1. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Principles of Marketing Theocharis Katranis Lecture 5 Spring Semester 2013 1

2. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 2 Today’s Lecture 1. Define Product and Product Classification 2. Define and Discuss Consumer and industrial Products 3. Discuss branding, Packaging, Labeling, and product Support Services. 4. Discuss the Product mix Decisions. 5. Discuss the New Product Development Strategy and Process as well as the Product Life-cycle Strategies.

3. Principles of MarketingTheocharis Katranis, MBA,Spring Semester 2013 What is a Product? Lecture 5 3 A Product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need.

4. Principles of MarketingTheocharis Katranis, MBA,Spring Semester 2013 Lecture 5 4 What is a Service? A Service is any activity or benefit that one party can offer to another that is essentially Intangible and does not result in the ownership of anything.

5. Principles of MarketingTheocharis Katranis, MBA,Spring Semester 2013 The Three Levels of Product and Services Lecture 5 5 1. Core Customer Value Level 2. An Actual Product Level 3. Augmented Product Level

6. Principles of MarketingTheocharis Katranis, MBA,Spring Semester 2013 Lecture 5 6 The Three Levels of Product and Services 1. Core Customer Value Level The Product Planners need to answer the Question “What is the buyer really buying?” Product Planners must first define the core, problem-solving benefits or services that consumers seek.

7. Principles of MarketingTheocharis Katranis, MBA,Spring Semester 2013 Lecture 5 7 Product Planners must turn the core benefit into an actual product. The Three Levels of Product and Services 2. An Actual Product Level Product Planners need to develop product an services features, design, a quality level, a brand name and packaging.

8. Principles of MarketingTheocharis Katranis, MBA,Spring Semester 2013 Lecture 5 8 The Three Levels of Product and Services 3. Augmented Product Level Product Planners must build an augmented product around the core benefit and actual product by offering additional consumer services and benefits.

9. Principles of MarketingTheocharis Katranis, MBA,Spring Semester 2013 Lecture 5 9 The Three Levels of Product and Services Core Customer Value Augmented Product Actual Product Brand Name Quality Lever Packaging Design Features After-sale Service Delivery and Credit Warranty Product Support

10. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 10 Product and Services Classifications 1. Consumer Products 2. Industrial Products

11. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 11 Consumer Product It is a Product bought by final consumer for personal consumption. Definition:

12. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 12 1. Convenience Products Consumer Products - Classifications 2. Shopping Products 3. Specialty Products 4. Unsought Products

13. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 13 It is a consumer product that customers usually buy frequently, immediately and with a minimum of comparison and buying effort. Consumer Products - Classifications 1. Convenience Products

14. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 14 Consumer Products - Classifications 2. Shopping Products It is a consumer product that the customer, in the process of selection and purchase, usually compares on such bases as suitability, quality, price, and style.

15. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 15 Consumer Products - Classifications 3. Specialty Products It is a consumer product with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort.

16. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 16 Consumer Products - Classifications 4. Unsought Products It is a consumer product that the consumer either does not know about or knows about but does not normally think of buying.

17. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 17 Consumer Products - Classifications Price Distribution Customer Buying Behavior Promotion Examples Marketing Considerations

18. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 18 Definition: Industrial Products It is a Product bought by individuals and organizations for further processing or for use in conducting a business.

19. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 19 The Three Groups of Industrial Products 1. Material and Parts 2. Capital Items 3. Supplies and Services

20. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 20 Materials and Parts group include raw materials (farm products like wheat, cotton) and manufactured raw materials (like iron, cement, wires) and parts (like small motors, tires). The Three Groups of Industrial Products 1. Material and Parts

21. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 21 Capital Items are Industrial products that aid in the buyer’s production or operations including installations (like factories, offices, generators) and accessory equipment (like hand tools, lift trucks, computers, fax machines). The Three Groups of Industrial Products 2. Capital Items

22. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 22 Supplies include operating supplies (like lubricants, pencils, paper) and repair and maintenance items (like paint, nails, brooms). The Three Groups of Industrial Products 3. Supplies and Services Business Services include maintenance and repair services (like window cleaning, computer repair) and business advisory services (legal, Management consulting, advertising)

23. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 23 Individual Product and Service Decisions Product Attributes BrandingPackaging Labeling Product Support Services Individual Product Decisions

24. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 1. Product Quality Lecture 5 24 2. Product Features Product and Service Attributes 3. Product Life and Design

25. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 25 It is the characteristics of a product or service that bear on its ability to satisfy stated or implied customer needs. 1. Product Quality Definition

26. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 26 Definition: 2. Product Features The company decides to add more features to a product in order to differentiate company’s product from competitors products.

27. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 27 Product Designers should think less about product attributes and technical specifications and more about how customers will use and benefit from the product. 3. Product Life and Design

28. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 28 Definition : Branding A Brand is a name, term, sign, symbol or design or a combination of these, that identifies the maker or seller of a product or service.

29. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 29 Definition: It is the activities of designing and producing the container or wrapper for a product. Packaging

30. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 30 Labeling Definition: Labels range from simple tags attached to products to complex graphics that are part of the package.

31. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 31 Product Support Services Nowadays, many companies include support services to their total offerings, because companies realized that … It is the decision of a company to fix any problem related to the company’s products i.e. to solve successfully a complaint by a customer. It is important for the customer and helps him to build trust, positive relationship and confidence with the company.

32. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Product Line Decisions Definition Lecture 5 32 It is a group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges. … I.e. BMW car series / HP printers and cartridges

33. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 33 It is the number of items in the Product Line. Product Line Decisions 1. Product Line Length The line is too short if the managers can increase profits by adding items. The line is too long if the managers can increase profits by dropping items.

34. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 34 Product Line Decisions Reasons for Adding Items to the product line 1. Reaching for Extra Profits 2. Satisfying Dealers 3. Using Excess Capacity 4. Plugging holes to keep out competitors

35. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 35 Product Line Decisions Reasons for Dropping Items from the product line. 1. Large decrease in Sales of a product, meaning lower profits for the company. 3. Increase of the Production Costs mainly to the increase in the prices of Raw Materials. 2. Too many competitors in one Market Segment.

36. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 36 Product Mix or Product Portfolio Decisions Definition A Product Mix consists of all the Product Lines and Items that a particular seller offers for sale. i.e. Sony Electronics, Sony Computer Entertainment, Sony Pictures Entertainment and Sony Financial Services.

37. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 37 The FOUR important Dimensions Product Mix or Product Portfolio Decisions 1. Width 2. Length 4. Consistency 3. Depth

38. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 38 The FOUR important Dimensions Product Mix or Product Portfolio Decisions 1. Width It refers to the number of different product lines the company carries.

39. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 39 The FOUR important Dimensions Product Mix or Product Portfolio Decisions 2. Length It refers to the total number of items the company carries within its corder line.

40. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 40 The FOUR important Dimensions Product Mix or Product Portfolio Decisions 3. Depth It refers to the number of versions offered to each product in the line.

41. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 41 The FOUR important Dimensions Product Mix or Product Portfolio Decisions 4. Consistency It refers to how closely related the various product lines are in end use, production requirements, distribution channels.

42. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 42 International Product Decisions Companies must pay special attention when making Product decisions in foreign markets. Companies should collect and analyze all possible and available information and then to decide their actions.

43. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 43 Designing Product: New Product Development and Product Life-Cycle Strategies New-product development is the development of original products, product improvements, product modifications, and new brands through the firm’s own product-development efforts.

44. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 44 1. Overestimation of market size 2. Poor Design 4. Launched at the wrong time 3. Incorrectly Positioned Reasons for Failure of New Products 5. Priced too high 6. Poorly Advertised

45. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 45 The EIGHT steps of the process New Product Development Process 3. Concept Development and Testing 4. Marketing Strategy Development 2. Idea Screening 1. Idea Generation 5. Business Analysis 6. Product Development 7. Test Marketing 8. Commercialisation

46. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 46 1. Internal Data Sources Ideas within the company i.e. Executives, Scientist, Sales people, Manufacturing Staff. Ideas from Distributors and Suppliers. 2. External Data Sources New Product Development – Idea Sources

47. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 47 1. Idea Generation It is the systematic search for New-product ideas. The EIGHT steps - Definitions

48. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 48 It is the screening of New-product ideas in order to spot good ideas and drop poor ones as soon as possible. The EIGHT steps - Definitions 2. Idea Screening

49. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 49 Concept Development is a detailed version of the new-product idea stated in meaningful consumer terms. The EIGHT steps - Definitions 3. Concept Development and Testing Concept Testing is the testing of new-products concepts with a group of targets consumers to find out if the concepts have strong consumer appeal.

50. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 50 It is the designing of an initial marketing strategy for a new product based on the product concept. The EIGHT steps - Definitions 4. Marketing Strategy Development

51. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 51 It is the review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the company’s objectives. The EIGHT steps - Definitions 5. Business Analysis

52. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 52 It is the development of a product concept into a physical product in order to ensure that the product idea can be turned into a workable market offering. The EIGHT steps - Definitions 6. Product Development

53. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 53 It is the stage of a new-product development in which the product and marketing program are tested in realistic market settings. The EIGHT steps - Definitions 7. Test Marketing

54. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 54 It is the introduction of a new product into the market. The EIGHT steps - Definitions 8. Commercialisation

55. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 55 It is the course of a product’s sales and profits over its lifetime. Product Life-Cycles Strategies Definition of a Product Life-Cycle

56. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 56 1. Product Development. The FIVE stages of a Product Life-Cycle Product Life-Cycles Strategies 2. Introduction 3. Growth 4. Maturity 5. Decline

57. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 57 It begins when the company finds and develops a new-product idea. Product Life-Cycles Strategies 1. Product Development. During this period, sales are zero and the company’s investments costs mount.

58. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 58 It is a period of slow sales growth as the product is introduced in the market. Product Life-Cycles Strategies 2. Introduction Profits are nonexistent in this stage because of the heavy expenses of product introduction.

59. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 59 It is a period of rapid market acceptance and increasing profits. Product Life-Cycles Strategies 3. Growth

60. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 60 It is a period of slowdown in sales growth because the product has achieved acceptance by most potential buyers. Product Life-Cycles Strategies 4. Maturity Profits level off or decline because of increased marketing outlays to defend the product against competition.

61. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 61 It is a period when sales fall off and profits drop. Product Life-Cycles Strategies 5. Decline

62. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 5 62

63. Lecture 5 Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Summary - Lecture 5 1. Defined Product and Product Classification 2. Defined and Discussed Consumer and industrial Products 3. Discussed branding, Packaging, Labelling, and product Support Services. 4. Discussed the Product mix Decisions. 5. Discussed the New Product Development Strategy and Process as well as the Product Life-cycle Strategies.

64. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Chapters 8 and 9 Lecture 5 64 END of Lecture 5 Thank you for your attention