ADBMS Lecture 3
ADBMS Lecture 3
ADBMS Lecture 3
Retailer
Consumer Consumer
www.learnmarketing.net
Product anatomy
Product definition
A product is a physical good, service, idea, person or place that is capable of offering tangible and intangible attributes that individuals or organisations regard as so necessary, worthwhile, or satisfying that they are prepared to exchange money, patronage or some other unit of value in order to acquire it.
WHAT IS A PRODUCT?
People buy want satisfaction, not objects. Example: Consumers buy televisions because they want entertainment, not because they want a box with a screen. Product Bundle of physical, service, and symbolic attributes designed to satisfy a customers wants and needs.
Figure 7.1
Product layers
The outer two depend on the core product to determine how they are realised.
Durable products - last for many uses and over a long period before having to be replaced. Non-durable products - can be used once or a few times before having to be replaced. Service products - intangible products comprising activities, benefits or satisfactions that are not embodied in physical products, e.g. financial services, holidays, etc.
Convenience goods - relatively inexpensive, frequent purchases which respond to routine response buying situations. Shopping goods - represent more of a risk and an adventure to consumers.
Capital goods - buildings and fixed equipment that contribute to production. Accessory goods - items that give peripheral support to the production process. Raw materials. Semi-finished goods. Components and parts. Supplies and services.
The sum of all the products and variants offered by an organisation. The product mix can be split into the following: Product lines. Product items. Product line length. Product line depth.
DESIRE TO GROW
Growth potential limited if company focuses on a single product. Example: L. L. Bean began selling a single style of boots but has grown by selling a variety of products.
Marketing mix Blending of the four strategy elements product, place promotion, and priceto fit the needs and preferences of a specific target market. Marketers develop strategies to sell both tangible goods and intangible services.
Pricing:
Low penetration pricing High skim pricing
Most common stage in the cycle. Sales begin to level off. The competition gets tougher as more competitors have entered the market.
Industry profits are largest, but it is also when industry profits begin to decline. Promotion is targeted to create brand differentiation.
New products replace the old. Firms will often try to use extension strategies. Companies may be able to keep some sales by appealing to their most loyal customers.
Pros
The product life cycle is a useful model when deciding possible stages of a product or service. Useful to help demonstrate how marketing strategies can vary at different stages of a product's life. Promotion
Cons
Tends to be backward looking We only know which stage we have been in after it has been completed.
Only looks at a single product when most firms have many products.