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CHAPTER 6
MARKETING MIX STRATEGY 1:
PRODUCT AND SERVICES
LEARNING OUTCOMES
6.1 Levels of Consumer Product
6.2 Classifications Of Consumer Product
6.3 Individual Product Decisions
6.4 New Product Development Process
6.5 Typical Product Life-Cycle
6.6 Services Marketing
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WHAT IS A PRODUCT?
Product Service Experience
• Product is anything that can be • Services are a form of product • Experiences represent what
offered in a market for that consists of activities, buying the product or service
attention, acquisition, use, or benefits or satisfactions offered will do for the customer
consumption that might satisfy for sale that is essentially
a need or want intangible.
LEVELS OF PRODUCT AND SERVICE
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Level of Product and Services
Product planners need to think about products and services on three levels (see Figure 8.1).
Each level adds more customer value.
The most basic level is the core customer value, which addresses the question: What is the
buyer really buying? Define the core, problem-solving benefits or services that consumers
seek.
The second level, product planners must turn the core benefit into an actual product. They
need to develop product and service features, a design, a quality level, a brand name, and
packaging.
Finally, product planners must build an augmented product around the core benefit and
actual product by offering additional consumer services and benefits.
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6.2 CLASSIFICATION OF
CONSUMER PRODUCTS
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PRODUCT AND SERVICE CLASSIFICATION
• Products and services bought by
1. Consumer product final consumers for personal
consumption.
• Those product purchased for
2. Industrial product further processing in conducting
a business.
PRODUCT AND SERVICE CLASSIFICATION
1. CONSUMER PRODUCT
Convenience products
• Consumer products and services that the customer usually buys frequently, immediately, and with a minimum
comparison and buying effort
• E.g., newspapers, candy and fast food
Shopping products
• Consumer products and services that the customer compares carefully on suitability, quality, price, and style
• E.g., car, furniture and appliances
Specialty products
• Consumer products and services with unique characteristics or brand identification for which a significant group
of buyers is willing to make a special purchase effort
• E.g., designer clothes, gourmet foods and high-eng cars
Unsought product
Consumer products that a consumer either does not know about or know but does not consider buying.
E.g., life insurance
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WHAT IS A PRODUCT?
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PRODUCT AND SERVICE CLASSIFICATION
2. INDUSTRIAL PRODUCT
Materials and parts
• Include raw materials and manufactured materials and parts usually sold directly
to industrial users
• E.g., Fish, fruits and vegetables
Capital item
• Industrial products that aid in the buyer’s production or operations
• E.g., buildings (factories, offices), office equipment (computers, fax machines,
desks)
Supplies and services
• Include operating supplies, repair and maintenance items, and business
services
• E.g., operating supplies (paper, pencils), repair and maintenance (paint, nails,
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brooms
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6.3 INDIVIDUAL PRODUCT
DECISIONS
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INDIVIDUAL PRODUCT AND SERVICE DECISION
1. Product attributes
2. Branding
Decisions on individual 3. Packaging
products and services
4. Labeling and
logos
5. Product support
services
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Individual Product and Service Decision
1. Product attributes
Product attributes are the benefit of the product or service. Includes:
Product quality Product features Product style and design
refers to the Product features are a Style describes the
characteristics of a competitive tool for appearance of the
product or service that differentiating a product product
bear on its ability to from competitors’
satisfy stated or implied Design contributes to a
customer needs. products. product’s usefulness as
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Individual Product and Service Decision
2. Branding
• A brand is the name, term, sign, or design or a combination of these that identifies the maker
or seller of a product or service.
• Consumers view a brand as an important part of a product, and branding can add value to a
consumer’s purchase. Customers attach meaning to brands and develop brand relationships.
• Brand names help consumers identify products that might benefit them and say something
about product quality and consistency.
• Branding also gives the seller several advantages. The seller’s brand name and trademark
provide legal protection for unique product features that otherwise might be copied by
competitors.
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Individual Product and Service Decision
3. Packaging
Packaging involves designing and producing the container or wrapper for a
product
Recently, packaging has become an important marketing due to increased
competition on retail store shelves.
All consumers who buy and use a product will interact regularly with its
packaging. For example, innovative packaging, product safety packaging.
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Individual Product and Service Decision
4. Labeling and logos
Labels and logos range from simple tags attached to products to
complex graphics that are part of the packaging.
Label identifies the product or brand, describe about the product
and might help to promote the brand.
Labels and brand logos can support the brand’s positioning and
add personality to the brand.
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Individual Product and Service Decision
5. Product Support Services
Customer service is A company’s offer
another element of usually includes some
product strategy. support services.
Support services are
an important part of
the customer’s overall
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brand experience.
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6.4 NEW PRODUCT DEVELOPMENT
PROCESS
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The New Product Development Process
Concept
Idea generation Idea screening development and
testing
Marketing Product
strategy and Business analysis development
development
Test marketing Commercialization
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The New Product Development Process
1. Idea Generation
• New product development starts Find new ideas Obtain new product
Internal sources
External sources
through formal ideas from customers,
with idea generation. R&D, competitors,
• A company typically generates management and distributors, suppliers,
and outside design
hundreds of ideas to find a few good staff, and
ones. intrapreneurial firms.
programs.
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Major sources of new products
Customers
Employees
Distributors
Focus groups usually
Vendors consist of seven to ten
people. The objective of focus
Competitors group, interviews is to
Sources of
New-Product stimulate insightful comments
Ideas R&D through group interaction.
Consultants
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THE NEW PRODUCT DEVELOPMENT PROCESS
2. IDEA SCREENING
• The purpose of idea generation is to create a large number of ideas. The purpose of the succeeding
stages is to reduce that number.
• The first idea-reducing stage is idea screening. Product development costs rise greatly in later stages,
so the company wants to pursue only those product ideas that will turn into profitable products.
Identify good ideas and drop R-W-W screening framework:
poor ideas
Is it real?
Can we win?
Is it worth doing?
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The New Product Development Process
3. Concept development and testing
An attractive idea must then be developed into a product concept.
It is important to distinguish between :
Product Idea Product Concept Product Image
• Is an idea for a • Is a detailed version • Is the way
possible product that of the idea stated in consumers perceiving
the company can see meaningful an actual or potential
itself offering to the consumer terms product
market
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The New Product Development Process
3. Concept development and testing
• Marketer’s task is to develop new product into
alternative product concept, find out how attractive
each concept is to customers and choose the best
Concept Development one.
• Refers to testing new-product concepts with
groups of target consumers
Concept Testing
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Before debuting the flexible handset, the Galaxy Fold underwent a week-
long factory folding test that folds and unfold the device 200,000 times.
According to Samsung, if you open and close your Galaxy Fold for 100 times
every day for five years, the device will still be alive and well. On March 27,
2019 the company published a video of the test in action.
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The New Product Development Process
4. Marketing Strategy and Development
• Marketing strategy development refers to the initial marketing strategy
for introducing the product to the market
• Marketing strategy statement includes:
‐ Description of the target market (the planned value proposition; and
the sales, market share, and profit goals for the first few years)
‐ Value proposition (product’s planned price, distribution, and marketing
budget for the first year).
‐ Sales and profit goals
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The New Product Development Process
5. Business Analysis
Business analysis involves a review of the sales, costs, and profit projections for a new product to
find out whether they satisfy the company’s objectives.
If they do, the product can move to the product development stage.
To estimate sales, the company might look at the sales history of similar products and conduct
market surveys.
After preparing the sales forecast, management can estimate the expected costs and profits for the
product including marketing, R&D and operations
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The New Product Development Process
6. Product Development
If the product passes R&D engineering
the business test, it develops the product Involve a huge in
moves into product concept into a investment.
development. physical product.
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The New Product Development Process
7. Test Marketing
Test marketing is the stage at which the product and marketing program are introduced into
more realistic marketing settings
Provides the marketer with experience in testing the product and entire marketing program
before the full introduction. The amount of test marketing needed varies with each new
product. When introducing a new product requires a big investment, when the risks are high,
or when management is not sure of the product or its marketing program, a company may
do a lot of test marketing
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The New Product Development Process
8. Commercialization
Test marketing gives management the information needed to make a final decision about
whether to launch the new product.
Commercialization is introducing the new product into the market – it will face high cost.
For example, company may spend hundreds of millions dollars for advertising, sales
promotion and other marketing efforts in the first year.
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6.5 PRODUCT LIFE-CYCLE
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Product Life-Cycle Strategies
After launching the Management is Product life cycle
new product, aware that each (PLC), the course that
management wants product will have a a product’s sales and
that product to enjoy life cycle. profit take over its
a long and happy life. lifetime. The PLC has
five distinct stages.
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Product Life-Cycle Strategies
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Product Life-Cycle Strategies
Product • Begins when the company finds and develops a new product
idea.
development • Sales are zero, and the company’s investment costs mount.
• A period of slow sales growth as the product is introduced in
Introduction the market.
• Profits are negative or low
• A period of rapid market acceptance and increasing profits.
Growth • New competitors enter the market, they will introduce new
product features, and the market will expand.
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Product Life-Cycle Strategies
• A period of slowdown in sales growth because the product
Maturity
has achieved acceptance by most potential buyers.
• Profits level decline because of increased marketing
outlays.
• Increased promotion and R&D to support sales and profits
• Is a period when sales fall off and profits drop.
Decline • Sales decline for many reasons, including technological
advances, shifts in consumer tastes, and increased
competition.
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PRODUCT LIFE-CYCLE STRATEGIES
Table 9.2 Part I
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PRODUCT LIFE-CYCLE STRATEGIES
Table 9.2 Part II
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6.5 PRODUCT LIFE-CYCLE
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SERVICES MARKETING
Service industries vary greatly. Includes:
Governments Service Private not-for-profit Business organizations
organizations
• offer services through • offer services through • offer services such as
courts, employment museums, charities, airlines, banks, hotels,
services, hospitals, churches, colleges, insurance companies,
military services, police foundations, and consulting firms,
and fire departments, hospitals. medical and legal
the postal service, and practices, entertainment
schools. and telecommunications
companies, real estate
firms, retailers, and
others.
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SERVICES MARKETING
The Nature and Characteristics of a Service
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