CHAPTER – IV

PRODUCT MIX
Marketing mix is one of the key concepts in modern marketing theory.
Marketing mix is the set of marketing tools that the firm uses to pursue
its marketing objectives in the target market. The four-factor classification
of marketing mix namely the ‘4 P’s are:- Product, price, Place &
Promotion.
MEANING OF A PRODUCT
A product is anything that can be offered to satisfy a need or
want. Three components of product: Physical good(s) service(s)
and idea (s).
Products that are marketed include physical goods (automobiles,
books etc), service (concerts, professional advice), persons (Mr A,
B, C), places (Langano, Sodere), organizations. (Health association,
social clubs), and ideas (family planning, safe driving) etc.
PRODUCT STANDARDIZATION Vs PRODUCT ADAPTATION
PRODUCT STANDARDIZATION:
• This means that a product designed originally for a local
marketing is exported to other countries with virtually no
change, except perhaps for the translation of words and
others cosmetic changes. Arguments for it: simplicity, cost,
consistent brand image
PRODUCT ADAPTATION:
• This means that a product is redesigned in a way to fit the
needs and the demands of local markets. Arguments for it:
sales and revenue will be increased due to appropriateness
to the specific needs of the markets. Its draw back is
complex organization and implementation issues.
Product mix Strategies:-
• To be successful in marketing, producers and middlemen need
carefully planned strategies for managing their product mixes.
• The major product mix strategies include:
- Positioning - Alteration
- Expansion - Contraction
1) Positioning the product
• Positioning means developing the image that a product projects in
relation to competitive products and to the firm's other products.

Several types of positioning includes

– Positioning in relation to a competitor
– Positioning in relation to a product class or attribute
– Positioning by price and quality
– Positioning in relation to a target market
2) Product mix Expansion
• Product mix expansion is accomplished by increasing the depth with in a particular
line and/or the number of lines a firm offers to consumers. When a company adds
a similar item to an existing product line with the same brand name, is termed as
line extension.
• The product strategies of trading up and trading down involve a change in product
positioning and an expansion of the product line.
• Trading up means adding a higher price product to a line to attract a broader
market. Also the seller intends that the new product's prestige will help the sale of
its existing lower price products.
• Trading down means adding lower-price product to a company's product line.
The firm expects that people who cannot afford the original higher price product
or who see it as too expensive will buy the new lower-price one.
3) Alteration of existing products
. Product alteration can be more profitable and less risky than developing a new one.
Redesigning the product itself can sustain its appeal or even initiate its
renaissance. Alternatively, especially for consumer goods, the product itself is not
changed but its packaging is altered.
4) Product mix contraction
Is carried out either by eliminating an entire line or by simplifying
the assortment with in a lien. Thinner and/or shorter product
lines or mixes can weed out low-profit and unprofitable
products.
The intended result of product-mix contraction is higher profits
from fewer products. As firms find that they have an
unmanageable number of products or that various items or
lines are unprofitable, or both, product-mix pruning is likely.
PRODUCT IDENTIFICATION
Branding
• A Brand is a name, term, sign, symbol, or design, or a
combination of them, intended to identify the goods or
services of one seller or group of sellers and to differentiate
them from those of competitors".
A brand can convey up to six levels of meaning.
i). Attributes
• E.g. Mercedes suggests expensive, well built, durable, high prestige, high
resale value, fast, and so on.
ii) Benefits
• Customers are not buying attributes; they are buying benefits.
• Attributes need to be translated into functional and/or emotional benefits.
• The attribute "durable" could translate into the functional benefit, "I won't
have to buy a new car every few years".
iii). Values:-
• The brand also says something about the product values. Thus, Mercedes
stands for high performance, safety, prestige, and soon.
v) Personality:-
• The brand can also project a certain personality. If the brand were a person,
an animal, or an object, what would come to mind? Some time it might take
on the personality of an actual well-known person or spokesperson.
vi) User:-
• The brand suggests the kind of consumers who buys or uses the product. The
users will be those who respect the product's values, culture, and personality.
High brand equity provides a number of competitive advantages: -
• The company will enjoy reduced marketing costs because of high level of
consumer's brand awareness and loyalty.
• The company will have more trade leverage in bargaining with distribution and
retailers since customers expect them to carry the brand.
• The company can charge a higher price than its competitors because the brand
has higher perceived quality.
• The company can more easily launch brand extension since the brand name
carries high credibility.
• The brand offers the company some defense against fierce price competition
Brand Strategy
i) Line extension:
• Line extension occur when a company introduces additional items
in the same product category under the same brand name, usually
with features, such as new flavors, forms, colors, added
ingredients, package sizes, and so on.
ii) Brand Extension
• A company may decide to use an existing brand name to launch a
product in a new category. Brand extension strategy offers a
number of advantages.
• A well-regarded brand name gives the new product instant
recognition and earlier acceptance. It enables the company to
enter new product categories more easily.
• i.e. Sony puts its name on most of its electronic products and
instantly establish a connection of the new products high quality.
iii)Multi brands:-
• A company will often introduce additional brands in the same
product category. There are various motives for doing this.
Sometimes the company is trying to establish different
features and/or appeal to different buying motives.
• A multi branding strategy also enables the company to lock up
more distributors shelf space and to protect its major brand
by setting up flanker brands.
• For example, Seiko establishes different brand names for its
higher priced (Seiko LaSalle) and lower-priced watch (pulsar)
to protect its flanks.
iv) New brand
• When a company launches products in a new category, it may
find that none of its current brand names are appropriate.
v) Co-brands
• A rising phenomenon is the appearance of co-branding (also called dual
branding), is which two or more well-known brands are combined in an
offer. Each brand sponsor expects that the other brand name will
strengthen brand preference or purchase intention. In the case of co-
packaged products, each brand hopes it might be reaching a new
audience by associating with the other brand.
Advantages of Branding
 It makes easier for the seller to process orders and track down problems.
 It provide legal protection of unique product features, which competitors
would otherwise be likely to copy.
 Help to attract a loyal and profitable set of customers.
 It gives sellers some protection from competition and greater control in
planning their marketing program
 Branding helps the seller segment markets.
 It build the corporate image
Packaging
• One such product feature, and a critical one for some
products, is packaging, which consists of all activities of
designing and producing the container or wrapper. Thus
packaging is a business function and a package is an item.
Packaging can be defined as follows:
• "Packaging includes the activities of designing and
producing the container or wrapper for a product." The
container or wrapper is called the package. The package
might include up to three levels of material. Thus, old spice,
after shave lotion is in bottle (primary package) that is in a
cardboard box (secondary package) that is in a corrugated
box (shipping package) containing six-dozen boxes of old
spice.
 Packaging and the resulting package are intended to serve several vital purposes.
i) Protect the product on its way to the consumer:-
• A package protects products during shipment.
ii) Provide protection after the product is purchased:-Compared with bulk (that is
unpackaged) items, packaged goods generally are more convenient, cleaner,
and less susceptible to losses form evaporation, spilling and spoilage.
iii) Be part of a company's trade marketing program:-
• A product must be packaged to meet the needs of wholesaling and retailing
middlemen. For instance, a packages size and shape must be suitable for
displaying and stacking the product in the store.
iv) Be part of a company's consumer marketing program:-
• Packaging helps identify a product and thus may prevent substitution of
competitive product. At the point of purchase such as supermarket aisle - the
package can serve as a 'silent sales person'
• Ultimately, a package may become a product's differential advantage, or at
least a significant part of it.
v) Product description:-
• The package is expected to show not only what the product is, but also
what it does in terms of benefits it gives the promotional message. This
could be done using words or pictures.
vi) Product image-
• The packaging material ought to match the image of the product inside.
Highly prestigious products and inferior products should be packed
differently.
vii) Product value
• The pack is often designed to make its contents look more than they
really are in terms of value a small value item looks huge in certain
packages.
viii) Shelf display
• It is also important products are packed in such a way that they occupy
small space, they are protected from shocks damages, their shelf life
increases, they are protected from pilferage.
Packing problems
i). Weight: Over packing not only directly increases packing cost but also
increases weight and size of cargo. Any undue increases in weight or size
only serves to raise freight changes.
ii). Breakage: Although over packing is undesirable, so is under packing
because the latter allows a products to be susceptible to breakage or
damage. The breakage problem is present in every step of ocean
transport.
iii) Moisture and temperature: Certain products can easily be damaged by
moisture and temperature. Such products are subject to condensation
even in the hold of a shipped equipped with air conditioning or
dehumidifying equipment. Another problem is that the cargo may be
unloaded in the rain.
iv) Pilferage and theft: Cargo should be adequately protected against theft.
One method to discouraging theft is to use shrink wrapping seals, or
strapping. Gummed sealing tapes with patterns when used, will quickly
reveal any sign of tampering.
Labeling
• Labeling which is closely related to packaging is another product feature
that requires managerial attention. A label is a part of a product that
carries information about the product and the seller. Labels fall into
three primary kinds:-
i) A brand label:-
• It is simply the brand name applied to the product or package.
ii) A descriptive label: It gives objectives information about the products'
use construction, care, performance, and/or other pertinent features
ingredients and nutritional contents.
iii) A grade label: It identifies the products judged quality with a letter,
number, or word. Canned peaches are grade labeled A,B,C, corn and
wheat are grade labeled 1 & 2. Brand labeling is an acceptable form of
labeling, but it does not supply sufficient information to a buyer.
Descriptive labels provide more product information but not necessarily
all that is needed or desired by a consumer in making a purchase
decision.
International Product Life Cycle
1. Stage 0 – Local Innovation
• It depicted as time 0 on the left of the vertical import/export axis
• Represents a regular and highly familiar PLC in operation within its
original market.
• Introduction occurs there because marketers are familiar with
local desires and marketing conditions, making them believe that
the risks in introducing any product at home, rather than some
where else, are smaller.
• Furthermore, it is common for a new product to have technical
problems even after market introduction and acceptance, perhaps
necessitating significant modifications.
• In most instances, regardless of whether a product is intended for
later export or not, an innovation is initially designed with an eye
to capture the U.S. market, the largest consumer nation.
 2). Stage 1- Overseas Innovation
• New product is well developed,
• its original market well cultivated, and
• local demands adequately supplied,
• The innovating firm will look to overseas markets to expand
its sales
• This stage is known as a “pioneering” or “International
Introduction” stage.
• Production cost tends to be decreasing because of increase
economies of scale.
• A low introductory price overseas is usually not necessary
because of the technological breakthrough; a low price is not
desirable because of the heavy and costly marketing effort
needed in order to educate consumers there
 Stage 2 – Maturity
• Growing demand in advanced nations provides an
impetus for firms there to commit themselves to
starting local production, often with the help of
their governments’ protective measures to
preserve infant industries.
• Thus, these firms can survive and thrive in spite of
relative inefficiency.
• This process may explain the changing national
concentrations of high – technology exports and
the laws of the US share to Japan, France, and
perhaps the United Kingdom.
Stage 3-Worldwide Imitation:
• For the innovating nation continuous decline in exports.
• There is no more new demand anywhere to cultivate.
• production costs thus begin to rise again.
• Firms in other advanced nations use their lower prices to
gain more consumer acceptance abroad.
• As the product becomes more and more widely
disseminated, imitation picks up at a faster pace.
Stage 4-Reversal:
 The major functional characteristics of this stage are
product standardization and comparative disadvantage.
 The innovating country's comparative advantage has
disappeared, and what is left is comparative disadvantage.
Marketing Strategies
i) Product Policy
• The IPLC emphasizes the importance of cost advantage. The
innovative firm must keep its product cost competitive. To reduce
production cost,
– Cutting labor costs through automation and robotics
– Eliminating unnecessary options, since such options increase
inefficiency and complexity.
– A firm may use local manufacturing in other countries as an entry
strategy.
– The company not only can minimize transportation costs and entry
barriers but also can indirectly slow down potential local competition
– Manufacturers should examine the traditional vertical structure in
which they make all or most components and parts themselves,
because in many instances outsourcing may prove to be more cost –
effective.
ii) Pricing Strategy
• Initially, an innovating firm can afford to behave as a monopolist,
changing a premium price for its innovation.
• But this price must be adjusted down ward in the 2ND and 3RD stages
of IPLC to discourage potential newcomers and to maintain market
share.
• In the last stage of the IPLC, it is not practical for the innovating firm to
maintain low price because of competitions cost advantage.
• A high standard of excellence should partially insulate the firm’s
product from direct price competition.
iii) Promotion Strategy
• Promotion and pricing in the IPLC are highly related.
• The innovative firm’s initial competitive edge is its unique product,
which allows it to made a premium price. To maintain this price in the
face of subsequent challenges from imitators, uniqueness can only be
retained in the form of superior quality, style, or service.
iv) Place (Distribution) Policy
• A strong dealer network can provide the
innovating firm with a good defensive strategy.
• Because of its near-monopoly situation at the
beginning, the firm is in a good position to be
able to select only the most qualified
agents/distributors
• Distribution network should be expanded
further as the product becomes more diffused