MARKETING PRICIPLES AND CONCEPTS
THE MARKETING MIX (4P)
PRODUCT
A product is anything that can be offered to a market to satisfy a want or need. Products
that are marketed include physical goods, services, experiences, events, persons, places,
properties, organizations, information, and ideas.
Core product – Basic product – Expected product – Augmented product (that exceeds
customer expectations) – Potential product (augmentations for the future).
Developed countries position products and compete at augmented product level
(differentiation arises on product augmentation), in developing – mostly at expected or
lower.
The new competition is not between what companies produce in their factories, but
between what they add to their factory output in the form of packaging, services,
advertising, customer advice, financing, delivery arrangements, warehousing, and other
things that people value (Levitt).
<discussion: pros and cons of augmentation>
PRODUCT CLASSIFICATIONS
Durable – Non-durable – Services – Know-hows.
Consumer goods classification
Convenience goods (frequently purchased)
Staples (regularly purchased: Heinz ketchup, Crest toothpaste, and Ritz crackers).
Impulse (purchased w/o planning or search efforts: candy bars and magazines).
Emergency (umbrellas during a rainstorm).
Shopping goods (search and analysis prior to purchase)
Homogeneous
Heterogeneous
Specialty goods (possess unique characteristics).
Unsought goods (gravestones, and encyclopedias).
Industrial goods classification
Materials and parts (go completely into the manufactured product).
Raw materials (mostly – commodities).
Farm products (wheat, cotton, livestock, fruits, and vegetables)
Natural products (fish, lumber, crude petroleum, iron ore).
Manufactured materials and parts (go completely into the manufactured product).
Component materials (wires, cement)
Component parts (tires, small motors)
Capital items (long-lasting goods that facilitate developing the finished product).
Installations (buildings, heavy equipment)
Equipment (portable)
Supplies
Maintenance and repair items
Operating supplies
—1—
Business services
Maintenance and repair services
Business advisory services
PRODUCT DIFFERENTIATION
Form, Features, Performance quality, Conformance quality, Durability, Reliability,
Repairability, Style.
Design is the totality of features that affect how a product looks and functions in terms of
customer requirements. (Relates to all characteristics above). Design alone may condition
a company’s position on a competitive edge.
SERVICES DIFFERENTIATION
Ordering ease, Delivery, Installation, Customer training, Customer consulting, and
Maintenance and repair.
PRODUCT HIERARCHY
Need family – Product family – Product class – Product line – Product type – Item
Product mix is a set of all product lines and individual products available for purchase.
Product lines management <discuss>
Product line length. Down-market, up-market stretching <discuss>
Line filling
Cannibalization
Line modernization
PRODUCT MIX PRICING (in brief; pricing is covered in full further).
Product-line pricing (e.g., Intel’s celeron, duo, quad, xeon, etc. lines).
Optional feature pricing (selling features for “stripped off” cars).
Captive product pricing (Epson printers and inks).
Two-part pricing (admission fee and services fee).
By-product pricing (pricing by-products on their value to customers).
Product bundling pricing (MS Office vs. individual programs).
Co-branding - two or more well-known existing brands are combined into a joint product
and/or marketed together in some fashion <pros and cons>.
Ingredient branding is a special case of co-branding. It involves creating brand equity for
materials, components, or parts that are necessarily contained within other branded
products.
PACKAGING, LABELING, WARRANTIES, AND GUARANTEES
Packaging is all the activities of designing and producing the container for a product.
—2—
Contributing factors to use package as a marketing tool.
Self-service. (Attract attention, describe the product's features, create consumer
confidence, and make a favorable overall impression; e.g. classics books with
contemporary covers).
Consumer affluence. (Rising consumer affluence means consumers are willing to pay a
little more for the convenience, appearance, dependability, and prestige of better
packages).
Company and brand image.
Innovation opportunity.
I.e. packaging must achieve the following objectives:
1. Identify the brand,
2. Convey descriptive and persuasive information,
3. Facilitate product transportation and protection,
4. Assist at-home storage, and
5. Aid product consumption.
Note: Packaging creates a major problem for solid waste disposal, requiring huge amounts
of labor and energy. Fortunately, many companies have gone “green” (societal marketing).
Labeling (identity, grade (quality), description, promotion, legal).
Warranties and Guarantees
Warranties are formal statements of expected product performance by the manufacturer.
Warranties, whether expressed or implied, are legally enforceable.
Guarantees are manufacturer’s or sellers specific promises about the product’s
performance. Guarantees are a competition tool.
—3—