BOM Unit 5 Mktg Mix Product business .pptx

marketing mix

1. What is a Product? Product is anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. Products include more than just tangible goods. Broadly defined, products include physical objects, services, events, persons, places, organizations, ideas or mixes of these entities. Services are a form of product that consists of activities, benefits or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything. Example banking, hotel and airline. In simple terms we can define a product as a ‘NEED SATISFYING ENTITY’

2. Contd.. examples to understand more about product Products, Services and Experiences: Today, companies are creating and managing customer experiences with their products. For example, Disney has manufactured memories through its movies and theme parks. Starbucks’s patrons are paying for more than just a coffee: customers can also poetry on their wallpapers! American Girl, Inc., has created a place (not a store) where girls can come and engage in experiences with dolls etc. Companies that market experiences realize that customers are really buying much more than just products and services. They are buying what those offers will do for them.

3. Starbucks: More than Just a Cup of Coffee?

4. Contd.. We live in a “brand” world . If you don’t buy shoes from Gucci, eat Burger King’s eco-friendly fries, or try that new Lancôme lipstick then you are outdated and prehistoric. Those tycoons sit in the CEO’S office, running around our lives while we submit to their spell wherever we are. We anticipate their next move and we look forward to whatever they pitch at us, even though it drastically affects our salaries and kind of turns us into zombie-like, branding-crazed creatures. Is Starbucks one of these companies? Definitely, yes. Starbucks is a Mecca for all caffeine addicts. It might not offer the greatest coffee in the world but it certainly is the largest coffeehouse company in the world with over 20,000 stores in 62 countries, including 13,279 in the United States alone. Starbucks doesn’t just offer you a soothing cup of coffee or a side muffin, Starbucks designs your cup, shapes your drinking experience and allows you to take that “coffee” into a whole different category from a “drink” to a “lifestyle anchor”. Starbucks’s menu is always updated, with a variety of hot and cold beverages, whole bean or ground coffee , naturally-flavored coffee, seasonal drinks, different roast-type coffee, full leaf teas and also a creative menu of bagels, pretzels, fritters and snacks. The coffeehouse chains also sell hot and cold sandwiches, fresh bakery, Starbucks-branded candy bars, ice-cream, coffee and chocolate bars.

5. Contd.. Starbucks has also designed a logo that can never be forgotten: the twin-tailed mermaid –siren, melusine , pick your favorite classification- against a green background with her hair draped over each side, hiding both of her breasts. In the original brown logo that was used from 1971 to 1987, the siren was topless and her double, fish tail was visible. But the green logo that we’re all accustomed to now starting 1992 is the one that stuck. One can’t imagine holding a paper Starbucks cup without the siren gazing at us with her twin-tail, and the crown above her head, promising us one cup of coffee we will never forget. The world’s largest coffee chain has started a mega petition titled “Come together”. The three day petition encourages US citizens to write letters that express their outrage at the government, ask lawmakers to reopen the government and reach a long-term budget deal by the end of 2013. Twenty million coffee-lovers are expected to either visit their nearest Starbucks branch, sign the petition digitally at ComeTogetherPetition.com or “like” the petition’s Facebook post. Starbucks is not just aroma and desserts. It’s a life-changing cup of coffee, at least on an individual level. Written by: Jaylan Salah

6. Product:- A product is a set of tangible and intangible attributes which may include, packaging, color, price, and quality, brand, and seller reputation and seller services. The first commandant in marketing is the customer and the second is the product. In narrow sense product is the product is set of basic attributes assembled in an identified form. Each product is identified by a commonly understood descriptive name, such as steel, insurance, tennis rackets etc.

7. There are many definitions of product by different authors. 1- A product is a set of tangible and intangible attributes, which may include packaging, color, price, quality, brand and seller’s services and reputations. 2- Product is a service that provides the benefit of a comfortable night rest at a reasonable price. 3- Product is a place that provides sun and sand, relaxation, romance, cross cultural experiences and other benefits.

8. Explanation:- We treat each brand as separate product. Any change in a feature (design, color, size, packing) however minor, creates another product. Each such change provides the seller with an opportunity to use a new product. A product may be a good, service, place, person or idea. Customers buy products to satisfy their needs.

9. The 5 product levels Potential product  – it is the final product that is available on the market and that the consumers can buy. This includes all the additional values and augmentations that the company finally included in the product to differentiate it from the competitors’ products. Augmented product  – those attributes of the product that can differentiate it from the competitors’ products and might provide a slight advantage over them for the consumers. These may include the brand name, the design, the packaging, the overall quality, the additional functions (apart from the basic features), the installation, the after-sale service, the warranty, the home delivery and the possibility to accept credit from the consumers.

10. Expected product  – the properties that the product has and that are absolutely necessary for the consumer to think about buying the product. Basic product  – the basic product that might satisfy the inner needs of the consumer. On this stage the product only contains those values that are totally necessary for it to function. Core benefit  – the inner need that urges the consumers to buy something, no matter if it is a product or a service. The main aim of consumers is to satisfy this inner urge.

11. Levels of Products and Services: Product Planners need to think on three levels: 1.Core Benefit: This addresses the question “What the buyer is really buying?”. At this level, marketers must define the core: problem-solving benefits or services that consumer seek. For example, buyers don’t buy Sony Handycam rather they are buying a way to capture moments and memories. 2.Actual Product: At this level, the core benefits must be turned into actual products. Product planners need to develop product and service features, design, quality level, brand name and packaging. 3.Augmented Product: Finally at this level, the product planners must bundle the products with services. They must build an augmented product by offering additional consumer services and benefits. For example, Sony must provide a warranty along with its Handycam .

12. Classification of product:- Products or goods are basically of two types. (A). Consumer goods (B). Industrial goods. (A). Consumer goods (1). Convenience goods:- Goods that the consumer usually purchase frequently, immediately, and with the minimum of effort in comparison and buying for most buyers, convenience goods include many food items, inexpensive candy, drugs like aspirin and tooth paste, hardware items such as light bulbs and batteries. Convenience goods have low price an are not greatly affected by fad and fashion. A manufacturer prepares these products to distribute it widely and rapidly.

13. (2) Shopping goods:- A tangible product for which a consumer wants to compare quality, price and perhaps style in several stores before making a purchase is known as shopping goods. Examples of shopping are furniture, automobiles, major appliance etc. The process of searching and comparing continues as long as consumer feels satisfaction. The shopping goods can be divided into homogeneous and heterogeneous goods. The homogeneous goods are similar in quality but different in price. The heterogeneous products are different in quality and prices.

14. (3) Specialty goods:- A tangible product for which a customer give preference to a strong brand and he wants to expend substantial time and effort in locating the desire brand is called a specialty good. Examples of specialty goods are men’s suits, stereo sound equipment, health foods, photograph equipment, new automobiles and certain home appliances. The specialty goods do no involve the buyer’s making comparisons, the buyer only invest time to reach the dealers carrying the wanted products.

15. (4) Unsought goods:- An unsought good is a new product from which a consumer is not aware. More people are unaware of interactive movies. An electric car might be an unsought good for most people, because they are unaware of it. Bathroom tissue made strictly from cotton fiber would seem to be an unsought good. A firm faces a very difficult, perhaps impossible advertising when trying to market unsought goods. Marketers market unsought goods by placing ads on bus-stop benches or in church buildings.

16. (B). Industrial goods/Business goods:- Industrial products are purchased to produce other products or for use in a firm’s operations. Industrial products are purchased on the basis of organization’s goals and objectives. On the basis of their uses and characteristics, industrial or business products can be classified into seven categories. 1).Raw material:- Raw materials are the basic materials that actually become part of the product. They are provided form mines, forests, oceans, farms and recycled solid wastes.

17. 2).Fabricating Materials and parts/Capital items:- Major equipment includes large tools and machines used for production purposes. Examples are cranes, Stamping machines.

18. 3). Accessory Equipment:- Accessory equipment does not become part of the final product but is used in production or office activities. Examples include, hand tools, type writers, fractional horse power motors etc. Accessory equipments are less expensive than capital items. 4).Component Parts:- Component parts become a part if the physical product and either are finished items ready for assembly or are products that enter the finished product completely with no further change in form, as when small motors are put into vacuum cleaners and tires are added on automobiles. Spark plugs, tires, clocks and switches are all component parts of the automobile.

19. 5).Process material:- Process materials are used directly in the production of other products. Unlike component parts, however process materials are not identifiable process materials are further fabricated. For example, Pig iron is made into steal and Yarn is woven into cloth. 6).Supplies:- Supplies facilitate productions, but they do not become part of he finished product. Paper, pencils, oils, cleaning agents and paints are examples. 7).Industrial Services:- Industrial services include maintenance and repair services. (e.g.; window cleaning, typewriter repair) and business advisory services. (e.g.; legal, management, consulting, advertising, marketing research services). These services can be obtained internally as well as externally.

20. IMPORTANCE OF PRODUCT INNOVATION The main purpose of business is to satisfy customers and to make profit fundamentally; a company fulfills this purpose through its products. New product planning and development are very important for an organization’s success. The new products must satisfy customers need as well as must be profitable for the firm .

21. 1. Requirement for growth:- Sooner or later, many products brands become outdated. Their sales volumes and market shares drop because of changing desires or superior competing products. Examples of outdated products:- Once successful products that are now become outdated include fountain pen, audio cassettes. Now many updated products are becoming successful rapidly for example, white cloud bathroom tissue, computers, etc.

22. Thus the guideline for management is innovating or die. Introduction a new product at the right time can help sustain a firm. In fact, companies that are leaders in terms of profitability and sales growth obtain 39% of their revenues from new products. Some firms that were successful innovators for long periods like Nike, Procter and Gamble, haven’t maintained a steady flow of new products in recent years. Some of their competitors have been more successful. Business profitability and success depends on innovation. IF we innovate well, we will ultimately win.

23. High Failure Rates:- For many years, “the rule of thumb” has been that about 80% of new product fail. New products higher failure rate is due to no change in existing products or new products are not being different that existing products. For example, Vaseline after shave lotion, Pepsi A.M, and Farrah Shampoo. A new product is also fail if it does not deliver on its promise. Further, a product can be failed if it is perceived as offering poor value in relation to its price. Other factors that can undermine new products include poor positioning and lack of marketing support. Firms that are inattentive to their new products can face higher failures. Firms and organizations that effectively manage product innovation can get higher advantage, higher sales and profits and solid foundation for the future

24. Planning and development of a new product: There are several possible categories of new products. Each separate category may require quite a separate marketing programmed to ensure a reasonable probability of market success. Three considerable categories of new products are: - 1) Products which are really innovative:- Truly unique, e.g., a hour restores, cancer cure products for which there is a real used but for which no existing substitutes are considered satisfactory. In this case we also includes product that are quite different from existing product but satisfy the same need.

25. 2) Replacement for existing products:- That are significantly different from existing goods. Annual model, change automobiles and new fashions in clothing, belong to this category. 3) Imitative Product:- That are new to a particular company but not new to market, with a “me-too” product. Perhaps the key criterion as to whether a given product is new is how to intend market perceives it. If a buyer perceives a product is significantly different from competitive goods in some characteristics then it is a new product.

26. Reasons of failure of new product:- 1. The idea is good, but market size is overestimated. 2. The product is not well-designed. 3. The product is incorrectly positioned in market, no advertised effectively and overpriced. 4. The product fails to gain sufficient distribution coverage or support. 5. Development costs are higher than expected. 6. Competitors fight back harder than expected.

27. Organizing new product development:- Companies handle organizational aspects of new product development in several ways. Many companies assigned responsibility for new product ideas to product manager. But product managers are often busy in managing existing lines that they give little time and effort to new products other than line extensions. They also lack specific skills and knowledge needed to develop and critique new product. New Product Strategy:- A new product strategy is a statement identifying the role of new product is expected to play in achieving corporate and marketing goals.

28. New product development (NPD) : New product development (NPD) is the process of bringing a new product to the marketplace. Your business may need to engage in this process due to changes in consumer preferences, increasing competition and advances in technology. Innovative businesses thrive by understanding what their market wants, making smart product improvements, and developing new products that meet and exceed their customers' expectations. new products through licensing or copyright acquisition.

29. 'New products' can be: products that your business has never made or sold before but have been taken to market by others product innovations created and brought to the market for the first time. They may be completely original products, or existing products that you have modified and improved. NPD is not limited to existing businesses. New businesses, sole traders or even freelancers can forge a place in the market by researching, developing and introducing new or even one-off products. Similarly, you don't need to be an inventor to master NPD. You can also consider purchasing

30. New product development strategy An NPD strategy will help you organise your product planning and research, capture your customers' views and expectations, and accurately plan and resource your NPD project. Your strategy will also help you avoid: overestimating and misreading your target market

31. Contd …. launching a poorly designed product, or a product that doesn't meet the needs of your target customers incorrectly pricing products spending resources you don't have on higher-than-anticipated development costs exposing your business to risks and threats from unexpected competition.

32. Important steps to plan into your NPD strategy. Define your product An accurate description of the product you are planning will help keep you and your team focused and avoid NPD pitfalls such as developing too many products at once, or running out of resources to develop the product.

33. Contd … Identify market needs Successful NPD requires a thorough knowledge of your target market and its needs and wants. A targeted, strategic and purposeful approach to NPD will ensure your products fit your market.

34. Ask yourself: What is the target market for the product I am proposing? What does that market need? What is the benefit of my proposed new product? What are the market's frustrations of existing products of its type?

35. How will the product fit into the current market? What sets this product apart from its competition? Establish time frames ,You need to allow adequate time to develop and implement your new products. your deadlines for implementation. Be thoughtful and realistic.

36. Identify key issues and approaches There are many tasks involved in developing a product that is appropriate for your customers. The nature of your business and your idea will determine how many of these steps you need to take. You may be able to skip or duplicate certain stages, or start some of them simultaneously.

37. In General Key tasks in new product development include following steps: Generating ideas screening of ideas Developing and screening concepts Testing concepts Analyzing market and business strategy Developing of Product testing of market for products Implementing and commercializing products.

38. 1. Generating ideas Successful new product development (NPD) starts with identifying good product ideas and using reliable criteria to decide which ideas to pursue. You should take the following steps before you allocate funds to new product development. Idea generation Write a customer needs list based on the information you gather from the sources identified below. You should try to identify existing weaknesses in your products, gaps in your product range and areas for product improvement.

39. Brainstorm product issues Work with your existing team members to brainstorm product issues. Your sales and service staff speak to your customers daily, hearing feedback about your products and the customers' needs. Capture the feedback, product observations and ideas from your team. Make sure you recognise their ideas and promote a shared  culture of innovation. Use your research and development (R&D) processes

40. Learn about  managing customer complaints . Review your research Review your  customer research  and  market research , and plan further market and customer surveys if you identify research gaps. What are your customers telling you they're looking for? What do they find frustrating or limiting about your products? How do they use your products most? Talk to your suppliers and other business partners Talk to manufacturers, retailers and sales reps to capture their knowledge of your products and thoughts for improving them. Research and understand your competition Try to  understand your competition . Review your competitors' product range and consider how the market is responding to them. Do any of their products seem to be meeting needs that yours aren't? Study catalogues and product information Make sure you have a comprehensive understanding of existing products available in your market.

41. 2. Idea screening With your list of potential new product ideas, you now need to decide which ideas to pursue and which to discard. Consider your competition, your existing products, their shortcomings, and the needs of your market. Draw on the customer needs list you have developed, and the areas for product improvement you have identified. Develop a set of criteria to evaluate your ideas against. You criteria might include: most prominently identified customer needs product improvements most needed the benefits to your target market the technical feasibility of the idea the level and scope of research and development required

42. Contd … the profitability of the idea. What is its potential appeal to the market? How would you price it? where the product fits in the market. Is there a gap? How close is it to competitor products? the resources it will require in development the marketing potential of the idea the fit with your business profile and business objectives. SWOT analysis Innovation support Your innovative approach and your steps to foster innovation in your team will help you realize your new product goals. Find out about innovation grants and support. .

43. 3. Concept development about the product Carefully plan the steps involved in testing your new product development (NPD) ideas. For every 7 new product ideas developed, 1 becomes successful. Defining your new product concept and testing it with your market will help you determine whether your new product idea will be a success. The concept development and testing stage of NPD can be time-intensive, but it will help you avoid unnecessary costs later by ensuring you pursue the best new product concept in your market. product concept: A product concept is a detailed description of an idea, which you describe from the perspective of your customer. Taking your customers' viewpoint when describing your product concept will help you test and evaluate how responsive your market will be to your product.

44. Important points to consider in concept developing : Do your sums carefully: Make sure your idea can be designed, manufactured and delivered within your financial, resource and time constraints Talk to the people : who will buy it Take your idea to your target audience to determine what they think and where any gaps might lie. Market researchers can help you run focus groups and surveys to determine how customers will respond to your product. Refine your target market : Detail your customer targets as accurately as you can. Your focus groups or conversations with your target audiences will help you determine whether you're targeting the right market segments.

45. Examine intellectual property (IP) issues: Find out whether another business or individual has already patented your idea by searching for a patent. If your idea was the combined result of several members of your team, consider how you will recognize their contributions to the intellectual property when you protect your idea. Identify the features Based on the information you have gathered to date, list the features and benefits of your proposed product from highest market importance to least. Take your time: Define your product concept clearly, test it with your audience and don't make any assumptions. Many NPD ventures fail because businesses rush through concept development and testing

46. 4. Business analysis of new products A new product idea that survives the screening stage of new product development (NPD) requires a more sophisticated and detailed business analysis. A business analysis will help you determine the costs involved in your proposed NPD, and forecast the profits you may make from the product in future financial years. The costs of developing a product are substantial. Your business analysis will also help you eliminate inappropriate ideas and avoid unnecessary costs

47. The following steps to assess the viability of your new product. Estimate your product price Review your market and competitor research and your feedback from customers to determine the selling price of your product, and the profit you are likely to make. Identify your product's market potential Review your market research and the sales performance of existing products in your range. Use your recent sales figures and industry sales figures to help you identify the current level of market activity and interest in products in the same line as your new product. Forecast your sales volume and estimate the volume of the product sales you anticipate based on your research into customer needs, the size of your existing customer base and your market. Identify your break-even point. Estimate the profitability of your product, and determine your break-even point - the amount of product you need to sell to cover your fixed costs (such as rent, electricity and wages).

48. Contd.. Determine your minimum sale price Project your returns based on your anticipated discounted product price to identify your lowest sales figure per item. Consider the long term forecast the lifespan of your product in the market. How long will it be relevant to your market's consumers? How long will it take you to realise a decent return on your investment? What market share percentage does it have the potential to realise ? Scope your marketing strategy Your marketing strategy will help you determine how to position your new product in the marketplace. The information you gather, next, in your market testing will help you identify which market segments to target and how At this stage? however, you can use the data you have gathered in your business and market research to start shaping your marketing strategy - identifying relevant market and product information as well as approaches that will be important in your product marketing.

49. 5. New product prototypes and market testing : Prototype testing is one of the most rewarding phases of new product development (NPD). Developing a prototype of your product allows you to bring your product to life for the first time and test it in its market. Your investment in market testing your prototype will help you prepare your product for market entry. It is important to be careful and considered in this exciting stage of NPD. Take your time and invest in the human resources and expertise you need to perfect your new product.

50. Put someone in charge Assign a member of your team (if not you) with strong project management skills to manage or coordinate the product development and delivery process. Ask your product development manager to maintain a practical, informative schedule and project plan that details the steps involved in developing your prototype and running your market testing. Consult the experts Product development specialists can help you streamline your process and avoid costly mistakes. Consider commissioning consultants who specialize in product engineering and design - for example, graphic or industrial designers, product engineers, product quality consultants, computer-aided design (CAD) specialists.

51. Important issues at this stage of product development and market testing Protect your intellectual property (IP): Make sure your  patents are in place and your IP is protected  before you take your product out for a test run. Commission a prototype of your product: A product mock-up will help you determine how to package,  brand  and market your new product. It will also help you test the look and feel of the product in sample segments of your market. Test the product in action: Put your prototype into use in the type of situations it's required in. Identify the characteristics that are most important to your customers and test those attributes, repeatedly. Run focus groups: Enlist the help of a market researcher to facilitate a focus group that will help you gauge the response of your sample target market. Interview your customers and take your prototype to as many informed people as possible. Make improvements: You may need to improve your product based on feedback. Use this opportunity to make changes that will increase your product's chances of success. Retest the product within more specific conditions that help you evaluate your changes - for example, by conducting a further focus group with a market segment that your product changes will affect most.

52. Contd … Test it in your industry : Attend  industry events and trade or consumer expos  to get feedback on your prototype. Take the opportunity to generate market interest and capture details of interested customers who want to hear about your product launch. Consider whether you need to prepare an initial run at this stage to test customer acceptance more broadly. Develop a marketing strategy: Your marketing strategy will help you accurately segment and target the right market for your product, set clear marketing objectives, and develop marketing strategies and tactics for your market segments. Start by reviewing all the information you have gathered in your business and market analysis and market testing.

53. 6. Launching and commercializing new products: Introducing a new product into the market is a significant business achievement. Launching your new product is your final, important step in the new product development (NPD) process. Deciding when, how and where to launch your product will determine its early impact on the market. Your  marketing strategy  and  marketing plan  will direct your product launch and help you make the most of your business and product exposure opportunities. Consider including some or all of these approaches in your new-product marketing.

54. Important issues in product launching and commercialization: Develop a direct marketing campaign Direct marketing methods  such as direct mail, email marketing and  social media marketing  can help you get straight to the customers in your target market. Create your advertising plan: Plan and book your advertising well ahead. Analyse where your target market customers get their product information. Book  advertising  in industry print and online publications and consider product innovation publications.

55. Contd … Develop a public relations and news media strategy: Use  public relations (PR)  to your advantage. Mainstream media often pick up innovation stories. Launch a print and online news media campaign and target interested industry journalists. Develop a sales plan: Develop a sales plan tailored to your new product.  Sales planning  helps you define strategies for your  ideal customers  and set realistic, healthy  sales targets . Develop a pricing strategy: Your  pricing strategy  should identify an entry-to-market price, a premium price and a minimum sale price. Contact your distributors: Give your distributors plenty of forward notice of your new product launch. Use your forecasts to calculate the product numbers you'll need to meet your anticipated sales volume. Get professional advice: A number of public and private sector organisations provide support to businesses investing in innovation, commercialisation and NPD:

56. Supporting organization of international repute to provide commercialization gudances : The Australian Institute for Commercialization helps researchers, entrepreneurs and innovative companies convert ideas into successful commercial ventures. The  Skills and Knowledge Program  is an initiative that helps entrepreneurs who know their idea has commercial potential but don't know how to achieve it. The program aims to convert ideas into successful commercial ventures. Commercialisation Australia  provides funding and networking assistance to Australian businesses. AusInnovation  runs the Australian Innovation Festival and provides resources and advice to support Australian innovation and entrepreneurship.

57. Product Differentiation A base of differentiation must fill some customer need: • image • status • comfort • taste • beauty • style • furthering a cause • reliability in use • safety • nostalgia • cleanliness • service • quality • accuracy • hunger • belonging A differentiated product fills one or more needs better than the products of competitors

58. Almost anything can be a base of differentiation • tangible thing (product features, location, etc.) • intangible concept (reputation, a cause, an ideal, etc.) • limited only by managerial creativity Bases of Differentiation • the wide range of customer needs can be filled by a wide range of bases of differentiation Example: Fred Smith and FedEx

59. Bases of Differentiation Three Categories 1) Product Attributes 2) Firm—Customer Relationships 3) Firm Linkages • exploiting the actual product • exploiting relationships with customers • exploiting relationships within the firm and/or relationships with other firms

60. Bases of Differentiation Product Attributes • Product Features – the shape of a golf club head • Product Complexity – multiple functions on a watch • Timing of Introduction – being the first to market • Location – locating next to a freeway exit

61. Bases of Differentiation Firm-Customer Relationships • Customization – creating a unique diamond bracelet for a customer • Consumer Marketing – creating brand loyalty to a soap through image advertising • Reputation – sponsoring the local homeless shelter to engender positive community response

62. Bases of Differentiation Firm Linkages • Linkages among Functions in the Firm – using a circuit board designed in one division in other divisions • Linkages with other Firms – a sporting goods store sponsors a benefit race by donating running shoes and receives free radio advertising in return • Product Mix – a furniture store begins to sell home gym equipment, computers, and lawn mowers

63. Bases of Differentiation Firm Linkages • Distribution Channels – a doughnut shop begins to sell its doughnuts through gas stations • Service and Support – an oil change shop begins to offer pick up and delivery of cars in an office building’s parking garage

64. Competitive Advantage A product differentiation strategy must meet the VRIO criteria… Is it V aluable? Is it R are? Is it costly to I mitate? Is the firm O rganized to exploit it? …if it is to create competitive advantage.

65. Focal Firm Buyers Suppliers Entry Rivalry Substitutes Industry Threat The Value of Product Differentiation Neutralizing Threats Toyota protected from Hyundai Allen Edmonds & Cole Hahn Home vs. Photo Shop Printing of Digital Pictures Ruth’s Chris Steak House Chrysler’s Crossfire

66. Fragmented Industry Branding: commodity differentiated product Example: Kellogg’s Corn Flakes Emerging Industry First mover advantages: captures market share Example: Motorola Cell Phones Exploiting Industry-type Opportunities The Value of Product Differentiation

67. Exploiting Industry-type Opportunities Mature Industry Refining product or adding services Example: Ford’s emphasis on service Declining Industry Exploiting niches: serving those with strong needs Example: NEWT at the Royal Hawaiian The Value of Product Differentiation

68. Exploiting Other Opportunities Trends or Fads • spinners • surf clothing Government Policy • Toyota Prius • airport x-ray machines Social Causes • themed credit cards • animal safe clothing Economic Conditions • outplacement agencies • check cashing services The Value of Product Differentiation

69. Rareness of Product Differentiation By definition, we assume rareness • if a product is differentiated, it is rare enough • customer preferences are evidence of a differentiated product • increased volume of purchases • and/or a premium price

70. PRODUCT LIFE CYCLE A product life cycle consists of the aggregate demand over an extended period of time for all brands comprising a generic product category. A product life cycle can be graphed by plotting aggregate sales volume for a product category over a time, usually years. It is also worthwhile to accompany the sales volume curve with the corresponding profit curve for the product category.

71. 1) Introduction:- During introduction stage, some times called pioneering stage, a product is launched into the market in a full scale of marketing program. It has gone through product development, including idea screening, prototype, and market test. The entire product may be new, such as the zipper, the video cassette recorder, etc for a new product there is very little competition. However, if the product has tremendous promise, numerous companies may enter into the industry early on. That has occurred with digital TV, introduced in 1988. Introduction is the most risky and expensive stage because substantial dollars must be spent not only to develop the product but also to seek consumer acceptance of the offering.

72. 2) Growth:- In the growth stage on market acceptance stage, sales and profit rise frequently at a rapid rate. Competitors enter the market, often in large number if the profit outlook is particularly attractive. Mostly as a result of competition profit start to decline nears the end of the growth stage. As a part of firm’s efforts to build sales and in turn, market share, prices typically decline gradually during this stage. ‘’The only thin that matters is if the exponential growth of your market is faster then the exponential decline of your prices’’

73. Maturity:- During the first part of the maturity stag, sales continue to increase, but at a decreasing rate. When sales level off, profits of both producers and middle-man decline. The primary reason increase price competition. Some firms extends their product lines with new models, other come up with a new improved version of their primary brand. During the later part of this stage marginal producers those with high cost or no differentiate advantage drop out to the market. They do so because the lack sufficient customers or profit.

74. Decline:- For most products a decline stage, as gauged by sales volume for the total category is inevitable for one of the following reason.  A better or less expensive product is developed to fill the same need.  The need for product disappears, often because of other product development.  People simply grow tired of a product so disappear from the market.

75. Why Brand? Why do companies such as Coca-Cola, Microsoft, IBM and Disney seem to achieve global marketing success so easily? Why does it seem such an effort for others? Why do we, as consumers, feel loyal to such brands that the mere sight of their logo has us reaching into our pockets to buy their products?

76. The Importance of Brands McDonalds sums this up nicely in the following quote emphasizing the importance of brands: “…it is not factories that make profits, but relationships with customers, and it is company and brand names which secure those relationships” Businesses that invest in and sustain leading brands prosper whereas those that fail are left to fight for the lower profits available in commodity markets.

77. Coca-Cola “If Coca-Cola were to lose all of its production-related assets in a disaster, the company would survive. By contrast, if all consumers were to have a sudden lapse of memory and forget everything related to Coca-Cola the company would go out of business.” Coca-Cola

78. What is a brand? One definition of a brand is as follows: “A name, term, sign, symbol or design, or a combination of these, that is intended to identify the goods and services of one business or group of businesses and to differentiate them from those of competitors”. Interbrand - a leading branding consultancy - define a brand in this way: “A mixture of tangible and intangible attributes symbolized in a trademark, which, if properly managed, creates influence and generates value”.

79. The meaning of brands Brands are a means of differentiating a company’s products and services from those of its competitors . There is plenty of evidence to prove that customers will pay a substantial price premium for a good brand and remain loyal to that brand. It is important, therefore, to understand what brands are and why they are important.

80. “Brand equity” refers to the value of a brand. Brand equity is based on the extent to which the brand has high brand loyalty, name awareness, perceived quality and strong product associations. Brand equity also includes other “intangible” assets such as patents, trademarks and channel relationships . Brand Equity

81. Brand image “Brand image” refers to the set of beliefs that customers hold about a particular brand. These are important to develop well since a negative brand image can be very difficult to shake off.

82. Brand extension “Brand extension” refers to the use of a successful brand name to launch a new or modified product in a new market. Virgin is perhaps the best example of how brand extension can be applied into quite diverse and distinct markets.

83. Branding gives the seller several advantages Seller’s brand name and trademark provide legal protection of unique product features Branding gives the seller the opportunity to attract a loyal and profitable set of customers. Branding helps the seller segment markets. Strong brands help build corporate image, making it easier to launch new brands and gain acceptance by distributors and consumers.

84. Benefits of Branding to A BUYER Help buyers identify the product that they like/dislike. Identify marketer Helps reduce the time needed for purchase. Helps buyers evaluate quality of products especially if unable to judge a products characteristics. Helps reduce buyers perceived risk of purchase. Buyer may derive a psychological reward from owning the brand, IE Rolex or Mercedes.

85. BRANDS - BUILDING A BRAND What factors are important in building brand value? Professor David Jobber identifies seven main factors in building successful brands, as given next:

86. Quality Quality is a vital ingredient of a good brand. Remember the “core benefits” – the things consumers expect. These must be delivered well and consistently. The branded washing machine that leaks, or the training shoe that often falls apart when wet, or a watch which needs frequent adjustments will never develop brand equity. Research confirms that, statistically, higher quality brands achieve a higher market share and higher profitability than that of their inferior competitors.

87. Positioning Positioning is about the position a brand occupies in a market in the minds of consumers. Strong brands have a clear, often unique position in the target market. Positioning can be achieved through several means, including brand name, image, service standards, product guarantees, packaging and the way in which it is delivered. In fact, successful positioning usually requires a combination of these things.

88. Repositioning Repositioning occurs when a brand tries to change its market position to reflect a change in consumer’s tastes. This is often required when a brand has become tired, perhaps because its original market has matured or has gone into decline.

89. Communications Communications also play a key role in building a successful brand. We suggested that brand positioning is essentially about customer perceptions – with the objective to build a clearly defined position in the minds of the target audience. All elements of the promotional mix need to be used to develop and sustain customer perceptions. Initially, the challenge is to build awareness, then to develop the brand personality and reinforce the perception.

90. First-mover advantage Business strategists often talk about first-mover advantage. In terms of brand development, by “first-mover” they mean that it is possible for the first successful brand in a market to create a clear positioning in the minds of target customers before the competition enters the market. There is plenty of evidence to support this.

91. Long-term perspective The need to invest in the brand over the long-term is utmost essential. Building customer awareness, communicating the brand’s message and creating customer loyalty takes time. This means that management must “invest” in a brand, perhaps at the expense of short-term profitability .

92. Internal Marketing Finally, management should ensure that the brand is marketed “internally” as well as externally. By this we mean that the whole business should understand the brand values and positioning. This is particularly important in service businesses where a critical part of the brand value is the type and quality of service that a customer receives. Think of the brands that you value in the restaurant, hotel and retail sectors. It is likely that your favorite brands invest heavily in staff training so that the face-to-face contact that you have with the brand helps secure your loyalty.

93. An Effective Brand Name Is easy to pronounce Is easy to recognize and remember Is short, distinctive, and unique Has a positive connotation Reinforces the product image Is legally protectable

94. Branding Strategies Brand No Brand Manufacturer’s Brand Private Brand Individual Brand Family Brand Combi- nation Individual Brand Family Brand Combi- nation

95. Manufacturers’ Brands Versus Private Brands Manufacturers’ Brand Private Brand The brand name of a manufacturer. A brand name owned by a wholesaler or a retailer. Also known as a private label or store brand.

96. Types of brand There are two main types of brand – manufacturer brands and own-label brands . Manufacturer brands Manufacturer brands are created by producers and bear their chosen brand name. The producer is responsible for marketing the brand. The brand is owned by the producer. By building their brand names, manufacturers can gain widespread distribution (for example by retailers who want to sell the brand) and build customer loyalty (think about the manufacturer brands that you feel “loyal” to).

97. Private Label brands Own-label brands are created and owned by businesses that operate in the distribution channel – often referred to as “distributors”. Often these distributors are retailers, but not exclusively. Sometimes the retailer’s entire product range will be own-label. Own-label branding – if well carried out – can often offer the consumer excellent value for money and provide the distributor with additional bargaining power when it comes to negotiating prices and terms with manufacturer brands.

98. Advantages of Private Brands Earn higher profits Less pressure to mark down prices Ties customer to wholesaler or retailer

99. Advantages of Manufacturers’ Brands Develop customer loyalty Attract new customers Enhance prestige Ensure dealer loyalty

100. Individual Brands Versus Family Brands Individual Brand Family Brand Using different brand names for different products. Marketing several different products under the same brand name.

101. Branding Policies First question is whether to brand or not to brand. Homogenous products are difficult to brand Branding policies are: Individual Branding: Naming each product differently P&G, facilitates market segmentation and no overlap. Overall Family Branding: All products are branded with the same name, or part of a name, IE Nokia, promotion of one item also promotes other items. Line Family Branding: Within one product line. Brand Extension Branding: Use one of its existing brand names as part of a brand for an improved or new product, usually in the same product category. 75% new products are brand extensions!!

102. 1. Coca-Cola $67,000 million Based in U.S. Flagging appetite for soda has cut demand for Coke, but the beverage giant has a raft of new products in the pipeline that could reverse its recent slide.

103. 2 Microsoft $56,926 million Based in U.S. Threats from Google and Apple haven't yet offset the power of its Windows and Office monopolies.

104. 3 IBM $56,201 million Based in U.S. Having off-loaded its low-profit PC business to Lenovo, IBM is marketing on the strategic level to corporate leaders.

105. 4.GE $48,907 million Based in U.S. The brand Edison built has extended its reach from ovens to credit cards, and the " Ecomagination " push is making GE look like a protector of the planet.

106. 5.Intel $32,319 million Based in U.S. Profits and market share weren't the only things slammed by rival AMD. Intel's brand value tumbled 9%, as it loss business from high-profile customers.

107. 6.Nokia $30,131 million Based in Finland .Fashionable designs and low-cost models for the developing world enabled the mobile phone maker to regain ground against competitors.

108. 7.Toyota $27,941 million Based in Japan. Toyota is closing in on GM to become the world's biggest automaker. A slated 10% increase in U.S. sales this year will help even more.

109. 8. Disney $27,848 million Based in U.S. New CEO Robert Iger expanded the brand by buying animation hit-maker Pixar and beefing up digital distribution of TV shows through the Internet and iPods.

110. 9.McDonald's $27,501 million Based in U.S. A new healthy-living marketing campaign—and the premium-priced sandwiches and salads that came with it—have led to a fourth year of sales gains.

111. 10.Mercedes-Benz $21,795 million Based in Germany The new S-Class sedan and M-Class SUV are helping repair a tarnished quality reputation. High costs and weak margins will take longer to fix.

112. Here's how we calculate the power in a name INTERBRAND TAKES lots of ingredients into account when ranking the world's most valuable brands. To even qualify for the list, each brand must derive about a third of its earnings outside its home country, be recognizable outside of its base of customers, and have publicly available marketing and financial data. One or more of those criteria eliminate such heavyweights as Visa, Wal-Mart, Mars, and CNN. Interbrand doesn't rank parent companies, which explains why Procter & Gamble doesn't show up. And airlines are not ranked because it's too hard to separate their brands' impact on sales from factors such as routes and schedules.

113. Evaluation BUSINESSWEEK CHOSE Interbrand's methodology because it evaluates brands much the way analysts value other assets: on the basis of how much they're likely to earn in the future. The projected profits are then discounted to a present value, taking into account the likelihood that those earnings will actually materialize. THE FIRST STEP IS figuring out what percentage of a company's revenues can be credited to a brand. (The brand may be almost the entire company, as with McDonald's Corp., or just a portion, as it is for Marlboro.) Based on reports from analysts at J.P. Morgan Chase, Citigroup, and Morgan Stanley, Interbrand projects five years of earnings and sales for the brand. It then deducts operating costs, taxes, and a charge for the capital employed to arrive at the intangible earnings. The company strips out intangibles such as patents and management strength to assess what portion of those earnings can be attributed to the brand.

114. Summary FINALLY, THE BRAND'S strength is assessed to determine the risk profile of those earnings forecasts. Considerations include market leadership, stability, and global reach—or the ability to cross both geographic and cultural borders. That generates a discount rate, which is applied to brand earnings to get a net present value. BusinessWeek and Interbrand believe this figure comes closest to representing a brand's true economic worth.

115. Packaging Packaging - enclosing or protecting products for distribution, storage, sale, and use. Packaging contains, protects, preserves, transports, informs, and sells.

116. Types of Packaging Transport packing: To protect against loss damage during handling, transport and storage Consumer Packing: This packaging holds the required volume of the product for ultimate consumption and is more relevant in marketing e.g. beverages, tobacco etc.

117. Packaging as a Marketing Tool Self-Service Consumer Affluence Company and Brand Image Innovation Opportunity

118. Objectives of Packaging and labeling Physical protection Barrier protection Containment Information transmission Marketing Security Convenience

119. Functions of Packaging Promoting and Selling the Product Defining Product Identity – invokes prestige, convenience, or status. Meeting Customer Needs – various sizes, snack kits, etc. Provides Information – - UPC symbols, contents, - guarantees, nutritional - value, potential hazards

120. Contemporary Packaging Issues Protecting the Product – during shipping, storage, and display. Protects food from spoilage.

121. Contemporary Packaging Issues Environmental Packaging – reusable, recyclable, less wasteful, and safer for the environment

122. Labeling A label is an information tag, wrapper, seal, or imprinted message attached to a product A labels main function is to inform about contents and give directions. Information about product use, care, other features.

123. Consumer Buying Behavior 1. Packaging color 2. Packaging Material 3. Font Style 4. Design of wrapper 5. Printed Information 6. Innovation

124. Packaging Machines Blister packs, skin packs and Vacuum Packaging Machines Bottle caps equipment Box, Case and Tray Forming, Packing, Unpacking Cartoning Machines Converting Machines Conveyor belts, Inspecting Check weighed Machines Label dispensers Package Filling and Closing Machines

125. Packing Material Aluminium Foil Butter Paper Cartons & Carates Flexible Plastic Laminate Pouches Insulation Material Laminated Paper/Sacks Plastic Container and Film Tin Container

126. Packaging of Amul Ice cream Packaged in sticks, cones, cups as well as take home packs and institutional/catering packs. Stick ice cream : Low income groups Stick, cup and cone ice cream from all range

127. Labeling of Amul Ice cream Labeling are very attractive In their advertisement ,pictures and wordings will be available Wish their costumers on festival vocations through labeling Important factors like manufacture date, net content, expiry date, certification for quality and MRP rate will be available in labeling Makes people to identify their product easily

128. Baskin-Robins Ice cream Packaged in cups, cones, waffle, bowls, shakes Label colors are very attractive Letter “ B” and “R” in big font and bold.

129. Labeling in Coca Cola Coca-cola uses two formulas (one with sugar, one with corn syrup) for all markets The product packaging in every country incorporates the contour bottle design Dynamic ribbon in same way, shapes, or form Bottle or can also includes the country’s native language Is of the same size as other beverage bottles or cans in that country

130. 67% consumers are influenced by packaging while making the purchase decision.

131. Observations in Product Packaging In preserved products long lasting packaging is most important In aesthetic components: a) Material use is most preferred b) Shape, size &color are less preferred c) Text & graphics are least preferred

132. Symbols used on packages and labels Symbols globally accepted Symbols communicate Speak about the product Shipments of hazardous materials or dangerous goods have special information Shipments of hazardous materials or dangerous goods have special information

133. Symbols used on packages and labels With transport packages, standardized symbols are also used to communicate handling needs.

134. Recommendations Preserved food packs is like that can be cooked in or kept at home as a re-sealable container. - More emphasis on Visual package elements . - Develop innovative packages. - Aesthetic components should be soothing for the eyes. - Label information accurately as consumers would like it, if simplified.

135. Packaging Industry Global packaging industry growth rates vary across the types of packaging. Growth rate of beverages package industry is 3.2% 5% for health care products Overall capital involved : $433 billion Large and diversified market Lots of contenders