Introduction to Marketing Management & Product

Marketing:

What is Marketing?

Marketing is a science and art of exploring, creating, and delivering value to satisfy, the needs of target market at a profit.

From the above definition we can say….

Creating, Delivering, The value_________ Product

Target Market_____________________Place

At Profit_________________________ Price

Exploring the value_________________ Promotion

Core Concept of Marketing : Needs, Wants & demands:

Need: The Basic Human Requirement.

Wants: Specific objective, that might satisfy the need.

Demand: wants for specific product backed by the ability to buy.

Types of Need:

- Stated Need: Need of a bike

- Real Need: want a petrol efficient and low maintenance bike

- Unstated Need: bike along with free accessories

- Delight Need: Servicing at better level for free

- Secret Need: customer wants his friends to see him a a savvy consumer.

Marketing Mix:

The four Ps of Marketing

Product, Price, Place Promotion…

Prof. Richard Clewett (1911- 2006), evolved the concept of marketing mix as Product, Price, Distribution & Promotion,

Dr. Prof. E. Jerrom McCarthy, Michigan state University& University of Notre Dame, Ph.D from North Western University, evolved the concept of 4P’s

Dr. Bob Lauterborn, Prof. of Advertisment, Universtiy of North Calorina, has basically converted the concept of 4 P’s and evolved the concept of 4 C’s

Product : Customer Value

Price : Customer Cost

Place : Customer Convinience

Promotion : Customer Communication

Dr. Prof. Jagdish Sheth, Emmory University gave the new concept of 4 A’s for the 4 P’s

Product : Acceptability

Price : Affordability

Place : Accessabilty

Promotion : Awareness

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Product:

A product is any thing that can be offered to a market to satisfy a want or need.

In simple word product is physical goods, services, experiences, events, persons, places, properties, organizations, information, ideas, construction work, etc…etc….

Product Levels:

Customer Value Hierarchy

Core benefits: services or benefits customers really buying

Eg. 1. Hotel guest is buying rest and sleep. Food for hunger, shelter for homeless, water for thirsty, etc…

2. travelling

Basic Product: A marketer has to turn core benefit into basic Products

Eg. 1.Hotel room with bed and bathroom, food, shelter, cloths, etc…

2. Vehicle

Expected Product: a set of attributes and conditions buyers normally expect when they purchase a product.

Eg. 1.Hotel guest expects a clean room, fresh towel, working fans and AC and a good service.

2. Good Milage, Comfort Seat, side Glasses, After Sales Services

Augmented Product: that exceeds customer’s expectations.

Eg.1. A hotel guest ordered a food and got Champaign free…

2. Free Insurance on Vehicle, Free Servicing for few years & Other Accessories Free

Potential Product: Combination of all possible augmentations & transformations

Product Classification

1. Durability and Tangibility

i. Durable Goods: are tangible good that normally survive many uses

Eg: Refrigerator, machine tools, clothing, etc…

ii. Nondurable Goods: are tangible goods that normally consumed in one or few uses,

Eg: soap, cold drinks, perishable goods etc…

iii. Services: are intangible, inseparable, variables products. Its generated , provided & ended on the spot

Eg: Haircut, Legal advice, garage etc…

2. Consumer Goods

i. Shopping Goods: are the goods that consumer, in process of selection and purchase, charecterly compares on such bases as suitability, quality, price, style etc.

Eg: furniture, clothing, home appliances, soap, toothpaste etc…

ii. Specialty Goods: have unique characteristics or brand identification for which, sufficient number of buyers is willing to make special purchasing efforts.

Eg: cars, photographic equipments

iii. Unsought goods: are those the consumer doesn’t know about or doesn’t normally think of buying

Eg: Smoke detectors, Life insurance

3. Industrial Goods

i. Materials and Parts: are goods that enter the manufacturer’s product completely.

ii. Capital Items: are long lasting goods that facilitates developing or managing the finished product

iii. Supplies and business services: are short-term goods and services that facilitate developing or managing the finished products.

iv. Raw Materials: are inputs for the production of the final product.

PRODUCT DIFFERENTIATION:

i. Form: the size, shape or physical structure of the product

ii. Features: that supplements its basic function

iii. Performance Quality: is the level average the products primary characteristics operate.

iv. Conformance Quality: is the degree to which all produced units are identical and meet the promise specification

v. Durability: a major of the products expected operating life under natural or stressful condition is a valued attribute for certain product

vi. Reliability: is a major of probability that a product will not malfunction or fail within a specified time limit

vii. Reparability: is a major of ease of fixing a product when its malfunction are failed

viii. Style: describes the products look and feel to the buyer.

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PRODUCT LIFE CYCLE

As it is shown in the above Diagram, there are four basic stages in PLC.

Introduction, Growth, Maturity & Decline.

Introduction

	Sales generally are low and somewhat slow to take off. Customers are characterized as 'innovators.'
	Production costs tend to be high on a per unit basis because the firm has yet to experience any significant scale economies.
	Marketing costs required for creating customer awareness, interest, and trial and for introducing the product into distribution channels are high.
	Profits, because of low sales and high unit costs, tend to be negative or very low.
	Competitors tend to be few in number, indeed there may be only one major player in the marketplace -- the innovating firm.

Growth

	Sales increase rapidly during the growth phase. This increase is due to: (1) consumers rapidly spreading positive word-of-mouth (WOM) about the product; (2) an increasing number of competitors enter the market with their own versions of the product; (3) and a "promotion effect" which is the result of individual firms employing, advertising and other forms of promotion to create market awareness, stimulate interest in the product, and encourage trial.
	Cost are declining on a per unit basis because increased sales lead to longer production runs and, therefore, scale economies in production. Similarly firms may experience experience curve effects which help to lower unit variable costs.
	Because sales are increasing and, at the same time, unit cost are declining, profits rise significantly and rapidly during this stage.
	Customers are mainly early adopters and early majority. It is the early adopter, specifically, that is responsible for stimulating the WOM effect. During the latter part of growth, the first major segment of the mass market, called the early majority, enters the market. This category of consumers is somewhat more price sensitive and lower on the socio-economic spectrum. As a result, these consumers are somewhat more risk averse and, therefore, somewhat more hesitant to adopt the product.
	Competition continues to grow throughout this stage. As competitors recognize profit potential in the market, they enter the market with their own versions of the product. As competition intensifies, strategies turn to those that will best aid in differentiating the brand from those of competitors. Attempts are made to differentiate and find sources of competitive advantage. In addition, firms identify ways in which the market can be segmented and may develop focused marketing strategies for individual segments.

Maturity

	Sales continue to grow during the early part of maturity, but at a much slower rate than experienced during the growth phase. At some point, sales peak. This peak may last for extended periods of time. In fact, the maturity phase of the life cycle is the longest phase for most products. As a result, most products at any given point in time probably are at maturity. And, most decisions made by marketing managers will be decisions about managing the mature product.
	Costs continue to rise during maturity because of market saturation and continually intensifying competition. When this slowing of sales is combined with the increasing costs associated with this stage, the result is that profits will have reached their highest level and must, from this point on, decline.
	The only remaining customers to enter the market will be the late majority and the laggards. These customer groups are by far the most risk averse and most hesitant to adopt new products. These customers are quite price sensitive and, as a result, will not buy products until prices have seen significant declines. Many laggards, the last group to adopt, often do not do so until the product is virtually obsolete and in danger of being displaced by new technologies.
	Competition is most intense during this stage. The intensity of competitive in-fighting drives the changes in costs and profitability.

Decline

	Sales continue to deteriorate through decline. And, unless major change in strategy or market conditions occur, sales are not likely to be revived. Costs, because competition is still intense, continue to rise. Large sums are still spent on promotion, particularly sales promotions aimed at providing customers with price concessions.
	Profits, as expected, continue to erode during this stage with little hope of recovery.
	Customers, again, are primarily laggards.
	There generally are a significant number of competitors still in the industry at the beginning of decline. However, as decline progresses, marginal competitors will flee the market. As a result, competitors remaining through decline tend to be the larger more entrenched competitors with significant market shares. Managing the Product in Product Life Cycle The Below Table will Help you to Understand How the product is managed at Different levels of PLC.

	Introduction	Growth	Maturity	Decline
Characteristic Sales Costs Profits Customers Competitors	Low sales High cost per customer Negative Innovators Few	Rapidly rising sales Average cost per customer Rising profits Early adopters Growing number	Peak sales Low cost per customer High profits Middle majority Stable number beginning to decline	Declining sales Low cost per customer Declining profits Laggards Declining number
Marketing Objectives	Create product awareness and trial	Maximize market share	Maximize profit while defending market share	Reduce expenditure and milk the brand
Strategies Product	Offer a basic product	Offer product, extensions, service, warranty	Diversify brand and models	Phase out weak items
Price	Use cost-plus	Price to penetrate market	Price to match or best competitors	Cut price
Distribution	Build selective distribution	Build intensive distribution	Build more intensive distribution	Go selective: phase out unprofitable outlets
Advertising	Build product awareness among early adopters and dealers	Build awareness and interest in the mass market	Stress brand differences and benefits	Reduce to level needed to retain hard-core loyals
Sales Promotion	Use heavy sales promotion to entice trial	Reduce to take advantage of heavy consumer demand	Increase to encourage brand switching	Reduce to minimal level

Types of PLC

1. Regular PLC

2. Growth Slump Maturity Pattern PLC:
1. High Learning PLC

Instant Coffee, Dishwasher, Washing Machine, Refrigerator, Cars etc

2. Low Learning PLC

Soap, toothpaste, Fairness cream etc.

3. Cycle – Recycle Pattern PLC:
1. Fashion Product Life Cycle

Fashion Goods, Clothing etc

2. FAD

i. FAD : Pager, Floppy

FAD With Significant Resideral MarketLML Freedom Bike

4. Scalloped Pattern PLC
1. ReGrowth PLC

Prof. A.R. Sayyed