MCD2050
Marketing 1: Week 6
Lecture 6 - Product
2
3Icons
Pages
6 - 10
Prescribed
reading. Refer
to textbook
Watch the
video via the
link
Class Activity –
Answer the
question
Case Study -
Real world
example
!
Important
point to
remember
Pages
6 - 10
Recommended
reading. Refer
to textbook
4 Anything offered to the market to satisfy customer need and wants.
 Goods, services, events and experiences
What is a product?
5 A company’s market offering often includes both tangible
products and intangible services.
Product, services and experiences
Source: Kotler et 10, 2013 ‘Marketing’ 9th Edn.
© Commonwealth of Australia, reproduced by permission
Insert Figure 10.1
in here
6 Market offers lie somewhere on a continuum.
 McDonalds, offers physical goods, hamburgers, fries yet also
provides a service, drive through, delivery and speed.
 McDonalds use both people e.g. crew members and
equipment e.g. fryers to complete their offering.
Good/Service –Equipment/People
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7 Each product consists of 4 levels, known as the total product concept.
 The total product concept is a way of viewing a product as the totality of
benefits it provides to the customer.
The four levels are:
1. Core
2. Expected
3. Augmented
4. Potential
The Total Product Concept
Pages
179
8 The core product relates to
the problem solving element
of the offer.
 E.g. ‘What benefit is the
consumer really seeking’
 For example the core product
of a mobile phone is
communication.
The Core Product
9 The expected product consists of attributes of the offer that
deliver the core benefit.
 These include:
– Brand name
– Features
– Style
– Packaging
The Expected Product
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 The augmented product is referred to as the value added element of
the offer.
 The additional benefits that the consumer receives from the offer.
 These may include;
– Extended warranties
– After sales service
– Product support
The Augmented Product
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 This final level includes all
possibilities that could
become part of the offer.
 Including those that have
been developed, planned or
not even conceived yet.
The Potential Product
Source: https://www.youtube.com/watch?v=fqym5TCxtPE
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What levels of the total product concept does this clip discuss?
Source: https://youtu.be/nOYk_M9oe_Y
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 Products can be classified as either consumer or business
products.
 Consumer products: Those purchased for personal
consumption.
 Business products: Those purchased for use by or within a
business.
 Our focus in this course is on Consumer Products.
Product Classification
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 There are four (4) ways a consumer product can be classified.
1. Convenience
2. Shopping
3. Specialty
4. Unsought
Consumer Product Classifications
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1. Convenience (FMCG):
 Consumer Behaviour: Frequently purchased, little planning effort,
low involvement
 Price: Low
 Place: Intensive Distribution
 Promotion: Mass promotion by the manufacturer
 Examples: Chocolate bars, milk, bread, eggs.
Classifications of Consumer Products
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2. Shopping:
 Consumer Behaviour: Less frequently purchased, greater shopping
effort, higher involvement.
 Price: Higher than Convenience
 Place: Selective, more than one place but less than many
 Promotion: Combination between manufacturer and reseller.
 Examples: Televisions, clothing, furniture
Classifications of Consumer Products
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3. Specialty:
 Consumer Behaviour: Unique benefits that generally cannot be
substituted by another, purchaser knows exactly what they want
(strong brand preference).
 Price: High
 Place: Exclusive Distribution
 Promotion: Carefully targeted to certain markets
 Examples: Fine jewellery, luxury cars,
Classifications of Consumer Products
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4. Unsought:
 Consumer Behaviour: Consumer does not normally consider
purchasing these products or they do not know about these
products.
 Price: Varies
 Place: Varies
 Promotion: Aggressive selling
 Examples: Insurance, charity donations
Classifications of Consumer Products
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Classifying Consumer Products
© Commonwealth of Australia, reproduced by permission
Insert Table 10.1
in here
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 Product Item: a specific version of a product that can be
differentiated from the company’s other product items. Example for
Samsung a product item is Samsung Galaxy Note within the
smartphone range
 Product Line: a group of products manufactured or distributed by an
organisation, similar in the way they produced or marketed. For
example Samsung’s line of smartphones, tablets, refrigerators,
vacuum cleaners…
 Product Mix – the set of all products that an organization makes
available to customers. Samsung has mobiles, TV & AV, Home
appliances, Computing, Displays, Smart Home..
Product Relationships
Source: Elliot 5th ed and Monash Business School
Pages
180
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 What is a brand?
 A brand is a name, logo, symbol or sign that represents the
manufacturer or retailer of the offer and differentiates it from
the competition.
 Brands play a critical role in the success or failure of an offer.
Branding
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 When developing brands within a product mix, a firm may decide to pursue the
following strategies.
 Individual Brands: Using a different brand on each product, owned by same firm.
E.g. Coca Cola company with their use of the Sprite, Fanta and Mt Franklin brands
 Family Brands: Using the same brand on several of the firms products. E.g. Kellogg's
 Brand Extension: Using the same brand to extend to a new product category.
E.g. Mercedes Benz Fragrances
Brand Strategies
Pages
194-195
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 Brand ownership strategies outline who the brand belongs to.
 There are four (4) commonly used strategies:
1. Manufacturer Brands
2. Private Label Brands
3. Licensing
4. Co-branding
Brand Ownership
Pages
195-197
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 Manufacturer Brands are owned
by the manufacturer - the
company that produces or
manufactures the product,
displays their branding on the
offer:
 Private Label: Owned by the
reseller - a branding strategy
where the reseller displays their
own branding on the offer.
 Woolworths has been heavily relying on their
private label products: Have a look here.
Manufacturers vs Private Label Brands
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 Co-branding: The use of two or
more brands on one offer. *
 * This must not be confused with a
supplier.
 Licensing: When one company
(Company A) pays a licensing fee ($$)
to another (Company B). In order to
use Company B’s logo, characters or
images on Company A’s offer.
 A significant amount of Disney’s revenue
comes from their licensing fees.
Co-Branding vs Licensing
+
Uniqlo T-shirt Bershka Hoodie
+
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 Without the use of devices, write down what you believe are the
worlds 10 most valuable brands.
 Those pictured are just examples and do not necessarily reflect the top ten brands.
 Lets see if you’re right: https://www.forbes.com/powerful-brands/list/
Activity
MCD2050
Marketing 1 - Product
New Products
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 A company has to continually develop new products.
 New products are the key source of growth for a company.
 Apple understands this and continually develops new
market offers.
 What will be next? An Apple car?
New Product Development
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 There are several ways that a new product can be developed.
 All of the following are new product classifications:
1. New to the market: an invention
2. New to the company: a brand extension
3. New to the product line: a line extension
4. New to the product: improvements or enhancements to an existing product.
What is classified as a new product?
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1. Idea Generation: The search for new product ideas
2. Idea Screening: The filtering of ideas, spot good ideas, drop bad ones.
3. Concept Evaluation (Idea Testing): Testing new concepts with a sample of target
consumers.
4. Marketing Strategy: Designing an initial marketing strategy.
5. Business Analysis: A financial evaluation of the new product
6. Product Development: Developing the concept into a physical object.
7. Test Marketing: Testing the new product into realistic market settings.
8. Commercialisation: Introducing the product into the market.
New product development process
Pages
185-186
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Example of Idea Generation and Screening
Source: https://youtu.be/JfhV_ezOxgA
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 The PLC traces a product throughout
it’s lifetime.
 It involves five distinct stages:
1. New Product Development
2. Introduction
3. Growth
4. Maturity
5. Decline
 Firms will adjust their marketing
strategies based on where the
product is within its lifecycle.
The Product Life Cycle (PLC)
Pages
184-185
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1. New Product Development: As discussed in previously.
Overview of the PLC Stages
Stage Characteristics Strategy
2. Introduction
• First appearance of the offer, market is likely to have
no or only little knowledge about the product
• Sales start at zero (0) and profits are negative given
the R&D costs.
• Create product awareness
• Heavily invest in promotional activities to
encourage trial of the product
3. Growth
• Rapid increase of popularity, competitors increasing
at this stage.
• Sales continue to increase but the profits eventually
slow
• Intensify product distribution in order to
maximise on the demand for the offer
• Reduce sales promotion (incentives) for the
offer to capitalise on the demand
4. Maturity
• Product acceptance is wide spread within the
market, intensive competitors present.
• Make changes to the marketing mix in order
to take the product back into the growth stage
i.e. make adjustments to the product
5. Decline
• Sales and profits fall, little interest in the product
evident.
• Decide to reduce investment in the product
• Drop the product from the company’s range
• Change the product and hope it will enter
another growth stage.
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 Firms have to carefully manage their range of offerings
to suit the needs and wants of customers
 Brand strategies are used in alignment with
organizational objectives to either order to grow or
downsize the company’s and product range.
 New products are regularly designed and introduced,
after which they proceed through a life cycle
Summary
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 Reminder to complete the online weekly quiz on Moodle.
 Quiz will close 5pm Saturday
 The test is open book – you can refer to your lecture notes and
textbook(s)
 The test is timed – 60 minutes to complete from when you start it.
Online Weekly Quiz