JYOTHISH P 4th Sem MBA

What is a product???
A product is an offering of commercial intent having tangible and intangible features that goes to satisfy needs, wants and desires of the consumers. A product thus become a tool by which an organisation achieves its strategic goal.

Definition
According to Peter F Ducker A product is a product if it is purchased and consumed; if it is not purchased and consumed then it remains a raw material or material in process

Product in service marketing

The product in service marketing mix is intangible in

nature. Like physical products such as a soap or a detergent, service products cannot be measured. Tourism industry or the education industry can be an excellent example. At the same time service products are heterogenous, perishable and cannot beowned.

Total product concept

Theodore levitt explained that a product was no longer an isolated goods offering. It now was combination of three products.

 The core product- this has the very basic feature and

was the main reason for consumption Actual product- The strategy at this level involves branding, adding features and benefits to ensure that their product offers a differential advantage from their competitors Augmented product- here the features were becoming more intangible. This time they added guarantees/warrenties customer education and training, different payment options, installations, home deliveries etc

Thus the total product concept was the complete offer package from the marketer. Eg: healthcare industry
Input Core product Expected service
Clean facilities Qualified staff & doctors Reasonable rates Range of rooms Efficient tools for specialized operations and surgeries Third party services Expert advice Installation kit Prompt result Error free

Augmented product
Health edu & training In-house facility Hostel Blood donation centre Research & lab Spcial ward for VIPs Visiting consultant Webcam connectivity Interconnectivity Acceptable connectivity Doorstep delivery Intimation on new updates Smart cards Different schemes

Hospitals

Quality treatment

Medical software

Software

Medical insurance

Covering risk

Choice available Reasonable rates

The service product audit

It is necessary for service firms to know and decide what actually they are offering to the customers in the form of benefits. The marketer should also know accurately what the customers perceive about the product and the main benefit they expect, seek and experience from it. The areas that the offer audit can probe are: The targeted market of the service offer Current and potential analysis Effectiveness off competiton Effectiveness of satisfying needs, want and desires of consumers

Product range
The service firm should be in a position to offer a wide range of products this will enables them to get more customers and satisfy their wide-ranging needs. The wider range would also enable the firm to be more competitive. The service firm increase its product mix bye following three ways By creating a service product line ( new product development) By increasing the number of service offer items within each product line By increasing the number of product lines (width

The Product Life Cycle

Product life cycle (PLC) has to do with the life of a product in the market with respect to business/commercial costs and sales measures. To say that a product has a life cycle is to assert three things: Products have a limited life, Product sales pass through distinct stages, each posing different challenges, opportunities, and problems to the seller, Products require different marketing, financing, manufacturing, purchasing, and human resource strategies in each life cycle stage

introduction

growth

Maturity

sancturation

decline

S A L E S

TIME

four main stages of a product's life cycle and the accompanying characteristics are
Stage 1. Market introduction stage 2. Growth stage Characteristics costs are very high slow sales volumes to start little or no competition demand has to be created customers have to be prompted to try the product makes no money at this stage costs reduced due to economies of scale sales volume increases significantly profitability begins to rise public awareness increases competition begins to increase with a few new players in establishing market increased competition leads to price decreases

Stage

characteristics

3. Maturity stage

costs are lowered as a result of production volumes increasing and experience curve effects sales volume peaks and market saturation is reached increase in competitors entering the market prices tend to drop due to the proliferation of

competing products
brand differentiation and feature diversification is emphasized to maintain or increase market share Industrial profits go down

4. Saturation and decline stage

costs become counter-optimal sales volume decline prices, profitability diminish profit becomes more a challenge of production/distribution efficiency than increased sales

Marketing responses to the PLC

Introduction Marketing emphasis Product strategy Pricing strategy
Create service product awareness; encourage product trial Introduce basic products Price skimming or penetration

Growth
Establish high market share

Maturity
Fight off competition; generate profits Design product versions for different segments Match or beat the competition

Decline
Minimize marketing expenditure

Improve features of basic product Reduce price enough to expand and establish market Mass media advt to establish brand image Increase the number of outlets

Rationalise the service offer range Reduce prices further

Promotional strategy Distribution strategy

Advt and sales promotion to end users and dealers Build selective distribution outlets

Emphasis brand strengths to different segments Maintain intensive distribution

Minimal level to retain loyal customers Rationalise outlets to minimise distribution costs

And also to tackle the product decline michael porter has suggested four strategies Leadership: When there is still potential in the market for profit exploitation, the service firm can invest in product support to strengthen in and emerge as a strong and competitive player Niche: the service marketer can analyse the total market and identify certain specific segments that has potential for profitability and which can decay slower than the rest Harvest : the marketer is all set to totally exploit the offers. While no further investment are made, there is a serious attempt to streamline costs including reduction of attributes in the augmented product level. Divestment: if the marketer is savvy enough to detect the symptoms of decline early on, the product line can be sold in the latter part of maturity or earlier part of decline stages at a profit

Service product strategies

Ansoffs offer-market matrix

Each service offer of a firm requires the development of a separate product strategy. Its only then that the long term product objectives like maximisation of growth and profit can be achieved. Pro. Igor Ansoff propound four basic product strategies: Market penetration, market development, product development and diversification Product Portfolio BCG It say that the product life cycle is an important influence on the management of service product portfolios and cash flows

Branding of product
A name, term, sign, or design or a combination of them intended to identify goods and services of one seller or a group of sellers so as to differentiate them from competition

Brand identity
it is a broad term confluence of words, images, ideas and association that form a consumers aggregate perception of the brand.

A brand can convey six levels of meaning: Attributes: helps the customer associate certain attributes to the offering like availability of 24 hours service from Citibank (The citi never sleeps) Benefits : the attributes and features of the service should be able to convey the existence and promised delivery of benefits that could be functional ( SBI has wide ranging offers for all) and/or emotional( security is a warm feeling) and (the nation banks on us ) Values : the brand should communicate about the values of the service marketer (HDFC extols trust, faith, and expertise: with you. Right through) Delhi police (with you, for you, always)

 Culture: the service brand can represent certain

specific culture (McDonalds is as much about America Lufthansa is about German culture) Personality: the service can project a personality User: the brand also suggests the type of customers who uses its services ( American Express cars boast that its car holders are achievers)

Importance of branding service products

Customers benefits: Reducing time and effort in the decision-making process Consistency of delivery, quality and benefits of the offer are assured, considerably reducing customers risk perception Enhancing their image and status of the offer, satisfying psychological or emotional needs of the customers

Marketers benefits: Charge a premium on their services Services are intangible and therefore do not have a legal case for patenting their concept innovations, designs, formats or processes. The service marketer can segment markets through branding Retain large number of customers for repeat consumption Ensure a less risky springboard for a new product launches through brand extensions

Brand Pyramid

VALUES &BELIEFS

Touches the self concept and emotional level of the customer

BRAND BENEFITS

desirable
BRAND ATTRIBUTES Least desirable, imitable

The deliverable benefits can be matched or surpassed by the competition

Brand equity
a set of brand assets and liabilities linked to a brand its name and symbol, that add to or subtract from the value provided by a product or services to a firm and/or that firms customers. It includes Brand awareness Brand associates Customer loyalty Perceived quality Prosperity assets

Brand communication
AWARENESS

BRAND KNOWELEDGE AND IMAGE

ATTITUDE TOWARDS THE BRAND

ACTION

Branding policies
Corporate/ company branding
Family branding Individual branding

Individual branding

Service brand name an be based on the following Name of persons Place Emotions and images

Brand development for existing service products

Brand extension
Multibranding Cannibalization

Co branding
Private and generic brands

Service brand building- steps

1.
2.

3. 4. 5.

6.

The basic value of the company should be clearly enunciated and then the corporate brand can be developed While brand managers are responsible for the development of corporate and service brand, in services everyone including the providers and the top company personnel should live through and believe in the brands promises and proposition The company should clearly define the essence of the brand Company should ensure positive customer experience The brand value proposition should always be the main plank for the firms strategy , operation, service delivery and product development The firm should correctly measure the effectiveness of the brand building exercise

Strategic drives of brand value

Creating and nourishing relationships rather than just

making transactions Focusing on stake holders rather than just customers and shareholders Maintaining strategic consistency rather than independent brand image Generating purposeful interactivity rather than a mass media monologue Marketing a corporate mission rather than just service product claims

 Using zero-based planning rather than tweaking last

years plans Using cross-functional rather than departmental planning and monitoring Creating core competencies rather than just communication specialisation and expertise Using integrated agency rather than a traditional, full service agency Building and managing databases to retain customers rather than just acquiring new customers

New Product Development Process

Internal sources Go errors IDEATION IDEA SCREENING External sources Drop errors

CONCEPT DEVELOPMENT AND TESTING

Marketing assessment Functional testing BUSINESS ANALYSIS PRODUCT DEVELOPMENT AND TESTING TEST MARKETING Financial assessment Market testing

FULL COMMERCIALISATION

Process of idea
Idea generation screening is at 2 levels External Changing customer needs and wants Competitors Distribution/trade/ retail channel analysis Suppliers, universities, advt and market researching agencies Internal Research and development Production and process possibilities Sales people Top management by experience Employees Trade channel

Idea screening
Drop error: failure to spot potential of ideas which later turn out to be successful. Go error: ideas that have been given Go ahead but later on turned out to be failures The process of idea screening is at 2 levels: 1. New ideas to be assessed in terms of their market potential and organisational capability of producing and selling 2. Screening process is on a numerical basis ie., relative merits of different ideas are to be systematically analysed

Concept development and testing

This implies that the product idea is the product concept. It implies building the prototype Testing: asking consumers about the reaction and performances about the concept

Business analysis
Include market assessment and financial assessment

Market assessment : Description of target marketing Forecasting sales volume An indication of product positioning Likely competitor reaction Specification of new product features An assessment of achievable price level A strategy distribution A strategy for promotional requirements

Financial assessment: Sales volume and value Variable cost of production Incremental fixed cost The condition and profitability of the new product

Product development and testing

Functional testing: consists of test on prototype and

CAD/CAM. The tests are made on functional aspects of products Market testing: here, the researcher dwells on the qualitative aspects affecting the customer ie., why he likes or dislikes the products and which are the features be appreciates or dislikes.

Test marketing
Its main purpose is to discover potential problems with products and with marketing activities. It also seeks to identify who the buyers are and how often they make repeat purchases. Different kinds of test marketing are Standard test marketing Limited test marketing Product use test

references
Service marketing- C Bhattacharjee
Service marketing and management- Dr. B.Balaji www.google.com