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Chapter 2 The product in theory and practice -Krishna Unadkat -MEFGI

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Marketing is about the creation and maintenance of mutually satisfying exchange relationships. (Baker, 1973)

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The market is the place where Adam Smiths invisible hand achieves an equilibrium between demand and supply. The amount of a particular economic good or service that a consumer or group of consumers will want to purchase at a given price.

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DEMAND Types of Demand: Effective Potential Latent Demand Influencers - Demographics - Buyer Behavior - Availability

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Melvin Copelands (1923) classification of goods: Convenience Shopping Specialty

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Differentiated Convenience Price Quantity Copelands classification of goods

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Convenience goods are generally inexpensive, non-durable, frequently purchased and used goods. They are often non-durable ones.

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Shopping Goods: Shopping is the activity of examination and selection of the goods or services from retailers with the intent to purchase at that time. The selection & purchasing is a result of a comparison of products based upon their suitability, quality, price, style and so on.. Some common features: Generally durable Generally high price in contrast with convenience goods. Comparison is main factor in making purchase decisions. Purchase is generally pre planned Retailers have very important role to play.

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Specialty Goods: The specialty goods incur special purchasing efforts and the items posses some special features. The buyers are willing to spend a lot of time & money to buy them in contrast with the shopping goods. The rare arts collections, antiques, prestige brands, style goods, automobiles etc. are the examples.

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Different categories of goods call for different marketing strategies: Convenience = Undifferentiated (Cost leadership) Shopping = Differentiated Specialty = Concentrated (Focus)

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Products and Services In marketing, a product is anything that can be offered to a market that might satisfy a want or need. In retailing, products are called merchandise. Services are economic activities offered by one party to another, most commonly employing time- based performances to bring about desired results. The action of serving, helping or benefiting of another for economic exchange

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Pure services are seen as having a number of characteristics that distinguish them from physical products, namely: Intangibility Inseparability Variability Perishability Impossibility of ownership

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Marketing for Products and Services School 1 : Services and Products are two sides of the same coin School 2 : Significant differences for a different approach School 3 : Basic principles apply to both but distinctive nature of services call for an extended marketing mix

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BRANDING Irrespective of whether we are dealing with a physical product or an intangible service, for a customer to be able to discriminate between the offerings of competing suppliers they must be able to discriminate between them.

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A successful brand is a name, symbol, design, or some combination which identifies the product or a particular organization as having a sustainable differential advantage. [Peter Doyle]

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Key points in Doyles definition: Successful brands are positive (and vice versa) Brands can take many forms not just names The product may just as easily be a service, an organization, or an aspiration Brands are owned by organizations/people Successful brands confer a sustainable differential advantage an advantage that is not easily copied and so represents a barrier to entry in the market segment in which the brand competes.

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Successful brands have 4 key attributes: 1. Quality 2. Superior service 3. First to market : nn ew technology nn ew positioning concept nn ew distribution channel nn ew market segment ee xploitation of a new gap 4. Differentiation

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Advantages of Branding Brand-based price premiums allow for higher margins Strong brands lend immediate credibility to new product introductions Strong brands allow for greater shareholder and stakeholder value Strong brands embody a clear, valued, and sustainable point of differentiation

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Loyalty drives repeat business Strong brands mandate clarity in internal focus and brand execution The more loyal the customer base and the stronger the brand, the more likely customers will be forgiving if a company makes a mistake Brand strength is a lever for attracting the best employees and keeping satisfied employees 70 per cent of customers use a brand to guide a purchase

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A brand name is: A form of identification or badge of origin A promise of a certain level of consistency in performance Reassurance as to the authenticity and performance of the product An indicator of the essential properties or attributes of the product. As a result buyers can develop attitudes towards a brands performance and quality even when it is difficult to assess this objectively.

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Classifying New Products ( Rogers) Relative Advantage Compatibility Complexity Divisibility Communicability

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Booz Allen and Hamilton (1982) identified six kinds of new products: 1. New to the world 2. New product lines 3. Additions to existing product lines 4. Improvements and revisions to existing products 5. Repositionings 6. Cost reductions.

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Buygrid Analytic Framework Buy PHASES Buy CLASSES Classes: 1. New Task 2. Modified Rebuy 3. Straight Rebuy

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The Buygrid framework 8. Performance feedback and evaluation 7. Selection of an order routine 6.Evaluation of proposals and selection of supplier(s) 5. Acquisition and analysis of proposals 4.Search for and qualification of potential sources 3.Description of characteristics and quantity of needed items 2.Determination of characteristics and quantity of needed items 1.Anticipation or recognition of a problem (need) and a general solution Straight rebuy Modified rebuy New task Buy phases Buy classes