8. Retell the text

Unit 5

Economie

1. Practise the pronunciation of the following words. Translate them into Russian.

Tangibles (n); Intangibles (n); Evaluate (v); Advertising (n); Guarantee (n); Dimension (n); Perceive (v); Perception (n); Enhance (v); Predisposition (n); Diversify (v); Saturate (v).

2. Read the text and answer the questions:

1) What do people evaluate when they buy a product?

2) How does the price affect consumer perception of product value?

3) What can increase the product’s value in the minds of consumers?

4) In what connection are such companies as Proctor & Gamble and MicroMagic mentioned?

5) What is the difference between a product line and a product mix?

6) What is the difference between a product and a product offer?

7) Why must companies be careful not to diversify widely?

Developing a Total Product Offer

From a marketing management viewpoint, a product offer is more than just the physical good or service. A product offer consists of all the tangibles and intangibles that consumers evaluate when deciding whether or not to buy some­thing. Thus, a product offer may be a washing machine, car, or bottle of beer, but the product offer also consists of the:

Price.

Package.

Store surroundings.

Image created by advertising.

Guarantee.

Reputation of the producer.

Brand name.

Service.

Buyers’ past experience.

When people buy a product, they evaluate all these things and compare product offers on all these dimensions. Therefore, a successful marketer must begin to think like a consumer and evaluate the product offer as a total collection of impressions created by all the factors listed.

Let’s look at our highly nutritious, high-fiber, low-sugar breakfast cereal, Fiberrific, for example. The product offer as perceived by the consumer is much more than the cereal itself. Anything that affects consumer perceptions about the benefits and value of the cereal may determine whether or nor the cereal is purchased. The price certainly is an important part of the perception of product value. Often a high price indicates high quality. The store surroundings also are important. If the cereal is being sold in an exclusive health food store, it takes on many of the characteristics of the store (e.g., healthy and upscale). A guarantee of satisfaction can increase the product's value in the mind of consumers, as can a well-known brand name. Advertising can create an attractive image, and word of mouth can enhance the reputation. If a buyer has tried the product before, he or she has certain predispositions to buy or not. Thus, Fiberrific is more than a cereal as a product offer; it is a whole bundle of impressions in the minds of consumers.

The Product Mix

Companies usually do not have just one product that they sell. Rather, they sell several different, but complementary products. A product line is a group of products that are physically similar or are intended for a similar market. The product lines for Procter & Gamble include bar soaps, detergents, and dishwashing detergents. In one product line, there may be several competing brands. Thus, Procter & Gamble has many brands of detergent in its product line, including Bold, Cheer, Tide, and Ivory Snow. All of P&G’s product lines make up its product mix.

MicroMagic has introduced a product line of microwavable snack foods that is capturing the market. It has 80 percent of the frozen microwavable milkshake market and 45 percent of the frozen microwavable french fry market. The company hopes to add to its product line – microwavable snack foods – in coming years.

Product mix is the term used to describe the combination of product lines offered by a manufacturer. P&G’s product mix consists of product lines of soaps, detergents, toothpastes, shampoos, and so on.

In the case of automobile manufacturers, the product mix consists of everything from passenger cars to small trucks, large tractor trailers, and tanks. One auto manufacturer's product line for passenger cars may include large luxury cars, midsize cars, compact cars, minivans, and station wagons.

Manufacturers must decide what product mix is best. The mix may include both goods and services to spread the risk among several industries. Companies must be careful not to diversify so widely that they lose their focus and their competitive advantage. Coca-Cola, for example, produces five of the top-selling soft drinks. When it diversified into wine companies, a movie studio, pasta manufacturing, and television shows, the results were disappointing. When it bought Columbia Pictures, it increased production from 12 movies a year to 18. This was an attempt to saturate the market with various products to get increased market share, as they did with Coca-Cola. Well, the strategy simply does not work in movies as it does in soft drinks.