Products and Markets

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RVS/ FoM/ Products and Markets

Products and Markets

Objectives To Understand Market and Ways in which Market can be defined Segmentation and approaches to market Segmentation Product Kotlers 5 levels of product benefit Copelandss product typology PLC Concvept of Portfolio

Strategies: BCG Matrix, GEC Matrix, Ansoffs Matrix

RVS/ FoM/ Products and Markets

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Market

Market- Demand and Supply sides Market Share- By volume/ by value Need Want Utility Served Market Market Segmentation Product Portfolio

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RVS/ FoM/ Products and Markets

Market

Demand side- a group of actual or potential customers with similar needs or wants Supply side- industry Market share- Measure of an organizations performance with regard to its ability to win and retain customers

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RVS/ FoM/ Products and Markets

Define Markets

Definition based on product Need satisfaction or function performed Customer identity

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RVS/ FoM/ Products and Markets

Product market

Product produced or sold

Disadvantage different products may satisfy the same need or want; may miss identifying the threats
Advantage: Economies of Scale Example: Mobile phone, electronic organizer

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RVS/ FoM/ Products and Markets

Need Satisfaction of function performed

Relies on concept of utility -ve: very broad view, does not allow a practical approach to decision-making +ve: mass markets are possible Example: products that satisfy thirst water, soft drinks, juice

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RVS/ FoM/ Products and Markets

Customer Identity

Based on common requirements of customers +ve: targeting of customers, may allow economies of scale -ve: Different technnologies may need to be employed, not economical to produce People who play cricket

Example: Udipi restaurants, IPL, HBO, INOX

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RVS/ FoM/ Products and Markets

Market Segmentation

Undifferentiated marketing Demand is homogeneous Example: Coca- Cola Differentiated marketing The total market has different segments, each to be treated separately Example: Commercial vehicles Concentrated marketing Focus on one market segment +ve: Specialization to satisfy the segment -ve: All eggs in one basket
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Product Positioning

How is a product or brand perceived in relation to the preferences of segments of the market, and in relation to competitive products
Example: Positioning for Beer xxx
Bitter
xx

xxx

xx

Weak

strong

xxxx
Sweet

Market gap

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Bases for Segmentation

Distinguish one customer type from another Criteria before segmentation is done: Market size- identifiability of the segment-measurability of the segment- accessibility to the segment-buying behaviour of the segment

Bases Demographic: age, stage of family life-cycle, gender, income, education Geographic: country, region Behavioural variables: brand loyalty, frequency of use, consumption occasion

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RVS/ FoM/ Products and Markets

Products

Anything offered for sale

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RVS/ FoM/ Products and Markets

How value is added

Kotlers 5 levels of Product benefit

Core benefits Basic benefits Expected benefits Augmented benefits Potential benefits

Discussion: Mobile phones At what product benefit level does competition occur?

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RVS/ FoM/ Products and Markets

Copelands Product Classification

How to bring bring products to the market?

Convenience goods Frequently purchased, low prices, low risk in purchase Shopping goods More expensive, of more interest to the customer, some risk in purchase , customers will shop around, promo material should have high info content Specialty goods Very differentiated, high levels of prestige, customers may insist only on one brand, high levels of service required, high prices, restricted distribution

Discussion: Examples?
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Product Life Cycle (PLC)

The Stages of the Product Life Cycle:

Development Introduction/Launch Growth Maturity Saturation Decline Withdrawal

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PP Product Life Cycle

Product Life Cycle Sales
Development Introduction Growth Maturity Saturation Decline

Time

Product Life Cycles

Sales

Effects of Extension Strategies

Time

Product Life Cycles

Sales/Profits PLC and Profits

PLC
Profits Losses Break Even Time

Product Life Cycle

Product Life Cycle (PLC):

Each product may have a different life cycle PLC determines revenue earned Contributes to strategic marketing planning May help the firm to identify when a product needs support, redesign, reinvigorating, withdrawal, etc. May help in new product development planning May help in forecasting and managing cash flow

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BCG Matrix

Rate of Market Growth

High

Stars

Q??

Cash Cows

Dogs

Low Low High

Relative Market Share

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Ansoffs Matrix

Product-Market Scenario
Current Product New Product

Existing Market
Market Penetration Product Development

New Market
Market Development Diversification

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Ansoffs Matrix

Market Penetration: increasing sales of an existing product and

penetrating the market further. Product Development: develop new products for the existing market. Market Development: sell existing products to new markets. Diversification: Moving away from what you are selling (your core activities) to providing something new e.g. Moving over from selling foods to selling cars. Consolidation: Withdrawing from particular markets, scaling back on operations and concentrating on its existing products in existing markets.

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GEC Matrix