Published on June 28, 2014
What Is a Product? Promotion Place (Distribution) Price ProductProduct is the “heart” of Marketing Mix
What is a product? A product is a bundle of benefits that satisfies needs of organizations or consumers. Includes tangible goods, services, ideas, people, and places. Products such as search engines are unique to the internet while others simply use the internet as a new distribution channel. Organizations use research to determine what is important to customers when creating new products. The marketing mix and CRM work together to produce relational and transactional outcomes with consumers.
In 1998, co-founders Brin and Page delivered an innovative new search strategy that ranked results on popularity as well as keywords. Today, Google performs 1 billion searches per day, speaks 345 languages and is the most-visited U.S. Web site. Innovative products and strong customer focus are driving its success and profitability. Generates revenue from several B2B markets: Licensing of its search services; Sales of advertising to Web advertisers. Google pays close attention to user value, keeps costs low, and delivers eyeballs to advertisers. Google’s product mix includes 24 search products, 3 advertising products, 20 applications. The Google Story
Types of Products Unsought Products Specialty Products Shopping Products Convenience Products Consumer Products Business Products PRODUCTS
5 Consumer Goods Classification: Convenience Goods: Purchased Frequently with min. effort. Staples: Eg: Food items, soaps etc. Impulse Goods: Eg: Chocolates, Magazines etc. Emergency Goods: Eg: Some pharma products Shopping Goods: Selection & Comparison Process before purchase Eg: Apparel, Furniture Specialty Goods: Unique Characteristics/Brand Eg: Mercedes Benz, Bose Speakers Unsought Goods: Consumer normally doesn’t buy them till persisted Eg: Helmets, Reflectors
6 Industrial Goods Classification: Materials & Parts: Raw Material: Eg: Milk for Ice Cream etc. Manufactured Material: Eg: Cement Capital Items: Installations: Eg: Factories, power plants Equipment: Eg: Tools, Lift trucks Supplies & Business Service Eg: Office Stationary, cleaning services
7 Product Classifications: On Basis of Durability & Tangibility: Non Durable Goods Eg: FMCG products Durable Goods Eg: TV, Mobiles Services Eg: Aviation Industry
8 Define the terms Product item, Product line, Product width, Product depth, and Product mix.
9 Gillette’s Product Lines and Mix Blades and Writing razors Toiletries instruments Lighters Mach 3 Series Paper Mate Cricket Sensor Adorn Flair S.T. Dupont Trac II Toni Atra Right Guard Swivel Silkience Double-Edge Soft and Dri Lady Gillette Foamy Super Speed Dry Look Twin Injector Dry Idea Techmatic Brush Plus Width of the product mix Depthoftheproductlines
11 Five Product Levels:
12 Product Levels Example: 5. Introduce New Features 4. Long Battery Life 3. Robust & Durable 2. Mobile Phone 1. Communicate
13 Product Hierarchy: Need Family: To pass time while on move Product Family: Entertainment Product Class: Portable Entertainment Instruments Product Line/Category: Portable DVD players, CD players, MP3 players Product Type/Form: Audio ipods Brand: Apple Item/SKU: Apple ipod nano 4GB
16 Product Mix: Width of Product Mix (Product Categories): Eg: For HUL it is Detergents, Deodorants, Soap, Shampoo, Tea, Ice Cream etc. Length of Product Mix (Brands): Eg: For HUL it is Surf, Rin, Lux, Axe, Sun Silk, Brooke Bond, Lipton, Kwality-Walls etc. Depth of Product Mix (SKUs): Variants of each brand. Consistency of Product Mix: Close relation among product categories
17 Product Line Strategies: Line Stretching: Taking product line to new segment Down Market Stretching/Trading Down: Eg: Tata’s 1 lakh car Up Market Stretching/Trading Up: Eg: Hyundai’s Verna, Elantra, Sonata, Tuscon Two-Way Stretching: Eg: Nokia Mobile Models
18 Line Filling: Adding More Variants/Filling Product Depth Maruti’s Strategy Line Modernization: Eg: Onida’s new technologically advanced products Line Featuring: Eg: Tata Indica & Indigo Line Pruning: Eg: HUL concentrating on 30 power brands out of its 110 brands. Product Line Strategies (Cont.):
19 Product-Mix Pricing: Product Line Pricing Eg: Different price points for HLL’s detergents, soaps Optional Feature Pricing Eg: In case of variants of Car Models, Laptops Captive Product Pricing Eg: low priced HP printer + high priced cartages Two-part Pricing: Set up cost + monthly fee By-Product Pricing Eg: Petrol, LPG (domestic and commercial) Product Bundling Pricing: Tour package Pure bundling, and Mixed bundling
Ingredient Branding One or more of the brands provides a distinctive ingredient or component to the primary or carrier brand. In this case, the ingredient brand is subordinate to the carrier brand. Examples Gateway Computer with Intel chips (ingredient brand) Clorox cleaner with Teflon. In all cases the ingredient brand’s identity structure is subordinate to the carrier brand in the co-branded identity structure.
Co-Branding The combining and retaining of two or more brands to create a single, unique product or service. Two or more companies acting in cooperation to associate any of various logos, color schemes, or brand identifiers to a specific product that is contractually designated for this purpose. An arrangement that associates a single product or service with more than one brand name, or otherwise associates a product with someone other than the principal producer. It involves the transfer of a subset of attributes from the two parent brands, and their recombination into a coherent composite concept that could become a member of the extension category to which new brand belongs.
Types of Co-branding 1. Promotional/Sponsorship Co-Branding 2. Value Chain Co-Branding Product Service Co-Branding, Supplier-retailer, and Alliance Co-Branding. 3. Innovation-Based Co-Branding. Ex:Apple-Nike 4. Shared Product Equity Co-Branding
Value Chain Co-Branding Product-service co-branding Sea World and Southwest Airlines Alliance co-branding Supplier-retailer co- branding Starbucks WiFi service from AT&T.
Private label Private label products or services are typically those manufactured or provided by one company for offer under another company's brand. These are also known as store / private brands, or private goods.
Internal co-branding Internal co-branding means that company users variety of their own products and services to expand sub brands by using them in conjunction with primary brand.
External co-branding External co-branding means a synthesis of products and services by different organizations (2 or more) that together create final product or service.
Mixed co-branding Mixed co-branding is when any combination of internal and external ventures and partnerships is used to achieve the final product or service or a complete package of services or products. Often mixed co-branding is used as a method for internationalizing brands by linking parent brand to a more locally known smaller brands or brands in parallel industries. Example: Coca-Cola and Axe in Argentina
Co-branding criteria Co-brand only with companies that share complementary values. Co-brand only with products that hold best-in- class status. Co-brand only in situations where you can retain full review and approval rights on all elements of communications. That narrows the company's co-branding possibilities, but it also reduces its risk.
Advantages of Co-Branding It lessens the costs of launching new products, since different products can touch base with a wide range of consumers on a broader scale. Consumer loyalty is enhanced since the same affection and admiration bestowed on the product that they respect and patronize will extend to its co-branding ally. Co-branding entails cost savings not only in terms of advertising but in sharing overhead costs, like rental expenses for leased spaces, utilities and manpower costs. Talents, expertise and creativity are shared by recognizing the principle that the success of one brand also brings success to its partners. It encourages participation from consumers who benefit from the convenience of having multiple selections and different products that are available in one roof or outlet.
Disadvantages of Co-Branding In the same way that the benefits of co- branding spreads from one brand alliance to another, so do the negative issues that may arise from mishaps or malicious attacks against a brand’s integrity and reputation. Forging a misalliance with another brand who cannot keep up with consumers’ demands, since such inability will tend to drag down the other brand’s reputation.
Some Examples 34
Apple - Nike
Asus - Garmin
Gillette - Art of Shaving
MasterCard - Virgin
Best Western - Harley Davidson
Motorola - Ferrari
46 Packaging & Labeling Why is it done? To identify the brand Convey descriptive and persuasive Information Facilitate product transportation Facilitate product protection Assist at-home storage Aid product consumption
47 Benefits of Product Lines Equivalent Quality Efficient Sales and Distribution Standardized Components Package Uniformity Advertising Economies
Product Mix Width Diversifies risk Capitalizes on established reputations The number of product lines an organization offers.
49 Product Line Depth Attracts buyers with different preferences Increases sales/profits by further market segmentation Capitalizes on economies of scale Evens out seasonal sales patterns The number of product items in a product line.
Creating Customer Value Online Customer value = benefits – costs Value means entire product experience Product awareness to product disposition Product decisions must be made that deliver benefits to customers. Attributes Branding Support Services Labeling Packaging
Attributes include overall quality and specific features. Notion: “You get what you pay for” Benefits are the same features from a user perspective. The internet increases customer benefits in many ways. “Broadening” and “Deepening” of product features Mass customization User personalization of the shopping experience can be achieved Recommendations, wish list, follow-ups Product Benefits: Attributes
Product Benefits: Branding A name, term, symbol, design, or combination thereof that identifies a seller’s products and differentiates them from competitors’ products. When a firm registers that information with the U.S. Patent Office, it becomes a trademark. History of Branding What is Branding? Brand Awareness, Brand Recall, Brand Recognition A brand represents a promise or value
Brand Equity Brand equity is the intangible financial value of a brand. A great brand taps into popular culture and touches consumers.
2006 2006 Rank Brand Value Industry 1 Microsoft 62039 Software 2 GE 55834 Technology 3 Coca-Cola 41406 F/D/T* 4 China Mobile 39168 Telecom 5 Marlboro 38510 F/D/T 6 Wal-Mart 37567 Retail 7 Google 37445 Software 8 IBM 36084 Technology 9 Citibank 31028 Bank 10 Toyota 30201 Cars
Ran k Brand Value Industry 1 Apple Inc. 153285 Technolog y 2 Google 111498 Technolog y 3 IBM 100849 Technolog y 4 McDonald's 81016 F/D/T* 5 Microsoft 78243 Technolog y 6 Coca-Cola 73752 F/D/T 7 AT&T 69916 Telecom 8 Marlboro 67522 F/D/T 9 China Mobile 57326 Telecom 10 GE 50318 Technolog y Ran k Brand Value Industry 1 Google 114260 Technolog y 2 IBM 86383 Technolog y 3 Apple 83153 Technolog y 4 Microsoft 76344 Technolog y 5 Coca Cola 67983 F/D/T* 6 McDonald's 66005 F/D/T 7 Marlboro 57047 F/D/T 8 China Mobile 52616 Telecom 9 GE 45054 Technolog y 10 Vodafone 44404 Telecom 2011 2010
Levels of Brand Relationship Intensity Advocacy Community Connection Identity Awareness Tell others about the brand Communicate with each other Communicate with company between purchases Display the brand proudly Is on the list of possibilities Highest intensity
Firms can use existing brand names (i.e. online extensions) or create new brands on the internet. Some firms may use different names offline and online to avoid risk if the new product or channel should fail. Sports Illustrated created thriveonline.com. Wired Magazine changed its online version name to Hotwired. Branding Decisions for Web Products
Creating New Brands for Internet Marketing Good brand names should: Suggest something about the product. Differentiate the product from competitors. Be capable of legal protection. On the internet, a good brand name should be short, memorable, easy to spell, and translate well into other languages. Cobranding occurs when two companies form an alliance and put their brand names on a product: Sports Illustrated co-brands with CNN as CNNSI Yahoo! Visa shopping pages EarthLink-Sprint
Product Benefits: Support Services Customer support is a critical component in the value proposition. Customer service reps help customers with installation, maintenance, product guarantees, etc. to increase customer satisfaction. Good companies combine online and offline channels to increase their customer support.
Product Benefits: Labeling Labeling has digital equivalents in the online world. Online “labels” provide information about product usage, features, and installing software. Online “labels” also provide extensive legal information about the software product. Online firms may add the Better Business logo or TRUSTe privacy shield to their sites.
Customer Codesign Business and consumer collaboration are possible on the Internet. Software developers often seek customer input about new products. They often allow users to download new products, test them, and provide feedback. Customer interaction has been found to increase product success. Amazon seeks customers’ product reviews. CNN encourges citizen generalists to upload videos of breaking news.
Product Mix Strategies, cont. 1. Discontinuous innovations are new-to-the- world products. 2. New-product lines are new products in a different category for an existing brand name. 3. Additions to existing product lines. 4. Improvements or revisions of existing products. 5. Repositioned products can be targeted to different markets or promoted for new uses. 6. Me-too lower-cost products.
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