Chapter 7 Marketing Research and Decision Support Systems

Product Concepts

Chapter 10Whats a Product?GoodService

Idea

ExperienceCredence2What is a product?A product is everything, both tangible and intangible, that a buyer receives in an exchange.

British Airways -- Honda --

Need-satisfying offering of a firm; dont get wrapped up in the technical details of the product. Look at the whole thing from a consumers point. Satisfaction with the product. Relative quality?

A product can be an idea, a service, a good, or any combination of the threeA good is a tangible physical entity. Timberland; Rolling Stone; Colombian CoffeeA service is a deed performed by one party for another. Dreamworks movie; Ski Lift in the Alps; Hair stylistsIdeas are concepts, philosophies, images, or issues.Combination of goods and services -- nails, canned soup; steel pipesPapa Johns delivery ; Shell gasGoods produced first; services -- produced and consumedat the same time; Perishable Services demand & supply; MCIWhat Is a Product?PromotionPlace (Distribution)PriceProduct Product is the heart ofMarketing Mix1Chapter 93Product-Service ContinuumSoapAuto with repair servicesRestaurantAirline trip with snacksDoctors exam4BrandnamePackagingDesignStyleDelivery& creditInstallationWarrantyAfter-saleserviceCoregood orservice2. Actual Product1. Core productWhat the consumer is really buying

3. Augmented ProductAdditional services &benefits (unexpected)Product is a bundle of benefits5Types of Products: Consumer, BusinessConsumer productsDetermined by how consumers behave when buying an item:1. Convenience2. Shopping3. Specialty4. Unsought6Consumer ProductsConvenience frequently purchasedGrocery productsStaplesEmergency items

7Retail outlets Low per-unit gross margins Little promotion effort Packaging important

Convenience products are relatively inexpensive, frequently purchased items for which buyers exert only minimal purchasing effort. -- routinized responseThe buyer spends little time planning the purchase of a convenience item or comparing available brands.A convenience product normally is marketed through many retail outlets.Because sellers experience high inventory turnover, per-unit gross margins can be relatively low.Producers of convenience products can expect little promotional effort at the retail level.

Consumer ProductsShopping (less frequent)Homogeneous vs. HeterogeneousWhat are the implications of marketing each of these two types?

8No brand loyalty Fewer retail outlets than convenience Lower inventory turnover Higher gross margins Personal selling Channel member cooperation Price versus features/styleConsumer ProductsSpecialty special purchase effortPrinciple of scarcity / uniqueness

9Limited retail outlets Lower inventory turnover High gross margins

Consumer ProductsUnsought

10Recognizable brand Superior performance

Product Line & Product Mix termsProduct ItemProduct LineProduct MixWidthDepthProduct mix is also known as product assortment11

Product Item- specific version of a product , a specific offering121313131313

LAMPS: TableCeilingTrackDeskProduct Line- closely related items viewed as a unit131414141313Equivalent QualityEfficient Sales andDistributionStandardized ComponentsPackage UniformityAdvertising EconomiesBenefits of Product Lines14

Product Line 1

Product Line 2

Product Line 3 TABLES:KitchenDining RoomEndCoffeeOutdoorConferenceComputer CHAIRS:Dining RoomLiving RoomBed RoomOutdoorDeskLAMPS: TableCeilingTrackDeskProduct Mix-total group of products15151515151515Product Assortment and Product Line Decisions16

Product Line 1

Product Line 2

Product Line 3 TABLES:KitchenDining RoomEndCoffeeOutdoorConferenceComputer CHAIRS:Dining RoomLiving RoomBed RoomOutdoorDeskLAMPS: TableCeilingTrackDeskProduct Width-number of linesDiversifies risk; Capitalizes on established reputations17171717171717

Product Line 1

Product Line 2

Product Line 3 TABLES:KitchenDining RoomEndCoffeeOutdoorConferenceComputer CHAIRS:Dining RoomLiving RoomBed RoomOutdoorDeskLAMPS: TableCeilingTrackDeskProduct Depth-number of different products in lineAttracts buyers with different preferences; market segmentation 18161616161616Campbells Product Lines and Mix

19Adjustments to Product Lines, Items and MixesProduct ModificationProductRepositioningProduct LineExtension or ContractionAdjustmentsProduct Modification-changes in quality, function, style20Modification: Planned ObsolescenceThe practice of modifying products so those that have already been sold become obsolete before they actually need replacement.

Floppy disk/cd-rom/FLASHDVD/VHS 18 mths life of click wheel ipodHD-DVD/Blue Ray

21Product Line ExtensionAdding additional products to an existing product line in order to compete more broadly in the industry.22

LINE EXTENSIONS23BrandName, term, sign, symbol, design, or some combination that identifies the products of a firm.

Brand name - part of a brand that can be spoken (examples of brands with no names?)

Brand mark - symbolic

WHAT AM I?24Branding TermsTrademark legal designation of the exclusive use of brand

Trade Name Commercial, legal name

WHAT AM I?25Value of BrandingTo Buyers

Quality assuranceRewards / Risks

To SellersLoyaltyPrice premiumsResistance to competition

26Brand EquityThe value of the brand name!

27Brand Equity: Can it be measured? Price premiums Which would you prefer?:_X_Bayer for $3.75 ___Generic at $3.75_X_Bayer for $3.75 ___Generic at $3.50_X_Bayer for $3.75 ___Generic at $3.25___ Bayer for $3.75 _X_Generic at $3.00___ Bayer for $3.75 _X_Generic at $2.75 Preference Which box of cornflakes would you prefer? Brand X Brand Y [47%] [53%] Kelloggs Brand Y [59%] [41%]Types of BrandsManufacturer BrandsPrivate OR Retailer OR Store OR Reseller Brands Generic Brands

Battle of the BrandsPros/Cons?

29 GenericideAspirinCellophaneCorn flakesGranolaKeroseneLinoleumRaisin branShredded wheatThermosZipper30Individual BrandFamily BrandUsing different brand names for different products from the same companyMarketing several different products under the same brand name.Individual Brands Versus Family Brands31http://www.hilton.com/en/hi/info/family_brands.jhtml?adId=fob,hihomepage,30http://www.hbo.com/

CobrandingIngredientBrandingCooperative BrandingComplementary BrandingTypes of Cobranding32PersonalProtectionAutoInteriorsCosmetics &NeutroceuticalsTRIACTIGENPage 24Ingredient BrandingA win-win situation or a zero-sumgame?jeff@incub8.ch+41 79 2446360

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BRAND EXTENSIONS34Successful Brand Extensions

Kodak film Kodak cameras and batteries Ivory soap Ivory shampoo, dishwashing liquid Barbie dolls Barbie games, furniture, clothes Honda bikes Honda cars, lawnmowers, generators Unsuccessful Brand Extensions

Dunkin Donuts Dunkin Donuts cereal Harley Davidson Bikes Harley Davidson cigarettes Levis Jeans Levis business wear Mr. Coffee coffee makers Mr. Coffee coffee

PackagingPackaging FunctionsProtect and Maintain Functional FormOffer ConvenienceMarketing

UPC37

LabelingPersuasiveFocuses on promotional theme

Consumer information is secondaryInformationalHelps make proper selections

Lowers cognitive dissonanceIncludes use/care

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Warranty

ExpressWarrantyImplied WarrantyA confirmation of the quality or performance of a good or service.A written guarantee.

An unwritten guaranteeProduct Warranties42Habitability, merchandability