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Managing the Product - Marketing Management
This document provides an overview of managing products, including concepts like product hierarchy, product line, product mix, and product life cycle. It defines a product as something offered to satisfy a want or need. Products can be classified based on need, product family, class, line, and type/item. A product line includes closely related products, while a product mix is all products offered. Product mix considers width, length, depth, and consistency. The document also discusses new product development processes, packaging and labeling as marketing tools, and strategies for different stages of the product life cycle.
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Managing the Product - Marketing Management
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- 2. 4TH UNIT SYLLABUS Managing the Product: Concept, product hierarchy, product line, product mix, product mix strategies, Product life cycle and its strategies, New Product Development, packing as a marketing tool, Role of labeling in packing.
- 3. WHAT IS PRODUCT A product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need A product is a bundle of utilities consisting of various features and accompanying services
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- 5. PRODUCT HIERARCHY Needfamily - core need or existence of product such as security with insurance industry Product family - all the product classes that satisfy core needs such as savings & income Product class - a group of products within product family such as ULIPs Product line - a group of products within a product class that are closely related eg term insurance Product type – a group of items with in a product line Item – stock keeping unit or product variant (Note :- Example taken from insurance industry to explain)
- 6. PRODUCT LEVELS Coreproduct - What the buyer is really buying such as “rest & sleep” with hotel industry Basic product – basic expectation from the customer such as bed, bathroom, towels …. Expected product – a set of attributes and conditions buyers normally expects such as clean bed, fresh towels, working lamps,… Augmented product – products that exceeds customer expectations such as paintings, refrigerators , high end televisions … Potential product- product and services such as FIVE star category (Note :- Example taken from Hotel industry to explain)
- 7. PRODUCT LINE Meaning :-A product line is a group of products that are closely related to each other by function, customer group, market, or price range. For example, a FMCG company's bath soaps product line. For HUL, product line includes Pears, Lifebuoy, Hamam, Santhoor, Jai, Moti, Lux, Dove, Rexona, Liril ….
- 8. PRODUCT MIX PRODUCT MIX -Set of all products and items that a particular seller offers for sale Example: BPL Consumer products - TVs, Washing Machine Cellular Services - Mobile operations in Mumbai Telecom - Instruments
- 9. PRODUCT MIX-CONCEPTS Width - Howmany different product lines are carried by the organization P & G Five lines - Detergents, Toothpaste, Bar soap, diapers, paper tissue Length Total number of items in the mix Total items 25 Average length of a line is 25/5 = 5
- 10. 3. Depth Howmany variants are offered of each product in the line Proctor and Gamble Crest Toothpaste - Comes in five sizes - Two formulations Mint Regular Total Depth = 5 * 2 = 10
- 11. Consistency How closely relatedthe various product lines are in end use, production requirements, distribution channels or some other way. Proctor and Gamble - Very consistent - Why - Products are available through the same distribution channels HUL - Products Fabric wash products Beverages Bath soaps
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- 13. Idea GenerationSources Internal Sources Customers Competitors Distributors and Suppliers Other Sources Idea Screening The purpose of screening is to spot good ideas and drop poor ones as quickly as possible
- 14. Concept Developmentand Testing A product idea envisions a possible product that company managers might offer to the market A product concept is a detailed version of the idea stated in meaningful consumer terms A product image is the way that consumers picture an actual or potential product The task is to develop an idea into alternative product concepts, determine how attractive each is to customers, and choose the best one Concept testing occurs within a group of target consumers
- 15. Marketing Strategy Includes information such as the target market and product positioning as well as both short and long term projections in terms of sales, profits and costs Business Analysis Business analysis involves a review of the sales, costs, and profit projections to determine whether they satisfy the company’s objectives
- 16. Product Development The prototype must: Have the key features described in the product concept statement, as perceived by the customer Performs safely under normal use Be produced for the budgeted costs Test Marketing The product and marketing program are introduced into realistic market settings
- 17. COMMERCIALIZATION In launchinga new product, a company must make four decisions: When? Where? To whom? and How?
- 18. PRODUCT LIFE CYCLE Time Product Develop- ment Introduction Profits Sales GrowthMaturity Decline Losses/ Investments ($) Sales and Profits ($)
- 19. INTRODUCTION STAGE Introductionis a period of slow sales growth as the product is being introduced into the market Profits are nonexistent at this stage due to high product introduction expenses High failure rates Little competition Frequent product modification Limited distribution High marketing and production costs Promotion focuses on awareness and information Intensive personal selling to channels
- 20. GROWTH STAGE Growthis a period of rapid market acceptance and increasing profits Increasing rate of sales Entrance of competitors Market consolidation Initial healthy profits Promotion emphasizes brand ads Goal is wider distribution Prices normally fall Development costs are recovered
- 21. MATURITY STAGE Maturityis a period of slowdown in sales growth because the product has achieved acceptance by most of its potential buyers Profits level off or decline due to increased marketing outlays to defend the product against competition Declining sales growth Saturated markets Extending product line Stylistic product changes Heavy promotions to dealers and consumers Marginal competitors drop out Prices and profits fall Niche marketers emerge
- 22. DECLINE STAGE Declineis the period when sales fall off quickly and profits drop Long-run drop in sales Large inventories of unsold items Elimination of all nonessential marketing expenses
- 23. How stages ofthe product life cycle relate to firm’s marketing objectives & marketing mix actions INTRODUCTION GROWTH MATURITY DECLINE Product Strategy Distribution Strategy Promotion Strategy Pricing Strategy Limited models Frequent changes More models Frequent changes. Large number of models. Eliminate unprofitable models Limited Wholesale/ retail distributors Expanded dealers. Long- term relations Extensive. Margins drop. Shelf space Phase out unprofitable outlets Awareness. Stimulate demand.Sampling Aggressive ads. Stimulate demand Advertise. Promote heavily Phase out promotion Higher/recoup development costs Fall as result of competition & efficient produc- tion. Prices fall (usually). Prices stabilize at low level.
- 24. Five Profiles ofProduct Adopters
- 25. PACKAGING The package =physical container or wrapping for a product It is an integral part of product planning and promotion 10% of the retail price is spent on developing, designing, and producing just the package Companies sometimes change packaging to update their image and reach a new market
- 26. FUNCTIONS OF PACKAGING 1.Promoting and Selling the Product 2. Defining Product Identity 3. Providing Information 4. Expressing Customer Needs 5. Ensure Safe Use 6. Protecting the Product The Keys to Product Packaging
- 27. 1. PROMOTING ANDSELLING THE PRODUCT Attractive, colorful, and visually appealing packages have promotional value A well designed package is a powerful selling device because it helps the product stand out from its competitors
- 28. 1. PROMOTING ANDSELLING THE PRODUCT Mixed Bundling – packaging different products or services together Usually the bundle price is cheaper than buying them individually Price Bundling – two or more similar products are placed on sale for one package price
- 29. 2. DEFINING PRODUCTIDENTITY Packaging is sometimes used to promote an image such as prestige, convenience, or status Can be a crucial part of the marketing strategy, particularly in advertising
- 30. 3. PROVIDING INFORMATION Gives customer useful information on: directions for using the product its contents product guarantees nutritional value potential hazards
- 31. 4. EXPRESSING CUSTOMERNEEDS When designing packages, companies analyze customer lifestyles and create packaging that meets their needs for size and convenience Packages often come in various sizes Family size Single serving
- 32. 5. ENSURE SAFEUSE Proper packaging helps to eliminate potential injuries or misuse of a product Formerly glass containers are now plastic Childproof caps Tamper resistant packages Blisterpacks – packages with preformed plastic molds surrounding individual items arranged on a backing
- 33. 6. PROTECTING THEPRODUCT Must protect during shipping, storage, and display Prevent or discourage from tampering Prevent shoplifting Protect against breakage and spoilage
- 34. AIR TO SPARE Do you ever get frustrated when you buy something and the package if filled with more air than product? Air To Spare
- 35. PACKAGING TRENDS Aseptic Packaging–technology that keeps foods fresh without refrigeration for extended periods Usually used to package food products canning bottling
- 36. PACKAGING TRENDS Environmental Packaging –recycled material, less plastic, and safer for the environment Sun Chips Ditching New Bag
- 37. PACKAGING TRENDS Cause Packaging– promote social and political causes May be totally unrelated to the product
- 38. LABELING Label – anidentification tag, wrapper, seal, or imprinted message that is attached to a product or its package Main function is to inform customers about a product’s contents and give directions for use Protects businesses from legal liability if someone if injured while using the product
- 39. THREE KINDS OFLABELS 1. Brand Label – gives brand name and trademark or logo 2. Descriptive Label – give information about product use, construction, care, performance, and other features 3. Grade Label – states the quality of a product