CHAPTER 6-12 NOTES.docx

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Published on 18 Apr 2013
School
UTSC
Department
Management (MGT)
Course
MGTA02H3
Professor
CHAPTER 6: THE 4 Ps-PRODUCT
WHAT IS A PRODUCT?
-in developing marketing mix for any productsideas, goods, servicesmarketers must
consider what consumers really buy when they purchase products
The Value Package
-customers get value from various benefits, features, and even intangible rewards associated
with a product
-features: qualities, both tangible and intangible, that a company builds into its products
-to attract buyers, features also must provide benefits: mower must produce attractive lawn
-value package: product marketed as a bundle of value-adding attributes, including reasonable
cost
-increasingly, buyers expect to receive products with greater valuemore benefits at
reasonable costs
-most items in the value package are services or intangibles that, collectively, add value by
providing benefits that increase the customer’s satisfaction
-products more than just visible features and benefits
-in buying a product, consumers are also buying an image and reputation
-today, more and more firms compete on basis of enhanced value packages
-addition of a simple new service often pleases customers far beyond cost of providing it
Classifying Goods and Services
-buyers fall into 2 groups: buyers of consumer products and buyers of industrial products
Classifying Consumer Products
-consumer products commonly divided into 3 categories that reflect buyers’ behaviour:
1) convenience goods/services are consumed rapidly and regularly
-inexpensive and purchased frequently with little expenditure of time and effort
2) shopping goods/services are more expensive and purchased less frequently than
convenience goods and services
-consumers compare brands, sometimes in diff stores
-may also evaluate alternatives
3) specialty goods/services are extremely important and expensive purchases
-consumers decide on what they want and will accept no substitutes
Classifying Industrial Products
-divided into 2 categories:
1) expense items: materials and services that are consumed w/in a year by firms producing
other goods or supplying services (used directly in production process)
2) capital items: permanentexpensive and long lastinggoods and services
-have expected lives of more than a year
-those for which long-term commitments are made
-involve decisions by high-level managers
The Product Mix
-product mix: group of products a company has available for sale (consumer or industrial)
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Product Lines
-product line: group of similar products intended for a similar group of buyers who will use
them in a similar fashion
-companies have extended horizons and identified opportunities outside existing product lines
multiple (or diversified) product lines
-multiple product lines allow company to grow rapidly and can help to offset the consequences
of slow sales in any one product line
THE PRODUCT LIFE CYCLE
-product life cycle: concept that the profit-producing life of any product goes through cycle of
introduction, growth, maturity (leveling off), and decline
Stages in the Product Life Cycle
1) Introduction: begins when product reaches marketplace
-marketers focus on making potential consumers aware of product and its benefits
-extensive promotional and development costs…profits nonexistent
2) Growth: if new product attracts and satisfies enough consumers, sales begin to climb rapidly
-product beings to show profit
3) Maturity: sales growth begins to slow
-product earns highest profit level early in this stage
-increased competition eventually leads to price cutting and lower profits
-towards end of stage, sales start to fall
4) Decline: sales and profits continue to fall
-new products in intro stage take away sales
-companies remove or reduce promotional support but may let product linger to
provide some profits
Extending Product Life: An Alternative to New Products
-foreign markets offer 3 possibilities for lengthening product life cycles:
1) product extension: an existing product is marketed globally instead of just domestically
2) product adaptation: product is modified for greater appeal in diff countries
-involves product changes so more costly than product extension
3) reintroduction: means reviving, for new markets, products that are becoming obsolete in
older ones
IDENTIFYING PRODUCTS
-developing a product’s features is only part of a marketer’s job
-marketers must also identify products so that consumers recognize them
-important tools for this task are: branding, packaging, and labeling
Branding Products
-branding: use of symbols to communicate qualities of a particular product made by a
particular producer
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-brands designed to signal uniform quality: customers who try and like product can return to it
by remembering its name
Adding Value through Brand Equity
-widely known and admired brands are valuable b/c of their power to attract customers
-brand equity: degree of consumers’ loyalty to and awareness of a brand and its resultant
market share (higher brand equity=better)
-brand adds value to a product so marketers manage brand names to increase that value
Brand Loyalty
-brand loyalty: customers’ recognition of, preference for, and insistence on buying a product
with a certain brand name
-exists at 3 levels: brand awareness - customers recognize brand name
-brand preference - consumers have favourable attitude toward product
-brand insistence - consumers demand product & willing to go out of their way to get it
Trademarks, Patents, and Copyrights
-trademark: exclusive legal right to use a brand name; granted for period of 15 years but only if
company continues to protect its brand name
-patent: protects an invention or idea for period of 20 years
-copyrights: exclusive ownership rights granted to creators for tangible expression of an idea
-apply to tangible expressions of an idea, not to idea itself
Packaging Products
-packaging: physical container in which a product is sold, including the label
-serves as an in-store advertisement that makes product attractive, clearly displays brand,
identifies product features and benefits, and reduces risk of damage, breakage, or spoilage
Labelling Products
-label: part of a product’s packaging that identifies product’s name and contents and
sometimes its benefits
-also promotes products by getting consumers’ attention
-label describes product: provides info about nutritional content, directions for use, disposal
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Document Summary

In developing marketing mix for any products ideas, goods, services marketers must consider what consumers really buy when they purchase products. Customers get value from various benefits, features, and even intangible rewards associated with a product. Features: qualities, both tangible and intangible, that a company builds into its products. To attract buyers, features also must provide benefits: mower must produce attractive lawn. Value package: product marketed as a bundle of value-adding attributes, including reasonable cost. Increasingly, buyers expect to receive products with greater value more benefits at reasonable costs. Most items in the value package are services or intangibles that, collectively, add value by providing benefits that increase the customer"s satisfaction. Products more than just visible features and benefits. In buying a product, consumers are also buying an image and reputation. Today, more and more firms compete on basis of enhanced value packages. Addition of a simple new service often pleases customers far beyond cost of providing it.

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