Mba Marketing Notes

We are now focusing on the major elements of the marketing mix, the ingredients of the marketing mix. First element… The Product!! Product Planning refers to the systematic decision making related to all aspects of the development and management of a firms products including branding and packaging. Each product includes a bundle of attributes capable of exchange and use. Product definition: A product is a good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers and is received in exchange for money or some other unit of value.

Return to Contents Differences between Goods and Services Goods are tangible. You can see them, feel them, touch them etc. Services are intangible. The result of human or mechanical efforts to people or objects. Major distinguishing characteristics of Services: • Intangibility-major component of a service is intangible • Pershibality-many cannot be stored for future sales Airline/Amusement ride Number of hair cut hours in one week: i. e. , if Christies employs 3 people, who work forty hours per week, they have potentially 120 hair cut hours to offer.

If they do not have any customers at a particular period during the day, they will lose the opportunity to cut hair at that time and therefore the opportunity to generate revenue… the opportunity has perished… they no longer have the ability to earn revenue from 120 hair cut hours that week!! • Inseparability-customer contact is often the integral part of the service… Legal services/hair dresser, therefore often a direct channel of distribution. • Variability-in service quality, lack of standardization, because services are labor intensive.

Sales of goods and services are frequently connected, i. e. a product will usually incorporate a tangible component (good) and an intangible component. Levels of Product There are 3 levels of products • Core Product- Marketers must first define what the core BENEFITS the product will provide the customer. • Actual Product-Marketer must then build the actual product around the core product. May have as many as five characteristics: o Quality level o Features o Brand name o Packaging all combined to carefully deliver the core benefit(s).

• Augmented Product-offer additional consumer benefits and services. o Warranty o Customer training EXAMPLE SONY CAMCORDER: • Core–the ability to take video pictures conveniently • Actual–Sony Handycam (brand name), packaged, convenient design so you can hold it, play back features etc. that provide the desired benefits, high quality etc. • Augmented–receive more than just the camcorder. Give buyers a warranty on parts and workmanship, free lessons on how to use the camcorder, quick repair service when needed and toll free telephone number when needed.

Marketers must first identify the core consumer needs (develop core product), then design the actual product and find ways to augment it in order to create the bundle of benefits that will best satisfy the customer. Classifying Products Products can be classified depending on who the final purchaser is. Components of the marketing mix will need to be changed depending on who the final purchaser is. • Consumer products: destined for the final consumer for personal, family and household use. • Business to business products: are to satisfy the goals of the organization.

The same product can be purchased by both, for example a computer, for the home or the office. The following are classifications for consumer products: • Convenience: Packaging is important to sell the product. Consumers will accept a substitute. Marketers focus on intense distribution, time utility. Convenience products can be categorized into staple (milk), impulse (not intended prior to shopping trip). • Shopping: Consumers expend considerable effort planning and making purchase decisions. IE appliances, stereos, cameras. Consumers are not particularly brand loyal.

Need producer intermediary cooperation, high margins, less outlets than convenience goods. Use of sales personnel, communication of competitive advantage, branding, advertising, customer service etc. Attribute based (Non Price Competition), product with the best set of attributes is bought. If product attributes are judged to be similar, then priced based. • Specialty: Buyer knows what they want and will not accept a substitute, IE Mercedes. Do not compare alternatives. Brand, store and person loyal. Will pay a premium if necessary. Need reminder advertising.

• Unsought: Sudden problem to resolve, products to which consumers are unaware, products that people do not necessary think of purchasing. Umbrellas, Funeral Plots, Encyclopedia!! The following are classifications for Business to Business products: • Production Goods o Raw Materials: o Component parts: becomes part of the physical product o Process materials: not readily identifiable part of the production of other products • Support Goods o Major Equipment: o Accessory Equipment: Type writers and tools o Consumable Supplies: IE Paper, pencils or oils

o Business to Business services: Financial, legal marketing research etc. Elements of a Product Mix If an organization is marketing more than one product it has a product mix. • Product item–a single product • Product line–all items of the same type • Product mix–total group of products that an organization markets Depth measures the # of products that are offered within each product line. Satisfies several consumer segments for the same product, maximizes shelf space, discourages competitors, covers a range of prices and sustains dealer support.

High cost in inventory etc. Width measures the # of product lines a company offers. Enables a firm to diversify products, appeals to different consumer needs and encourages one stop shopping. Proctor & Gamble example in class. Why so many different products? Different needs of different target markets for the same product. Channels of distribution economies etc. Product Positioning and Product Repositioning Definition: This refers to a place a product offering occupies in consumers’ minds on important attributes, relative to competing offerings.

How new and current items in the product mix are perceived, in the minds of the consumer, therefore reemphasizing the importance of perception!! New Product–need to communicate benefits Established Products–need to reinforce benefits Ideal Characteristics Need to introduce products that possess characteristics that the target market most desires, ideal. Product positioning is crucial. Consumers desires refer to the attributes consumers would like the products to possess–IDEAL POINTS.

Whenever a group of consumers has a distinctive “ideal” for a product category they represent a potential target market segment. A firm does well if its attributes (of the product) are perceived by consumers as being close to their ideal. The objective is to be “more ideal” than the competitors. Each product must provide some unique combination of new features desired by the target market. Instead of allowing the customer to position products independently, marketers try to influence and shape consumers concepts and perceptions. Marketers can use perception maps.