Module 1 Transcript - MOOC2

Marketing Management II
Professor Hayden Noel
Module 1: Creating Value (Product)
Table of Contents
Module 1: Creating Value (Product)......................................................................................... 1
About the Course ............................................................................................................................. 2
Developing a Marketing Mix for Growth ..............................................................................................................2
Meet Professor Hayden Noel ................................................................................................................................6
Using the Marketing Mix to Create Value.............................................................................................................8
Learn on Your Terms ...........................................................................................................................................21
Lesson 1-1: What is Product?.......................................................................................................... 22

Lesson 1-1.1: What is Product?...........................................................................................................................22
Lesson 1-2: What is Service? ........................................................................................................... 35

Lesson 1-2.1: What is Service? ............................................................................................................................35
Lesson 1-3: The Services Marketing Triangle ................................................................................... 50

Lesson 1-3.1: The Services Marketing Triangle ...................................................................................................50
Lesson 1-4: How the Product Delivers Value ................................................................................... 60

Lesson 1-4.1: How the Product Delivers Value ...................................................................................................60
Lesson 1-5: Five Product Levels ...................................................................................................... 70

Lesson 1-5.1: Five Product Levels .......................................................................................................................70
Lesson 1-6: Product Classifications ................................................................................................. 87

Lesson 1-6.1: Product Classifications ..................................................................................................................87
Lesson 1-7: The Product Life Cycle ................................................................................................ 106

Lesson 1-7.1: The Product Life Cycle.................................................................................................................106
Professor Noel's Board Walk: Product Mix Decisions .................................................................... 112

Professor Noel's Board Walk: Product Mix Decisions .......................................................................................112
1
About the Course
Developing a Marketing Mix for Growth
I always say, sell the problem you solve not the product you make.
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Effective marketing is about solving a consumer's problems, consumers would not be

interested in a product if it didn't provide a benefit that addressed a problem they had.
So marketing involves creating value for the consumer by providing them with benefits.
The way that you deliver this value is by implementing the marketing mix. In this course,
you will learn about the marketing mix, and where it fits in the overall marketing strategy
process. You'll also learn about the different elements of the marketing mix. Those
elements are known as of four Ps, and they are
3
product, place, price, promotion. These elements must work in harmony for your
marketing mix to deliver value successfully.
4
We'll examine these elements to a series of interviews with successful business

leaders. Many case studies and explanations of how popular companies such as
Amazon, Tiffany, and Tesla are implementing specific elements of the marketing mix.
Once you've completed this course, you should be able to develop your marketing mix
for growth. Although this is a standalone book, it is recommended to take the scores
after you've completed creating a winning marketing strategy on Coursera. And that
course we'll show you that developing a winning marketing strategy is essential for your
business to attract new, and retain existing customers in today's marketplace. I look
forward to sharing this journey with you. On that note, let's move right along, and I'll tell
you a bit more about me and my background.
5
Meet Professor Hayden Noel
Hello, welcome from wherever you are in the world. My name is Hayden Noel and I'm
on the faculty of the University of Illinois, Urbana-Champaign. I teach marketing
strategy. And I must say, I'm really, really passionate about what I do. I was born in the
wonderful twin island republic of Trinidad and Tobago. That's the southernmost country
in the Caribbean, so we're very close to Venezuela.
6
We are the home of steel band, calypso, and limbo. I worked in business for quite a
while before I did my PhD. I worked at an ad agency called Bozell Worldwide, you might
have heard of them. We created the milk mustache campaign, Got Milk? Some more
about me, in terms of who I am. Who is Hayden Noel? Let me tell you. I am a huge,
huge soccer fan. My favorite team is one of the best soccer-playing teams in the world,
Arsenal. I also do play soccer sometimes, indoor, and I try outdoor, but I'm getting too
old for that. So, that's me in a nutshell. I really, really, really look forward to being
involved with you over the coming months. Teaching you about marketing strategy, and
learning collectively with you about marketing, and the fact that marketing is about
creating value. Let's look at that entire process together. Wonderful times ahead.
7
Using the Marketing Mix to Create Value
So what is the goal of marketing? Marketing is satisfying consumers needs profitably

and satisfying these needs marked and creates value
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Marketing strategy is the plan by which this value is created on a sustained basis.
This effort to create value, as shown in this diagram that outlines the process of
developing marketing strategy. The first step is to determine where value gaps exist in
the consumer market.
9
Police do needs exist that are yet to be satisfied or not yet adequately satisfied. To do
this, you must scan the environment, examine potential customers, potential
competitors and collaborators.
The next step in the process is to develop a marketing mix that delivers this value to the
consumer.
10
Value looks at what the consumer gets relative to what they give up if the customer gets
back more than what she gives up, that's a successful value exchange. Businesses
depend on the right marketing mix comprised of the four piece to create the maximum
value for their target customers,
the four piece being of course, product place, price and promotion.
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Where the product would be the form in which values packaged and delivered,
features, packaging, labeling, and so on.
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Place, that would be how we move the product from the manufacturer to the consumer.
How do you get from here to there
13
prices among charge to the consumer in exchange for the benefits provided by the
product. Finally, promotion, that's a means, you used to differentiate your product from
competitors in the consumer's mind. And inform and persuade the consumer about the
benefits that you claim to provide,
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all these elements of the marketing mix must work together in order to deliver value
successfully. They bring the film's planned marketing strategy to fruition, think of
marketing strategy as baking a desert, something I've never had. But sounds delicious,
a cinnamon spiced rum cake, I love the sound of that. Let's assume you need only four
ingredients to make that cake, and these ingredients are elements of the marketing mix.
First we have product sugar, next place flower, then you have a price which is your milk
and finally promotion, that's your egg, it binds everything together. If the ingredients are
mixed together in the right way, then the marketing campaign is more likely to be
successful. If one of the ingredients is not mixed in the right quantity. Yeah, then
chances of success are lower, forgetting about one of the ingredients completely means
the cake or the marketing campaign is unlikely to be successful. I hope this cake turns
out okay,
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yes, back to myself. Now, each element of the marketing mix influences the others. So
the messages across all elements need to be consistent. For example, a business
selling luxury cruises to people who are retired, would be unlikely to do well by
advertising them at very low prices in magazines aimed at teenagers.
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These elements must work in harmony in order to deliver on the value promise of the
company.
Let's examine what the marketing mix might look like for Louis Vuitton bag, this bag
promises the benefit of luxury and exclusivity. So all elements of the marketing mix must
be aligned in order to deliver on this benefit,
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the product is a high fashion purse, using an exclusive design that is hand stitched.
The price would be premium, of course, since you want to be consistent with the luxury
image portrayed by the brand, you want to deliver on that promise of luxury. Currently,
the price of a Louis Vuitton Purse ranges from $1,000 to as much as $6000.
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This bag sold primarily in Louis Vuitton stores and perhaps a few high-end department
stores,
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but its availability is somewhat limited given the exclusive nature of the product. Limited
distribution supports such a luxury brand strategy. Finally, promotion would include
celebrity endorsers and high profile advertising campaigns, not though very few price
focus promotions will be used since this may impact the brand perception and lead to
dilution. In order for the company to deliver on their promise, these disparate elements
must be consistent and must work together to support the strategic goal of the brand.
Now, let's talk about the first element of the marketing mix product.
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21
Lesson 1-1: What is Product?
Lesson 1-1.1: What is Product?
Hi all, welcome back. Thanks for joining us on this wonderful day. Today we will discuss
product's strategy. We'll talk about different ways to classify products. We'll discuss a
product mix and identify the ways in which a company can manage its mix. Then we'll
end by addressing the concept of product life cycles. Are these really useful frameworks
and how should they be used? In order to understand what a product really is, let's
examine the launch of the Segway.
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A famous marketing quote goes, "Sell the problem you solve, not the product you
make." Hear it again, "Sell the problem you solve, not the product you make."
This quote highlights what a product is supposed to be, a solution to a problem.
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When the Segway was launched, venture capitalist, John Doerr said that sales would
reach one billion dollar,
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one billion dollars up faster than any company in history. He also said that it could be
bigger than the Internet. For his part, Dean Kamen, the inventor of the Segway,
believed he could sell about 10,000 units a week, that's 0.5 million units a year. Over
the next six years, Segway sold just 30,000 units. For all intents and purposes, the
Segway was a commercial failure. From an initial sales has made up 500,000 units a
year to actual sales of just about 5,000 units a year. When asked about this lack of
adoption entrepreneur Peter Shankman, one of the first five people to buy Segway in
New York City said, "The technology was awesome, but the world just wasn't ready for
it." He was probably right, technology was awesome. Technology, yes, but it did not
solve a problem. It did not provide a benefit that satisfied an existing need,
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so it did not create value.
What is a product?
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Well, a product has been defined as anything that you can be offered for acquisition or
consumption. This definition covers a wide range of items,
could be a physical product, such as an Apple Watch,
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a Tesla,
or just a bottle of Coca-Cola.
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Could also be an event like the World Cup of soccer or football for people from Trinidad
like myself, we call it football.
Or it could be an event like the Olympics or even a fundraiser at your children's school.
Persons can also be products. Famous people like Michael Jordan have been
marketed. In Jordan's case, his name was eventually tuned into a brand.
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The Jordan brand of shoes manufactured by Nike has increased Jordan's net worth to
almost two billion dollars.
Places could also be products.
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A vacation destination like Disney World or the Grand Canyon in the USA,
that's a product. Organizations could also be products
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like Doctors Without Borders, Medecins San Frontieres and UNICEF is also product.
Ideas like climate change also considered products.
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This idea is marketed to the public and the intent is to convince them that climate
change exists and is important for the world to take seriously.
Also, campaigns like the one designed to stop teens from vaping, that's a product and
that needs to be marketed as well. A product could also be intangible,
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a service like UPS or employment services. That's a product.
Let's discuss services in a bit more detail.
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Lesson 1-2: What is Service?
Lesson 1-2.1: What is Service?
What is a service? As I just said, it is a form of a product that is intangible and does not
result in the ownership of any physical product.
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Banking and insurance are financial services. Hotel stays, they're are also services, of
course with very different levels of cooperative service. Massage therapy is a service.
Products fall somewhere along a continuum of tangibility. At one extreme, a product

offer may consist of a pure tangible good like soap, toothpaste, or salt. At the other
extreme, are pure services; doctor's visits or financial services. But many products are
made up of both tangible and non-tangible elements.
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Think of when you purchase a car, a new car. You buy the car and you might also get
several months or in some cases, years of service from the dealership. A restaurant is a
great example of a product with service elements. The tangible product, the food, and
intangible service, the efforts of the server.
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We discussed the marketing mix earlier, the four Ps: Price, product, place, promotion.
However, these elements are best used to describe how firms deliver value for goods
and not services.
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Service centered businesses are very different from businesses focused on delivering
value to tangible goods. So it makes sense that they each have unique considerations
when it comes to marketing. Unlike goods, services are intangible, perishable, and their
production, purchase and consumption often happen at the same time. Many
businesses offer both goods and services.
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Take the restaurant example I gave earlier. The food is so good, but everything else
involved in the experience could be classified as service.
This is where we derive the three additional elements of the marketing mix that applies
specifically to services.
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In the case of the restaurant, these three elements would be the quality of the greeters
and servers, those are people. How quickly the food is served, process, and the
restaurant's ambiance, the physical environment. While the original four P's still apply to
service businesses, these additional aspects are equally as important. Let's talk about
them.
First, the people.
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Who provides services to the customers. In most cases, it is people. The quality of the
service being provided by companies' people, largely contributes to the customers
overall experience. Which is why many service businesses view the employees as an
investment.
Because of this inseparability of production and consumption of services, the person

delivering the service is not distinct from the service itself.
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So it is critical to hire the right people in a service industry.
Next is process.
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For every service-based business, there is a process that happens behind the scenes to
make that service possible. Your processes contribute to the overall experience you
offer and also great way to differentiate yourself from the competition. What your
processes look like, and how do you make them unique? Does it make your service
faster than the competition? Is it more affordable? Is it more reliable or more
memorable? Processes are different for everyone.
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But the one thing that is important for businesses of all kinds is that these processes
must remain consistent,
ensuring that your customers experiences are also consistent.
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Finally, physical environment. Since services are intangible, customers are searching
for any tangible cues to have them understand the nature and the quality of the service
experience.
For example, when choosing a restaurant, customers will consider its ambiance, I do, all
the time. Walk into a restaurant, you look at the lighting, the decor, and so on.
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When choosing a hair salon, customers we consider whether the waiting room has
comfortable seating and whether reading material is available. We may also look at the
quality of the different products that are used on the client's hair. Service businesses
can take advantage of their surroundings to make the experience more memorable,
simple, tempting, extravagant, or more comfortable for customers. Depending on your
business and your goals, altering your businesses physical environment or the other
fiscal elements involved in delivering the service could impact the level of trust and
eventually how the customer experiences the service itself.
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When it comes to people, processes, and physical environment, no two businesses are
completely alike.
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Where one restaurant may rely on it's professional service staff, award winning chefs,
and it's upscale atmosphere, another maybe well loved for it's order at the counter
service, it's comfort food dishes and it's quaint decor. Two businesses may be in the
same industry, but the way they choose to run that business and the appeal they offer
to their clientele can be completely different. One thing that remains the same however
is the importance of the three Ps. It is important to remember to utilize the three Ps in a
service centered business to deliver value in a consistent manner, and in a way to
support your competitive advantage.
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Lesson 1-3: The Services Marketing Triangle
Lesson 1-3.1: The Services Marketing Triangle
The marketing and selling of services require a special set of tactics and priorities
compared with selling physical products.
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The service marketing triangle breaks the marketing task of your business down into
three types.
As a service business you must market both to your employees. So they understand the
focus of your business and your customers, so they do more business with you in the
future.
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Each side of the service Marketing Triangle represents a type of marketing
and the types interact between the entities on the points where the sides meet
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at the top of the triangle. Since your business organization at each corner, at the bottom
of the triangle are your customers and your employees who interact with and provide
the services to your customers.
Internal marketing is the side of the triangle between your organization and your
employees who provide your services to the customers.
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Marketing issues include adequate training on the services to be delivered and

customer satisfaction service techniques. internal a marketing requires you to be
involved with their employees and to let them know the goals and even the problems
facing the business. Internal marketing also can include a performance reward system
for employees who deliver the highest level of customer service.
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External marketing goes from your business organization out to customers and
prospective customers.
This is a traditional form of business marketing, showing customers how the services
provided by a business benefits them. External marketing includes advertising, your
website and your company's social media efforts. The purpose of external marketing is
to fill the business pipeline with future business prospects.
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Interactive marketing is the side of the triangle between your employees and your
customers.
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This form of marketing revolves around how your employees deliver the services that
your company provides. The goal is to have highly satisfied customers will become long
term repeat customers. The effectiveness of the interactive marketing relates to the
internal marketing efforts of your business. Interactive marketing is also how your
employees keep the promises made by your external marketing efforts. Your brand
promise.
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Let's look at an example of a services marketing triangle. Let's talk about the Marriott
International, which is a well known hotel brand that owns other brands such as the
Starwood and the Ritz Carlton.
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Marriott markets internally by referring to its employees as associates and cultivating

loyalty through its development program and performance incentives. To finance
external marketing Marriott created a content studio aimed at attracting young guests
with short films, videos and infographics. As part of Marriott's interactive marketing, all
associates undergo customer service training regardless of whether they will ever
interact with guests. Think of that whether or not you interact with guests doesn't matter
you still get customer service training. At all three levels of the triangle Marriott ensures
that it communicates its culture and values. This marketing has helped brand the
company as one of the hippest and the most customer friendly hotel chains in the world.
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Lesson 1-4: How the Product Delivers Value
Lesson 1-4.1: How the Product Delivers Value
Now we've talked about the marketing strategy process, but I just want to reiterate some
aspects of it.
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Initially, the marketing strategy process calls for companies to complete the situation
analysis.
After this initial analysis, you must make the value decision, what value could I provide
to the consumer, what need do I satisfy?
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This value would be in the form of the benefits you provide to satisfy that need.
This process involves segmentation, targeting and positioning STP. Once a value
decision has been made, the rest of the value creation process moves forward. The
company does this by its marketing mix. This is sometimes referred to as the company's
action plan.
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All of the elements of the mix need to complement each other in order to achieve the
desired positioning and deliver the valley the consumer wants.
These elements are known as a four piece price product, place and promotion.
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Product along with place and promotion helped create value for the consumer by
delivering the perceived benefit.
Now what is the heart of a product?
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Remember the quote, sell the problem you solve and not the product you make.
For instance, snickers satisfies hunger. Volvo keeps you safe. These products solve
specific problems. Of course a product has external physical attributes.
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Let's think of the Volvo automobile for a moment. The Volvo T6 Sedan automobile offers
all wheel drive 300 and 16 horsepower engine. The passenger compartment is made
with boring steel which is some of the strongest steel in the world. It uses a large animal
detection system, a highly sophisticated safety feature that allows your car to detect a
large animal in the road. Warn you and if necessary, break if you don't because that's
another feature called run off road mitigation. This going to reduce the risk of a road
departure.
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It intervenes when radar senses that your car might be drifting off the road and corrects
automatically with no driver intervention. There's also blind spot information and auto
braking technology to protect you on the highway and on city streets. This aims to
prevent collisions with other automobiles,
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but we need to peel back the product to see why it would be desirable for consumers.
Why would these external attributes matter? They matter because they can be
translated into internal core benefits. When we open up the Volvo XC 90 out pops
safety peace of mind, caring for family and status since it's considered somewhat of a
luxury SUV this is what a product is. A bundle of benefits, not a collection of attributes,
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the attributes and other external layers are important, as we shall see since they do help
companies differentiate from the competition. But consumers buy products primarily for
the core benefits
in this case, safety, peace of mind and status.
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Lesson 1-5: Five Product Levels
Lesson 1-5.1: Five Product Levels
Let's discuss a model that looks at different levels of product. There's a simple model of
product that discusses three different levels. However, a more comprehensive model
originated by Theodore Levitt back in 1980 describes five different levels of product.
Levitt proposed a broad view of a product from the core benefit to augmentations like
the safety systems in the new Volvo automobiles, as we shall see, this is key in
differentiating your product from competitors. Levitt believed in the adoption of a total
product view, considering the product has the full set of ways in which an offering can
solve a customer's problem.
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In a nutshell, Levitt's model suggests that all elements of a product or experience fall
into five value categories for consumers. Let's look at each of these.
The 1st level is the core product.
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Robert G. Cooper wrote the book, Winning at New Products, spoke about a key
success factor when designing new products. He stated that this was the output of the
product design process be, and I quote, "A differentiated product that delivers unique
benefits and a compelling value proposition." The value proposition is a sum total of
benefits that the product delivers to the consumer.
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This value proposition must be unique and must be supported by the different levels of
product that surround this core benefit.
For some individuals, a car is simply a means of transport to get them from one point to
another.
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For others, a car delivers other co-benefits, it could be status, it could be safety, or other
types of benefits. But that core benefit, that central benefit is critical to any product
success. The next level is the basic level.
These are generic elements are the things every product or service would offer.
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Their physical features such as design, brand name, et cetera.
For the Volvo, this would be the brand Volvo, the engine, the anti-lock brakes, all of
these.
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The next level is the expected product.
Expected elements are those things beyond the generic but still expected from a quality
provider.
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With a Volvo automobile, this could be elements such as high-quality sound system,
satellite radio, GPS, concierge services, night vision.
This is not the level of product that allows a firm to differentiate themselves, but
products need to deliver these expected attributes just to be at the table, just to be
considered.
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The next level is the augmented product.
Augmented elements are the surprises. These other wows that consumers don't expect
from the experience. This is where firms compete, where they truly differentiate their
products.
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For the Volvo, the XC90, this would be the use of borane steel, the large animal
detection, the run-off road mitigation. All of it provides support for its core benefit of
safety. Can you think of any automobile augmentations? Do they support the core
benefit that the automobile provides? Let's look at another possible augmentation.
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The next level is the potential product.
Companies must keep developing new products, they must keep innovating and
changing to make use of technological developments that enable them to better satisfy
customers' needs.
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This keeps them relevant and competitive. Continuous innovation is a best growth
strategy for firms. One potential product is the cellphone that can bend.
Nokia first conceptualized the application of flexible OLED displays in mobile phones
with the Nokia Morph concept mobile phone.
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Released to the press several years ago, the Morph concept was a project Nokia had
co-developed with the University of Cambridge in England. With the Morph, Nokia
intended to demonstrate their vision of future mobile devices to incorporate flexible and
polymorphic designs, allowing the devices seamlessly change and match a variety of
needs by the user within various environments.
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Some things to note about this model of levels of product. First, when firms add
augmentations, this increases the price of the product, as each new feature is added,
this sends up the price. Second, as firms continue to innovate and add augmentations
to their products, augmentations become more standard.
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I remember seeing commercial for new Accuro and the Allstate that the Blind Spot
recognition, automatic braking system, all those things that some years ago were
augmentations then now standard on all new models. This happens for almost all car
manufacturers. Augmentations become expectations.
Also as augmentations rise and products become more complex, stripped-down

versions become more popular.
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For example, my mom, when she visits me from Trinidad, she came last year. She
asked me to get a cellphone for her to use during her visit, it was going to be a month.
She did not want an iPhone with a touchscreen and apps. No. In her words, "I just want
a phone, son. One that I can use to make and receive calls."
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These so-called dumb phones and my mom isn't dumb, the phone is. These dumb
phones are basic cell phones that lack the advanced functionality that's characteristic of
a smartphone.
There are still six dumb phones out there for every smartphone. For every smartphone
someone owns, there's six dumb phones in circulation. Although augmentations are
desirable and they enhance competition, they do not matter to every segment in the
marketplace.
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Lesson 1-6: Product Classifications
Lesson 1-6.1: Product Classifications
How are products classified?
Let's think of consumer products. There are different types of product classifications for
consumer goods.
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First, there are convenience goods. Convenience goods are those goods that you buy
frequently, they are low priced,
they usually have mass advertising and they're products like candy or newspaper.
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Next, shopping goods.
Shopping goods are goods that you buy less frequently, they're higher priced, sold in
fewer purchase locations, and you comparison shop.
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These are goods like appliances like microwaves and electronics.
Next, specialty goods.
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Specialty goods are products that require special purchase effort. They're high-priced,
they have unique characteristics.
A specialty good could be a product like a Patek Philippe watch
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that retails for anywhere from $10,000-$120,000.
Unsought products, that's the next category.
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Those are goods that are new innovations sometimes or they are goods that consumers
don't know they might need or do not believe they need to purchase at the moment.
These require much more advertising and a lot of personal selling.
These are goods like burial plots or life insurance.
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These different types of products could form part of a company's product mix. The
product mix is a total variety of products that are for themselves. Some firms will sell just
one product, whilst others will sell a large number of different products. For example,
Samsung's product mix includes mobile phones, notebooks, tablets, televisions, fridges,
microwaves, printers, memory cards, etc. Firms should select their product mix carefully
as they'll need to generate a profit from each of the products in the product mix. The
products and company's mix can usually be grouped into basic categories. A bakery, for
example, might have four categories, say: breads, rolls, pastries, and cookies. I'm
getting hungry.
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The width of a company's mix describes how many product categories it has.
Think of the Campbell Soup Company as an example. Its mix is five categories wide,
canned soups, microwave soups, gravies, meal kits, and tomato juices. The product line
length shows a number of different products in a product line.
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The depth is the amount of sub-products offered by a business within a particular line of
products. Increasing a company's product depth can involve adding new related
products to an existing product line, or increasing the number of varieties of a particular
product that is offered.
Here, you need to determine the number of items in the product line.
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This decision impacts the consistency of the line and how consumers might view your
products. Let's examine two different ways in which a product line is impacted.
First, product line filling.
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This involves increasing the number of products in an existing product line to take
advantage of gaps in the market, which can sometimes be a barrier to competition.
Many businesses use line filling to round out an already well-established product line
and to help increase the market success of new related products.
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Next, line stretching.
Product line stretching occurs when a business adds new products to the product line
and the new product types are of a higher or lower quality than existing products in the
product line.
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If the new product types are cheaper over lower-quality, it is known as a downward
stretch. If the new product types are more expensive or of a higher quality it is known as
an upward stretch. Supermarkets often stretch product lines by offering value, standard,
and premium versions of their own branded products. Product stretching is similar to
line filling in that it enables firms to fill any gaps that have identified in the market. In
addition to filling gaps and growing the product line, line stretching can have other
benefits.
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Think of the automobile, the Hyundai Genesis G90.
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When this car was introduced, the base model of this luxury automobile was priced at
$68,100. Did Hyundai really expect this to compete with BMW, Audi, and Mercedes
automobiles, which were similarly priced? Heck, no. This serves another purpose. What
do you think that could be? It helps shift opinion regarding other down-market models,
the Hyundai Elantra, the Hyundai Sonata. It move them upward to the newly created up-
market level established by this Genesis luxury automobile. Perception began to
change. Consumers thought more positively about the down-market models. Down-
market stretches come with some risk. If a brand is known as a luxury brand, then there
could be brand dilution.
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Think of the Jaguar X-Type designed and manufactured by Ford. This led to erosion of
the luxury image of Jaguar
and the car was called one of the worst automobiles of all time.
103
Then there's a two-way stretch.
Marriott use a two-way stretch moving both up and down-market.
104
This help to fill gaps and with smart branding and positioning the company limited brand
dilution. Product selection is an important decision as a product is the item you're
selling. Firms need to strike a balance between giving consumers choice and trying to
cater for everybody by stocking too many products. Dividing products into product lines
and the product line into further subgroups helps firms to develop product strategies. It
will also have them identify which product ranges sell well and which do not as each
product line needs to be monitored.
105
Lesson 1-7: The Product Life Cycle
Lesson 1-7.1: The Product Life Cycle
Let's discuss a product lifecycle. A new product progresses through a sequence of

stages from introduction to growth, maturity, and decline.
This sequence is known as a product life cycle,
106
and is associated with changes in the marketing situation, thus impacting the marketing
strategy and the marketing mix. The product sales and profits can be plotted as a
function of the life cycle stage.
107
In the introduction stage, the firm seeks to build product awareness and develop a
market for the product. In the growth stage, the firm seeks to build brand preference and
increase market share. At maturity, the strong growth in sales diminishes. Competition
may appear with similar products. The primary objective at this point is to defend market
share while maximizing profit. As sales decline, the firm has several options, it could
maintain, harvest or discontinue the product.
108
Some facts about product lifecycles.
Products do have a limited life, yes, and they do pass through different stages. Profits
go up and down during these stages. In addition, during each stage, different marketing
efforts are required. There have been arguments made against validity of the product
lifecycle concept being used as a marketing instrument in this present dynamic
environment. Research done on this concept has come with the following conclusions;
109
it is difficult to determine in which phase of the cycle the product is, the value of the
product lifecycle for forecasting purposes is limited.
110
There is still doubt and no evidence of the efficacy of the product life cycle as an
instrument to prescribe marketing strategies. Product lifecycle is great to understand
and describe what a company is going through at present. What marketing activities
should be implemented at the moment. But as a future prescriptive tool, what a
company should do in the future, the product life cycle as a concept has limited value.
111
Professor Noel's Board Walk: Product Mix Decisions
Professor Noel's Board Walk: Product Mix Decisions
Let's examine the product mixed decisions in some more detail. Let's draw a walk
through of the process by which these decisions are made. How does the company
really decide on their range of products that they offer? Which elements impact the
variations of one specific type of product that they may sell? Ask another way, how
many different items would they sell within each line? Consider the range of products
offered by Dyson. Love their products by the way, they're very well known for their
vacuum cleaners. In 1991, the first dual cyclone vacuum built under the Dyson name,
the DA001 was launched. However, Dyson relied on his core competencies of
innovation and reliability, And launched a range of products that could leverage these
strengths.
112
Dyson started selling vacuum cleaners, vacuum cleaners, Including cordless, Upright,
cannister, and hardwood vacuums, hardwood vacuums.
Then they developed a range of hair care accessories, Including hair dryers, Hair
straighteners, And stylers, stylers. I have no use for these things, but I knew they make
them. Then they created air treatment devices, air treatment devices.
113
Including purifiers, Humidifiers, Hand dryers and fans.
Next was lighting including Dyson desk lamps, Desk lamps and floor lamps.
114
Of course, they develop different models for many items in their product lines.
With the Dyson cordless vacuums, you can now buy the V8 Dyson, the V10 cyclone.
They sound like cars, don't they? The V11 animal, yes, that's the name, and the V15
detect. Finally, you can buy one called out size the outsize, the outsize, S-I-Z-E.
115
For the upright vacuum, you can purchase the Dyson ball, The Dyson ball two, the
Dyson cinetic big ball, and the Dyson ball animal. They have done the same with almost
all the products in their various product lines, creating several different models of each
product. These are really well just product line extensions.
116
Dyson's product strategy started with their decision regarding their business model.
According to James Dyson, they get frustrated by products that don't work properly. And
as design engineers, they do something about it. They're all about invention, innovation,
and improvement. So although they started out in a vacuum business, they broadened
their business model and moved into the innovation business, developing innovative
solutions to problems that consumers face.
117
The company developed several different product lines. That's the product, Mix breadth.
And within each line developed several types of products. It's product line length. And
finally created several different versions of their products to help them target different
segments.
This was there, Product line depth,
118
the mix breadth, the line length, and then the line depth. All of these decisions must
align with the company's business model, in this case, creating innovative devices to
solve everyday problems.
119
Over time, Dyson expanded the kinds of markets that addressed. They move from
individual consumers to businesses by developing larger air treatment devices like the
Dyson air blade hand dryers that you've seen airports all around the world. I'm sure
you've seen them. They are touchless and easy to use. The Dyson product policy
decisions made over many years have resulted in their product mix that we see today.
120
So, Product mixed breadth refers to the variety and number of product lines offered. To
arrive at the product mix breadth, managers must ask themselves how many product
lines will be offered, also what is the relationship if any between the lines? Product line
length is a number of different products in a product line, and product line depth refers
in a number of different versions of items in each product line. To arrive at the product
line depth, managers will ask themselves, within a given line, how many versions of a
product can the company manufacture profitably? This involves capacity and expertise
constraints. Also how is the line to serve customer segments of varying taste or
willingness to pay?
121
Product line length and depth decisions are critical here, since the company might strain
their resources. These decisions are driven by how many different segments within the
target market that chooses to serve and if they can deliver on this demand. Unless the
product line is well managed, the company's desire to serve customers or retail partners
with precisely the right product for them can lead to excessively long product lines.
However,
122

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Marketing Management II

Professor Hayden Noel

Module 1: Creating Value (Product)

Lesson 1-1: What is Product?.......................................................................................................... 22

Lesson 1-2: What is Service? ........................................................................................................... 35

Lesson 1-3: The Services Marketing Triangle ................................................................................... 50

Lesson 1-4: How the Product Delivers Value ................................................................................... 60

Lesson 1-5: Five Product Levels ...................................................................................................... 70

Lesson 1-6: Product Classifications ................................................................................................. 87

Lesson 1-7: The Product Life Cycle ................................................................................................ 106

Professor Noel's Board Walk: Product Mix Decisions .................................................................... 112

About the Course

Developing a Marketing Mix for Growth

Effective marketing is about solving a consumer's problems, consumers would not be

We'll examine these elements to a series of interviews with successful business

So what is the goal of marketing? Marketing is satisfying consumers needs profitably

features, packaging, labeling, and so on.

How do you get from here to there

Lesson 1-1: What is Product?

Lesson 1-1.1: What is Product?

This quote highlights what a product is supposed to be, a solution to a problem.

so it did not create value.

could be a physical product, such as an Apple Watch,

or just a bottle of Coca-Cola.

Places could also be products.

that's a product. Organizations could also be products

Ideas like climate change also considered products.

a service like UPS or employment services. That's a product.

Let's discuss services in a bit more detail.

Lesson 1-2: What is Service?

Lesson 1-2.1: What is Service?

Products fall somewhere along a continuum of tangibility. At one extreme, a product

First, the people.

Because of this inseparability of production and consumption of services, the person

So it is critical to hire the right people in a service industry.

ensuring that your customers experiences are also consistent.

Lesson 1-3: The Services Marketing Triangle

Lesson 1-3.1: The Services Marketing Triangle

Each side of the service Marketing Triangle represents a type of marketing

Marketing issues include adequate training on the services to be delivered and

Marriott markets internally by referring to its employees as associates and cultivating

Lesson 1-4: How the Product Delivers Value

Lesson 1-4.1: How the Product Delivers Value

Now what is the heart of a product?

in this case, safety, peace of mind and status.

Lesson 1-5: Five Product Levels

Lesson 1-5.1: Five Product Levels

The 1st level is the core product.

Their physical features such as design, brand name, et cetera.

The next level is the expected product.

The next level is the augmented product.

The next level is the potential product.

Also as augmentations rise and products become more complex, stripped-down

Lesson 1-6: Product Classifications

Lesson 1-6.1: Product Classifications

How are products classified?

Next, shopping goods.

These are goods like appliances like microwaves and electronics.

Next, specialty goods.

A specialty good could be a product like a Patek Philippe watch

that retails for anywhere from $10,000-$120,000.

Unsought products, that's the next category.

These are goods like burial plots or life insurance.