4.5a.

The Four Ps – Product

 Product
 A product is any good or service that satisfies the needs or wants of consumers
 Either tangible (physical products) or intangible (services)
 Must have value added (either functional value or emotional value)
 Functional – Useful
 Emotional – Appeals to emotion (instills pride, happiness, etc.)
 Types of products
 Consumer products – products sold directly to consumers
 Fast-moving consumer goods (FMCG)
 Sells by large quantities
 Soap, shampoo, pencils, etc.
 Usually cheap
 Consumer perishables
 Seasonal products
 Products with limited shelf-life
 Can be sold at a higher price compared to FMCG since they are a
premium
 Consumer durables
 Long lasting and relatively expensive products
 Since they are long lasting, not as many are sold, so they are more
expensive
 Specialty goods
 Most expensive
 Unique products
 Can also be classified by purchase consideration
 Low Involvement Product (LIP)
 Opposite of HIP
 High Involvement Product (HIP)
 Consumer will take a while to decide when purchasing
 Producer Products
 Goods purchased by businesses for production process (raw materials &
inputs)
 Product life cycle
 Pertains to the different stages of a product’s lifespan
 Measured in terms of sales level and growth phases over a period of time.
 Used to identify necessary changes in marketing strategies
 Each stage will usually need a different marketing mix
 Product life cycle stages
 Research and development
 Design, development and testing
 Requires a large investment in resources and time
 Creation of prototype with feedback from target market
 Alpha and Beta releases for testing
 Launch/introduction
  Product will be priced HIGH to cover
 Costs of heavy marketing
 Cost of research and development
 Product is not very profitable at this moment
 Growth
 Rapid volume increase due to better awareness and expansion of
distribution channels
 Starts to be profitable due to economies of scale in production and
marketing
 Competition begins becoming attracted to the market
 Maturity/saturation
 Sales may begin to peak/stabilize (no significant changes)
 Achieve highest market share, while competition continues to pour
into the market
 Companies will employ price reductions, product differentiation
and extension strategies very aggressively to protect their market share
 Decline
 Sales and profits decline due to shifts in demand, new technology,
or new models
 Price levels fall (to get rid of inventory) prior to withdrawal
 Phasing out the product
 Extension strategies
 Price reduction
 Redesigns (e.g. special features, limited edition, etc.)
 Repacking (e.g. new colors, materials)
 New markets/market development
 Promotions (advertising and special tie-ups)
 Aside from demographic/psychographics, speed of adoption is also affected by
 Relative advantage
 Compatibility
 Testability
 Observable feature
 Convenience
 Product life cycle and the marketing mix
 Launch
 Price: may be high or low compared to competitors
 Promotion: high levels of informative advertising to make the consumers
aware of the product’s arrival on the market
 Place: restricted outlets – possibly high-class outlets if a skimming
strategy is adopted
 Product: basic model
 Growth
 Price: if successful, an initial penetration pricing strategy could now lead
to rising prices
 Promotion: consumers need to be convinced to make repeat purchases-
brand identification will help to establish consumer loyalty
  Place: growing numbers of outlets in areas indicated by strength of
consumer demand
 Product: planning of product improvements and developments to maintain
consumer appeal
 Maturity/saturation
 Price: competitors likely to be entering market – there will be a need to
keep prices at competitive levels
 Promotion: brand Imaging continues growing – need to stress the positive
differences with competitor’s products
 Place: highest geographical range of outlets as possible – developing new
types of outlets where possible
 Product: new models, colors, accessories, etc. as part of extension strategy
 Decline
 Price: lower prices to sell off stock-or if the product has a small ‘cult’
following, prices could even rise
 Promotion: advertising likely to be very limited – may just be used to
inform of lower price
 Place: eliminate unprofitable outlets for the product
 Product: prepare to replace with other products – slowly withdraw
 Boston Consulting Group (BCG) matrix
 Planning tool used to classify a portfolio of products based on market share and
market growth
 Problem child/question mark
 High growth market but low market share
 More resources must be used (cash absorbing) to gain higher market share
 Alternative is to divest and use resources to help other products
 To do nothing will make this a dog
 It can become a star or dog
 Star
 High growth market with high market share
 Generate a lot of cash and profit but require marketing support
 If position is maintained, it may turn into a cash cow
 If not, may become problem child
 Cash cow
 Low growth market but high market share
 Products that command a high share of the market despite maturity
 Well-established
 Generate good cash flow and strong profits
 No further investments required although extension strategies may be used
to delay decline
 May be used to pay dividends, debts, support problem child products, stars
or new product development
 Dog
 Low growth market with a low market share
 Product in a mature market
 Does not generate much revenue
  Ties up cash (capital), may be withdrawn or repositioned to niche market
where more premium price can be demanded
 Strategic analysis
 Used to support your products
 Building – support problem childs
 Holding – try to maintain the position
 Milking – using cash cows
 Divesting – getting rid of dogs
 Can only be undertaken if business has a balanced portfolio of products.
 All 4 quadrants must be filled
 Dogs or problem children outnumbering stars and cash cows may lead to a
cash shortage preventing the firm to take appropriate action

 Branding
 Name identifiable to a product or a mixture of tangible and intangible attributes
symbolized in a trademark in order to differentiate the product from competitors
 Role and benefits
 Legal instrument
 Differentiation
 Risk reducer
 Image enhancer
 Sales generator
 Growth platform
 Timeless
  An effective brand name can be a stimulus for positive association with the
product; should be memorable, recognizable, and portray the desired image
 Aspects of branding
 Brand awareness
 An important aspect in being able to successfully promote a product
 Essential in markets with products that have very few tangible factors that
differentiate products from one another
 Brand development
 Long term marketing strategy meant to build and strengthen the image
 A strong brand can extend maturity or cash cow position of a product
(sustain and increase sales)
 Brand preference
 Customers favoring a brand over rivals
 Quantifies effect of marketing activities
 Brand loyalty
 When customers buy products of the same brand repeatedly
 Benefits:
 Higher market share
 Premium pricing by keeping loyal customers
 Demand is more price inelastic
 Customers are not sensitive to price changes
 Brand extension and growth strategies
 Raises barriers to entry
 New players find it hard to gain a market
 Brand value
 The value added premium that customers are willing to pay for a product
of a well known brand as opposed to a generic equivalent
 Mass promotion campaigns are essential to help create brand value
 Is important if a business would like to expand its product line
 Can help assure sales if current products within the brand have
experienced relatively good success/popularity with customers

 Packaging
 Serves as protection for the product before reaching the end consumer
 Makes it easier, more efficient, and safer to transport
 Attraction, promotion, and differentiation
 Makes it eye-catching, amongst dozens of other similar products on a shelf
 Design theme, color scheme,
 Carries information about the product
 How to use the product
 Materials/ingredients used
 Highlights important features
 Helps to promote the brand and its image