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21st of November: handing the draft of the presentation
Last week of class: presentations
Chapter 1: Introduction
I. What is a product?
We define a product as something that can be offered to a market for its attention, acquisition, use or consumption, and that could satisfy a wish or a need.
The products include more than just tangible goods. In a broad definition, products include physical objects, services, events, people, places, organizations, ideas or combinations of all these.
We try to make services more tangible, so the client can compare with similar services.
Given its importance in the global economy, we will pay special attention to services. Services are a form of product that consists of activities, benefits or satisfactions offered for sale and are basically intangible since they do not result in obtaining ownership of something.
The offer of a company to the market often includes both tangible goods and services. Each component can be a secondary or main part of the total offer.
II. Product and Marketing
Products and services become increasingly generic, many companies are moving to a new level of value creation for their customers. In order to differentiate their offers, in addition to simply manufacturing products and providing services, they are developing and managing experiences for the customer with their products or their company.
A. Levels of product
1. Basic product
Product planners should consider products and services at three levels. Each level adds more value for the client.
The fundamental level is the basic product, which answers the question: What is the buyer really getting? When the Marketer designs the products, it must first define the basic benefits of the product, those that solve a problem or provide services that consumers seek.
→ Trying to answer needs (water for thirst, but coke isn't necessary).
2. Real product
At the second level, the product planner must convert the basic benefit into a real product. It has to develop the characteristics of the product or service, such as design, quality level, brand and packaging.
The name, its different parts, design, features, packaging, and other attributes have been carefully combined to deliver the basic benefit to be remembered. An increased product must be built around the basic benefits and the actual product, and offer the consumer additional services and benefits. It must provide consumers with a complete solution to their problem.
3. Augmented product
The product planner must build an augmented product around the basic benefits and the actual product, and offer the consumer additional services and benefits.
It must provide consumers with a complete solution to their problem. Consumers tend to see products as complex sets of benefits that meet their needs. The basic needs of the consumers that the product will satisfy must be identified first; Then, the company has to design the actual product and find ways to augment it in order to create the set of benefits that will provide the greatest satisfaction for the customer experience.
Consumer products include convenience products, shopping products, specialty products and unsought products. Such products differ in the ways that consumers buy them and, therefore, in the way they are sold.
Convenience products are consumer goods and services that the customer usually buy frequently, immediately and with minimal effort of comparison and purchase.
Examples: detergent for clothes, sweets, magazines or fast food.
Shopping products and services are consumer goods purchased less frequently so that customers compare carefully in terms of convenience, quality, price and style. Consumers spend a lot of time and effort to obtain information and make comparisons.
Examples: furniture, clothing, large household appliances, hotel reservations or flights.
Specialty products are consumer products and services with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort. Examples: specific car brands, professional photographic equipment, designer clothing or medical services or legal specialists.
Unsought products are consumer products that the consumer does not know or knows but not normally think to buy. The consumer does not look for the most important innovations until he knows them thanks to advertising. Examples: life insurance, funeral services, blood donations to the Red Cross.
Traditional circus VS Cirque du Soleil
- Describe and compare both (marketing mix, relationship marketing)
- Compare product levels (basic, real, augmented)
Traditional circus
Basic: entertainment
Real: trapeze, funny clowns, muscle men, animals, tent, music, food…
Augmented: see the animals, more local/personal ticket selling
Cirque du Soleil
Basic: entertainment
Real: (trapeze, funny clowns, muscle men), new age music, theme, costumes, stage design (production)
Augmented: customer-relationship, loyalty program, online community, buy tickets online, promotion, company culture
- Apply other marketing knowledge to cirque du soleil (case study)
Cirque du Soleil = shopping product
Traditional = shopping product
Price: start from 68€, value based / Product: specialty product because it's unique / Place: worldwide / Promotion: online marketing, fanbase, posters, / Personnel:
B. Industrial products
Industrial products are those that are acquired for further processing or to be used in the activity of a business.
Thus, the difference between a consumer product and an industrial product is based on the purpose for which the product is acquired.
If a consumer buys a lawn mower to fix his house, he buys a consumer product. If the consumer acquires the same mower for use in a gardening business, then it is an industrial product.
Reduces effort: cleaning company/lady Avoids hassles: meditation Reduces cost: Quality: apple Variety: Deliveroo / restaurant Sensory appeal: Informs: news channel/newspaper Saves time: Simplifies: calculator Makes money: bitcoin Reduces risk: seatbelt/helmet Organizes: agenda Integrates: Connects: social media
Wellness: gym / massage Therapeutic value: meditation Fun/entertainment: concert / cinema Attractiveness: Provides access: internet Reduces anxiety: meditation / yoga Rewards me: Nostalgia: Design / aesthetics: apple Badge value:
Motivation: good news
IV. Products: Concept, types and attributes
A. Price
A price is the amount of money charged for a product or service.
In broader terms, a price is the sum of the values that consumers give in exchange for the benefits of having or using the product or service.
Pricing based on value for the customer
It uses the perceptions that buyers have of the value of the product that is sold, and not the seller's costs, as a fundamental element to assign prices.
This means that the marketer cannot design a product and a marketing program, and then set the price.
The price should be considered along with all the other variables of the marketing mix before establishing the marketing program.
Although costs are important in establishing prices, pricing based on cost is often driven by the product. The company designs what it considers a good product, adds the costs of manufacturing the product, and allocates a price that covers the costs plus a target profit margin.
Then, in marketing you must convince the buyers that the value of the product at that price justifies their purchase. If the price is too high, the company must settle for smaller overprices or lower sales, which would result in disappointing profits.
Pricing for good value
Pricing for good value, by offering the right combination of quality and good service at a fair price. In many cases, this has involved introducing less expensive versions of branded products already established.
In other cases, pricing for good value has involved the redesign of existing brands to offer higher quality for a given price, with the same quality for less.
Value-based pricing
They do not reduce prices to match those of competitors, but they add value-added features and services to differentiate their offers and thus justify their higher prices.
"Offer features and value-added services to differentiate the offers of a company, and charge higher prices."
Insight = value. The more value we provide, the more we can charge.
Growth – A period of rapid market acceptance and substantial profit improvement. Early adopters: opinion leaders, more sensitive to price, they want to feel unique.
Maturity – A period of a slowdown in sales growth because the product has achieved acceptance by most potential buyers. Profits stabilize or decline because of increased competition. Early majority: pay normal price, they are followers of recommendations, go to the functional and emotional part of the product.
Decline – The period when sales show a downward drift and profits erode. Late majority: pay normal price, they are followers of recommendations, go to the functional and emotional part of the product.
After – laggards – They don't mind about the product, they need to satisfy a basic need, very low price, no promotion.
The company need to launch a new product on the market at the maturity/decline stages, otherwise the customers will buy from other companies.
The product life cycle is getting shortened by information, technology, purchasing power. But with innovation, you can give a new life to a product, rebirth it.
Profits rise and fall at the different stages of the life-cycle.
III. Marketing strategies and Product Life Cycle
A. Introduction
B. (^) Growth
C. Maturity
D. Decline
- The depth or number of versions offered of each brand or product in the line can also be counted (57 beauty and personal care brands, 69 foods and refreshments brands, 34 home care brands, 2 water purifier brands)
- The consistency of the product mix refers to how closely related the various product lines are in end use:
III. Product mix strategies
These product-mix dimensions provide the handles for defining the company's product Strategy. The company can increase its business in four ways;
- It can add new product lines, thus widening its product mix. In this way, its new lines build on the company's reputation in its other lines.
- The company can lengthen its existing product lines to become a more full-line company.
- It can add more product versions of each product and thus deepen its product mix.
- The company can pursue more product line consistency, or less, depending on whether it wants to have a strong reputation in a single field or in several fields.
IV. Business portfolio
Business portfolio : The collection of businesses and products that make up the company.
Portfolio analysis : A tool by which management identifies and evaluates the •varifms businesses that make up the company.
A. SBU
Management's first step is to identity the key businesses making up the company. These are strategic business units.
A strategic business unit (SBU) is a unit of the company that has a separate mission and objectives, and which can be planned independently from other company businesses.
An SBU can be a company division, a product line within a division, or sometimes a single product or brand.
The purpose of strategic planning is to find ways in which the company can best use its strengths to take advantage of attractive opportunities in the environment. So most standard portfolio-analysis methods evaluate SBUs on two important dimensions:
- the attractiveness of the SBU's market or industry.
- the strength of the SBU's position in that market or industry.
The best-known portfolio-planning methods are from the Boston Consulting Group, a leading management consulting firm, and by General Electric and Shell
B. BCG
Using the Boston Consulting Group (BCG) approach, a company classifies all its SBUs according to the growth-share matrix. By dividing the growth share matrix as indicated, four types of SBU can be distinguished:
- Stars – Stars are high-growth, high-share businesses or products. They often need heavy investment to finance their rapid growth. Eventually their growth will slow down, and they will turn into cash cows.
- Cash cows – Cash cows are low-growth, high-share businesses or products. These established and successful SBUs need less investment to hold their market share.
Chapter 4: packaging
I. Marketing and packaging
Most physical products have to be packaged and labeled. Some packages—such as the Coke bottle—are world famous. Many marketers have called packaging a fifth P, along with price, product, place, and promotion; however, packaging and labeling are usually treated as an element of product strategy.
The following factors have contributed to packaging’s growing use as a potent marketing tool:
- Self-service: The typical supermarket shopper passes by some 300 items per minute. Given that 53 percent of all purchases are made on impulse, an effective package attracts attention, describes features, creates confidence, and makes a favorable impression.
- 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: Packages contribute to instant recognition of the company or brand. Campbell Soup estimates that the average shopper sees its red and white can 76 times a year, the equivalent of $26 million worth of advertising.
- Innovation opportunity: Innovative packaging can bring benefits to consumers and profits to producers. Toothpaste pump dispensers, for example, have captured 12 percent of the toothpaste market because they are more convenient and less messy.
II. Packaging: primary, secondary and shipping packaging
Packaging includes the activities of designing and producing the container for a product.
The container is called the package, and it might include up to three levels of material.
Old Spice aftershave lotion is in a bottle ( primary package ) that is in a cardboard box ( secondary package ) that is in a corrugated box ( shipping package ) containing six dozen boxes of Old Spice.
A. Labelling
Every physical product must carry a label, which may be a simple tag attached to the product or an elaborately designed graphic that is part of the package.
Labels perform several functions.
First, the label identifies the product or brand—for instance, the name Sunkist stamped on oranges.
The label might also grade the product, the way canned peaches are grade labeled A, B, and C.
The label might describe the product: who made it, where it was made, when it was made, what it contains, how it is to be used, and how to use it safely.
Finally, the label might promote the product through attractive graphics.
III. Recoverable or lost packaging material: packaging and ecology
Companies need to evaluate whether they are truly practicing ethical and socially responsible marketing. Business success and continually satisfying the customer and other stakeholders are intimately tied to adoption and implementation of high standards of business and marketing conduct
Ethical issues must be dealt with in many aspects of business. There are product issues such as quality and safety, warranties, and patent protection; packaging issues such as accurate labeling and use of scarce resources.
IV. Packaging test
Developing an effective package for a new product requires several decisions.
The first task is to establish the packaging concept, defining what the package should basically be or do for the particular product.
Then decisions must be made on additional elements—size, shape, materials, color, text, and brand mark, plus the use of any “tamperproof” devices.
All packaging elements must be in harmony and, in turn, must harmonize with the product’s pricing, advertising, and other marketing elements.
Next come engineering tests to ensure that the package stands up under normal conditions; visual tests, to ensure that the script is legible and the colors harmonious; dealer tests, to ensure that dealers find the packages attractive and easy to handle; and, finally, consumer tests, to ensure favorable response.
V. Packaging strategies
Tetra Pak, a major Swedish multinational, provides an example of the power of innovative packaging and customer orientation.
The firm invented an “aseptic” package that enables milk, fruit juice, and other perishable liquid foods to be distributed without refrigeration. This allows dairies to distribute milk over a wider area without investing in refrigerated trucks and facilities. Supermarkets can carry Tetra Pak packaged products on ordinary shelves, which saves expensive refrigerator space.
Choose a product and describe it or do the exercise for a limited edition of Absolut vodka
- (^) Describe the actual packaging and its levels.
Primary packaging is the plastic bottle. Secondary packaging is the plastic wrap around the packs. And the shipping packaging is the cardboard box to transport them.
- Describe the brand: write a sentence, choose attributes of value, choose 5 adjectives to describe it, create its color palette.
- What can be improved in the current product packaging?
- Design the perfect packaging - and label - for this product: describe the materials and colours (handmade drawing design of each member of the group- optional .psd file) - How does the new packaging reach the desired improvement?
- Write the quantity and find at least 3 suppliers that can sell it, consider the delivery time.
- Now try to find a more sustainable option (steps 4 and 5)
All steps must include at least one image. Create a file with the info from step 4 and upload it to the campus.
Chapter 5: branding
I. The foundations of branding
We must provide brands with the right content so that consumers can build the expected meaning. In the brand strategy we are going to talk about:
Brand personality, Brand values, Brand territory, Consumer Insights.
Brand personality is humanization with the use of attributes and values. The brand attributes are the most rational part, they correspond to the characteristics of the product. Brand values are more creative and irrational.
The Brand territory is the prism from which we are going to address a certain insight. It will serve as a filter to obtain what our values will be in a brand territory, thus generating a brand personality and an advantage over competitors.
Before creating or choosing a value we have to go through more analytical phases that show us the opportunities we have and the motivations of consumers ( Consumer insights ).
Once the essence of our brand is defined, we have to collect this key information to create a clear positioning in the minds of consumers.
Grouping that information will give place to the DNA of the brand or Brand platform. The purpose of the process is clear: to give rise to the idea of brand or Big idea.
Apple
- Describe the brand image:
- High quality
- Innovation
- Lifestyle
- Simplicity / design
- Each student creates the brand associative network
- iPhone
- Mac
- Clean design
- Good customer experience
- Apple logo
- Create its color palette
- White
- Grey
- (^) Black
- Gold / Silver
