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Definition - A good or service that serves to satisfo the needs or wants of customers.

Classifi.catign qf products

Product Line--) Product Mix -) Product Range

UNIT 4.3 Product

\ '1.Consumer Products '.

Fost Maving Goods

Cansumer Perishables

Consumer Durobles

Specia ty Ca nsu m e r P rod u cts

Producer Prducts

lndustrialGoods

Fixed Assets

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Itaqes of. Npur Fr.oduct Developmpnt

Market Research -) Product Development and testing -) Feasibility Study -) Launch

Market ResearchProduct ExtensionResearch and Derrelopment'Me too' Developments

1.

2.3.

4.

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Definitio+ - PLC shows the ffiele*t W tfut a prtodrfr b filsdy to go dror,rgh from itsinitial design and iaruttch toirs &d6tp.

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Ettle Nqative

Growth Hig[ {Persrlas E} Yes, increasing PositiveMaturity Irss{mainty

remfindirulHigh, but littlegrotrdl

Positiv

Saturation {h}Srrstpointl

ErtenslorSartegi,es Hith, sbHe Posilire

Decline little, if any Ye+ butHling Positive, but fafiinc

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Extension Strateeisfor Prodg.f Ufu qde

7. Prie Redudion2. Redeslgning3. Repackoging4. New Mlarkefs5. Promotian

PqfiEition -The range of products owned by o business.

Using The Boston Matfix for PPA

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Braqdine

Definition * o form of differentiating a firm's prductfrom those of itscompetitors

Role_and advant?ges of branding

Role .\ AdnantageAs a leaal instrument Unique and recognizable name and

image

As o o looo Provides cost advantages

As o risk reducer Betterchance at survival, encouragescustomer loyalty

As an imooe enhancer Allows businesses to charge apremium price

As a soles oen?fator Reduces price elasticity of demand

ACvaqtage oJ Brandinqover Product

1. lntangibility2. Uniqueness3. Timelessness.

\*t

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B,rqnd Na.mSS

Types of Brand Names Examples

9oleed gra,nds Haagen Dazs

Bona fide names',.\ q.\r.\

Apple, British Petroleum

Asorrms KFg CNN, BMW

Ilumbers PlayStation 3, Nike 90, 7-Eleven

Perconpl Namef Ford Motors, Walt Disney, Michael Dell.

Plpce naqne,s American Express, The WashingtonPost.

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Brand Lovaltv

Defi4ition - Brand loyalty is when custarners buy the same brand of productrepeatedly

\

AWo,ntaaes of Bm4 Lglgittv.\1. Higher Market Share2. Ability to charge a premium3. Demand becomes price inelastic4. Fosters brandextension strategies5. Higher barriers to entry

Type Characteristics Examples

Family Branding Marketing a range of products under asingle brand name

Hewlett-Packerd,

Product Branding MarkeUng separate products under a

range as separate identities

Mercedes and

Smart carsCompanyBranding

Using the business' narne as the brandname

McDonalds

Own label brand Created and owned by the distributors Carrefour

Manufacturerbrand

Created and owned bythe producers Microsoft

IH

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Tvoes of Prornotion

{bove the line.through the usage of mass media.television-radio

cinema

-newspaper'magaeines.outdoor advertisirqg billboards, posters

rdl prornotion'techniques used to stimulate demand.above the line methods

Belowthe line-through the usage of non-media-branding-slogans-logos

-packagrng-word-of-mouthdirect marketingdirect mail-sales promotion-point-of-sales-publicity-sponsorship

Ptrsh promoti,on-techniques that rely on intermediaries-belowthe line method

\

Above the llne / Pull promotion Bebuu ttpf,ne /PustrDisadvantage Advantage Disadvantage

-can reach huge number of:ustomers-more noticeable & appealing

-do not meet the rightsegments or potentialcustorners-ignored by customers-relatively costly

-has direct control overadvertisements-relatively cheap

-reh on intermediaries

rromotional mix-set of promotional methods that can effectively comrnunicate the benefits of the products-raise awareness through attention; appealing promotional methods.stimulate aru* interest customer through interest; interesting adsenerate a desire or feeling through desire; free samples-encourage the customer through action; discount vouchers

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4.6 ?LACE

Channels of Distribution

Long Channel Shart Chonnel

Producer

Wholesaler

Retailer

Customer: \o Consurner (wentually consume)o lndustrial conzumer

lntermediaryFirm

r Between rwo endsofthe channel

r Involved in sellingon the producttothe next

e Break bulk -simplifies & reducestltelines ofcommunication,

transportation

+

+

lntermediaryfirms

Whatthrydo,.. Explanation

Agent lAct on behalf of other firm ; common inimport exports

o Commission agento Secure orders from customerso Do not become ownerofthe goods. Stocklist agento Carries a stock of manufacturers'

products

Wholesalers Buy goods for resale to someone otherthaneventual customers-

o Provide storage facilities - reduce needto hold large stock

. lmprove manufacturer's cash flow{taking goods off their ands)

o Hold sme of producers' marketine riskRetailers Buy goods from wholesaler/dirertly from

manufacturer for sale

to thepublic

in shops/ other retailoutlets

Provides:Variety of goods, convenient service,

information and advice to consumers, deliveryof soods

Channel ChoiceFactor! Short Channel fDirectl tom ChannelClass of produd lndustrial ConsumerNumber of customers Low HiehControl towards product lmportant UnimportantProduct characteristics :Bulky, expensive, custorn made,hieh unit value. oerishaHe

v x

Purchasing pattem Hish Low

Tvpe : Good/service Service Goods

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lnlur+i,tttzI Place product in many retail outleBf Does not require explanationI High ma*et exposure & sales revenueI Conveniencegoods:candy,drinks

Sdtt{wez

- I Preferred group of rctailer in aa area\.I Custorner*epect after-sah seryice

r Market is sffkier* to warrant hi8lrer iaBr$r,e dlstrihrtionI E-g: Fumiture, &ths

Erd*ti,tru

I ExclusiveproductI Only 1 retail outlet in a single geographkal areaI Eetter service, pay more attention

I Rolex, Ferrari

Disribufion sfategr:

tx

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4.6 PI.ACEChannels of Distribution

Long Chonnel Slnrt Chdnnel

Producer

Wholesaler

Retailer

Customer: .\r Co*sumer (eventually consume)o lndustrial consumer

lntermediaryFirm

o Between rwo endsofthe channel

o Involved in sellingonthe producttothe next

o Breakbulk-simplifies & reducesthe lines ofcommunication,transporbtion

t +

lntennediaryfirnrs

Whettheydo.- Explanation

Agent *Ast on behalf of other firm ; cornmon inimportelportr

o Commission agento Secure orders from customerso llo not becorne ownerofthe goods

o Stortlistagento Carries a siock of manufacturers'prodr.6

Wholesalers Buy goods for resale to someone o*trer tfigreventual customers-

o Prwide storqe facitities - reduce needto hdd larBe stok

o lmprsve manufacture/s cash flow{tating goods orff their ands)

o Hold sme of producers' marketinc riskRetailers Buy goo& frun rftolesdsldiredy frsn

rnanufacturer for s.{eto the puHlc in drops/ ds rtu{l qdets

Provides:Varie'fy of goodq conyenient service,informationand advice to consumers, deliveryofeoods

Channd ClrciceFactors SlprtGhampl {Direct} tong OrannelChss of product lndustrial ConsumerNumberof customers Low HighControl towards aroduct lmportant UnimportantProduct characteristics :Bulky, expen$vq a$torn made,high unit valug perishable

'l x

Purchasing pattern High LowIype : Good/service Service Goods

r37

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Mvs

f Pbce productin manyrcbil oudeBI Does not reSrire explanation* High marketexpcrrre&sahs revenue* Convenisagoods:erdy,drinb

Scredfues

f Preferredgrurpof r*InandEr* Ctstsrssryect*e*seryioe* fffieaissnfficiectbrarr:rrthfuhrinten**=dlstrihnion

\* Eg:fun*Ere,dothes

Exctdra:

* Exdrsive productI &rly 1reail outlet in a single geographical area* Better service, pay more attention; Rolex, Ferrari

Distribution stlategn

e$

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4.7 INTERNATIONAI{ MARKETING

Definition

lnternational is the marketing of a firm's products in foreign countries.

Hgly a fifm sains entry into intgrnalipnal parkets

Method \ NotesExpofting

to an overseas buyer.

business (c.ost and risk)Direct Iavestment

distribution facilities in foreigncountries

Wider distibution channel but highcost of inveshent

E-commerce Trading viathe intemet

[,ow costs and riskJoint Ventures

shared business project to form aseparate busiuess.

companies ftom the target country togain access to the foreign market.

Strategic Allianceforrr a separat legal identity.

Franehisingits name in return for a fee and share ofthe profits while marketing its productoverseas from those \ilho us thelicensins fr,om the oarent comDanv.

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Mergerssingle organization.

companies to gain access to

intemational markets.Acq uisitions (takeovers)by purchasing majority stake in thetarget company.

international markets.

Benefits of International M,arketing

. Wider customer base

. Econ'omies of scale-.\

. Increased brand recognition

. Spread riskso Extend the product life cycle. Gain more pro{it

#*ta

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Problems in Entering Intefnational Markets.

Issue Notes

Cultural Issues

'ir.\ \.\

- Thecultrral exportsfromonecountry may not be sitable withanother as different cormtries hasdifferent local preferences

- The dtfference in language mayinterfere with marketing

- Differentethics incultursmaypose different rules forthe firm tofollow.

- Business etiquette is also ditrerentdepending on the cormE5r, ftmsmust be aware of it to please theforeein coilsumers

Legal Issues - Copyright andpatent legislationmust be dhered to (nemes,slogans, etc)

- kicingdecisions{regulationofma*tpo\rer)- Tradepracticesfr,om&e

goverru[ent

- Comumerprotection laws thatditrer from cormtry to country(labelling, informatiorqadvertisins)

Political Issues - Quotas, Tariffs, Embargoes,Administrative Barriers andSubsidies.

Social and Demographic issues - Different socio-economic anddemographic conditions inoverseas markets mean different

mixesmustbeconsidered

- Pressure groups mustalso beconsidered (e.g. influence ofPETA)

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ECOnOmiC ISSUeS I Degrce of competition- Traosportationcosts- E:rc@srates

I - Ifferdrdes

| - Commmicdimcosts.

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