For some, a product is simply the tangible, physical entity that may be buying or selling. The product is more than just the plastic, metal, wood, electronics or other components that come together. There can be three levels of a product: the CORE product, the ACTUAL product and the AUGMENTED product.
Marketing Mix- Product
CORE PRODUCT is the BENEFIT of the product that makes it valuable to you. For example, when you buy a car, you can travel anywhere at your convenience. Your convenience of traveling anywhere and anytime you want is the BENEFIT of buying a car.
ACTUAL PRODUCT is the tangible physical product. The car that you bought is the ACTUAL PRODUCT. With leather seats, an iPOD dock, sun roof, 17 inch mag wheels, etc.
AUGMENTED PRODUCT is the non-physical part of the product. It usually consists of lots of added value, for which you may or may not pay a premium. Using the same product, the car dealership gives you an offer to finance the car by paying 10% down payment and the rest will be payable in 12 months with 0%. Or if you decide to pay the full price of the car, the dealership will give you a 25% discount on all repairs and services. The financing of the car and the discount on the repairs and the services are the augmented products which the buyer will not have to pay for it but an added value of the car.
Which of these benefits does your target market really care about? Have you asked them? Your important benefit and theirs may not align.
Understand Your Product,
What is a Marketing Mix and why do I care?
The Marketing Mix is probably the most famous marketing term. The term became popular after Neil H. Borden published his 1964 article, The Concept of the Marketing Mix. Borden began using the term in his teaching in the late 1940’s after James Culliton had described a marketing manager as a “mixer of ingredients.”
Marketing Mix Overview
The marketing mix set a set of controllable, tactical marketing tools that work together to achieve company’s objectives. These controllable tools are the four Ps of marketing: Product, Price, Place and Promotion. These four Ps are the parameters that the marketing manager can control, subject to the internal and external constraints of the marketing environment.
The goal is to make decisions that center the four Ps on the customers in the target market in order to create perceived value and generate a positive response. Think of it like baking a cake. Flour, eggs, sugar and butter are the ingredients for the cake. Mixing them with the right measurements will produce a not-too-sweet soft moist cake. But if you add more sugar or separate the egg whites and make soft peaks, the cake will turn out different – a sweeter and lighter cake.
Over the coming weeks I will go more in depth of each aspect of the Marketing Mix. I actually took a cake decorating class recently and have been experimenting with different cake icing flavors and what to decorate. Just when you think you have the “right” mix, your can add something different and see how your customer (target market) reacts to it. These split tests can help your marketing mix to better match your intended audience.
Marketing Mix It Up,
I like running a few times a week anywhere from three to five miles at a time. Each month I’ve been running a 5 kilometer (3.1 miles) race. For Christmas my wife got me a Nike Plus (Nike+) to track my distance ran and to help improve my runs. Overtime as you get better the sensor needs to be recalibrated to more accurately measure your runs.
Example Nike+ Pouch
Lately I have had to run farther than normal for the Nike+ to show I have run a 5K. After the first time I went to recalibrate the sensor, I thought I was okay. The next day I had a 5K race and at the end the Nike+ said only 4.2 kilometers, way too short. Then I remembered that my youngest child a few days ago said, “What’s this,” as she was taking the sensor out of the pouch. I checked the sensor after the race and found out it was upside down!
I placed the sensor right-side up. Then I went to recalibrate the Nike+ again, it worked correctly this time. So now I should be good for my runs for awhile. Recalibrating applies to business also.
Regardless of how large or small your business is, you need to occasionally need to recalibrate the business (systems, customer service, order process).
Why would you need to recalibrate?
- Brand image changed
- Better technology available
- Other new products you can cross-promote
- More employees so different communication needed
- As “copy-cats” abound, nichifying your products for the long-tail
- Many more reasons are possible.
Taking all of these new aspects in mind, do these Action Steps:
- Write down a brain storm of some changes that can be made to better meet the need of your target market.
- Then order these changes by complexity and time required.
- Immediately get the easiest three done to get some immediate impact for your company.
- Then make a plan to do one more change each week or month.
Recalibrating is not a one-time event, any time your business changes drastically it is good to examine the changes. Also an “Annual Checkup” helps to increase efficiency of the business. What can you improve right now?
Like everything in life, there is an ending. In the Decline Stage of the product life cycle, eventually sales begin to decline as the market becomes saturated, the product becomes technologically obsolete, or customer tastes change. If the product has developed brand loyalty, the profitability may be maintained longer.
Product Life Cycle- Decline
You may also discontinue the product, liquidating remaining inventory or selling it to another firm that is willing to continue the product. Unit costs may increase with the declining production volumes and eventually no more profit can be made. There is intense price-cutting and many more products are withdrawn from the market. Profits can be improved by reducing marketing spend and cost cutting.
Every firm in the cosmetics industry has the similar product as yours. It has obtained some loyal customers thats why you have continued to produce the lipstick even though there is increase in production cost. Smoothe, another cosmetic company, is about to introduce an eye shadow-lipstick that changes color with a higher SPF and a moisturizer with Vitamin E.
Lipstick Tombstone- Death of a Product
There are three things you can do: 1) Continue to produce the lipstick for your loyal customers; 2) Add new features to the lipstick to rejuvenate it or 3) Sell the lipstick to another firm that will continue to produce it. What would you do?
Innovate or Die,
p.s. The product doesn’t have to die, just be aware of what is going on and move faster than your competition. Or you may sell off that product line and go into something else just as the decline starts.
In the Maturity Stage of the product life cycle, your product is at its peak of its life. Cost of the product continues to lower as a result of production volumes increasing and experience increasing efficiency of manufacturer. As more competitors are seeing that your product has the big slice in the market they too will produce a similar product. (Different enough to bypass any patents you may have, to stay legal but still directly compete.)
Product Life Cycle- Maturity
At this point, market saturation is reached and prices tend to drop due to the proliferation of competing products. It is important to maintain or increase market share at this stage of the life cycle through brand differentiation and feature diversification (how can you be different in a way that the end use consumer cares). Maybe some features like this picture?
Lipstick with features of a Swiss Army Knife
Now, let’s use the same product from the last blog entry about Product Life Cycle: the lipstick that is both a moisturizer and sunscreen that changes color depending on the wearer’s body temperature. The lipstick is in every woman’s purse and becomes a household name.
All major cosmetic companies are about to start or have started to introduce similar lipsticks. And this has prompted you to further drop the price to keep your customers and attract even more. To keep customers loyal to your brand/product you add new features to the lipstick like being waterproof or bundling the lipstick with matching eye shadow or blush. Is all this enough?
Help Your Product Mature and Not Die,