Chapter 1
This chapter introduces global marketing and its benefits to the business community. Companies should embrace good marketing if they are to succeed in a global market that is characterized by slow growth and high competition. Consumers face an abundance of choices in seeking to satisfy their needs, thus they look for excellence in quality and value at a cost that is affordable to them when choosing their suppliers. In order for a firm to succeed in delivering competitive and superior products into the market and to enhance shareholders wealthy, the company should analyze to know the customer‘s needs. This function can only be carried out through a marketing function which is charged with the responsibility of defining the customer‘s needs and targets. This will enable to them to make sure that their recommendation leads competitive product that results into profitability (Kotabe, and Helsen, 2000, chap.1)
Markets are as a result of scarcity of resources and increase of human needs. When human beings need something they go into a state of instability which creates a need to source for the required product from those who have to satisfy wants. In order to satisfy the needs of the products in the market, a choice should be made in relations to the value and utility of the products. The products should be able to satisfy the human being needs at a certain value which is affordable to them. There are many ways of acquiring products that satisfy human needs that is to purchase, produce, exchange, begging and coercion. The modern society has specialized in trade as a means of obtaining products and services that are scarce and are needed to satisfy their wants/needs. Trade has created a chain of relationships across communities and nations. This relationship creates markets because the people who are social have a common need and they are in the process of satisfying these needs. Therefore marketing can simply be defined as those activities that enhance working relationships which actualizes exchange of products and services (Kotabe, and Helsen, 2000, chap.1).
Therefore marketing management can be defined as an effort carried out by the management of an organization to achieve the exchange of goods and services with the target market. The marketing management must have people with some basic skills that are geared to influencing fellow human beings to patronize the product of the company. They must be people with timing knowledge and they should understand the product as well as the market (Kotabe, and Helsen, 2000, chap.1).
Marketing management is a field in business that is involved in putting into practice the theoretical approaches that an organization can embrace to make known its products and itself in the market. The business organization can adopt various strategies in order to remain significant in the market. Five alternative philosophies can guide organization in carrying out their marketing work. When a company is producing a product they believe that the target market will be in a position to accept the product that they are availing in the market, at the same time the product should be at affordable price. The management‘s main aim should be to ensure that the product is delivered at the right place, at the right quantity, at the right quality and improve the distribution efficiency. No customer will patronize a product that is of poor quality, and unreasonably priced. However a product should be marketed through the right promotional techniques to the target market in order to stimulate consumers. This means that the company should carry out research in order to know the target market needs, preferences and wants. Without this the company will not succeed in delivering their products thus they need to consider the principles of profitability, customer orientation, market centered and promotion. The societal marketing concept holds that the main task of the company is to generate customer satisfaction and long-run consumer and societal well-being as the key to satisfying organizational goals and responsibilities (Kotabe, and Helsen, 2000, chap.1).
Interest in marketing is intensifying as more organizations in the business sector, the nonprofit sector, and the international sector recognize how marketing contributes to improved performance in the marketplace (Kotabe, and Helsen, 2000, chap.1).
Chapter 2
Each company should be in a position to know how to adapt and respond to a continuously changing market place through the practice of market-oriented strategic planning. They know how to develop and maintain a viable fit between their objectives, resources, and opportunities. The objectives developed at the corporate level move down to lower levels where business strategic plans and marketing plans are prepared to guide the company‘s activities. Strategic planning involves repeated cycles of planning, implementation, and control (Kotabe, and Helsen, 2000, chap.2).
Strategic planning in an organization takes various forms and incorporates various activities. The company must first develop mission and vision statements that will take into consideration the industry in operation, the customer segments, interaction with suppliers and geographical environment. These two statements provide the management and employees a direction which to follow, opportunities to be exploited, and the significance of the corporation to society and the achievements to be attained (Kotabe, and Helsen, 2000, chap.2).
The company must also identify the business units to be incorporated operations to deliver the product into the market. This is done through defining the target market, the target market needs and technologies that is required in production. This is easily done through planning, identifying competitors and managing various departments within the business. After the company has carried out this, they should be in a position to allocate resources to each department depending on their contribution to the company’s existence in the markets. Resources should be fairly distributed to allow the companies to remain in business (Kotabe, and Helsen, 2000, chap.2).
The other activity in strategic planning is the ability of the firm to expand their operations or introduce new products into the market. The company can identify opportunities by considering intensive growth; integrative growth; and diversification growth (Kotabe, and Helsen, 2000, chap.2).
Each strategic business units conducts its own business strategic planning, which consists of eight steps : defining the business’s mission, analyzing the external environment, analyzing the internal environment, choosing business objectives and goals, developing business strategies, preparing program plans, implementing program plans, and gathering feedback and exercising control. All of these steps keep the strategic business units close to its environment and alert to new opportunities and problems. Furthermore, strategic plan provides the context for preparing market plans for specific products and services. Within organizations, several factors act in solitude or in collection to influence production and profitability outcomes. These factors are classified as either internal (incidental to the internal arrangement of the firm) or external factors.These factors, save for their effects on productivity, have enormous effect on a form’s competitive advantage (Kotabe, and Helsen, 2000, chap.2).
Chapter 3
Marketing plans focus more on product and market and develop the detailed marketing strategies and programs for achieving the product’s objectives in the market. Marketing plans are central instrument for directing and coordinating the market effort. Marketing in any organization has various steps that are followed in order to deliver the product into the market. These steps include; analyzing the available opportunities, carrying out research to select the target market, designing strategies for marketing the products, coming up with marketing programs and eventually marketing the products. Each step is briefly described in this chapter and then examined in the following chapters (Kotabe, and Helsen, 2000, chap.3).
Marketing planning results in a marketing plan document that contains, or should contain, the following section: executive summary, current market situation, opportunity and issue analysis, objectives, marketing strategy, action programs, projected profit-and- loss statement, and controls. To plan effectively, marketing managers must understand the key relationship between types of marketing-mix expenditures and their sales equation. Profit-optimization planning calls for finding the profit-maximizing plan. It involves determining the optimal marketing expenditure level, marketing mix, and marketing allocation (Kotabe, and Helsen, 2000, chap.3).
Marketing information is a critical element in effective element in effective marketing as a result of the trend towards national and international marketing, the transition from buyer needs to buyer wants, and the transition from price to non price competition. All firms have marketing information systems connecting the external environment with its executives, but the systems vary greatly in the level of sophistication. In too many cases, information is not available or comes too late or cannot be trusted. There is an increase in the number of companies which are not improving the marketing information system they have (Kotabe, and Helsen, 2000, chap.3).
A well designed market information system consists of four subsystems. The first is the internal reports system, which provides current data on sales, costs, inventories, cash flows, and accounts receivable and payable. Many companies have developed advanced computer-based internal reports systems to allow for speedier and more comprehensive information (Kotabe, and Helsen, 2000, chap.3).
The second is the marketing intelligence system, which supplies marketing executives with everyday information about developments in the external marketing environment. Here a well trained sales force, special intelligence personnel, purchased data from syndicated sources, and an intelligence office can improve the marketing intelligence available to company executives (Kotabe, and Helsen, 2000, chap.3).
The other system that is followed is marketing research which enables the company to collect data, analyze and interpret it to make it relevant to the company’s marketing needs. Market research like any other research has steps to be followed. This steps include, definition of the problem and research objectives, preparing a research proposal, carrying out research, tabulating research data as well as analyzing the information and lastly, using the information and findings for the good of the company( Kotabe, and Helsen, 2000, chap.3).
The fourth system is the analytical marketing system, which consist of advanced statistical procedures and models to develop more rigorous findings from information.
Marketing scientists use descriptive or decision models and verbal, graphical, or mathematical models to come to grips with marketing problems (Kotabe, and Helsen, 2000, chap.3).
Chapter 4
No company will succeed in the target market without understanding the marketing environment. It is through a market environment, a company is able to understand the opportunities available to them and the threats they are likely to face. Marketing environment consists of various micro and macro actors and forces. The micro environment includes members of the public, competitors, suppliers, distributors, employees, the management and many others. The company consists of several influential departments to marketing management’s decision making. Suppliers, through their influence on the cost and availability of needed inputs, also have an influence on marketing decisions. The company converts these supplies into useful products and service agencies, financial intermediaries to help it find customers and deliver the goods. The target market itself consists of consumers, producers, resellers, or government agencies, here or abroad. In carrying out its marketing task, the company faces several types of competitors, generic competitors, product form competitors, and brand competitors. The company also has to deal with various publics that have an actual or potential interest in or impact on the company’s ability to achieve its objectives: Financial; media; government; citizen en action; and local general and internal publics. All of these actors make up the company’s microenvironment (Kotabe, and Helsen, 2000, chap.4).
The company’s macro environment consists of six major forces impinging on the company: demographic, economic, physical, technological, political/legal, and social/ cultural. Marketing of products to the changing American society and social stratification is important because various products are able to reach the market. Marketing involves delivering the product to the changing markets segment since marketing involves pricing of the product, to suite a certain demographic, branding of the product to suit a certain segmentation which is due to demographics and cost differentiation. Without marketing the product to the changing society, the product may loose value and meaning because of continual introduction of new and advance products and services. Marketing ensures there is always a change in product for market that is product differentiation to suit a changing society (Kotabe, and Helsen, 2000, chap.4).
When the economic environment shows the reduction in really income, an increase in debt, changing of inflation and low savings among consumers then consumption of the product is reduced. When there is a shortage of production resources such as law materials, labor energy and there is an increase in environmental degradation it is a physical environment. On the other hand technological environment shows how technology changes and how innovations are carried out through research and developments. The political/ legal environment shows substantial business regulation, strong government agency enforcement, and the growth of public-interest groups. The socio/cultural environment shows long-run trends towards self-fulfillment, immediate gratification, the easy life, informal and open relationships, and a more secular orientation (Kotabe, and Helsen, 2000, chap.4).
The interaction between the marketing environment and company marketing system and strategy is illustrated for a major candy company that produces a candy bar for the mass market (Kotabe, and Helsen, 2000, chap.4).
Chapter 5
A market should analyse and understand the market before making marketing plan. Human beings go into the market to purchase goods and services to satisfy their needs. This is the main reason why a market is organized to be able to carry these economic activities. The markets consist of many submarkets, such as black consumers, young adults’ consumers, and elderly consumers. In analyzing a consumer market, one needs to know the occupants, the objects, and the buyers’ objectives, organization, operations, occasions, and outlets (Kotabe, and Helsen, 2000, chap.5).
The consumers in the market are influenced by a number of factors to purchase a product. These factors are categorized into four categories which includes, social, personal, cultural and physiological. The marketer must be able to analyze these factors to be in apposition to understand how to deliver the product to the customer (Kotabe, and Helsen, 2000, chap.5).
Before planning its marketing, a company needs to identify its target consumers and the type of decision process they go through. While many buying decision involve only one decision marker, other decision may involve several participants, who play such roles as initiator, influencer, decider, buyer, and user. The marketer‘s job is to identify the other buying participants, their buying criteria, and the amount of influence they have on the buyer. The marketing program should be designed to appeal to and reach the other key participants as well as the buyer (Kotabe, and Helsen, 2000, chap.5).
The amount of buying deliberateness and the number of buying participants increase with the complexity of the buying situation. There are four types of consumers in the market which a marketer should consider in planning to deliver the product into the market. This type of consumer behavior includes complex behavior, habitual behavior, reducing behavior and a behavior of seeking a variety of product. In understanding this type of behavior one will be able to asses how to approach the market with your brand (Kotabe, and Helsen, 2000, chap.5).
Complex behavior means the consumer uses a decision making process before purchasing a product. This kind of customer will define the need, search for information relating to the products that will satisfy the need, come up with alternatives, make a decision on the product to purchase and evaluate the product. The duty of the marketer in this situation is to understand the customer’s behavior at each stage. This understanding allows the marketer to develop a significant and effective marketing program for the target market (Kotabe, and Helsen, 2000, chap.5).
The industrial markets buys goods and services for the purpose of increasing sales, cutting costs, or meeting social and legal requirements. Compared with the consumer market, the industrial market consist of fewer buyers, larger buyers, and more geographically concentrated buyers; the demand is derived, relatively inelastic, and more fluctuating; and the purchasing is more professional and more buying influences are involved. Industrial buyer makes decision that vary with the buying situation or buy classes consist of three types; straight re buys, modified re-buys, and new tasks. In an organization or individuals who make decision on which product to purchase are grouped according to their roles they play in an organization and this include: deciders, users, gatekeepers, influencers, procurers and those who approve. This means that for a marketer to be able to market a product for an organization must be able to understand the marketing environment, the hierarchy in the organization and the buying process of the company (Kotabe, and Helsen, 2000, chap.5).
Resellers have to decide on their assortment, suppliers, prices, prices, and terms. They face three types of buying situations; new items, new vendors, and new terms. In small wholesale and retail organizations, buying may be carried on by one or a few individuals; in larger organizations, by a whole purchasing department. In modern supermarket chain the major participants include headquarters buyers, storewide buying committees, and individual store managers. With new items, the buyers; and with standard items, the buying process consists of routines for reordering and renegotiating contracts (Kotabe, and Helsen, 2000, chap.5).
Chapter 6
To prepare an effective marketing strategy, a company must consider its competitors as well as its actual and potential customers. This is especially necessary in slow –growth markets because sales can only be gained by winning them away from competitors. Competitors are those producers and manufacturers who offer the same, similar or alternative products to the target market with the aim of satisfying the same needs as the company I question. Marketers should not only concentrate on this type of competitors but also include those competitors who may introduce new products which have the capacity to satisfy similar needs. Therefore the company should carry out market and industry analysis to e able to identify existing competitors as well as potential competitors (Kotabe and Helsen, 2000, chap.6).
The company should carry out research on competitors’ strategies to be able to understand how to react to competitors’ advances. The company needs to know each competitor’s strategies in order to identify its closest competitors and take the proper steps. The company should know the competitors’ objectives in order to anticipate further moves and a reaction knowing the competitor’s strength and weaknesses will permit the company to refine its own strategy to take advantage of the competitor’s typical reaction patterns helps the company choose and time its moves (Kotabe and Helsen, 2000, chap.6).
Competitive intelligence needs to be collected, interpreted, and disseminated continuously. Company marketing executive should be able to obtain full and reliable information about any competitor that has a bearing on a decision (Kotabe and Helsen, 2000, chap.6).
To carry out their responsibilities, marketing managers need various estimates of current and future demand. Quantitative measurements are essential for the analysis of market opportunity, the planning of marketing programs and the control of marketing efforts. The firm may prepare several estimates of demand, varying in the level of product aggregation, the time dimension, and the space dimension (Kotabe and Helsen, 2000, chap.6).
In a nutshell consumers are the actual buyers and potential buyers that are offered in the market. The size of the market depends on how many people have interest, income and access to the market offer. Marketers must know how to distinguish between potential market, available market, qualified available market served market, and penetrated market. Marketers must also distinguish between market demand and company demand and within these between potentials and forecasts. Market demand is a function not single number and as such is highly dependent on the level of variables. A major task is estimating current demand. Total demand can be estimated through the chain-ratio method which involves multiplying a base number by successive percentages. Area market demand can be estimated by the market build up and the multiple-factor index method in the latter case, geo-demographic coding system are proving a boon to marketers. Actually industry sales require identifying the relevant competitors and using some method of estimating the sales of each. Finally, companies are interested in estimating the market shares of competitors to judge their relative performance (Kotabe and Helsen, 2000, chap.6).
Producers who sell products to the market can approach the market in three different ways i.e. mass marketing variety, marketing and target marketing. Mass marketing means production of goods in large numbers and distributing them in large numbers to all types or customers. The product in distribution may be homogeneous. Variety marketing involves product differentiation in terms of quality, features, size, style type and many others. These varieties are designed to distinguish one company’s product to competitors. Target marketing involves market discrimination where each target group receives a different type of product either in terms of size or color. Most marketers in the world today are engaging in target marketing because it is easier to take advantage of the existing opportunities as well as creating a product that meets the target market needs (Kotabe and Helsen, 2000, chap.6).
Chapter 7
The drafting of marketing strategies will depend on the company’s position in the market. If the company is a market leader will have different strategies as compared to challengers or followers. The market leader is interested in finding ways to expand the total market because it is the chief beneficiary of any increased sales. To expand market size the leader looks for new users of the product, new users and more usage. To protect its existing market share the market leader has several defenses, mobile defense, and contraction defense. The most sophisticated leaders cover themselves by doing everything right leaving no openings for competitive attack. Leaders can also try to increase their market share. This makes sense if probability increases at higher market share levels and the company‘s tactics will not invite antitrust action (Kotabe and Helsen, 2000, chap.7).
Marketing strategy is used in business circles and the corporate world to denote a powerful tool that is used to claim a strategic share and part of the market segment in marketing products and services of a company. This is likened to a recipe which should be in form of a procedure that is laid down and targets are set in accordance to products offered and the target customers. It has evolved over the years to 4P’s that are correlated in achieving the fundamentals associated with marketing strategies. The ‘marketing mix’ is always the tool targeted for optimization as the first step in planning for marketing in any organization. The four P’s are representative of the main forces that play a part and are the main elements of a business. For the profitability of a company, each element needs a critical address and the implementation of the issues arising after the address (Kotabe and Helsen, 2000, chap.7).
The product is definitely high in value, but should be cost competitive. This is the key strategy considering that the target market will definitely maximize their budgets and save on costs considering the current economic recession. Therefore, although the products are artistic, and project a high-quality, premium image, the more prudent strategy is to harp on the product’s durability, reliability, and “value for money” positioning. The product shall be distributed in strategic, high-traffic areas such as appliance and electronic goods stores, home depot outlets, and other retail channels that families frequent. Consequently, the products shall be located in highly populated, urban areas that are very accessible to residential customers (Kotabe and Helsen, 2000, chap.7). The challenger can choose from a variety of attack strategies, including a frontal attack, flanking attack encirclement attack, bypass attack and guerilla (Kotabe and Helsen, 2000, chap.7).
Chapter 8
Products and markets have life cycles that call for changing marketing strategies over time. Every new need follows a demand life cycles that passes through the stages of emergency, accelerating growth, decelerating growth, maturity, and decline. Each new technology that emerges to satisfy that need exhibits a demand-technology life cycle. Particular product forms of a given technology also shows a life cycle, as do brands within that product form (Kotabe and Helsen, 2000, chap.8).
The sales history of many products follows an S –shaped curve consisting of four stages. The introduction stage is marked by slow growth and minimal profits as the product is pushed into distribution. During this stage, the company has to decide between the four strategies of rapid skimming, slow skimming, rapid penetration, or slow penetration. If successful, the product enters a growth stage marked by rapid sales growth and increasing profits. During this stage the company attempts to improve the products, enter new market segments and distribution channels, and reduces its prices slightly. The company’s task during this period is to identify the truly weak products in a way that minimizes the hardship to company profits, employees, and customers (Kotabe and Helsen, 2000, chap.8).
Not all products pass through an S-shaped PLC. Some products show a growth slump- maturity pattern, others a cycle-recycle shape, and still others a scalloped shape some investigators have discovered over a dozen PLC shapes, including those describing styles, fashions, and fads. PLC theory has been criticized on the grounds that companies cannot predict the shapes in advance, or know what stage they are in within a given shape, or predict the duration of the stages. Also, PLCs are the result of chosen marketing strategies rather than of an inevitable sale that is independent of the chosen marketing strategies (Kotabe and Helsen, 2000, chap.8).
Product life cycles theory must be broadened by theory of market evolution. The theory of market evolution holds that new markets emerge when product is created to satisfy an unmet need. The innovator usually designs a product for the mass market competitors enter the market with similar products leading to market growth. Later growth slows down and the market enters maturity. The market undergoes increasing fragmentation until some firm introduces a powerful new attribute that consolidate the markets into fewer and larger segments. This stage does not last, because competitors copy the new attributes. There is a cycling back and forth between market consolidation based on innovation and fragmentation based on competition. The market for the present technology will ultimately decline upon the discovery of superior technologies. Companies must try to anticipate new attributes that the market wants. Profits go to those who introduce new and valued benefits early. The search for new attributes can be based on empirical work, intuition, dialectical reasoning or hierarchy reasoning. Market evolution theory shifts marketers’ attention from specific brands PLCs to the evolution of the market. Successful marketing comes through creatively visualizing the market’s evolutionary potential (Kotabe and Helsen, 2000, chap.8).
Companies today can no longer afford to pay attention only to their domestic market, no matter how large it is. Many industries are global industries, and those firms that operate globally achieve lower costs and higher brand awareness. Protectionist measures can only slow down the invasion of superior goods; the best company defense is a sound global offense (Kotabe and Helsen, 2000, chap.8).
International marketing is unlike local marketing because of foreign exchange currency fluctuations, political risks in some countries, Protection of local industries by government, high costs of marketing the products and restriction of flow of capital across borders. Yet the international product life cycle provides support for notion that comparative advantage in many industries will move from high cost to low cost countries, and companies therefore cannot simply stay domestic and expect to maintain their markets (Kotabe and Helsen, 2000, chap.8).
The first step is to understand the international marketing environment, particularly the international trade system. In considering a particular foreign market, its economic political-legal, and cultural characteristics must be assessed. Second, the company must consider what proportion of foreign to total sales it will seek, if it will do business in a few or many countries, and what types of countries it wants to enter. Many companies start as indirect or direct exporters and then move to licensing, joint ventures, and finally direct investment; this company evolution has been called the internationalization process. A company entering the international market should not make a decision on what extent their product, the amount of promotion or the price to be charged and distribution channels that should be used in individual foreign markets because this factors are determined by the target market. In order for the company to succeed in the foreign markets they must have an effective international markets strategy. Most firms start with an export department and graduate to an international division. A few pass to a global organization, which means that top management thinks and plans a global strategy for the company (Kotabe and Helsen, 2000, chap.8).
Chapter 9
Organizations are increasingly recognizing the necessity and advantage of regularly developing new products and services. Their more mature and declining products must be replaced by newer products. New products however can fail. The risks of innovation are as great as the rewards. The key to successful innovation lies in developing better organizational arrangements for handling new product ideas and developing sound research and decision procedures ate each stage of the new product development process (Kotabe and Helsen, 2000, chap.9).
New product development has various stages before it is delivered to consumers to purchase. The purpose of each stage is to decide whether the idea should be further developed or dropped. The company wants to minimize the chances that poor ideas will move forward and good ideas will be rejected. With regard to new products, consumers respond at different rates, depending on the consumer’s characteristics. Manufacturers try to bring their new products to the attention of potential early adopters, particularly those with opinion leader characteristics (Kotabe and Helsen, 2000, chap.9).
The technical research engineering and technical testing attached to establishing experimental models and the final product must be handles. Many variations of the product are often developed before the most suitable alternative is found. Consumer preference texting must take place and this issue is very closely related to the prototype development and the main objective is to determine which experimental model complies best with the requirements that consumers set for the product (Kotabe and Helsen, 2000, chap.9).
How new products should be packaged should be made in advance before its production. The objectives of effective presenting are to project the product physically to ensure convenient handling, to accomplish economic use and to help with the promotion of the product in the marketing situation. Brand must also be selected for the new product and the brand forms part of the product image and normally serves as a symbol and strengthener of the product concept (Kotabe and Helsen, 2000, chap.9).
The commercialization process is undertaken by the marketing and promotional committee in conjunction with all the other committees and the faculty. Basically after the validation event, course code is assigned and then the promotional activities begin. The course is made available to the public through prospectus and other mediums like billboards and posters (Kotabe and Helsen, 2000, chap.9).
Marketing objectives are made clear and the objectives of test marketing made in line. Test marketing is normally done to gain more and better knowledge of expected sales; to test alternative marketing strategies, to locate possible product defects which slipped through during physical development; and to get a better idea of the reaction of the different market segments (Kotabe and Helsen, 2000, chap.9).
In launching new products, it is also necessary to take notice of the process through which potential customers become aware of new products, buy and try them for the first time and eventually accept or reject them. This adoption process of new products is basic to the entire course of the product life-cycle and marketing management this be very well acquainted with it if they want to manage the life-cycle effectively (Kotabe and Helsen, 2000, chap.9).
The customer starts to seek information about the product and evaluates it. In the evaluation the student receives the information and considers the utilities of the product then the product is adopted. The adoption involves the use purchase proves to be successful if the consumer decides to use the product regularly (Kotabe and Helsen, 2000, chap.9).
Only a few people are the innovators and the number of adopter’s increases rapidly as the benefit of the new product becomes known. The possibility of identifying the innovators is an extremely tempting idea for the marketer. Since the innovators are normally the opinion leaders from whom other potential consumers seek advice, their attitudes towards new products are often spread rapidly by means of word-of-mouth advertising (Kotabe and Helsen, 2000, chap.9).
Chapter 10
Product is the first and most important element of the marketing mix. Each product offered to customers can be looked at on three levels. The core product is the essential service that the buyer is really buying. The tangible product is the features, styling, quality, brand name, and packaging that constitute the tangible product. The augmented product is the tangible product plus the various services accompanying it, such as warranty, installation, service maintenance, and free delivery (Kotabe and Helsen, 2000, chap.10).
Several schemes have been proposed for classifying products. Consumer goods are usually classified according to consumer shopping habits. Most companies handle more than one product, and then product mix can be described as having a certain width, length, depth, and consistency. The four dimensions of the product mix are the tools for developing the company’s product strategy. The various lines making up the product mix have to be periodically evaluated for profitability and growth potential. The company’s better lines should receive disproportionate support; weaker lines should be phased down or out; and lines should be added to fill the profit gap (Kotabe and Helsen, 2000, chap.10).
Each product line consists of product items, which should be evaluated. The product line manager should study the sales and profits contribution of each item in the product line as well as the way the items are positioned against competitors’ items. This provides information needed for making several product line decisions. Line stretching involves the question of if a particular line should be extended downward, upward, or both ways (Kotabe and Helsen, 2000, chap.10).
Physical product requires packaging decision to create such benefit as protection, economy and promotion. Marketers have to develop a packaging concept and test if functionally and psychologically to make sure it achieves the desired objectives and is compatible with public policy. A. product should be labeled for easier identification and brand differentiation as well as grading. Labeling enables the product to be promoted as a different unit as well as its description comes out clearly. U.S. laws require sellers to present certain minimum information on the label to inform and protect consumers (Kotabe and Helsen, 2000, chap.10).
Work Cited
Kotabe, Masaak and Helsen, Kristiaan. Global Marketing Management. New York: John Wiley and Sons, 2000.