chapter 7 Flashcards
(30 cards)
PRODUCT
a combination of tangible and intangible characteristics that enable an object/ service to satisfy a customer need
SERVICE
Intangible- and almost instantly perishable- activity that satisfies users, but cannot be owned or stored
PRODUCT LEVELS
CORE PRODUCTS- BASIC NEED, BENEFIT OF THE PRODUCT
ACTUAL/ TANGIBLE PRODUCT- PRODUCT FEATURES
AUGMENTED PRODUCT- SUPPORTING SERVICES AND BENEFITS
TYPES OF CONSUMER PRODUCTS
Convenience products:
Shopping products-
Specialty products
Unsought products
CONVENIENCE PRODUCTS
are items the consumer buys frequently, immediately and with a minimum shopping effort
Convience products can be categorised into:
Frequently bought- staples or fast- moving consumer goods (for example- bread)
Spontaneously bough- impulsive goods (purchased with no pre-planning or careful decision making, as when adding a packet of chewing gum while standing in line at the checkout in a grocery store
Emergency goods- purchased when the customer urgently needs the item (for example new umbrella bought during rain, even if the consumer has one at home)
SHOPPING PRODUCTS
items for which the consumer normally compares the quality, price and style of a number of alternatives, often visiting several stores before making a purchase decision- cameras, bicycles and clothes
They can be:
Homogeneous-all products are more or less the same (person just tries to find the lowest price)
Heterogenous- if a person perceives certain product attributes to be substantially different between offerings (regardless their similarities)
SPECIALTY PRODUCTS
are items or services for which consumers are willing to make a special effort to acquire. These are high involvement/ A consumer may know little about it, before even feeling a need for it- know what brand he would buy
A specialty product involves a high degree of brand loyalty, therefore the effort in shopping, when it is time to purchase a watch, does not involve comparing one brand against another, but finding a store that carries the brand
PRODUCT LIFE CYCLE
As a marketeer it is important to keep in mind the life cycle of your product. After all, turnover and profit will change at every stage. Although it remains difficult to predict how long each phase will last and which form each cycle will take. This all depends on environmental factors
Still, you have a significant influence as a marketeer during this life cycle with good marketing strategies
STAGES OF LIFE CYCLE
INTRODUCTION
RAPID GROWTH
TURBULANCE
MATURITY
DECLINE
Unsought products-
are products and services of which consumers are unaware, haven’t necessarily thought of buying or discover they need in order to solve an unexpected problem
New unsought products-
items have not been on the market long and are unknown until advertising and distribution increase consumer awareness
Known or regular uncought products
are life insurance, encyclpediadias
Non-durable consumer products-
have short life cycle- like clothing or footwear they rarely last longer than about three years
Fast moving consumer goods-
soft drinks, shampoo (profit margins are relatively small) they are usually distributed intensively and advertised heavily to create brand awareness and brand preference
Succesful marketing strategies are built around two fundamental decisions-
The selection of markets and products
Product mix-
total assortment of products and services that the company sells, including the various product lines, products, product types and brands
Product line-
is a group of closely related items in the organisation’s assortment or product mix
Products within a product line share some common features or technological characteristics
Production ( made in the same factory, such as widescreen televisions and plasma monitors)
Distribution (sold in the same store or distribution channels)
Price (falling within a given price range)
Marketing (targeted at the same customer group)
Consumption pattern (satisfying a similar need or used together as complementary products)
DIMENSIONS OF THE PRODUCT MIX
Width of the assortment- number of product lines that a company sells
Length of the assortment- the product mix length- total number of articles that a company offers within all of its product linesm and thus is a measure of the total number of items that the company sells- product line length- number of items in a product line
Product line depth- number of product items (brands, types, models and container sizes) in a product line (The greater the number of versions offered of each product in the line, the deeper the assortment
Height of the assortment- average price level of the items in the product lines
Consistency of the assortment- some retailers try to increase their customer base by widening their product mix
PRODUCT MIX PRICING STRATEGY
If a company is facing declining demand it may have to expand and modernise its product mix
when deciding how the different products in the product lines or in the assortment should be priced to maximise profits on the total mix
CORE AND PERIPHERAL ASSORTMENT
An important consideration when changing the product portfolio is the 20/80 rule, which states that approximately twenty percent of the product items offered by a company account for about 80% of its total sales
This twenty percent makes up the core assortment, consisting of those items with a high turnover rate
The remaining 80% of the articles are known as the peripheral assortment- these products have a relatively low turnover rate
PRODUCT LINE EXTENSION- to optimise their product mix
This involves adding a closely related products to the current product line- developed to satisfy a somewhat different customer need- so as to compete more broadly in the industry
Four possible strategies used to extent the product line:
- trading up-lengthening the product line with a higher priced, better quality product to meet the needs of the market,is known as trading up
-tradiding down-new, price-sensitive segment at the lower end of the market by introducing a lower priced item. Its objectives is fot the firm to reach a larger target market
Line filling- expanding the product line by adding more items within the existing range of products and prices (make sure that it does not lead to cannibalisation or customer confusion. Buyers should be able to see how the products differ from each other
Brand extension is a completely different strategy, since the existing brand name is now applied to a new product in a different product class or category
Downgrading-positioning strategy designed to influence the customer’s perception
Upgrading-tries to improve its image by increasing the price and the quality or by enhancing the facilities and decor in the store
brand stretching
When a new product has been well received by the target market, the company may launch other products or product items unde the same brand name, possibly in new market segments
