- •В.Е. Приходский
- •Contents
- •Introdiction
- •Market-based pricing
- •Competition-based pricing
- •1. The Principles and Functions of Marketing
- •Introduction: Develop and review a framework for marketing
- •1.1. What is marketing?
- •1.2. The objectives of marketing
- •1.3. Implementing the marketing mix
- •Test Questions
- •Product
- •Personnel
- •2. Market Research
- •Introduction
- •2.1. What is market research?
- •2.2. Sources of marketing information
- •Information requirements
- •Internal sources
- •2.3. Primary research
- •2.4. Market changes
- •Information on sales
- •Test Questions
- •A questionnaire
- •Case Study ‘Sun Rush’
- •4M Brits shrug off gloom in sun rush
- •3. Product
- •Introduction
- •3.1. Kotler’s five ‘levels’ of product benefit Core and basic benefits
- •Expected, augmented and potential benefits
- •Competition of augmented benefits
- •Copeland’s product typology and strategy
- •3.2. The product life cycle Uses of the product life cycle
- •Introduction
- •Figure 3.1. The product life cycle The introduction stage
- •The growth stage
- •The maturity stage
- •The decline stage
- •Criticisms of the product life cycle
- •3.3. New product development The importance of new products
- •Screening
- •Development
- •3.4. Product portfolio theory
- •The bcg matrix
- •Figure 3.2. The Boston Consulting Group matrix
- •A composite portfolio model: the gec matrix
- •Figure 3.3. The gec matrix
- •4. Pricing Decisions and Strategies
- •4.1. The Pricing Decision What determines prices?
- •Factors influencing pricing decisions
- •External factors influencing pricing decisions
- •4.2. Cost-Based Pricing
- •What is break-even analysis?
- •Calculating break-even point
- •Break-even charts
- •‘What if’ analysis
- •The margin of safety
- •Cost-based pricing methods
- •Fixed Cost 200,000
- •Contribution 25
- •Problems with cost-based pricing
- •4.3. Market-Based Pricing Demand based pricing
- •4.4. Competition-Based Pricing
- •4.5. Problems with Demand- and Competition-Based Pricing
- •Test Questions
- •Case Study ‘What Price Promotion?’
- •5. Customer Service and Sales Methods
- •Introduction
- •5.1. ‘The customer is always right’
- •5.2. Placing the product – distribution
- •Indirect distribution via intermediaries
- •5.3. Closing the sale
- •Test Questions
- •Case Study ‘Company Handbook’
- •6. Marketing Communications
- •6.1. Targeting an audience
- •6.2. How to reach a target audience
- •6.3. Marketing communications performance
- •6.4. Guidelines and controls on marketing communications
- •Test Questions
- •Case Study ‘Marketing Communication’
- •References and further reading
3. Product
Key words: product, product benefits, product typology, product life-cycle, product idea generation, product screening, product development, product portfolio, BCG matrix, GEC matrix
Introduction
A product can be defined as anything that is offered for sale. All products contain a good, a service and an intellectual element, such as when we buy hairdressing services from a fashionable (brand name as an intellectual property) barber or hairdresser (the service) who then also washes and blow-dries the hair using hair care products (such as shampoo – goods). The totality of the hairdressing product contains goods, services and intellectual property. Hence, a product is a mixture of a physical good, a service, and an intellectual property. A good is a tangible part of a product and is something that can be owned. A service is something that is done on the buyer’s behalf, intangible in nature and not able to be owned. An intellectual property is also intangible in nature, but opposite to a service can be owned.
Of value in product strategy is a consideration of how value might be added to the product from the point of view of the customer. To do this, it can be helpful to consider the product’s features and benefits in a number of levels. Different approaches can give different numbers of levels. We shall consider here Kotler’s five-level model (1997).
Then we will consider product life cycle concept which can be used to analyse and predict product competitive conditions and identify product key issues for management.
Change in markets, economies and society has led to shortening of life cycles, and this has intensified the need for most organizations to innovate in terms of the products they offer. New products can provide the mechanism whereby further growth can take place. Increasing competition, often itself coming from new or modified products, means that innovation is frequently not an option but a necessity.
The notion of a portfolio exists in many areas of life, not just for products. Underpinning the concept is the need for a business to spread its opportunity and risk. A broad portfolio signifies that a business has a presence in a wide range of product and market sectors. Conversely, a narrow portfolio implies that the organization operates in only a few or even in one product or market sector.
The Boston Consulting Group matrix offers a way of examining and making sense of a company’s portfolio of product and market interests. It is a way of viewing the entire product range to see a company’s products as a collection of items in a similar way that a holder of shares in several companies might consider the decision on what to do with the shares.
The limitations of the BCG matrix have given rise to a number of other models that are intended to take a greater number of factors into account and to be more flexible in use. A leading example is the GEC matrix, developed by McKinsey and company in conjunction with the General Electric Company in the USA.