Discussion QuestionMK5
Kendrick18
Week5overviewPowerPoints.pptxWeek 5 Overview
Principles of Marketing
MRKT 310
Week 5 begins our discussion on the first of the variables under the direct control of the marketer — the offering — how it is designed, looks, packaged, benefits, and features. The product strategy is only as good as the work that preceded it in understanding the customer and his behaviors as well as selection of target market and positioning strategy. The product strategy should be a direct reflect of those things.
Creating Offerings
Developing value for customers through offerings
5.1 What composes an offering
5.2 Types of consumer offerings
5.3 Branding, labeling, and packaging
5.4 Managing the offering
5.5 New products
5.6 Product Life Cycle
Offerings can be created or in some cases modified or recreated to fill unmet market needs. This week we look at these six areas that comprise offering strategy.
5.1 What composes an offering?
Products are comprised of features that consumers translate into benefits
Price the customer will pay PLUS other costs the customer may incur to own the product successfully (total cost of ownership)
Products can be:
tangible goods
intangible services
a combination of both tangible good and intangible service
First, remember that products can be tangible goods, intangible services, or a combination. While the word product tends to conjure thoughts of a tangible good, it is the catch-all phrase for any offering a company can provide to meet a consumer need.
Price is the last component of an offering as the price is integral to the consumer determining the personal value equation of that offering. We will discuss at length next week, but for now just remember the price component of an offering.
Four offering levels
(See chart)
Very few companies make just one stand alone-product anymore
Most products belong to a product line.
Many companies have multiple product lines
Some companies have more than one product line in a product category.
If you watch Shark Tank you may notice that one of the biggest criticisms Sharks give to the entrepreneurs is that they don’t see how the product is scalable, or what will happen once the original product reaches saturation. They are looking at how the product can be the launching pad for related products.
A product line generally has a common thread, e.g. Kellogg cereals are all breakfast foods; and when that common thread is a technology such as Intel or IOS operating systems, that is known as a technology platform from which multiple products can be offering using the same technology.
The four offering levels gives us a way to categorize related products.
5.2 Types of consumer offerings
Four general categories of offerings
Convenience offerings
Shopping offerings
Specialty offerings
Unsought offerings
Different marketing strategies used for different types of offerings
Offerings can also be classified by the type of offering. This is useful to marketers because it means that marketing strategy can follow the classification.
For example, if the product is a disposable phone, the company would do well to make it available wherever the market wants it, or the convenience the market wants. That is why they are readily available in convenience stores.
5.3 Branding, labeling and packaging
A brand can be a company’s greatest asset.
Brand is a name, picture, design or symbol or combination of those items used by seller to identify its offerings and to differentiate them from competitors
Branding is the activities designed to create and position a brand in the minds of the consumers
Brand name is spoken part of brand’s identity
Brand extension is using existing brand name or brand mark for a new product category.
Brand strategy is whether to use a parent brand to market a new product or give the new product its own brand identity
Branding is so important in marketing today that the professionals that used to be known as product managers are now known as brand managers. A brand can be an umbrella to communicate the value of all products under the brand umbrella. Apple is an excellent example, but many more traditional products also have strong brands such as Kleenex, Campbell Soup, or Tumi Luggage. Each brand conjures an image of quality in the minds of the consumers.
A strong brand also means the company can launch related products under the brand, and because the brand has a pre-existing image, the new product can benefit from the halo effect of that image. This means it may be more cost efficient to launch under the existing brand.
Sometimes a company wants to launch a product but is nervous about using the brand image for various reasons. The most famous example is when Coke first forayed into diet drinks and launched Tab. Coca-Cola didn’t want to damage the Coke brand. However, when imitation sugar drinks became popular Coke was able to add Diet Coke to its line-up and benefit from the Coke brand. Interestingly, Tab still has its niche market. While small, even a sliver of the billion dollar soft drink market means hundreds of thousands in sales.
Packaging:
Communicates the brand and its benefits. Can be company’s last chance to communicate with customer.
Protects the product from damage and contamination during shipment or on retail shelves
prevents leakage of the content
presents government required warnings and information labels
The package is the last time the company can communicate with the customer as they stand before the product making their purchase decision. Packaging as a functional job to hold and protect the product, but it also needs to communicate the brand or other important messages to the customer.
5.4 Managing the offering
Brand manager = responsible for many products within the branded product line
Product manager = responsible for one product
Category manager = responsible for a broad group of offerings
Market manager = responsibilities for a specific market area of customer group
Lastly, the offer has to be managed. Here are a few of the job titles of marketing professionals involved in the management of the brand or product.
5.5 New products
Continuous search for new products is necessary to grow the business
New product development process
Time consuming but necessary
Focuses on needs and wants of consumers
Ensures the new product includes the right features to create customer benefits
All companies need new products to survive. A company should be in a constant process of finding and filling new consumer needs. All companies go through some sort of process for identifying new opportunities. Of course some companies get lucky and sort of fall into new successful ideas, but generally a process following the steps outlined above represents a good customer-focused process for adding to the product mix.
5.6 Managing new products
The product life cycle
All products will move through the four stages
Marketers can try to extend the lifecycle with small product modifications, price incentives or marketing communications strategies.
Demarketing is when the product should be eliminated as cost of the product exceeds any potential profits and substitute products are better.
All products move through a product life cycle. The stage of the life cycle is closely correlated to its profit maximization as the above chart illustrates. The speed with which the product moves through the cycle depends on the resources the company can use for the introduction and growth stage, number of direct competitors, the introduction of substitute products in the maturity stage, and the degree to which the product still fills a need in the decline stage.
Since costs are high in the introduction stage and revenues are low, companies develop strategies for moving the product into growth as quickly as prudent. This may mean a penetration pricing policy for products that can be quickly imitated; or a skimming pricing strategy for products that require a lot of development costs and for which there is a market willing to pay the high price. Electronics such as Sony TVs used to all have skimming pricing, but the speed with which electronic technology can now be imitated means the company may have to rely on getting to maturity quickly to capture maximum profits.
These are just a few examples of how the product life cycle can suggest marketing strategies for offerings.
Week 5
Assessments
Week 5 Discussion Forum participation
Week 5 Quiz
All due Tuesday
by 11:59 pm,
Eastern Time
It is highly unlikely that Vlasic Pickles brand can venture into dessert topping or cleaning products using the same brand. Branded products are generally related in some way.
Questions or concerns?
Be sure to take advantage of the General Discussion topic in the Week 5 Discussion Forum to ask any questions, get clarifications, or otherwise seek the advice and assistance of your faculty member.
Questions or concerns about offerings? See you in the Week 5 Discussion Forum.
