Principles of marketing: Lecture 23

MGT301
Principles of Marketing
Lecture­23


Summary
of  
Lecture­22


Consumer Adoption Process
Awareness
Awareness

Strategy
Communicate
CommunicateAvailability
Availability

Interest
Interest

Strategy
Communicate
CommunicateBenefits
Benefits

Evaluation
Evaluation

Strategy

Emphasize
EmphasizeAdvantages
Advantages

Trial
Trial

Strategy
Motivate
MotivateConsumers
Consumers

Adoption
Adoption

Strategy
Ensure
EnsureSatisfaction
Satisfaction


Product Life­Cycle 
(PLC)
Sales and
Profits ($)
Sales

Profits

Time

Product
Development
Stage

Introduction

Growth

Maturity

Decline

Sales and Profits Over
the Product’s Life From
Inception to Demise


Today’s Topics

Product


Value­Driven Marketing
Value
– A customer’s subjective assessment of benefits relative to 
the costs in determining the worth of a product
Customer value = customer benefits – customer costs
– Customer benefits
Anything desired by the customer that is received in an 
exchange

– Customer costs
Anything a customer gives up in an exchange for 
benefits
–Monetary price of the benefit
–Search costs (time and effort) to locate the product
–Risks associated with the exchange


Benefits


Consumers don’t buy products; they buy benefits



Functional benefits: relating to the practical purpose a 
product serves



Psychological benefits: relating to how a product makes 
one feel


Segmentation


Market
Segmentation

1. Identify
segmentation
variables and
segment the
market
2. Develop
profiles of
resulting
segments

Market
Targeting

3. Evaluate
attractiveness
of each
segment
4. Select the
target
segment(s)

Market
Positioning

5. Identify
possible
positioning
concepts for
each target
segment

6. Select,
develop, and
communicate
the chosen
positioning
concept


Question: Why do you buy a product?


Marketing Mix
4 Ps


Marketing is the involved process of determining the 4 P’s 
of the Marketing Mix

Product 
Price
Promotion
Place (Distribution)


The Marketing Mix
Four marketing activities—product, Price, Place and 
Promotion—that a firm can control to meet the needs of 
customers within its target market

Product

Price
Place
Promotion

Target
Market




Definitions
Product
Anything offered to a market for attention, acquisition, 
use, or consumption that might satisfy a need or 
want.
Service
Any activity or benefit that one party can offer to 
another that is essentially intangible and does not 
result in ownership of anything.


Goods

Services


Goods

Services

Tangible

Intangible

Produced Then Sold

Sold Then Produced and/
or Consumed Same Time


Goods

Services

Tangible

Intangible

Produced Then Sold

Sold Then Produced and/
or Consumed Same Time

Can Store and Transport

Perishable

Produced Separate
From Consumer

Often Produced In
Consumer's Presence


Levels of Products


Augmented
Augmented
Product
Product
Installation
Packaging
Brand
Name
Delivery
& Credit

Quality
Level

Core
Core
Benefit
Benefit or
or
Service
Service

Features

Design

Warranty
Actual
Actual
Product
Product

Core
Core
Product
Product

AfterSale
Service


Product Classifications


Individual Product Decisions
Product Attributes
Branding
Labeling
Packaging
Product Support Services


Product Attributes

Developing a Product or Service Involves Defining the Benefits 
that it Will Offer


Quality
Quality

Features
Features
Design
Design