stmkt auc-class.11-spring.2013
TRANSCRIPT
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Dr.Amira El-Deeb 1
Marketing Mix
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Dr.Amira El-Deeb 3
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Product strategy & tactics
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What 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.
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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.
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Classification of
Products
Consumer Business
Installations
Accessory equipment
Raw materials
Component parts
Process materials
MRO supplies
Business services
Convenience
Shopping
Specialty
Unsought
PRODUCTS
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Classifying 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)
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Consumer 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
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Consumer 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
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Consumer 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
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Is Ben & Jerry’s Ice
Cream a
Convenience,
Shopping, or
Specialty Product?
Why?
Reprinted with permission of Ben & Jerry’s.
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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
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Industrial products
Material & Parts
Raw materials
Farm products
Natural products
Manufactured materials
Component parts
Component materials
Capital items
installation equipment
Supplies & services
Maintenance & repair
Operating supplies
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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
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Business 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
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Business 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
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Business Products (cont’d)
Business Services
The intangible products that
many organizations use in
their operations such as
cleaning, legal, consulting,
and repair service
PRODUCT STRATEGY
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Product Life Cycles and
Marketing Strategies
Product Life Cycle
The progression of a
product through four
stages: introduction,
growth, maturity, and
decline
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Stages of the Product Life Cycle
FIGURE 11.2
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The 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
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The 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
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The 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
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The Product Life Cycle (cont’d)
Maturity (cont’d)
Strategic objectives for maturity stage
Generate cash flow
Maintain market share
Increase share of customer
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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
Principles of Marketing A.U.C - Amira EL-Deeb
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Product strategy…
1. Product Level
Product Levels: The Customer Value Hierarchy
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Principles of Marketing A.U.C - Amira EL-Deeb
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Product family
Product class Product class
Product line
Product line
Product line
Product line
Products Products
Products
Products Products
Products
Products Products
Products
Product strategy…
2. Product Mix
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Product Line and Product Mix
Product Item
A specific version of a product
Product Line
A group of closely related product
items viewed as a unit because
of marketing, technical, or
end-use considerations
Whole
Milk
Whole
Milk
Skim
Milk
2%
Milk
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Product 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
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The Concepts of P & G Product Mix
FIGURE 11.1
Source: Reprinted by permission of The Procter and Gamble Company.
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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 Analysis
Principles of Marketing
Exercise.1 :
Regarding
the following
products,
what are the
strategies of
product- line
length used ?
Product strategy
3.Product Line Analysis
Alfa romeo
Fiat 127
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Principles of Marketing
Exercise.1 :
Regarding
the following
products,
what are the
strategies of
product- line
length used ?
Product strategy
3.Product Line Analysis
Rolex
Tudor
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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
Product strategy
4. Packaging
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Major Packaging Considerations
Family Packaging
Similar packaging for all of a
firm’s products or packaging
that has one common design
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
A A
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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
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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
Product strategy
5.Labeling