Principles of Marketing

NICK C. SATUR JR.BATAS-NSJ

What is a Product?• A productproduct is anything that can be offered to a

market for attention, acquisition, use, or consumption and that might satisfy a want or need.

• Includes: Physical Objects Services Events Persons Places Organizations Ideas

Five Product Levels

Product Hierarchy• Product need—the core need that underlies the

existence of a product family. To satisfy a need e.g. feet protection

• Product class—a family of products having similar function e.g. all shoes

• Product line—a group of products with closely related functions e.g. sports shoes

• Product type—products within a line having similar form e.g. basket-ball shoes

• Brand—a name representing a product or line e.g. Nike

• Item (Stock Keeping Unit)—a unit item e.g. one pair of Nike basket-ball shoe

Product Classification

Durability

Use

Tangibility

Durability and Tangibility

Nondurable

goods

ServicesDurable

goods

Durable goods

- Are tangible goods that normally survive many uses. Durables have long intervals of repeat purchase.

Non Durables

- Repeat purchase is usually strong.These are tangible goods normally consumed in one or few uses

Services

- Are intangible,inseperable variable, and perishable products that do not result to the ownership of anything.

Consumer Goods Classification

The vast array of goods consumers buy can be classified on the basis

of shopping habits.

Convenience Goods

• Are those that customer ussually purchases frequently, immediately and with a minimum of effort.

• Lowest risk, lowest effort

Ex. Soap, tobacco

Shopping Goods

• Are goods that the customer, in the process of selection and purchase, characteristically compares on such basis as suitability,price, quality and style.

• Ex. Clothings, used cars, furnitures

Specialty Goods

• Goods that have a unique characteristics or brand identification for which a sufficient number of buyers is willing to make a special purchasing effort.

Ex Mercedes, paintings by known artists,

Unsought Goods

• Those that the consumer does not know about or does not normally think of buying.

Consumer Goods Classification

Convenience

Unsought

Shopping

Specialty

USE

• Industrial Goods Classification

- These goods can be classified by how they enter the production process and their relative costliness.

1.Materials & Parts

2.Capital Items

3.Supplies and Business Services

2 Classes of Materials & Parts

• Raw Materials

- Natural Products

- Farm Products

• Manufactured material parts

Component Parts-Enter the finished product with no further change in form

Component Materials-fabricated Further ex iron

Supplies and Business Services

- Are short-lasting goods and services that facilitate, developing or managing the finished product.

Supplies

• Maintenance & Repair Items

• Operating Supplies

Business Service

• Maintenance & Repair Services

• Business Advisory Services

Definition of New Products

1. Products new to the world; usually revolutionary products resulting from product innovation e.g

• When Creative Technology first introduced the Sound-blaster

• When disposable cameras were first introduced

• When Seiko introduced the Seiko Kinetic Relay, a watch that can go into suspended animation

2. New Product Lines

3. Improvements to existing products e.g. In 1960 Kao introduced shampoo liquid and in 1970

introduced Kao Merit shampoo (anti-dandruff)

4. Additions to existing lines e.g. In 1965 Kao introduced the Kao Tender hair

conditioner

5. Costs reductions

6. re-positionings

Product Mix

• Product Assortment

• Set of all products and Items that a particular seller offers for sale.

Marketing Mix

New Product Development Process

IdeaIdeaGenerationGeneration

ConceptConceptDevelopmentDevelopmentand Testingand Testing

MarketingMarketingStrategyStrategy

DevelopmentDevelopment

IdeaIdeaScreeningScreening

BusinessBusinessAnalysisAnalysis

ProductProductDevelopmentDevelopment

MarketMarketTestingTesting

CommercializationCommercialization

Step 1. Idea Generation

Idea Generation is the Systematic Search for New Product Ideas Obtained Internally From Employees and Also From:

Customers Competitors Distributors Suppliers

Idea Screening• Process to spot good ideas and drop poor ones as soon

as possible. • Many companies have systems for rating and screening

ideas which estimate: Market Size Product Price Development Time & Costs Unit Costs Rate of Return

• Then, the idea is evaluated against a set of general company criteria.

New Product Development Process Step 3. Concept Development

1. Develop New Product Ideas into Alternative Detailed

Product Concepts

2. Concept Testing - Test theNew Product Concepts with Groups of Target Customers

3. Choose the One That Has theStrongest Appeal to Target

Customers

Step 4. Marketing Strategy

Part Three Describes Long-Term:Sales & Profit Goals

Marketing Mix Strategy

Part Two Describes First-Year:Product’s Planned Price

DistributionMarketing Budget

Part One Describes Overall:Target Market

Planned Product PositioningSales & Profit Goals

Market Share

Step 5. Business AnalysisStep 6. Product Development

If No, Eliminate Product Concept

Business AnalysisReview of Product Sales, Costs, and Profits Projections to See if They Meet Company Objectives

Business AnalysisReview of Product Sales, Costs, and Profits Projections to See if They Meet Company Objectives

If Yes, Move to Product Development

Step 7. Test MarketingTest Marketing is the Stage Where the Product and Marketing Program are Introduced into More Realistic Market Settings.

AdvertisingAdvertising

AtmosphereAtmosphere

ProductProductBudget LevelsBudget Levels

Positioning Positioning

LocationLocationPricingPricing

BrandingBranding

Elements that May be Test

Marketed by a Company

Step 8. CommercializationCommercialization is the Introduction of the

New Product into the Marketplace.

When is the Right Time to

IntroduceProduct?

When is the Right Time to

IntroduceProduct?

Where to Launch a

New Product?

Where to Launch a

New Product?