Transcript Marketing Management, 8/e

Chapter Six
The Marketing Mix
Key Words / Outline
Tangible product, Extended product, Generic product,
Marketing myopia, Buyer derives, Vertical market,
Horizontal market, Quality Value, Product mix, ,line
extension, Brand extension, Franchise extension, Dual
branding, Multi branding, Fashions, Fads, Innovators,
Laggards, Market dimensions
McGraw-Hill/Irwin
Marketing Management, 8e
© 2007 The McGraw-Hill Companies, Inc., All Rights Reserved.
Levels of Product
Augmented
Product
Installation
Packaging
Brand
Name
Delivery
& Credit
Quality
Level
Core
Benefit
or
Service
Features
AfterSale
Service
Design
Warranty
Actual
Product
Core
Product
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6- 3
Three Views Of Product
• Tangible (Actual Product)– physical entity or service
• Extended Augment Product– tangible product plus a whole
cluster of services that accompany it
• Generic (Core Product) – the essential benefits the buyer
expects to receive from the product
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Product Definition
• A product is the sum of the physical, psychological, and
sociological satisfactions the buyer derives from purchase,
ownership and consumption
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Product Classification
• Two basic criteria of product classification
- End use or market
- Degree of processing or physical transformation
• Three categories of products
- Agricultural products and raw materials
- Organizational goods
- Consumer goods
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Organizational Goods
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•
•
•
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Purchased by firms for the purpose of producing other goods
Raw materials and semi-finished goods
Major and minor equipment
Parts or components needed to complete other finished goods
Supplies or items used to operate the business but not an
element of a finished good
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Consumer Goods
• Convenience goods – such as food which require minimal
effort
• Shopping goods – such as appliances, which are purchased
after some time and energy is spent comparing
• Specialty goods – which are unique in some way to the
consumer and are characterized by special effort
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Organizational Market Characteristics
• A primary purchasing motive for organizational goods is profit
• Organizational markets are concentrated geographically as in
the case of steel or auto
• Can be categorized into
- Vertical market: Limited number of buyers
- Horizontal market: Limited number of industries
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Quality and Value
• Buyers expect . . .
- Quality
• The degree of excellence or superiority that an organization’s
product possesses
- Value
• What the customer gets in exchange for what the customer gives
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Product and Service Decisions
Key Decisions
• Individual Product
• Product Line
• Product Mix
• Product attributes
- Quality, features, style
and design
• Branding name sign symbol or design to
identifies products
• Packaging designing and producing the
container or wrapper for product
• Labeling simple tags attached to product
which is apart of packaging
• Product support
services
8 - 11 6- 11
Goal 2: Learn decisions companies make regarding products
Packaging
Competitive
Advantages
Sales
Tasks
Packaging
Product
Safety
Identifies
Labeling
Promotes
Describes
8 - 12 6- 12
Product and Service Decisions
Key Decisions
• Individual Product
• Product Line
• Product Mix
• Product line
- A group of products that
are closely related
because they may:
• function in a similar
manner
• be sold to the same
customer groups,
• be marketed through the
same types of outlets
• fall within given price
ranges
8 - 13 6- 13
Goal 2: Learn decisions companies make regarding products
Product and Service Decisions
Key Decisions
• Individual Product
• Product Line
• Product Mix
• Product line length
- Line stretching: adding
products that are higher
or lower priced than the
existing line
- Line filling: adding
more items within the
present price range
8 - 14 6- 14
Product and Service Decisions
Key Decisions
• Individual Product
• Product Line
• Product Mix
• Product mix
- Also known as product
assortment
- Consists of all the
product lines and items
that a particular seller
offers for sale
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Product and Service Decisions
Key Decisions
• Individual Product
• Product Line
• Product Mix
• Product mix width:
- Number of different
product lines carried by
company
• Product mix depth:
- Number of different
versions of each product
in the line
8 - 16 6- 16
Branding Strategy
• Brand equity is the positive differential effect that
knowing the brand name has on customer response to
the product or service
• One measure of equity is the extent to which
customers are willing to pay more for the brand
• Brand valuation is the process of estimating the total
financial value of a brand
8 - 17 6- 17
Branding Strategy
• Brands with strong equity have many
competitive advantages:
- High consumer awareness
- Strong brand loyalty
- Helps when introducing new products
- Less susceptible to price competition
8 - 18 6- 18
Brand Strategy
Key Decisions
•
•
•
•
Brand Positioning
Brand Name Selection
Brand Sponsorship
Brand Development
• Three levels of positioning:
- Product attributes
• Least effective
- Benefits
- Beliefs and values
• Taps into emotions
Goal 3: Understand branding strategy
8 - 19 6- 19
Brand Strategy
Key Decisions
•
•
•
•
Brand Positioning
Brand Name Selection
Brand Sponsorship
Brand Development
• Good Brand Names:
- Suggest something about the
product or its benefits
- Are easy to say, recognize
and remember
- Are distinctive
- Translate well into other
languages
- Can be registered and legally
protected
Goal 3: Understand branding strategy
8 - 20 6- 20
Brand Strategy
Key Decisions
•
•
•
•
Brand Positioning
Brand Name Selection
Brand Sponsorship
Brand Development
• Manufacturer brands
• Private (store) brands
- Costly to establish and
promote
- Higher profit margins
• Licensed brands
- Name and character licensing
has grown
Goal 3: Understand branding strategy
8 - 21 6- 21
Brand Strategy
Key Decisions
•
•
•
•
Brand Positioning
Brand Name Selection
Brand Sponsorship
Brand Development
• Line extensions
- Minor changes to existing
products
• Brand extensions
- Successful brand names help
introduce new products
• Multibrands
- Multiple product entries in a
product category
• New brands
- New product category
Goal 3: Understand branding strategy
8 - 22 6- 22
Branding
• A brand identifies one seller’s good or service as distinct
from competitors
• Brand can be
-
A name
A term
A design
A symbol
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Branding
• Line extension: Uses brand name to facilitate entry into a
new market segment Diet coke
• Brand extension: Uses an existing brand to enter a different
product class
• Family branding: Attaches the corporate name to a product
to either enter a new market or a new product class (Toyota
Lexus)
• Dual branding: Concept where two or more branded
products are integrated (Pepsi)
• Multibranding: Assigning different brand names to each
product Proctor &gamble laundry detergent dash& Tide
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Advantages of a Multi-branding strategy
• The firm can distance products from other offerings it
markets
• The image of one product is not associated with other
products the company markets
• The products can be specifically targeted
• If the product fails, the effect on other products is
minimized
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Brand Equity
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Packaging
• Differentiates relatively homogeneous products
• Contributes to “Brand Equity” by creating new attributes or
value
• Creates urgent salability within a target market
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Product Lifecycle
• Introduction
- High costs, low or no profit
• Growth
- Reduced costs, profits increase, maximum value
• Maturity
- Marginal cost, marginal profit, high competition
• Decline
- Low costs, high profits, competition lessens
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Product Lifecycle - Limitations
•
As useful as the product life cycle can be to managers, it
does have limitations that require it to be used cautiously
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Accuracy pertaining to the longevity of the product can’t be
predicted
Variations in life cycle exists
•
•
Fashion: These are accepted and popular product styles
Fads: Products which experience high but brief popularity
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Product Lifecycle and Strategy
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Product Adoption And Diffusion
•
Adopter categories
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•
Innovators
Early adopters
Early majority
Late majority
Laggards
Diffusion: The spread of the product through the
population is known as the diffusion of innovation
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6- 32
How stages of the product life cycle relate to a firm’s marketing objectives and
marketing mix actions
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Product Adoption
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Product Audit
•
The product audit is a marketing management technique
whereby the company’s current product offerings are
reviewed to ascertain (Assure) whether each product should
be continued as is, improved, modified, or deleted
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Deletions
•
Deletion decisions are difficult because of the potential
impact on customers and the firm
Considerations in the deletion decision include
•
-
Sales trends: Have sales moved over time? What has happened
to market share?
Profit contribution: What has been the profit contribution of
the product to the company?
Product life cycle: Has the product reached a level of maturity?
Customer migration patterns: If the product is deleted, will
customers switch to another product marketed by our firm?
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Product Improvement
•
•
•
Another important objective of the audit is to ascertain
whether to alter the product in some way or leave things the
way they are
Attributes: Refer to main features of the product such as
design, package and so forth
Marketing dimensions: Refer to features like pricing,
promotion strategy and distribution channels
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Product Improvement
•
Benchmarking: Continuous process of measuring
products, services, and practices against those of the
toughest competitors
Advantages of benchmarking include
•
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Boosting product quality
Developing more user-friendly products
Improving customer order processing activities
Shortening delivery lead times
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Product Management
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•
Market management system: One person is responsible for
overseeing an entire product line with all of the functional
areas of marketing such as research, advertising, sales
promotion, sales, and product planning
Brand management system: A manager focuses on a single
product or a very small group of new and existing products
6- 39