Examining The Marketing Mix LECTURE WEEK 3 Examining The Marketing Mix

Chapter questions What marketing strategies are appropriate at each stage of the product life cycle? What are the implications of market evolution for marketing strategies? What are the characteristics of market products and how do marketers classify products?

Chapter questions (continued) How can companies differentiate products and manage its product mix and product lines? How can companies use packaging, labelling, warranties, and guarantees as marketing tools?

Lessons from product life cycles Products (market offerings) have a limited life. Sales pass through distinct stages, each posing different challenges, opportunities and problems to the seller. Profits rise and fall at different stages of the product life cycle. Products require different marketing, financial, manufacturing, purchasing and human resource strategies at each stage. View this video clip about the product life cycle: www.youtube.com/watch?v=CRfjJ9yOyp0

Long-range product life cycle Figure 14.1 Long range product market expansion strategy (P1 product 1; M1 market 1)

Growth-slump-maturity pattern Figure 14.2 Common product life-cycle patterns

Cycle-recycle pattern Figure 14.2 Common product life-cycle patterns (continued)

Scalloped pattern Figure 14.2 Common product life-cycle patterns (continued)

Style-shaped PLC Figure 14.3 (a) Style, (b) fashion and (c) fad life cycles

Fashion-shaped PLC Figure 14.3 (a) Style, (b) fashion and (c) fad life cycles (continued)

Fad-shaped PLC Figure 14.3 (a) Style, (b) fashion and (c) fad life cycles (continued)

Why be first in a market? Industrial age environment Natural monopolies Bias toward winners In this video: Coca-Cola’s European Market Director argues his company’s case for fast new product development. www.youtube.com/watch?v=HvMP1OV4qac

Long-range product market Figure 14.4 Long-range product market expansion strategy (pi = product i; mj = market j)

Strategies to sustain rapid market growth Improve product quality and add new product features and improved styling. Add new models, accessory items and personalising options. Enter new market segments. Increases its distribution coverage and enters new distribution channels. Shifts from product-awareness advertising to product-preference advertising. Lowers prices to attract the next layer of price- sensitive buyers.

Phase in the maturity stage of the PLC Growth maturity Stable maturity Decaying maturity

Ways to increase sales volume Table 14.1 Alternative ways to increase sales volume

Product modifications possible Quality Feature Style

Marketing programme modifications Prices Distribution Advertising Sales Personal selling Services

Design options for emerging markets Design the new product to meet the preferences of one of the corners of the market – a single niche strategy. Launch two or more products simultaneously to capture two or more parts of the market – a multiple-niche strategy. Design the new product for the middle of the market – a mass-market strategy.

Market fragmentation Figure 14.5 Market fragmentation and market consolidation strategies

Market consolidation Figure 14.5 Market fragmentation and market consolidation strategies (continued)

What is a product? A product is anything that can be offered to a market to satisfy a want or need, including physical goods, services, experiences, events, persons, places, properties, organisations, information and ideas.

Figure 14.6 Components of the market offering

Figure 14.7 Five product levels

Product classification schemes Durability Tangibility Use

Durability and tangibility Nondurable goods Durable goods Services

Consumer goods classification Convenience Shopping Specialty Unsought

Industrial goods classification Materials and parts Capital items Supplies/ business services

Product differentiation Form Features Customisation Performance Conformance Durability Reliability Repairability Style

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

The product hierarchy Item Product type Product line Product class Product family Need family

Product systems and mixes Product mix Product assortment Depth Length Width Consistency

Product systems and mixes (continued) Product mix Product assortment Depth Length Width Consistency

Product line analysis Core product Staples Specialties Convenience items

Figure 14.8 Product item contributions to a product line’s total sales and profits

Product map Figure 14.9 Product map for a paper product line Source: B. P. Shapiro (2003) Industrial product policy: managing the existing product line, Cambridge, MA: Marketing Science Institute (Report No. 77-110). Copyright © 2003. Reproduced with permission from Marketing Science Institute and Benson P. Shapiro

Line stretching Down-market stretch Up-market stretch Two-way stretch

Pruning Pruning weak brands can strengthen the remaining brands in the line Pruning slow-selling brands from product lines often benefits the brands that are left, such as Unilever’s global bestsellers including Lipton worldwide or Persil in the United Kingdom Source: Martin Meissner/AP Wide World Photos

Product-mix pricing Product-line pricing Optional-feature pricing Captive-product pricing Two-part pricing By-product pricing Product-bundling pricing

What is the 5th P? Packaging, sometimes called the 5th P, is all the activities of designing and producing the container for a product. Packaging must protect goods effectively be attractive to consumers and look good. View this fun video clip to appreciate the important role of packaging: www.youtube.com/watch?v=jm19iXvxl6g&feature=related

Factors contributing to the emphasis on packaging Self-service Consumer affluence Company/brand image Innovation opportunity

Packaging objectives Identify the brand Convey descriptive and persuasive information Facilitate product transportation and protection Assist at-home storage Aid product consumption

McDonald’s environmentally friendly packaging McDonald’s burger and fries cardboard packaging is environmentally friendly. Source: mediablitzimages UK Ltd/Alamy

Functions of labels Identifies Grades Describes Promotes

Recap: can you explain? What marketing strategies are appropriate at each stage of the product life cycle? What are the implications of market evolution for marketing strategies? What are the characteristics of market products and how do marketers classify products?

Recap: can you explain? (continued) How can companies differentiate products and manage its product mix and product lines? How can companies use packaging, labelling, warranties, and guarantees as marketing tools?