Question I: Explain the concepts of product line width, length, depth, and consistency. Use examples to support your answer. A product mix is a collection of a large variety of product lines. A product line is a group of items or products closely related and lie within a product class as the functions performed by them are similar, have the same group of customers, range within the given price or are advertised and marketed through the same channels or outlets. Every company’s product mix encompasses certain width, depth, consistency and length.
Product width: Refers to the number of different product lines carried by the company. For e. g. Unilever deals with food brands, home care and personal care products therefore it offers a product mix width of 3 lines. Product length: The total number of different items or products in a single product line refers to the product length for e. g. if we take food brands of Unilever then Best foods, Knorr, Birds Eye, Lipton and Ben & Jerry’s makes the product length of the specific product line of food brands. Product depth: The variants of each product in a product line refers to the product depth for e. . if we take Lipton, it comes in two formulations loose powder tea and tea bags as well as it also comes in different types such black tea, green tea and herbal tea, so this would mean that Lipton has a depth of 5, as it branches out in 5 different variants. Product consistency: How closely the different product lines are related to each other in use, requirements, production , channels and distribution or some other possible way for e. g. If we take Unilever then their goods are consistent in a way that all of their goods are consumer durable and are distributed through the same channel.
Similarly they are less consistent as each of their goods serves different buyers and also perform different functions for them. Question II: In planning its market offering, the marketer must address the five product levels of the customer value hierarchy. Describe the “customer value hierarchy” and identify the five levels of product contained within. Customer value hierarchy is an approach of viewing customer value. It is in a hierarchical representation telling us about how the customer relates and views a product.
The customer value hierarchy is pyramid shaped with its base comprising of the basic customer value followed by the expected, unanticipated and desired levels. The five levels of product contained within it are as follows: Core benefit: This is the basic level. It actually refers to the benefit or the service the customer wants to have out the product he buys. Benefit providers, is how a marketer must see himself. Basic product: This is the next important level where the core benefit is converted into a basic product by the marketer.
Expected product: The third important level where an expected product is created by the marketer. By expected product we mean a set of conditions or attributes expected by the buyer when he purchases the product. Augmented product: In this level such a product is created by the marketer which is far beyond the expectations of the customer and is referred as an augmented product. Brand positioning and competitions usually starts from this level in developed countries where as in developing countries like India competition starts from expected product level.
Potential product: This level comprises of all the possible changing or augmentations the product gets to face in future. New ways of satisfying customers and distinguishing the product and its offering starts from this level. Question III: Explain the concept of a hybrid channel distribution system. When would this system be best utilized? When would this system not be beneficial? Hybrid channel distribution is when a marketer utilizes more than one or a multi channel distribution design. It is one of the most widely used and important channel distribution systems among the vertical marketing network.
A single firm can easily cater multiple marketing segments by setting up two or as many marketing channels using hybrid channel distribution system. Firms mostly establish a hybrid system as multiple targets and segments can be approached. If we take the example of star bucks we’ll notice that it follows many distribution designs as they use direct retail system by selling to the stores owned by the company, selling through grocery stores following a single party selling system and also via direct mail following the direct marketing system. Also other distribution systems are utilized by the company.
Hybrid channel distribution system works the best when a company serves a wider market and also the marketer knows what system suits the best to its customer way of doing the business. The Hybrid channel communication system carries a lot of potential for channel conflict, therefore in the case of conflicts; this multi channel system does prove to be that beneficial as it may result in improper channel utilization and blocking probabilities. Question IV: In designing a marketing channel system, the marketer must understand the service output levels desired by target customers.
Channels provide five service outputs. List and briefly describe each of these outputs. In developing marketing channel systems, needs of the customers are analyzed, objectives of the channel are established and major channel alternatives are evaluated. The five service outputs produced by the channels are: Lot size: The quantity of items possible for the channel to make available to a customer on one occasion. For e. g. a wholesaler will always prefer a channel that can supply him a large lot size of units. Waiting and delivery time: The time taken by the channel to deliver goods to the customers.
A customer normally does not like waiting a lot for receiving the goods and prefer a faster system. Spatial convenience: The extent to which the channel makes it convenient for its customers to receive the product. For e. g. if we consider TCS then we’ll notice that it has more offices situated in every area nearby and customers save a lot on transportation as compared to OCS which has less offices and dealers, therefore TCS offers more spatial convenience as compared to OCS. Product variety: The variety or the assortment breadth of the product that the channel offers to its customers.
More variety is preferred by the customers as it increases their chance of finding what they are looking for or even better than that. Service backup: Any add on services that the channel provides to its customers such as delivery, installation, repair facilities etc. How good the service backup is, determines how good the channel performs. An increase in the channel cost also takes place for the customers in the case of greater service backup. Question V: The extraordinary growth of direct marketing can be attributed to many factors with both consumers and business are benefiting.
List some of the factors that are contributing to the growth of direct marketing. Many factors are involved in the growth of direct marketing. The few most prominent ones are: Changing lifestyles is one of the most important factors that have made the customers accepted direct marketing. In these few years the number of women entering the workforce has increased tremendously. This trend contributed a lot to the growth of direct marketing as it became very inconvenient for working women to take time out and go for shopping.
They could simply sit at home and select the merchandise of their choice and convenience through mail-order shopping and receive all kinds of merchandise at their home only via commercial television, mail, interactive television or via home shopping networks. The second most important factor that has increased the growth of direct marketing was the increase that has taken place in the cost of personal sales calls which has risen tremendously in the past few years making personal sale calls very expensive.
Direct marketing methods have now made personal selling more cost effective. Another factor that has contributed a lot to the growth of direct marketing is technological growth such as computer based technologies. These technologies have enabled the marketers to be more accurate in the analysis of results, in creating advanced and better customer and prospect databases, better targeting of messages regarding complex demographics and psychographics and even in faster and better execution of packages by direct-mail.
Another important factor that has made direct marketing more attractive than mass marketing is the quantity of available product and services has grown as through direct marketing a greater variety and number of products and services can be offered to a smaller group of prospects. Due to an increase in the use of telephones as a means to order has also helped direct marketing to grow and prosper as placing an order through a telephone results in faster order fulfillment and also makes the customer get rid of any delays connected with the mail order system.
Question VI: Most companies set annual quotas. Quotas can be on dollar sales, unit volume, and margin, selling effort or activity and product type. Compensation is often tied to the degree of quota attainment. What problems does the setting of quotas present to both the company and to the sales representative? Sales quotas are set by a lot of companies to encourage and provide incentives to the sales representatives in order to meet their daily challenges and also to motivate them to work more effectively bringing out good results for the company.
First a sales forecast is created by the company which becomes the basis of planning production, financial requirements and workforce size but the sales quotas create a lot of problems for the sales representatives and the company. Problems cause the company or the sale representative to suffer a lot for e. g. when the company underestimates and the sale representative is already pain then the company has over paid them. Similarly when the company overestimates the potential of the sales, it gets very hard for the sales representatives to match up to their quotas and eventually they get frustrated leading them to even quit at times.
Another disadvantage is that often quotas ignore the service side of the business as it usually enables the sales representatives to get a lot of business. Another problem is that only short term results are gained by the company though providing customer satisfaction for a very long term. Due to all these problems faced by the company and the sale representatives most companies have dropped quotas and are adopting other systematic and proper means of attracting sales representatives to work at their best. Question VII: The new product development process starts with the search for ideas.
New-product ideas can come from interacting with various groups and using creativity-generating techniques. List these techniques. New innovative product ideas can be created either by interacting with other people such as your own customers and getting their ideas or also by using creativity generating techniques for developing and enhancing creativity in individuals working for the company. These techniques are as follows: Attribute listing: In this technique each attribute of a product is listed and then modification is done to it. For e. g. f we take milk box, we can modify it by replacing the paper box by a glass bottle then it is painted differently and the cap is replaced by a cork etc. Forced relationships: Several ideas are listed then each idea is considered in relation to other ideas. For e. g. in designing a bed room, you consider a bed and a sofa as separate ideas. Then you think of getting a sofa bed that can serve both the purposes. Morphological analysis: It refers to listing every possible combination for creating many innovative solutions. For e. g. we take a problem like “getting something cooked”.
First think of the dimensions such as how well cooked like half cooked, full cooked or baked. Then think of the possible mediums such as stove, on fire or oven and the power source such as electric oven, gas over or electric stove. Reverse assumption analysis: This is done by noting down all the assumptions and the possibilities about an entity and then reversing them. For e. g. let’s take a cinema that plays a movie of the audience choice, charges for the movie and provide snacks. Now if we apply the reverse assumption analysis we will reverse every assumption.
The cinema will now show any movie that the owner gets charges not for the movie but for sitting as long in the cinema and instead of snacks offers fast food. New contexts: Consider a familiar process and re-design it into a new context. For e. g. replacing people-helping services with animals such as cats and dogs. Mind mapping: Start with a thought such as food, note it down. Then note down the next thought that comes into your mind such as pizza. Then link both the thoughts that are food and pizza and think of the next association that will be Italy.
Associate a new thought with every other word that comes up. Doing this might lead to a whole new idea. Question VIII: Explain the product or brand management organization and list its advantages and disadvantages. Only a company that produces different variety of products or the production capacity is beyond the ability or control of the functional organization establishes a product management organization. It however has another form of management but doesn’t replace the functional organization. A product category manager is under the supervision of a product manager.
A product category manager manages and supervises specific brand and product managers. Product and brand management is sometime referred to as hub and spoke system with the brand manager in the center and managing various departments. The brand managers develop competitive strategies for the product, think of an annual marketing plan and predict sales, initiates improvements in the product to meet the changing needs of the market and also continuously work with advertising agencies for the promotion of their product. Advantages of product or brand management:
A product manager always develops a cost-effective marketing mix A product manager always ends up reacting quickly to new and innovative products. Smaller brands produced by the company get a product advocate. Disadvantages of product or brand management: Lack of authority to product and brand managers in carrying out their responsibilities. Lack of functional expertise as they are only experts in their own product areas. High costs associated with the system as every major product or brand requires an individual to manage it.
Even minor products and brands are catered by different individuals. Brands are usually managed by the brand managers for a short time which leads to short term planning and fails in developing long term strengths. It’s harder for the management to develop a national strategy due to the fragmentation of the markets. Product and brand managers are more focused towards gaining the market share for the company rather than developing healthy customer relationships.
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