Product

4P's of Marketing

1. 1. Product

   2. Price

   3. Place

   4. Promotion

A product is an item that is built or produced to satisfy the needs of a certain group of people and can be intangible or tangible as it can be in the form of services or goods. Ideally, a product should fulfill a certain consumer demand or be so compelling that consumers believe they need to have it.

To be successful, marketers need to understand the life cycle of a product, and business executives need to have a plan for dealing with products at every stage of their life cycles. The type of product also partially dictates how much businesses can charge for it, where they should place it, and how they should promote it in the marketplace.

All in all, marketers must ask themselves the question “what can I do to offer a better product to this group of people than my competitors”.

Vocab

• • Supply Chain Management

  • Branding

  • Followership

  • Distribution/Distributor

  • Fad

  • Trend

  • Niche

  • Manufacturing Costs

  • Profit Margin

Product

In developing the right product, you have to answer the following questions:

• • What does the client want from the service or product?

  • How will the customer use it?

  • Where will the client use it?

  • What features must the product have to meet the client’s needs?

  • Are there any necessary features that you missed out?

  • Are you creating features that are not needed by the client?

  • What’s the name of the product?

  • Does it have a catchy name?

  • What are the sizes or colors available?

  • How is the product different from the products of your competitors?

  • What does the product look like?

While there a number of questions to answer for potential consumers, we can classify the establishment of a product into two broad categories: Push vs Pull.

Push vs Pull Strategy

The Push vs Pull strategy can be made simple by understanding this concept.

• • Push Strategy – Making people want things

  • Pull Strategy – Making things people want (Design Thinking)

The Push vs Pull Strategy can be used in several areas of the business. The three areas of implementation that we will cover are as followed.

• • Product Development (Develop a product you believe customers need vs figure out what customers want and make the product)

  • Supply Chain Management (Products stocked on shelves vs Made to order)

  • Marketing (Pushing sales to customers; typically short-term vs Building branding and followership; long-term)

In this section, we will be covering Product Development using the Push vs Pull strategy. We will cover the following topics in several other sections:

• • Supply Chain Management – 4P’s of Marketing: Place and in Business Canvas Model: Channels

  • Marketing Strategy – 4P’s of Marketing: Promotion and Business Canvas Model: Customer Relationships

Push Strategy in Product Development

When using a Push strategy in developing a product, businesses often create a product that they feel the general public or a specific group of people need/want.  This is often done with minimal input from the market. Another example of using a Push strategy with products, would be publishing companies (books/novels) that push out their products.

"You can have any color as long as it's black." ~ Henry Ford

Push Strategy: Advantages and Disadvantages

Advantages of the Push Strategy

• • Useful for manufacturers seeking distributor for product promotion.

  • Useful for those manufacturing or those selling low value items as a distribution who is likely to place bulk items.

  • Creates product exposure in potentially large retail environments.

  • Good way to test new products in the market.

Disadvantages of the Push Strategy

• • The distributor may source alternative products (cheaper, faster delivery) once your product has established the market need.

  • Distributors may not organize a formal contract, so no guarantee of regular orders.

  • Distributors may demand financial contribution towards promotion.

  • Distributors may demand lower prices to fit in with their promotional campaign.

  • Distributors can establish dependence and then request price reductions

  • Distributors can demand lengthy credit terms.

Pull Strategy in Product Development

When using a Pull strategy in developing a product, businesses often look at what the general public or a specific group of people need/want. The Pull strategy typically involves three major methods:

• • Follow fads and trends

  • Using the Design Thinking Process to understand the market needs and developing a product to meet those needs

  • Find a Niche Market

Follow Fads and Trends

In this strategy, companies will create products that follow the current trend or up and coming trend. There are several factors that a company will consider before beginning:

• • Manufacturing costs vs profit margins

  • Distribution (Where we sell)

  • How quickly we can get product to market (think product life cycle)

Design Thinking

As described in our DTP module, this is about gathering as much information as possible from potential consumers to create a product. This method typically looks to challenge the status quo to create new and innovative products that often address the 4 Psychological Reasons Why People Buy.

This does not typically follow the fad and trend method as this process often takes time and could result in missing the time frame of the product life cycle. One way it could follow the fad and trend phase would be in product redevelopment as the it matures. This would help to add new features or change the existing product to meet needs not previously met (eg. smart phones, cars).

Find a Niche Market

A niche market and target market are often used interchangeably, though incorrectly. 

• • Your target market is the group of people you serve.

  • Your niche is the service you specialize in offering to your target market.

A target market tends to be a generalized market with needs, while a niche focuses on specific products. A good example can be seen with:

• • Babies R Us

  • Pampers - disposable baby diapers

Babies R Us focuses on the target market for people who need baby related items. In contrast, Pampers, a niche market, focuses on just disposable diapers to become an expert in their area. Below are a few other differences between a company that focuses on a target market vs niche market:

• • Babies R Us does not make products

  • Products labeled as being Baby R Us products were manufactured by another company that allowed them to put their name on it. Think about businesses that have bottles of water with their name on it; trust me they did not bottle it.

  • If Babies R Us goes out of business, they no longer exist

  • If Babies R Us goes out of business, Pampers can still sell their product to other businesses or directly to consumers.

Here are a few ways to select a niche.

• • Listen to what people are talking about

  • See what is trending

  • Check out Google Trends to see what people are following online

Think About It: Google Trends

• • In the Google Trend search bar, type BTS. What state had the highest interest in the past 90 days?

• Scroll down, click on YEAR IN SEARCH 2019. Who/what was the top:

  • • Song

• • TV Show

  • Where is...?

  • What is...?

Pull Strategy: Advantages and Disadvantages

Advantages  of the Pull Strategy

• • Direct contact with customers.

  • Instant payment as customers do not have credit facilities and pay online or in store at the checkout.

  • Greater margins as no discount needed.

  • Customers can generate ideas for new product development.

  • Ideal for premium priced products.

Disadvantages of the Pull Strategy

• • Greater administration required in-house to fulfill customer's orders.

  • Many smaller and one-off orders.

Think About It: Push vs. Pull Strategy 

• • Which strategy do you think presents the least risk?

  • Would you rather use a Push or Pull strategy when it comes to Product Development (Develop a product you believe customers need vs figure out what customers want and make the product)? Why?

Complete and bring to class on scheduled due dates. You may print your work in our classroom prior to coming to class. Assignments can be submitted early, but late assignments will not be graded. Early or on time submissions may be returned for corrections in order to receive points, meet minimal requirements, or to improve your grade. Late assignments can be submitted for correction and to complete modules. Consideration for grade is given to those who complete all assignments.

All activities can be found above or in the Vocab document in the Resource section.

• • https://www.smartinsights.com/marketing-planning/marketing-models/push-pull-product-distribution-model/

  • https://smallbusiness.chron.com/difference-between-push-pull-marketing-31806.html

  • https://yaro.blog/8190/how-to-create-a-product/