PRODUCT MIX

To transform marketing strategy in to marketing programs, marketing managers must

make basic decisions on marketing expenditures, marketing mix, and marketing
allocation. First a company must decide what level of marketing expenditures is
necessary to achieve its marketing objectives. Companies typically establish their
marketing budget at percentage of the sales goal.

Second, the company also has to decide how to divide the total marketing budget among
the various tools in the marketing mix. Marketing mix is one of the key concepts in
modern marketing theory.

We can define marketing mix as: -

Marketing mix is the set of marketing tools that the firm uses to pursue its marketing
objectives in the target market.
The four-factor classification of marketing mix namely the ‘4 P’s are:- Product, price,
Place & Promotion. The Particular marketing variables under each P are as follows.

ELEMENTS OF MARKETING MIX

Product Mix Price Mix

Product variety Discount
Product Quality Allowance
Brand name Target Payment terms
Packaging markets Credit Terms
Size
Services
Warranties
Features
Design
Place Mix
Promotion
Mix
Sales Promotion Physical Distribution &
Advertising Channels of Distribution
Personal selling
Public Relation
Publicity

Marketers must decide on the allocation of the marketing budget to the product, channels,
promotion media, and sales area. To make these allocations, marketing managers use
sales- Expense functions that show how sales would be affected by the amount of money
put into each possible application.
Product Mix
The most basic marketing mix tool is product. The firm’s tangible offer to the market,
which includes the product quality, design, features, branding and packaging. As a part of
product offering, some companies provide various services, such as leasing, delivery,
repair, and training. Such support services can provide a competitive advantage in the
globally competitive market place.

Price Mix
A Critical marketing mix tool is price; the amount of money that customers pay for the
product. Company’s has to decide on wholesale, and retail prices, discounts, allowances,
and credit terms. If its price is not competitive, the buyers will turn to competitors
Products.

Place Mix
Another key marketing tools includes the various activities the company undertakes to
make the product accessible and available to target customers. Company’s must identify,
recruit, and link various marketing facilitators to supply its products and services
efficiently to the target market. It must understand the various types of retailers,
wholesalers and physical distribution firms and how they make their decisions.

Promotion Mix

Promotion is the fourth marketing- mix tool. Includes all the activities the company
undertakes to communicate and promote its products to the target market.

Company’s has to hire, train, and motivate sales-people. It has to set up communication
and promotion programs consisting of advertising, sales promotion, public relations, and
direct and online marketing; though that the 4ps represent the seller’s view of the
marketing tools available for influencing buyers. Form a buyer’s point of view, each
marketing tool is designed to deliver a customer benefit.

The seller’s 4P’s to the customer 4C’s

4P’s 4C’s
Product Customer needs & wants
Price Cost to the customer
 Place Convenience
Promotion Communication

Product is the first and most important element of the marketing mix. Product strategy
calls for making coordinated decisions on product mixes, product lines, brands,
packaging and labeling.

Most companies sell more than are product. Their product mix can be classified
according to width, length, depth and consistency. These four dimensions are the tools for
developing the company’s marketing strategy and deciding which products lines to grow,
maintain, harvest and divest.

Strong products should be grown or maintained weak and/or unprofitable lines shard be
harvested or divested. To analyze a product line and decide how many resources shard be
invested in that line, product line manages need to look at the line’s sales and profit and
market profile.

A company can change the product component of its marketing mix by lengthening its
product via line stretching or line filling. By modernizing its products; by featuring
certain products and by proving its products to eliminate the least profitable.

MEANING OF A PRODUCT

A product is anything that can be offered to satisfy a need or want.

A product consists of as many as there components: Physical good(s) service(s) and

idea (s). Products that are marketed include physical goods (automobiles, books etc),
service (concerts, professional advice), persons (Mr A, B, C), places (Langano, Sodere),
organizations. (Health association, social clubs(, and ideas (family planning, safe driving)
etc.
Levels of a product
There are three levels of a product: The core product, the actual product, and the
augmented product as indicated in the refigure below:
 1. The core product - This is the most basic level, which answers the question, what
is the buyer really buying? The core product constitutes the benefits received. As
the figure illustrates, the core product stands at the centre of the total product. It
consists of problem solving services or core benefits that consumers seek when
they buy a product.
2. The tangible product- The core product must be turned into a tangible product.
Perfume, computers, lipsticks, political candidates, cars, shoes are all tangible
products. Tangible products have multiple characteristics: features, styling, a
brand name, packaging, and quality level.
3. The augmented product - includes the additional services and benefits offered
around the core and actual products. Therefore, a product is more than a simple
set of tangible features.

Consumers tend to see products as complex bundles of benefits that satisfy their needs.
When developing products, marketers first must identify the core consumer needs the
product will satisfy. They must then design the actual product and find ways to augment
it in order to create the bundle of benefits that will best satisfy consumers.

PRODUCT CLASSIFICATION
Marketers have traditionally classified products on the basis of varying products
characteristics: durability, tangibility, and use (consumer or industrial). Each product
type has an appropriate marketing mix strategy.

1 Durability & Tangibility

Products can be classified into three groups, according to their durability, tangibility and
use.

1. Durability
Products based up on Durability could be classifies as Durable and Non-Durable goods
Non-durable goods
Non-durable goods are tangible goods that normally are consumed in one or few uses.
i.e. soap, beet etc. since these goods are consumed quickly and purchased frequently, the
appropriate strategy is to make them available in many locations, charge only a small
mark up, and advertise heavily to induce trail and build preference.

Durable goods
Durable goods are tangible goods that normally service many uses. i.e. refrigerators,
machine tools, clothing etc. Durable products normally require more personal selling and
service, command a higher margin, and require more seller guarantees.
2. Tangibility
Products further more could be classified based upon tangibility. On this basis we could
find: Tangible and Intangible Products
Intangible Product (Service)
Intangible products (Service) are those products that cannot be touched, seen, felt etc.
Services are intangible, inseparable, variable, and perishable. So as a result they
normally require more quality control, supplier credibility, and adaptability. e.g. repairs,
professional services.
Tangible Products
Tangible products are those products that can be seen, touched, felt etc. E.g Refrigerator,
Car, Stereo

3. Use
Products further could be classified based up on their use. Accordingly they will be
classified as: Consumer Goods and Industrial Goods

A. Consumer -Goods classification

Consumers buy a vast array of goods. These goods can be classified on the basis of
consumer shopping habits. They can be classified as convenience, shopping, specialty
and unsought goods.

1. Convenience goods: are goods that the customers usually purchase frequently,
immediately, and with a minimum of efforts, i.e. soaps, newspapers, etc.
2. Shopping goods: are goods that the customer, in the process of selection and
purchase, characteristically compares on such bases as suitability, quality, price, and
style. i.e. furniture, clothing, cars & major appliances etc.

3. Specialty goods: are goods with unique characteristics and/or brand identification
for which a significant group of buyers is habitually willing to make a special
purchasing effort i.e. specific brands and types of fancy goods, cars stereo
components, photographic equipment etc.

4. Unsought goods: are goods that the consumer does not know about or knows
about but does not normally think of buying? New products, such as smoke
detectors, food processors, are unsought goods until the consumer is made aware of
them through advertising. The classic examples of known but unsought goods are life
insurance, cemetery plots, gravestones, & encyclopedias etc.

B. Industrial goods classification

Organizations buy a vast array of goods and services. Industrial goods can be classified
in terms of how they enter the production process and their relative costliness. They are
classified as: material & parts, capital items, and supplies and business services.

i) Materials and parts

Are goods that enter the manufacturer's product completely? They fall into two classes:
raw materials, and manufactured materials and parts.

 Raw materials fall into two major classes:

- Farm products - wheat, cotton, livestock, fruits etc, and
- Natural products - fish, lumber, crude petroleum etc.

 Manufactured materials and parts divided into two categories:

- Component materials - Iron, yarn , cement, wires and
- Component parts - small mortars, tires, casting etc.

ii) Capital Item:

Are long-lasting goods that facilitate developing and/or managing the finished product?
They include installation and equipment.

Installations consist of building (i.e. factories & offices) and equipment (i.e. generators,
drill presses, computers, elevators). Installations are major purchases. They are usually
brought directly from the producer, with the typical sale preceded by a long negotiation
period.

Equipment comprises portable factory equipment and tools (hand tools, life trucks) and
office equipment (e.g. personal computers, desks). These types of equipment do not
become part of the finished product.

Supplies and Business Services are short-lasting goods and services that facilitate
developing and/or managing the finished product.

Supplies are of two kinds: operating supplies (e.g. lubricants, coal, writing paper, pencils)
and maintenance and repair items (paint, nails, brooms): supplies are the equivalent of
convenience goods in the industrial field; they are usually purchased with a minimum
effort on a straight re-buy basis.

Business services include maintenance and repair services (e.g. window cleaning,
typewriter repair etc.) and Business advisory service (e.g. legal, management, consulting,
and advertising) maintenance services are often provided by small producers, and repair
services are often available from the manufacturers of the original equipment.

Business advisory services are usually purchased in new task-buying situations, and the
industrial buyer will choose the supplier on the basis of the supplier's reputation and
people.

PRODUCT PLANNING AND DEVELOPMENT

Guided by a company's new-product strategy, a new product is best developed through a
series of six stages.

Major steps in development process

Identify 1 2 3 4 5 6
the Idea Screening of Business Prototype Market Commercialization
strategic generation Analysis development Test
role of ideas
new
products

The formal development of new products provides benefits such as higher success rates,
increased customer satisfaction, and greater achievement of time, quality, and cost
objectives for new products.
1. Generating new product ideas

New product development starts with an idea. A system must be designed for stimulating
new ideas within an organization and then acknowledging and reviewing them promptly.
Customers should also be encouraged to propose innovations.
2. Screening ideas
At this stage, new product ideas are evaluated to determine which one warrant further
study. Typically, a management team screens the pool of ideas.

3. Business Analysis
A surviving idea is expanded in to a concrete business proposal. This means
management (a) identifies product features (b) estimates a market demand, competition,
and the products profitability (c) establishes a program to develop the product, and (d)
assigns responsibility for further study of the products feasibility
4. Prototype development

If the result of the business analysis is feasible, then a prototype (or trail model) of the
product is developed. In the cases of goods, a small quantity of the trail model is
manufactured to designated specifications.
5. Market tests

Unlike the internal tests conducted during prototype development, this test involves
actual customers. A new tangible product may be given to a sample of people for use in
their households (in the case of consumer good) or their organization (a business good).
Following this trail, consumers are asked to evaluate the product. Consumers use tests
are less practical for services due to their intangible nature.

This stage in new product development often entails test marketing, in which the product
is placed on sale in a limited geographic area. Results, including sales and repeat
purchases, are monitored by the company that developed the product and perhaps by
competitors as well.

6. Commercialization

In this stage, full-scale production and marketing programs are planned and finally,
implemented, up to this point in development, management has virtually complete
control over the product.
PRODUCT LINE AND PRODUCT MIX
1 Meaning of Product Line
A broad group of products, intended for essentially similar uses and having similar
physical characteristics, constitutes a product line.

2 Meaning of Product Mix

The set of all products offered for sale by a company is a called a product mix.

The structure of a product mix has both breadth & depth. Its breadth is measured by the
number of product lines carried, its depth by the variety of sizes, colors, and models
offered with in each product line.

PRODUCT MIX STRATEGIES

To be successful in marketing, producers and middlemen need carefully planned

strategies for managing their product mixes.

The major product mix strategies include:

- Positioning - Alteration
- Expansion - Contraction

1 Positioning the Product

Positioning means developing the image that a product projects in relation to competitive
products and to the firm's other products.

Marketing executives can choose from a variety of positioning strategies. Sometimes

they decided to use more than one for particular products. Several types of positioning
includes

 Positioning in relation to a competitor

 Positioning in relation to a product class or attribute
 Positioning by price and quality
 Positioning in relation to a target market
2 Product Mix Expansions

Product mix expansion is accomplished by increasing the depth with in a particular line
and/or the number of lines a firm offers to consumers.

When a company adds a similar item to an existing product line with the same brand
name, is termed as line extension.

Another way to expand the product mix, referred to as mix extension. Under a mix
extension the company is to add a new product line to its present assortment.

The new line may be related or unrelated to current products. Furthermore, it may carry
one of the company's existing brand names or may be given a entirely new name.

The product strategies of trading up and trading down involve a change in product
positioning and an expansion of the product line; trading up means adding a higher price
product to a line to attract a broader market. Also the seller intends that the new product's
prestige will help the sale of its existing lower price products; trading down means
adding a lower-price product to a company's product line. The firm expects that people
who cannot afford the original higher price product or who see it as too expensive will
buy the new lower-price one.

3 Alterations of Existing Products

Product alteration is often improving an established product. Product alteration can be

more profitable and less risky than developing a new one. Redesigning the product itself
can sustain its appeal or even initiate its renaissance. Alternatively, especially for
consumer goods, the product itself is not changed but its packaging is altered.
4 Product Mix Contractions

Another product strategy, product mix contraction, is carried out either by eliminating an
entire line or by simplifying the assortment with in a lien. Thinner and/or shorter product
lines or mixes can weed out low-profit and unprofitable products. The intended result of
product-mix contraction is higher profits form fewer products.

As firms find that they have an unmanageable number of products or that various terms
or lines are unprofitable, or both, product-mix pruning is likely.

PRODUCT IDENTIFICATION
1 Brand

In developing a marketing strategy for individual products, the seller has to confront the
branding decision, branding is a major issue in product strategy. On the one hand,
developing a branded product requires a great deal of long-term investment spending,
especially from advertising, promotion, and packaging.

Perhaps the most distinctive skill of professional marketers is their ability to create,
maintain, protect, and enhance brands; marketers say that “Branding is the art and
cornerstone of marketing." The American marketing association defines a brand as
follows: -

Meaning of a Brand
"A Brand is a name, term, sign, symbol, or design, or a combination of them, intended to
identify the goods or services of one seller or group of sellers and to differentiate them
from those of competitors".

A brand is essentially a seller's promise to consistently deliver a specific set of features,

benefits, and services to the buyers.

A brand name is the part of brand consisting of words, letters, and/or numbers that can be
vocalized. A trademark is defined as a brand that is given legal protection. Therefore,
trademark is a legal term meaning the words, names, or symbols that the law designates
as trademarks.
A brand mark is that part of a brand which can be recognized but is not utterable, such as
a symbol, design, or distinctive coloring or lettering.

2 Brand Name Selection

A good name can add greatly to a products' success. However, finding the best brand
name is a difficult task. It begins with a careful review of the product and its benefits, the
target market and proposed marketing strategies.

Desirable qualities for a brand name includes:-

 It should suggest something about the product's benefits & qualities
 It should be easy to pronounce, recognize, and remember. The brand name should be
distinctive
 It should be capable of registration and legal protection
Once, chosen, the brand name must be protected. Many times try to build a brand name
that will eventually become identified with the product category.
Brand sponsor: - A manufacture has certain sponsorship option; as illustrated below,

i) Manufacturer's brand
The product may be launched as a manufacturer's brand (or national brand), as when
the manufacturer sells its output under its own brand names.

ii) Private brand:

The manufacturer may sell to resellers who give it a private brand (also called a store
brand or distributor brand).

iii) Licensed brand:-

The manufacturer may produce some output under its own name and some under
distributor’s labels.

3 Brand Strategy

Brand Strategy

A company has four choices when it comes to brand strategies, which are as follows:-

i) Line extension:
Line extension occur when a company introduces additional items in the same product
category under the same brand name, usually with features, such as new flavors, forms,
colors, added ingredients, package sizes, and so on.

ii) Brand Extension

A company may decide to use an existing brand name to launch a product in a new
category. Brand extension strategy offers a number of advantages. A well-regarded
brand name gives the new product instant recognition and earlier acceptance. It enables
the company to enter new product categories more easily.
i.e. Sony puts its name on most of its electronic products and instantly establish a
connection of the new products high quality.
iii) Multi brands:
A company will often introduce additional brands in the same product category. There
are various motives for doing this. Sometimes the company is trying to establish different
features and/or appeal to different buying motives. A multi branding strategy also
enables the company to lock up more distributors’ shelf space and to protect its major
brand by setting up flanker brands.

For example, Seiko establishes different brand names for its higher priced (Seiko
LaSalle) and lower-priced watch (pulsar) to protect its flanks.

iv) New brand

When a company launches products in a new category, it may find that none of its current
brand names are appropriate.

v) Co-brands
A rising phenomenon is the appearance of co-branding (also called dual branding), is
which two or more well-known brands are combined in an offer. Each brand sponsor
expects that the other brand name will strengthen brand preference or purchase intention.
In the case of co-packaged products, each brand hopes it might be reaching a new
audience by associating with the other brand.
2 Packaging
Even after a product is developed and branded, strategies must still be developed for
other product related aspects of the marketing mix. One such product feature, and a
critical one for some products, is packaging, which consists of all activities of designing
and producing the container or wrapper. Thus packaging is a business function and a
package is an item.

1. Meaning of Packaging

"Packaging includes the activities of designing and producing the container or wrapper
for a product."

The container or wrapper is called the package. The package might include upto three
levels of material. Thus, old spice, after shave lotion is in 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.
In recent times, packaging has become a potent marketing tool. Well-designed packages
can create convenience value for the consumer and promotional value for the producer.

A product must be packaged to meet the needs of wholesaling and retailing middlemen.
For instance, a packages size and shape must be suitable for displaying and stacking the
product in the store.

Ultimately, a package may become a product's differential advantage, or at least a

significant part of it. In the case of convenience goods and operating suppliers buyers
feel that are well-known brand is about as good as another. Thus a feature of the package
- reusable jar, self-contained applicator etc, might differentiate these types of a product.
In general, packaging provides the following advantages:-
 It physically protect the products from damage, theft, pilferage
 It helps in identifying the products
 It encourages impulse buying
 It is used as an advertising media
 It serves as an information tool
 It serves as a sales tool

3 Labeling

Labeling which is closely related to packaging is another product feature that requires
managerial attention.

1 Meaning of Labeling
A label is a part of a product that carries information about the product and the seller. A
label may be part of the package, or it may be a tag attached to the product. Obviously
there is a close relationship among labeling, packaging, and branding.
2 Types of Labels

Labels fall into three primary kinds:

i) A brand label:-
It is simply the brand name applied to the product or package.

ii) A descriptive label

It gives objectives information about the products' use construction, care, performance,
and/or other pertinent features ingredients and nutritional contents.

iii) A grade label

It identifies the products judged quality with a letter, number, or word. Canned peaches
are grade labeled A,B,C, corn and wheat are grade labeled 1 & 2.

Brand labeling is an acceptable form of labeling, but it does not supply sufficient
information to a buyer. Descriptive labels provide more product information but not
necessarily all that is needed or desired by a consumer in making a purchase decision.

PRODUCT LIFE CYCLE

Introducing a new product at the proper time will help maintain a company's desired level
of profit. Striving to maintain its dominant position in the market, the company has to
face that challenge often. However, any product moves though identifiable stages, each
of which is related to the passage of time and each of which has different characteristics.
Assumptions of PLC
According to P.Kotler, the assumption, behind the product life cycle concepts are as
follows

 Products have a limited life

 Product sales pass through distinct stages, each posing different challenges to the
seller
 Profits rise and fall at different stages of product life cycle.
 Products require different marketing, human resource, finance, production strategies
in each stage of their life cycle.

The Life cycle of a product consists of four stages:

stages: Introduction, growth, maturity
and decline.
A product life cycle consists of the aggregate demand over an extended period of time for
all brands comprising a generic product category.
1 Characteristics of Each Stage

Management must be able to recognize what part of the life cycle its product is in at any
given time. The competitive environment and marketing strategies that should be used
ordinarily depend on the particular stage.
1. Introduction
During the introduction stage, a product is launched into the market in a full-scale
marketing program. It has gone through product development, including idea screening
prototype and market tests.

This introductory (Sometimes called pioneering) stage is the most risky and expensive
one, because substantial amount of money spent in seeking consumer's acceptance of the
product.

2. Growth
In the growth stage, or market acceptance stage, sales and profit rises, often at a rapid
rate. Competitors inter the market, often in a large numbers if the profit outlook is
particularly attractive. Mostly as a result of competition, profits start to decline near the
end of the growth stage.

3. Maturity
During the first part of the maturity stage, sales continue to increase, but at a decreasing
rate. When sales level of profits of producers and middlemen decline, the primary
reason: Intense price competition. During the latter part of this stage, marginal producers,
those with high costs or with out a deferential advantages are forced to drop out of the
market. They do so because they lack sufficient customers and /or profits.

4. Decline
For most products, a decline stage as gauged by sales volume for the total category is
inevitable for one of the following reasons:

 The need for the product disappears.

 Better or less expensive product is developed to fill the same need
 People simply tired of a product (a clothing style for instance)
 So it disappears from the market.

The concept of product life cycle is very important in modern marketing; steps in
planning and development of products, why new product fail? And strategies used on
every stage of the life cycle are illustrated as follows:
Marketing strategies throughout the PLC

1. Introduction stage: -

Rapid skimming strategy

 Consisting of launching the new product at a high price and high promotional level
Slow skimming strategy:-
 Consists of launching the product at a high price and low promotion.
Rapid penetration strategy
 Consists of launching the product at a low price and spending heavily on promotion.
Slow penetration strategy.
 Consists of launching the new product at a low price and low level of promotion.

2. Growth strategy:-
 It improves product quality and adds new product features and improved styling.
 It adds new model and flankers product(product of different sizes, flavors, etc)
 It enters new market segments
 It increases its distribution coverage and enters new distribution channels.
 It shifts from product awareness advertising to product preference advertising
 It lowers prices to attract the next layer of price sensitive buyers.

3. Maturity Stage:-
Marketers should systematically consider strategies of market, product, and
marketing mix modification:-

a. Marketing modification:-
 Attracting & converting non-users
 Enter new market segments
 Win competitors' customers.

b. Product modification:-
 Strategy of quality improvement
 (Durability, reliability, Speed, taste .etc)
 Strategy of feature- improvement
 (Size, Weight, Materials, additives, accessories)
 Strategies of style improvement (Restyling the package)

C. Marketing Mix- Modification

 Prices: - cut the prices, quantity discounts, credit terms etc.

 Distribution:- More outlets penetration ,new distribution channels
 Advertising:- Increasing advertising expenses, copy or message should be changed,
timing ,frequency or size of ads be changed.
 Sales promotion:-trade deals, cents- off, coupons rebates, warranties, gifts, and
contests.
 Personal selling: - quality of salespeople be increased, sales territories, be revised,
sales incentives be revised.
 Services:- Speed up delivery ,more technical assistance to customers, extend more
credit