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Term 2: Week 4

Section outline

  • Learning Intentions

    • Investigate the meaning and relevance of the Marketing Mix (4 Ps) 
    • Explore the 'Product' element of the Mix, through case studies and examples
    Success Criteria
    • Can explain the meaning and relevance, with examples, of the Marketing Mix 4 Ps
    • Can explain and apply understanding of the Product element of the Mix.

    Marketing     is the process of gathering information about people in the market and then acting on that information to influence their beliefs or decisions about your products or business. 
    The Marketing Mix contains the variables that can be changed in order to influence people's beliefs or decisions. In business, the aim is usually to attract customers to buy the product (to satisfy their needs or wants). These variables are called the 4Ps: 

    • Product      design features, quality, packaging, after-sales service, etc
    • Price          skimming, penetration, etc
    • Place          distribution channels, delivery, retail outlet, mail order, etc
    • Promotion  advertising, sales promotion, personal selling, publicity, etc  

    In small groups, discuss the 4Ps of these businesses or products:
    1. Local Dairy shop
    2. Pack'n'Save supermarket vs Farro supermarket
    3. Apple computers and phones 
    4. Nike shoes
    5. Homebrand product range (at Countdown supermarket)

    Product

    A product is a good (tangible) or a service (intangible) produced by an organisation. Companies can grow using existing or new products:

    Strategies for each method of growth

    Market penetration: encourage consumers to use more, 'steal' competitor's customers

    Market Development: new uses for products, new markets geographically, new segments

    Product development: modify existing products (eg new shapes), upgraded model, 'me-too' copycat product  

    Diversification: risky as you have less knowledge & experience (may buy an existing business).

    • Value Analysis

      Value analysis is the process of deciding which product features most attract or satisfy a target customer's needs. 

      For example, 
      • Function will be most important when buying a parachute!
      • Fashion clothes or bought mostly on the basis of aesthetics (how they look).
      • Economic manufacture is important for customers who have low income



      Product Life Cycle

      Sales, costs and profit of a product follow a series of stages over its life. 

      When being developed, there are no sales, high costs and no profit - just losses.

      A newly introduced product has slowly growing sales, high costs & no profit. 

      Sales increase rapidly during the Growth stage, unit costs start to fall and some profit may be made. 

      As competitors enter the market during Maturity, sales stop growing, costs reduce and profits are high. 

      When the market becomes saturated with too many businesses competing for customers, a price war can start and some businesses drop out. Costs remain constant, but sales and profits decrease.

      The market declines and the product eventually becomes unprofitable.  



      Discussion: In small groups, discuss the range of life cycle diagrams on the right and think of examples of real products for each one. 

      The life cycle is important because:

      1. each stage needs a different marketing mix
      2. a business needs products at different life stages to survive long term. 

      Extension strategies

      Businesses try to extend products' lives beyond the saturation stage and so might repackage or slightly change it. Lux soap is more than 100 years old and its shape, perfume, colour, size and packaging have all changed to maintain consumer interest in it. Other extension strategies are finding new uses or accessories for the product. Examples of long lived products are Dettol, Bisto, Persil, Marmite, Coleman's mustard, Tetley tea.

      Life cycles are getting shorter as technological change accelerates. Products can become obsolete within months as more advanced versions are released. 

        

      Product portfolio

      It helps to sustain your business to have a range of products at different stages of their life cycles, so that as sales of one decline, sales of others are growing. 

      In the product portfolio, some products may be cash cows, which are established brands in mature markets. The main work has been done. They sell well, bring money in, but are unlikely to increase sales. Every business wants these!

      Stars are also great to have because, not only are they strong brands in the market, but also the market is growing and so income and profits will probably increase.

      Dogs are products that are sold to the last, loyal, 'die hard' customers. They are not attracting new consumers and will probably be phased out. 

      Question marks are in a growing market and may become established, popular brands, but this is uncertain. Work is needed here to make them stars.



      Obsolescence

      Obsolescence is the process by which products become disuded, discarded or 'overtaken' by more up-to-date versions or products (eg vinyl records, magnetic cassette-tapes, CDs, MP3 players). 

      Built-in obsolescence       results from the product's design or durability (ie how long before it wears out).

      Planned obsolescence       is making a product out of date by deliberately introducing a new version or product. 

      Discuss examples of products that became obsolete without their manufacturer's intention.
      Discuss examples of products that are obsolete because their manufacturer deliberately released a new product.

      Discuss why obsolescence might benefit a company (eg Apple iPhones).