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Essentials of marketing

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					  Chapter 6
Product and service
     concepts
     Learning objectives
1 Define the term product
2 Classify consumer products
3 Discuss the importance of services to
  the economy
4 Identify the differences between
  services and goods
5 Explain why services marketing is
  important to manufacturers
  Learning objectives (cont.)
6 Define the terms product item,
  product line and product mix
7 Describe marketing uses of branding
8 Describe marketing uses of packaging
  and labelling
9 Describe how and why product
  warranties are important marketing
  tools
 Learning objective 1



Define the term marketing
   Define the term product
1
            Product


    Everything, both favourable and
    unfavourable, that a person
    receives in an exchange.
1
       What is a product?


                  Product
               is the heart
    Price          of the          Promotion
                marketing
                    mix


            Place (distribution)
 Learning objective 2


 Describe four marketing
      Classify philosophies.
managementconsumer
      products
2
        Product classifications

                 A product used to manufacture
    Business   other goods or services, to facilitate
    product     an organisation’s operations or to
                    resell to other consumers.


    Consumer       Product bought to satisfy an
     product       individual’s personal wants.
2
    Types of consumer products

                    Products



      Consumer                    Business
       products                   products


Convenience   Shopping    Specialty    Unsought
 products     products    products     products
2
Types of consumer products                     (cont.)


Convenience       A relatively inexpensive item that
  product            merits little shopping effort.

                  A product that requires comparison
    Shopping
                  shopping because it is usually more
     product     expensive and found in fewer stores.
                A particular item for which consumers
    Specialty
                search extensively and are reluctant to
     product              accept substitutes.
                 A product unknown to the potential
    Unsought
                 buyer or a known product that the
     product        buyer does not actively seek.
 Learning objective 3


       Discuss the
 Describe four marketing
       importance of
management philosophies.
       services to the
       economy
3
         Service


    The result of applying
    human or mechanical
    efforts to people or
    objects.
3
    The importance of services

      8 out 10 workers are in
           service sector


            Services account for
              74% of US GDP

               Service occupations will be
              responsible for all job growth
                     through 2005
Learning objective 4


   Identify the
   differences between
   services and goods
4
    How services differ from
            goods
      Characteristics that distinguish
      services:
        •   intangibility
        •   inseparability
        •   heterogeneity
        •   perishability.
4
       Characteristics of services
                     Services that cannot be touched,
    Intangibility    seen, tasted, heard or felt in the
                         same manner as goods.
                      A characteristic of services that
    Inseparability    allows them to be produced and
                          consumed simultaneously.
                      A characteristic of services that
    Heterogeneity    makes them less standardised and
                           uniform than goods.
                      A characteristics of services that
    Perishability    prevents them from being stored,
                         warehoused or inventoried.
Learning objective 5


  Explain why services
  marketing is important
  to manufacturers
5
    Services marketing in
       manufacturing



        Strong competitive
            advantages
Learning objective 6


   Define the terms
   product item, product
   line and product mix
6
     Product items, lines and
              mixes
               A specific version of a product
                that can be designated as a
Product item     distinct offering among an
                  organisation’s products.

                 A group of closely related
Product line
                      product items.

                    All products that an
Product mix
                     organisation sells.
6
    Benefits of product lines

     Why form product lines?
       •   Advertising economies
       •   Package uniformity
       •   Standardised components
       •   Efficient sales and distribution
       •   Equivalent quality
6
     Product mix width

    The number of product lines
    an organisation offers:

     •   diversifies risk
     •   capitalises on established
         reputations.
6
          Product line depth
    The number of product items in a
    product line:
    •   attracts buyers with different
        preferences
    •   increases sales/profits by further
        market segmentation
    •   capitalises on economies of scale
    •   evens out seasonal sales patterns.
6
                   Adjustments

                    Adjustments to
                     product items,
                    lines and mixes


                                      Product line
     Product
                                      extension or
    modification
                                       contraction
                        Product
                     repositioning
6
    Product modifications


      •   Quality modification
      •   Functional modification
      •   Style modification
6
    Planned obsolescence

      The practice of modifying
      products so those that
      have already been sold
      become obsolete before
      they actually need
      replacement.
6
           Repositioning

    Why reposition established brands?

      •   Changing demographics
      •   Declining sales
      •   Changes in social environment
6
    Product line extension

       Adding additional
       products to an existing
       product line in order to
       compete more broadly in
       the industry.
6
         Product line contraction

    Symptoms of product line over-
    extension:
     •    some products have low sales or
          cannibalise sales of other items
     •    resources are disproportionately
          allocated to slow-moving products
     •    items have become obsolete
          because of new product entries.
Learning objective 7



   Describe marketing
   uses of branding
7
            Brand

    A name, term, symbol, design
    or combination thereof that
    identifies a seller’s products
    and differentiates them from
    competitors’ products.
7
                    Branding
    Brand    That part of a brand that can be spoken,
    name      including letters, words and numbers.

    Brand          The elements of a brand that
    mark                cannot be spoken.

    Brand
             The value of company and brand names.
    equity

                A brand so dominant that it comes to
    Master
             mind immediately when a product category,
    brand      use, attribute or benefit is mentioned.
7
         Benefits of branding

                    Branding
                  distinguishes
                 products from
                  competition


   Product                        New product
identification                       sales

                 Repeat sales
7
    An effective brand name …
    •   is easy to pronounce
    •   is easy to recognise and remember
    •   is short, distinctive and unique
    •   describes the product, use and
        benefits
    •   has a positive connotation
    •   reinforces the product image
    •   is legally protectable.
7
               Master brands
    Photography         Kodak
    Adhesive bandages   Band-Aid
    Rum                 Bundaberg
    Vacuum cleaners     Hoover
    Biscuits            Arnott’s
    Cream cheese        Philadelphia
    Crayons             Crayola
    Petroleum jelly     Vaseline
7
              Branding strategies

                      Brand       No brand



       Manufacturer’s
                                         Private brand
           brand



Individual   Family     Combi-   Individual   Family     Combi-
  brand       brand     nation     brand       brand     nation
7
    Generic brand


    A no-frills, no-brand-
    name, low-cost product
    that is simply identified by
    its product category.
7
    Manufacturers’ brands versus
          private brands


    Manufacturers’    The brand name of a
        brand            manufacturer.


                     A brand name owned by
       Private
                        a wholesaler or a
        brand
                             retailer.
7
       Advantages of
    manufacturers’ brands
     •   Develop customer loyalty
     •   Attract new customers
     •   Enhance prestige
     •   Offer rapid delivery so can
         carry less inventory
     •   Ensure dealer loyalty
7
    Advantages of private brands
     •   Earn higher profits
     •   Less pressure to mark down prices
     •   Manufacturer may drop a brand or
         become a direct competitor to
         dealers
     •   Ties to wholesaler or retailer
     •   No control over distribution of
         manufacturers’ brands
7
      Individual brands versus
            family brands

    Individual   Using different brand names
      brand         for different products.


                 Marketing several different
     Family
      brand       products under the same
                        brand name.
7
                 Co-branding

                  Types of co-
                    branding


    Ingredient                   Complementary
     branding                       branding

                  Cooperative
                   branding
7
             Trademarks
    A trademark is the exclusive right
    to use a brand.
     •   Many parts of a brand and
         associated symbols qualify for
         trademark protection.
     •   The mark has to be
         continuously protected.
     •   Rights continue for as long as
         it is used.
Learning objective 8


   Describe marketing
   uses of packaging and
   labelling
8
          Packaging

    Functions of packaging:
      •   contain and protect
      •   promote
      •   facilitate storage, use
          and convenience
      •   facilitate recycling.
8
                    Labelling

      Persuasive           Informational

    • Focuses on          • Helps make
      promotional           proper selections
      theme               • Lowers cognitive
    • Information is        dissonance
      secondary           • Includes
                            use/care
8
    Universal product codes

       A series of thick and thin
       vertical lines (bar codes),
       readable by computerised
       optical scanners, that
       represent numbers used to
       track products.
Learning objective 9


   Describe how and why
   product warranties are
   important marketing tools
9
           Product warranties

                A confirmation of the quality or
    Warranty
                performance of a good or service.


    Express
    warranty           A written guarantee.


               An unwritten guarantee that the
    Implied
    warranty   good or service is fit for the purpose
               for which it was sold (UCC).
9
    Product warranties (cont.)

     Express          Implied
     warranty         warranty


     Written         Unwritten
    guarantee        guarantee

				
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