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Traditional marketing is based on a popular model used in the industry – the marketing mix, also known as 4p’s of marketing. These are the key factors that are involved in every good or service sold and should be defined at the early stage of the business.
The 4 p’s of marketing stand for product, price, place, and promotion. Together, the 4p’s of marketing refers to a set of strategies, and tactics a company uses regarding its products. These components are useful to place your brand in the market with the right positioning.
This post is a part of a marketing-mix series published at the mktmag blog, where each marketing-mix variable is explained thoroughly.
Product is one of the four elements of the marketing-mix, as such, it can be referred as product-mix. This variable focuses in depth on the product or service a company sells.
Although this is a very important aspect of the marketing-mix, it is the most recent one. It only became a marketing concern in the mid XX century. Until then, engineers and R&D teams were the only ones responsible for product conception. This new concept claims that marketing departments should also be a part of product conception alongside its promotion, in order to reach consumer’s needs.
The product-mix has multiple elements to take into consideration such as:
- Intrinsic characteristics
- Associated services
- Product life cycle
- Product range
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From a marketing perspective, products exist to answer consumer’s needs. When developing a new product it is important to consider what the consumer most values and what characteristics are non-negotiable in a specific product.
With that being said, it is also important to understand that products are not just objects and can take various forms such as goods (tangible products), services and even ideas (intangible products). Intangible products require marketing departments to add other marketing-mix variables to their strategy. However, that will be covered in another post and this one will have greater focus on tangible products.
There are three main categories in which tangible products can be arranged: durability, consumer goods and industrial goods. Each one has its perks and should be marketed accordingly.
Besides the product itself (base product), there are other product levels to be taken into consideration.
- Base product – product composition, performance, product advantages
- 1st Level (Augmented Tangible Product) – packaging, brand, design, quality
- 2nd Level (Augmented Intangible Product) – warranty, service, delivery, payment options
The range of products distributed by a company can be very diverse. Products can be divided in different categories that are organised into product ranges and, at another level, into different product lines.
Product ranges and lines are measured according to its length, depth and width.
- Range width: number of product lines;
- Line depth: number of products it contains;
- Range width: number of all products of all lines a company has available on the market.
Product ranges can also be categorized into low-end, mid-end and high-end products.
Generally, products in this category tend to have low positioning as well as low price points. In customer’s perception it is usually associated with bad quality. However low-end products can be associated with a company strategy such as a cost/volume strategy, positioning for a certain market, value mid range products, and many others.
For a long time, marketeers believed this was the right position to place products when regarding sales volume. It was important for companies to offer products that had a good price/quality relation. However, consumers have shown to be more polarised at both ends of the spectrum. When a customer shows a big commitment, it’s willing to pay a high price for a product. On the other hand, when not involved with the product, consumers tend to look for the cheapest option.
High-end or luxury products require particular attention regarding marketing efforts due to its target market. Usually, these products are marketed internationally and the image and communication are crucial. From these products it is expected to have high quality as well as expertise from sellers and above all, great customer service.
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Packaging plays an important role not only in the product-mix but also in place-mix (distribution) and promotion-mix. It is crucial for proper storage and transportation and making the product get to the consumer in the desired conditions. Besides that, it has an impact regarding communication as it can define the product’s and brand’s positioning.
It is called “the silent seller” because it can entice the consumer to buy a product, based on its packaging. How many times have you preferred a product over another because of the packaging?
When considering the right packaging for products it is important to think about functionality, positioning and appearance.
There are three packaging levels:
- First: has direct contact with the base product
- Second: direct contact with first packaging
- Third: direct contact with second packaging
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Brand is the name or symbol that identifies and differentiates a product from another with similar physical characteristics. It is an entity embedded in the consumer’s mind and that affects their perception of a product.
It is crucial that a company has good brand management in order to create coherence between all brand elements and everything it represents. This all reflects on brand positioning.
There are six different types of brands:
1 – Umbrella brand: the brand’s name is contained in all its product’s name;
2 – Family brand: the brand’s name in partially contained in it’s products name;
3 – Product brand: for each product or product range a new brand is created, however they all belong to the same company;
4 – Institutional brand: the company name is used to designate the product’s brand;
Ex.: HP, Sony
5 – Distributor’s brand: brands owned by distributors;
Ex.: Target’s owned brands
6 – Generic brand: brand with high notoriety in a certain category; all products in that category is designated by that brand’s name;
Ex.: Gillette, Rimmel
When developing a product it is important to think about what services to offer the customer along it’s customer journey. When deciding which services to provide alongside a product purchase, positioning, price, quality and product range are factors to take into consideration.
It should be defined if the considered associated services will be included in the product’s price or an additional charge for the customer. The latter can be a strategy to increase revenue. In most cases basic services are included in the product’s price, so the company has to determine whether it has conditions to support additional services costs or not.
Service and customer service can be achieved through automated marketing processes.
Steps do define associated services strategy
- Determine what services could eventually set you apart from competitors and bring the most value for customers;
- Evaluate company’s capacity to support those additional costs;
- Define which services will be included in the main offer (basic services), and which will bring additional costs for customers;
- Establish new internal processes or create partnerships with third-party companies to secure the associated services.
Product Life Cycle
Even though a product’s life curve can be variable, usually the evolution of a product’s sales translates into four different stages along its life cycle. Below is a simple explanation of the four stages of a product’s life cycle. However, if you want to read more about product life cycle read this article.
- Launch/Introduction: stage when the product is launched in the market; sales tend to be slow as demand is created
- Development: stage when the product starts to gain some traction in the market and gained customer’s trust; competitors may enter the market with their own versions of the product; sales tend do increase rapidly
- Maturity: in this stage the product has already gained notoriety and it is established in the market; as sales increase, cost of producing the product will decline, showing higher profits
- Decline: eventually competition will manage to secure lower prices or better quality turning your customers into a different direction; decline can also be caused by innovation and technological advances
In an ever evolving market, it is crucial that companies face product development as a means to stay ahead of competition and keep satisfied customers, even when their needs change.
Product-innovation is the only efficient way to increase demand again on saturated markets. It also allows companies to recover eventual losses that may have occurred in the decline stage of an older product.
Product renovation is a steady trend amongst the majority of the markets, forcing companies to accelerate its research and development processes. Company’s market survival depends on it.