MKTG101 Topic 2 The Total Product (Weeks 3-4) PDF

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MKTG101 TOPIC 2: THE TOTAL PRODUCT (WEEKS 3-4) THE

MARKET OFFERING

Most -

‘Market Offerings’ are a mixture of goods and services. The Substance (core product, physical; Product Management) The Service (Interactive Marketing) vs. The The Symbol (Brand Marketing, External Marketing) Price

Price - The amount of money charged for a total product; or the sum of the values that consumers exchange for the benefits of having or using the total product. Most firms offer customers a package of benefits: - core product (a good or a service) - supplementary services that add value to the core (opportunities for differentiation, competitive advantage)

MARKETING PARADIGMS: -

Transactional Marketing - focussed only on ‘winning’ customers Relationship Marketing - focussed on ‘keeping’ customers

1.THE SUBSTANCE Durable goods - tangible goods that normally survive many uses: refrigerators, machine tools, and clothing. They normally require more personal selling and service, command a higher margin, and require more seller guarantees.

FIVE PRODUCT LEVELS

Nondurable goods - tangible goods normally consumed in one or a few uses, such as beer and shampoo. Because these goods are purchased frequently, the appropriate strategy is to make them available in many locations, charge only a small markup, and advertise heavily to induce trial and build preference.

CONSUMER -

-

-

-

1

GOODS CLASSIFICATION:

Convenience – purchased frequently, immediately and with minimum effort (e.g. drinks, soap, newspapers) o Staples – on a regular basis o Impulse – without plan or research o Emergency – urgent need Specialty - unique characteristics or brand identification for which enough buyers are willing to make a special purchasing effort; they don’t need convenient location or comparisons (e.g. car, suit, video machine) Unsought – goods that consumer doesn’t normally think of buying; they require advertising and personal-selling support (e.g. smoke detectors, life insurance, cemetery plots) Shopping - goods that consumer compares on such bases as suitability, quality, price, and style (e.g. furniture, clothes) o Homogeneous – similar in quality but different enough in price

o Heterogeneous – differ in product features and services than may be more important that price

INDUSTRIAL -

-

-

-

GOODS CLASSIFICATION:

Material and parts – enter the manufacturer’s product completely o Raw materials  Farm products (e.g. wheat, cotton, livestock, fruits) – supplied by many producers, little advertising  Natural products (e.g. fish, crude petroleum, iron ore) – limited supply o Manufactured materials and part  Component materials (e.g. iron, cement, wires) – usually fabricated further  Component parts (e.g. small motors, tires) – no further change in form Capital items – long lasting goods o Installations (e.g. buildings, heavy equipment) – bought directly from the producer, personal selling o Equipment (e.g. tools, office equipment) – shorter life, sold by intermediaries mainly Supplies – short term goods that facilitate developing or managing the finished product o Maintenance and repair items (e.g. paint, nails, brooms) o Operating supplies (e.g. lubricants, coal, pencils, paper) Business services - short term services that facilitate developing or managing the finished product o Maintenance and repair services (e.g. window cleaning, copier repair) o Business advisory services (e.g. legal, advertising consulting)

KINDS

OF PRODUCTS:

1. Individual Product (We focus on quality, features, style, design, warranty etc.) 2. Product Line (A group of products that are closely related because they may: a. function in a similar manner b. be sold to the same customer groups c. be marketed through the same types of outlets d. fall within given price ranges b. Product line length a. Line stretching: adding products that are higher or lower priced than the existing line. It may be down-market, up-market or two-way stretch) b. Line filling: adding more items within the present price range) 3. Product Range (Also known as product assortment. Consists of all the product lines and items that a particular seller offers for sale) 4. Product Mix a. Product mix width - number of different product lines carried by company b. Product mix depth - number of different versions of each product in the line c. Product mix length – total number of items in the mix d. Product mix consistency – describes how close are the various product lines 2

PRODUCT -

DIFFERENTIATION:

Form (size, shape) Features (supplementations) Performance quality (low to high, superior) Conformance quality (low to high, depending on promises) Durability Reliability Repairability (ease of fixing) Style

-

Customization

SERVICES -

DIFFERENTIATION:

Ordering ease Delivery Installation Customer training Customer consulting Maintenance and repair Returns

THE PRODUCT LIFE CYCLE: -

-

Profits rise and fall at different stages Products require different marketing, financial, manufacturing, purchasing and human resource strategies at different stages! Marketers are paid to keep happening profit and product flow

2.THE SERVICE FOUR

CATEGORIES OF SERVICE:

1. People Processing (e.g. airlines, hospitals, restaurant, hotels) 2. Possession Processing (e.g. repair, cleaning, retailing, recycling) 3. Mental Stimulus Processing (e.g. education, broadcasting, consulting) 4. Information Processing (e.g. accounting, banking, research)

 Own a Physical Good vs. Rent the Use of a Physical Good?  Perform the Work Oneself vs. Hire Someone to Do the Work?

Goods Tangible (Real)

3

Services Intangible

Results/Implications Services can’t be inventoried, easily patented, readily

Standardized

Heterogeneous

Production separate from consumption

Simultaneous production and consumption

Nonperishable (Unstable)

Perishable

displayed – pricing is difficult. Customer satisfaction depends on employee actions. Service quality depend on unmeasurable factors. It is unsure sometimes. Customers participate in, affect and interact with others. Decentralization, mass production is difficult. It is difficult to synchronize supply and demand, services can’t be returned or resold.

HIGH SERVICES 1. High Contact Services: o Customers visit service facility and remain throughout service delivery [or viceversa] o Active contact between customers and service personnel o Includes most peopleprocessing services 2. Low Contact Services: o Little or no physical contact with service personnel o Contact usually at arm’s length through electronic or physical distribution channels 4

CONTACT AND LOW CONTAC

o New technologies drive reduction in contact levels

CHALLENGES • • • • • •

FOR

SERVICES:

Defining quality Ensuring the delivery of consistent quality Communicating and maintaining a consistent image Accommodating fluctuating demand Motivating and sustaining employee commitment Finding a balance between standardization versus personalization

THE FIVE DIMENSIONS -

OF

SERVICE QUALITY

Reliability (Ability to perform the promised service dependably and accurately) Assurance (Feeling safe, having a knowledge, confidence) Tangibles (Physical facilities, equipment, and appearance of personnel) Empathy (Caring, individualized attention the firm provides its customers) Responsiveness (Willingness to help customers and provide prompt service)

TRADITIONAL CONSUMER MARKETING CHANNELS MARKETING CHANNELS

INDUSTRIAL

B2B2R

3.THE SYMBOL Brand - A name, term, sign, symbol or design, or a combination of them, intended to identify the goods & services of one seller or group of sellers and to differentiate them from those of competitors. Source of promise associated with the goods or services of a seller.

ADVANTAGES 5

OF

STRONG BRANDS:

Greater loyalty Less vulnerable to competition Less vulnerable to crises Larger margins Price up – demand stable Price down – demand up Increase in effectiveness of promotional activity Licensing opportunities Brand extension opportunities

WHAT -

ARE

BRAND LIABILITIES?

Brand Awareness Reputation Legacy Customer Dissatisfaction Product or Service Failures Environmental Problems Lawsuits and Boycotts

BRANDING - BENEFITS CONSUMERS: -

FOR

POTENTIAL

Ethical

BRAND ELEMENTS:

Identification Simplifier Guarantee Badge Continuity Hedonistic

IDENTIFYING

-

Brand names Slogans Characters Symbols Logos URL

POINTS-OF-DIFFERENCE

AND

POINTS-OF-PARITY

1. Points-of-Difference (PODs) - attributes or benefits that consumers strongly associate with a brand a. Desirable to consumer – relevant to them b. Deliverable by the company – company have resources and possibility c. Differentiating from competitors – superior to relevant competitors 2. Points-of-Parity (POPs) – attributes that are not unique to the brand, but shared with other brands a. Category – represent necessary conditions for brand choice b. Correlational – negative associations that arise from positive (e.g. it’s cheap so it’s bad) c. Competitive – associations designed to overcome perceived weaknesses of the brand in light of competitors’ points-of-difference

OWN-BRAND BENEFITS RETAILER:

FOR

1. Higher margins a. 5-

10% better margins b. Higher sales through “trading-off” with big brands c. Tighter stock control d. More control over pricing e. Increased bargaining power – easier to switch suppliers f. Breaks down manufacturer hold 2. Competitive advantage 6

a. Means of differentiation b. Loyalty to store rather than manufacturer c. Allows more retailer-led

innovation d. More control over product specs/quality e. Lower prices – more consumers variety 3. Store Image/Loyalty a. Good value enhances store image b. Retailer advertising helps store and brand

7

8

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c. Own-labelled carries retailer name into home

BRAND EXTENSIONS: 1. Advantages: a. Improved odds of success b. Development of positive consumer expectations c. Access to retailer support d. Leverage of current brand awareness e. Economies of scale advertising, packaging, distribution 2. Disadvantages: a. Dilution of brand name b. Risk to brand integrity c. Risk of harm to parent brand d. Cannibalization of parent brand e. Lost opportunity to create new brand

BRAND RESONANCE PYRAMID

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