4.5a.

The Four Ps – Product

● Product
● A product is any good or service that satisfies the needs or wants of consumers
● Either tangible (physical products) or intangible (services)
● Must have value added (either functional value or emotional value)
● Functional – Useful
● Emotional – Appeals to emotion (instills pride, happiness, etc.)
● Types of products
● Consumer products – products sold directly to consumers
● Fast-moving consumer goods (FMCG)
● Sells by large quantities
● Soap, shampoo, pencils, etc.
● Usually cheap
● Consumer perishables
● Seasonal products
● Products with limited shelf-life
● Can be sold at a higher price compared to FMCG since they are a premium
● Consumer durables
● Long lasting and relatively expensive products
● Since they are long lasting, not as many are sold, so they are more expensive
● Specialty goods
● Most expensive
● Unique products
● Can also be classified by purchase consideration
● Low Involvement Product (LIP)
● Opposite of HIP
● High Involvement Product (HIP)
● Consumer will take a while to decide when purchasing
● Producer Products
● Goods purchased by businesses for production process (raw materials & inputs)
● Product life cycle
● Pertains to the different stages of a product’s lifespan
● Measured in terms of sales level and growth phases over a period of time.
● Used to identify necessary changes in marketing strategies
● Each stage will usually need a different marketing mix
● Product life cycle stages
● Research and development
● Design, development and testing
● Requires a large investment in resources and time
● Creation of prototype with feedback from target market
● Alpha and Beta releases for testing
● Launch/introduction
● Product will be priced HIGH to cover
● Costs of heavy marketing
 ● Cost of research and development
● Product is not very profitable at this moment
● Growth
● Rapid volume increase due to better awareness and expansion of distribution
channels
● Starts to be profitable due to economies of scale in production and marketing
● Competition begins becoming attracted to the market
● Maturity/saturation
● Sales may begin to peak/stabilize (no significant changes)
● Achieve highest market share, while competition continues to pour into the
market
● Companies will employ price reductions, product differentiation and extension
strategies very aggressively to protect their market share
● Decline
● Sales and profits decline due to shifts in demand, new technology, or new
models
● Price levels fall (to get rid of inventory) prior to withdrawal
● Phasing out the product
● Extension strategies
● Price reduction
● Redesigns (e.g. special features, limited edition, etc.)
● Repacking (e.g. new colors, materials)
● New markets/market development
● Promotions (advertising and special tie-ups)
● Aside from demographic/psychographics, speed of adoption is also affected by
● Relative advantage
● Compatibility
● Testability
● Observable feature
● Convenience
● Product life cycle and the marketing mix
● Launch
● Price: may be high or low compared to competitors
● Promotion: high levels of informative advertising to make the consumers aware of
the product’s arrival on the market
● Place: restricted outlets – possibly high-class outlets if a skimming strategy is
adopted
● Product: basic model
● Growth
● Price: if successful, an initial penetration pricing strategy could now lead to rising
prices
● Promotion: consumers need to be convinced to make repeat purchases- brand
identification will help to establish consumer loyalty
● Place: growing numbers of outlets in areas indicated by strength of consumer
demand
 ● Product: planning of product improvements and developments to maintain
consumer appeal
● Maturity/saturation
● Price: competitors likely to be entering market – there will be a need to keep prices
at competitive levels
● Promotion: brand Imaging continues growing – need to stress the positive
differences with competitor’s products
● Place: highest geographical range of outlets as possible – developing new types of
outlets where possible
● Product: new models, colors, accessories, etc. as part of extension strategy
● Decline
● Price: lower prices to sell off stock-or if the product has a small ‘cult’ following,
prices could even rise
● Promotion: advertising likely to be very limited – may just be used to inform of
lower price
● Place: eliminate unprofitable outlets for the product
● Product: prepare to replace with other products – slowly withdraw
● Boston Consulting Group (BCG) matrix
● Planning tool used to classify a portfolio of products based on market share and market
growth
● Problem child/question mark
● High growth market but low market share
● More resources must be used (cash absorbing) to gain higher market share
● Alternative is to divest and use resources to help other products
● To do nothing will make this a dog
● It can become a star or dog
● Star
● High growth market with high market share
● Generate a lot of cash and profit but require marketing support
● If position is maintained, it may turn into a cash cow
● If not, may become problem child
● Cash cow
● Low growth market but high market share
● Products that command a high share of the market despite maturity
● Well-established
● Generate good cash flow and strong profits
● No further investments required although extension strategies may be used to
delay decline
● May be used to pay dividends, debts, support problem child products, stars or new
product development
● Dog
● Low growth market with a low market share
● Product in a mature market
● Does not generate much revenue
 ● Ties up cash (capital), may be withdrawn or repositioned to niche market where
more premium price can be demanded
● Strategic analysis
● Used to support your products
● Building – support problem childs
● Holding – try to maintain the position
● Milking – using cash cows
● Divesting – getting rid of dogs
● Can only be undertaken if business has a balanced portfolio of products.
● All 4 quadrants must be filled
● Dogs or problem children outnumbering stars and cash cows may lead to a cash
shortage preventing the firm to take appropriate action

● Branding
● Name identifiable to a product or a mixture of tangible and intangible attributes
symbolized in a trademark in order to differentiate the product from competitors
● Role and benefits
● Legal instrument
● Differentiation
● Risk reducer
● Image enhancer
● Sales generator
 ●Growth platform
●Timeless
● An effective brand name can be a stimulus for positive association with the product;
should be memorable, recognizable, and portray the desired image
● Aspects of branding
● Brand awareness
● An important aspect in being able to successfully promote a product
● Essential in markets with products that have very few tangible factors that
differentiate products from one another
● Brand development
● Long term marketing strategy meant to build and strengthen the image
● A strong brand can extend maturity or cash cow position of a product (sustain and
increase sales)
● Brand preference
● Customers favoring a brand over rivals
● Quantifies effect of marketing activities
● Brand loyalty
● When customers buy products of the same brand repeatedly
● Benefits:
● Higher market share
● Premium pricing by keeping loyal customers
● Demand is more price inelastic
● Customers are not sensitive to price changes
● Brand extension and growth strategies
● Raises barriers to entry
● New players find it hard to gain a market
● Brand value
● The value added premium that customers are willing to pay for a product of a well
known brand as opposed to a generic equivalent
● Mass promotion campaigns are essential to help create brand value
● Is important if a business would like to expand its product line
● Can help assure sales if current products within the brand have experienced
relatively good success/popularity with customers

● Packaging
● Serves as protection for the product before reaching the end consumer
● Makes it easier, more efficient, and safer to transport
● Attraction, promotion, and differentiation
● Makes it eye-catching, amongst dozens of other similar products on a shelf
● Design theme, color scheme,
● Carries information about the product
● How to use the product
● Materials/ingredients used
● Highlights important features
● Helps to promote the brand and its image