MARKETING MANAGEMENT(Subject Code: MBADS1-126) → LESSON 4 :TOPIC:PACKING AND LABELING We know about the four very important P’s of a marketing mix, namely Product, price, Place and Promotion. But did you know that many consider another P that is equally important- Packaging. That’s right, packaging of a product is a very important factor in marketing .What is Packaging in Marketing – Meaning Once the decision is taken on the brand, we have to consider the design and the make-up of the package and the labeling of the package. Branding, packaging and labeling are distinctly specialized activities, demanding the services of advertising experts. In reality it is not the product which is displayed and sold but it is the brand together with the package and the label which is sold or which enables to sell the product. In a sense your brand, package and label represent your product. Modern methods of packaging are valuable to the manufac¬turer to establish his branded products as distinct from those of his rivals. The more effectively a product is packaged the more effective is its identity and individuality. Package is advertising on the shelf, a means of attractive display in the retailers’ shops. Packaging alone makes possible branding and advertising of products e.g., tea, soap, cosmetics etc. Packaging may be defined as the general group of activities in the planning of a product. These activities concentrate on formulat¬ing a design of the package and producing an appropriate and attractive container or wrapper for a product. The container itself can act as a forceful though silent and colorful salesman at the point of purchase or an effective medium of advertisement encou¬raging impulse buying. Many a time, package design itself can act as a registered brand. Almost every article has to be packed to make a trip to the ultimate consumer. But packing is merely a physical action and provides a handling convenience, e.g., wheat, cotton, etc. Packing is necessary to prevent flowing out of such liquids as milk, drinks, etc. It is essential to maintain freshness and quality, e.g., ghee, sauce, etc. It can prevent the danger of adulteration, e.g., butter, cheese, spices, edible oil, etc. However, packaging is much more than mere packing. Packag¬ing is a marketing necessity. The public does not want just the product. It wants explanation, assurance, encouragement, confidence and praise, i.e., pat-on-the-back, all integrated or combined with a pleasant and eye-catching get-up or appearance on the top to gain action, i.e., close the sale- Thus, a good package ensures ultimate success of the product as a commercial venture. Package is an invaluable aid to decision-making by the customers. Under keen competition the consumer needs an effective means to recognize a difference and establish preference that will ensure repeated re¬purchases. Packaging does this job in a competitive market. That is why millions of rupees are spent on packaging and branding. Such huge expenditure is made for the simple reason that packaging and branding alone can sell your products. In fact, the amount spent on packaging is more than that poured into advertising. Packaging completes the sales cycle triggered by advertising. In the present age of consumer-oriented marketing approach (i.e. Buyers’ Market), packaging has gained unique importance. The utility reasons for packaging, viz., protection, identification and convenience are themselves exploited in selling and some features of the package may serve as a sales appeal, e.g., a reusable jar. Message on the label is a constant reminder to the user of the product. Packaging decorates and beautifies the product so as to lead the consumer to impulsive buying. Thus, the package serves in most cases as a vehicle by which the brand of the product is carried through to the consumers. In modern self-service stores, with mass display, well-designed packages attract attention, and through silent sales talk increase the sales volume. Packaging itself is a device of sales promotion. A customer will pay more just to get the special package—even though the increase in price exceeds the additional cost of the package, e.g., Supreme Lux Soap sold in an attractive re-usable box for lunch or tiffin. In short, packaging is an advance stage of packing and it demands the services of experts. It has assumed a specialised status in the process of marketing. ________________________________________ Classification of Packaging Kinds or methods of packaging will depend largely upon the nature of the contents in terms of their value, physical composition, and durability. The length of the distribution channel, the amount of handling which the container will receive, and variations in climatic conditions which may be encountered between the point of manufacture and sales are also to be taken into account. For example, liquid products require containers made of glass or plastics. Generally, electrical appliances require tin sheet containers. Similarly, for fragile (i.e., easily breakable or damageable) articles, wooden containers may be used. Packaging may be classified into three categories as follows: 1. Family Packaging: When the product of a particular manufacturer is packaged in an identical manner, it is known as family packaging. The size, shape, color, etc. of the packages will be similar for all his products. “Family brands” are made meaningful by using family packaging also. In such cases, packaging methods, materials used for packaging, the appearance, etc. will be one and the same for all the products of a firm. 2. Re-Use Packaging: Packages that could be used for some other purpose after the packed goods have been taken out or consumed, fall under the re-use packaging. Vegetable oils, and wellness drinks are being sold in re-usable plastic containers of different shapes. Re¬use packaging can increase the sales value of the product considerably. 3. Multiple Packaging: It is the practice of placing several units in one container. For example, liquor industry uses multiple packaging. ________________________________________ 8 Important Function Packaging is aimed at attaining two basic functions, the first to protect the product and the second to promote the product. According to Philip Kotler “protection, convenience and economy were the three traditional purposes attached to package.” But in this modern era, we need to add all the modern functions of packaging. Following are the functions of packaging: a. Containment: Packaging performs the basic functions of providing a container for a material. For example- consumer durables like televisions, refrigerators, washing machines, etc. are packed in cardboard cartons, vegetables, fruits and milk are packed in plastic cover. Beer and Milkmaid is packed in cans which are easy to open. Thus, the utilitarian function of packaging has the following advantages: 1. It protects the products from deterioration, spilling, spoilage and evaporation during its transit from manufacturer to consumer. 2. It enhances product use and convenience by keeping the contents clean and undisturbed. 3. It helps easy brand identification. 4. It makes product handling easier and safer to exhibit in super markets. b. Protection: Goods are to be transported from the place of manufacture to the ultimate consumer. This involves several types of risk. Packaging helps protect the goods from damage during transport and warehousing. It also removes the hindrance of risk by keeping goods safe and free from spoilage. Thus packaging helps make the transporting of goods easier and safer. c. Identification: Packaging helps to distinguish from one brand to another. It is mandatory that packages contain the name of the product, the maker, the ingredients, date of manufacture, expiry date, etc. This function of packaging has the following advantages: 1. Packaging makes product identification and differentiation both easy and effective. In a competitive market, unique presentation makes products look different from competing brands. 2. Package features communicate the product message and motivate consumers to buy the product. d. Convenience: Wholesalers, retailers, middlemen, warehouse keepers and consumers demand convenience in packaging i.e. they should be light-weight and conveniently packed so as to be carried by hand. For example- Amul Mithai Mate is packed in an aluminum container in an easy to open form. Similarly, ten tablets of Crocin are packed in a strip and soft drinks are packed in a glass bottle with lift off caps that required a bottle opener. These have also evolved to non – returnable, unbreakable aluminum cans. e. Attractiveness: Packaging enhances the appearance of the product. The design, colour, label, printed matter, picture etc. all add value to the packaging. For example- chocolates are always packed in attractive packets and displayed to attract the target group. f. Promotional Appeal: Products must sell themselves. This is possible, if they are placed in more attractive and eye – appealing packages. This has resulted in a number of innovations which appeal to the consumers. For example- Nescafe, Boost, Horlicks, etc. are now available in attractive glass jars. g. Re-Use: Nowadays several companies aim at providing “re – useable container”, once the product have been completely used. For example- health drinks like Boost, Horlicks, Nescafe, Pickles, Jams, etc. are sold in glass bottles that can be used for storing provisions in the kitchen. If not, they can be sold as scrap. h. Economy: Packaging should not create a financial burden for the company. Consumers prefer economical packaging options, because the packaging cost is included in the cost price. Hence, the packaging should be made attractive, appealing and economical. ________________________________________ Important Essentials From the seller’s point of view: 1. Packaging is a sales tool, 2. It identifies the maker as well as the product and carries the brand name, 3. The package label informs the buyer about inner contents and how to use them. 4. It is the biggest advertising medium. 5. It moves the product at the point of purchase. 6. It encourages impulse buying, 7. It establi¬shes a product image, and 8. It identifies the product with advertis¬ing. The following are the important essentials of packaging: 1. Protection: This is the fundamental function of packaging. The product demands protection until it is used or consumed. Package prevents damage or loss during transport and warehousing. Foreign trade without sound packaging is impossible. Air-tight package protects the quality of inner contents. Package can prevent the disappearance of volatile or gaseous articles, e.g, spirit, acid, gas, etc. 2. Dependable: Truthfulness and honest representation is the most important function and quality of packaging. Consumers rely on the package itself for the quality of the product inside the packing 3. Ease in Handling: Modern packaging facilitates easy handling and movement during the process of distribution. 4. Easy Identification: Identification is an important function of packaging, following closely protection and ease in handling. Your product can be identified by a consumer from the rival’s because packaging creates individuality and helps quick identification. Packaging enables branding and advertising. The product gains special and separate existence due to branding and packaging. 5. Convenience: Convenience in packaging is not simply a matter of customer service. Middlemen, wholesalers, retailers and warehouse-keepers, i.e., all agencies in the machinery of distribution, demand convenience. The size and shape of the package will deter¬mine the function of convenience, viz, adaptability. 6. Reasonable Cost: Costly package may be needed for fragile and very valuable products. It may be good for goods bought as gift. But in general cost of package must be reasonable. Lighter but sturdy packages can reduce cost of transport also. 7. Attractiveness (Selling Tool): Attractiveness is a major consideration in modern packaging. The design and the label on the package, printed matter, picture, layout or get-up of the package, color combination, all these are special aspects of the package and act as selling points of the package. Package must have an artistic appeal. Picture on the package adds to the attention value by drawing and holding the onlooker’s eyes on it. Prominent, clear and attractive advertising message given on the package label plays the role of a silent salesman—performing the functions of salesman— attracting attention, arousing interest, creating desire and gaining action (A.I.D.A. Formula). Promotional potency of packaging is tremendous. Packaging should be looked upon as a powerful tool of promotion just like other devices of promotion, e.g., salesman¬ship and advertising. Attractiveness, convenience of use and reusability are its significant demand creating factors. Reu¬sable packages or containers encourage repeat sales through -re¬fill packages. ________________________________________ Major Attributes of packing As a Product and As a Medium of Communication This can be divided into two heads, i.e. as a product and as a medium of communication. As a Product: 1. It should protect the content from spoilage or breakage. 2. It should be easy to open, close, and dispense from. 3. It should be safe to use. 4. It should keep the product from deteriorating. 5. It should be of proper size and shape. 6. It should be reusable or be sold as a scrap. 7. It should be economical cost wise. 8. It should be available in sizes, appropriate to the market segment reserved. As a Medium of Communication: 1. Packaging should be attractive. 2. It should project a favourable image of the product. 3. It should sell itself, i.e. it should play the role of a salesman. 4. It should be readily identifiable in a shopping situation. 5. It should act as a unique selling proposition. 6. It should have labels with the information, like date of manufacture, contents, net weight, expiry date, date of packaging, etc. 7. It should communicate on the usage of the product, precautions, benefits of the product, etc. 8. Lastly, it should not be deceptive or misleading in size, content, etc. ________________________________________ Types of Packaging Cost Various types of packaging cost are as follows: i. Material cost: It means the cost of the pack and quality control cost. ii. Storage and Handling Cost: This include the handling cost of bulky packages, heavy materials of construction, drums etc. iii. Packaging Operation Costs: This includes the cost involved in operations like, cleaning the package product filling – closing, labeling – unitizing, stenciling, handling cylindrical slums etc. iv. Storage of Filled Packages: This includes the cost incurred to shift the goods from one form of packaging to another. v. Transportation Cost of Filled Packages: This involves the transportation cost by sea, air etc. it depends on the size and volume of packages. vi. Loss and Damage Cost: It is related to the loss and damage during operation, transportation delivery etc. vii. Insurance Cost: It varies depending on the vulnerability of package, to cover the risk in transportation. viii. Obsolescence Cost: This cost involves when changes in the packaging materials, packages and labels happen. ix. Package Developmental Cost: This include the evaluation cost, pilot test cost, field testing cost, consumer research cost, feedback cost, final trial cost etc. ________________________________________ Packaging Strategies and Policies Every producer adopts a certain policy or strategy. There may be different types of packaging policies and strategies and a producer has to select any one of them. Use of a particular policy depends upon the needs, requirements and circumstances of the producer. Some of the important packaging policies and strategies 1. Transit Packaging: Every producer has to deliver the goods to its real consumers. Delivery of a product from producer to the consumer is the process involving many activities. One of these activities is the transportation of the product from the place of producer to the place of the consumers. Product must be packed in a manner that it may reach to the consumer in original conditions. Such packaging of the product is called transit packaging. Thus, transit packaging is that form of packaging which is meant to keep a product safe in the process of physical distribution. It is thus also known as “distribution packaging”. The materials generally used for transit packaging are the drums, wooden containers, tins, jute sacks, hardboard, etc. Main stress in this type of packaging is upon the safety of the product during transit. 2. Consumer Packaging: The packaging in which the product is finally delivered to the consumers is known as consumer packaging. Material used for consumer packaging may be a bottle of glass or plastic, jar, tin, plastic box, hardboard box, polythene bags, etc. Main stress in this type of packaging is upon the attraction of packaging. Packaging must attract the attention of consumers and it must be convenient for consumer to handle. 3. Product Line Packaging or Family Packaging: When a producer uses identical packaging for all the product items of a product line, it is called product line packaging or family packaging. This type of packaging is widely used by the producer of consumer goods and generally by the producers producing a large number of product items in particular product line. The best example of family packaging is packaging of shoes, slippers, etc. mainly by the producer of repute such as Bata, Liberty, Khadims, etc. 4. Protection Packaging: The basic function of packaging is to protect the product form breakage, pilferage, theft, evaporation etc. Packing of the food items, medicines are done in such a way so as to protect it from moisture, sunlight and high temperature. 5. Multiple Packaging: In this packaging strategy closely related products used by a single consumer are packed together. This strategy is economical and it also saves consumer’s time in buying different products. By packing different products in a single package, manufacturer saves packing material of different items and thus it is economical. Also consumer saves much time as he gets all the required items in one package. For example, pencil box contains pencil, pen, rubber, eraser, ruler etc. 6. Re-Use Packaging: Here the goods are packed in such a package which can be used again after consuming the product. This strategy promotes economy in the use of the product and also promotes repeat purchase by consumer. It helps in reducing pollution caused due to used packages. Re-use packaging, thus preserves the physical environment by increasing the life of packages. 7. Kaleidoscopic Packaging: Kaleidoscopic packaging is concerned with printing suitable and attractive cut-out figures, toy and cartoons on the package in order to attract the consumer and stimulate the demand. Pictures of fresh and juicy vegetables, fruits on ready to eat items give an impression of a healthy product. A healthy smiling child picture shown on various baby products signifies that the products will keep our child healthy. ________________________________________ Requisites of a Good Package Packaging is an important device of sales promotion. It acts as a colourful and silent salesman. It gives full information about the uses and features of the product to the users. It helps in giving individuality to the product. It may be noted that branding is not possible without packaging. Both are interlinked. Brand name and mark are to be printed on the package to make the product easily identifiable by the customers. In other words, the package must tell the product story at a glance. The basic purpose of packaging is to provide protection to the goods and to facilitate their easy handling and storage. But in the modern age of competitive marketing, packaging has assumed certain other objectives also. Packaging is used as a medium of publicity and as a silent salesman. It helps in preventing adulteration of goods and ensures their safety. In order to achieve its objectives efficiently, a good package should possess the following features: 1. Suitability: A package should suit the requirements of the goods to be packed in. That means the package designed should consider the size and quality of the product and the quantity to be packed in the container. 2. Protective: The package must be so designed that it protects the contents contained in it. Articles subject to deterioration in quality such as medicines, powders, acids, and edible oils require a special type of packaging. Wherever required, the package must protect its contents from sun, moisture, germs, etc. 3. Requirements of Consumers: The same product might meet the requirements of different segments of consumers who have different levels of income. The package may be more attractive and costly for selling the product to affluent users. It should be quite economical for selling the product to the users of the lower income group. For instance, polythene bags have become quite popular with the manufacturers of Ghee for selling it in small quantities, say 1 Kilogram, to the customers from low and middle income groups. 4. Packaging Materials: This factor is very important as it influences the cost of packaging. Materials to be used in packaging depend partly on the nature of goods and partly on its appealing power to customers. For instance sugar, food grains, cement, etc. are traditionally packed in gunny or jute bags and now in HDPE bags. Biscuits are packed in air tight containers or packets; so that they remain fresh, crisp and original in taste and flavor. Oils, Ghee, Jams, Pickles, etc. are stored in glass jars, metallic jars or tins. Materials used in packaging industry include glass, aluminium paper, tin, paper and card boards, cellophane, plastic, polythene and gunny bags. Their relative merits and demerits in terms of cost, utility, customer appeal have to be analysed before choosing any of the above materials for packaging. 5. Cost: The cost of package is to be considered in the context of nature and value of article and the nature of buyers. As a general rule, articles of common use such as sugar, soap, tea leaves, cereals, etc. should be packed in low cost containers. Articles of high value and catering to the requirements of high income group such as cosmetics, jewellery, etc. should be packed in attractive and durable packages. 6. Attraction Value: As far as possible, the package must possess attraction value. Design and label of the package, and the colour combination of the package are all important. Attractive packages earn reputation and increase sales and profits of the manufacturer. The use of a picture on the package is made quite often to attract the attention of people. The picture and other information printed on the package should be suggestive of the contents and its characteristics inside. It should be ensured that there is maximum information in minimum words. Attractive packaging is not always costly. Even the low cost packages can be made very attractive. It depends upon the imagination of the designer. 7. Size and Shape: The size and shape of packaging depends upon the type and value of product to a large extent. Size and shape of the package do add to its attraction value. They also facilitate proper display of the product at retail stores. 8. Durability: Durability of packages is also an important consideration. If a package is durable, it will be reusable even after the product has been consumed. For example, plastic containers of ghee, coffee jars and pickle jars are reusable. From publicity point of view also, such packages are quite useful. ________________________________________ Factors Affecting Packaging Decisions The following factors are to be considered while making packaging decisions. a. Size – The size of the package should be convenient and handy for the customer. For example- soft drinks are available in 100ml, 200ml, half a litre, one litre, one and a half litre, etc. b. Shape – The nature of the content determines the shape of the package. Moreover, it should be convenient and attractive to display in retail stores. c. Colour – The colour of the package also plays a significant role in marketing decisions. The colour should be attractive, eye – catching and at the same time relevant to the contents of the package. d. Material – The packaging material also needs careful consideration. The most commonly used packaging materials are metal, cardboard, aluminum foils, sack cloth, etc. But now, due to the growing importance of environmental protection, plastics are being used less frequently for packaging. Instead, environment friendly packaging materials are being used. e. Text – Usually, some form information is communicated to the consumers through the package. Now, it is mandatory to give the statutory warning, date of manufacture, expiry date, contents, date of packing etc.; for example “This fairness cream is only for external use”, or “Alcohol consumption is injurious to health”. f. Brand Name – The brand name should be prominently displayed on the package. The brand name differentiates a product from its competitive products. Hence, the package should contain the distinguishing brand name or brand label. g. Cost – Packaging cost is added to the cost of production. Hence, the packaging cost should be economical and minimum, so that the consumers are not over charged. Moreover, the cost of packaging also affects the cost of transportation, handling, storage, etc. ________________________________________Packaging Significance : Societal View of Packaging The various types of plastics have not only helped conserve or utilize the depleted natural resources but also revolutionized the concept of packaging. Plastics have proved to be much better substitutes to wood, cotton, metal, card board, paper, glass and so on. The new rigid PVC now manufactured by modern, computerized and automatic process both in the normal and non-toxic grade with printability and metalizing property is going to revolutionize the packaging systems for medical and food sectors and for consumer and industrial usage by thermoforming and twist wrapping process. In the Food Processing Industry the new plastic package offers strength, protection, presentation and consumer appeal. The recycling process of plastics right from collection of the garbage to segregation and conversion in prime form for reprocess and reuse has solved the problem of pollution. In India rag pickers contribute enormously to the estimated 40 per cent of plastic which is recycled. The ‘re-use’ culture is more prevalent in India, where plastic containers are re¬used several times before they are discarded. If environmentalists believe that less plastics would mean less waste, a German study indicates that without plastics the weight of packing materials would be 300 per cent higher, the volume of waste 150 per cent higher and energy consumed by packaging at least 100 per cent higher. Plastic recycling has reduced substantially problem of waste disposal and environmental degradation due to packaging. Social View of Packaging: Significance of societal view of packaging is summarized below: 1. Pollution control is a burning issue in packaging particularly in Western countries. Broken bottles, crushed cartons, and bent cans litter the streets and choke municipal dumps. This has created the solid waste problem in those countries. All packaging programmers must weigh environmental and ecological issues. 2. Resource scarcity is another problem. The same precious natural resources that are being wasted on non-returnable (disposable) containers, e.g., soft drink bottles and beer bottles, later create litter and pollution problem. Such a consumption pattern cannot be tolerated now. 3. Among the resources which are being wasted, energy sources are the most critical at present. Throwaway bottles use three times the energy of returnable bottles. The efficient, energy-saving, returnable bottles must be introduced. 4. Nutrition labeling, open dating (how fresh is the product), unit pricing, and grade labeling are the latest demands of consumers on all food products. ________________________________________ Consumer Problems with Packaging 1. Unless the package is transparent, the buyer cannot judge the contents by appearance. If quality information on the package label is absent, the buyer has to purchase almost blindly. 2. If the consumer wants a specific quantity, he may not have that amount when goods are sold in packages. 3. There is no feasible way to check weight and volume of the contents unless a buyer opens the package to ascertain the weight. Prepackaged shortages amount to about 20 per cent. 4. Package sizes and designs inflate the contents. ‘One Rupee off’ labels proclaim price reduction which may not be real. 5. Deceptive packages have several room-mates in trade practices. They are hidden declaration of contents, fine print, glorified illustrations, unexplainable fractions (3-7/8 Kilograms) etc. Consumers think that they are getting more when in fact they may be getting less due to the cunning package design. 6. Packages are same, contents are reduced and apparently same prices are charged. This method is popular in a period of rising prices. 7. Packages may create health hazards for consumers. Certain plastic food packaging has been shown to cause cancer (vinyl chloride inhaled by humans). Packages stored in godowns are susceptible to infection (rodents and insects nesting in packages). The Total Product Image: Image means a mental picture drawn by a fancy. A product image is the sum total of- 1. Inner value of the product, 2. Its ability to perform and give service and safety to user, 3. Packaging, 4. Branding, 5. Labeling, 6. Product warranty, and 7. Product services. The product image also indicates the goodwill of the product and its producer. In the product planning and development, we have to consider branding, packaging, labeling, warranty and services as these constitute the vital parts of marketing programme and these are closely interconnected in building up a bright product image in the market. Pricing decisions have strategic importance in any enterprise. Pricing governs the very feasibility of any marketing programme. Because it is the only element in a marketing mix accounting for demand and sales revenue. Other elements are cost factors. Price is the only variable factor determining the revenues or income. A variety of economic and social objectives came into prominence in many pricing decisions. We now come to the most absorbing question of pricing. ________________________________________ Labelling Definition: Labelling is a part of branding and enables product identification. It is a printed information that is bonded to the product for recognition and provides detailed information about the product. Customers make the decision easily at the point of purchase seeing the labelling of the product. .Labels must comply with the legal obligations. A company’s label needs to adhere to the Competition and Consumer Act 2010. According to The Food and Drug Administration (FDA), packaged and processed food items must have nutritional labelling. The Federal Trade Commission Act (FTC) states that cheating of labels and graphics is an offence and comprise unjust competition. The Fair Packaging and Labeling Act establishes compulsory labelling conditions, boosts independent packaging standards and grants federal companies to establish packaging regulations in certain industries. Types of Labelling There are different types of labels: • Brand label: It plays an important role in labelling as it gives information about the brand. It can be removable or non-removable. • Descriptive label: It specifies product usage. • Grade label: It describes the aspect and features of the product. Functions of Labelling The different functions of labelling are as follows: 1. Defines the product and its contents: A label is informative about the product’s usage and caution to be taken while using the product. Example, Red Label Natural Care tea mentions five ingredients in its label that provide immunity. 2. Recognition of product: Labeling assists in the identification of the product. Example, the brand name of a chocolate will help one choose from the rest of the confectionery items available. 3. Assorting of products: It means classification or grading of products according to different categories in the market. Example, shampoos are categorized as dry hair, normal hair and oily hair types and cater to consumers in the market with the dry, normal and oily scalp, respectively. 4. Assists promotion of products: It gives the customer the reason to purchase the product. Example, it attracts the attention of the consumer by displaying messages such as ‘20% free’ or ‘save rupees 15’ message in potato chips packet. 5. In compliance with the law: Labels should strictly abide by the law. Example, for tobacco, the label should mention ‘Tobacco is injurious to health’. Cigarettes also should have ‘Smoking is injurious to health’ as the statutory warning on its package. Importance of labelling 1.Provides Identification Labelling plays an efficient role in providing uniqueness & identity to products. It helps the consumers in the identification of products among large number of products available in the market. It prevents confusion among the people that can be created by the substitute products of other competitors. Therefore, through customer easily recognises its brand. For example, the Label of Dettol helps people in easy identification of its products. 2.Provides Description Label is a medium that communicates the information regarding the product to customers. It is basically a slip that contains detail like nature, quality, price, quantity etc. Customers can easily get each & every required information by simply reading labels. It will help them in making their decision during the buying process fast & easily. 3.Makes Products Comparison Easy Comparison is something on which customers relies to make the best & right choice. It has an important part in the buying process of the customers. Labelling gives each & every detail regarding the product on a small printed slip. Customers just by reading the labels of different products can choose the best one as per their choice. It enables the customers in understanding & checking product even before using it. 4.Helps In Marketing Labelling is considered an efficient sales tool for marketing of the product. It helps in the promotion of products easily. It adds attraction to the products. Labelling helps in attracting more & more products for the products. Many times the people are encouraged to buy a product just by seeing the labels of the product. Businesses should try to design attractive & small labels for their products. It will create a long-lasting influence on your customers. 5.Makes Products Grading Easy Grading is important function of businesses for categorisation of its products. Through grading, business divides their large varieties of products as per quality for a different class of customers in the market. Labels on products provide full detail regarding the quality & standard of product to customers. Customers easily recognises the quality of different products through reading their labels. It will enable them to make the right choice as per their needs. For example, Mother Dairy supplies different quality of milk in the market like full cream, half cream & toned milk. It provides all details on labels of their product package. 6.Protects Customers From Getting Cheated Labelling helps customers in the right choice. It helps the people in choosing a product that can fulfil all their demands. Customers can easily recognise fake products by seeing their labels. They can get all the details regarding the manufacturing date & date of expiry from labels. It helps in assuring the customers whether the product is right or not. Making the wrong choice during the buying process will have ill effects on customers. Therefore, it avoids all chances of wrong decisions during the buying process. 7.Provides Information As Per Law Business are required to provide certain statutory information regarding their products. It is mandatory by law & they are strictly required to follow it. Labelling is a means through which all required information required by law is provided on the product package. There are certain poisonous & hazardous products, with which providing safety tips & certain warning is very important to be mentioned. Likewise in the case of different tobacco products giving health warning is important. All these requirements of the law are fulfilled by business by printing labels with all these details. There are certain poisonous & hazardous products, with which providing safety tips & certain warning is very important to be mentioned. Likewise in the case of different tobacco products giving health warning is important. All these requirements of the law are fulfilled by business by printing labels with all these details. Advantages and Disadvantages of Labelling in Marketing Disadvantages of Labelling 1.Raise The Cost Of Product The first and foremost limitation of labelling process for every organization is that it leads to increase the cost of product. Process of labelling requires heavy expenses in designing and printing of label slip to be attached to with every product. Company generally provides three type of labels with their items that are brand label, grade label and descriptive label. All of these eventually raises the manufacturing cost of product for business which increase its price. 2.Not Ideal For Illiterates Label is of no use for peoples that are not literates enough for understanding the written information. Under the labelling process, all details are communicated to customers in written form by printing it on product package. A person should know to read and write for benefiting form products labels otherwise all efforts of company would go in vain. 3.Require Standardized Products Process of labelling is effective only if company is manufacturing a standardized range of products. Labels are standard messages which are printed on every product package. It would be inconvenient for companies to design separate labels for every product in case if they are not standardized. 4. Leads To Pre-Purchase Discarding Of Product Another major disadvantage of labelling process is that it enables customers in doing a comparison of brand products with other products without even purchasing them. They are able to detect the advantages and disadvantages of products in light of other competitive products before purchasing them. It will eventually lead to discarding of one product in favor of other one.

LESSON 3: DIFFERENTIATION AND POSITIONING Differentiation vs positioning The previous article (i.e., market segmentation vs. target marketing), explains how companies segment market and how they target one or more segments to sell their output. After segmentation and targeting, the next step that comes in place is the differentiation and positioning through which companies decide how they would be serving their customers falling in their selected or targeted segment(s). Companies first go for differentiating their products from other available products and then strive to achieve a distinct position in the minds of consumers as well as in the market through positioning. The article differentiation vs positioning elucidates the meanings of and the differences between the two terms – differentiation and positioning. Definitions and meanings Differentiation Differentiation refers to the marketing strategy that a company adopts to make its product or service distinct from all other products or services available in the market. Through differentiation, the products stand out from all other competing products, such that they offer unique value and become attractive to the customers. When perceived and valued by customers, product differentiation can bring brand loyalty and competitive advantage for companies by making their product or service superior to others in the eyes of customers. The objective of differentiation is not just to make the product stand out of competitors’ products but to stand above them. Differentiation can be achieved through adding or modifying one or more of numerous attributes like price, quality, performance, design, features, order processing, availability, timing, location, distribution and after sale services and support. Differentiation does not require companies to start a product from scratch. A company can ad some important or appealing feature to its one or more of its existing products or services at any stage. For example, customer support is extremely important for a webhosting business. A web hosting company like Bluehost may focus on providing supports to its customers better than ever. A cosmetic company may add to its website a tool for finding the most appropriate foundation shades. A food restaurant may launch an android/iOS app and a website to receive online orders and start a home delivery service in particular area. Differentiation must be thought and carried out from buyers’ perspective and not from company’s own perspective, which means the buyer must be able to realize and understand the value added to the product through differentiation. Merely a change made to a product or service that don’t create a sense of value among consumers can’t be regarded as differentiation. For successful and result oriented differentiating, companies must consider the following important points:  The differentiation should result in added value. It requires a detailed market research and outlining the existing market gaps in terms of unfulfilled needs, issues and challenges faced by the customers in targeted market and comprehending how the effective solutions can be offered.  The customer should be able to perceive the value added through differentiation. If the customers are unable to understand the value, it means either the differentiation actually has not added any value to the product or the company has failed to communicate the same to customer.  The differentiation should be such that the competitors are not able to easily copy it, i.e., the added value should be exclusive to the organization for a long time.  The value introduced through differentiation should be affordable which means the customers are agree and are financially able to pay for the additional features or attributes added to the products. Positioning Product positioning is the outcome of many previous marketing efforts and activities like market segmentation, target marketing and product differentiation. If a company has successfully performed in these steps, it would certainly position itself successfully. Product positioning (or just positioning, for short) refers to the place occupied by a product in the minds of the customers in relation to other competing products in the targeted market or segment. It basically signifies how the company would like the product to be considered by its customers. It includes feelings, perceptions and impressions that actual as well as potential customers should have about the products being offered by the company. Positioning should make the customers think that the product or service is capable of providing greater value than any other. To achieve this, companies or marketers need to determine why customers should buy their products rather than an alternative or another similar product offered by someone else. To develop a distinct identity of the product in the minds of the customers targeted segment, the marketers highlight relevant and appealing aspects while striving for product promotion. These include product category, product attributes, pricing strategies, unique selling propositions, brand image, quality of both product and after sale service etc. A company’s overall marketing efforts need to be consistent with its positioning strategy. The marketers should be capable of communicating and delivering product value that is unique from that offered by their competitors. Difference between differentiation and positioning The four points of difference between differentiation and positioning are given below: 1. Meaning  Differentiation is the strategy by which one or more important, unique and appealing differences, in terms of design or actual usage, are added to the product to make it stand out of same like products.  Positioning is the strategy that companies use to create a specific position for the product in the minds of consumers, both actual an potential 2. Objective  The objective of differentiation is to attract customers and compel them to choose your product over another in the market on the basis of additional or unique features that it offers.  Positioning, on the other hand, has the objective of obtaining a specific place in the minds of consumers. It aims to define the way people think about your products and is achieved through making the people realize that the offered product has some rich and unique capabilities in terms of design, look or actual usage. 3. Specific to  Differentiation is more product-specific in that it pertains to the product or service being sold.  Positioning is specific to the audience in that it seeks to influence the perception of customers regarding a given product or service. It is more pertinent to the customers that are being targeted by the marketers. 4. Based on  Differentiation can be based on product features, performance, attributes, quality, benefits offered or uniqueness.  Positioning is based on promotional aspects of the product and is carried out by advertising products as being better than other similar products available in the market. Differentiation vs positioning – tabular comparison A comparison of differentiation and positioning in tabular form is presented below: DIFFERENTIATION VS POSITIONING Meanings Strategy used to identify the features of the products that are distinct from other competing products in the market Strategy used to create a specific image of the product in the minds of the consumers Objective Attract customers to choose your products over other competing products Determine how people think about your products and engage with it Specific to Specific to the product or service Specific to the customers and to influence their perceptions Based on Features, quality, benefits or uniqueness of the product Promotional aspects of the product Conclusion – differentiation vs positioning Differentiation and positioning are two consecutive and highly related elements that occupy a prime importance in a company’s marketing strategy. Despite the differences between them, they both have the same objective and are closely related to each other because product or service is positioned on the basis of its distinct features or qualities. Differentiation is considered effective only when it creates enough position for the product offered for sale within the target market. The concept of differentiation and positioning is applicable to all industries but is of special importance in a market with heavy competition. The purpose is to make the customers aware and realize what we can deliver that others can’t and how and why the unique capability of our product has value for them. To know whether the product is differentiated and well positioned, keep an eye on sales numbers and customers’ engagement with your product. Finally, if the numbers are not satisfactory, doing a little bit more research and changing or adding one or more new features might work.

LESSON 5 :TOPIC: NEW PRODUCT DEVELOPMENT Products are broadly classified into two categories – consumer products and industrial products. Consumer products are products that the ultimate consumer purchases himself for direct use. The consumer purchases these consumer products to satisfy his personal needs and desires. Definition: Product development refers to the creation of a new product which has some utility; or up-gradation of the existing product; or enhancement of the production process, method or system. In simple words, it is all about bringing a change in the present goods or services or the mode of production. • In simple terms product development comprises of the following Creation and Innovation pave the way for new inventions and generation of a new product which provides utility to the consumers. • Improvement of the existing products is essential to upgrade the old products and to attain perfection. • Enhancement of the existing production process, methods, techniques and system helps in the betterment of customer experience. It is more cost-efficient for the organization too. For Example; One of the most popular electronic brands Sony came up with the idea of coloured television in the year 1960. Sony, with its new product development, has given a modern edge to the technological advancement in the entertainment world. elements: • Creation and Innovation pave the way for new inventions and generation of a new product which provides utility to the consumers. • Improvement of the existing products is essential to upgrade the old products and to attain perfection. • Enhancement of the existing production process, methods, techniques and system helps in the betterment of customer experience. It is more cost-efficient for the organization too. For Example; One of the most popular electronic brands Sony came up with the idea of coloured television in the year 196o. Sony, with its new product development, has given a modern edge to the technological advancement in the entertainment world. Content: Product Development 1. Identifying the Need 2. Process 3. Conclusion Identifying the Need for Product Development Have you ever wondered; Why is the change needed in organizations? Why do the companies keep on modifying their ways? What makes companies invest a tremendous amount in research and development? Product Development November 30, 2018 by Prachi M Leave a Comment Definition: Product development refers to the creation of a new product which has some utility; or up-gradation of the existing product; or enhancement of the production process, method or system. In simple words, it is all about bringing a change in the present goods or services or the mode of production. In simple terms product development comprises of the following elements: • Creation and Innovation pave the way for new inventions and generation of a new product which provides utility to the consumers. • Improvement of the existing products is essential to upgrade the old products and to attain perfection. • Enhancement of the existing production process, methods, techniques and system helps in the betterment of customer experience. It is more cost-efficient for the organization too. For Example; One of the most popular electronic brands Sony came up with the idea of coloured television in the year 196o. Sony, with its new product development, has given a modern edge to the technological advancement in the entertainment world. Content: Product Development 1. Identifying the Need 2. Process 3. Conclusion Identifying the Need for Product Development Have you ever wondered; Why is the change needed in organizations? Why do the companies keep on modifying their ways? What makes companies invest a tremendous amount in research and development? To answer these questions, let us go through the following reasons for which companies plan for product development: Slow or Static Product Growth When the company notices a downfall in the product performance regularly, which is not due to change in the economy or other factors which are beyond control, it should inspect the product line to find out the reason. Pressure to Lower the Product Price A business which is controlled merely by the price factor may land nowhere. If a company encounters that the customers are shifting to the competitors’ product due to the price factor and land up cutting down the prices of its product, it must opt for product development. Diminishing Business from the Most Valuable Customers The company finds out that its high revenue-generating customers prefer the competitor’s product over its product. Then, it must analyze the change in the customer’s demand and the features offered by the competitor’s product to meet that requirement. Decrease in Inquiries by Prospective Customers A product itself has the capability of acquiring customers. If the product becomes obsolete or unworthy for its buyers and is unable to attract inquiries from the potential customers, the company must consider product development. Rise in Salesforce Turnover When it becomes difficult for the sales team to sell a particular product to the customers, they tend to grab better opportunities in other companies. This leads to salesforce turnover. It signifies that something is wrong with the product due to which it is being rejected in the market. Entry of New Competitor with Innovative Product A new competitor enters the market and successfully acquires the company’s prevailing market share. The company needs to analyze that the competitor’s innovative product is providing a higher level of satisfaction to the customers, which the company’s product failed to do. Change in Customer’s Demand When the company finds out that the customers are frequently demanding a particular change in the product or seeking for some additional feature which the competitor is offering at the similar price, it should look forward to product development. Competitors Exit the Market Sometimes, many competitors leave the market since they have sensed the downfall. At this point, the company must look up to product development to retain the customers through innovation. Product Development Process Product development is a strategic approach. It should be well planned and systematically executed to achieve desired results and avoid loss. Given below is the step by step process for introducing a new product in the market: Idea Generation: The first step is knowing customer’s requirement through market research by taking feedback, conducting surveys and going through the competitor’s product. From this research, a product idea is developed. Idea Screening: The product idea is to be well studied and investigated to find out the need for introducing the new product, the requirement of additional machinery, selection of marketing channel and its break-even point. Concept Testing: The next stage is enquiring about the product feasibility by conducting concept testing. The new product idea is revealed to a group of consumers, and they are asked to share their response over it. If the majority is in favour of the product, then further steps are to be taken. Business Analysis: In this step, the organization decides whether the product is financially viable for it or not. Product’s demand, cost, competitiveness, profitability, expected sales, overheads, etc. are analyzed. Product Development: At this stage, the manufacturing of a new product, it’s financing, marketing and distribution as well as advertisement and promotion takes place. However, initially, a small quantity is produced as a test batch. Test Marketing: The product is then launched in the market on a small scale. If it attains success and can generate customers, the large-scale production is planned. If the product is rejected in the market, the company finds out the shortcomings and rectifies it. If the product fails again in the market, the company tends to dump it. Commercialization: At this point, the company executes large-scale production and distribution of the successful new product. It advertises and markets the product on a massive scale to acquire a considerable customer base. Review Market Performance: Lastly, the company keeps track of the product’s performance in the market to know customer satisfaction level, demand, profitability, sales volume, competitor’s strategy, the satisfaction of the middlemen involved, etc. Conclusion Product development is essential for the growth of all; the business, the consumers and the economy. No business can survive the competition without adding the element of innovation to its product line. Developing a successful product for the consumers require a lot of brainstorming, planning, research, trials and rectification.

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