CHAPTER FIVE

MANAGING PRODUCTS
• The four Ps of marketing: product, price, place and
promotion
• Product: The goods and/or services offered by a company
to its customers.
• Price: The amount of money paid by customers to
purchase the product.
• Place (or distribution): The activities that make the
product available to consumers.
• Promotion: The activities that communicate the product’s
features and benefits and persuade customers to purchase
the product.
 What is product?

•Product is anything that can be offered to a

market for that might satisfy a want or need.
Products may be tangible (goods) or
intangible (services).
Levels of Product
 Levels of Product and Services

• There are three levels of products

1. core customer value: which addresses the
question ‘what is the buyer really buying?’
•Problem solving benefits or services that
consumers seek.
2. actual product: design, a quality level, a
brand name, and packaging of the product
 Cont’d
3. augmented product: offering additional
consumer services and benefits.
• For example, The Nokia is more than just a
communications device. warranty on parts
and workmanship, instructions on how to
use the device, quick repair services when
needed
For example: Take a merchandise car, from this;
 Transportation service is core product,
 The car itself is actual product, and
 After sale services (like: warranty, installation, and repair and
maintenances) are an augmented part of the product (the car).
Classification of a product
Marketers have traditionally classified products on the basis of varying product
characteristics like: durability, tangibility, and use (Consumer or industrial).

Products can be classified into three groups, according to their durability and tangibility:

1. Nondurable goods: are tangible goods, consumed quickly (consumed in one or few uses)
and purchased frequently, available in many locations, charge only a small markup

Examples: Beer, soap, and salt.

2. Durable goods: are tangible goods that normally survive many uses. It require more
personal selling and service, and require more seller guarantees.

Examples: Refrigerators, machine tools, and clothing.

3. Services: are intangible, inseparable, variable, and perishable.

Examples: Haircuts and repairs.

• Based on their uses products can be
classified in to: consumer products and
industrial products.
1.Consumer Products
• Consumer products are products bought by
final consumers for personal consumption
 Cont’d
• Consumer products: based on the shopping
habit consumer products are classified into
four groups.
I. Convenience products:
• buy frequently, immediately with a minimum
of comparison and buying effort. E.g. soap,
fast foods etc.
• with low price
 Cont’d
II. Shopping products: are less frequently
purchased
• compare them carefully on suitability, quality,
price, style etc.
• spend much time and effort in gathering
information and making comparisons e.g.
furniture, clothing, hotel services etc.
 Cont’d
• III. Specialty products: are products with unique
characteristic or brand identification for which a
significant group of buyers is willing to make a
special purchase effort.
• simply they are willing to invest their time and
resources to reach dealers carrying the wanted
products.
• Examples include specific brands of cars, high-
priced photographic equipment, designer
clothes, etc.
 Cont’d
• IV. Unsought products: are products that the
consumer either does not know or does
know but normally do not think of buying
• Most major new innovations are unsought
until the consumer becomes aware of them
through advertising.
 2. Industrial Products
• Industrial products are those bought for
further processing or for use in conducting a
business. There are three groups of
industrial product:
I. Materials and parts:
II. Capital items
III. Supplies and services
 Branding:
• A brand is a name, term, sign, symbol, or
design, or a combination of these, that
identifies the maker or seller of a product
 Brand Name
• The part of a brand that can be spoken/vocalized, including letters, words, and numbers–
 Brand Mark
o It can appear in the form of a symbol, design, distinctive coloring or lettering but it
doesn’t make up of words.
 Trademark
 is legal designation of exclusive use of a brand. It is a brand or part of a brand that has
been given legal protection so that the owner has exclusive rights to its use.
 Trade Name
→ full legal name of organization
 Brand Equity
 That value is determined by consumer perception of and experiences with the brand.

 It is the level of measurement of brand loyalty by

customers.
 Cont’d
• Branding helps buyers:
consumers identify products that might benefit
them
say something about product quality and
consistency
• Branding helps sellers:
o provide legal protection for unique product features
o helps the seller to segment markets
o build the corporate image
 Qualities of Brand Name

Desirable qualities for a brand name include the following:

•1. It should suggest something about the product's benefits

and qualities.

•2. It should be easy to pronounce, recognize and remember.

•3. The brand name should be distinctive.

• 4. It should be capable of registration and legal protection.
 Brand Strategy

•1. Line Extensions: Line extensions occur

when a company introduces additional items
in a given product category under the same
brand name, such as new forms, colours,
ingredients or package sizes.
 Cont’d
• 2. Brand Extensions: is any effort to use a
successful brand name to launch new or
modified products in a new category.
• advantages.
 capture greater market share and realize
greater advertising efficiency
 helps the company enter new product
categories more easily as it gives a new product
instant recognition and faster acceptance
 Cont’d
• 3. Multi Brands:
• 4. New Brands:
 Packaging
• Packaging is designing and producing the
container for a product.
• It may take different forms.
 primary container: a container to be used
throughout the life of the product
 secondary container: a container to be thrown
away when the product is about to be used
 shipping package: container necessary to ship or
store the product.
 Cont’d
• Traditionally, the primary function of package
was to contain and protect the product.
• No matter how, in today’s competitive market
environment, packaging concern extended to
include issues such as attracting customers,
describing the product, convincing buyers to
make sale etc.
 Labeling:
• Labeling is printed information appearing on or with the package.
• It ranges from the simple tags attached to products to complex graphics on the
package or with the package.
• The label may include brand name, who made it, where it was made, its
contents, how it is to be used, and how to use it safely.

• Typically, there are three kinds of labels.

1. Brand label- Simply the brand alone applied to the product or to the package.

2. Grand label- is a label which identifies the quality with a letter, number or
word.
3. Descriptive label- It gives objective information about the use, construction,
care, performance or other features of the product. Sometimes it is called
informative label.
 Product Line Decisions:
•Product line is group of products that are closely
related because they function in a similar manner, are
sold to the same customer groups, are marketed
through the same types of outlets, or fall within given
price ranges. Nike produces several lines of athletic shoes.
•Product mix: consists of all product lines and items that a
particular seller offers for sale
A. New Product Development
 Product Life Cycle
Sales

Introduction Growth Maturity Decline

Time
 A. Introduction Stage

• Sales: low
• Costs: high cost per customer
• Profits: negative
• Marketing Objective: create product awareness and trial
• Product: offer a basic product
• Price: use cost-plus formula
• Distribution: build selective distribution
• Promotion: heavy to entice product trial
• Productivity is low since demand is low
• High amount of money is placed in
advertisement
• Expenses are high
• Therefore it is the least profitable stage
• By considering only price and promotion management can
pursue one of the following four strategies.
• A. A rapid skimming strategy:-This strategy involves
launching the new product at a high price and a high
promotional level.
• B. A slow skimming strategy:-This involves launching the new
product at a high price and low promotion.
• C. A rapid penetration strategy:-This involves launching the
new product at low price and spending heavily on promotion.
• D. A slow penetration strategy:-This involves launching a new
product at a low price and low level of promotion.
 2. Growth stage
• This stage has the highest growth rate
• Customers are now familiar with the merits and demerits of the product
• Accordingly, sales volume increases very rapidly
• A proportional rise in profits occurs
• In this stages, competitors enter the market bringing about imitation of the product
• Promotional campaign is still very high.

• Sales: rapidly rising

• Costs: average cost per customer
• Profits: rising
• Marketing Objective: maximize market share
• Product: offer extension, service, warranty
 3. Maturity stage:
• To out race the competition, firms will start to
cut price, increase their promotion in general
and sales promotion in particular, rise R and D
budgets to find better versions of the product.
• some firms to leave the market and eventually
the market will contain only well-established
competitors at this stage.
 4. Decline stage
• As sales and profit decline, some firms may
withdraw from the market.
• Hence, companies should identify products in
the decline stage by regularly reviewing sales,
market shares, costs and profit trends.
• Then management must decide whether to
maintain, harvest or drop the product.
 Chapter six
Placing the Product
 Meaning and Importance of Placing/Distribution
 Distribution is the set of all firms & individuals that assist in the transferring
the title of goods & services as they move from producers to
customers.”
 It is also defined as “the root through which goods move from the place of
production to the place of consumption.”
 Marketing Channel or Distribution Channel- A set of interdependent
organizations involved in the process of making a product or
service available for use or consumption by the consumer or
business user.

 The basic functions in distribution are buying,

selling, transporting, and warehousing.
Importance of the Channels
1. Channels of distribution helps, the goods & services to move from the place of
production to the place of consumption, hence they create place utility.

2. Goods are brought by the channels when they are needed. Hence they create
time utility.

3. A channel reduces complexity in the distribution system

4. Inclusion of channel reduces the financial burden of the producers

5. They supply the market information to the producers

6. They help producers in promoting their sales.

Factors Influencing Channel Decision
1. Market Factors
 Nature of the market

 Size of market

 Number of potential customers

 Geographic concentration of the market

2. Product Factors
 Perishability

 Product Complexity

 Nature of Product

3. Company Factors
 Finance


• Distribution channels may be direct or
indirect. A distribution channel is called direct
distribution channel if there is no marketing
intermediary between the producer and the
ultimate consumer. If there are one or more
marketing intermediaries, the distribution
channel is called indirect distribution channel.
Types of Channel Members/Middlemen
Middlemen means that those individuals or institutions, which assists a producer in the
transfer of ownership of goods to consumers.
Following are some of the various kinds of middlemen:

1. Agents/Brokers: These are the middlemen assist the buyers & the sellers in
buying & selling of the goods without taking the ownership.
to bring into contact between buyers & sellers. Their powers are limited as they cannot
fix price, terms of sale, etc.
2. Wholesalers: The wholesaler is a middleman who buys from the producer directly
& sells it to the retailers on a small scale for the purpose of resale.
3. Retailer: is defined as all activities directly related to the sale of goods and services
to the ultimate consumer for personal, non-business use or consumption.
Retailers are businesses or individuals that sell more of their goods and/or
Channels for Consumer Products
0- Level 1- Level 2- Level 3- Level

Producer Producer Producer Producer

Agents or
Brokers

Wholesalers Wholesalers

Retailers Retailers Retailers

Consumers Consumers Consumers Consumers

 Methods of Distribution
1. Intensive Distribution
 A manufacturer distributes its products through a large number of retailers.
Retailers control the distribution system.
 Usually, consumer’s necessities are sold through this system.

2. Selective Distribution
 Manufacturer sells their products through few retailers.
 Even though this method is suitable to sell all products, it is usually followed in
case of industrial goods & consumer shopping & luxury goods. Ex: Motor vehicle.

3. Exclusive Method of Distribution

 The manufacturer sells its products only through a particular wholesaler or
retailer.
Levels of Distribution Intensity
Intensity Number of
Objective
Level Intermediaries

Achieve mass market

Intensive selling. Many
Convenience goods.

Work with selected

intermediaries.
Selective Shopping and some
Several
specialty goods.

Work with single

intermediary. Specialty
Exclusive goods and industrial
One
equipment.
THE END