to each product and deepen its product mix. 4. The Co. can pursue more product-line consistency or less, depending upon whether it wants to acquire a strong reputation in a single field or participate in several fields.
PRODUCT LINE 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 or fall within the given price ranges. The product mix may be composed of several product lines.
Product Mix Length and Product Line Length TAKE AN EXAMPLE..
PRODUCT LINE ANALYSIS Product line managers need to know the sales and profits of each item in their line in order to determine which items to build, maintain, harvest,, or divest. They also need to understand each product’s market profile, i.e. how their product line is positioned against competitors’ product lines (The Product Map).
PRODUCT PORTFOLIO MANAGEMENT Product Line Length : . Downward Line Stretching . Upward Line Stretching . Two Way Stretching High New Present Product New Price Present Present New Product New Low Low High Quality (Downward) (Upward) (Two Way)
PRODUCT PORTFOLIO MANAGEMENT Filling in the Product Line ( adding more items within the present range of line ) Product Line Modernization Product Line Featuring Product Line Pruning
PRODUCT LIFE CYCLE The Product Life Cycle ( PLC ) is an important concept in marketing that provides insights into a product’s competitive dynamics. To fully understand the concepts of PLC , one should first understand its parent concept, the demand and technology life cycles.
DEMAND / TECHNOLOGY LIFE CYCLE Marketing thinking should not begin with a product or even a product class, but rather with a need. The product exists as one solution among many to meet a need. A need is satisfied by some technology. Each new technology normally satisfies the need in a superior way and it shows a demand-technology life cycle. The PLC portrays distinct stages in the sales history of a product.
DEMAND-TECHNOLOGY-PRODUCT LIFE CYCLES Sales Time
STAGES IN THE PRODUCT LIFE CYCLE Sales & Profits Time Introduction Growth Maturity Decline
STAGES IN THE PRODUCT LIFE CYCLE By identifying the stage that a product is in, or may be headed toward, companies can formulate better marketing plans. Products require different marketing, financial, manufacturing, purchasing and personnel strategies in each stage of their life cycle. Marketers must pursue appropriate marketing strategies in each stage of PLC. Today, in order to succeed, it is absolutely essential to constantly improve products to increase the value offered to customers, ( V = B/P ). The success of competitors is based on creating value for the customer by differentiating their product, ( Competitive Differential ).
EXTENDING THE PRODUCT LIFE CYCLE Sales Time
( When the sales of a product starts declining marketers may choose suitable strategy for further growth of product /business/enterprise.)
PRODUCT LIFE CYCLE Reasons for change in behavior of PLC : --Changes in the consumer needs and preferences --Advancing Technology --Competition, Government Policies etc. --Changes in number of potential buyers Stages in PLC : Introduction, Growth, Maturity, And Decline.
MARKETING STRATEGIES IN THE INTRODUCTION STAGE Promotion Low High Rapid Skimming Strategy Slow Skimming Strategy High Price Rapid Penetration Strategy Slow Penetration Strategy Low
MARKETING STRATEGIES IN THE GROWTH STAGE It improves product quality and adds new product features and improved styling. It adds new models and flanker products (i.e., products of different sizes, flavors, and so forth that protect the main product ). It enters new market segments. It increases its distribution coverage and enters new distribution channels. It lowers prices to attract the next layer of price-sensitive buyers. It shifts from product-awareness advertising to product-preference advertising.
MATURITY STAGE Sales are increasing but at a decreasing rate. Profits are beginning to decline. Price competition increases. The manufacturer assume a greater share of the total promotional effort in the fight to retain dealers and shelf space in their stores.
MATURITY STAGE To understand better, we can devide Maturity Stage into three stages : Growth Maturity : When the rate of sales growth starts to decline because of distribution saturation. Stable Maturity : When the rate of sales growth starts declining due to market saturation. Decaying Maturity : The sales level starts to decline as some of the customers move towards other competitive and substitute products.
MARKETING STRATEGIES IN THE MATURITY STAGE Market Modification Product Modification Marketing Mix Modification
MARKETING STRATEGIES IN THE MATURITY STAGE Market Modification Expand number of users : - Convert non-users - Enter new market segments - Win competitors’ customers Increase annual usage : - More frequent use - More usage per occasion - New and more varied uses
MARKETING STRATEGIES IN THE MATURITY STAGE Product Modification A strategy of quality improvement aims at increasing the product’s functional performance - its durability, reliability, speed, taste. A strategy of feature improvement aims at adding new features ( for example - size, weight, materials, additives, accessories ) that expand the product’s versatility, safety, or convenience.
MARKETING STRATEGIES IN THE MATURITY STAGE Product Modification (contd.) A strategy of style improvement aims at increasing the product’s aesthetic appeal. The periodic introduction of new car models amounts to style competition rather than quality or feature competition.
MARKETING STRATEGIES IN THE MATURITY STAGE Marketing Mix Modification Prices Distribution Advertising Sales Promotion Personal Selling Services
MARKETING STRATEGIES IN THE DECLINE STAGE Identifying the Weak Products To do this, many companies appoint a product-review committee with representatives from marketing, R&D, manufacturing and finance. The product review committee makes a recommendation for each dubious product--leave it alone, modify its marketing strategy, or drop it.
MARKETING STRATEGIES IN THE DECLINE STAGE (Contd.) Determining Marketing Strategies : ( Go Strategy ) Continuation Strategy : -Increasing the firm’s investment ( to dominate the market or strengthen the competitive position ) - Maintaining the firm’s investment level until the uncertainties about the industry are resolved. (Contd.)
MARKETING STRATEGIES IN THE DECLINE STAGE (Contd) Determining Marketing Strategies : ( Go Strategy ) Concentration Strategy : - Decreasing the firm’s investment level selectively, by dropping unprofitable customer groups, while simultaneously strengthening the firm’s investment in lucrative niches. Harvesting Strategy : - Divesting the business quickly by disposing of its assets as advantageously as possible.
MARKETING STRATEGIES IN THE DECLINE STAGE (Contd) The Drop Strategy - When a company decides to drop a product, it faces further decisions. If the product has strong distribution and residual goodwill, the company can probably sell it to another firm. - If the company can’t find any buyers, it must decide whether to liquidate the brand quickly or slowly. It must also decide on how much parts inventory and service to maintain for past customers.
NEW PRODUCT DEVELOPMENT PROCESS (1) Idea Generation (2) Screening (3) Concept Development and Testing (4) Marketing Strategy (5) Business Analysis (6) Product Development (7) Market Testing (8) Commercialization
THE CONSUMER ADOPTIONPROCESS (STAGES IN THE ADOPTION PROCESS ) Awareness : The consumer becomes aware of the innovation but lacks information about it. Interest : The consumer is stimulated to seek information about the innovation. Evaluation : The consumer considers whether to try the innovation. Trial : The consumer tries the innovation to improve his or her estimate of its value. Adoption : The consumer decides to make full and regular use of the innovation.
ADOPTER CATEGORIZATION ON THE BASIS OF RELATIVE TIME OF ADOPTION OF INNOVATIONS Time of adoption of innovations