course material

1. (Mt) – JNTU 4 Ps Marketing Strategy Presentation
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a
publicly accessible website, in whole or in part. © 2018 Cengage Learning®. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6. 6 Products: Goods and Services © 2018 Cengage Learning.® May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part. 6. 2 Marketing
Framework © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part. 6. 3 Discussion Questions #1 1.
Is Arnold Schwarzenegger a product? 2. What is a product? © 2018 Cengage Learning.®
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in
whole or in part. 6. 4 Products • A product can be either a good or a service • It is the most
essential decision in the 4Ps because it is what the consumer is receiving in the exchange ©
2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part. 6. 5 Marketing Exchange (slide 1 of 2) • Exchange •
The company offers something (product) that will benefit the customer • The product can
be designed to be more or less attractive – Increase/decrease quality, service, etc. • The
customer offers something in return (payment) • Customer can be more or less attractive –
High/low loyalty, high/low maintenance, spreads positive word-of-mouth, etc. © 2018
Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part. 6. 6 Marketing Exchange (slide 2 of 2) • Marketers
need to 1. Determine what the customers want in order to increase the likelihood of
exchange 2. Determine what the company can profitably offer • The goal is to create
mutually beneficial exchanges that result in long-term customer relationships © 2018
Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part. 6. 7 Discussion Questions #2 1. Discuss an example
of a situation where a company is only looking for a discrete transaction with a customer. 2.
Why do marketers want to create longterm relationships? © 2018 Cengage Learning.® May
not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or
in part. 6. 8 Goods vs. Services • Goods and services differ in terms of • Intangibility •
Search, experience, credence • Perishability • Variability © 2018 Cengage Learning.® May
not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or
in part. 6. 9 Goods vs. Services: Intangibility • Intangibility: • Extent to which you have
something concrete • Pure goods: e.g., paper & phone • Pure services: e.g., massage &
babysitting • Hybrids: e.g., restaurant & beauty salon • Experience marketing • Consumers

2. are buying the experience • e.g., ESPN Zone & Build-a-Bear © 2018 Cengage Learning.®
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in
whole or in part. 6. 10 Goods vs. Services: Qualities (slide 1 of 2) • Search qualities • May be
evaluated prior to purchase • Experience qualities • Need trial/consumption before
evaluation • Credence qualities • Difficult to judge even post-consumption © 2018 Cengage
Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part. 6. 11 Goods vs. Services: Qualities (slide 2 of 2) • Goods are
dominated by search and experience qualities • Services are dominated by experience and
credence qualities • Professional service providers are beginning to understand the value of
marketing • Create professional appearance and setting, tap their networks, etc. © 2018
Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part. 6. 12 Goods vs. Services: Perishability • Perishability
• Services are simultaneously produced and consumed; thus, 1. Services cannot be stored;
goods can • Marketers need to even out demand 2. Services cannot be separated from the
provider; goods can • Customer/service provider interaction becomes part of the service ©
2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part. 6. 13 Goods vs. Services: Variability • Variability •
Goods are made by machines; services are usually people intensive • Services change across
customers and across time • Marketers need to • Reduce bad variability • Enhance good
variability • Self-service is advancing in many industries © 2018 Cengage Learning.® May
not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or
in part. 6. 14 Core vs. Value-Added (slide 1 of 3) • Core is essential to the product offering •
Value-added is supplemental • Can use to differentiate & improve satisfaction • Can use to
identify competition © 2018 Cengage Learning.® May not be scanned, copied or duplicated,
or posted to a publicly accessible website, in whole or in part. 6. 15 Core vs. Value-Added
(slide 2 of 3) • Core elements are expected by customers • If core elements are substandard,
dissatisfaction can be triggered • Recall issued, poor quality, etc. • Marketers can
compete/differentiate on value-addeds • Generous service plan, good staff, etc. © 2018
Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part. 6. 16 Core vs. Value-Added (slide 3 of 3) • Core
businesses may change as industries and firms change • e.g., Victoria’s Secret was 70%
apparel but is now 70% beauty and fragrance • It is key to continually ask • What business
are we really in? • Who are our true competitors? © 2018 Cengage Learning.® May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6. 17 Competition through Customers’ Eyes • Define competition broadly • Car companies
compete with other means of transportation (bus, taxi, etc.) © 2018 Cengage Learning.®
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in
whole or in part. 6. 18 Product Lines: Breadth and Depth • Product mix • A company’s
product lines • Breadth • Number of product lines • Frigidaire sells refrigerators, washers,
dryers, ranges, etc. • Depth • Number of products in a line • Frigidaire refrigerators have
different sizes and features © 2018 Cengage Learning.® May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part. 6. 19 Discussion
Questions #4 1. Which option has the least breadth? 2. Which option has the most depth? ©

3. 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part. 6. 20 Product Line Strategies • Product line
managers can prune or supplement existing lines © 2018 Cengage Learning.® May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6. 21 Discussion Questions #5 1. Which firm(s) above is leveraging its segment knowledge
efficiently? 2. Inefficiently? © 2018 Cengage Learning.® May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part. 6. 22 Managerial
Recap (slide 1 of 2) • Products are goods and services • Products are the central offering in
the marketing exchange • Goods and services share similarities and differences • Services
are relatively more intangible, inseparable, perishable, and variable © 2018 Cengage
Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part. 6. 23 Managerial Recap (slide 2 of 2) • A firm’s market offering
is comprised of the core and the value-addeds • Consider competition broadly •
Competition can evolve over time as product lines are further developed in length and
breadth © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to
a publicly accessible website, in whole or in part. 6. 24 © 2018 Cengage Learning.® May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in
part. © 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a
publicly accessible website, in whole or in part. 8. 1 8 New Products and Innovation © 2018
Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part. 8. 2 Marketing Framework © 2018 Cengage
Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part. 8. 3 Discussion Questions #1 1. List three new products. 2. Why
do you think companies introduce new products? © 2018 Cengage Learning.® May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 4 Why Improve Products? • For corporate pride • To be consistent with innovative image
• To better attract/satisfy customers • To stave off competition • Because the
macroenvironment changes • Consumer tastes, natural resources, demographics, cultural
changes, etc. © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part. 8. 5 Approaches to Developing
New Products • Top-down (inside-out) 1. Idea generation 2. Design and development 3.
Commercialization • Customer feedback is sought later in the process; marketing supports
product launch • Works well in industries where internal R&D has expertise that end-
customers lack • Co-creation (bottom-up or outside-in) • Customer & company co-create
products © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted
to a publicly accessible website, in whole or in part. 8. 6 New Product Development Process
(slide 1 of 2) © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part. 8. 7 New Product Development
Process (slide 2 of 2) • The NPD process is not entirely linear • It is important to continually
revisit prior decisions and change when necessary • e.g., A good decision in stage 2 may not
be a good decision in later stages • Marketing is involved throughout process • Idea
generation, refinement, marketing mix decisions, etc. © 2018 Cengage Learning.® May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in

4. part. 8. 8 Where Do New Ideas Come From? © 2018 Cengage Learning.® May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 9 Idea Creation & Market Potential (slide 1 of 2) 1. Idea generation • Brainstorming: “No
idea’s a bad idea; let’s get everything up on the white board” • Firms may allocate time for
employees to work on pet projects © 2018 Cengage Learning.® May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part. 8. 10 Idea
Creation & Market Potential (slide 2 of 2) 2. In-house winnowing & refinement • Screen
ideas for plausibility using • • • Internal experts’ knowledge Marketers’ target knowledge
Management’s company knowledge • Feasibility assessments & business analyses are
somewhat fuzzy at this stage © 2018 Cengage Learning.® May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part. 8. 11 Concept
Testing, Design, & Development (slide 1 of 4) 3. Obtain feedback on plausible ideas • Use
marketing research to • Save a company from a bad idea • Yield information to tweak an
idea • Encourage pursuit of good idea • Research may include focus groups, online surveys,
etc. • Conjoint analysis may also be used to determine trade-offs © 2018 Cengage
Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part. 8. 12 Concept Testing, Design, & Development (slide 2 of 4) •
Focus groups • 2–3 groups (per segment) of 8–10 customers • Usually last 1.5–2 hours •
Goal is background information to improve product development or product positioning •
Participants give feedback on product concepts © 2018 Cengage Learning.® May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 13 Concept Testing, Design, & Development (slide 3 of 4) • Conjoint procedure • Different
combinations of attributes are put together and compared • Customer says which is best,
next best, etc. • Use in focus groups, online studies, etc. • Allows marketers to see what
attributes are most attractive • e.g., Should a laptop be light, powerful, specific color, and
preloaded with software? © 2018 Cengage Learning.® May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part. 8. 14 Concept
Testing, Design, & Development (slide 4 of 4) 4. Research results are used to develop a
prototype • • Only one prototype is developed at a time If the prototype is not successful,
another prototype is developed © 2018 Cengage Learning.® May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part. 8. 15 Beta Testing
(slide 1 of 4) • A beta version is made available for trial • Ideal to simulate a real-world
purchase • Used to help forecast sales • Customer reactions to marketing materials are also
examined • Ad copy, price points, distribution, etc. • Clarifies image of product to customer •
Allows company to get feedback © 2018 Cengage Learning.® May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part. 8. 16 Beta Testing
(slide 2 of 4) • Try product in market on a small scale before an expensive full-scale rollout •
Area test markets: • Product is made available and ads are run in a few randomly selected
metropolitan areas • Sales are observed and compared to sales in control markets • Not as
commonly used now because • They are expensive, require setup, tip off competition, and
sampled areas may have own “flavors” © 2018 Cengage Learning.® May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part. 8. 17
Beta Testing (slide 3 of 4) • Electronic test markets are more valid than area test markets •

5. Households within a sample of metropolitan areas are selected: some are designated “test”
and some are “control” • Electronic (cable) transmissions are sent to test households, but
not sent to the control households • Differences between the test and control households’
purchasing are evaluated © 2018 Cengage Learning.® May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part. 8. 18 Beta Testing
(slide 4 of 4) • Simulated test markets • Popular premarket launch tests • Customers are
recruited and given play money to shop in a simulated environment • They can buy the new
product and competitors’ products • Advertising materials are available with competitors’
advertising • Marketers record purchases • Customers complete a survey • Data are used as
input to forecast sales © 2018 Cengage Learning.® May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part. 8. 19 Launch
(slide 1 of 5) • Forecast sales • If not promising, abort launch • If promising, launch •
Forecasts are important to • Accounting and finance for budgeting • Sales force for setting
sales goals • Production and logistics for planning equipment, storage, transportation, etc.
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a
publicly accessible website, in whole or in part. 8. 20 Launch (slide 2 of 5) • Forecasting •
Goal is to estimate sales potential ($SP), not sales 1. Determine market potential (MP) •
How many units might be sold – Start with secondary data » » Census, sales for similar
products, etc. Relevant in-house benchmarking data © 2018 Cengage Learning.® May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in
part. 8. 21 Launch (slide 3 of 5) • Forecasting (continued) 2. Estimate the purchase
intention (PI) • Likelihood target will buy the product • Use recent marketing research –
e.g., Assume research suggests PI = 0.7 • Note: Customers usually overstate PI; estimate ¾
downward P = ¾(0.7)= 0.525 © 2018 Cengage Learning.® May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part. 8. 22 Launch
(slide 4 of 5) • Forecasting (continued) 3. Determine the price (Pr) • Remember economics;
PI may increase as Pr decreases • Forecasting equation: $SP = MP × PI × Pr • Remember this
number is not profit; it is maximum sales © 2018 Cengage Learning.® May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part. 8. 23
Launch (slide 5 of 5) • Timing • Process of developing new products can be relatively quick
or slow • Delays caused by – Internal activities such as testing – External factors such as
regulations • e.g., New pharmaceuticals take years – Promotional efforts are intended to
create enough sales to recoup development costs © 2018 Cengage Learning.® May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 24 Discussion Question #2 • Outline each likely stage in the new product development
process for the introduction of Swiffer Sweeper. © 2018 Cengage Learning.® May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 25 Product Life Cycle (slide 1 of 5) • Describes the evolution and duration of a product in
the marketplace • Phases have predictable sales and profits as well as optimal marketing
actions © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to
a publicly accessible website, in whole or in part. 8. 26 Product Life Cycle (slide 2 of 5) •
Market introduction • Low sales • Heavy marketing spending on awareness • Pricing
strategies • Penetration: low price • Skimming: high price; recoup R&D costs • Limited

6. distribution © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part. 8. 27 Product Life Cycle (slide 3
of 5) • Market growth • Sales and profits increase • Distribution coverage is greater • Price
may increase • Competition • Competitors enter the market and kill each other off or
specialize • Product needs competitive advantage • Promotion focuses on product’s
superiority © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part. 8. 28 Product Life Cycle (slide 4
of 5) • Market maturity • Industry sales level off; competition is fierce with weaker firms
leaving; profits decline • Promotion focuses on product’s superiority and provides a
reminder to buy • Product line may be extended and new benefits may be added •
Marketing costs increase and price falls due to competition © 2018 Cengage Learning.®
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in
whole or in part. 8. 29 Product Life Cycle (slide 5 of 5) • Market decline • Sales and profit
decline • New products replace older generations • Old products may be • Divested: sold—
sell early to get best price • Harvested: support reduced • Rejuvenated: refurbished with
new benefits © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part. 8. 30 Discussion Questions #3 1.
Do products have to die? 2. Are the lengths of product life cycles consistent across products?
3. Do individual brands have shorter or longer life cycles than product categories? © 2018
Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part. 8. 31 Diffusion of Innovation (slide 1 of 3) • A normal
curve is utilized to partition customers into groups to show how new products spread
through the marketplace © 2018 Cengage Learning.® May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part. 8. 32 Diffusion of
Innovation (slide 2 of 3) • Innovators: first 3–5% • Like to try new products; willing to take
risks • Early adopters: next 10–15% • Even more influential as opinion leaders because the
group is bigger • Early majority: next 34% • More risk averse • Waiting to hear about
favorable experiences from early adopters © 2018 Cengage Learning.® May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 33 Diffusion of Innovation (slide 3 of 3) • Late majority: next 34% • Even more cautious •
Often older and more conservative • Want to buy only proven products • Laggards or non-
adopters: next 5–15% • Most risk averse • Skeptical of new products • Stereotypically lower
in income • Product category may not be relevant to them © 2018 Cengage Learning.® May
not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or
in part. 8. 34 Discussion Question #4 • Use the diffusion of innovation model to explain the
growth of the smartphone market. © 2018 Cengage Learning.® May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part. 8. 35
Cumulative Diffusion • Diffusion curve is recast to show cumulative sales • Tipping point:
point at which sales rate increases rapidly © 2018 Cengage Learning.® May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part. 8. 36
Mathematical Model of Diffusion • Two ways to use diffusion model 1. Observe early sales
data, fit the model, and predict future sales 2. Plug in past results on similar products and
predict future sales © 2018 Cengage Learning.® May not be scanned, copied or duplicated,

7. or posted to a publicly accessible website, in whole or in part. 8. 37 Model of Diffusion •
Coefficient of innovation (p) • Likelihood purchase or adoption due to promotion • Increase
p by decreasing price earlier • Coefficient of imitation (q) • Likelihood of purchase or
adoption due to word-of-mouth information • q is usually bigger than p • Increase q by
decreasing price later © 2018 Cengage Learning.® May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part. 8. 38 New Product
Acceptance • Acceptance of new products tends to be higher when the new product: • Has
clear relative advantage • Is compatible with customers’ lifestyles • Is not overly complex or
has a user-friendly interface • Is easily tried or sampled © 2018 Cengage Learning.® May
not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or
in part. 8. 39 New Product Willingness • Companies vary in their willingness to pursue new
products • From innovator to reactor • Market pioneers have difficulty with “really new”
products • First movers launch “incrementally new” products because there is less risk •
Early followers have approximately the same survival risks © 2018 Cengage Learning.®
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in
whole or in part. 8. 40 Growth Strategies (slide 1 of 3) © 2018 Cengage Learning.® May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in
part. 8. 41 Growth Strategies (slide 2 of 3) • Market penetration • Sell the same products to
current customers • New ways to use, better marketing mix, etc. • Easiest strategy • Product
development • Sell new or modified products to current customers • Introduce extensions
or new variations • Company wants to be innovative © 2018 Cengage Learning.® May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in
part. 8. 42 Growth Strategies (slide 3 of 3) • Market development • Sell existing products to
new segments • Move global or target different segment • May need to change image,
channels, etc. • Diversification • Pursue new markets with new products • Too difficult for
most companies due to lack of experience in product and market • Toughest strategy ©
2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part. 8. 43 Trends to Watch • Aging of population •
Hispanic population growth • More wealthy Americans • Growing concern for environment
and corporate social responsibility • Cultural differences • Role of China and fast-growing
economies © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part. 8. 44 Discussion Questions #5 1.
How could firms capitalize on the opportunity presented by the aging population? 2.
Discuss changes in the global economy. © 2018 Cengage Learning.® May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part. 8. 45
Managerial Recap (slide 1 of 2) • New products are crucial to growth • New product
development process • Idea generation to market potential, to concept testing, design and
development, then beta testing, and ultimately the launch © 2018 Cengage Learning.® May
not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or
in part. 8. 46 Managerial Recap (slide 2 of 2) • Products evolve through a life cycle •
Introduction, growth, maturity, and decline • Each stage is recognizable by its sales and
profitability and carries 4P recommendations • Models can be used to forecast sales •

8. Marketers should study important trends © 2018 Cengage Learning.® May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part. 8. 47