UNIVERSITY OF GUYANA MARKETING PRODUCT MODULE 6

Transcription

1 UNIVERSITY OF GUYANA MARKETING PRODUCT MODULE 6 ERIC M. PHILLIPS (MBA, CTP, BSc. Eng.) SEPT-DECEMBER 2013

2 MODULE OUTLINE What is a product? Product versus Brand Product Life cycle Product Management

3 WHAT IS A PRODUCT? A product is anything that can offered to market for attention, acquisition, use, consumption that might satisfy a want or need.

4 WHAT IS A PRODUCT? Goods (physical and tangible things) Ideas (Say no to drugs) Services (intangible, airlines, hotels) Information (universities) Organizations (favorable image) Experiences (Theme Parks) Properties (real estate) Places (Tourism, Guyana) Events (Shows, Olympics) Persons (Celebrities)

5 PRODUCTS Tangible products Intangible products GOODS SEVICES

6 FEATURES OF PRODUCT Associated attributes Tangibility Features of product Intangible attributes Exchange value Customer satisfaction

7 Unexpected features Luxury features Expected features Basic features Basic product LEVELS OF A PRODUCT Potential product Augmented product Expected product Generic product Core benefit

8 CONSUMER ADOPTION PROCESS Adopt Trail Evaluation Interest Awareness

9 CONSUMER ADOPTION PROCESS Potential product Augmented product Expected Product Generic product Core Benefit

10 CLASSIFYING PRODUCTS Durable products Consumer products Business products

11 DURABLE PRODUCTS Durable Non-durable Services

12 CONSUMER PRODUCTS Shopping Products Specialty Products Convenience Products Unsought Products.. To satisfy information needs & buying motives

13 CONVENIENCE GOODS CONVENIENCE GOODS CONSUMERS USE MINIMAL EFFORT FOR FREQUENTLY PURCHASED LOW COST ITEMS Staples Emergency goods Impulse purchases

14 SHOPPING PRODUCTS SHOPPING GOODS - CONSUMERS MAKE A CONSIDERABLE EFFORT TO EVALUATE Consumers make product comparison(s), They seek information before purchase, they are not impulsive Moderate substitutions are made Product s last a considerable time Monetary & social costs may be highigh

15 BUSINESS PRODUCTS Materials and parts Raw materials and parts Manufactured materials and parts Capitals items Equipment Suppliers and business services Maintenance and repair items Operating supplies

16 RAW MATERIALS Farm products Natural products

17 MANUFACTURED MATERIALS AND PARTS

18 PRODUCT MIX

19 PRODUCT MIX THE ASSORTMENT OF PRODUCTS THAT A COMPANY OFFERS TO A MARKET Width how many different product lines? Length the number of items in the product mix Depth The number of variants offered in a product line Consistency how closely the product lines are related in usage

20 PRODUCT LINE & PRODUCT MIX LAMPS Table Product Line Ceiling Track Desk

21 PRODUCT MIX Product Line 1 LAMPS Table Ceiling Track Desk Product Line 2 TABLES Kitchen Dining Room End Coffee Outdoor Conference Product Line 3 CHAIRS Dining Room Living Room Bedroom Outdoor Desk

22 Product vs. Brand A product is something that is made in a factory A brand is something that is bought by a customer. A product can be copied by a competitor. A brand is unique. A product can be quickly outdated. A successful brand is timeless.

23 WHAT IS A BRAND? A set of product perceptions by the consumer. It is a personality developed over time. A brand signifies a relationship with the customer. It is the company s most valuable asset. It s also the main differentiator, the best defense against price competition, and the key to customer loyalty. Competitors can copy your features and benefits, but they can t steal your brand. It s a promise. But it must be backed up by performance.

24 WHAT IS A BRAND? It s the company s definition of what they have to offer. A brand is a product that has a personality. A promise to the customer. What the customer knows about your specific product. It s your image. How the company or product is perceived?

25 BRAND A name becomes a brand when consumers associate it with a set of tangible and intangible benefits that they obtain from the product or service It is the seller s promise to deliver the same bundle of benefits/services consistently to buyers

26 BRAND EQUITY When a commodity becomes a brand, it is said to have equity. The premium a brand can command in the market The difference between the perceived value and the intrinsic value

27 BRAND EQUITY COMPETITIVE ADVANTAGES Reduced marketing costs Trade leverage Can charge a higher price Can easily launch brand extensions Can take some price competition

28 BRAND POWER Customer will change brands for price reasons Customer is satisfied. No reason to change. Customer is satisfied and would take pains to get the brand Customer values the brand and sees it as a friend Customer is devoted to the brand

29 UMBRELLA BRAND Products from different categories under one brand Dangerous to the brand if the principal brand fails Sometimes the company name is prefixed to the brand. In such cases the company name gives it legitimacy. The product name individualizes it.

30 BRAND IDENTIFICATION Batteries: DieHard contains a promise of long use. Sears has Craftsman, DieHard, Homart and Kenmore. 2. Mercedes promises well-built, prestigious, safety, performance. 3. Co branding/dual branding: "Intel inside."

31 WHAT IS A BRAND? & BRAND IDENTIFICATION More Examples: 4. Need to keep it fresh. Look at Coca-Cola. Its image is as fresh today as when it started. It s not luck. It s careful nurturing and development of the brand. Can exploit brand equity with brand extensions, if there is value. 5. Look at licensing. Need control over who uses your brand. Sunkist. Why? Lowers marketing costs, greater trade leverage, can charge higher price, defense against price competition, more easily launch line extensions.

32 WHAT IS A BRAND? & BRAND IDENTIFICATION Salt is in bright-colored packages. Oranges are marked. Labeled. A guarantee of quality. BMW paid $60 million for the Rolls Royce name. Nothing else. A brand can convey: Attributes + Benefits + Values + Culture + Personality Seller s promise to deliver a specific set of features. Brand equity is the value a brand adds to the product.

33 BRAND REPOSITIONING This may be required after a few years to face new competition and changing customer preferences

34 PORSHE VERSUS LEXUS Porsche is positioned on the basis of performance and freedom. 7-34

35 MARKET SEGMENTATION Levels Of Marketing Segmentation Mass Marketing Segment marketing Niche Marketing Micro-marketing No Segmentation Complete segmentation 35

36 PACKAGING

37 PACKAGING Includes the activities of designing and producing the container for a product Packaging is done at three levels - primary - secondary - shipping

38 PACKAGING AS A MARKETING TOOL Self service Consumer affluence Company and brand image innovation

39 DESIGNING PACKAGING Packaging concepts Technical specifications Engineering tests Visual tests Dealer tests Consumer tests Packaging innovations Environmental considerations

40 LABELS Identification Grade classification Description of product Manufacturer identity Date of mfg., batch no. Instructions for use Promotion

41 LABELS AS A MARKETING TOOL Labels need to change with time or packaging changes to give it a contemporary and fresh look

42 PRODUCT LIFE CYCLE

43 PRODUCT LIFE CYCLES AND THE BOSTON MATRIX The Stages of the Product Life Cycle: Development Introduction/Launch Growth Maturity Saturation Decline Withdrawal

44 PRODUCT LIFE CYCLES AND THE BOSTON MATRIX Development Introduction Growth Maturity Saturation Decline Sales Time

45 PRODUCT LIFE CYCLES AND THE BOSTON MATRIX Introduction/Launch Advertising and promotion campaigns Target campaign at specific audience? Monitor initial sales Maximise publicity High cost/low sales Length of time type of product

46 Product Life Cycles and the Boston Matrix Growth: Increased consumer awareness Sales rise Revenues increase Costs - fixed costs/variable costs, profits may be made Monitor market competitors reaction?

47 PRODUCT LIFE CYCLES AND THE BOSTON MATRIX Maturity: Sales reach peak Cost of supporting the product declines Ratio of revenue to cost high Sales growth likely to be low Market share may be high Competition likely to be greater Price elasticity of demand? Monitor market changes/amendments/new strategies?

48 PRODUCT LIFE CYCLES AND THE BOSTON MATRIX Saturation: New entrants likely to mean market is flooded Necessity to develop new strategies becomes more pressing: Searching out new markets: Linking to changing fashions Seeking new or exploiting market segments Linking to joint ventures media/music, etc. Developing new uses Focus on adapting the product Re-packaging or format Improving the standard or quality Developing the product range

49 PRODUCT LIFE CYCLES AND THE BOSTON MATRIX Decline and Withdrawal: Product outlives/outgrows its usefulness/value Fashions change Technology changes Sales decline Cost of supporting starts to rise too far Decision to withdraw may be dependent on availability of new products and whether fashions/trends will come around again?

50 THE BOSTON MATRIX Market Growth High Problem Children Stars Dogs Cash Cows Low Market Share High

51 THE BOSTON MATRIX Problem Child: - Products having a low market share in a high growth market - Need money spent to develop them - May produce negative cash flow - Potential for the future? Problem children worth spending good money on?

52 THE BOSTON MATRIX STARS products in markets experiencing high growth rates with a high or increasing share of the market - Potential for high revenue growth

53 THE BOSTON MATRIX Dogs: Products in a low growth market Have low or declining market share (decline stage of PLC) Associated with negative cash flow May require large sums of money to support Is your product starting to embarrass your company?

54 THE BOSTON MATRIX Cash Cows: High market share Low growth markets maturity stage of PLC Low cost support High cash revenue positive cash flows

55 Product Life Cycles and the Boston Matrix Sales Effects of Extension Strategies Time

56 Sales/Profits PRODUCT LIFE CYCLES AND THE BOSTON MATRIX PLC and Profits PLC Profits Losses Break Even Time

57 Sales THE PRODUCT LIFE CYCLE AND THE BOSTON MATRIX (1) (2) (3) Importance of The (1) (2) (3) maintaining Cash A from product is at maturity a C B stage used balance to cash support of cow. portfolio four Generates C growth products through of in funds D growth the and for products the development in the stage possibly portfolio and to at to finance of portfolio D launch extension different D. stages strategy A now of possibly for the B? PLC Boston a dog? Matrix helps with the analysis D A B C Time

58 WHAT IS PRODUCT MANAGEMENT?

59 WHAT IS PRODUCT MANAGEMENT? The following questions need to be answered What is product management? What do product managers do? Who does product management? How does one become a product manager?

60 THE ROLE OF PRODUCT MANAGEMENT The role of Product Management is to define, develop, deploy and maintain products and services that: Provide more value than the competition. Help build a sustainable competitive advantage. Deliver financial benefit to the business.

61 THE ACCIDENTAL PROFESSION It s a pretty safe bet to say that few if any product managers have a Bachelor degree in Product Management Everyone comes from somewhere else.. Steven Haines The Product Managers Desk Reference

62 MOST PRODUCT MANAGERS HAVE ROOTS IN OTHER PROFESSIONS

63 WHAT DO PRODUCT MANAGERS DO? Product managers spend time understanding what customers need and want Then develop solutions that solve these problems and satisfy needs & wants Product managers have a duty to deliver and maintain financial benefit to the business

64 PRODUCT MANAGERS SEE THINGS DIFFERENTLY The carpenter doesn t want a drill. He wants a hole HOW DOES A PRODUCT MANAGER SEE THIS PROBLEM The speed at which the hole is made. The accuracy of the cut The carpenter has a problem. He needs a hole in the wall. A drill can solve this problem, but there s much more to it than just creating a hole. The carpenter is concerned with multiple factors: The safety of the device that makes the hole The ease of using the device The reliability of the device Where the device can be purchased or accessed The price of the device After sales support of the device

65 PRODUCT MANAGERS HAVE TO SEE THE HOLISTIC SOLUTION Product managers define the problem using criteria such as these before working on possible solutions

66 THE PRODUCT MANAGEMENT DOMAIN STRATEGIC PRODUCT MANAGEMENT PRODUCT PRODUCT PLANNING PRODUCT MARKETING BUYER FOCUS USER FOCUS

67 THERE ARE MANY ROLES IN PRODUCT MANAGEMENT strategic Product marketing Product Planning Marketing/Sales Tactical/operational Product Architect/ Design Engineering Market communications Sales manager Product Operations Project Manager Project Manager

68 A PRODUCT MANAGER IS AN ALL-ROUNDER

69 PRODUCT DELIVERY CYCLE

70 STAGE 1: IDEA STAGE Key stage actions Ideation and innovation workshops Interviews and discussions with customers Market analysis including foreign markets Market Problem Key stage deliverables Market Opportunity Discussion Report

71 STAGE 2 PRODUCT STRATEGY Key stage actions Investigate idea concept Contrast market problems, needs and wants with organizational capabilities and competitive threats Conduct due diligence to determine if idea presents a feasible opportunity Business case Key stage deliverables Competitive analysis Product comparison documents (of existing products)

72 STAGE 3 PRODUCT PLANNING Key stage actions Articulate the market problem Develop and define market requirement Identity and understand customers including buyers, users and influencers Key stage deliverables Market segmentation and targeting Personas Use cases Market requirements document

73 STAGE 4 PRODUCT DEFINITION Key stage actions Articulate the solution that will solve the market problem and satisfy needs/wants Provide inputs for development and other teams that will build and deliver the solution Key stage deliverables Product requirements document Product comparison document Deliver prototype

74 STAGE 5 LAUNCH PLANNING Key stage actions Prepare customer facing messaging Prepare customer facing teams including sales, support and marketing communications Value proposition Key stage deliverables Product-Solution-Feature-Benefit table Sales collateral Marketing plan Launch plan

75 STAGE 6 -LAUNCH Key stage actions Manage product launch and maintain velocity Coordinate internal and external parties involved ad agencies, support teams, sales teams Act on feedback immediately Key stage deliverables Marketing communications materials Sales materials Be available to colleagues as required

76 STAGE 7 DAY-TO-DAY PRODUCT MANAGEMENT Key stage actions Continue to refine and improve product Assist marketing, support and sales teams in selling and maintaining the product Key stage deliverables Product in-life reports Product roadmap Product profile and collateral Product marketing plans