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Chapter 6-12

CHAPTER 6-12 NOTES.docx

by

Department
Management (MGT)
Course Code
MGTA02H3
Professor
Chris Bovaird
Chapter
6-12

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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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