MCD2050

Marketing 1: Week 6
Lecture 6 - Product
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Icons

Pages
6 - 10

Prescribed
Pages
6 - 10

Recommended Class Activity – Case Study - Watch the

!
Important
reading. Refer reading. Refer Answer the Real world video via the point to
to textbook to textbook question example link remember

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What is a product?

 Anything offered to the market to satisfy customer need and wants.

 Goods, services, events and experiences

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Product, services and experiences

 A company’s market offering often includes both tangible

products and intangible services.

Insert Figure 10.1

in here

Source: Kotler et 10, 2013 ‘Marketing’ 9th Edn.

© Commonwealth of Australia, reproduced by permission

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Good/Service –Equipment/People

 Market offers lie somewhere on a continuum.

 McDonalds, offers physical goods, hamburgers, fries yet also
provides a service, drive through, delivery and speed.
 McDonalds use both people e.g. crew members and
equipment e.g. fryers to complete their offering.

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The Total Product Concept

 Each product consists of 4 levels, known as the total product concept.

 The total product concept is a way of viewing a product as the totality of

benefits it provides to the customer.

The four levels are:

1. Core
2. Expected
3. Augmented
4. Potential
Pages
179

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The Core Product

 The core product relates to

the problem solving element
of the offer.
 E.g. ‘What benefit is the
consumer really seeking’
 For example the core product
of a mobile phone is
communication.

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The Expected Product

 The expected product consists of attributes of the offer that

deliver the core benefit.
 These include:
– Brand name
– Features
– Style
– Packaging

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The Augmented Product

 The augmented product is referred to as the value added element of

the offer.
 The additional benefits that the consumer receives from the offer.
 These may include;
– Extended warranties
– After sales service
– Product support

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The Potential Product

 This final level includes all

possibilities that could
become part of the offer.
 Including those that have
been developed, planned or
not even conceived yet.
Source: https://www.youtube.com/watch?v=fqym5TCxtPE

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What levels of the total product concept does this clip discuss?

Source: https://youtu.be/nOYk_M9oe_Y 12
Product Classification

 Products can be classified as either consumer or business

products.
 Consumer products: Those purchased for personal
consumption.
 Business products: Those purchased for use by or within a
business.
 Our focus in this course is on Consumer Products.

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Consumer Product Classifications

 There are four (4) ways a consumer product can be classified.

1. Convenience
2. Shopping
3. Specialty
4. Unsought

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Classifications of Consumer Products

1. Convenience (FMCG):
 Consumer Behaviour: Frequently purchased, little planning effort,
low involvement
 Price: Low
 Place: Intensive Distribution
 Promotion: Mass promotion by the manufacturer
 Examples: Chocolate bars, milk, bread, eggs.

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Classifications of Consumer Products

2. Shopping:
 Consumer Behaviour: Less frequently purchased, greater shopping
effort, higher involvement.
 Price: Higher than Convenience
 Place: Selective, more than one place but less than many
 Promotion: Combination between manufacturer and reseller.
 Examples: Televisions, clothing, furniture

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Classifications of Consumer Products

3. Specialty:
 Consumer Behaviour: Unique benefits that generally cannot be
substituted by another, purchaser knows exactly what they want
(strong brand preference).
 Price: High
 Place: Exclusive Distribution
 Promotion: Carefully targeted to certain markets
 Examples: Fine jewellery, luxury cars,

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Classifications of Consumer Products

4. Unsought:
 Consumer Behaviour: Consumer does not normally consider
purchasing these products or they do not know about these
products.
 Price: Varies
 Place: Varies
 Promotion: Aggressive selling
 Examples: Insurance, charity donations

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Classifying Consumer Products

Insert Table 10.1

in here

© Commonwealth of Australia, reproduced by permission 19

Product Relationships
 Product Item: a specific version of a product that can be
differentiated from the company’s other product items. Example for
Samsung a product item is Samsung Galaxy Note within the
smartphone range
 Product Line: a group of products manufactured or distributed by an
organisation, similar in the way they produced or marketed. For
example Samsung’s line of smartphones, tablets, refrigerators,
vacuum cleaners…
 Product Mix – the set of all products that an organization makes
available to customers. Samsung has mobiles, TV & AV, Home
appliances, Computing, Displays, Smart Home..

Pages
180

Source: Elliot 5th ed and Monash Business School 20

Branding

 What is a brand?
 A brand is a name, logo, symbol or sign that represents the
manufacturer or retailer of the offer and differentiates it from
the competition.
 Brands play a critical role in the success or failure of an offer.

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Brand Strategies
 When developing brands within a product mix, a firm may decide to pursue the
following strategies.
 Individual Brands: Using a different brand on each product, owned by same firm.
E.g. Coca Cola company with their use of the Sprite, Fanta and Mt Franklin brands
 Family Brands: Using the same brand on several of the firms products. E.g. Kellogg's
 Brand Extension: Using the same brand to extend to a new product category.
E.g. Mercedes Benz Fragrances

Pages
194-195

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Brand Ownership

 Brand ownership strategies outline who the brand belongs to.

 There are four (4) commonly used strategies:
1. Manufacturer Brands
2. Private Label Brands
3. Licensing
4. Co-branding

Pages
195-197

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Manufacturers vs Private Label Brands

 Manufacturer Brands are owned  Private Label: Owned by the

by the manufacturer - the
company that produces or
manufactures the product,
displays their branding on the
offer:
reseller - a branding strategy
where the reseller displays their
own branding on the offer.
 Woolworths has been heavily relying on their
private label products: Have a look here.

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Co-Branding vs Licensing

 Co-branding: The use of two or  Licensing: When one company

more brands on one offer. * (Company A) pays a licensing fee ($$)
 * This must not be confused with a to another (Company B). In order to
supplier. use Company B’s logo, characters or
images on Company A’s offer.
 A significant amount of Disney’s revenue
comes from their licensing fees.
+

+
Uniqlo T-shirt Bershka Hoodie
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Activity

 Without the use of devices, write down what you believe are the
worlds 10 most valuable brands.

 Those pictured are just examples and do not necessarily reflect the top ten brands.
 Lets see if you’re right: https://www.forbes.com/powerful-brands/list/

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MCD2050

Marketing 1 - Product
Product Life Cycle and New Products
New Product Development

 A company has to continually develop new products.

 New products are the key source of growth for a company.
 Apple understands this and continually develops new
market offers.
 What will be next? An Apple car?

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What is classified as a new product?
 There are several ways that a new product can be developed.
 All of the following are new product classifications:
1. New to the market: an invention
2. New to the company: a brand extension
3. New to the product line: a line extension
4. New to the product: improvements or enhancements to an existing product.

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New product development process

1. Idea Generation: The search for new product ideas

2. Idea Screening: The filtering of ideas, spot good ideas, drop bad ones.
3. Concept Evaluation (Idea Testing): Testing new concepts with a sample of target
consumers.
4. Marketing Strategy: Designing an initial marketing strategy.
5. Business Analysis: A financial evaluation of the new product
6. Product Development: Developing the concept into a physical object.
7. Test Marketing: Testing the new product into realistic market settings.
8. Commercialisation: Introducing the product into the market.
Pages
185-186

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A company’s perspective on New Product Development

Source: https://www.youtube.com/watch?v=RhYlKckoHwA 31
The Product Life Cycle (PLC)
 The PLC traces a product throughout
it’s lifetime.
 It involves five distinct stages:
1. New Product Development
2. Introduction
3. Growth
4. Maturity
5. Decline

 Firms will adjust their marketing

strategies based on where the
product is within its lifecycle. Pages
184-185

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Overview of the PLC Stages
1. New Product Development: As discussed in previously.
Stage Characteristics Strategy
• First appearance of the offer, market is likely to have • Create product awareness
no or only little knowledge about the product • Heavily invest in promotional activities to
2. Introduction • Sales start at zero (0) and profits are negative given encourage trial of the product
the R&D costs.
• Rapid increase of popularity, competitors increasing • Intensify product distribution in order to
at this stage. maximise on the demand for the offer
3. Growth • Sales continue to increase but the profits eventually • Reduce sales promotion (incentives) for the
slow offer to capitalise on the demand
• Product acceptance is wide spread within the • Make changes to the marketing mix in order
4. Maturity market, intensive competitors present. to take the product back into the growth stage
i.e. make adjustments to the product
• Sales and profits fall, little interest in the product • Decide to reduce investment in the product
evident. • Drop the product from the company’s range
5. Decline • Change the product and hope it will enter
another growth stage.

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Summary

 Firms have to carefully manage their range of offerings

to suit the needs and wants of customers
 Brand strategies are used in alignment with
organizational objectives to either order to grow or
downsize the company’s and product range.
 New products are regularly designed and introduced,
after which they proceed through a life cycle

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Online Weekly Quiz

 Reminder to complete the online weekly quiz on Moodle.

 Quiz will close 5pm Saturday

 The test is open book – you can refer to your lecture notes and
textbook(s)

 The test is timed – 60 minutes to complete from when you start it.

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