Product – The first element of
marketing mix
Marketing mix
 The marketing mix is the combination of variables that a

business uses to carry out its marketing strateg...
The Marketing Mix
 Think of a Cake
 All cakes need 4 things – flour, egg, sugar, milk
 However, you can play with the f...
Water Storage Problem in India
 Steel, Brick, reinforced cement concrete.
 Need for leak proof & maintenance free soluti...
Components of the
Market Offering
Product Characteristics/Classifications
•
•
•
•
•
•

Persons

Experiences
Events
Properties
Organizations
Information
Idea...
Product - Meaning
• Anything

that can be offered to market for
attention, acquisition, use or consumption that might
sati...
Goods & Services continuum
Categorising offerings along the service continuum
 Pure tangible goods
 toothpaste
 Tangible goods accompanied by one ...
Service characteristics
Intangibility
 Cannot be seen, tasted, felt, heard or smelt before they are

bought.
 Service pr...
Product Differentiation
Form

Features

Customizatio
n

Durability

Performance

Conformanc
e
Repairability

Reliability

...
Services Differentiation

Customer
Consulting

Delivery &
Returns

Ordering
Ease

Training

Installation

Maintenance & Re...
Product Classifications
Durability and
Tangibility
Nondurable
goods goods
Tangible
Consumed in
few uses
Distribution
Small...
Consumer goods
PRODUCTS

Consumer
Products

Convenience
Products

Shopping
Products

Business
Products

Specialty
Products...
Product Classifications
• Staples
• Impulse goods
• Emergency goods

Convenience
goods

Shopping goods –
furniture, clothi...
Convenience
Product

Frequently bought, inexpensive, little shopping effort.
Staples - on regular basis (Colgate toothpast...
Product Classifications
Materials and Parts
Manufacture
d
materials
Raw materials

Supplies and
business
Services

Industr...
Product
Materials & parts

Raw materials

Manufactured
materials & parts

Farm Products
(wheat, cotton, li
vestock, fruits...
 Organizations, Persons, Places, and Ideas
 Organization marketing
 Undertaken to create, maintain, or change the attit...
Five Product Levels
Product Levels
Core Benefit
(Rest and sleep)

Basic Product
(Bed, bathroom, towels)

Expected Product
(Clean bed, fresh to...
Product Levels
 More Differentiation & more competition on Product









augmentation.
Augmented benefits becom...
Product Mix

Product
System

Consisten
cy

A product mix is the set of
all products and items a
particular seller offers f...
Product Mix
• Width – different product lines a company carries
• The number of product lines an organization offers.
• Di...
Product Mix Decisions
Home & Personal care

Foods

Personal
wash

laundry

Skin care

Hair
care

Oral care

Deodora
nts

K...
Product Line Analysis
Sales and Profit

Market Profile
Product-Item
Contributions
 In conducting product line analysis - contribution to








overall sales and profits.
Market Profile
Products w...
Product Map
Product Line Length
Up-market
stretch

Line
stretching

Twoway
stretch

Line modernization,
featuring, and
pruning

Down-m...
Product Line Length
 Line stretching – company lengthens its product line beyond its

current range.
 Down-Market Stretc...
 Line filling – company lengthens its

product line by adding more items
within the present range.
 Motives – to get inc...
 Line modernization, featuring, and pruning
 Piecemeal approach
 Intel, AMD, Microsoft, Oracle – not to early or

not t...
Product Mix Pricing

Product line
pricing clothing store

Captive-product
pricing

with 3 different shirts at
Optional-fea...
Co-Branding and Ingredient Branding
CoBranding

• (Dual Branding)
Same-company
• Gillette
shaving cream
& razors
• Aquagua...
Packaging and Labeling
Packaging
Objectives
1. Brand
identification
2. Persuade
3. Protection
4. At-home storage
5. Aid co...
Packaging and Labeling

•Labelling
–
from
Labeling
single tags attached to
Objectives
complex graphics
•Identification
of
...
Product
 Product Support Services
 Survey customer periodically, take steps to fix problem,

add new services
 Warranti...
Product Mix
– Product Quality – freedom from defects
– (Siemens – Quality is when our customers come back & our
product do...
 150 crores in 3 yrs

 Overtaken

Colgate

Sensitive
 Suited
to
Indian
Taste,
dentists
associations,
retail
presence, t...
Questions?????

Thank You
Product-The first element of marketing mix
Product-The first element of marketing mix
Product-The first element of marketing mix
Product-The first element of marketing mix
Product-The first element of marketing mix
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Product-The first element of marketing mix

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  • As shown in Figure 12.1 the customer will judge the offering’s: product features and quality, services mix and quality, and price.
  • As discussed in chapter 1, a product is anything that can be marketed to satisfy a want or need, including physical goods, services, experiences, events, persons, places, properties, organizations, information, and ideas.
  • Products can be differentiated in many ways including: Form, features, customization, performance quality, conformance quality, durability, reliability, repairability, and style.
  • The main service differentiators are ordering ease, delivery, installation, customer training, customer consulting, and maintenance and repair. The key to competitive success may lie in adding valued services and improving product quality.
  • Durability, tangibility, and use (consumer or industrial).
  • Consumers purchase convenience goods frequently, immediately, and with minimal effort. Consumers compare shopping goodsbased on suitability, quality, price, and style. Consumer make special purchasing effort to buy specialty goods due to their unique characteristics or brand identification. Consumer does not normally know or buy unsought goods. As such these goods require advertising and personal-selling support.
  • Materials and parts are goods that enter the manufacturer’s product completely.Capital items are long-lasting goods that facilitate developing or managing the finished product.Supplies and business services are short-term goods and services that facilitate developing or managing the finished product.
  • Figure 12.2 shows the five levels of a product. Each of these will be illustrated in more depth on the next slide.
  • Products are comprised of 5 levels. Each level adds more customer value. Here are the product levels using a hotel as an example. Core benefit: service or benefit the customer is really buying.Basic product: marketers turn core benefit into a basic product at this level.Expected product: attributes and conditions buyers expect when they purchase this product. Competition takes place at this level in developing countries.Augmented product: : attributes and conditions exceed customer expectations. Competition takes place at this level in developed countries..Potential product: various augmentations that could be incorporated in the future. Here is where companies search for new ways to satisfy customers and distinguish their offering.
  • In conducting product line analysis managers must examine each product in terms of how it contributes to overall sales and profits. Products that are responsible for a large percentage of sales and profits must be carefully monitored and protected. Products that deliver on a small percentage may be candidates for being dropped, unless strong growth potential is possible. Figure 12.3 highlightsA product line manager must examine how the line is positioned against competitors. One tool that managers can employ is a product map, which shows competitors’ items in relation to firm’s items. This also allows for identifying market segments.Product line analysis is helpful in two key decision areas – product line length and product mix pricing.
  • Figure 12.3 highlights the sales and profits of a 5-item product line. Item 1 accounts for 50% of total sales and 30% of total profits.
  • Figure 12.4 shows the location of the various product line items of company X and four competitors, A, B, C, D. Competitor A sells two product items in the extra-high weight class ranging from medium to low finish quality. The product map shows which competitors’ items are competing against company X’s items.
  • Line stretching – company lengthens its product line beyond its current range.Line filling – company lengthens its product line by adding more items within the present range.Line modernization, featuring, and pruning – Companies continuous modernize product lines to encourage customer migration to higher-valued, higher-priced items; boost demand for certain product lines by featuring them; and optimize their brand portfolios by focusing on core brand growth and concentrating resources on the biggest and most established brands.
  • In product-mix pricing, the firm searches for a set of prices that maximizes profits on the total mix.Product line pricing – develop product lines rather than single products and introduce price steps.Optional-feature pricing – offer optional products, features, and services with their main product.Captive-product pricing – price the main products low and set high markups on the aftermarket products.Two-part pricing – consists of a fixed fee plus a variable usage fee.By-product pricing – charge low price for the main products and earn income on the by-products .Product-bundling pricing – offer goods as a bundles and charges less for the bundle than if the items were purchased separately.
  • Co-branding - Brand bundling or Dual brandingSame-company- When brands owned by the same company are used together. Example, General Mills launched a Trix branded Yoplait yogurt.Joint venture co-branding – Where brands owned by different companies are combined. Example, American Airlines and Citibank launching the Citibank AAdvantage credit card.Multi-sponsor – An alliance between three or more partners.Retail co-branding – Where two retail establishments use the same location to optimize space and profits. Pizza Hut, KFC, and Taco Bell often share the same retail space.Ingredient branding is a special case of co-branding and involves the linking of one brand with another. KC Masterpiece barbecue sauce was combined with Lay’s potato chips is an example.
  • The package is the customers first encounter with the product and a good package draws the customer in, encouraging product choice. Packaging also influences customers when they go to open and use the product at home. Distinctive packaging, Altoids mints and Absolut vodka serve as an important part of a brand’s equity.Labeling – FDA requires that labels on all processed foods contain nutritional information.Warranties and guarantees – A warranty is a formal statement of expected product performance, and are legally enforceable. Guarantees help reduce a buyers perceive risk by suggesting that the product is high quality and that the manufacturer is dependable.
  • The package is the customers first encounter with the product and a good package draws the customer in, encouraging product choice. Packaging also influences customers when they go to open and use the product at home. Distinctive packaging, Altoids mints and Absolut vodka serve as an important part of a brand’s equity.Labeling – FDA requires that labels on all processed foods contain nutritional information.Warranties and guarantees – A warranty is a formal statement of expected product performance, and are legally enforceable. Guarantees help reduce a buyers perceive risk by suggesting that the product is high quality and that the manufacturer is dependable.
  • Product-The first element of marketing mix

    1. 1. Product – The first element of marketing mix
    2. 2. Marketing mix  The marketing mix is the combination of variables that a business uses to carry out its marketing strategy and meet customer needs.  The tools available to a business to gain the reaction it is seeking from its target market in relation to its marketing objectives  Traditional 4Ps extended to encompass growth of service industry The marketing mix is often called the 4Ps:  Product  Price  Place  Promotion
    3. 3. The Marketing Mix  Think of a Cake  All cakes need 4 things – flour, egg, sugar, milk  However, you can play with the flavour of your cake by changing the ingredients slightly  Example: Sweeter cake – add more sugar
    4. 4. Water Storage Problem in India  Steel, Brick, reinforced cement concrete.  Need for leak proof & maintenance free solutions to water storage.  Sintex industries came up with a idea of modelled polythene water storage tanks of standard size, were easy to transport and quick to install.  Building & construction material – plastic, steel or wooden doors, false ceilings etc.
    5. 5. Components of the Market Offering
    6. 6. Product Characteristics/Classifications • • • • • • Persons Experiences Events Properties Organizations Information Ideas Goods Services Places
    7. 7. Product - Meaning • Anything that can be offered to market for attention, acquisition, use or consumption that might satisfy a want or need. • A product is a good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers and is received in exchange for money or some other unit of value. • Also includes services, events, persons, places, organizations, idea s or mixes of these. • Pure tangible goods – toothpaste, soap or salt. • Pure service – medical, financial services. • Consumer & Industrial products.
    8. 8. Goods & Services continuum
    9. 9. Categorising offerings along the service continuum  Pure tangible goods  toothpaste  Tangible goods accompanied by one or more service  computer and warranty  Hybrid offer consists of equal parts of goods and services  restaurants  Service with accompanying minor goods  air travel  Pure service  haircut
    10. 10. Service characteristics Intangibility  Cannot be seen, tasted, felt, heard or smelt before they are bought.  Service providers need to manage the evidence by providing evidence of the benefits. Inseparability  Cannot be separated from providers, whether people or machines.  Customers are always involved Variability  Quality may vary greatly depending on who provides the service, when and how.  Staff need to know how to do something well.  Staff must be well motivated to maintain high standards of service Perishability Services cannot be stored for later sale or use
    11. 11. Product Differentiation Form Features Customizatio n Durability Performance Conformanc e Repairability Reliability Style
    12. 12. Services Differentiation Customer Consulting Delivery & Returns Ordering Ease Training Installation Maintenance & Repair
    13. 13. Product Classifications Durability and Tangibility Nondurable goods goods Tangible Consumed in few uses Distribution Small mark up Heavy ads Induce trial Build preference Durable goods  Survive many uses  More personal selling & service  Higher margin  More seller Services  Intangible  More quality control, credi bility, & adaptability
    14. 14. Consumer goods PRODUCTS Consumer Products Convenience Products Shopping Products Business Products Specialty Products Unsought Products
    15. 15. Product Classifications • Staples • Impulse goods • Emergency goods Convenience goods Shopping goods – furniture, clothing, major Consumer-Goods Specialty goods Stereo component Men suits Unsought goods Life insurances, encyclopedias &
    16. 16. Convenience Product Frequently bought, inexpensive, little shopping effort. Staples - on regular basis (Colgate toothpaste) Impulse Goods - purchased without planning (chocolates, potato chips) Emergency Goods – when need is urgent (umbrellas) Shopping Product A product that requires comparison on the basis of suitability, quality, price & style, Usually more expensive and found in fewer stores. Homogeneous – same quality but different prices Heterogeneous – differs in product features & services Specialty Product Unsought Product Unique characteristics or brand identification. A particular item that consumers search extensively for and are reluctant to accept substitutes. Mercedes A product unknown to the potential buyer or a known product that the buyer does not actively seek. Smoke detector Requires advertising & personal selling support
    17. 17. Product Classifications Materials and Parts Manufacture d materials Raw materials Supplies and business Services Industrial-Goods Capital Items Installations Equipment
    18. 18. Product Materials & parts Raw materials Manufactured materials & parts Farm Products (wheat, cotton, li vestock, fruits, v egetables) Natural products (fish, lumber, crude petroleum, iron ore) Component materials (iron, yarn, ceme nt, wires) Component parts (small motors, tires, castings) Industrial product Capital Items Installations Buildings (factories, offices) Fixed equipments (generators, drill presses, large computer systems, elevators) Accessory Equipments Portable factory equipments & tools (hand tools, lift trucks) Office equipments (computers, fax machines, desks ) Supplies & Services Supplies Operating supplies (lubricants, coal, paper, pencils) Repair & maintenance items (paint, nails, broo ms) Business Services Maintenance & Repair services (window cleaning, computer repair) Business advisory services (legal, management consulting, advertising)
    19. 19.  Organizations, Persons, Places, and Ideas  Organization marketing  Undertaken to create, maintain, or change the attitudes & behaviour of target consumers towards an organization.  Corporate image advertising  Person marketing  Place marketing – God’s own country.  Ideas – healthy beautiful smiles for life by Colgate
    20. 20. Five Product Levels
    21. 21. Product Levels Core Benefit (Rest and sleep) Basic Product (Bed, bathroom, towels) Expected Product (Clean bed, fresh towels) Augmented Product (Free Internet; free breakfast) Potential Product (Future augmentations) Customer-value Hierarchy
    22. 22. Product Levels  More Differentiation & more competition on Product        augmentation. Augmented benefits become expected benefits E.g. Today’s hotel guests expect satellite television, high speed internet access, fully equipped fitness center etc. ITC Hotels Super Delux Hotels – ITC Hotels & Luxury Collection 5* - Welcome & Sheraton hotels 1st class – Fortune Hotels Place, forts, havelis - WelcomeHeritage
    23. 23. Product Mix Product System Consisten cy A product mix is the set of all products and items a particular seller offers for sale. A company’s product mix has a certain width, length, depth, and
    24. 24. Product Mix • Width – different product lines a company carries • The number of product lines an organization offers. • Diversifies risk • Capitalizes on established reputations • Length – total no of products in a mix • Dividing the total length by no of lines • Depth – how many variants are offered of each product in each line • Attracts buyers with different preferences • Increases sales/profits by further market segmentation • Capitalizes on economies of scale • Evens out seasonal sales patterns • Consistency – how closely product lines are related in terms of end use, production requirements, distribution channels etc.
    25. 25. Product Mix Decisions Home & Personal care Foods Personal wash laundry Skin care Hair care Oral care Deodora nts Kitchen & Floor care tea coffee foods Ice cream Lux Surf Excel Fair & Lovely Sunsi lk Pepsode nt Axe Domex Brooke Bond Brook bond bru Kissa n Kwality Walls Lifebuoy Rin Pond’s Clinic Close-up Rexona Cif Lipton Liril Active Wheel Vaseline Clear Hamam Sunligh t Aviance Comfort Lakme Breez Dove Pears Rexona Ayush Vim Knorr Anna purna Moder n
    26. 26. Product Line Analysis Sales and Profit Market Profile
    27. 27. Product-Item Contributions
    28. 28.  In conducting product line analysis - contribution to       overall sales and profits. Market Profile Products with large percentage of sales and profits carefully monitored and protected. Products with a small percentage - dropped, unless strong growth potential is possible. A product line manager must examine how the line is positioned against competitors. One tool that managers can employ is a product map, which shows competitors’ items in relation to firm’s items. This also allows for identifying market segments. Product line analysis is helpful in two key decision areas – product line length and product mix pricing.
    29. 29. Product Map
    30. 30. Product Line Length Up-market stretch Line stretching Twoway stretch Line modernization, featuring, and pruning Down-market stretch Objectives – To induce up selling Protection against economic ups & downs Line filling
    31. 31. Product Line Length  Line stretching – company lengthens its product line beyond its current range.  Down-Market Stretch – introducing low priced line  Reasons  Strong growth opportunities. Walmart, Big Bazaar etc  Tie up/counterattack with lower end competitors  If market is stagnating or declining.  Choices –  Use of Parent Brand. Sony  Low priced offering using sub-brands. Gillette Vector  Low priced offering under different name. Britannia – Tiger  Risk of existing customer shifting to lower priced version.  Up-Market Stretch  Moving higher end of the market to achieve more growth, higher margins, or to position as full-line manufacturers.  Toyota Lexus, Starbucks in Coffee  Ultra dry Pampers  Two-Way Stretch – in both directions
    32. 32.  Line filling – company lengthens its product line by adding more items within the present range.  Motives – to get incremental profits satisfying dealers, utilizing excess capacity, to become full line company, plugging holes to keep out competitors.  Avoid self cannibalization and consumer confusion. Good Knight – coils, mats, liquid vaporizers, mosquito
    33. 33.  Line modernization, featuring, and pruning  Piecemeal approach  Intel, AMD, Microsoft, Oracle – not to early or not too late.  Companies continuous modernize product lines to encourage customer migration to  higher-valued,  higher-priced items;  boost demand for certain product lines by featuring them; and  optimize their brand portfolios by focusing on  core brand growth and concentrating resources on the biggest and most established brands.
    34. 34. Product Mix Pricing Product line pricing clothing store Captive-product pricing with 3 different shirts at Optional-feature different prices Printers & Cartridges pricing Fixed + Variable – Telecom services Cars, tour packages Two-part pricing By-product pricing Product-bundling pricing Petroleum Products & Chemicals Film Actor can be signed only if writers & directors selected
    35. 35. Co-Branding and Ingredient Branding CoBranding • (Dual Branding) Same-company • Gillette shaving cream & razors • Aquaguard & Euroclean • Joint venture • Indian Oil & Citibank • Retail co-branding • Pizza Hut & KFC Restaurants Ingredient Branding Carl Zeiss Camera, Dolby, Intel
    36. 36. Packaging and Labeling Packaging Objectives 1. Brand identification 2. Persuade 3. Protection 4. At-home storage 5. Aid consumption •Packaging – from attracting attention to describing the product to making the sale •Poorly designed package causes headaches for consumers & lost sales for company •Heinz – quickly squeeze bottle &
    37. 37. Packaging and Labeling •Labelling – from Labeling single tags attached to Objectives complex graphics •Identification of 1. Identify 2. Grade product, description, 3. Describe promote. 4. Promote •Legal concerns – Kinnaur false, misleading or Apples, pure deceptive labels etc. •Unit pricing, open dating, nutritional labelling.
    38. 38. Product  Product Support Services  Survey customer periodically, take steps to fix problem, add new services  Warranties & Guarantees  Warranties – a formal statements of expected product performance by the manufacturer.  Repair, replacement or refund.  Extended warranties & service contracts.  Procter & Gamble – If you are not satisfied for any reason, return for replacement, exchange or refund.  Reduces buyer’s perceived risk
    39. 39. Product Mix – Product Quality – freedom from defects – (Siemens – Quality is when our customers come back & our product don’t) – Level & Consistency • Some people really want quality (Ferrari) vs. others that don’t really matter (MacD’s) – Product Features • How will your product/service differ from the competition • What will you do differently? – Product Style & Design – Eye catching, yawn producing, Sensational style. • How is it going to look? • Consumers often will purchase because “it looks cool”
    40. 40.  150 crores in 3 yrs  Overtaken Colgate Sensitive  Suited to Indian Taste, dentists associations, retail presence, type of ads  Support from Saravana supermarket, Chennai  Retail – shelf highlighters, displays at counters, converting bay flags, or the space between rows into stocking units
    41. 41. Questions????? Thank You

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