Marketing II Session 1 02 03 2015

Marketing II / Session 1 02. 03. 2015 Martin Samek martin. samek@lbs. ac. at

Spring Term 2015 Written final exam in Session 12; 1 st of June 2015: 90 Minutes, open-ended questions, 40% contribution to final grade Two written (groups of two) assignments until: Session 8; 7 th of May 2015 Session 12; 1 st of June 2015 30% contribution per assignment Groups of two students each need to discuss in form of an essay a given question per assignment. Assignment a) Product and Price Assignment b) Place and Promotion Each essay needs to be structured in introduction, main text and conclusion (a deeper structure/chapters of 2 nd and 3 rd level are also allowed). A minimum of 15 pages (fonts and layout according to LBS standards) is required per essay. You will be asked to elaborate on an example of your choice about the applicable concepts of pricing and product strategies respectively distribution channels and networks a s well as integrated marketing communication (promotion). Lauder Business School Marketing II/ Session 1 2

Product Lauder Business School Marketing II/ Session 1 3

What is a PRODUCT? v. The term product can refer to - both goods and services - the full product profile (4 Ps) - part of the customer-company exchange Remember: A Company offers something (a flight), and the customer offers something in return (payment). 4 Lauder Business School Marketing II / Session 1

The Product – Essential for Exchange A marketable product is the profitable intersection between v What customers want (Utilize marketing research to find answers regarding value, quality, specific features, benefits, etc. v and what the firm is well-suited offer 5 Lauder Business School Marketing II / Session 1

INVOLVEMENT AND PRODUCT TYPES? 6 Lauder Business School Marketing II / Session 1

INVOLVEMENT AND PRODUCT TYPES Low Involvement Convenience and straight re-buys Customers are inclined to engage in limited, if any, word-of-mouth exert minimum effort retrieving the product be more price sensitive Marketers are inclined to offer price-related loyalty programs engage in extensive distribution try to capture customers’ attention 7 Lauder Business School Marketing II / Session 1

INVOLVEMENT AND PRODUCT TYPES Low Involvement 8 Lauder Business School Marketing II / Session 1

INVOLVEMENT AND PRODUCT TYPES High Involvement Products Specialty and new buys Customers are inclined to engage in considerable word-of-mouth exert effort retrieving the product be less price sensitive Marketers are inclined to offer community related loyalty programs engage in selective distribution offer much information about products 9 Lauder Business School Marketing II / Session 1

INVOLVEMENT AND PRODUCT TYPES High Involvement 10 Lauder Business School Marketing II / Session 1

INVOLVEMENT AND PRODUCT TYPES High Involvement Offer a lot of specific information about products! Riedel HP 11 Lauder Business School Marketing II / Session 1

GOODS AND SERVICE CONTINUUM 12 Lauder Business School Marketing II / Session 1

TANGIBILITY Goods are more tangible than services Pure goods are tangible - socks Pure service are intangible - medical procedure A mix has tangible and intangible components - rental cars 13 Lauder Business School Marketing II / Session 1

SEARCH, EXPERIENCE, CREDENCE Search Qualities May be evaluated prior to purchase - socks Experience Qualities Require trial or consumption before evaluation - restaurants Credence Qualities Difficult to judge even post-consumption - medical procedures 14 Lauder Business School Marketing II / Session 1

PERISABILITY & INSEPERABILITY Services are simultaneously produced and consumed Perishability: Services are more perishable than goods Marketers must try to even out demand Inseparability: Services are more impacted by the interaction between the service provider and the customer than goods 15 Lauder Business School Marketing II / Session 1

VARIABILITY Services are more variable than goods Due to changing needs, abilities, etc. in the service provider and customer Self-service and equipment can decrease variability Try to reduce bad variability Errors in the system Try to improve good variability Customization for customers’ unique needs 16 Lauder Business School Marketing II / Session 1

GOODS & SERVICES Differences between goods and services influence business decisions - Advertising, branding, pricing, logistics, etc. Thinking beyond traditional services… - Professional services - Purchase experiences - On-line shopping 17 Lauder Business School Marketing II / Session 1

CORE AND VALUE-ADDED OFFERINGS When designing a product one needs to define the product’s core offerings and the value-added 18 Lauder Business School Marketing II / Session 1

CORE AND VALUE-ADDED OFFERINGS Core is essential to the product offering Core elements are expected by customers If core elements are substandard, dissatisfaction can be triggered Value-added is supplemental and can be used for differentiation Marketers can affect level of satisfaction through value-addeds For example, luxurious rooms may lead to high satisfaction 19 Lauder Business School Marketing II / Session 1

DYNAMIC STRATEGIES Core businesses might change as the industry changes or as the firm’s competencies change Ask… What business are we in? What benefits do we want to provide to the consumer? Who is our competition? Example: IBM 20 Lauder Business School Marketing II / Session 1

PRODUCT MIX Product mix A company’s product lines Breadth Number of product lines Depth Number of products in a line 21 Lauder Business School Marketing II / Session 1

PRODUCT MIX Example: Faber-Castell Example: Samsung 22 Lauder Business School Marketing II / Session 1

PRODUCT MIX Product line manager can prune or supplement existing lines Extensions into breadth and depth must be done for strategic reasons Shouldn’t try to be all things to all people Are the new launches consistent with brand’s/company’s positioning? If not, can the brands be directed to different target segments without diluting the existing position? 23 Lauder Business School Marketing II / Session 1

PRODUCT LINE STRATEGIES 24 Lauder Business School Marketing II / Session 1