Product, MIx, Cannibal, Life cycle, Differenciation, Pricing, Brand

Define a product
a product is a good, service, or idea consisting of a bundle of tangible and intangible
attributes that satisfies consumers and is received in exchange for money or some other unit of value.

Level 1: Core Product
Level 2 Actual Product
Level 3: Augmented product




Product Mix
When we say a firm’s product mix we are actually discussing about all product items it offers.
Hindustan Lever’s product mix includes agro-chemical products, soaps, detergents, toothpaste, shampoos,
Talcum powders, cosmetics and now, frozen foods.
Reasons many firms do not want to limit themselves to one product.
1.To counteract the effects of the PLC on a one product firm.
2.To even out seasonal sales patterns.
3.To use company resources and capabilities more effectively.
4.To capitalize on middlemen and consumer acceptance of established products.
5.To spread production and marketing costs over a wider product mix.
6.To become better known and respected by middlemen and consumers





Cannibalization
When the sales of the firms new products are due mainly because of decreasing sales of its existing and established product then we say that cannibalization has occurs in brief we can say by this you are actually eating away your own market.
A good example of it would be Hyundai Santro they have introduced Santro Xing as a new product in the market in other way they have cannibalized their own market, like a person who wanted to buy Santro old model will buy Xing as it latest so they are not capturing new customer but converting their own customers If you want to avoid cannibalization, the new product should not be identified too closely with established products. Instead it should be targeted with new appeals to different market segments. Cannibalization is desirable when margins on new products are higher than those on established Products. In highly competitive industries, it is often desirable to induce target customers to trade up to the firm’s newer products. This strategy is adopted by Videocon International, Which entered the market
with a low priced color TV with basic features and then introduced more sophisticated models up the price scale in order to ensure that customers in all segments would buy only Videocon products.






The Product Life Cycle
A product's life cycle (PLC) can be divided into several stages characterized by the revenue generated by the product. If a curve is drawn showing product revenue over time, it may take one of many different shapes,
Product development is the incubation stage of the product life cycle. There are no sales and the firm prepares to introduce the product. As the product progresses through its life cycle, changes in the marketing mix usually are required in order to adjust to the evolving challenges and opportunities.

Introduction Stage

When the product is introduced, sales will be low until customers become aware of the product and its benefits. Some firms may announce their product before it is introduced, but such announcements also alert competitors and remove the element of surprise. Advertising costs typically are high during this stage in order to rapidly increase customer awareness of the product and to target the early adopters. During the introductory stage the firm is likely to incur additional costs associated with the initial distribution of the product. These higher costs coupled with a low sales volume usually make the introduction stage a period of negative profits.

During the introduction stage, the primary goal is to establish a market and build primary demand for the product class. The following are some of the marketing mix implications of the introduction stage:

Product - one or few products, relatively undifferentiated

- Price - Generally high, assuming a skim pricing strategy for a high profit margin as the early adopters buy the product and the firm seeks to recoup development costs quickly. In some cases a penetration pricing strategy is used and introductory prices are set low to gain market share rapidly.
- Distribution - Distribution is selective and scattered as the firm commences implementation of the distribution plan.
- Promotion - Promotion is aimed at building brand awareness. Samples or trial incentives may be directed toward early adopters. The introductory promotion also is intended to convince potential resellers to carry the product.

Growth Stage

The growth stage is a period of rapid revenue growth. Sales increase as more customers become aware of the product and its benefits and additional market segments are targeted. Once the product has been proven a success and customers begin asking for it, sales will increase further as more retailers become interested in carrying it. The marketing team may expand the distribution at this point. When competitors enter the market, often during the later part of the growth stage, there may be price competition and/or increased promotional costs in order to convince consumers that the firm's product is better than that of the competition.

During the growth stage, the goal is to gain consumer preference and increase sales. The marketing mix may be modified as follows:

- Product - New product features and packaging options; improvement of product quality.
- Price - Maintained at a high level if demand is high, or reduced to capture additional customers.
- Distribution - Distribution becomes more intensive. Trade discounts are minimal if resellers show a strong interest in the product.
- Promotion - Increased advertising to build brand preference.

Maturity Stage

The maturity stage is the most profitable. While sales continue to increase into this stage, they do so at a slower pace. Because brand awareness is strong, advertising expenditures will be reduced. Competition may result in decreased market share and/or prices. The competing products may be very similar at this point, increasing the difficulty of differentiating the product. The firm places effort into encouraging competitors' customers to switch, increasing usage per customer, and converting non-users into customers. Sales promotions may be offered to encourage retailers to give the product more shelf space over competing products.
During the maturity stage, the primary goal is to maintain market share and extend the product life cycle. Marketing mix decisions may include:
- Product - Modifications are made and features are added in order to differentiate the product from competing products that may have been introduced.
- Price - Possible price reductions in response to competition while avoiding a price war.
- Distribution - New distribution channels and incentives to resellers in order to avoid losing shelf space.
- Promotion - Emphasis on differentiation and building of brand loyalty. Incentives to get competitors' customers to switch.

Decline Stage
Eventually sales begin to decline as the market becomes saturated, the product becomes technologically obsolete, or customer tastes change. If the product has developed brand loyalty, the profitability may be maintained longer. Unit costs may increase with the declining production volumes and eventually no more profit can be made.

During the decline phase, the firm generally has three options:
- Maintain the product in hopes that competitors will exit. Reduce costs and find new uses for the product.
- Harvest it, reducing marketing support and coasting along until no more profit can be made.
- Discontinue the product when no more profit can be made or there is a successor product.






Product differentiation
In this we are using the marketing mix variable to make unique product offer that stands out from the competitors. This strategy is aggressive; in this the company is focusing on besting the competition and at the same time they are satisfying the consumers and gaining higher profits. The tools that are used to differentiate products include branding, quality, image, product features, packaging, location, promotion, innovation and different service levels. Consumers who perceive that a product is unique in servicing their needs often become brand loyal and are more willing to pay a premium price in order to gain the product benefits. Marketers have identified that the products are capable of higher differentiation than services such as automobile and furniture.
Form:
Features
Performance quality
Conformance quality
Durability
Reliability
Reparability
Style
Design








Pricing Decision:
PRICE- The amt of money charged for a product or service, or the sum of the values that consumers exchange for the benefits of having or using the product or service.
“One can define price as that which people have to forego in order to acquire a product or service.” A firm must set a price for the first time when it develops a new product, when it introduces its regular product into a new distribution channel or geographical area, and when it enter bids on new contract work.
Identify the target market segment for the product or service, and decide what share of it is desired and how quickly.
Establish the price range that would be acceptable to occupants of this segment. If this looks unpromising, it is still possible that consumers might be educated to accept higher price levels, though this may take time.

Examine the prices (and costs if possible) of potential or actual competitors.

Examine the range of possible prices within different combinations of the marketing mix (e.g. different levels of product quality or distribution methods).

Determine whether the product can be sold profitably at each price based upon anticipated sales levels (i.e. by calculating break-even point) and if so, whether these profits will meet strategic objectives for profitability.

According to Kotler an organization goes through the following steps in setting its pricing policy:

Selecting the pricing Objective
Determining the demand
Estimating Costs
Analyzing competitor’s costs, prices and offers
Selecting a pricing method
- Cost Oriented Pricing
- Competitor Oriented Pricing
- Marketing Oriented Pricing
Selecting the final Price

Pricing Strategies
Pricing strategy should be an integral part of the market- positioning decision, which in turn depends,
to a great extent, on your overall business development strategy and marketing plans.
Geographical pricing
Price discounts and allowances
Promotional Pricing
Discriminatory pricing
Product-mix pricing






Brand
“As a name, term, sign, symbol or special design or some combination of these elements that
is intended to identify the goods or services of one seller or a group of sellers. A brand differentiates these products from those of competitors” (American Marketing Association, Chicago)

Characteristics of a Good Brand Name - A good brand name should possess as many of the following characteristics as possible

(i) It should be distinctive: The market is filled with over-worked names and over-used symbols.
A unique and distinctive symbol is not only easy to remember but also a distinguishing feature.
“Northstar” shoes have a distinct name.
(ii) It should be suggestive: A well-chosen name or symbol should be suggestive of quality, or may
be associated with superiority or a great personality. The name VIP Classic for travelers is suggestive
of a superior quality for a distinct class of people. Promise is suggestive of an assurance of tooth
health.
(iii) It should be appropriate: Many products are surrounded by a certain mystique in the minds of
the consumers. Carefree is an appropriate brand name of a sanitary towel.
(iv) It should be easy to remember: It should be easy to read, pronounce and spell. Tide, Surf,
Gold Spot are examples of such brand names.
(v) It should be adaptable to new products: Videocon is was good brand name for TVs and
VCRs but when it is extended to refrigerators and washing machines, some of the sales appeal is
lost. Hotline was a good name for gas stoves, but definitely not a suitable name for TVs.
(vi) It should be registerable under the Indian laws of Trade Marks and Copyrights.

Benefits of Branding - It Provides benefits to buyers and sellers
TO BUYER:

􀂄 Help buyers identify the product that they like/dislike.
􀂄 Identify marketer
􀂄 Helps reduce the time needed for purchase.
􀂄 Helps buyers evaluate quality of products especially if unable to judge products characteristics.
􀂄 Helps reduce buyers perceived risk of purchase.
􀂄 Buyer may derive a psychological reward from owning the brand, IE Rolex or Mercedes.

TO SELLER:

􀂄 Differentiate product offering from competitors
􀂄 Helps segment market by creating tailored images
􀂄 Brand identifies the company’s products making repeat purchases easier for customers.
􀂄 Reduce price comparisons
􀂄 Brand helps firm introduce a new product that carries the name of one or more of its existing
products...half as much as using a new brand, lower co. designs, advertising and promotional
costs.EXAMPLE, Gummy Savers
􀂄 Easier cooperation with intermediaries with well known brands
􀂄 Facilitates promotional efforts.􀂄 Helps foster brand loyalty helping to stabilize market share