Principles Principles of of

MarketingMarketing

Lecture-7Lecture-7

Today’s Today’s TopicsTopics

Product Strategies and Product Strategies and FeaturesFeatures

Product Mix and Product Product Mix and Product LineLine

Product MixProduct Mix The set of all product offered for sale by The set of all product offered for sale by

a company is called a product mix.a company is called a product mix. Breadth and DepthBreadth and Depth

Breadth = the number of product lines Breadth = the number of product lines carriedcarried

Depth = variety of sizes, colors and models Depth = variety of sizes, colors and models within each product line.within each product line.

Product LineProduct Line A group of products similar in usage and A group of products similar in usage and

physical characteristics.physical characteristics.

Product Mix – Kraft Product Mix – Kraft FoodsFoods

BeveragesBeverages CoffeeCoffee Refreshment BeveragesRefreshment Beverages

Cheese & DairyCheese & Dairy SnacksSnacks

ConfectioneryConfectionery Salty snacksSalty snacks BiscuitsBiscuits

Convenient MealsConvenient Meals GroceryGrocery

DessertsDesserts Enhancers (dressings and spreads)Enhancers (dressings and spreads) CerealsCereals

Kraft –BeveragesKraft –Beverages BeveragesBeverages > > CoffeeCoffee

Kraft –BeveragesKraft –Beverages BeveragesBeverages > > CoffeeCoffee

Kraft –BeveragesKraft –Beverages BeveragesBeverages > > CoffeeCoffee

Kraft –BeveragesKraft –Beverages BeveragesBeverages > Refreshment Beverages > Refreshment Beverages

Kraft –BeveragesKraft –Beverages BeveragesBeverages > Refreshment Beverages > Refreshment Beverages

Kraft –BeveragesKraft –Beverages Beverages > Coffee Beverages > Coffee

Kraft – Cheese and DairyKraft – Cheese and Dairy

Kraft – Cheese and DairyKraft – Cheese and Dairy

Product Mix – Kraft Product Mix – Kraft FoodsFoods

SnacksSnacks Confectionery Confectionery Salty snacks Salty snacks Biscuits Biscuits

Convenient MealsConvenient Meals GroceryGrocery

Desserts Desserts Enhancers (dressings and spreads) Enhancers (dressings and spreads) Cereals Cereals

Positioning the ProductPositioning the Product Management's ability to:Management's ability to:

bring attention to a productbring attention to a product differentiate it in a favorable way from similar differentiate it in a favorable way from similar

productsproducts goes a long way toward determining that product’s goes a long way toward determining that product’s

revenues and the company’s profits. revenues and the company’s profits. Thus management engages in Thus management engages in positioning the positioning the

productproduct Developing the image that a product projects in Developing the image that a product projects in

relation to competitive products and to the firm’s relation to competitive products and to the firm’s other products.other products.

Marketing executives can choose from a variety Marketing executives can choose from a variety of positioning strategies. Sometimes they of positioning strategies. Sometimes they decide to use more than one for a particular decide to use more than one for a particular product. product.

Positioning StrategiesPositioning Strategies

Positioning in Relation to CompetitorPositioning in Relation to Competitor Positioning in Relation to a product Class Positioning in Relation to a product Class

or Attributeor Attribute Positioning by Price and QualityPositioning by Price and Quality

Positioning in Relation to Positioning in Relation to CompetitorCompetitor This strategy is especially suitable for a firm:This strategy is especially suitable for a firm:

Has a solid differential advantageHas a solid differential advantage Trying to solidify such an advantage.Trying to solidify such an advantage.Example. Example. Intel launched a campaign to convince buyers that its Intel launched a campaign to convince buyers that its

product is superior to competitors. The company even product is superior to competitors. The company even paid computer makers to include the slogan, “Intel paid computer makers to include the slogan, “Intel Inside,” in their ads.Inside,” in their ads.

Coca-Cola and Pepsi-Cola compete directly with each Coca-Cola and Pepsi-Cola compete directly with each other in virtually every element of the marketing mix other in virtually every element of the marketing mix (even celebrity endorsers).(even celebrity endorsers).

For other products, head-to-head positioning is For other products, head-to-head positioning is exactly what not to do, especially when a exactly what not to do, especially when a competitor has strong market position. competitor has strong market position.

Positioning in Relation to a Product Class Positioning in Relation to a Product Class or Attributeor Attribute Positioning strategy entails associating its Positioning strategy entails associating its

product with (or dissociation it from) a product with (or dissociation it from) a product class or attribute.product class or attribute.

Promoting products as being in a desirable Promoting products as being in a desirable class, such as “Made in America,” or class, such as “Made in America,” or having an attractive attribute, such as “low having an attractive attribute, such as “low energy consumption” or “environmentally energy consumption” or “environmentally friendly.”friendly.”

Widely used for food products.Widely used for food products. For example, Libby’s, Del Monte, For example, Libby’s, Del Monte,

Campbell’s, Kellogg’sCampbell’s, Kellogg’s No (or very little) salt.No (or very little) salt. Low calories, Low cholesterol and fat (frozen Low calories, Low cholesterol and fat (frozen

foods)foods)

Positioning by Price and Positioning by Price and QualityQuality

Certain producers and retailers are Certain producers and retailers are known for their high-quality known for their high-quality products and high prices. products and high prices. Saks Fifth Avenue, Neiman-MarcusSaks Fifth Avenue, Neiman-Marcus Target, Kmart are at the other. Target, Kmart are at the other.

Saks Fifth AvenueSaks Fifth Avenue

Saks Fifth AvenueSaks Fifth Avenue

Saks Fifth AvenueSaks Fifth Avenue

KmartKmart

KmartKmart

KmartKmart

Think …..Think …..

Will celebrities endorse Kmart or Will celebrities endorse Kmart or Saks?Saks?

Which magazines will Kmart Which magazines will Kmart advertise in?advertise in?

Which magazines will Saks advertise Which magazines will Saks advertise in?in?

Others?Others?

The Product Life CycleThe Product Life Cycle

The Product Life CycleThe Product Life Cycle

Management must be able to Management must be able to recognize what part of the life cycle recognize what part of the life cycle its product is in at any given time.its product is in at any given time.

The competitive environment and The competitive environment and marketing strategies that should be marketing strategies that should be used depends on the particular life-used depends on the particular life-cycle stage. cycle stage.

Introduction Stage:-Introduction Stage:-During the introduction stage, product is launched During the introduction stage, product is launched into the market in a full-scale marketing program. into the market in a full-scale marketing program.

Growth Stage:-Growth Stage:-In the growth stage, or market-acceptance stage, In the growth stage, or market-acceptance stage, sales and profits rise, often at a rapid rate. sales and profits rise, often at a rapid rate. Competitors enter the market, often in large Competitors enter the market, often in large numbers if the profit outlook is particularly numbers if the profit outlook is particularly attractive.attractive.

Maturity:-Maturity:-During the first part of the maturity stage, sales During the first part of the maturity stage, sales continue to increase, but at a decreasing rate. continue to increase, but at a decreasing rate. When sales level off, profits of both producers and When sales level off, profits of both producers and middlemen decline.middlemen decline.

The Product Life CycleThe Product Life Cycle

Decline Stage:-Decline Stage:- For most products, a decline stage, as For most products, a decline stage, as

gauged by sales volume for the total gauged by sales volume for the total category, is inevitable for one of the category, is inevitable for one of the following reasons:following reasons:

The need for the product disappears.The need for the product disappears.

A better or less expensive product is A better or less expensive product is developed to fill the same need. developed to fill the same need.

People simply grow tired of a product (a People simply grow tired of a product (a clothing style, for instance), so it disappears clothing style, for instance), so it disappears from the market.from the market.

The Product Life CycleThe Product Life Cycle

Characteristics and implication of different Characteristics and implication of different PLC StagesPLC Stages

StageStage

IntroductionIntroduction GrowthGrowth MaturityMaturity DeclineDecline

CharacteristicsCharacteristics

CustomersCustomers InnovatorsInnovators Mass marketMass market Mass Mass marketmarket

Loyal Loyal customerscustomers

Competition Competition

SalesSalesLittle if anyLittle if any

Low levels, Low levels, then risingthen rising

IncreasingIncreasing

Rapid growthRapid growthIntenseIntense

Slow/no Slow/no annual annual growthgrowth

Decreasing Decreasing

DecliningDeclining

ProfitsProfits NoneNone Strong, then Strong, then at a peakat a peak

Declining Declining annuallyannually

Low/noneLow/none

Marketing implication Marketing implication

Overall strategyOverall strategy Market Market developmentdevelopment

Market Market penetrationpenetration

Defensive Defensive positioningpositioning

Efficiency or Efficiency or exitexit

CostsCosts High per unitHigh per unit DecliningDeclining Stable or Stable or increasingincreasing

LowLow

Product strategyProduct strategy UndifferentiateUndifferentiatedd

Improved Improved itemsitems

DifferentiatDifferentiateded

Pruned linePruned line

Pricing strategyPricing strategy Most likely Most likely highhigh

Lower over Lower over timetime

LowestLowest IncreasingIncreasing

Distribution Distribution strategystrategy

ScatteredScattered IntensiveIntensive IntensiveIntensive SelectiveSelective

Promotion strategyPromotion strategy Category Category awarenessawareness

Brand Brand preferencepreference

Brand Brand loyaltyloyalty

ReinforcemeReinforcement nt

BrandsBrands

BrandsBrands BrandBrand

AA name and/or mark intended to identify the product name and/or mark intended to identify the product and differentiate from competitors. and differentiate from competitors.

Brand nameBrand name WWords, letters, and/or numbers that can be vocalized.ords, letters, and/or numbers that can be vocalized.

Brand markBrand mark Part of the brand that appears in the form of a Part of the brand that appears in the form of a

symbol, design, or distinctive color or lettering.symbol, design, or distinctive color or lettering. TrademarkTrademark

A brand that has been adopted by a seller and given A brand that has been adopted by a seller and given legal protection. Includes brand mark brand name.legal protection. Includes brand mark brand name.

One method of classifying brands is on the One method of classifying brands is on the basis of who owns them thus we have basis of who owns them thus we have producers’ brands producers’ brands and and middlemen’s middlemen’s brands, brands, the latter being owned by retailers the latter being owned by retailers or wholesalers. or wholesalers.

Reasons for BrandingReasons for Branding

For consumers, brands make it easy For consumers, brands make it easy to identify goods or services. They to identify goods or services. They aid shoppers in moving quickly aid shoppers in moving quickly through a supermarket, discount through a supermarket, discount house, or other retail store and in house, or other retail store and in making purchase decisions. Brands making purchase decisions. Brands also help assure consumers that they also help assure consumers that they will get consistent quality when they will get consistent quality when they reorder.reorder.

Reasons for not Reasons for not BrandingBranding

Two responsibilities come with brand Two responsibilities come with brand ownership: (1) promoting the brand ownership: (1) promoting the brand and and

(2) maintaining a consistent quality (2) maintaining a consistent quality of output. of output.

Many firms do not brand their Many firms do not brand their products because they are unable or products because they are unable or unwilling to assume these unwilling to assume these responsibilities.responsibilities.

Desirable CharacteristicsDesirable Characteristics Five characteristics determine the Five characteristics determine the

desirability of brand name for either a desirability of brand name for either a good or service.good or service. Suggest something about the product, Suggest something about the product,

particularly its benefits and use. Example particularly its benefits and use. Example Mr. Goowrench, Holiday Inn, Minute Mr. Goowrench, Holiday Inn, Minute Rice, and—perhaps best of all—DieHard. Rice, and—perhaps best of all—DieHard. Product use is suggested by Dustbuster, Product use is suggested by Dustbuster, La-Z-Boy chairs etc.La-Z-Boy chairs etc.

Be easy to pronounce, spell, and Be easy to pronounce, spell, and remember. Examples of simple, short, remember. Examples of simple, short, one-syllable names such as Tide, Surf etc.one-syllable names such as Tide, Surf etc.

Desirable CharacteristicsDesirable Characteristics

Be distinctive. Examples National, Be distinctive. Examples National, United, Allied, or Standard. But are United, Allied, or Standard. But are these really distinctive?these really distinctive?

Be adaptable to new products that may Be adaptable to new products that may be added to the product line. Example be added to the product line. Example Kellogg, Lipton, or Ford may serve the Kellogg, Lipton, or Ford may serve the purpose better than a highly distinctive purpose better than a highly distinctive name suggesting product benefits.name suggesting product benefits.

Branding StrategiesBranding Strategies

Both producers and middlemen face Both producers and middlemen face strategic decisions regarding the strategic decisions regarding the branding of their goods or services.branding of their goods or services.

Branding within a Branding within a Product MixProduct Mix

At lest three different strategies are At lest three different strategies are used by firms that sell more than used by firms that sell more than one product:one product:

A separate name for each A separate name for each product.product. This strategy is employed by Unilever This strategy is employed by Unilever

and Procter & Gamble. and Procter & Gamble.

Branding within a Branding within a Product MixProduct Mix

The company name combined The company name combined with a product name.with a product name. Examples include Johnson’s Pledge and Examples include Johnson’s Pledge and

Johnson’s Glo-Coat, and Kellogg’s Rice Johnson’s Glo-Coat, and Kellogg’s Rice Krispies and Kellogg’s Corn Pops.Krispies and Kellogg’s Corn Pops.

The company name alone.The company name alone. Nowadays few companies rely Nowadays few companies rely

exclusively on this policy. Examples exclusively on this policy. Examples Heinz in the food field, and General Heinz in the food field, and General Electric in various industries.Electric in various industries.

Packaging & Product Packaging & Product FeaturesFeatures

PackagingPackaging

PackagingPackaging Activities of designing and producing the Activities of designing and producing the

container or wrapper for a product. container or wrapper for a product.

PackagePackage The actual container or wrapper.The actual container or wrapper.

Advantages of Packaging Advantages of Packaging Protect the product on its way to the consumer.Protect the product on its way to the consumer.

Shipment, tampering (food, meds)Shipment, tampering (food, meds) Provide protection after the product is Provide protection after the product is

purchased.purchased. Cleaner, spilling, spoilageCleaner, spilling, spoilage

Be part of the company’s trade marketing Be part of the company’s trade marketing program.program. Display and stackingDisplay and stacking

Be part of the company’s consumer marketing Be part of the company’s consumer marketing program.program. Identify, “silent sales person”Identify, “silent sales person”

Packaging StrategiesPackaging Strategies

Packaging the Product LinePackaging the Product Line Create resemblanceCreate resemblance Family packaging uses highly similar Family packaging uses highly similar

packages for all productspackages for all products Multiple PackagingMultiple Packaging

Placing several units of the same product in Placing several units of the same product in one container e.g. tennis balls, candy bars, one container e.g. tennis balls, candy bars, towels etctowels etc

Changing the PackagingChanging the Packaging Correct a poor feature of a package or new Correct a poor feature of a package or new

packaging material. packaging material.

LabelingLabeling

LabelLabel A label is the part of a product that carries A label is the part of a product that carries

information about the product & the seller.information about the product & the seller. Types of LabelsTypes of Labels

Brand LabelBrand Label Simple brand name as label e.g. mangoesSimple brand name as label e.g. mangoes

Descriptive LabelDescriptive Label Gives objective info about product use, care, performance Gives objective info about product use, care, performance

e.g. bottle of tomato ketchupe.g. bottle of tomato ketchup Grade LabelGrade Label

Gives info about product quality with a letter, number or Gives info about product quality with a letter, number or symbol e.g. motor oil etcsymbol e.g. motor oil etc

Labeling LawsLabeling Laws The Federal Trade Commission Act (1914)The Federal Trade Commission Act (1914) False or deceptive labels are illegalFalse or deceptive labels are illegal Consumer satisfaction with labeling is lowConsumer satisfaction with labeling is low

Labels contain incomplete or misleading infoLabels contain incomplete or misleading info Fair Packaging and Labeling Act (1966)Fair Packaging and Labeling Act (1966) Food and Drug Act (1906)Food and Drug Act (1906) Food, Drug and Cosmetic Act (1938)Food, Drug and Cosmetic Act (1938) Nutrition Labeling and Education Act (1990)Nutrition Labeling and Education Act (1990)

Label ExampleLabel Example

Other featuresOther features

Design and ColorDesign and Color Quality Quality WarrantiesWarranties

Assures buyers that they will be Assures buyers that they will be compensated in case the product does not compensated in case the product does not perform up to reasonable expectationsperform up to reasonable expectations

Warning labels (meds, chemicals, Warning labels (meds, chemicals, washing)washing)

Post-sale servicePost-sale service

An example IAAAn example IAA

IAA at IUBIAA at IUB IAA LogoIAA Logo IAA SloganIAA Slogan IAA WebsiteIAA Website

End of Lecture -7End of Lecture -7