Transcription
Now it is time to start our walk with the four Ps, the marketing mix. From here on out, for the rest of the class, that is what we'll talk about: product, price, place, and promotion. Each of the four Ps will will have two chapters. On chapter 11 and chapter 12 will be our two product chapters. We'll begin with the basics of the product, our branding, our our basic uh PR, packaging decisions, and this is where we'll [Music] begin.
The product is the heart of the marketing mix. I cannot tell you anything else about the four Ps until I tell you until I know what the product is. I cannot give you any idea about the price, I would not even hazard to guess how we can distribute it, the place, and I certainly wouldn't know how to promote it unless I know what the it is. We always begin with the product. Therefore, the product is the heart of our marketing mix.
What is the product? It's anything that we are going to create that's going to provide provide value to our consumer and that's going to be offered through a voluntary marketing exchange. Often times, individuals will think that that means that it's limited to an actual tangible good, like a car, like a house, like a pen. Tangible goods, meaning things that we can see, touch, taste, or feel. So tangible goods, that is one type of product, but there are two other types of products.
Okay, so we can have products that have physical characteristics, but there are more than that. There are products we call services, those intangible products: education, health care, entertainment, other experiences. Those are also products. Then finally, if any of you in this class, and I know that I have quite a few, want to start your own business right now, you have thoughts and ideas in your mind that you you are committing or you will commit to paper or computer at some point in order to share those thoughts and ideas with others. Those thoughts and ideas that you have about that business that you want to create, those thoughts and ideas are products. Therefore, we have three different types of products: tangible goods, intangible services, and then thoughts and ideas.
Now, I've listed them off, and they sound very simple, and they certainly have their own variation of characteristics, and even and under that umbrella of those three different book bullet points, there are many different types of characteristics. But even within those, there aren't simple in the least bit. They're quite complex. Let's go back to the car example, and you remember my car story. I bought a car on a Monday, and then I had the the stunt person um experience with the car on that Thursday. So in less than four days, I had issues with a brand new car, with less than 101 miles with the car.
Therefore, let's take a look at this. We have the actual product, the car. Okay, and in the actual product, you have the the brand name, uh the perceived quality level of the car, uh the packaging, uh any futures or designs that come uh with the car. Um, you know, it's funny that we buy cars here with heated seats, uh here in Florida, but I must admit, I use my heated seats on those 60-degree days. Okay, so we have the actual product, and then we have associated services which go into our product. Uh, the financing for our vehicles, uh product warranties that come along, product support, such as the maintenance we receive with our vehicle. All of that forms the complexity of the products we may purchase. So we have a car that can be very complex.
But then you think about when you go out for lunch or you go out for dinner. Okay, so you have the actual product again, the brand name of the restaurant, the perceived quality level of the food that you're buying, the packaging that's coming in, um, any future designs of of that restaurant. But then you also have whatever Sur guarantees there are, um, that's part of those associated services. Okay, so we certainly have then our our different types of of restaurants that we are going to uh, excuse me, our different types of services that we are going to be looking into and using along with the actual product.
Now, you see then that products, no matter how simple we may think they are, uh, they can be quite complex. That brand name alone can provide expectations, um, even if it's a candy bar with the Snickers brand name on it from Mars candy, it can provide quite amount of expectations, which then are promises to us. Therefore, certainly then, um, we have the actual product and then other things wrapped around that core customer value. Okay.
Now then, let's take a look at different types of consumer products. And when we say products, remember we're including services in that, and our thoughts and ideas. And look at what types of products they are and how we go about using or purchasing them. Okay, so first, we have the the specialty products. And these are ones that uh, we are not buying, uh, these are not, you know, our groceries or anything like that. Okay, um, these are definitely products that we are going to be buying from particular suppliers. You can think about, let's say, jewelry or uh, special chocolates. Uh, at one point, Godiva chocolates had their own stores, and now, of course, they've done away with those particular stores. Um, you can think about particular clothing stores, um, office supply stores. So specialty items, uh, that are not part of our our daily buying.
Then let's think about our our shopping items. Our shopping items are bigger purchase items. We're going to spend some time doing research. You remember when we learned about our consumer decision-making model, where we're going to do not only our internal information search but also our external information search. Shopping items, this is where we're going to do this. Uh, cars, furniture, at some point, home. Okay, so these are a high ticket items where we're going to do um, a wealth of not only internal or exter and also external information search.
For convenience items, in and out are groceries. Okay, uh, these are where our groceries lie, in and out items. Okay, uh, so that's where those those items lie. We're not really putting a great deal of um, deep processing in.
Last but not least, unsought goods or services. We don't really want to buy these at all. Therefore, we're going to really probably avoid buying them. Uh, our parking permit for school, at some point, you'll think about this, life insurance, um, insurance in general, in general, your car insurance, your house insurance. Not things you're like, yay, I bought this, you know, but it's things P service and goods that we do eventually M, we must buy. Uh, so not things that we are completely thrilled about, not goods or services that we must buy, excuse me, that we want to buy, but certainly goods and services that we we need to buy. Okay, so not actively out wanting to buy them.
Now, I'm going to talk to you about a puzzle. I always like to say it's a puzzle. We're going to put a puzzle together, and the puzzle is going to become what we refer to in marketing as the product mix. Okay, and and we're going to start with piece by piece. And the most basic piece of the product mix is one product item, one product item. Okay, and we'll start with liquid detergent, liquid laundry detergent. And here I have, for example, Liquid Tide. Okay, so we're going to put a puzzle together. The puzzle is called product mix. The most basic piece of the puzzle, one item, one product item. And in this particular case, Liquid Tide.
I'm going to ask you a question: Which laundry detergent do you usually purchase? Okay, so I'll give you a moment to think on that, and you know what detergent it is. Okay, I'll be quiet now.
I'm going to go over some answers here. Okay, first of all, some of you probably did say Tide. And if you said Tide, I'm going to hazard to guess that your um parental units at home use Tide, and that is why you're buying Tide here at school. Uh, you have what's called an inherited loyalty, and Tide is one of those brands that uh uh benefits from that. It is what's a it is a brand that is usually um handed down. That loyalty is handed down. So if you're using Tide, it's because 90% of the time your parental units at home used Tide when you were growing up.
Now, if you chose Gain, okay, most times it's that maybe your parents at home did use Tide, and now you're you're using Gain because you are thinking, wow, Tide's really expensive, and so I'm not going to use Tide. That's crazy. So I'll use Gain. Like it's better. It's not really cheap, but it's it's still good, good, but I can't, I'm not going to pay Tide's money. Tide is way too expensive. I'm not paying for Tide, and so you're using Gain. So you trade it down, but it's still good. Okay, so that's why you're using Gain.
Now, I would find it surprising if some of you are using Cheer. Uh, maybe some of you are. Uh, that's usually a a a new family or new per new family unit, household unit, I'll say, uh, thanks to the Millennials, we'll go with new household unit. Uh, and that's usually the demographics we've learned about segmentation, targeting, and positioning. So that's usually a new demographic, laundry detergent.
I find it very interesting if any of you chose Ivory. Ivory is a laundry detergent that is marketed specifically to new parents. It's so much marketed to new parents that when you leave the hospital with your firstborn child, and they give you this baby bag full of samples, Ivory is the the sample laundry detergent that's put in that bag. It's sort of the how to take care of baby bag, and so you come home with it, and you think, well, this is what the hospital gave me, so of course I'm going to use Ivory, and that's what's in the bag.
Okay, Era. Um, unless you're one of my mature um students, and I mean mature in age, not in emotional intelligence, um, then you're probably did not choose Era. Era is one of the older brands, okay, and um, and it's kept around by that company because of the fact that it's an older brand in that particular um uh segment. Still buys that brand.
Ariel. If you come from a a Latin um Latin Latino Latina household, then you maybe chose that, uh, that segment. That's what that um, that particular brand is um, targeted towards. And then, of course, maybe you're like, cheapest. I go to the market, whatever's cheapest. Maybe it's the store brand. We'll talk about store brands later on. Maybe that's what you chose. And then perhaps it's none of the above. Um, lately, I've had students tell me that they they make their own or they choose their organic one. Um, so there are choices.
Now, here here's what I'm going to tell you. If you chose from one to six, any of those, regardless of which of those that you chose, you're buying from one company, one company. They're all made by Proctor and Gamble. One company makes all of those laundry detergents. Okay, they are all part of their laundry kit care line, their product line, laundry care.
Let's go back to our product mix puzzle that we've been talking about. Okay, we have one item, one item, Tide. Tide is one brand inside of Proctor and Gamble's laundry care line. Proctor and Gamble, if you've not heard of the company, Proctor and Gamble is uh, wow, I'd say maybe Fortune three at this point in the in the in the in the country. Uh, they are uh the world's largest consumer packaged goods company. They are the world's largest single spender an advertisement because they don't do not use their company name on any of their goods. They use individual brand names on all of their goods. So they do not use their company name, they use individual brand names on all of their goods. So yes, if you go to the grocery store and you say, no, I don't want to buy Tide, I don't like that company, they're too expensive, I'm going to buy Gain. Proctor and Gamble goes, good for you, you have choices. If you say, no, I don't want to buy that, I'm I'm going to buy a Cheer, I I don't like either of those companies, they're big brand companies. Proctor and Gamble says, good for you, you have choices. Um, Proctor and Gamble owns nearly 40% of the laundry care aisle. We'll look at some of the other products that Proctor and Gamble owns. It's a massive company. So um, without a doubt, you have at least one Proctor and Gamble item in your house. Okay, uh, so it it is a massive company.
So let's take a look here. So here's some of Proctor and Gamble items, but more importantly, we now have the product mix. Here's the puzzle put together. So we have the fabric or laundry care line. Here you see Tide, there you see Ariel, Gain, um, you see some other items there. So here are their product lines. So in their baby care line, they have um, two different brands of diapers. It's because they sell to two different um groups. Their new parents will buy the Pampers, and those are the higher price brand. Second-time parents will usually buy Luvs. Okay, feminine care, they own both the Always and the Tampax brand. Over in the paper, there's Bounty and Charmin. Laundry care, as I said, they own close to 40% of that aisle. Home um, they own Dawn, for Breeze, Swift, or um, Fairy, which you may not um, realize that's an international brand. Hair care, side Head and Shoulders, um, hair um, excuse me, Pantene. Skin and personal care, they own Olay, um, Old Spice. Grooming, one of their one of their most most profitable brands, Gillette, of course, Venus, Braun. They own um, uh, Crest, Oral-B. On the personal healthcare side, uh, they own Metamucil, NyQuil. So these are just some of their brands.
So you see the puzzle piece come together. One product item, Tide, is in their fabric care product line. And then you see multiple lines side by side that make up their product mix. This is what we refer to as product mix in marketing. One company can have an item, that item then is in one of their product lines, and then they will have one, two, three, or in case of Proctor and Gamble, several product lines.
Now, some companies may only have one product line. You look at Michelin tires. They make tires, they make a lot of tires, but they make tires. So they would have one line here. So take out from feminine care all the way over to personal health care. Pretend that's gone, and you'd have that baby line, but it would say tires, but it'd be a really deep line. It would just keep going, tires, tires, tires, tires. Okay, but all these other lines wouldn't be there, from feminine care all the way over to personal health care would not be there.
Okay, okay. So I was talking about number of lines and then number of products or categories within a product line. We refer to these as the measurements or dimensions of a product mix. We refer to them as the breadth or width of the product mix, and then the depth of a product mix. You see how how many product lines, number of lines that Proctor and Gamble has, we would say they have a wide breadth, okay, a wide product mix.
Now, if we were Michelin, and we took out feminine care all the way over to personal health care, because Michelin has just that baby one, because it'd be tires, we would say it would have a narrow, a narrow product line, excuse me, a narrow um product mix, because it would only have the one product line. So one product line, very narrow. Okay, so number of product lines, narrow or wide.
Now, the other measurement we have is how deep. How many items do you have in your line? We know that with the fabric care, I just told you that Proctor and Gamble owns nearly 40% of the fabric care aisle, the laundry care slash fabric care aisle. So with that, with that percentage of the share in that aisle, then you know that their fabric care line has a lot of items, a lot of categories in that one line, the fabric care line. So that means then that's a very deep line for them, a very deep line.
Okay, now let's look at their personal health care side. Uh, we have NyQuil and we have Metamucil. Uh, compared to their other lines, uh, that looks pretty short, okay, or shallow, because there are not many as many categories in that product line as you see others. So those are the two measurements that we have for product lines.
As we grow as a company, as this is how we make changes in order to be nimble and ready and flexible for the market we're operating in. We make changes to our product mix by making changes to these two measurements, the breadth and the depth. Here's what I'm talking about. So maybe I want to increase my depth, meaning I want to add products to one particular line. And it could be because I see changes in the laundry care. Let's say, example, I want to add, if I'm Proctor and Gamble, and I want to add items to my fabric care, my laundry care line, uh, in order to increase the depth, make that longer. Uh, there could be a couple of reasons I want to do that. I could I could want to add products there because I see consumer preferences changing. I could see competition about to do something. So I've done my SWOT analysis, and I want to make a change before I see an opportunity or threat arise. Uh, or I do see an opportunity and threat in the environment. And that's exactly Proctor and Gamble, of course, being such a large company and a consumer packaged goods company, that means that their packages are one of the larger contributors to environmental waste, and they are very cognizant of that. They have in the last decade consistently tried to work to decrease the environmental waste from their products, from their goods. And one of their initiatives in March of 2024, they launched what's called Tide Evo. Tils for their laundry care in their laundry care line. So they added, they deepened the depth, they increased the depth by adding a product uh to that line, and they are these little tiles um that they uh that you can use to do um laundry. So they're meant to be a dry detergent or laundry sheet, and the goal is to eliminate plastic and water in laundry use. Right now, the liquid detergents represent 70% of the 9.3 billion laundry detergent market in the United States. What is what Proctor and Gamble is expecting these particular laundry tiles to to do, and why they're expecting it to appeal to consumers is one, it's expecting to appeal to those consumers who are wanting to save time on laundry day, that's supposed to say save save time on laundry day, and wanting products with reduced packaging. So these are not the liquid detergent that's coming in those large plastic containers, right, that are most times not being uh properly uh recycled. So uh, this is one way to do that. So adding this new product to their laundry care line helps increase the depth of the laundry line and helps answer to uh consumer preferences and to sustain sustainability. So that's one way to change the measurements of their product mix.
Another way is to actually decrease the depth, get rid of a product or a category. You know, during the the pandemic, those those two and a half, nearly three years of the pandemic, uh, we as a country saw massive supply chain issues. And one of the things we saw companies do in order to answer to those supply chain issues was cut back on their product lines, so decrease the depth of their product lines, decrease um their low margin items, and and refocus their marketing efforts on their more profitable items. Uh, and that definitely helped free up some of the the backlog in the supply chain during the pandemic. Well, then the pandemic ended, and here we are quite some time down the road now, and the pandemic has ended, the logistical mess is behind the companies, but many have found that they're not going to add those those products back to their product lines. Couple of examples: Newell Brands, they retired 50 types of Yankee Candle. So they decreased the depth of that, and they have a couple of different product lines. Newell Brands makes the Sharpie markers, and then another one of their product lines, the Yankee Candles, the candles, they decreased their Yankee Candle line, their candle line, by cutting 50 types of candles. And those were low producing, low margin items, and there were they felt there was no need to add them back in post-pandemic. Coca-Cola, wow, did Coca-Cola make a lot of cuts because supply chain, they live and die by that as a beverage distribution company. And they particularly found several of their items were low margin or um, slow growing, declining products, and and they were just highlighted by the pandemic and the uh supply chain issues. Two of them, the Honest Tea product, they cut them, and then also one of their uh beginning products, Tab, which is U uh one of the first uh Diet Cola products, and from back in the 80s, they cut that product. So they decreased the depth of their um beverage products, that the product line. So they went from 400 brands of drinks to 200, um, becoming much more lean and and uh definitely cutting their their um low margin items. So definitely decreasing the depth of the product line by getting rid of a product um category, or increasing the product line by um increasing the product line depth by adding a product line. Those are uh two ways to change the measurement of your product mix.
Making those changes in depth. Another way, or two other ways that you can make changes are changes in the breadth. I can actually decide that I can either add a new product line um or take away a product line. Let's take a look then at uh Canada Goose. Okay, so as a company, I can decide that uh, okay, I've done one particular type of product very well. Now let me see if I can add a whole new product line that captures a new or an evolving market. This is exactly what Canada Goose has done. Okay, this particular company has been known for decades for its extreme cold weather clothing gear, and now what they're doing is adding clothing for warmer temperatures. By doing this, one, they're capturing, going back to our our segmentation, targeting, positioning, they're capturing a whole new consumer base that maybe wouldn't normally use cold weather but would use warmer weather clothing. So it's definitely expanding their marketing appeal, and it's also expanding their shopping season. Okay, so by widening their breadth, by adding on that one more more um uh product line, um, and so therefore widening their breadth, they're certainly changing their product mix.
Another thing I can look at, though, is say, well, the market has changed, and there's some things I maybe don't want to be known for, or it's not part of my core competency, it's not what I do well. So maybe I want to get rid of a product line. So sometimes a company deletes entire product lines, and it may be not because they're failing. Okay, uh, it's merely because maybe maybe it is marketing conditions, or sometimes in the case of these three, in the case of the three brands I'm about to talk about with Proctor and Gamble, these were all um billion-dollar brands that they sold off. They were not losing money. It was just that these did not meet with what strategic priorities were. They did not want, they they had acquired these through sales throughout the years, and they did not meet with what they want to be known as as a company. And so over the last decade or so, Proctor and Gamble, uh, they did own, but then decided to sell off. One, Folgers coffee, they sold that in 2008 to Smucker's, and they sold that for 4.5 billion. And once again, they were not, it was not a true dog that they were losing money by no means. It's just they did get, they had quite a few food items. They at one point owned SunnyD, they owned they owned several different food products, but they did not want to be a food company. That was not their, they decided that was not part of their strategic priorities. So because they did not want to be a food company, they also sold off Pringles in 2012 to Kellogg for 2.7 billion. And then, uh, they owned a whole whole umbrella of pet food brands that in 2014 they sold to Mars Pet Care for 2.9 billion. So you see Proctor and Gamble, and you know they have a wide breadth, even after they went off a ma, went on a massive sell-off from 2008 and on, uh, they actually ended up selling off close to 22 brands in order. They owned a great deal of cosmetics, they own pharmaceuticals, uh, they went through a massive sell-off to get back to where they want it to be as far as the company goes, and around what their strategic priorities were. And and that is, and that is what they did. So they sold off these companies in order to do that. Uh, doesn't always have to be a dog that's failing. It can be a dog because it doesn't meet your your priorities.
So let's look at all of this in this diagram here. And this diagram, exhibit 11.3, it's in your book. So first, I can decide that I'm going to add a product. Okay, so remember that we had um, Canada, um, Canada Goose added warm, warm weather. So so, um, uh, no, that's the the product line. So we can have a company um, add a particular product to their product line, okay, so that it then um, stretches out the the product line, makes it deeper. We can also have a company decide that they're going to get rid of products to make that product line shorter, decrease the depth. We can decrease the depth by um, selling off an entire product line. Uh, so U Proctor and Gamble sold off um, their pet food line, and that that eliminated that whole product line of pet food. Or we can add a a product line. K Goose added their warm wear line. Okay, so we have four different options there in order to be able to make changes to our product lines. Okay, but this is our product mix. We have a product item that makes up then, product items make up a product line, and then product lines right beside each other make up the the product mix. And then we can make changes to the product mix by making it wider by adding a line, making it narrow by taking away a line, making it deeper by adding on a product, making it shorter by taking away, taking away a product.
Now, here's the challenge with product lines, and particularly deep product lines. And Proctor and Gamble is a perfect example of this. If you have product offerings that are the same, the challenge is, make sure they aren't going to cannibalize each other's sales. Let's go back to the baby care line. Remember I said that they had two different brands of baby care B, diapers in the baby care line? They have Pampers and they have Luvs. They are very careful to price those diapers differently. Pampers has a premium price, and Luvs is slightly lower. They are very careful to market them differently. Pampers is specifically marketed to first-time parents. Luvs is specifically marketed to the second-time, more um, experienced parent. And and that is what they do in order to differentiate them and and in hopes that there is no cannibalization.
Let's go over to the fabric care, the laundry care line. Tide and Gain are the the two that really are are the ones that are at most at risk, and the ones they do a a delicate balancing act with as far as cannibalization goes. Tide is most definitely the premium brand. Uh, it is the one with the inherited loyalty from step to step to step. And so that is the one that they market as as you know, it can do everything, it can do it all. Um, and uh, Gain really is is marketed to U uh, the step down, um, the the hos, the household that's budget conscientious. So once again, it takes a great deal of advertising that is strategically wrapped around the STP, the segmentation, targeting, and positioning, to make certain that these two brands, particularly that um, Gain is not cannibalizing on Tide. And this is this is definitely the case when you're in a time period where the economy is not particularly strong. You don't want that the the Gain to cannibalize the sale of of of Tide.
Now, you can understand why with the different brand names, with the different um segments targeted, and very specific targeting and positioning, you can understand why then you have Proctor and Gamble as a leading advertiser worldwide over, not just here in the United States, because they are the world's leader in um advertising. And because they're not using their one name, Proctor and Gamble, they are using the different individual brands in order to be able to do the differentiation that they do. Uh, but cannibalizing, when you do have multiple brands of product items in the same product line, uh, can be very challenging.
Now, Proctor and Gamble is number two. Proctor's competitor to Proctor and Gamble is Unilever. It's a company out of Europe, but you you may not know Unilever, but you know their products very well. For instance, Dove soap, um, Ben & Jerry's, um, Vaseline, um, ramen noodles, nor um noodles. So you know them very well. When I say number two, there's almost a 30% difference in their profit margin. So when I say number two, it's a big gap. Okay, so that just gives you an idea of how very big and profitable Proctor and Gamble is. Um, but uh, they are the number one consumer package goods company. You'll also then understand that when we get to retailing, you'll also understand then why the relationship, the very strong relationship between Walmart and Proctor and Gamble. You have uh the country's largest retailer, and then now you see the world's largest consumer packaged goods company. Why they truly cannot do without each other. One has all the shelf space, brick and mortar, and the other has all the goods to go on that shelf. So you realize why they literally cannot do without each other, and and they've been entwined in business since Walmart came into existence in the in the 80s. So uh, definitely it's a it's a tightly inned relationship that we'll talk more about when we get to um supply chain management and then also our our retailing uh chapters.
When we talk about products and we talk about um goods, I just want to show you this. Nothing you have to memorize or anything, but it's amazing when you look at companies and you see how very few companies, and of course, the one big one, Proctor and Gamble, isn't on here. But you can see Unilever, their competitor. Now, where Proctor and Gamble is not no longer a food company, they sold off all their food. Unilever still owns, and they do, they make that a very big part of their company. U Unilever owns quite a bit of food products. You can see they own Popsicle, they own Klondike bar, they own um, of course, Ben & Jerry's, they own Lipton, um, so they own quite a bit of food food products. Um, and and uh, but you can see this is just the food market. The the the, and these are the bigger players in the food market, and you can see it comes down to um, just a very few companies here in the United States who own the largest part of our our food products here in the United States. So uh, it's every time I see this um, this graphic, it's um, always shocking to me.
Okay, so we will um stop here, and when we start again, we'll talk about branding, which is always fascinating to me and fun to the marketing nerd in me. Okay.