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week5.pdf
Learning outcomes
1. Understand what a product is.
2. Understand and apply the Total Product Concept.
3. Identify product classifications and the different types of products.
4. Understand the Product Life Cycle and the process of new product development.
5. Understand how products are adopted in the market.
6. Understand and apply the Ansoff growth matrix and strategies.
7. Understand product obsolescence.
8. Understand what a service is and its unique characteristics.
What does it mean to “manage” the product?
Keeping in mind the organisational objectives (e.g., sales, revenue, reputation), managing product-related decisions involves:
Product development
Product launching
Branding
Packaging
Positioning is the process of developing a marketing mix to occupy a certain position in the minds of consumers in the target market, relative to competing offers.
The marketing mix is used in its entirety to position the offering.
Repositioning is the process of shifting from the existing position to a new position in the minds of consumers in the target market, relative to competing offers.
“Managing product” is about how to position
Segmentation Targeting Positioning
What is a “product”?
A physical good A service An idea Examples:
Food Clothes Shampoo Cars
Essentially anything we buy that we can physically touch (tangible).
Examples:
Banking Insurance Education Healthcare
Essentially the intangible things we buy that we benefit from (i.e., experience).
Examples:
Reuse, refuse, recycle Stay home, save lives MAGA Get out, stay out
Essentially concepts, issues, or philosophies aimed at behavioural or attitudinal change.
Anything offered to a market that satisfies a need/want for exchange of value between the customer and the organisation.
The Total Product Concept (TPC)
• An idea to determine the different levels of the product.
• Allows marketers to take a comprehensive view of the product.
• Views the product as the totality of value and benefits it provides to the customer.
Potential product
Augmented product
Expected product
Core product Fundamental benefit that satisfies the customer’s need. The “solution”.
Attributes that deliver the benefits of the core product. The “basic expectations”.
Bundle of benefits beyond expectations. The “add-ons”.
Potential features and benefits not yet available. The “upcoming”.
Product differentiation
TPC of Hidrate Spark 3 (Smart water bottle)
Potential product
Augmented product
Expected product
Core product
Portable hydration
Convenient size and weight Durable (drop-resistant, dishwasher safe) Easy to refill and wash Leakproof
Ergonomic design Fashionable colour and shape Patented one-click lid BPA-free Sensor technology for tracking intake Bluetooth sync for hydration reminders Glowing light for hydration reminders GPS tracking
* Not yet a feature but is
a possibility in the future
Hygiene sensor*
Product classifications
Durability and tangibility
Two broad categories 1. Consumer products 2. B2B (industrial) products
Durable goods
• Long-lasting and tangible
• E.g., computer
Non-durable (perishable) goods
• Short-lasting and tangible
• E.g., food
Services
• Intangible and perishable
• E.g., haircut
Consumer product types Adapted from
Kerin & Hartley (2017) Type of consumer product
Basis of comparison Convenience product Shopping product Specialty product Unsought product
Examples Toothpaste, cake mix, soap, ATM cash withdrawal
Cell phones, computer, airline tickets, clothes, furniture
BMW, Rolex watch, heart surgery
Burial insurance, skin treatment for acne
Price Relatively inexpensive Relatively expensive Very expensive Varies
Place (distribution) Widespread, many outlets Large number of selective outlets
Very limited Often limited
Promotion Emphasise price, availability, awareness
Emphasis on differentiation from competitors
Emphasis on uniqueness of brand and status
Awareness is essential
Brand loyalty Easily substitutable Substitutable but prefer certain brands
Not substitutable, strong brand loyalty
Substitutable
Purchase behaviour Frequent, quick, minimal effort
Infrequent, relatively time-intensive
Infrequent, very time- intensive
Very infrequent, sometimes time-intensive
Level of involvement Low (routine problem- solving)
Moderate to high (limited or extended problem- solving)
High (extended problem- solving)
Varies
B2B (industrial) product types
Parts and materials
• Raw materials • Unprocessed, natural
materials that form parts of business products • E.g., fleece for yarn, iron
ore for steel • Components
• Processed items that form parts of business products • E.g., processors for
computers, engines for cars
Equipment
• Capital equipment • Buildings and machinery
• E.g., warehouses • Accessory equipment
• Items that support production • E.g., printers
Services and supplies
• Business services • Specialised services that
support operations • E.g., legal services,
cleaning • Maintenance, repair,
operating supplies • Items that assist in
production operations • E.g., engine oil
Product life cycle
Develop idea,
research,
prototyping,
pre-testing,
modifications
Product launch
(commercialisation),
promotion, trial and
purchase
Increased
competition,
continued
promotion
Determine
future of
product (alter
marketing mix
or exit market)
Reduce
investment,
change
product, halt
production
Which stage/phase of the PLC is the Hidrate Spark 3 smart water bottle in? Why?
Managing product through the life
cycle
New product fail https://www.wired.com/2013/08/the-newton-lives/
New product development (NPD)
“New” means lots of things: • New to market – new product market has never seen before • New to company – existing product but first time producing as a company • New to product line – extension of what the company is currently producing • New to product – modification, enhancement, improvement of product already being produced
by the company
NPD process:
Idea
generation Screening
Concept
evaluation
Marketing
strategy
Business
analysis
Product
development
Test
marketing Commercialisation
Important note: Throughout this process, the customer must be considered at all times.
Product adoption and diffusion of innovation
Degree of “newness”
How “new” a product is to consumers impacts the amount of learning effort consumers need to exert in order to use the product.
Adapted from Kerin & Hartley (2017)
CONTINUOUS INNOVATION DYNAMICALLY CONTINUOUS INNOVATION DISCONTINUOUS INNOVATION
Definition Requires no new learning Disrupts consumers’ normal routine, moderate degree of new learning
Requires high degree of new learning and change in consumption behaviours
Examples Toothbrush and toothpaste Electric toothbrush and tooth “foam”
Hands-free electric brushing device
Marketing strategy
Gain awareness, wide distribution
Promote points of difference and benefits
Focus on consumer education
Degree of “newness”
How “new” a product is to consumers impacts the amount of learning effort consumers need to exert in order to use the product.
Adapted from Kerin & Hartley (2017)
CONTINUOUS INNOVATION DYNAMICALLY CONTINUOUS INNOVATION DISCONTINUOUS INNOVATION
Definition Requires no new learning Disrupts consumers’ normal routine, moderate degree of new learning
Requires high degree of new learning and change in consumption behaviours
Examples Toothbrush and toothpaste Electric toothbrush and tooth “foam”
Hands-free electric brushing device
Marketing strategy
Gain awareness, wide distribution
Promote points of difference and benefits
Focus on consumer education
Degree of “newness”
How “new” a product is to consumers impacts the amount of learning effort consumers need to exert in order to use the product.
Adapted from Kerin & Hartley (2017)
CONTINUOUS INNOVATION DYNAMICALLY CONTINUOUS INNOVATION DISCONTINUOUS INNOVATION
Definition Requires no new learning Disrupts consumers’ normal routine, moderate degree of new learning
Requires high degree of new learning and change in consumption behaviours
Examples Toothbrush and toothpaste Electric toothbrush and tooth “foam”
Hands-free electric brushing device
Marketing strategy
Gain awareness, wide distribution
Promote points of difference and benefits
Focus on consumer education
Degree of “newness”
How “new” a product is to consumers impacts the amount of learning effort consumers need to exert in order to use the product.
Adapted from Kerin & Hartley (2017)
CONTINUOUS INNOVATION DYNAMICALLY CONTINUOUS INNOVATION DISCONTINUOUS INNOVATION
Definition Requires no new learning Disrupts consumers’ normal routine, moderate degree of new learning
Requires high degree of new learning and change in consumption behaviours
Examples Toothbrush and toothpaste Electric toothbrush and tooth “foam”
Hands-free electric brushing device
Marketing strategy
Gain awareness, wide distribution
Promote points of difference and benefits
Focus on consumer education
Ansoff growth matrix
Least risk Moderate risk
High riskModerate risk
Ansoff growth strategies
Market penetration Selling more to current customers or recruiting new customers in current market. Key activity: Promotion
Market development Seeking new markets for current product. Key activity: STP and promotion
Product development Creating new products for current market. Key activity: NPD
Diversification Creating new products into new markets. Key activity: NPD, STP, promotion
Now your turn
Which strategy do you think Coca Cola company are using with the new flavoured Diet Coke range?
How can Coca Cola use each of the Ansoff growth strategies? What would that look like?
Product obsolescence
When a product is no longer used and/or relevant, they are said to have become ‘obsolete’.
Unplanned obsolescence: When a product is superseded by another due to environmental change (e.g., social or technological). Planned obsolescence: When companies intentionally makes their product become obsolete either by introducing new products to replace them or by designing them to become less functional over time.
A company can either reposition an obsolete product for reinvigorated growth OR it can stop production altogether and ‘delete’ it from their product mix. Product deletion: Process of eliminating a product from the product mix.
What is a “service”?
Intangible activities or benefits offered to a market that satisfies a need/want for exchange of value between the customer and the organisation.
“Service” • Act of delivering an offering that adds value to the offering. • E.g., online shopping delivery, restaurant service “Services” • Are unique products. • Activities, performances, or benefits of value but does not involve exchange of tangible
goods. • E.g., medical consultation, massage
In reality, an offering is always a mixture of tangible goods and intangible services (and service).
The service continuum
No such thing as “pure good” or “pure service”.
Characteristics of services
Intangibility
• No physical presence. • Create tangible cues
(e.g., physical
atmosphere), service
guarantees,
testimonials, consumer
education, price and
branding.
Inseparability
• Can’t separate service from service provider or production from consumption.
• Quality skills (technical
and interpersonal), time
management and
availability, technology
(e.g., ATMs)
Heterogeneity
• Inconsistent and variable.
• Develop service delivery
systems/scripts,
manage expectations,
staff training, customer
selection, feedback
mechanisms (mystery
shoppers, surveys),
customisation/tailoring.
Perishability
• Cannot be stored or stockpiled.
• Manage demand over
time, stimulate
demand, manipulate
supply capacity (i.e.,
more/less
staff/providers).
“Extended services marketing mix”—the 7 Ps People—managing employees in contact with customers. Process—systems and procedures surrounding the service offering. Physical evidence—tangible cues of quality of service (includes branding).
Summary 1. Managing the product is part of positioning and involves all product-related decisions that provide value to
consumers as well as meet organisational goals.
2. A product can be a physical good, a service, or an idea that satisfies a need/want and provides value.
3. The TPC is a comprehensive perspective of the product that has four levels that comprise of the whole product.
4. Products range from durable to non-durable, tangible to intangible.
5. Consumer products consist of four broad categories; B2B products consist of three broad categories.
6. The PLC has five phases, each which must be managed differently.
7. NPD process involves 8 stages, all requiring the customer to be at the centre to avoid product failure.
8. The newer and unfamiliar a product is, the more focus needs to be put on consumer education.
9. Ansoff growth matrix and associated growth strategies outline how an organisation can use products to grow.
10. Marketers also need to think about product obsolescence and how to manage product deletion.
11. Services are unique and have four distinct characteristics. The three extra Ps address these characteristics.
12. Offerings are always on a continuum ranging from service-dominated to product-dominated.
