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Unit 5 Product
Unit 5 Product
Unit 5
Product:
Meaning and concept:
"It is a Bundle of benefits and satisfaction"
It is one of the components of marketing mix. It is the center of the
marketing operation. A product is any thing that satisfies a need or want of
customers. It is physical goods plus the services attached with the goods.
It is a set of tangible and intangible attributes including packaging, color,
price , quality, brand, plus the seller's services and reputation. A Product
is any things that can be offered to a market to satisfy a want or need. It is
every thing one receives in an exchange. Therefore products include all
entities such as Goods, services, experiences, events, properties, and
organizations, in formations, and ideas and mixes of these entities.
Levels of product:
Core product (Benefits) satisfaction: Here service and benefits customers buy. At the
first level there is a core benefit and essential utility attached with a product. Buyers
purchase a product for the benefit and satisfaction attached with the product. A woman
Buyers buys lipstick for solving her problems. She is not buying any chemical or
physical attributes of the product (car for prestige and cream for beautiful).
Actual product (formal products ) : the formal product is the outer part of the product
including physical and chemical attributes such as package, brand name, quality ,
styles etc. through which the product is formally recognized as a tangible item.
The expected product: At the third level there is expected product that includes a set of
attributes and conditions buyers normally expect in a product. Hotel guests expect
clean beds and bath room.
Augmented product (extra benefit): It is the totality of benefit or a hope that a persons
receive or experiences or prestige in obtaining the formal product. For example free
helmets with motorcycles, Fresh flowers in hotel rooms. Lipstick with package, quality
style etc.
Potential product: This level includes all possible augmentations and transformations
the product may undergo in future.
Key: satisfactions / utility / benefits / Attributes / feature Extra benefit
1.
.
Consumer Product:
They are bought by consumer for personal need, family
need, and satisfaction. They may be goods or services.
They are used by ultimate consumers. It consists food
items, cigarettes, cars etc. They can be used without
further processing. We should follow the marketing
consideration in
Convenience products: Bread, news paper, cigarettes,
sweets, salt, sugar etc. They are non durable type and
low involment in purchase.
Shopping products: Shopping goods are those goods
for which the consumer lacks sufficient information
about product alternatives. And their attributes.
( Bicycles / furniture , shoes )
Industrial products:
Industrial products are also known as business products that are to
be sold primarily for use in producing other goods or rendering
services. For example a type writer may be a consumer product if
a consumer buys it for type his personal letters or articles. But if a
retailers or wholesaler buys it to type business letter it is and
industrial product.
Foundation goods: they are the manufacturing machines that
make production possible. They consist installations / accessory
equipments / Printing machine for a press, factory building, still
mill etc. Restaurant kitchen equipment etc.
Accessory equipment: It is used in the production operations of a
firm but they are not used in the actual manufacturing process.
Life of accessory equipment is short and the prices to this
equipment become comparatively low. For example type writer
small power tool. Cash registers, delivery, trucks, calculators etc.
1. Introduction stage:
A period is slow sales, growth negative or low profit,
Innovator customers, few competitors, high price, high cost
of production, distribution, promotion, technological
problems in this stage product is commercially launched in
the market.
Symptoms:
2. Growth stage:
Many new products fail during the introduction stage because
they can not gain buyers acceptance. Or economically and
technically unfeasible. If the product can cross the critical
stage of introduction, it enters the growth stage.
Sales increase dramatically or rapidly.
Rising profit
New buyer groups
Stable technological improvement
Slightly lower price
New market segment
Stable price and promotion on level
Growing competition.
3. Maturity stage:
In this stage many firm enter in to the market with a broad
range of products. Since the competition on price
promotion and product is at its highest peak, each and
every company as long as possible to try to maintain a
differential advantage such as low price, change product
features , extended warranty gift giving etc.
Sales and profit increase at decrease rate
Profit starts to decrease.
Tough competition
Price cuts
Market segmentation increased in the faster pace.
.Product specialization in increased in the market.
4. Decline stage:
After maturity period, saturation periods continues, the
sales of the c company go on decline and there will be
least profit or loss to the firm. As a result it be comes
very difficult for the firms to survive in the market.
Many firm quit the market in search of new
opportunities.
Declining sales / Profit
Laggard customers. (Loyal customers continue buying)
Declining competition
Increased price (loyal customers are willing to pay high
price.)
Eventually all products reach a stage of zero sales.
2. Idea Screening:
It involves a preliminary elimination process in which a large
number of product ideas are screened in term of the organization's
objectives, policies, technical feasibility and financial viability. Idea
is screened through a committee formed out of the functional
manager of the organization.
Promising ideas: Carried out for further testing.
Marginal ideas: stored for future use.
Rejected ideas: Dropped altogether.
Actually the committee meets regularly and evaluated the product
ideas.
3. Concept Development:
The main tasks of marketers should be to translate product idea into
to a technically feasible and commercially feasible physical product.
More especially the marketers develop product design, packaging,
Branding, preference and technical quality testing.
4. Business analysis:
The main purpose in this stage is to collect information the
enables the marketers to determine the commercial viability
of the product, estimates sales, Revenue and cost, profit
appraisal product life vs. investment recovery and analyzed
the risk involved and competitor's analysis.
5. Concept testing:
Test marketing is to examine the performance of the product.
It is related for identification of consumer's behavior with the
attributes of the product. It is asking consumers for
evaluation of product's performances. Different techniques
are used to find out the customer's reaction.
6. Commercialization:
Once the purpose of test marketing is over, The Company
is ready to produced products in mass scale for commercial
purpose. It involves major decisions relating to timing, place,
and segments and marketing strategy for launching the
product.
Branding Strategies:
Branding:
Concept: Most of the manufacturer's and sellers use brand
names to identify their product in the market. It is a part of
a product. It is a name, term, symbol, or special design of
products. It involves using an identification features on the
product. Branding is very popular in Nepal. Branding has
started even in farm product like rice, wheat flour, cooking
oil and pulses. Licensed brands are the most selling brand
such as coca-cola, Pepsi, sprite, 7up, fantail, fruity, real in
soft drinks market. Successful brands are rare, nanglo,
NDS, surya international, shikhar, khukuri, etc.
Component of Brand
Brand Name: It is that part of the brand that can be
vocalized and includes letters, words, and number. For
example Coca-cola, 7up etc are brand name of soft
drink.
Brand mark: It is that element of the brand that cannot
be vocalized. It often appears in terms of a sign, symbol
or design, the green bottle of 7up is brand mark.
Trade mark: It is a legal designation indicating that the
owner has exclusive right to use the brand name and the
brand mark. Brand name or brand mark can be
converted into a trade mark only when they are
registered with the concern department of government
Objectives:
Containment
Identification
Protection
Promotion
Communication
Product differentiation
Importance of Branding:
Product identification and choice
Reduction in search and evaluation time
Promotion
Value building
Product positioning
Brand loyalty
Quality assurance prestige and status
Responsiveness to environmental problems
Packaging:
It is an act of designing or producing the package for a
product. It is the process of designing the container for a
product. It includes activities required for designing the
container for a product. So a package means wrapper or
container in which a product is enclosed.
Objectives:
Containment
Identification
Protection
Promotion
Communication
Product differentiation
Levels of Packaging:
The primary packages (milk container, toothpaste )
The secondary packages ( wrapper of toilet soap, bread
or biscuits etc )
The shipping packages (cardboard box, wooden boxes
etc )
Essentials of a good Package:
1. Convenient
2. Attractive
3. Communicative
4. Economic
5. Environment friendly
Labeling:
It may be a tag or symbol or means of recognition directly
attached to the product. A label is that part of the product in
which the brand name, brand mark, information about the
product, its use ingredients, date of manufacture,
manufacturer's name and address etc appear.
Types: Brand labels (only brand name are write or stamped or
tagged ) Grade labels (fruits, eggs, food grains etc )
Descriptive labels ( explanation of use and miss use etc also )
Objectives or functions:
Identification
Description
Promotion
Trading up:
Adding higher price item It means adding a higher
price product to a product line to attract the broader
market, which can generated better sales, better profits
and improve goodwill to the company. The company
thinks that the prestige of a high price product will help
to improve the sale of the existing lower price products.
Trading down:
It means adding lower price products to a particular
line. With the hope that the people who cannot afford
high price original products, will buy the new low price
products and they don't have to shift to another
preferred products.
For example:
Biscuits
Electronic
soap
services
Glucose
Television
Detergent
Hospital
Salted
Radio
Cake
School
Coconuts
Freeze
Bathing
College
Cracker
Computer
Gel
Hotel
Cream
Telephone
Shampoo
Cinema
Each in various size and price
Nepothene group of industries
Biscuits Detergent Toothpaste Polythene Plastic wares Tea
Cream Go-Go
Everest
High Density A
Taste
Glucose go-go
-----Low ,,
B
........
Thin A detergent ..........
..............
C
..........
Co-conut ........
.........
..............
D
..........
............... ..........
.........
...........
E
...........
Total product product is 15 (4+2+1+2+5+1)
Vertical is depth closely related items in a product line and width horizontal.
Service product:
It may be defined as an any task performed by the
company another as the provision of any facility or as a
product. Services may or may not attach with the physical
product. For example repair and maintenance, medical
and health care, banking insurance etc. If the main goal of
the company is to provide a physical product and services
as the supplementary products. Then services become just
provisions. For example sale of a television set to a
customer and facility regarding warranty services
becomes the part of the television, warranty services are
provided to the customer when the purchases a television
set. Here services become supplementary products.
Perish ability:
Services are produced and consumed at the same time.
Services can not be stored for future use. Some services
providers, such as telephone companies, airlines, hotels vary
their prices according to time or seasons in order to shift the
demand from peak to off peak periods.
Variability
Services provided by different individuals and organizations
widely differ in price and quality. The price and quality of
services are dependent on who provides the services, how
they are provided and and where they are provided? Some
services providers give at home services to consumers for
higher services.
Types of services
1. People based and equipment based services
2. Personnel and business services
3. Presence and absence of the buyers
4. For profit and non profit services
1. Relationship strategies:
. In service marketing there are three
major parties involved like the
company, customers, and
employees.
External Marketing
Internal marketing
Interactive marketing
2. P7 related strategies:
Product: The service product is the main offer by the
service producer. Service may be different high quality or
low quality. Here post sales services are entertained.
Price: Pricing of services need to be based on the
perceived delivery value and perceive duality of the
services.
Promotion: In this mix the role of personal selling an
direct marketing has become highly relevant in marketing
of services,
People
Physical evidence
Process ( service differentiation etc )
4. Service differentiation
Most services are intangible and customers can not easily
judge the quality of service until they buy and use the service.
A service market also faces strong challenge to differentiate
their services from competitor's services. Customers also find
it very difficult to differentiate the services offered by various
organizations. Service differentiation is also achieved through
a difference of service delivery methodology or process.
Service provider can adopt a variety of delivery processes and
charge different prices for its services. For example restaurant
may offer Chinese, Indian or Nepalese food. Differentiation
implemented over the delivery process can contribute to build
and image for the service organization. The image can also be
used to communicate the quality of service to customers.
Service Quality:
It is the key element of customer
satisfaction and relationship. Each and every
consumer evaluate the service quality through
three important element of service marketing
as follows:
1. Outcomes ( value creation )
2. Interactions
3. Physical Evidence
Service productivity:
Service firms have major problems in enhancing their
productivity due to the involvement of people who are
influenced by the human elements of tiredness, moods, leave,
motivations and many others. Many service firms are trying
different strategies to increase their productivity levels. Which are
given below.
1. Automation ( ATM, ABBS, etc )
2. Assembly lines: Some food chains like McDonald and KFC
have adopted the assembly line approach for food production to
enhance the productivity.
3. Reduction to service quality: government hospitals have
increased the service productivity of their doctors by shortening
the time allocated for a patients check up and prescription.
4. Atmospherics ( color, furnishing, Music, TV etc )
Successful brands are Rara, Nanglo, KFC,Nanglo, Nepal dairy, Surya etc,
Growing tendency to use family name like Golchha, Hulas, chaudhary etc.
5.Packaging:
Nepalese products are found to be adequately packaged.
Manufactures have learnt to develop good package from Chinese, Thai, Malaysian,
Indian products.
Paper, Metal and glass are used for packaging.
The use of color on the packages in gradually improving over the years although red
is still found to be the dominant color.
Package designer still dont have good knowledge.
6. Labeling:
It is mandatory in Nepal but not well practiced.
Manufacturers often dont provide full information on the label as per required of
law.
7. Product line extension:
Successful companies undertake very rapid line extension in Nepal.
Care less line extension
Product lines are extended without market assessment.
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Important Questions
Define Product? Explain its classification?
What is consumer product? Explain the characteristics and types
of consumer shopping products.
How are industrial products classified? Describe the
characteristics and marketing considerations of materials and
parts.
Define product life cycle with figure?
Explain the concept and issues related to total quality marketing.
Write a short note:
Service marketing
Product mix and line
Labeling and packaging
Reasons for not branding