Unit – II: Marketing Mix Decisions, Product and Pricing

Marketing Mix Decisions: Product, Price, Promotion Planning, and Distribution:

• Product: The product is what a company offers to meet customer needs. This decision involves product design, features, branding, quality, and more.
• Price: Pricing is setting a value on the product or service offered. It involves strategies like cost-plus pricing, value-based pricing, and penetration pricing.
• Promotion: Promotion includes advertising, public relations, sales promotions, and personal selling to create awareness and persuade customers.
• Distribution: This focuses on getting the product to customers through channels like direct sales, retailers, wholesalers, and e-commerce.

Product Planning for Export:

• Market Research: Understand the target market's preferences, needs, and regulatory requirements.
• Product Adaptation: Modify the product to meet local standards and consumer preferences.
• Quality Control: Ensure consistent quality to meet international standards.
• Packaging and Labeling: Comply with labeling requirements and create packaging suitable for export.
• Documentation: Prepare necessary documentation for customs, including invoices, certificates, and permits.
• Product Testing: Conduct tests to ensure the product performs well in various environmental conditions.
• Legal Compliance: Understand and adhere to intellectual property laws, safety regulations, and industry standards.
• Pricing Strategy: Develop pricing strategies considering factors like exchange rates, tariffs, and local market conditions.
• Distribution Channels: Choose appropriate distribution channels and partners.
• After-Sales Support: Plan for post-sale customer support, warranty, and servicing.

Definition of Product:

a. According to Philip Kotler, a prominent marketing expert, "A product is anything that can be offered in a market to satisfy a need or want. It includes physical objects, services, personalities, places, organizations, and ideas."

b. In "Principles of Marketing" by Gary Armstrong and Philip Kotler, a product is defined as "a good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers' needs and is received in exchange for money or something else of value."

Product Concept:

• Core Product: The fundamental benefit or service that addresses the customer's needs.
• Actual Product: The tangible elements of the product, such as its design, features, and packaging.
• Augmented Product: Additional services or benefits, like warranties, customer support, and product customization.
• Product Line: A group of related products offered by a company.
• Product Mix: The entire range of products a company offers, including different product lines.

Classification of Products:

1. Consumer Products:

   Consumer products are categorized based on consumer buying behavior and the effort consumers put into purchasing them. This classification is divided into four main types:

   • Convenience Products: These are everyday, low-cost items that consumers buy frequently with minimal effort. Examples include toothpaste, snacks, and cleaning products.

   • Shopping Products: Shopping products require more consideration and comparison before purchase. Consumers invest time and effort in finding the best option. Examples include electronics, clothing, and furniture.

   • Specialty Products: Specialty products are unique or branded items with strong consumer loyalty. Consumers are willing to search extensively for these products. Examples include luxury watches and high-end cars.

   • Unsought Products: Unsought products are items that consumers may not actively seek. These products require aggressive marketing to generate demand. Examples include life insurance and funeral services.

2. Industrial Products:

   Industrial products are categorized based on their use in the production process or for organizational purposes. This classification includes:

   • Materials and Parts: These are raw materials and components used in manufacturing. Examples include steel, plastic, and electronic chips.

   • Capital Items: Capital items are long-term investments that organizations use to operate efficiently. Examples include machinery, buildings, and vehicles.

   • Supplies and Services: Supplies and services support the day-to-day operations of a business. Examples include office supplies, maintenance services, and consulting services.

3. Organizational Products:

   This category includes products used by organizations and institutions, such as government agencies, non-profits, and educational institutions. It encompasses a wide range of products, from office supplies to specialized equipment used in healthcare and research.

4. Branded Products:

   Branded products are those with well-established and recognized brand names. These brands have strong consumer loyalty and often command premium prices. Examples include Apple, Coca-Cola, and Nike.

5. Generic Products:

   Generic products are unbranded or store-brand alternatives to branded products. They are typically more affordable and offer an alternative to consumers who prioritize price over brand. Examples include store-brand cereal or medication.

6. Durability and Tangibility:

   Products can also be classified based on their durability and tangibility:

   • Durable Goods: These products have a longer lifespan and can be used repeatedly. Examples include cars, appliances, and electronics.

   • Non-Durable Goods: Non-durable goods are consumed quickly and have a shorter lifespan. Examples include food, toiletries, and disposable items.

   • Tangible Goods: Tangible goods are physical products that can be seen and touched, such as clothing, furniture, and electronics.

   • Intangible Goods or Services: Intangible goods are products that offer non-physical benefits, such as consulting, education, and healthcare services.

7. Newness and Innovation:

   Products can be categorized based on their degree of newness and innovation:

   • New Products: These are entirely new innovations, such as the introduction of a new technology or a groundbreaking invention.
   • Product Line Extensions: This involves adding variations or extensions to existing product lines, like introducing new flavors of a beverage.
   • Product Improvements: This category includes products with enhancements or improvements, but not groundbreaking changes.
   • Repositioned Products: Repositioning involves marketing a product differently, targeting new market segments or changing its perceived value.

8. Consumer vs. Industrial Products:

   This classification is based on the intended audience for the product:

   • Consumer Products: Consumer products are designed for individual consumers, and their marketing focuses on meeting consumer needs and preferences.
   • Industrial Products: Industrial products target businesses and organizations, with marketing efforts aimed at fulfilling industrial and organizational needs.

9. Nondurable vs. Durable Goods:

   This classification considers the lifespan and longevity of the product:

   • Nondurable Goods: These products have a relatively short lifespan and are consumed or used quickly.
   • Durable Goods: Durable goods have a longer lifespan and can be used over an extended period.

10. Luxury vs. Necessity Products:

    Products can also be classified based on their luxury or necessity status:

    • Luxury Products: Luxury products are high-end, often with premium price tags, and are associated with status and exclusivity.
    • Necessity Products: Necessity products are essential for daily life and fulfill basic needs, such as food, clothing, and shelter.

International Product Life Cycle:

The International Product Life Cycle is a theory that describes the stages a product goes through from its introduction to its maturity and decline in international markets.

Stages in IPLC:

• Introduction: The product is first introduced in the home market.
• Growth: Exports to foreign markets begin to increase as the product gains acceptance.
• Maturity: The product becomes well-established in foreign markets, and competition intensifies.
• Saturation: The product reaches its peak in terms of market share and profitability.
• Decline: Sales decrease as new innovations or substitutes enter the market.

Pricing for International Markets:

Pricing for international markets involves setting a price for products or services sold in different countries, considering factors like production costs, currency exchange rates, and local market conditions.

Factors Affecting Pricing Decisions:

• Production Costs: Including material, labor, and overhead costs.
• Market Demand: The level of demand in the target market.
• Competitive Pricing: Analyzing and matching competitors' prices.
• Economic Conditions: Exchange rates, inflation, and economic stability.
• Regulatory and Legal Constraints: Compliance with local laws and regulations.
• Cultural Factors: How local culture and preferences affect pricing.

Methods of Pricing:

1. Cost-Plus Pricing: Setting a price by adding a markup to the production cost.
2. Market-Oriented Pricing: Pricing based on market demand and customer willingness to pay.
3. Skimming Pricing: Setting a high initial price and gradually reducing it.
4. Penetration Pricing: Setting a low initial price to gain market share.
5. Value-Based Pricing: Pricing based on the perceived value to the customer.
6. Dynamic Pricing: Adjusting prices in real-time based on demand and other factors.
7. Psychological Pricing: Using pricing strategies to influence consumer perception, like setting prices at Rs.99 instead of Rs.100.