Unit 2 product decision

Marketing
Management
Thursday, October 1, 2020 1
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Marketing Management
Unit 1 – Marketing Concepts
Unit 4 – Physical Distribution Decision
Unit 2 – Product Decision
Unit 3 – Price Decision
Unit 5 – Promotion Decision
Unit 6 – Consumer Behavior

Meaning & Definition
Nature & Scope of Marketing
Importance of Marketing Management
Marketing orientation / Concepts
Functions of Marketing
 Marketing Mix – 7 P’s
Unit 1 – Marketing Concepts

 Meaning & Definition of Product
 Types of Product / Product Classification
 Product Life Cycle & related Strategies
 Product Mix & related Strategies
 New Product Development & related
Strategies

 Why New product fails
 Branding Functions
 Types of Branding labeling

Marketing Mix
When marketing their products firms need
to create a successful mix of:
•The right PRODUCT
•Sold at the right PRICE
•In the right PLACE
•Using the most suitable PROMOTION

Product
•Design
•Quality
•Range
•Brand Name
•Features
Place
•Distribution
Channels.
•Methods of
Distribution.
•Coverage.
•Location.
Price
•Pricing
practice
•Discounts.
•Commissions.
Promotion
•Advertising.
•Sales
Promotion.
•Salesmanship.
4P’s OF MARKETING MIX

Meaning & Definition
According to C.P. Stephenson:
“Everything the customer gets in
exchange of money”.
8

Meaning & Definition
According to Philip Kotler:
“A product is anything that can be
offered to the market for use or
consumption that might satisfy
customer expectation”.
9

To Conclude
A product is anything that can
be offered to a market that
might satisfy a customers
requirement.
10

Concepts of Product

Concepts of Product
1. Physical Concept:
Which has a physical existence in it. In this
concepts, physical goods have the physical
features like Color, Name, Size etc..
It can be touched , seen and transformed.

Concepts of Product
2. Service Concept:
According to this concept, product can not be
seen and touched. Its can not be owned
and ownership cannot be transferred.
Example: Education, Hair cutting, KSRTC
Service, Accounting etc.

Concepts of Product
3. Augmented Concept:
This concept combines both tangible and
intangible activities. Therefore the services
like warranty, free repair and maintenance etc..
Provided to increase the sales of augmented
products.

Concepts of Product
3. Augmented Concept:
Example:
While purchasing the computer, buyer not only
buys the physical computer but also buys the
free installation, free repair and maintenance.

Classification of Products
16
Consumer
Products
Industrial
Products

Consumer products are Products / Services bought by
the final customers for Personal Consumption
Example: Television, Toothpaste, Soap etc…
17
Industrial products are those purchased for
further production, or for use in conducting a
business.
Example: Raw material, farm products etc

Consumer Products can be further classified into
1. Convenience Goods
2. Shopping Goods
3. Specialty Goods
18

Convenience goods
 Consumer purchase it with least effort
 Low unit prices & frequently purchased
 Not much planning require
 Products of daily consumption
• E.g.: Newspaper, Toothpaste, Soap, Milk etc….
19

• Spend Some Time in Buying These Goods
•Medium unit prices & bought occasionally
• Some planning is require
E.g. Shoe, Dress, Watch etc..
20
Shopping Goods

 Consumer spend considerable time in buying
these goods
 High unit prices & bought less frequently than
shopping goods
 Lot of planning is require
• E.g. Car, House, TV etc..
21
Specialty Goods

Product Life Cycle & related Strategies

Product Life cycle:
23
1.Introduction
2.Growth
3.Maturity
4.Saturation
5.Decline
FIVE stages

Product Life cycle:
25
1. Introduction
FIVE stages
Stage Characteristics
Market
Introduction
Stage
1. Demand has to be created
2. Customers have to be encouraged
to try the product
3. Slow sales volumes to start
4. High production costs
5. Little or No competition
6. Makes No profit this stage

Strategies for Introduction Stage:
26
Rapid
Skimming
Strategy
Launch the product at a
Higher Price &
Higher
Promotional level to
skim the market rapidly.
Large part of the
potential market
is unaware of the
product
Marketer can adopt strategies like

Strategies for Introduction Stage:
27
Slow
Penetration
Strategy
Launch the
product at a
lower price &
at a lower
promotional
level.
Customers are highly
aware of the
product, they are
price sensitive &
there exists some
potential;
competition in the
market.

Product Life cycle:
28
2. Growth
FIVE stages
Growth
1. Public awareness increases
2. Sales volume increases significantly
3. Profitability begins to rise
4. Costs reduced due to economies of scale
5. Competition begins to increase with a few new
players entering the market
6. Increased competition leads to price decreases

Strategies for Growth Stage
29
I. They renovate to aggressive pricing, including price
cuts to attract price sensitive customers.
II. They stress upon the product’s benefits in order to create a
competitive position in the market.
III. They try to improve product quality & add new features &
product available in different sizes, flavors etc…
IV. They may introduce new distribution channels
V. They should look for potential market to market their products.

30
3. Maturity FIVE stages
Maturity
1. Costs are lowered as a result of production
volumes increasing.
2. More competitors entering the market.
3. Prices tend to drop due to the large number of
competing products.
4. Brand differentiation & feature diversification is
emphasized to maintain or increase market
share.
5. Industrial profits go down.

Strategies for Maturity Stage:
31
I. Increase advertising & sales promotion, new packaging.
II. Abandon weaker products & concentrate more
on profitable products.
III. Invest more in R & D to bring about improvements in the
product & Product Line Extensions.

Product Life cycle:
32
4. Saturation FIVE stages
Saturation
1. Point of maximum Sales & Profit.
2. All potential buyers are using the product
3. Consumption achieves a constant rate.
4. Marketers have to fight very hard to Maintained
the Market Share.

Product Life cycle:
33
5. Decline FIVE stages
finally the sales & profits of almost all products & brands tend
to decline. Some products experience a faster rate of decline
while others experience a slower decline rate.
The reason for decline in sales could be
a) Technological advances
b) Increase in competition
c) Shift in consumer’s tastes & preferences etc…

Product Mix & related Strategies
34

Product Mix & related Strategies
35
Set of all product offered for sale by a
company
Product Mix Width
Product Mix Length
Product Mix Depth

Product Mix Decisions
36
Product
Mix
Width
It refers to the number of
different product lines the
company carries
Example: HUL, TATA,
Maruti
a. Home appliance
b. Two wheeler
c. Car
Product
Mix Length
It refers to the total
number of items the
company carries within
its product lines.
P & G has many brands
within each line,
7 laundry detergents,
6 soaps,
5 shampoos.
Product
Mix
Depth
It refers to the
number of versions
offered of each product in
the line.
P&G crest toothpaste
comes in 13 varieties –
multi care, cavity
protection, sensitivity
protection etc…

Product Mix
Product Line -1
Product Width
Product Line -2 Product Line -3
Is a group of products that are closely related, either
because they function in a similar manner, are sold to the
same customer groups,
Number of
different product
lines the company
carries

Product Mix
Product Line -1
Television
Product Length
Product Line -2
Washing Machine
Product Line -3
Total number of items
the company carries within
its product lines.

Refers to the number of
versions offered of each product

Product Mix of Hindustan
Unilever Limited
Home & Personal
Care
Beverages
Personal
Wash
Laundry Skin Care
Hair
Care
Oral Care Tea CoffeeDeodorants
Lux
Lifebuoy
Liril
Hamam
Breeze
Dove
Pears
Rexona
Surf excel
Rin
Wheel
Fair &
Lovely
Ponds
Vaseline
Sunsilk
Clinic +
Pepsodent
Close-up
Axe
Rexona Lipton
Brooke
Bond
Bru

Product Mix Strategies
44
When an organization introduces a product
into a market they must ask themselves a
number of questions.
Who are my customers?
What benefit will they expect?
How to position the product within the market?
What differential advantage will the product offer
over their competitors?

45
The Major Product Mix Strategies
Expansion of Product Mix.
Contraction of Product Mix.
Alteration of Existing Products.
Development of new uses for the Existing Products.
Trading up & Trading down.
Product differentiation & Market segmentation.
1
2
3
4
5
6

Expansion of Product Mix.
46
Accomplished by increasing the depth within a
particular line and / or the number of product lines
a firm offers to customers.
Product Line -1 Product Line -2 Product Line -3
New Line May Be Related Or Unrelated To The Current
Products.

47
Contraction of Product Mix
Dropping out the products for which
demand has been declining.

48
Alteration of Existing Products
Altering the existing products instead of adding
new products to their product mix.
Creative Packaging
Redesigning
 Adding New Features to the existing products can
prove to be profitable.

49
Development of new uses for the Existing Products
Firm may find out the new uses for its
existing products by R & D
If the firm brings to the notice of the
consumers such uses & benefits.
It may able to promote the sales of its
products.

50
Trading up & Trading down.
Companies offer Higher Priced,
Prestige Products to their existing
product line in an effort to increase the
sales of their low priced products.

51
Trading up & Trading down
Marketers who use the ‘trading up’ strategy may
a. Continue to depend on the old, low priced
products for the volume of their sales &
promote the old product heavily.
b. Gradually shift their promotion emphasis onto
the new products, wait till the new product
increased its sale volume to a reasonable level
& then drop the low priced product totally.

52
Trading up & Trading down
Trading down means Adding Low
Priced Product to the existing high
priced prestige products.
It is used in order to provide a new product
to customers who cannot afford the original
product. (Price sensitive)

53
New Product Development Process

New Product Development Process
54
1. Idea Generation
2. Idea Screening
3. Concept Testing / Development
4. Marketing Strategy
5. Business Analysis
6. Product Development
7. Test Marketing
8. Commercialization
There are EIGHT steps

55
1.Idea generation
act of searching for new ideas
Many sources;
• Research & Development
• Customers
• Competitor’s
• Company sales people
• Dealers & Top management etc…

56
2. Idea screening
Process to spot good ideas and drop poor
ones
Top management should Consider Criteria
Market size,
Product price,
Time & Cost involved, Rate Of Return etc…

57
one of the crucial stages of product development
Success / Failure Product
Most of the co’s consider
Preferences & Capabilities Of The Company
not the customer needs or
product benefits should distinguish from
competitive offerings.

58
. The new concept would then be evaluated by asking
Employees & Customers
In this stage of concept testing, the company finds out:
• Whether the consumers understand the product idea
or not?
• Whether the consumers need the new product or not?
• Whether the consumers will accept the product or not?

59
4. Marketing Strategy
The Marketing Manager / Product Mgr. has
to develop a strategy.
Including Size & Structure of the target market,
Market share, Profit goals,
Distribution strategy, Marketing mix strategy
etc..

60
The Marketing Experts undertake marketing
research to ascertain the potential sales level for
the new product.
Estimated demand for the new product.
Nature of competition existing in the
market.
Major competitors, their share in the market
Channels of distribution required. Etc…

Business Analysis
Review of Product Sales, Costs,
& Profits Projections to See if
They Meet Company Objectives
If Yes, Move to
Product Development
If No, Eliminate
Product Concept

6. Product Development:
62
If the product concept passes the business analysis, it
moves to the Production department to
be developed into a physical
product.

63
Product & its marketing plan are exposed to a
carefully chosen sample of the population for
deciding if to reject it before its full scale launch.
• Experiment conducted in a field comprising of
Actual Stores and real-life buying situations,
without the buyers knowing they
are participating in an evaluation exercise.
7. Test Marketing

8. Commercialization / Market Introduction
64
Last stage of new product development
process. It involves the launching of the
product with a Full-scale Marketing
Program.

Why New Product Fails?
66
1. Poor Product Quality:
Obviously, a product, which is of poor quality,
cannot be sold in the market.
2. High Price:
Higher Production & Distribution Costs may
lead to higher price. Such a product cannot
be sold in a market consisting of middle
and lower income buyers.

Why new product fails?
67
3. Poor Timing:
It is important that a product, to be successful, is
introduced in the market at the correct time. If it
is introduced at an unsuitable time it may
turn out to be a failure.
Example:
Publishers of textbooks usually bring out books in
the beginning of the academic year.

68
4. No product point-of-difference
• For a new product to win initial trials & then
ongoing repeat business, it needs to bring
something new to the marketplace.
• Potential customers need an incentive – such as
additional benefits or some form of variety – to
be persuaded to try and buy a new product.
• Without any real point of difference, the new
product is likely to fail.

69
5. Inherent defect:
There may be an inherent defect in the
product, which may affect its market
potentialities.
Such a product may not be preferred by
the buyers even if the defect is rectified
later.

70
6. Extent of competition:
A monopolist may not have any difficulty in
marketing his product. In the case of a
market where there are a large number of
sellers for a particular product, the buyer
will have many alternatives. Therefore, in
such a condition unless the marketer
brings out the product to the satisfaction
of the buyers, he cannot be successful.

71
7. Lack of Promotional Measures:
Popularizing the brand, particularly, in
the introduction stage of a product is
essential. Such a step will ensure
repeated buying and bring long-term
benefits for the marketer.
Failure to do so will ‘prove to be
disastrous for the product.

72
8. Faulty Distribution Policy:
It is important that a product reaches the
right market at the right time and at the
right price.
The faulty distribution policy of the
marketer may lead to many problems, i.e.,
the goods may not be available when
required, may lead to higher price and so
on.

73
9. Unavailability of spare parts:
In the case of durable goods like
Televisions sets, Air-conditioners, etc.,
and also in the case of Two wheeler and
Cars, easy availability of spare parts is an
important requirement. Unavailability of
spares may discourage the buyers. Such
buyers would not recommend the product
to their friends and relatives.

74
10. Poor after-sale service:
The quality of after sale service is yet
another important cause. Most marketers,
particularly those marketing durables,
two-wheeler, etc., if you don’t provide
them after sales service then it will have
negative impact on sales.

75
11. Imitation products:
Last, but not the least, the presence of a
number of imitation products in the
market makes the genuine products
vulnerable. An average buyer may not be
able to distinguish between the genuine
product and the fake one.

Branding Functions
77
Branding
We live in a brand conscious world, in fact,
according to some studies - India is one of the
most brand - conscious countries in the
world.

Branding Functions
78
Brand
“Brand is a name, term, sign, symbol or
design, or a combination of these, that is
intended to identify the goods and
services of one business or group of
businesses and to differentiate them from
those of competitors”.

Branding Functions
79
Branding
Branding is a process which involves
creating a specific name, logo, and an
image of a particular product, service or
company.
This is done to attract customers. It is
usually done through advertising with a
consistent theme.

80
Importance of Branding:
1.It helps in product identification and gives
‘distinctiveness’ to a product.
2.Indirectly it denotes the quality or
standard of a product.
3. It eliminates imitation of the product.

81
Importance of Branding:
4. It ensures legal rights of the product.
5. It helps to create and sustain brand
loyalty to a particular product.
6. It helps in price differentiation of
products.

Branding Functions
82
Branding is a powerful instrument of promotion which
performs the following functions:
1. Distinctiveness:
A brand name creates a distinctive impression among
the customers. For instance, different brands of soap
such ‘Cinthol’, ‘O.K.’, ‘Lux’, Tears’, ‘Vigil’, etc. create
different impressions upon the users, though the article
is the same, i.e., soap. Thus, a branded product enjoys
distinct or separate identity.

83
2. Publicity:
A brand name enables its holder to
advertise his product without any difficulty.
Once a brand name becomes popular,
people remember it for long.

84
3. Protection of Goods:
Generally, the branded products are packed
in suitable containers or wrappers which
provide protection to the goods against heat
and moisture & facilitate convenient
handling. So customers are assured of the
quality of the branded products.

85
4. Consumer Protection:
The prices of branded products are fixed by
the manufacturers and are printed on the
packages. This protects the interest of the
consumers because the retailers cannot charge
more than the printed prices.
The prices of branded goods remain fixed at
different places and over a considerable period of
time.

86
5. Customer Loyalty:
Branding ensures better quality at competitive
prices. Branded products are available in all parts
of the country at uniform prices. This tends to
create brand loyalty on the part of customers.
They ask for the goods by their brand name such
as Taj Mahal (tea leaves), Nescafe (Coffee), Tata
(Iodised Salt), Natraj (Pencils), etc

87
6. Wide Market:
Branded products are quite popular and
have wide market. The wholesalers and
retailers readily handle the branded
products which are advertised.

88
Labeling
Whenever you manufacture a product, you want to
communicate the value of the product to the customers.
One of the ways to do that is to use product
labeling.

89
Labeling
Product labeling is a part of the packaging
of a product.
Labeling is the written information on the
packages. These written labels on the
package cover important information
which needs to be communicated to a
customer.

90
Labeling
Display of information about a product on its
container, packaging, or the product itself. For
several types of consumer and industrial
products.

91
Labeling
All these labeling requirements come from
the regulatory body. There are numerous
regulatory bodies for all products.
So, the regulatory and governing body for
the food product is the Food & Drugs
Administration (FDA).

93
Brand Label
Give the brand name , trademark or
logo
Example:
Some clothes Vimal, and Raymond or soaps carry brand LUX

95
Grade Label
A grade label identifies the quality of
the product by a letter or words or
numbers.
For instance grapes may be graded as
like Grade “A”, “B” or 1 or 2

97
Descriptive Label:
•The descriptive label means placing on the
label details such as
• Directions for its use
• Weight, MRP
•Date of Manufacturing
•Expiry date etc.

99
Importance of labeling a product
1) Brand and Product Identity
The label on the product is the primary
product identity. The name of the product
and the brand itself is considered as part of
product labeling and these product labels
form the brand identity.

100
2. Grade and type
Every Sun silk shampoo has different types.
Besides changing the design and packaging
style of the product, they also change the
label on the shampoo. Some of them will
say that the shampoo is Anti-dandruff
shampoo whereas the other will say
Smooth Silk.
Thus, product labeling can be used
to differentiate between the various grades
and type of the product.

101
3. Requirement by law
There are numerous labeling requirements
which might be specified by a regulatory
body.
include Ingredients, Manufacturing Plant,
Batch Number, Expiry Date, MRP, safety
instructions etc.
Thus, a company has to consider all legal
requirements before deciding on the
product labeling.

102
4. Promotion:
Buy 2, get 1 free. This is a type of
product labeling which you would
have most likely encountered
especially during festive season.
It also comes to the immediate
attention of the customer.

Unit 2 product decision

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