Ass. Prof. Dr. Özgür KÖKALAN İstanbul Sabahattin Zaim University Marketing II Ass. Prof. Dr. Özgür KÖKALAN İstanbul Sabahattin Zaim University

Define product and list the elements of a product strategy Describe the classifications of consumer goods, business goods, and services Distinguish between the product mix and product lines Describe the four stages of the product life cycle Chapter Objectives

Marketing Mix A marketing mix that blends the four important marketing elements product, pricing, promotion and distribution to fit the needs and preferences of the target market. It is also called as 4p’s Product Price Place (Distribution) Promotion

WHAT IS A PRODUCT? Product: bundle of physical, service, and symbolic attributes designed to enhance buyers’ want satisfaction Included in this broad definition are considerations of package design, brand names, warranties, and product image © PhotoDisc

Services Are Products, Too Service: intangible task that satisfies consumer or business user needs Most products combine both tangible goods and intangible services Someone who purchases a new set of tires may receive services such as mounting, balancing, and periodic rotation as part of the package © PhotoDisc

CLASSIFYING CONSUMER AND BUSINESS PRODUCTS Products can be broadly categorized as either consumer products or business products depending on who purchases them for what reasons © PhotoDisc

Categories of Consumer Products Marketers seeking to classify consumer products ask several questions regarding purchases: Who? What? When? Where? How? The answers place a purchase in one of three consumer products categories Convenience Shopping Specialty Unsought

Categories of Consumer Products Convenience Convenience products: items that consumers purchase frequently, immediately, and with little effort Examples include newspapers, chewing gum, milk, and snack foods

Categories of Consumer Products Convenience Shopping products: typically purchased only after comparisons between products in competing stores to evaluate such characteristics as price, quality, style, and color Example: furniture, almost all textile products Shopping

Categories of Consumer Products Convenience Specialty products: items that purchasers are willing to make special efforts to obtain Shopping Specialty

Categories of Consumer Products Convenience Often have a well-known brand names, are expensive, and distributed through exclusive dealers Examples: Louis Vuitton luggage and Porsche autos Shopping Specialty

Categories of Consumer Products Convenience You would not generally prefer buying Example; life insurance, cemetery plots etc… Shopping Specialty Unsought

Figure 14.2 Advertising a Specialty Product Interesting Site

Marketing Strategy Implications for Consumer and Business Products Classifying products is a useful tool in developing marketing strategies After classifying an item as a shopping product, marketers gain an immediate idea of its promotion, pricing, and distribution needs

Figure 14.3 Marketing Impacts of Consumer Product Classifications

THE PRODUCT LIFE CYCLE Product Life Cycle: four basic stages through which a successful product progresses – introduction, growth, maturity, and decline

The Product Life Cycle Introduction Firm attempts to build demand for its new offering Promotional campaigns concentrate on features, uses, and benefits Financial losses are common due to low initial sales and heavy promotional costs

The Product Life Cycle Sales climb quickly Introduction Growth Sales climb quickly Firm usually begins to realize profits due to higher sales volume Marketing efforts continue to focus on establishing the product in the market and building brand awareness Later in the growth stage, the strategy shifts to building loyalty Additional spending on product adaptation, promotion and distribution, along with lower prices may be necessary

The Product Life Cycle Introduction Growth Maturity Industry sales continue to grow, but eventually reach a plateau Companies emphasize market segmentation – often resulting in an oversupply of the product Competition intensifies, and profits begin to decline Some firms reduce prices and/or spend heavily on promotion

The Product Life Cycle Introduction Growth Maturity Decline Innovations or shifts in consumer preferences cause an absolute decline in industry sales Industry as a whole does not generate profits, though some firms can prosper Prices tend to hold steady if a loyal market segment continues to buy the product If the firm is selling to consumers who are loyal, they can skip most of the usual advertising

Marketing Strategies for Stages in the Product Life Cycle Product life cycle concept is a valuable management tool for designing a marketing strategy at different life-cycle stages

PRODUCT LINES AND THE PRODUCT MIX Product line: group of related products that are physically similar or are intended for a similar market Product mix: the assortment of product lines and individual goods and services that a firm offers to consumers and business users

PRODUCT IDENTIFICATION Brand: name, term, sign, symbol, design, or some combination thereof that identifies the products of a firm Brand name: the part of a brand consisting of words or letters that form a name that identifies and distinguishes an offering from those of competitors Trademark: brand with legal protection against another company’s use (can include pictorial designs, slogans, packaging elements, and product features) ™ ™ ™

Generic Products Family Brands Individual Brands Brands Categories Manufacturer's Brands Some firms market their goods and services without branding them. Such items are called generic products or generic brands They are characterized by plain packaging, minimal labeling, and little or no advertising Private Brands

Generic Products Family Brands Individual Brands Brands Categories Manufacturer's Brands Family Brand: single brand name that identifies several related products When a firm that practices family branding introduces a new product, the familiar brand name is recognized by all Private Brands

Generic Products Family Brands Individual Brands Brands Categories Manufacturer's Brands Individual brands: giving a different brand name to each product within a product line Individual branding builds competition within a firm and enables the company to increase overall sales Private Brands

Generic Products Family Brands Individual Brands Brands Categories Manufacturer's Brands Manufacturer’s (or national) brands: brand offered and promoted by a manufacturer or producer Examples include Chanel, Swatch, Bic, Crest, and Dr. Pepper Private Brands

Generic Products Family Brands Individual Brands Brands Categories Manufacturer's Brands Private (or store) brand: identifies a product that is not linked to the manufacturer, but instead carries the label of a retailer or wholesaler Retailers define their own brands to maintain control over the images, quality levels, and prices of products they sell Private Brands

Characteristics of an Effective Brand Name Should communicate appropriate product images Must be easy to pronounce, recognize, and remember Best if Short Should Attract Attention © PhotoDisc

BUILDING BRAND LOYALTY AND BRAND EQUITY Brand loyalty: measured in three stages– recognition, preference, and insistence Brand recognition: brand acceptance strong enough that the consumer is aware of a brand, but not enough to cause a preference over competing brands © PhotoDisc

BUILDING BRAND LOYALTY AND BRAND EQUITY Brand preference: occurs when a consumer chooses one firm’s brand, when it is available, over a competitors Brand insistence: when the consumer will accept no substitute for a preferred brand Product has achieved a monopoly position with its consumers © PhotoDisc

Brand Equity Brand Equity: added value that a certain brand name gives to a product High brand equity offers financial advantages to a firm Product commands a comparatively large market share Often reduces price sensitivity Most Valuable Brands include Coca-Cola, Microsoft Windows, IBM, Intel, Nokia, GE, Ford, Disney, McDonald’s, and AT&T © PhotoDisc

PACKAGES AND LABELS Packaging helps to achieve several goals: Protects against damage, spoilage, and pilferage Assists in marketing the product Cost-effectiveness © PhotoDisc

PACKAGES AND LABELS Label: descriptive part of a product’s package that lists the brand name or symbol, name and address of the manufacturer or distributor, product composition and size, nutritional information for food products, and recommended uses © PhotoDisc

PACKAGES AND LABELS Effective labeling serves several functions: Attracts buyer’s attention Describes package contents Conveys product benefits Provides information on warranties, warnings, and other consumer matters Gives and indication of price, value, and uses © PhotoDisc