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  • 1. 2/17/2013Marketing Mix Dr.Amira El-Deeb 1 2 1
  • 2. 2/17/2013 5 Product strategy & tactics Dr.Amira El-Deeb 3What Is a Product? A Product Defined as  A good, a service, or an idea received in an exchange  It can be tangible (a good) or intangible (a service or an idea) or a combination of both.  It can include functional, social, and psychological utilities or benefits. 4 2
  • 3. 2/17/2013 What Is a Product? (cont’d)  Why Buyers Purchase a Product  To get the benefits and satisfaction that they think the product will provide  Symbols and cues provided by marketing help consumers make judgments about products. 5Classification ofProducts PRODUCTS Consumer Business Convenience Installations Accessory Shopping equipment Specialty Raw materials Unsought Component parts Process materials MRO supplies Business services 6 3
  • 4. 2/17/2013Classifying Products Consumer Products – Products purchased to satisfy personal and family needs Business Products – Products bought to use in an organization’s operations, to resell, or to make other products (raw materials and components) 7Consumer Products Convenience Products  Relatively inexpensive, frequently purchased items for which buyers exert minimal purchasing effort  Marketed through many retail outlets  Relatively low per-unit gross margins  Little promotional effort at the retail level  Packaging is an important marketing mix element 8 4
  • 5. 2/17/2013Consumer Products (cont’d) Shopping Products  Items for which buyers are willing to expend considerable effort in planning and making purchases  Expected to last a long time; less frequently purchased  Do not have brand loyalty appeal  Require fewer retail outlets  Inventory turnover is lower  More open to personal selling  Supported (servicing and promoting the product) by both the producer and channel members 9Consumer Products (cont’d) Specialty Products  Items with unique characteristics that buyers are willing to expend considerable effort to obtain  Are preselected by the consumer  Have no close substitutes or alternatives  Are available in a limited number of retail outlets  Purchased infrequently and represent a significant and expensive investment  Have low inventory turnover 10 5
  • 6. 2/17/2013Is Ben & Jerry’s IceCream aConvenience,Shopping, orSpecialty Product?Why?Reprinted with permission of Ben & Jerry’s. 11 Consumer Products (cont’d)  Unsought Products  Products purchased to solve a sudden problem, products of which the customers are unaware, and products that people do not necessarily think about buying  Speed and problem resolution of the utmost importance  Price and other features not considered  No consideration of substitutes or alternatives  Purchased infrequently 12 6
  • 7. 2/17/2013 Industrial products Supplies & Material & Parts Capital items services Manufactured Maintenance Operating Raw materials materials installation equipment & repair supplies Farm Natural Component Component materialsproducts products parts 13 Business Products  Installations  Facilities and nonportable major equipment  Office buildings, factories and warehouses, production lines, very large machines  Equipment  Equipment used in production or office activities  generators, elevators, small motors, calculators, and tools 14 7
  • 8. 2/17/2013Business Products (cont’d) Raw Materials  Basic natural materials that become part of a physical product such as ores, water, lumber, grains, and eggs Component Parts  Items that become part of the physical product  Finished items ready for assembly  Items needing little processing before assembly  Computer chips, engine blocks, girders, and paints 15Business Products (cont’d) Component Materials  Materials that are not readily identifiable when used directly in the production of other products such as screws, wires, cement..etc MRO Supplies  Maintenance, repair, and operating items that facilitate production and do not become part of the finished product such as cleaners, rubber bands, and staples 16 8
  • 9. 2/17/2013Business Products (cont’d) Business Services  The intangible products that many organizations use in their operations such as cleaning, legal, consulting, and repair service 17 PRODUCT STRATEGY 18 9
  • 10. 2/17/2013Product Life Cycles andMarketing Strategies Product Life Cycle  The progression of a product through four stages: introduction, growth, maturity, and decline 19Stages of the Product Life Cycle 20 FIGURE 11.2 10
  • 11. 2/17/2013The Product Life Cycle Introduction  The initial stage of a product’s life cycle—its first appearance in the marketplace—when sales start at zero and profits are negative or zero  Why new products fail  Lack of resources, knowledge, and marketing skills to successfully launch the product  High pricing to recoup research and development costs 21The Product Life Cycle (cont’d) Growth  The stage of a product’s life cycle when sales rise rapidly and profits reach a peak and then start to decline  More competitors enter the market  Product pricing is aggressive  Brand loyalty becomes important  Gaps in market coverage are filled  Promotion expenditures moderate  Production efficiencies lower costs 22 11
  • 12. 2/17/2013The Product Life Cycle (cont’d) Maturity  The stage of a product’s life cycle when the sales curve peaks and starts to decline and profits continue to fall  Intense competition  Emphasis on improvements and differences in competitors’ products  Weaker competitors lose interest and exit the market  Advertising and dealer-oriented promotions predominate  Distribution sometimes expands to the global market 23The Product Life Cycle (cont’d) Maturity (cont’d)  Strategic objectives for maturity stage  Generate cash flow  Maintain market share  Increase share of customer 24 12
  • 13. 2/17/2013 Product Life Cycle (cont’d)  Decline  The stage of a product’s life cycle when sales fall rapidly  Pruning items from the product line  Cutting promotion expenditures  Eliminating marginal distributors  Planning to phase out the product  Strategic choices  Harvesting the product’s remaining value  Divesting the product when losses are sustained and a return to profitability is unlikely 25Product strategy… 1. Product Level Principles of Marketing A.U.C - Amira EL-Deeb Product Levels: The Customer Value Hierarchy 26 13
  • 14. 2/17/2013Product strategy… 2. Product Mix Product family Product class Product class Product Product Product Product line line line line Products Products Products Products Products Products Products Products Products Principles of Marketing A.U.C - Amira EL-Deeb 27 Product Line and Product Mix  Product Item Whole Milk  A specific version of a product  Product Line  A group of closely related product Whole Milk items viewed as a unit because of marketing, technical, or Skim Milk end-use considerations 2% Milk 28 14
  • 15. 2/17/2013Product Line and Product Mix(cont’d) Product Mix  The total group of products that an organization makes available to customers  Width of product mix  The number of product lines a company offers  length of product mix  different products in each product line  Depth of product mix  number of different versions in each product line 29The Concepts of P & G Product Mix Source: Reprinted by permission of The Procter and Gamble Company. FIGURE 11.1 30 15
  • 16. 2/17/2013Product strategy 3.Product Line Analysis 1. Sales and Profits 2. Market Profile 3. Product-Line Stretching  Down-market stretch  companies at the upper end of the market to plug a market hole or respond to a competitor’s attack.  Up-market stretch  companies at the lower end of the market to add prestige to their current products 4. Line Modernization.Product strategy 3.Product Line AnalysisExercise.1 : Regarding the following Fiat 127 products, Alfa romeo what are the strategies of product- line length used ? Principles of Marketing 16
  • 17. 2/17/2013Product strategy 3.Product Line AnalysisExercise.1 : Regarding Tudor the following products, what are the strategies of product- line Rolex length used ? Principles of MarketingProduct strategy 4. Packaging Packaging is all the activities of designing and producing the container for a product. 1. Identify the brand. 2. Convey descriptive and persuasive information. 3. Facilitate product transportation and protection. 4. Assist at-home storage. 5. Aid product consumption 6. Create the perception of value & Image 34 17
  • 18. 2/17/2013Major Packaging Considerations Family Packaging  Similar packaging for all of a firm’s products or packaging that has one common design A A element Innovative Packaging  Unique features or ways of packaging that make a product more distinct from its competitors Multiple Packaging  Bundling multiple units of a product together to encourage usage and to increase demand 35 36 18
  • 19. 2/17/2013 Criticisms of Packaging  Lack of functionality  Leak, difficult to open/close/seal, hard-to-use designs  Safety  Sharp edges, broken glass, health hazards  Deceptive  Shape, size, colors mask true nature of product 37Product strategy 5.Labeling  Labeling  Providing identifying, promotional, legal, or other information on package labels  Universal Product Code (UPC)  A series of electronically readable lines identifying a product and containing inventory and pricing information 38 19