Lecture 12:

Levels of Products:
 Core
 Augmented
 Potential

In marketing, there are three levels of products: the core product, the actual product, and the
augmented product.

Core Product: The core product is the fundamental need or want that the customer satisfies when they
buy the product. For example, the core product of a hotel is to provide somewhere to rest or sleep
when away from home.

Actual Product: The actual product is the physical product or service that the customer buys. In our
hotel example, this could mean a bed, towels, a bathroom, a mirror, and a wardrobe.

Augmented Product: The augmented product refers to any product variations, extra features, or
services that help differentiate the product from its competitors. In our hotel example, this could be the
inclusion of a concierge service or a free map of the town in every room.

Services Marketing:
Service marketing is a technique used by businesses to advertise services to customers. It is
unique in that the aim is to persuade a customer to purchase something they cannot physically
own but addresses their wants and needs.
Characteristics:
The characteristics of service marketing include:

 Intangibility
 Inseparability
 Perishability
 Heterogeneity

Intangibility: Services are intangible, meaning that customers can only experience them and
not test, keep, or use them.
Inseparability: The purchase of a service depends on the customer’s knowledge and
understanding of what the company is offering.
Variability: Services are highly variable, meaning that the quality of service can vary depending
on the provider, time, and location.
Perishability: Services are perishable, meaning that they cannot be stored for future use 3.
Service marketing is important for businesses as it helps them increase revenue by showcasing
and promoting non-physical products to customers, giving businesses the ability to access a
wider and potentially global market.
Categories of Services:
Services can be categorized into three broad categories based on the nature of the service act:

 People processing
 Possession processing
 Information processing

People Processing: Services that involve people’s bodies are categorized under people
processing. Examples of such services include health care, lodging, passenger transportation,
fitness centers, and haircutting salons,
Possession Processing: Services that involve possessions are categorized under possession
processing. Examples of such services include repair and maintenance work, warehousing,
recycling of waste, laundry or dry cleaning.
Information Processing: Services that involve intangible assets are categorized under
information processing. Examples of such services include education consulting, legal advice,
and accounting services.
Conclusion
Categorizing services into these three categories helps in understanding the nature of the
service act and the type of service processing involved.
New Product Development ~ Diffusion of Innovation Process

Marketing Mix:
The marketing mix is a framework that helps define the tactics to make the marketing plan happen. It
includes multiple areas of focus as part of a comprehensive marketing plan. The term often refers to a
common classification that began as the 4Ps: product, price, placement, and promotion.

7Ps of Marketing (Services Marketing):

The 7Ps of marketing is a framework that helps define the tactics to make the marketing plan
happen. The 7Ps of marketing are:
Product: An item or service designed to satisfy customer needs and wants. To effectively
market a product or service, it’s important to identify what differentiates it from competing
products or services.
Price: The sale price of the product reflects what consumers are willing to pay for it. Marketing
professionals need to consider costs related to research and development, manufacturing,
marketing, and distribution—otherwise known as cost-based pricing. Pricing based primarily on
consumers’ perceived quality or value is known as value-based pricing.
Promotion: This refers to the various methods used to promote a product or service, such as
advertising, public relations, and sales promotions.
Place: When determining areas of distribution, it’s important to consider the type of product
sold.
People: Refers to the people involved in the marketing process, including employees,
customers, and other stakeholders.
Process: Refers to the processes involved in delivering a product or service to the customer.
Physical Evidence: Refers to the physical evidence of a product or service, such as packaging,
branding, and other tangible elements.

The Product Life Cycle:

The product lifecycle refers to the length of time from when a product is introduced to
consumers into the market until it’s removed from the shelves1. The product lifecycle has four
stages: introduction, growth, maturity, and decline.
Introduction Stage: The introduction phase is the first-time customers are introduced to the
new product. A company must generally include a substantial investment in advertising and a
marketing campaign focused on making consumers aware of the product and its benefits,
especially if it is broadly unknown what the item will do. During the introduction stage, there is
often little-to-no competition for a product, as competitors may just be getting a first look at
the new offering. However, companies still often experience negative financial results at this
stage as sales tend to be lower, promotional pricing may be low to drive customer engagement,
and the sales strategy is still being evaluated.
Growth Stage: If the product is successful, it then moves to the growth stage. This is
characterized by growing demand, an increase in production, and expansion in its availability.
The amount of time spent in the introduction phase before a company’s product experiences
strong growth will vary from between industries and products.
Maturity Stage: Sales stabilize and peak when the product’s adoption matures, though
competition and obsolescence may cause its decline. During this stage, the product is well-
established, and the company may focus on maintaining its market share. The company may
also consider expanding the product line or modifying the product to appeal to new markets.
Decline Stage: The decline stage is when the product is no longer profitable, and sales begin to
decrease. The company may choose to discontinue the product or reduce its investment in it.
The decline stage may be due to a variety of factors, such as increased competition, changing
consumer preferences, or technological advancements.
The concept of product life cycle helps inform business decision-making, from pricing and
promotion to expansion or cost-cutting.

Brand Equity
Brand equity refers to the value that a brand adds to a product or service. It is the sum of all the
perceptions, experiences, and associations that a customer has with a brand. A strong brand
equity can help a company differentiate its products from competitors, increase customer
loyalty, and command premium prices.
House of Brands vs. Branded House vs. Hybrid House
Brand architecture refers to the way a company organizes its brands and products. There are
three main types of brand architecture: House of Brands, Branded House, and Hybrid House.
House of Brands: In this model, the parent company owns multiple brands, each with its
distinct brand voice, identity, target audience, and unique selling proposition 1. This strategy
allows each brand to cater to unique target audiences and a different demographic, almost as if
each brand is its own standalone company.
Branded House: In this model, the parent company is the main brand, and all its products or
services carry its name. This approach allows the brand equity of the parent brand to extend to
all the sub-brands or new products.
Hybrid House: This model combines elements of both House of Brands and Branded House2.
The parent company has a strong brand, but it also has sub-brands that have their own brand
identities.
Each brand architecture model has its own advantages and disadvantages, and companies must
choose the one that best suits their business goals and objectives.

Marketing Funnel:
 Lecture 11:
(STP): Segmentation, Targeting and Positioning in Marketing
Segmentation, targeting, and positioning (STP) is a marketing model that helps businesses
identify and target the most valuable customer segments for their products or services. The STP
model consists of three steps:
Segmentation: This step involves dividing the market into smaller groups of consumers with
similar needs or characteristics. The goal is to identify the most profitable segments that the
business can serve.
Types of Segmentation in Marketing:
Demographic Segmentation: This method of segmentation divides the market based on
demographic factors such as age, gender, income, education, occupation, and family size.
Geographic Segmentation: This method of segmentation divides the market based on
geographic factors such as region, city, climate, and population density.
Psychographic Segmentation: This method of segmentation divides the market based on
psychological factors such as personality, values, interests, and lifestyles.
Behavioral Segmentation: This method of segmentation divides the market based on
behavioral factors such as usage rate, brand loyalty, and purchase occasion .
Targeting:
After identifying the most profitable segments, the business must decide which segments to
target. This step involves evaluating the potential and commercial attractiveness of each
segment and selecting the most valuable segments for the business.
Targeting helps companies to minimize risk by identifying the most profitable segment(s) and
focusing their resources on efforts that are likely to be the most profitable. It also helps
companies to tailor their products and branding in a way that is attractive to the targeted
segment)
Example:
For example, a company that sells high-end sports cars may target wealthy individuals who are
interested in luxury cars and have a high disposable income. The company may use
demographic segmentation to identify the age, gender, and income level of the target
audience. It may also use psychographic segmentation to identify the personality, values,
interests, and lifestyles of the target audience. Once the company has identified the most
profitable segment, it can tailor its products and branding to appeal to the targeted segment,
and deliver marketing messages through various channels.
 Positioning:
Positioning in marketing is a strategic process that involves creating an identity or image of the
brand or product within the target customers’ minds. It involves differentiating your product or
service from that of your competitors and determining which market niche to fill.
The STP model is a critical strategy and planning tool that helps businesses deliver more
relevant messages to commercially appealing audiences. It is one of the most commonly
applied marketing models in practice, with marketing leaders crediting it for efficient,
streamlined communications practice.
Perceptual / Positioning Map:
A positioning map is a two-dimensional graphical representation of marketing positioning, also
called a perception map. It shows the position of a company, a brand, or an individual product
or product line in its market segment.
5C’s of Marketing

The 5C’s of marketing is a situation analysis framework for helping you determine the strengths and
weaknesses of your brand, relative to the field in which you operate1. The 5C’s include:

Company: This refers to the company’s internal environment, including its product lines and offerings,
marketing mix, communication channels, and key influencers for marketing decisions 1.

Customers: This refers to the target audience for the company’s products or services. It’s important to
understand the customers’ needs, wants, and preferences to effectively market a product or service 2.

Competitors: This refers to the other companies that offer similar products or services. Understanding
the competition can help a company differentiate itself and develop a competitive advantage 1.

Collaborators: This refers to the partners and suppliers that help the company deliver its products or
services3.

Climate: This refers to the external environment in which the company operates, including economic,
political, and social factors1.

The 5C’s of marketing is a useful tool for businesses to analyze their marketing strategies and make
informed decisions. By understanding the internal and external factors that affect their business,
companies can develop effective marketing plans that help them achieve their goals.
 Chapter 3
Vision and Mission Statement:
A mission statement defines the organization's business, its objectives, and how it will reach
these objectives. A vision statement details where the organization aspires to go.
Nike Mission Statement
Our mission is to bring inspiration and innovation to every athlete* in the world. [*If you have a
body, you are an athlete.] This mission drives us to do everything possible to expand human
potential. We do that by creating groundbreaking sport innovations, by making our products
more sustainably, by building a creative and diverse global team and by making a positive
impact in communities where we live and work.
Nike Vision Statement
We see a world where everybody is an athlete — united in the joy of movement. Driven by our
passion for sport and our instinct for innovation, we aim to bring inspiration to every athlete in
the world and to make sport a daily habit.
Strategic Objectives (P)
BCG Matrix
The Boston Consulting Group (BCG) Matrix is a business planning tool that helps evaluate the
strategic position of a firm’s brand portfolio. It classifies a firm’s products and/or services into a
two-by-two matrix based on their relative market share and market growth rate. The four
quadrants of the BCG Matrix are:
Cash Cows: Products with low market growth but a high market share. These products generate
significant cash flow and profits for the company.
Stars: Products with high market growth and a high market share. These products are leaders in
their respective markets and generate significant revenue for the company.
Question Marks: Products with high market growth but a low market share. These products
require significant investment to increase their market share and become stars.
Dogs: Products with low market growth and a low market share. These products are not
profitable and should be phased out or divested.
The BCG Matrix is a useful tool for companies to evaluate their product portfolio and make
strategic decisions about which products to invest in, which to divest, and which to maintain.
Planning gaps – strategy to fill gap

 Ansoff’s matrix
  Porter’s generic strategies [cost leadership, differentiation]

Planning Gaps and Strategies to Fill Them

When a company identifies a gap between its current state and its desired state, it can use
various strategies to fill the gap. Two popular frameworks for identifying such strategies are
Ansoff’s Matrix and Porter’s Generic Strategies.

Ansoff’s Matrix
Is a two-by-two matrix that helps management teams and analysts plan and evaluate growth
initiatives. It features products on the X-axis and markets on the Y-axis. The four quadrants of
the matrix correspond to specific growth strategies:
Market Penetration: Increase sales of existing products into an existing market.
Market Development: Focus on selling existing products into new markets.
Product Development: Introduce new products to an existing market.
Diversification: Enter a new market with altogether new products.
Porter’s Generic Strategies
Are three strategies that companies can use to gain a competitive advantage. They are:
Cost Leadership: Offer products or services at a lower cost than competitors.
Differentiation: Offer unique products or services that are not offered by competitors.
Focus: Focus on a specific market segment or niche.
By using these frameworks, companies can identify the most appropriate strategy to fill their
planning gaps.

Porter’s Five Forces Model

Porter’s Five Forces Model is a framework for analyzing a company’s competitive environment.
It identifies and analyzes five competitive forces that shape every industry. These forces
include:
Competition in the Industry:
The number and power of a company’s competitive rivals, potential new market entrants,
suppliers, customers, and substitute products that influence a company’s profitability.
Potential of New Entrants into the Industry:
The ease with which new competitors can enter the market and compete with established
companies.
Power of Suppliers:
The bargaining power of suppliers, which can affect the cost of raw materials and other inputs 1.
Power of Customers:
The bargaining power of customers, which can affect the price of the product or service.
Threat of Substitute Products:
The extent to which alternative products or services can replace the need for the company’s
product or service.
By analyzing these five forces, companies can identify the level of competition within the
industry and enhance their long-term profitability.