BUS203: Principles of Marketing

4a. Explain the product life cycle

• What is the role of the product life cycle in managing and developing new products?
• Which controllable and uncontrollable factors may affect products as they travel through each stage of the product life cycle?

As products progress through their lifespan, they experience predictable sales and profits. These sales levels correspond to the stage where the product has evolved, requiring companies to manage their manufacturing, distribution, and marketing activities according to the needs of each stage. These stages include:

• Product development
• Introduction
• Growth
• Maturity
• Decline

There are many factors that companies can control as their products experience changes in the product life cycle, such as marketing and promotional activities, pricing strategies, distribution and geographic expansion, and product investment. However, there are also factors that a company cannot control. These include economic conditions, competition, technological advances, government regulations, and other external factors.

Being aware of these factors, and having strategies in place to address them will enable companies to better compete in their marketplace and experience higher levels of sales during the growth stage.

Additionally, while some products may spend less time at each stage than others, and some products may not follow this evolution at all, this model can provide companies with a guideline and a systematic approach for managing and developing their products.

To review, read Introducing and Managing the Product.

 

4b. Explain how offerings are created

• What are the components of an offering?
• What different types of offerings are available to consumers?

An offering is what is delivered to a customer in a way that meets customer needs. These include the product itself and the features inherent in the product. These features deliver benefits to the consumer in a way that satisfies a need or want. An offering also includes the price of the product. In addition to the initial amount of money paid to obtain a product, the price also includes the cost of owning, maintaining, and disposing of the product. This is known as the Total Cost of Ownership (TCO). Finally, offerings also include services. Since services are not tangible like their product counterparts, marketers have greater challenges when distinguishing their offerings from the competition. Consider recent product or service purchases you have made. Identify their offerings and how those elements influenced your decision.

There are four types of offerings marketed to consumers. These include:

• Convenience offerings: Items consumers purchase but do not put much effort into deciding, such as bread or milk.
• Shopping offerings: Items whose brands consumers spend some time comparing before making a purchase. This might include furniture or even toothpaste.
• Specialty offerings: Brands that are differentiated by their features and may be sold through limited channels. These may include cars or appliances.
• Unsought offerings: Goods and services consumers purchase only when they are needed. These may include insurance or towing services.

To review, read Creating Offerings.

 

4c. Explain how supply chains create value

• What is supply chain management, and how is it used?
• What are the elements of supply chain management? How is each element important?

Supply chain management includes designing, monitoring, and adjusting every aspect of a product from obtaining raw materials, all the way to delivering the product into the hands of the consumer. In addition to ensuring that this process is cost-effective, companies must also make sure that the products they are delivering meet consumer needs in ways that are not being addressed by the competition.

The value chain is an integral part of the process and ensures that each player in the supply chain management process enables the company to provide greater value to their own customers.

There are several important activities of supply chain management. Each makes valuable contributions to the process. These factors include:

• Sourcing: Evaluating and hiring companies to provide goods and services for a business
• Procurement: Purchasing goods and services for a business
• Demand planning: Estimating consumer sales levels of a product or service
• Inventory control: Ensuring a sufficient amount of goods and services to meet consumer needs
• Warehousing: Storing additional items to meet anticipated consumer demand
• Transportation: Physically moving goods from one place to another to make them available for purchase
• Trace and Track: The ability to determine where goods are located at any time in the process
• Reverse logistics: When products are returned to a company, either from suppliers or customers

Each of these steps in the process is quite complex, with many factors that impact their roles and effectiveness.

For more details, and to review, read Using Supply Chains to Create Value for Customers.

 

4d. Explain different considerations and models in setting a price

• What is the role of price in the product-dominant approach to marketing?
• What are the advantages and disadvantages of the service-dominant approach?

In the early days of manufacturing and marketing, companies considered products, services, and prices to be separate elements. The focus was on producing items for the lowest cost possible and selling them for the lowest price possible. There was no consideration given to consumer needs or the price/value relationship. This approach continued until after the Second World War.

In comparing the value of a good or service, consumers will take many factors into consideration. We compare the features and benefits of an item and the overall cost to purchase that item. We look at the ways an item differs from the competition, how easy or difficult it is for consumers to obtain the item, and what it may take to dispose of the item when it no longer has a use. As noted, the price of an item plays an integral part in the consumer decision-making process, causing manufacturers to carefully consider how to demonstrate the price/value relationship.

To review, read Creating Offerings.

 

Unit 4 Vocabulary

This vocabulary list includes terms that might help you with the review items above and some terms you should be familiar with to be successful in completing the final exam for the course.

Try to think of the reason why each term is included.

• controllable factors
• convenience offerings
• decline
• demand planning
• growth
• introduction
• inventory control
• maturity
• price offerings
• procurement
• product-dominant approach
• product development
• product life cycle
• product offerings
• reverse logistics
• service-dominant approach
• services offerings
• shopping offerings
• sourcing
• specialty offerings
• supply chain management
• total cost of ownership
• trace and track
• transportation
• uncontrollable factors
• unsought offerings
• value chain
• warehousing