Professional Documents
Culture Documents
NC Ali Tanveer NC Muhammad Ajmal NC Umar Ehsan NC Imran Azeem Capt Zahid Jadune
PRODUCT CONCEPTS
Product Classifications
(Part 2 of 3)
Derived demand carsteelglass Price elasticity industry vs. company Volatility of demand inventory fluctuation Buyer expertise rational - - emotional
Business Products used to create other products Production Operations Based Based
Raw Materials
Accessory Equipment
Component Parts
MRO Supplies
Process Materials
Business Services
Conceptual Model
Classification
(M. Copeland)
Specialty Products
Convenience Products
Shopping Products
CONVENIENCE GOODS
Convenience goods consumers use minimal effort for frequently purchased low cost items
regular basis (ex. milk, eggs) Emergency goods - purchased when the need is urgent (ex. umbrella, boots) Impulse purchases no conscious pre * 70 % of cheese purchases planning
(Donut)
MILK
Convenience Products
Marketing Strategy Principles
- Intensive distribution Provide convenient locations and hours of operation - Self-Service/Pre sold Brand Name TOMS - Low Markup MARKET - Substantial substitution
Open 24 hrs.
UNILEVER 17% Mk Sh Nestle (Dreyers)- 16% Ben & jerrys Haagen Daz Good Humor, Breyers Drum Stick Brands
Nestl's task
Improve (intensive) distribution techniques Introduce new branded vending machines & freezers in big gas stations & convenience stores. (aim for 100,000 non grocer outlets) Create new novelty products & specialty items: ex. Coffee Almond Crunch Bar at Starbucks
WSJ, June,03
Costs are up to 6x higher to keep food in the freezers of non grocer venders because of electricity and maintenance costs Ice cream covers 35% of convenience freezer space but items offer 25% higher profit margins than super market tubs Out of home consumption is growing 10% per year compared to 8% in home (* 80% of ice cream consumption is in home) (8%x80% volume)
Shopping Products
Shopping
Consumers make product comparison(s), They seek information before purchase, they are not impulsive Moderate substitutions are made Products last a considerable time Monetary & social costs may be high
Brand Name
Homogeneous shopping goods have numerous substitutes which are similar in quality and features but they are different in price. Principle: you need to find a way to make your good stand out and make people want it (product differentiaion)
Specialty Products
Specialty Products
Marketing Strategy Principles
- Have a knowledgeable sales force (pros)
Exclusive Distribution High Markup/exceptional service Be Innovative/cutting edge Maintain a differential advantage
Tony M. drove a Ford explorer to a Mercedes showroom. Where are the sales people? (2003)
Intensive Distribution
Selective Distribution
Exclusive Distribution
(shopping)
(specialty)
Consumer behavior is so complex that marketers do not understand what consumers want Conclusion: Product classifications overlap & have limited influence on strategy
CAUSES:
Do you think the consumer product classification sequence has an impact on marketing strategy?
Product mix
Product line
Product Mix - the total group of products offered consistency: relatedness Product Line - a group of of items closely related products
# of lines = 4 # of items = 12
D E P T H
Root Beer
*Atra Razor & Cartridges *Trac II Razor & Blades *Disposable Razors
*Foamy Shaving Cream *Adorn Hair Spray *Silkience Shampoo *Right Guard Deodorant *Toni Hair Preparation
33
31
. . The sales revenue (cash flow) for the complete mix of products is emphasized rather than (isolated) problems of individual products . . Focus on the interrelatedness among products Issue: Cannibalism
A small percentage of the organizations products contribute to a large % of profits.(80/20 rule) Principles: Protect best sellers Delete marginal products Reallocate marketing support
The main goals were also the design criteria for the process:
Pause processing of old methods when new fix it all emerges means appreciation of innovation
Professional product development and portfolio management need to take a long term view, as well as keeping ahead in finding and commercialising new business opportunities.
Products by Telenor
TALK~SHAWK
Telenor Business
Any questions?