Product - The Marketing Mix

Generally speaking, company management has a number of variables or ingredients that it can control. For example, the management of a company has discretion over the range of products to be produced, their feature, quality levels, etc. The task of marketing management is to blend these ingredients together into the successful recipe. The term marketing mix is appropriate, for there are many marketing mix ingredients and even more ways of combining them. Each element of four Ps requires that decisions are taken:

• Price: price levels, credit terms, price changes, discounts
• Product: features, packaging, quality, range
• Promotion: advertising, publicity, sales promotion, personal selling
• Place: inventory, channels of distribution, number of intermediaries

It will be seen that personal selling is considered to be one component of the promotional decision area of the marketing mix.


Product


The term "product" covers anything a company offers to customers to satisfy their needs. In addition to physical, tangible products offered for sale, there are also services and skills. There are a number of ways of classifying products, depending upon the basis chosen for classification. For example, a broad distinction can be made between consumer and industrial products, here the classification is based on the end-user or buyer. Regardless of the classification basis, an important factor to bear in mind is that the customer is purchasing a package of benefits, not product features. 

Many believe that product decisions represent the most important ingredient of the marketing mix. It is true that unless there is a potential demand (a true market need) for a product, then no matter how good it is, it will not succeed. This is not to say that decisions about products should be made in isolation. It is also true that there are many examples of products which had considerable market potential, but failed because of poor promotional, pricing, and distribution decisions. In effect, product decisions determine the upper limit to a company's sales potential. The effectiveness of decisions on other elements of the mix determines the extent to which this potential is realized. 

The Product Lifecycle


One of the useful concepts in marketing derives from the idea that most products tend to follow a particular pattern over time in terms of sales and profits. 


The product life cycle is analogous to the life cycle of humans and has four distinct stages: the introduction (birth), growth, maturity, and decline. Its shape can best be explained by giving a brief description of the four stages:

Introduction
In this stage, sales growth is relatively slow. Dealers must be persuaded to stock and promote the products. Consumers must be made aware of its existence, persuaded to be interested and convinced that it is a worthwhile purchase. They may have to be educated in how to use the product and their existing purchasing and lifestyle habit might change. There are few profits at this stage and heavy launch costs often mean a financial deficit.

Growth
After initial slow acceptance, sales begin to escalate at a relatively rapid pace. There is a snowball effect as word-of-mouth communication and advertising begin to take effect. Dealers may request to stock product. Profits begin to be made, especially if a newly introduced product can command high initial prices (known as market skimming).
Maturity
The growth of sales begins to slow as the market becomes saturated. Few new buyers are attracted to the product and there is a high proportion of repeat sales. Attracted by the high profit and sales figures, competitors have now entered the market. Partly because of this increased compensation, profit, having peaked, then begin to decline.

Decline 
Sales begin to fall and already slim profit margins are depressed even further. Customers might have become bored with the product and are attracted by newer, improved product. The dealer begins to destock the product in anticipation of reduced sales. 

The implication of the product lifecycle


Not all products exhibit such a typical cycle of sales and profits. Some products have hardly and life cycle at all (many new products are unsuccessful in the marketplace). Similarly, sales may be reduced abruptly even in a period of rapid sales growth as a result of the introduction of a new and better competitive product. Products vary too in the length of time they take to pass through the life cycle. Unlike the human lifespan, there is no average life expectancy for products. Nevertheless, a great number of products do tend to follow the generalized life cycle pattern has a number of implications for marketing and sales strategies. Two of the more important implications of the product life cycle concept is considered below:

The first is that even the most successful products have a finite life. There is some evidence which suggests that intensifying competition and rapid technological change are leading to a shortening of product life cycles. This explains the importance and emphasis now attached to the continued development of new products. The salesforce has an important role because they often have daily contact with customers, they are usually the first to detect signs that products are about to embark upon the period of decline. Such detailed knowledge of customers, competitors, and market requirements makes them potentially a valuable source of new product ideas.

The second implication is that different marketing and sales strategies may be appropriate to each stage. For example, in the introductory stage, the emphasis may be on locating potential prospect. In the growth stage, the salesforce may find themselves having to deal with the delicate issue f rationing their customers as demand increase more rapidly than capacity. In the maturity and decline stage, the salesforce will increasingly have to rely on competitive pricing offers in order to combat increasing competition and falling sales.  

Product adoption and diffusion


Consumers are placed into one of five adopter categories, each with different behavioral characteristics. These adopter categories contain percentages of first-time buyers (not repeat buyer) that fall into each category. What will attract first time buyer to a product or service, and the length of time it will take for the diffusion process to be completed, will depend on the nature of the product or service.



A number of factors can determine the rate at which the innovation is taken up:
  • Its relative advantage over other products or services in the marketplace
  • The extent to which it is compatible with the potential needs of customers
  • It's complexity in terms of how it can be used and understood
  • It's divisibility in terms of how it can be tried beforehand on some kind of test basis before a commitment is made to purchase 
  • Its communicability, which is the degree to which the innovation can be described or demonstrated prior to purchase

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