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Chapter 8: Summary
The good or service as seen by the consumer constitutes much more than just a physical core product; all the intangibles that accompany the product form the package. The product audit is used to explore what this package comprises. The Ansoff Matrix looks at the four main growth strategies and demonstrates the increase in risk as a company moves from penetration of the known market to diversification into a totally unknown market.
The theory of the product life cycle says that the stages of introduction, growth, maturity, decline, and postmortem that a product goes through are to be reflected in the corresponding marketing mix. Even though most attention is focused on new-product launches, most products are in the maturity stage, where they need careful management attention to either prolong their life cycle or to lead to graceful retirement.
A popular theoretical tool for structuring product portfolios is the Boston Consulting Group Matrix. Its four quadrants are based on market share and market growth: problem children (or question marks), stars, cash cows, and dogs. Because of its assumption of a significant product life cycle and economies of scale, the Boston Matrix may have less relevance than its advocates suggest. In any event, the use of the matrix requires a sound understanding of the complex interrelationship between market growth rate and relative share.
The development of a product mix needs to consider both the width and depth of product lines and may require line stretching or line rationalization. In doing so, the firm must carefully consider the implications of such product policies on sales, profits, and relationships with customers and suppliers.
When using a strategy of market expansion, the firm must consider whether and how to standardize or adapt its products. In addition, attention must be devoted to packaging. No longer simply driven by product protection, packaging must reflect market requirements, promotional opportunities, and distribution considerations.
Services, whether related to goods or pure services, have distinctive features. In particular, they are more dependent on people, which necessitates more, and higher, standards of management. The intangibility of services means that the associated physical elements may be used for promotion, and strong branding is important. The lack of storage capacity may require new efforts at smoothing out demand fluctuations through personnel management or pricing strategies.
Overall, even though all elements of the marketing mix are equally important, the product is the most visible component and serves as the focal point for all marketing mix aspects.