Marketing Fundamentals 3.10.07

The services marketing mix Figure 13.2

Product definition A product is a physical good, service, idea, person or place that is capable of offering tangible and intangible attributes that individuals or organisations regard as so necessary, worthwhile, or satisfying that they are prepared to exchange money, patronage or some other unit of value in order to acquire it.

The anatomy of a product Figure 6.1

Branding An important element of the tangible product. In consumer markets can link items within a product line. Can help in the development of a new product. Creates and communicates a three dimensional character of a product that is not easily duplicated by competitors.

Branding terms Brand name - word or illustration that distinguishes one seller’s goods from another. Trade name - the legal name of an organisation, which may or may not relate directly to the branding of its products. Trade mark - brand name, symbol, or logo which is registered and protected for the owner’s sole use. Brand mark - the element of the visual brand identity that does not consist of words but design and symbols.

Benefits of branding Figure 6.3

Packaging Serves a functional purpose and a means of promotional communication about the product or brand. A container or wrapping in which a product is offered for sale. Effective and thoughtful packaging can increase sales.

The product lifecycle (PLC) Products need managing throughout their working lives. This requires deciding: What products should be created. The best time to launch them and introduce them to the public. How to capitalise on a product’s strengths and iron out any weaknesses. When an older product is past its prime and needs modification or withdrawal from the market.

The product lifecycle (PLC) Figure 6.5

Relevance of price (1 of 2) Generates revenues that allow organisations to create and retain customers at a profit. Can be used as a communicator, a bargaining tool and competitive weapon. Can be an important indicator of the positioning of a product/service. Customers equate price with the value attached to the exchange.

Relevance of price (2 of 2) Customers often equate price with quality. Customers often use price to compare competing products. For some products price can be the primary customer criterion for choice.

Factors influencing customers’ price assessments Figure 7.1

Price: the seller’s perspective A distinctive and highly visible element of the marketing mix. Must give out signals consistent with the other elements of the marketing mix. Generator of revenue. Provides the basis of recovering costs and creating profit. Pricing requires knowledge and understanding of the customer and external environment.

External influences on price Figure 7.2

Internal influences on the pricing decision Figure 7.6

Defining marketing channels A marketing channel is a structure that links a group of individuals or organisations through which products/services are made available to the consumer or industrial user. The structure of channels can vary depending on the type of market, the needs of the end consumer, and the type of product.

Channel structures Channel structure = the route selected to move a product to market through the different intermediaries.

Channel structures for consumer goods Figure 8.1

Intermediaries Play an important role in increasing efficiency and reducing costs. There are several different types of intermediary who come together to create different kinds of distribution channels between manufacturer and consumer. Each intermediary adds a margin to the price of the goods handled. Different functions are performed by the different intermediaries. Not all intermediaries necessarily take legal title or physical possession of the goods.

Role of intermediaries (1 of 2) Increase efficiency. Reduce costs of individual transactions. Provide value added services.

Types of intermediary Wholesalers - do not normally deal with the end consumer instead deal with other intermediaries, usually retailers. Exception to this is in the B2B market. Wholesalers do take legal title to the goods. Retailers - sell direct to the consumer and may purchase direct from the manufacturer or wholesaler.

Types of intermediary cont. Distributors and dealers - add value through services associated with stocking or selling inventory, credit and after sales service. Franchisees hold contracts to supply and market a product/service to the blueprint of the franchisor. Agents and brokers have legal authority to act on behalf of the manufacturer without taking legal title to the goods or handling the products directly.

Channel strategy Channel structure - this should reflect the market and product characteristics (market coverage, value, quantity sold, margin available, etc.). Market coverage - considerations here include who the end customer is, demand patterns, frequency of ordering, degree of comparison shopping, associated services required, etc.

Factors influencing channel strategy Figure 8.6