Management Studies: Product Mix

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Service Product and Strategies of Service Product

Meaning of Service Product

The thing which cannot be seen or touched is called service product. Service product is also called non-physical product. Such product does not have physical existence. Communication service, transport service, insurance service, hotel service, restaurant service, advertisement service, counseling service etc. are the instances of service product.

Such service products become perishable. They cannot be stored. Price and quality of the service product also cannot have uniformity. Such service can be classified into two types: personal or person related services and equipment related services. The former service is based on person or person related service. Teacher’s service, doctors’ service, lawyer’s service, technical service, counseling service etc. are provided by persons. The later service is related with equipment. This type of services includes lifting machine, vending machine, television, computer, and other equipment used by a business firm.

Some organizations can be operated in order to provide profitable or business services. Bank, nursing home, private sector school, etc. are profitable business services. Similarly, non-profitable services also can be operated. Government hospital, government school etc. are non-profitable services. Such services can be provided at different times. The services can be provided by giving information or knowledge to the possible customers earlier than providing services. In the course of selling services or goods, agreement can be done for counseling services, repair services, guaranty services etc. Besides, services can be provided after the sale of the goods. For example, transport cost for exchanging goods, free repair services etc. can be provided. In the same way, necessary technical services can also be provided free of charge.

Nature of Service goods

Product service becomes invisible. So, the customers cannot touch, taste, see such services. Service product becomes inseparable. It becomes difficult to divide or separate this service. All the organizations or firms cannot provide same types of services. Standard or level of service may be different according to capacity, goodwill, place and time. No organizations can keep/store service; they are determined to provide service according to necessity. So, it becomes clear from different facts that the products which cannot be touched, seen, felt, and are invisible, perishable, inseparable and remain changing time to time.

Strategies of Service Product

Every business organization should maintain quality of service product. Service oriented organizations should also form proper strategies to satisfy customers’ new wants by carrying out market research and study. Generally, service oriented business organizations should adopt the following marketing strategies.

1. Price Strategy

A service company/firm should give full confidence about price to the customers of target market. Different price strategies should be adopted to keep the customers intact. Such strategies may be one price strategy, flexible pricing strategy, price competition strategy etc.

2. Product mix strategy

Products may have several lines. They may decrease or increase or improve. The customers can be kept intact/ loyal towards the services. The following strategies are included under product mix strategy:

Service line featuring strategy
Limited line strategy
Service mix consistency strategy
Broad line strategy
Strategy for expansion of semi line length
Service line modification

3. Promotion strategy

Service company/firm should, at first, disseminate and advertise its service products giving every information about quality and features of its product. A short description of operating methods of the product should also be made. Sample of the new products also may be provided to certain customers of the target market. The following strategies can be adopted under promotional strategies:

Personal selling,
Advertising,
Sales promotion activities,
Publicity.

4. Distribution strategy

In the course of distributing products, simple distribution method should be arranged. At first warehouse should be managed at right place for easy distribution. This may minimize distribution cost. The following strategies can be adopted for distribution.

Selection of suitable place,
Selection of suitable channel.

5. People strategy

Skill and intelligence of the people involved in business organization can help to achieve organizational goal. The manpower providing such services should be given training and motivation including different facilities. For this, the following strategies can be adopted:

Interactive marketing strategy: In this method, effort is made to establish warm relationship between organization and customers. It helps to maintain the loyalty and belief of the customers to the organizations.
Internal marketing strategy: Under this strategy, company or firm gives training, motivation, knowledge and other facilities to the manpower due to which they get involved in the campaign to provide services to meet the wants, need and interest of the customers.

6. Physical strategy

The process of providing service strategy also plays important role in marketing services. As the process also becomes different according to the nature of services, there is no certain fixed method or process. Every proper process should be applied according to the nature of services. Service providing organizations, firms, persons, or group should apply different delivery methods. Price should also be fixed by different methods.

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Product Line Strategies and Product Mix Strategies

Product line is a group of any products. They are related to one another. Such products fulfill similar nature of functions. Electrical product line includes electrical goods such as radio, television, telephone, computer, refrigerator, air conditioner, fan etc. Similarly, the line of soap includes detergent, shampoo, gel, surf etc.

Same line products should be supplied to market through same distribution channel. Some products of the same line do the same works. Their target market also becomes the same.

Nowadays, most of the firms give stress to mass production. In such firms, arrangement of line manager is made to look after product line. Besides, brand manager is also appointed to look after each product. The line manager analyzes product line sales and profits and estimates future sales and profits. Strategic decision can be taken on the basis of the estimate. Some important factors should be considered for formation of product line strategy. They are as follows:

1. Product line length

Product line length denotes all the products of the same line. Product line length should be long to expand and increase the market segment. Product length should be short for the increase in profit. However, profit can also be increased by increasing the length of product line according to the context. Decisions can be taken for adopting two strategies to increase or decrease the length of the product line. Two strategies are mentioned as follows:

a) Line expansion

The task of adding any other related new products to product line is called line expansion. This includes two strategies. They are filling the line and expanding the line. If nay textile industry produces three types of jackets pricing Rs. 1000 to 2500, it can be expanded to produce fourth type jackets. In this way, same products can be produced to fill the gap and widening the product length. The same task is called line filling. The task of adding new more products of the same line going beyond the current prices is called product stretching. Three types of strategies can be adopted to stretch the products. They are mentioned as follows:

i. Stretching up: The task of adding new goods of more prices to the existing same product line is called stretching up. This is made clearer by the given figure.

Stretching Up

ii. Stretching down: The task of adding new products of low prices to the existing same product line is called stretching down. This is made clearer by the given figure:

Stretching Down

iii. Stretching both ways: Many types of products can be included in any product line. In this way, the task of adding new products of both more price and low price is called stretching both ways. This is made clearer by the following figure:

Both Ways Stretching

b) Line Contraction

Some products of same line cannot influence target market segments. Such products which cannot influence market and cannot meet market demand should be abandoned or given up. The task of decreasing products or removing them from market is called line contraction. The products which are demanded in market should be encouraged and supplied by removing unnecessary dump of the unsold products. This can help to face market competition and the product can control markets.

2. Product line modification

Any firm or organization should meet market competition and customers’ wants in any way. Besides, improved technology also should be gradually adjusted. This means, product line should be regularly modified and modernized. Such activities are called product line modification. The task of product line modification is compulsory for any firm or business organization. So, the product line manager should take proper decision by researching, studying and analyzing market.

3. Product line featuring

Attention of various groups and classes of customers should be attracted towards products. For this, both low price and high price products should be included in product line. Low priced products attract price sensitive group of customers and the high priced products attract class sensitive customers. That means, low priced products attract the customers having low purchasing capacity and high priced products attract the customers having high purchasing capacity. This can meet the goal of the company or firm.

Product Mix Strategies

The form of all products as a whole presented by producer or seller to sell in the target market is called product mix. In this, product line and unit of the products are integrated. The main products of four product lines of Avon have been mentioned here. They are called cosmetics product line, jewelry product line, fashion line, fashion product line and household product line. In each product line, sufficient auxiliary product line or products may be included. The decision to be taken on width, depth, length and consistency of products is called product mix strategy. In other word, the decision to be taken on product line, auxiliary product line or on product is called product mix strategy.

At the time of distributing products for sale, product mix strategy should be adopted. Generally, four strategies can be given priority in product mix strategy. Such strategy helps product sellers in their functions. The main strategies which also help sellers can be mentioned as follows:

1. Width of the product

If any firm makes clear the number of product lines, it is called width of the product. Product line or product width can be expanded or contracted. The following table also has made easy to understand it.

2. Length of product

Length of product means all the things of product mix. Length of products can be changed by increasing the number of products or decreasing it. So, length of product can be increased or decreased according to the capacity of firm and wants of markets.

3. Depth of product

Depth of product indicates the number of the products belonging to a product line. Product depth can be changed by increasing or decreasing the number of units of products. In the above mentioned table, there are four things belonging to the tooth paste product line.

4. Consistency of product

Consistency of product line shows how many things are related to the use, production and distribution of the products. To increase the consistency of the product, related product should be added to the product line. If the consistency of the product is to be decreased, the unrelated products of the product line should be added.

Meaning of Marketing Mix

All the activities from market research to satisfy customers’ need is called marketing mix. This included the questions such as ‘What type of goods need to be produced? How to determine price of the goods? How and in which market to present the goods for sale? How to motivate the possible customers to buy the goods? The combination of these components is called marketing mix. Need of targeted market can be fulfilled with proper combination of marketing and success can be achieved in competitive market. James Colleton had first used the word ‘marketing mix’ in 1948. Neil H. Borden carried out a research on the concept of marketing mix in 1964 being influenced by the thought of James Colleton.

Product, place, price and promotion are included in marketing mix. Wants or needs of targeted market can be fulfilled with the proper mixture of these components. But there is no unanimity among writers and experts of marketing over the elements of marketing mix. The following experts and writers have claimed that the elements given below are included in marketing mix:

Albert W. Fray

The offering – product, packaging
Methods and tools – advertisement, personal selling

J. E. McCarthy

Products
Place
Price
Promotion

W. Laxer and E. J. Kelley

Goods and services mix
Communication mix
Distribution mix

Philip Kotler

Price
Promotion
Place
Product

Petter D. Bennett

Product
Price
Promotion
Distribution

W. J. Stanton, M. J. Etzel & B. J. Walker

Product
Price
Distribution
Promotion

The above given facts make us clear that there are differences among experts and writers over the marketing mix. A. W. Fray has supposed offering, methods and tools as the elements of market mix whereas J. E. McCarthy has supposed product, place, price and promotion as the elements of market mix. Similarly, Lazer and Kelley have supposed goods, and services mix, communication mix and distribution mix as the elements of market mix. Philip Kotler has supposed price, promotion, place and product, and Stanton, Etzel and Walker have supposed product, price, distribution, and promotion as the elements of marketing mix. Similarly, Petter Bennett has supposed product, price, promotion and distribution as the elements of marketing mix. The views of McCarthy and Kotler are found same about the marketing mix.

Now, a new concept of marketing mix has been developed. It is called ‘mega marketing’. According to this concept, the six elements of marketing mix are price, promotion, place, product, power and public relation. Different writers and experts have defined marketing mix as follows:

According to Philip Kotler, “Marketing mix is the setting of the firms of marketing decision variables at a particular point in time.”

According to William J. Stanton, “Marketing mix is the term that is used to describe the combination of the four inputs that constitute the core of company’s marketing system: the product, the distribution system, the price structure and the promotional activities.”

According to Pitter D. Bennett, “Marketing mix is the marketing program including product conception and development, pricing decision, promotion of the product and distribution to consumers.”

According to Jerome E. McCarthy, “Marketing mix is the controllable variables, which the company puts together to satisfy its target market.”

According to Thomas A. Staudt and Donald A. Taylor, “Marketing mix refers to the actual work that must be done to reach target market and achieve corporate objectives.”

In conclusion, the mix of activities done to satisfy the wants of target market is called marketing mix. Products, place, promotion and price are the elements of marketing mix. Organizational goal cannot be achieved without proper mix of these elements of marketing.

Components of Marketing Mix

The mix of activities done to satisfy the wants of target market is the marketing mix. The writers and experts of marketing are found different in their views about the elements of marketing mix; however, the main elements of marketing mix are products, place, price and promotion. Success can be achieved through the proper mix of these four elements. The following figure makes the elements of marketing mix clearer.

Elements of Marketing Mix

As the first letter of all the four elements of marketing mix is P, it is also called 4Ps of marketing. All these elements of marketing mix have also their own elements. This is made clear by the following figure:-

Elements of marketing mix

1. Product Mix

The thing or material which satisfies the human wants is called product. This is an important element of marketing mix. In its absence, no activities of marketing can be done. Product mix includes the elements such as design of the product, quality, variety, features, specialty, branding, packaging, service, warranty etc. Firm or industry cannot satisfy the wants of target market in the lack of product. So, product, plan and development, standardization, grading etc. should be seriously considered. Only attractiveness in looking does nothing, the product should also be good quality. Otherwise, the product cannot compete in market. Similarly, brand, packaging and labeling of the product also play important role in market. Name or brand of the product should be short, attractive and easily memorable and packaging should reflect the features of the product. Besides, the packaging should be attractive and cost effective. Labeling should give necessary information about the product and the firm should be fully responsible for the information. Warranty should also be given in order to increase the demand of the product in market, because the customers like to buy the products having warranty rather than those of no warranty.

The following points make the elements of product mix clearer:-

Quality of product
Product design
Standardization and grading of product
Variety of product/or product line and items
Branding of product
Packaging of product
Warranty of product
Features of product
Product planning and development
Services

2. Place Mix

The other important element of marketing mix is place. The entirety of different activities to supply products to the targeted market is called place mix. Mainly the channel of distribution and the activities related to physical distribution are included in place mix. Distribution channel includes agents, dealers, wholesalers and retailers whereas order processing, warehousing, material handling, inventory management and transportation are included in physical distribution. If the channel of distribution and physical distribution is not good, it affects adversely. So, physical distribution should be made according to the nature of product through proper channel. Generally, direct distribution channel becomes appropriate for receiving and proper means of transport should be used. Considerable quantity of stock should be kept. If the products, in the quantity, to the place and at the time as wanted by customers are supplied, sale quantity can be increased. So, this also should be wisely considered. The following points make it clearer.

The elements that are included in place mix are:

Distribution channel

Agent
Dealer
Wholesaler
Retailer
Direct

Physical distribution

Order processing
Warehousing
Material handling
Inventory management
Transportation

3. Price Mix

The amount to be paid by customers for any goods is called price. Price is the measure of exchange. The price of any goods should agree with the quality of the goods. Price is the other important element of marketing. The price of goods directly affects the quantity of sale. If the price of goods is low, sale becomes high, and if the price is high, sale becomes low. In other words, the lower the price, the higher becomes quantity of sale. So, the price of goods should be minimized by minimizing production cost as far as possible. As the customers pay price for the quality, the utility of the goods should be equal to the price. Otherwise, the goods cannot get popularity in markets and also cannot compete with the substitution goods. While determining the price of any product, all the elements affecting it should be analyzed. Price mix includes discount, terms and conditions of sale, price list, production cost, price of substitute goods, allowances etc. This is made clearer by the following points:

Elements of price mix:

Trade or cash discount
Credit period
Terms and conditions of sales
Setting price list
Cost of goods
Price of substitute goods
Allowances

4. Promotion Mix

The other important element of marketing mix is promotion. All activities and efforts to be made in order to increase sale quantity as a whole is called promotion mix. This includes advertisement, publicity, personal selling, exhibition, free sample, request, and pestering. The task sale promotion is creative as well as artistic one. Success can be achieved in the competitive environment by increasing sale quantity through sale promotion activities. In this competitive age, increase of sale quantity cannot be imagined without sale promotion activities. So, the customers should be persuaded to realize the need and be motivated to buy goods. Otherwise, goods of whatever the best quality, they cannot be taken out from warehouse. It is also said that those who become active and dynamic can get success but those who are lazy can get nothing. Even if the goods are bad, promotional activities can create demands for them. But without any sale promotional programme, even the best quality goods cannot be sold. The elements of sale promotion have been presented in the following points for easy understanding:

Elements of promotion mix:

Advertising: Radio, TV, Newspaper, Internet etc.
Sale promotion: Premium, exhibition, free sample etc.
Personal selling: Salesmanship, experience, training, politeness etc.
Public relations: meeting and contacting
Publicity: Propagation program
Service after sale: Exchanging the sold goods, free repairing, instructing who to use and keep safe etc.

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