Marketing Mix Elements

MM-II
MBA – BM (2021-23, Sec E-F)

Prof. Nirali Shah

nirali@xim.edu.in
 Pricing

Promotion Place

Product

Process People
Physical
evidence
Purpose Packaging

Newer elements
Promise depending upon
Platform
what is the
market offering

Performance Personas Cx
Product Mix Decisions

MM-II
MBA – BM (2021-23, Sec E-F)

Prof. Nirali Shah

nirali@xim.edu.in
 Product classifications

• Products and Services

• Organizations, Persons, Places, and Ideas

– Create, maintain or change the attitudes and behavior toward
 Product levels: The customer value hierarchy
• Each level adds more
customer value.
• Each new benefit / Core benefit
feature increases cost.
• Each augmented Basic product
benefit soon
becomes expected Expected product
benefits and Augmented product
necessary POP in
the category. Potential product
• Each level provides
an opportunity for
structuring their
product portfolio to
target various
customer segments 6
 Product levels

• Core benefit: The service or benefit that customer is really buying.

• Basic product: Convert the core benefit into a basic product.
• Expected product: A set of attributes and conditions buyers
normally expect when they purchase this product.
• Augmented product: Product exceeds customer expectations.
• Potential product: Companies search for new ways to satisfy
customers and distinguish their offerings. It encompasses all
possible augmentations and transformations that product might
undergo in future.
Product classifications

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 Product classifications

Durability Tangibility Use

Non-durable Durable Services Consumer Industrial

goods goods goods

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 Product classifications

Durability Tangibility Use

Consumer Industrial

Convenience Specialty Material & parts Supplies &

• Staple • RM bus. services
• Impulse • Farm & natural • MRO goods
• Emergency • Mfd. material & parts • MR services
• Component material • Bus. advisory
Shopping Unsought • Component parts services
• Homogeneous Capital items
• Heterogeneous • Installations
• Equipment
• Factory &Office 10
Product classifications
 The product hierarchy

6. Item

5. Product
type
4. Product
line
3. Product
class
2. Product
family
1. Need
family
 The product hierarchy

1. Need family—The core need that underlies the existence

of a product family. Example: travelling

2. Product family—All the product classes that can satisfy a

core need with reasonable effectiveness. Example: air,
road, water

3. Product class—A group of products within the product

family recognized as having a certain functional
coherence, also known as a product category. Example:
short distance road trip
 The product hierarchy
4. Product line—A group of products within a product class that
are closely related because they perform a similar function,
are sold to the same customer groups, are marketed through
the same outlets or channels, or fall within given price ranges.
A product line may consist of different brands, a single-family
brand, or an individual brand that has been line extended.
Example: cab aggregators.

5. Product type—A group of items within a product line that

share one of several possible forms of the product.
Example: self-driving, chauffer-driven (premium, sedan,
economy)
 The product hierarchy
6. Item (also called stock-keeping unit or product variant)—A
distinct unit within a brand or product line distinguishable by
size, price, appearance, or some other attribute.
Example: Zoom car.
 Product systems and mixes

• Product system

• Product mix/assortment
– Width

– Length

– Depth

– Consistency
 Product systems and mixes

• Product system
• Product mix/assortment
– Width: how many different product lines the company carries
– Length: total number of items in the mix
– Depth: how many variants are offered of each product in the
line
– Consistency: how closely related the various product lines in
end use, production requirements, distribution channels,
promotion, or some other ways
 Depth

Tata Salt Size

Tata Salt 1 kg, 2 kg, 5 kg
Tata Salt Lite 1 kg.
Tata Salt Plus 1 kg.
Tata Salt Black Salt 100 gm, 250 gm, sprinklers
Tata Salt Rock Salt 100 gm, 250 gm
 Consistency
Air Hair oil Hair Face Body Toilet Sanitizers
fresheners shampoo cleaners

Odonil Dabur amla hair Vatika FEM Dabur Sanifresh Dabur air
oil health fairness gulabbari shine sanitizer
shampoo natural rose water spray
bleach
Odonil Vatika enriched Vatika black Dabur Dabur
occasions coconut hair oil shine moisturizin laundry
shampoo g lotion sanitizer

Dabur almond Vatika anti- FEM anti Dabur hand

hair oil dandruff darkening sanitizer
shampoo hair
removal
cream
Dabur anmol Dabur Oxylife
gold coconut oil almond men hair
shampoo removal
19
cream
 Product line decisions

• Product line analysis

– Sales and profit analysis

– Market profile and image

 Product line analysis: Sales and profit

5
Contribution to sales and profit

4.5
4 Sales
3.5 Profit
3
2.5
2
1.5
1
0.5
0
Category 1 Category 2 Category 3 Category 4

Product item
21
Product line analysis: Market profile and image

High
Attribute 1

Medium

Low

A B C D
Attribute 2 22
 Product line-length decisions

• Line stretching
– Down-market stretch
– Up-market stretch
– Two-way stretch
• Line filling
• Line modernization, featuring, and pruning
 Product mix pricing

• The firm searches for a set of prices that maximizes profits on

the total mix

Product line Optional-feature

pricing pricing

Product- Captive-product
bundling pricing pricing

By-product
pricing Two-part pricing
Differentiation

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 Differentiation

Product Services Services Channel Communication Pricing

(product
• Form
• Features related)
• Performance • Ordering
quality ease
• Conformance • Delivery
quality • Installation
• Durability • Customer
• Reliability training
• Repairability • Maintenanc
• Style e & repair
• Customization • Returns

November 17, 2021 26

Packaging

27
 Packaging

• All the activities of designing and producing the container for

a product to ensure its smooth, untampered and non-
mollified delivery

• Layers of packaging might include

1. Primary package (for example, perfume in a bottle)
2. Secondary package (for example, perfume bottle inside a
cardboard box)
3. Shipping package (for example, in a corrugated box)
 Packaging

Used as a marketing tool Packaging objectives

• Self-service • Protect the product
• Consumer affluence • Identify the brand
• Company and brand image • Convey descriptive and
persuasive information
• Innovation opportunity
• Facilitate product
transportation and
protection
• Assist at-home storage
• Aid product consumption
• (colors) Connote meanings
• Convey company mission
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 Packaging

• Packaging strategies
– Correct selection of functional and aesthetic components

– Develop correct structural design

– Harmonize with marketing program

– Choose right color

– Update packaging to be relevant, contemporary or practical

31
Source: https://www.winnerbrands.in/6-indian-fmcg-packaging-designs-which-broke-convention/
Source: https://www.winnerbrands.in/6-indian-fmcg-packaging-designs-which-broke-convention/
Source: https://www.winnerbrands.in/6-indian-fmcg-packaging-designs-which-broke-convention/
Source: https://www.winnerbrands.in/6-indian-fmcg-packaging-designs-which-broke-convention/
Source: https://www.winnerbrands.in/6-indian-fmcg-packaging-designs-which-broke-convention/
Labeling

37
 Labeling

Simple tag or elaborated graphical part of the packaging

• Functions of a label
1. Identifies the product or brand
2. Grades the product
3. Describes the product
4. Promotes the product through attractive graphics
 New labeling norms in India (for food items)
from January 1, 2022
• Mandatorily display use by or expiry date instead of “best
before date”
• Present nutritional information on the principal display panel
in bigger font sizes
• Ensure that name of the food and vegetarian and non-
vegetarian classification symbol is on the front of the pack
• FSSAI has defined the age of children for the food industry as
below 18 years for the first time
NEW PRODUCT DEVELOPMENT (NPD)
 NPD

• “The purpose of business is to create a customer, the business

enterprise has two and only two-basic functions: marketing
and innovation. Marketing and innovation produce results; all
the rest are costs.” – Peter Drucker

November 17, 2021 41

 New product development (NPD)

• What is new? / Types of new products

– According to Booz, Allen and Hamilton:

• New to the world product
• New product lines*
• Additions to existing product lines
• Improvement and revision of existing product
• Repositioning
• Cost reduction
 NPD

Product category

New Existing

Additional
New Diversification
brand
Brand (name)
Line Brand
Existing
extensions extension

Product line and brand extension grid

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 Challenges in NPD

• The innovation imperative

 Challenges in NPD
Breakthrough product Incremental product development
development
Categories • New to the world • Improvement in existing
performance features product
• Huge advance in • Derivative of existing product
performance platform
• Dramatic cost reduction • Exploits existing form of
NP Success

technology
Risk High Lower
Frequency of Infrequent More frequent
occurrence
Cost Costly to do Less costly
Targeted to New or existing markets Existing or adjacent markets
Marketer’s key • Envision the market • Listen to the existing market
responsibility • Create demand • Accommodate current demand
• Educate the market
 Challenges of NPD

• Failure of new products

– Withdrawal from the market
– Inability to get the required market share
– Inability to achieve the anticipated LC
– Ultimate failure to achieve profitability

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 Challenges in NPD

• Reasons for NP failure

– Faulty concept
– Faulty product design
– Overestimated market size
– Incorrectly positioning product
– Ineffective promotion, including packaging message
– Incorrectly priced
– Misleading market research findings
– Ignored market research findings
– Non-involvement of key channel partners
– Lower than anticipated revenue and/or margins
 Organizational arrangements

• Defining business domain, product categories and explicit

criteria

• Budgeting

• Organizing

• Step-gate / NPD Process

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New product development process
 NPD decision process

Idea Y Idea Concept Marketing

Y Y Business Y
generation screening development & Y strategy & analysis
Is the idea testing development
compatible Can we find a
Is the idea Will the
with co. good concept Can we find
worth product
objectives, that consumers a right
considering? meet our
strategies & say they would strategy? profit goals?
resources? try?

NO NO NO NO NO

DROP
 Make
NPD decision process future
plans

Business Product Yes

Y Market testing Y Commercialization
analysis Y development
Will the Have we got
Have product Are product sales
product meet technically &
met sales meeting
our profit commercially
expectations? expectations?
goals? sound product?

NO NO
Yes Yes
Send the
idea back Modify the
to PD? product/ marketing
program?

NO NO NO NO

DROP
 Idea generation
Is the idea worth considering?

Sources Adopting techniques

• Internal sources
• Creativity / brainstorming
• External sources technique
• Attribute listing
• Forced relationships
• Morphological analysis
• Reverse assumption analysis
• New contexts
• Mind mapping
• SCAMPER (Substitute, Combine,
Adapt, Modify, Put to another
use, Eliminate, Reverse)
• https://www.cleverism.com/18-best-idea-
generation-
techniques/#:~:text=10.,combinations%20that
%20are%20often%20useful.

November 17, 2021 54

 Idea screening

Is the idea compatible with co. objectives, strategies & resources?

• Identify good ideas and drop poor ideas

• Avoid two errors
– Go error and drop error
• R-W-W screening framework:
– Is it real?
– Can we win?
– Is it worth doing?
 Concept development & testing

Can we find a good concept that consumers say they would try?

• Concept development: necessary but not sufficient

– Product idea: an idea for a possible product that the company

can see itself offering to the market
– Product concept: a detailed version of the idea stated in
meaningful consumer terms
– Product image: the way consumers perceive an actual or
potential product.
 Concept development & testing

• Concept testing
– Uses virtual reality programs and sensory devices to simulate reality
– Helps in measuring
• Communicability and believability
• Need level
• Gap level
• Perceived value
• Purchase intention
• Purchase occasions
• Purchasing frequency
• User targets
 Marketing strategy development
Can we find a right strategy?

Designing an initial marketing strategy for a new product based

on the product concept.
Preliminary three-part strategy plan
• Target market’s size, structure and behavior, the planned
brand positioning, sales and market share in first few years
• Planned prices, distribution strategy, and marketing budget
for the first year
• Long run sales, market-share, profit goals and marketing mix
strategy over time
 Business analysis

Will the product meet our profit goals?

• A review of the sales, costs, and profit projections for a new

product to find out whether these factors satisfy the
company’s objectives
• Estimating total sales
– First-times sales, replacement sales, repeat sales
• Estimating costs and profit
 Product development
Have we got technically & commercially sound product?

• Developing the product concept into a physical product to

ensure that the product idea can be turned into a workable
market offering.

• Creating physical prototypes

• Conducting customer tests

– Alpha testing: test the product within the firm
– Beta testing: test the product with customers
 Test marketing

Have product met sales expectations?

• Product and its proposed marketing program are tested in

realistic market settings
 Test marketing

Consumer goods market testing Business goods market testing

• Sales-wave research • Beta and alpha testing
• Simulated test marketing • Customized tests
• Controlled test marketing • Trade shows
• Test markets • Test markets
– How many test cities
– Limited supply of the
– Which test cities
product to sales force to
– Length of test sale in a limited areas with
– Which information to promotion and catalogue
collect support
– What action to take
 Test marketing
When test marketing is
When test marketing is likely unlikely
• New product with large • Simple line extension
investment • Copy of competitor product
• Uncertainty about product • Low costs
or marketing program • Management confidence
 Commercialization

Are product sales meeting expectations?

• Introducing a new product

• Decisions to make
• When (Timing)
• Where (Geographic strategy)
• To whom (target-market prospects)
• How (introductory marketing strategy)
 Commercialization

– When – To whom
• First entry, parallel entry, late • The best prospect groups
entry
– How
– Where • To allocate sufficient time
• Market potential and resources
• Company’s local reputation
• Cost of filling the product lines
• Cost of communication
• Competitive penetration
 The consumer-adoption process

• Stages in the adoption process

Awareness

Interest

Evaluation

Trial

Adoption
• Funnel approach to circular approach

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 Consumer decision-making journey
Funnel approach Circular journey

Awareness

Interest

Evaluation

Trial Moment of
Aha moment/
approach truth

Adoption
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 The consumer-adoption process

• Factors influencing the adoption process

– Readiness to try new products and personal influence
• Innovators, early adopters, early majority, late majority,
laggards
– Characteristics of innovation
– Organization’s readiness to adopt innovations

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 The consumer-adoption process

• Readiness to try new products / consumer adoption categories

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 The consumer-adoption process

• Factors influencing the adoption process

– Characteristics of innovation

Relative advantage Communicability

Comparability Divisibility

Complexity

– Organization’s readiness to adopt innovations

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• https://www.youtube.com/watch?v=ckPbnZqVAbs