MARKETING MATERIAL

Product Package Product Audit Product Strategy Market Penetration

Product Development Market Extension Diversification Ansoff Matrix

Product Life Cycle Competitive Saw Stepped Saw Marketing Depreciation

Product Portfolios Boston Matrix Relative Market Share

Criticism of Boston Matrix Advantage Matrix Marketing Myopia Product Mix

Product Plan Packaging Services Features of Services Intangibility

Inseparability Variability Perishability Core Services Social Marketing

9435 MARKETING Chapter 5

- Product or Service Decisions

Introduction

The focus of suppliers' activities is the product or service that

is offered. While all other aspects of marketing have their part

to play, it is the product or service itself that ultimately

matters to the consumer. By defining the product/service offer

(Which, in its extended form, will involve most of the 4 Ps), the

supplier defines almost all of the marketing mix.

The strongest, most influential, theories of marketing have been

developed in this area. The Ansoff Matrix, covering degrees of

diversification, is one example. The most important and pervasive

--in theory if not in practice --is, however, that of the

Product Life Cycle (PLC). A significant amount of other marketing

theory relates to the PLC, and hence the theory behind it is

crucial; if, as this chapter shows, often fundamentally flawed in

terms of practical applicability. The other main element of

theory is the Boston Matrix; which is also very influential --

and again also potentially flawed in practical use. This is

based, in part, upon the assumption of `economies of scale' (or

`learning effects'), which are also explored. Despite their

attractive simplicity, however, these theories typically have

only specialized applications.

Beyond this theory, the product specification is developed,

particularly in the area of quality. The last part of the chapter

extends this, in some detail, to meet the specific needs of the

service sector in general; and of non-profit organizations in

particular.

So far we have considered that part of marketing which deals with

the processes of finding out what the customer wants; arguably

the most important element of marketing --and the one which is

most often neglected. But knowing about customer wants is not

sufficient in itself, and so we now turn our attention to the

responses of the producer or supplier.

It is worth reiterating that the 4 Ps (Product, Price, Place and

Promotion) simply provide a convenient framework. But whatever

the framework, 'the most important contribution to the overall

marketing mix will almost certainly be the product or service

itself'. A good product might sell even if the promotion is

mediocre. A bad product will rarely obtain repeat sales, no

matter how brilliant the promotion is. Unilever developed a

toothpaste dispenser which was able to add stripes to the paste

coming out of the neck of the tube. In the USA this feature was

emphasized using the slogan `Looks like fun, cleans like crazy'.

It was a smash hit, but repeat sales were dismal --because the

`fun' only justified one purchase. In the UK, however, the

company sold the product on the basis that the stripe contained

the flouride and was an essential component --it is still going

strong. Despite the feelings of some advertising agencies, and

the echoes in popular myth, a good product or service is the

essential prerequisite to a successful marketing campaign; a fact

which is clearly recognized by most managers.

The importance of the product was demonstrated in the early days

of the market for portable PCs. Compaq, then a small start-up

company, and IBM met head on. It should have been no contest. Yet

the customers judged the Compaq product to be better, albeit only

marginally so, and eventually IBM had to withdraw its product

from the market; leaving Compaq to go on from strength to

strength.

The `Product Package'

At this stage it is worth pointing out that the product (or

service) as perceived by the customer is a much more complex

construct than is normally allowed for. 'Indeed, the most

important specification of that product or service is the

`positioning' described in chapter 6'.

For example, in the case of branded products, such as Heinz Baked

Beans, the physical product itself is submerged under layers of

image, not to say emotional involvement built up from childhood,

to which decades of advertising and promotion have contributed.

Even with industrial goods, such as computers, it is often the

intangibles which are most important. Hence IBM's philosophy of

`customer service'.

This overall combination of product, packaging and service is

often referred to as the `extended product'.

Confusion may sometimes be caused by taking too sophisticated a

view of superficial answers by consumers. As Gardner and

Levy - 1 - point out:

... the reasons people usually give for using a product are

inclined to be either strongly rationalized or related to the

product's most obvious purposes ... When such goals as these are

taken at their face value, and considered to be the end of the

matter, they lead up many blind alleys. The belief that people

are fretting over these minute differences ... results,

sometimes, in a shrill focus on product merits beyond all

proportion and sensible differentiation.

This is the reason why the more sophisticated research techniques

(such as repertory grids) have been developed to explore the

consumer's hidden motivations.

The `Product Audit'

For existing products or services, the starting point is to

decide exactly what you have. As Drucker - 3 - says:

The best way to come to grips with one's business knowledge is to

look at the things the business has done well, and the things it

apparently does poorly. This is particularly revealing if other

apparently well-managed and competent businesses have had the

opposite experience.

This is not as obvious as it might at first seem. Even the

`physical' features of the brand may need to be reviewed; and the

facts book added to, because those managers (possibly including

the brand manager) who have become used to seeing the brand

perform --in the way it has always performed --may have

forgotten what other features it may potentially have.

AUDIT 7.1

Prepare a short description of the important features of your

organization's main products or services, together with the

technology that lies behind them.

Are there other features, or aspects of the technology, which are

not currently important but which might be useful in future?

The main feature of a product audit, though, is to look at the

products or services in terms of what the customer sees in them.

The brand which counts is the one that the 'customer' sees.

Some of the factors which may need to be examined in this review

or audit might be:

What is the market segment that this `brand' addresses?

Who are the existing customers?

Who are the prospective customers?

What benefits are these customers and prospective customers

seeking?

How does the product or service match up to these customer needs

and wants?

How does it compare with competitive products?

You will later find that there are other, more detailed and

sophisticated questions that will also need to be examined. But,

for the moment, the basic question, `How does the customer view

the brand?' is a good starting point.

AUDIT 7.2

Now conduct the second part of your product audit and answer the

list of questions above in terms of your organization's main

brands.

These questions could be addressed in the form of a 'benefit

analysis'. This is a more rigorous analysis of the benefits

that the product(s) offers, in terms of what the customer needs

and wants. In sales-oriented organizations it is often described

as 'feature/benefit' analysis; though this too frequently

substitutes a mechanistic, product-oriented set of supplier-

determined `benefits' to match the chosen list of product

`features'.

'The list of customer benefits must, therefore, be very

carefully compiled, preferably using sophisticated market

research, to see it from the customer's viewpoint'. The list

also needs to be clearly 'prioritized', to be ranked in

order of what the customer considers most important: otherwise

the temptation is for the supplier to concentrate on the items

where the organization can excel, regardless of the fact that

these are relatively unimportant to the customer. On the other

hand, the 'differential benefits' which the supplier can

offer, as against the competitive offerings, may be very

important; particularly if most of the other important benefits

are offered by all brands --and do not differentiate between

brands in the market. Equally, 'the benefits offered by the

organization itself' should not be ignored; it is often these

`service' and support elements, rather than the product, which

are the final influence on the customer's buying decision.

Product (or Service) Strategy

The `product' strategy, the route by which to reach your long-

term product objectives, will need to be developed specifically

for each product or service. But, in general, there are said to

be four basic product strategies for growth in volume and profit

(which is what shareholders conventionally demand):

market penetration

product development

market extension

diversification

These were originally described by Igor Ansoff; - 5 - and were

subsequently developed as the well-known `Ansoff Matrix':

Product

Present<>New

Present<>Market penetration<>Product development

Mission (market)

New<>Market development<>Diversification

Market Penetration

The most frequently used strategy is to take the existing product

(or service) in the existing market and try to obtain improved

`penetration' (or, more accurately, an increased share) of that

market. There are two ways in which this can be achieved:

Increasing sales to existing customers

Finding new customers in the same market

In general, the first strategy means persuading users to use

more. This may be achieved by motivating them to use the product

on more occasions, perhaps by replacing an indirect competitor;

for example, inducing a house-hold to eat beans on toast an extra

time each week, instead of fish fingers. It may, on the other

hand, simply be to use the product more often without any need to

take business from competitors; as Unilever used Timotei to

promote the more regular shampooing of hair. Possibly it may be

to use more each time; promotions offering `30 per cent more

free' may have, as one objective, the intention of persuading

customers to get into the habit of using more.

The second strategy almost invariably relates to taking business

directly from competitors, increasing both penetration and market

share.

Product (or Service) Development

This involves a relatively major modification of the product or

service, such as quality, style, performance, variety and so on.

Returning to our example of the car market, the provision of

`high-performance' versions of the existing models can be used to

extend the ranges to cover additional customers. Similarly,

adding sausages to tinned baked beans will possibly cause some

existing users to increase their usage, but may also attract new

users.

To be most effective, such developments should extend the

`product' into a new segment, or to a new competitive position in

relation to the clusters of consumers.

Market Extension

This depends upon finding new uses for the existing product or

service, thereby taking it into entirely new markets; as Apple

did in persuading customers to use its PCs for desktop

publishing. Alternatively, this may be achieved by moving into

other countries; in this context, most export operations can be

viewed as `market extensions'.

Diversification

This quantum leap, to a new product and a new market, involves

more risk, and is more normally undertaken by organizations which

find themselves in markets which have limited, often declining,

potential. One obvious example is that of the tobacco companies

which have diversified --often at considerable cost --into

areas as diverse as cosmetics and engineering. However, it can be

a positive move to extend the application of existing expertise;

as Amstrad diversified from consumer electronics to home

computing and thence to business computing. But beware of

diversification which is undertaken simply because the grass

looks greener in the new market.

Heinz, for instance, has steadily (and successfully) extended

beyond its `57 varieties' core business (which revolved around

baked beans and soups). Its `Weight Watchers' brand is now worth

more than $300m in the US. But it should be noted that, in common

with many other similarly successful diversifications, this was

built on a logical extension of the company's existing

strengths.

The Ansoff Matrix

As already mentioned, these four basic product strategies are

often shown in a modified version of the `Ansoff Matrix' - 7 -

(figure 7.2). The four alternatives are simply the logical

combinations of the two available `positioning variables'

(products and markets).

A number of such matrices (but with different

characteristics/dimensions/variables) are used in this book,

since this is one of the favourite graphical devices adopted by

marketing academics. All they are intended to convey, however, is

a useful visual representation of the four categories to be

obtained by splitting each of two groups of variables (or

`characteristics' or `dimensions') into two further categories --

giving four possible permutations. The resulting `pigeon-hole'

matrix just shows these four resulting combinations.

(Fig 7.2 near here)

In this context, the matrix illustrates, in particular, that the

element of risk increases the further the strategy moves away

from known quantities --the existing product and the existing

market. Thus, product development (requiring, in effect, a new

product) and market extension (a new market) typically involve a

greater risk than `penetration'; and diversification (both new

product and new market) generally carries the greatest risk of

all. In his original work, - 8 - which did not use the matrix

form, Igor Ansoff stressed:

The diversification strategy stands apart from the other three.

While the latter are usually followed with the same technical,

financial, and merchandising resources which are used for the

original product line, diversification usually requires new

skills, new techniques, and new facilities. As a result it almost

invariably leads to physical and organizational changes in the

structure of the business which represent a distinct break with

past business experience.

For this reason, amongst others, most marketing activity revolves

around penetration; and the Ansoff Matrix, despite its fame, is

usually of limited value --although it does always offer a

useful reminder of the options which are open.

In a similar vein to the original Ansoff Matrix, Peter

Drucker - 10 - has identified three kinds of opportunities:

Additive

Breakthrough

Complementary

'Additive'. The `additive opportunity more fully exploits

already existing resources'. In Ansoff's terms, it is the new

product in an existing market or the existing product in a new

market. As Drucker says, `it does not change the character of the

business'.

'Breakthrough'. This typically `changes the fundamental

economic characteristics and capacity of the business'. It is the

high-risk extreme of diversification, of which Ansoff in effect

warns. This warning (which lay at the heart of Ansoff's

categorization) has, however, largely been ignored by subsequent

teachers.

'Complementary'. This is a category not separately explored

by Ansoff (although, in practice, it could possibly lie in either

of the two development quadrants, but is most likely to lie in

that of diversification). As Drucker says, `The complementary

opportunity will change the structure of the business. It offers

something new which, when combined with the present business,

results in a new total larger than the parts.' But he also

emphasizes that it `always carries considerable risk'.

AUDIT 7.3

Using the Ansoff Matrix, plot what product (or service) and

market strategies your organization is following.

What strategies do you think it ideally ought to follow? What are

your reasons for your suggestions?

THE 'PRODUCT' LIFE CYCLE

The 'life-cycle' has long been a very important element of marketing theory. You should be aware, though, that its supposed universal applicability is largely a myth[1]; but an important one, which you will need to appreciate before you can dismiss it!

Its 'intuitive appeal' is based on the analogy of natural (human) lives. It, thus, suggests that any product or service moves through identifiable stages, each of which is related to the passage of time (as the product or service grows older) and each of which has different characteristics;

INTRODUCTORY STAGE

At this first stage of a product's life, the supplier can choose from strategies which range from 'penetration', where the supplier invests to gain the maximum share of a new market, through to 'skimming', where the maximum short term profit is derived from the 'innovation'. In either case the main task is to create awareness of the brand. In general the 'pioneer' which invests can expect to retain the highest market share; usually double the share of later entrants, even over the longer term.

GROWTH STAGE

As a result of awareness having been largely established, and in the light of growing competition, the emphasis at this stage may well be on promotion of the 'brand'; establishing the correct attitudes to the product. Promotion is still heavy, and suppliers often have to make further, substantial investments. In recent years, another feature of this phase has been the battle for distribution.

MATURITY

No product or service can grow forever; and eventually all the significant, potential uses will have been developed. The sales curve will flatten, and it will have reached maturity. The majority of products or services currently in the market place are at this stage, and much of the theory and practice of marketing revolves around this 'steady state'; building groups of loyal users, and attracting those of competitors.

DECLINE STAGE

Eventually the whole market may decline or other newer products may be introduced which are themselves a substitute for the established product. The product or service thus goes into a terminal decline - though this decline can last for years.

LESSONS OF THE LIFE CYCLE

Every product or service must, almost by definition, have a life cycle. It is launched, it grows, then it dies. As such, it offers a useful 'model' to keep at the back of your mind. Indeed, if you are in the introductory or growth phases, or in that of decline, it perhaps should be at the front of your mind; for the predominant features of these phases may be those revolving around such life and death. Between these two extremes, it is salutary to have that vision of mortality on front of you.

The most important aspect of product life-cycles is, however, that to all practical intents and purposes they often do not exist! In most markets the majority of the major (dominant) brands have held their position for at least two decades. The dominant product life-cycle, that of the brand leaders which almost monopolise many markets, is therefore one of continuity!

In the most respected criticism of the product life cycle, Dhalla & Yuspeh[2] state;

"...clearly, the PLC is a dependent variable which is determined by market actions; it is not an independent variable to which companies should adapt their marketing programs. Marketing management itself can alter the shape and duration of a brand's life cycle."

Thus, the life cycle may be useful as a description, but not as a predictor;; and usually should be firmly under the control of the marketer! The important point is that in many, if not most, markets the product or brand life cycle is significantly longer than the planning cycle of the organisations involved. It, thus, offers little of practical value for most marketers. Even if the PLC exists for them, their plans will be based just upon that piece of the curve where they currently reside (most probably in the 'mature' stage); and their view of that part of it will almost certainly be 'linear', and will not encompass the whole range from growth to decline.

I have included the above section on the Product Life Cycle despite the fact that - as you no doubt detected - I think that it has little value in practice. Indeed, I believe that its use may be positively dangerous for many organisations; since it tempts managers of successful, mature brands to prematurely anticipate their move into decline. But is probably the most widely known, and taught and respected, piece of marketing theory! It is imperative, therefore, that you appreciate the problems that its use, in any form, might pose.

How, then, might you manage change?

At one extreme, seeing fractures in advance, or even recognising their implications after they have occurred, is very difficult. This is best handled by 'scanning', described in the later chapter on the 'External Environment'. Responding to them once they have been detected is perhaps best ensured by undertaking the most effective possible marketing - better than that of other organisations which might also attempt to take advantage of the fracture - and, most important of all, reacting much faster than these competitors.

Handling the less dramatic changes which regularly occur in the stable market - and are the staple diet of most marketers - is a different matter. These are dealt with especially poorly by the PLC. The technique which has accordingly been developed, as a positive alternative to ineffective use of the PLC in this ('Mature') range, is called the 'Competitive Saw';

The principles involved are very simple: as is indicated by the chart above.

The first is quite simply that every 'stimulus' (every investment, be it an advertising or promotional campaign or a new feature added to the 'product') results, after a short delay, in an rapid improvement in 'output', raising the product or service's position (typically directly in terms of its competitive position, and indirectly in terms of sales levels).

The second is that this advantage is then steadily diluted as competitors invest in their own activities, and the performance level (the competitive advantage or sales) slowly drops until the next stimulus is applied. Because of the competitive aspect and because it largely removes variations due to seasonality etc, the measurements are usually in terms of relative share (though absolute figures may also be used).

This is a very simplified model of what actually happens, though something approaching it can be observed in practice (in the way that, for instance, advertising agencies routinely track the impact of advertising campaigns on awareness levels), which is not the case with the Product Life Cycle which it replaces. Despite its simplicity, it offers a number of significant benefits:

INTIMATIONS OF MORTALITY - it very effectively replaces the one important function of the Product Life Cycle, that of reminding managers that there will be no future if they do not look after their brands, and continue to invest in them - but it does this more directly and practically, and without the major drawbacks inherent in the PLC model.

TIMESCALING - on much the same theme, it is an ever-present reminder that you cannot neglect your brands, or stop investing in them, for too long - especially during the very extended 'maturity' phase of a successful brand

LINKAGE OF INPUTS AND OUTPUTS - it encourages, and provides a framework for, managers to actively plan what inputs are needed, when, and what the outputs will be; and what the efficiency of conversion of inputs to outputs is

SURFACING OF INVESTMENT - it makes very clear the need for, and the results of, investment policies on brands. This becomes even more clear in the 'Stepped Saw';

This looks at the effect of major inputs, major investments (such as new products or significantly increased promotional spending). These may have the effect of raising the average level of the 'saw teeth'; though, as shown above, later neglect (or a comparably strong competitive response) can just as easily result in a step down to a lower average level.

As the above illustration shows, there are two elements to performance. One is the average level; averaged over the short timescales that normally are reported on by the Competitive Saw. This is strategically most important since it shows longer term trends (a slowly decreasing average might be hidden by the variations in the short-term saw).

The other is the pattern of the saw itself, the time intervals and the performance variation per cycle, which determines the tactical approach.

The idea of the saw should not lull you into expecting regularity. Different stimuli will have different impacts, and will be more or less efficient, so the saw will be a jagged one;

As the saw is primarily an illustration of the impact of short term investments, the main criterion will be which of the stimuli available will result in the most efficient investment pattern (which, advertising or new features say, will produce the greatest impact for the same amount of money), though a mix of stimuli will usually produce the highest efficiency overall.

The three main lessons of the competitive saw are the importance of relative performance, the time related nature of this, and the investments which lie underneath.

Adopting the long-term perspective implied by the third of these observations reveals another important implication. Thus, following the implied principle of the fixed asset, the shorter-term sawtooth maintenance pattern can be overlaid on a gradually declining trend in performance; notionally equivalent to depreciation in financial accounting. Thus, over time there may be a slow drift away from the ideal position - as the customers' needs and wants change and/or competitive positioning improves. Your own response to this may take two forms. The first, and perhaps the most effective, is that of 'dynamic repositioning'. The need for change is regularly tracked and the brand's position readjusted - in much the same way that an autopilot's feedback mechanisms ensure that an airliner follows the correct flightpath. The emphasis here is on the dynamic approach to (current) change - where most of marketing theory revolves around decisions based upon static (historic) positions.

If such dynamic repositioning is not possible, perhaps because the necessary product changes come in discrete steps, then periodic readjustments may be needed. This is where the concept of depreciation is especially valuable. Thus, it allows the build-up of reserves to cover the significant costs of such repositioning exercises.

The investment in a successful brand needs to be maintained both in the short term, by regular marketing programmes funded from annual budgets, and in the longer term, by less frequent major investments (in repositioning and relaunching) which require reserves provided by a depreciation fund; Marketing Depreciation.

Encouraged by PLC theory, which seems to emphasises the futility of long term investment, the long-term asset investment aspect of brand performance is largely ignored by traditional marketing theory. We believe that, on the contrary, it should represent the main element of marketing strategy - and (in view of the dangers it poses for the unwary) the PLC should be dropped from the marketers vocabulary!

PRODUCT PORTFOLIOS

Most organizations have more than one product or service, and

many operate in several markets. In the context of the product

life-cycle, this theoretically confers the advantage that the various products,

the `product portfolio', can be managed so that they are not all

at the same phase in their life-cycles; indeed, ideally, so that

they are evenly spread throughout it. This allows for the most

efficient use of both cash and manpower resources.

This simple example shows some of the benefits that can be

obtained from a well-managed product portfolio. The current

investment in C, which is in the growth phase, is covered by the

profits being generated by the earlier product, B, which is at

maturity. This had earlier been funded by A, the decline of which

is now being balanced by the newer products.

An organization looking for growth can introduce new products or

services which it hopes will be bigger sellers than those which

they succeed. Perhaps an easier, and more likely, route is to

introduce more products or services, of equal size, than are

being lost; thus increasing the size of the portfolio, and with

it the volume of sales.

On the other hand, if this expansion is undertaken too rapidly

many of these brands --at the beginning of their life-cycles --

will be hungrily demanding investment; and even the earliest of

them will be unlikely to generate profits fast enough to support

the numbers of later launches. Therefore, the producer will have

to find a source of funds until his investments pay off.

The Boston Matrix

As a visual tool for managing portfolios, the Boston Consulting

Group, a leading management consultancy, developed its well-known

matrix. For each product or service the 'area' of the circle

represents the value of its sales. The Boston Matrix thus offers

a very useful `map' of the organization's product (or service)

strengths and weaknesses (at least in terms of current

profitability) as well as the likely cashflows.

The need which prompted this idea was, indeed, that of managing

cash-flow. It was reasoned that one of the main indicators of

cash generation was relative market share, and one which pointed

to cash usage was that of market growth rate.

Relative market share

This indicates likely cash generation, because the higher the

share the more cash will be generated. As a result of `economies

of scale' (a basic assumption of the Boston Matrix), it is

assumed that these earnings will grow faster the higher the

share. The exact measure is the brand's share relative to its

largest competitor. Thus, if the brand had a share of 20 per

cent, and the largest competitor had the same, the ratio would

be 1:1. If the largest competitor had a share of 60 per cent,

however, the ratio would be 1:3, implying that the organization's

brand was in a relatively weak position. If the largest

competitor only had a share of 5 per cent, the ratio would be

4:1, implying that the brand owned was in a relatively strong

position, which might be reflected in profits and cashflow. If

you are using this technique in practice, it should be noted that

this scale is logarithmic, not linear.

On the other hand, exactly what is a high relative share is a

matter of some debate. The best evidence - 37 - is that the

most stable position (at least in FMCG markets) is for the brand

leader to have a share double that of the second brand, and

treble that of the third. Brand leaders in this position tend to

be very stable --and profitable; the Rule of 123.

The reason for choosing relative market share, rather than just

profits, is that it carries more information than just cashflow.

It shows where the brand is positioned against its main

competitors, and indicates where it might be

likely to go in the future. It can also show what type of

marketing activities might be expected to be effective.

Market growth rate

Rapidly growing brands, in rapidly growing markets, are what

organizations strive for; but, as we have seen, the penalty is

that they are usually net cash users --they require investment.

The reason for this is often because the growth is being `bought'

by the high investment, in the reasonable expectation that a high

market share will eventually turn into a sound investment in

future profits. The theory behind the matrix assumes, therefore,

that a higher growth rate is indicative of accompanying demands

on investment. The cut-off point is usually chosen as 10 per cent

per annum. Determining this cut-off point, the rate above which

the growth is deemed to be significant (and likely to lead to

extra demands on cash) is a critical requirement of the

technique; and one that, again, makes the use of the Boston

Matrix problematical in some product areas. What is more, the

evidence, - 38 - from FMCG markets at least, is that the most

typical pattern is of very low growth, less than 1 per cent per

annum. This is outside the range normally considered in Boston

Matrix work, which may make application of this form of analysis

unworkable in many markets.

Where it can be applied, however, the market growth rate says

more about the brand position than just its cashflow. It is a

good indicator of that market's strength, of its future potential

(of its `maturity' in terms of the market life-cycle), and also

of its attractiveness to future competitors.

The development of the theory is that, in common with other four-

quadrant matrices (such as the Ansoff Matrix, which we have

already met), products or services lying in each of the quadrants

will behave differently, and require different marketing

strategies. As is often the case with such techniques, however,

the quadrants have since been given rather exotic names

(presumably to improve their memorability --though in practice

causing considerable confusion):

'Stars' (high market share, high market growth rate). These

are probably relatively new products in the growth phase. Because

they have high market shares, however, they may be generating

sufficient gross profits to cover their current investment needs.

Usually the predominant strategy is to grow them to the next

stage, the `cash cow', where the most profit is made.

'Cash cow' (high market share, low market growth rate). Here

the brand has maintained its high share, and hence cash

generation capabilities, but the market life-cycle has now moved

to maturity and the growth is slow (as we have seen,

conventionally below 10 per cent per annum), if at all.

Investment is not required to any significant extent, because

there is little need to recruit new customers and almost no

demand for new plant. A `cash cow' is, therefore, the main

generator of cash of the profit which will cover the on-going

investment in new products.

'Problem child' (often called the `question mark' --low

market share, high market growth rate). This is a product,

typically a recently launched one, which has not yet built its

market share. As it does not yet have the share to deliver

reasonable profits, it will almost certainly be a net user of

cash; possibly substantially so. Such `problem children' are

often where most of the cashflow generated by the `cash cows'

transfers to, but the organization hopes that this will be a good

investment; as the market is attractive and the `problem child'

could eventually become a winner, as one of its future `cash

cows'.

'Dog' (low market share, low market growth rate). A product

here has little or no prospects. It may not yet be making a loss,

unless it is demanding a disproportionate use of overheads, but

it will probably do so in the not too distant future. Hence it

too should have its future regularly reviewed, so that it can be

discontinued as soon as it becomes a burden.

A basic, but hidden, assumption behind the Boston Matrix is the

product life-cycle. Thus, following the PLC, successful products

will steadily process around the quadrants in anticlockwise

fashion; starting as problem children, then moving through stars

to cash cows, where hopefully they will dwell for some time, and

then on to dogs and eventually extinction. Unsuccessful ones will

never become cash cows, and will probably move from problem

children directly to dogs, if they are allowed to survive for

that long.

One of the most informative uses of the Boston Matrix is to plot

competitors' positions as well as your own. This gives a valuable

insight into their position (especially their cash position), as

well as indicating how they may behave in future and showing the

relative strengths and weaknesses of your own brands.

AUDIT 7.6

Can you identify at least one `star', `problem child', `cash cow'

and `dog' from among your organization's product (or service)

range? Plot them on a Boston Matrix. Predict what will happen to

each in five years' time.

Now apply the same principles to all the major products of your

organization (or at least, say, the top products). How well

balanced does the `port-folio' look? What does this imply for

future development of the organization? What changes are needed

to ensure a more stable future growth?

Criticism of the Boston Matrix approach

As originally practised by the Boston Consulting Group, the

matrix was undoubtedly a useful tool, in those few situations where

it could be applied, for graphically illustrating cashflows. If

used with this degree of sophistication its use would still be

valid. However, later practitioners have tended to over-simplify

its messages. In particular, the later application of the names

(problem children, stars, cash cows and dogs) has tended to

overshadow all else --and is often what most students, and

practitioners, remember.

This is unfortunate, since such simplistic use contains at least

two major problems:

'Minority applicability'. The cashflow techniques are only

applicable to a very limited number of markets (where growth is

relatively high, and a definite pattern of product life-cycles

can be observed, such as that of ethical pharmaceuticals). In the

majority of markets, use may give misleading results.

'Milking cash cows'. Perhaps the worst implication of the

later developments is that the (brand leader) cash cows should be

milked to fund new brands. This is not what research into the

FMCG markets - 39 - has shown to be the case. The brand

leader's position is the one, above all, to be defended, not

least since brands in this position will probably outperform any

number of newly launched brands. Such brand leaders will, of

course, generate large cash flows; but they should not be

`milked' to such an extent that their position is jeopardized. In

any case, the chance of the new brands achieving similar brand

leadership may be slim --certainly far less than the popular

perception of the Boston Matrix would imply.

As with most marketing techniques there are a number of

alternative offerings vying with the Boston Matrix; although this

appears to be the most widely used (or at least most widely

taught --and then probably 'not' used). The next most

widely reported technique is that developed by McKinsey and

General Electric; which is a three-cell by three-cell matrix --

using the dimensions of `industry attractiveness' and `business

strengths'. This approaches some of the same issues as the Boston

Matrix, but from a different direction and in a more complex way

(which may be why it is used less, or is at least less widely

taught).

Boston Consulting Group's Advantage Matrix

The Boston Consulting Group subsequently developed another, much

less widely reported, matrix which approached the `economies of

scale' decision rather more directly. This is their `Advantage

Matrix' (figure 7.14) which takes as its `axes' the two

contrasting `alternatives', `economies of scale' (here shown as

`potential size of advantage') against `differentiation' (here

shown as `number of approaches to achieving advantage'). In

essence, the former category covers the approach described in the

preceding section, while the latter represents the approach

(described by Michael Porter, - 48 - for instance, as well as

in chapter 6 of this book) of `differentiating' products so that

they do not compete head-on with their competitors. The result is

the four quadrants shown in figure 7.14.

(Fig 7.14 near here)

'Volume business'. In this case there are considerable

economies of scale, but few opportunities for differentiation.

This is the classic situation in which organizations strive for

economies of scale by becoming the volume, and hence cost,

leader. Examples are volume cars and consumer electronics.

'Stalemated business'. Here there is neither the opportunity

for differentiation nor economies of scale; examples are textiles

and shipbuilding. The main means of competition, therefore, has

been reducing the `factor costs' (mainly those of labour) by

moving to locations where these costs are lower, even to

different countries in the developing world.

'Specialized business'. These businesses gain benefits from

both economies of scale and differentiation (often characterized

by experience effects in their own, differentiated, segment);

examples being branded foods and cosmetics. The main strategies

are focus and segment leadership.

'Fragmented business'. These organizations also gain benefit

from differentiation, particularly in the services sector, but

little from economies of scale; examples being restaurants and

job-shop engineering. Competition may be minimized by innovatory

differentiation.

Apart from the fact that it has not suffered as badly at the

hands of later popularizers, the particular advantage of this

matrix is that it highlights the assumptions that are hidden in

the Boston Matrix. It may also give a better feel for the optimum

strategy and the likely profits, but it does not give any feel

for the cashflow, which was the main feature of the original

matrix.

The strategies that can be developed on the basis of this matrix

are illustrated by Rowe 'et al'. - 49 - (figure 7.15).

ACTIVITY 7.2

The Boston Matrices for two organizations are shown above. Each

has eight products. In the case of company A they are evenly

spread around all four quadrants. In the case of company B they

are concentrated only in the `cash cow' quadrant.

Which organization do you think is better placed?

Inherent Dangers

Having now completed our description of two of the most elegant

and widely taught marketing techniques, the Ansoff and Boston

Matrices, it is worth issuing a further warning.

'Marketing techniques should be the servants of the marketer.

They should be used as an aid to the creative decision-making

processes, and can never be a substitute for them. Although they

may frequently offer helpful insights, they almost never offer

definitive answers in themselves'.

There is sometimes a desire to look for simple solutions to what

are usually complex marketing problems; and, in particular, to look

for solutions which incorporate the expertise of acknowledged

masters in the field. These desires are not infrequently

stimulated by the service providers who are offering such

marketing panaceas.

The temptations for the marketer can be severe when the

techniques are as elegant, and in their own way powerful, as

those we have just looked at. Indeed, they do frequently offer a

'very' valuable insight; into the issues of portfolio

planning, for example.

In all cases, however, the wise marketer will recognize that such

techniques usually offer just one perspective on the problem. The

marketer should always consider other perspectives; which are

almost invariably available --even the Boston Consulting Group

has several. In any case, as we have seen, each of these tools

typically has a limited range of situations in which it may be

appropriately applied.

The experienced marketer will approach each new situation afresh.

In many ways a blank sheet of paper is the most powerful

analytical tool. Only when all the options have been examined,

should it be decided which of the specific tools available, if

any, is most suitable. That marketer will then use these chosen

tools in the most appropriate manner, as part of the overall

approach. 'There is no one tool that offers a universal answer

to all marketing problems'. Undue attention to any one

individual tool can distract the marketer from the range of

other factors which may apply. The myopia this can cause is

particularly well illustrated by the dangers inherent in ill-

informed use of the Boston Matrix. The apparent implication of

its four-quadrant form is that there should be balance of

products or services across all four quadrants; and that is,

indeed, the main message that it is intended to convey. Thus,

money must be diverted from `cash cows' to fund the `stars' of

the future, since `cash cows' will inevitably decline to become

`dogs'. There is an almost mesmeric inevitability about the whole

process. It focuses attention, and funding, on to the `stars'. It

presumes, and almost demands, that `cash cows' will turn into

`dogs'.

The reality is that it is only the `cash cows' that are really

important --all the other elements are supporting actors. It is

a foolish vendor who diverts funds from a `cash cow' when these

are needed to extend the life of that `product'. Although it is

necessary to recognize a `dog' when it appears (at least before

it bites you) it would be foolish in the extreme to create one in

order to balance up the picture. The vendor, who has most of his

(or her) products in the `cash cow' quadrant, should consider

himself (or herself) fortunate indeed, and an excellent marketer;

although he or she might also consider creating a few stars as an

insurance policy against unexpected future developments and,

perhaps, to add some extra growth.

Returning to activity 7.2, the chances are that 80 per cent of

you would have chosen company A, because of the evenly balanced

spread of products. Even the 20 per cent of you that chose

company B would have probably felt nervous about that choice.

Yet, as you should now realize, the clear choice has to be

company B. Think of it in terms of the eight cash cows. Which two

would you want to downgrade to become only stars, which to

problem children --and which would you want to destroy by making

them dogs? Of course, the question over-simplified the position.

It did not specify the size of the brands (a star the same size

as a cash cow might be preferable, since it will presumably

grow).

The real lesson is that the Boston Matrix is useful as a tool to

do a certain job. It should, for example, remind the owners of

company B to invest in some new products, so that they may

become stars and then cash cows, to underwrite an uncertain

future. On the other hand, it should not distract attention from

the much more important task of maintaining the cash cows so that

they 'do not' turn into dogs; and the money stripped out to

fund new developments should never be at the expense of the

future of those existing cash cows.

Igor Ansoff, - 51 - almost alone amongst writers of textbooks,

issues this warning about the need to understand what is being

measured:

... before the BCG matrix is used, it is essential to make sure

that the future prospects are adequately measured by volume

growth and the firm's relative competitive position by its

relative market share. When the conditions are right, the BCG has

the advantage of simplicity ...

Marketing Myopia

One of the most important marketing papers ever written was that

on `Marketing Myopia' by Theodore Levitt. - 52 - Some

commentators have even gone as far as to suggest that its

publication marked the beginning of the modern marketing movement

in general. Its theme was that the vision of most organizations

was constricted in terms of what they, too narrowly, saw as the

business they were in. It exhorted CEOs to re-examine their

corporate vision; and redefine their markets in terms of wider

perspectives.

It was successful in its impact because it was, as with all of

Levitt's work, essentially practical and pragmatic.

Organizations found that they had been missing opportunities

which were plain to see once they adopted the wider view. The

impact of the paper was indeed dramatic. The oil companies (which

represented one of his main examples in the paper) redefined

their business as energy rather than just petroleum; although

Shell, which embarked upon an investment programme in nuclear

power, subsequently regretted this course of action --even good

ideas can sometimes lead to unforeseen, and costly, problems.

Indeed, this point can also be used to illustrate the dangers

inherent in any `management fashion'. Peter Spillard - 53 -

comments, rather critically, that:

Following the lead given by Levitt in his over-popular writings

on myopia of one kind or another, marketers faced with market

shifts have been only too ready to respond by chasing them

uncontrollably wherever they might lead. They have ascribed

objectives to their organizations 'in toto' which they

probably would not have espoused had they thought about them

carefully.

In the wider context, though, Levitt's concept of myopia is

invaluable. Even now, too much of marketing is constricted by the

narrow vision of marketers using just the few tools they have

bothered to learn. The world is a large place; and cannot be

limited by a few crude rules-of-thumb --no matter how expert, or

charismatic, their inventors!

AUDIT 7.7

This will be a rather unfair set of questions; but it does

reflect the problems caused by the apparent strength of the PLC

and Boston Matrix theories.

Look at your answers to the previous three audits (7.4--6). In

the light of the last two sections (which indicted uncritical

application of these theories) how would you now change your

answers? What does this say about the influence of management

theory?

In the light of this new `realism', what would you now propose

for your organization?

Product (or Service) Mix

There are other dimensions on which the `product' portfolio,

`the 'product mix'', can be balanced. Classically, the two

most important are:

'Width'. The number of different (independent and distinct)

`product' lines carried; which is a measure of the number of

different 'markets' addressed. Thus, Unilever has a very

wide range of product types (covering Birds Eye frozen foods as

well as Persil detergent) but Coca-Cola for many years had a very

narrow range (based on just the one product).

'Depth'. This refers to the total number of products

carried, across all the product lines, and thus relates to the

market 'segments' addressed. These may be very simply

defined segments; where a range of pack sizes (from `trial size'

to `jumbo economy') can address the differing value needs of

consumers. Alternatively, they may be carefully targeted brands,

such as Unilever uses in the detergent market, precisely aimed at

different segments of a very large market.

The balance of the product mix also concerns the 'volumes'

achieved by the different lines. What may appear to be a wide

and deep portfolio may be an illusion if just one product within

it produces 90 per cent of the total sales. The same is true, and

is more frequently found, in relation to profit. A sound product

portfolio (or product mix) will show a balanced profit

contribution from a number of lines (although, as predicted by

the Pareto 80 : 20 Rule, it will be likely even then that a

minority of products will contribute most of the profit).

The other major overall `product' decision will therefore be on

portfolio size, `product line' width and depth. How many items

are to be carried, in what markets and segments? If too few

lines are carried then sales opportunities will be missed. By

adding a variation on an existing line, a different pack size

for example, additional sales will be created; and the additional

revenue created will be greater than the additional costs, so

that these extra sales will generate extra profit. On the other

hand, there is a tendency for product lines to grow in size, to

the point at which some products in the list will actually make a

loss.

There are, therefore, two types of product mix decision to be

taken in this context:

line stretching --additional items need to be added to tap

potentially profitable extra business

line rationalization --items need to be removed, to reduce

costs and improve profitability

AUDIT 7.8

What is the width and what is the depth of your organization's

product line?

Does it need to be stretched or rationalized, and if so, how?

The Product Plan

It is at this stage, having decided upon the `position' of the

brand (which in real life represents a variety of decisions

covering a rich mix of attributes, tangible and intangible) as

well as the `product' and portfolio combinations, that the

product plan should be prepared; to document the strategy and

proposed implementation deriving from these ideas. Many managers

see marketing's most important contribution to be that of

integrating the different activities of the organization

(internally just as much as externally). Bringing together a

product plan is a classical example of this integrative process.

I do not propose to detail the formal process at this stage,

since it is a variation (containing rather fewer elements) of the

marketing plan; which is described in some detail in chapter 15.

It is important to note, however, that the product plan should be

brought together at this earlier stage; and incorporated in the

overall marketing plan later; as all the separate elements of

that overall plan (promotion and pricing plans as well) are

usually best developed separately, before being finally combined.

AUDIT 7.10

Now for another major exercise. Although it will not necessarily

follow the detailed format of a formal product plan, you should

now bring together the various elements that make up the

product/service strategy, which you have started to develop in

the context of the theories and techniques explored in the last

two chapters.

First you need to collect the answers you have given to the

questions about the market, including:

What is the market?

Is it segmented, and how are you (or will you be) targeting the

chosen segments?

What is your (brand) positioning strategy? How does this need to

change to match the latest circumstances?

How well is the product or service branded? Does this need

attention?

Then you should bring together the product or service strategies

you explored, using Ansoff, PLC, Boston Matrix and Advantage

Matrix.

How useful have these techniques proved to be in the case of your

product or service? Is there any marketing myopia to be found?

What is, or should be, the specification? What implications are

there for quality?

Packaging

In its most basic sense, packaging is simply necessary to deliver

a product to the consumer in sound condition. This requirement

may demand a bottle, for a shampoo, or a box with moulded shock-

absorbing padding, to protect delicate electronic goods. The

requirement here is purely technical; the container has to be

designed to be most efficient at containing and protecting the

product. This requirement most obviously predominates in the

fibre-board `shipping outers' or `cases' which are used to

protect the product, or to hold numbers of packs, during delivery

to retailers. Even here, though, the `case' is increasingly being

used as a vehicle for advertising; just in case a customer might

see it and be swayed by the message printed on it.

In recent years, particularly as `self-service' has become a

predominant feature in most distribution chains, the packaging of

a product has become a major element of the promotion of that

product. It is often the supplier's only opportunity, at the

point of sale, to present the benefits of the product to the

potential consumer who has picked it up to evaluate its potential

value. Packaging requirements, therefore, include:

'Product `description''. The pack must convey to the

potential consumer not just what the product is, but what it

does; in terms of the benefits it offers --the promotional

message. This may be conveyed by the words, but for the most

impact the graphics and overall design are usually chosen to

deliver the main, initial messages. The potential buyer is

expected to read these messages in a few brief seconds, and

probably at a distance of three feet or more.

'Product image'. It must also at least match the required

image; so that the boxes for expensive chocolates look expensive

in themselves --so much so that one almost hates the waste of

throwing the packaging away.

'Product value'. The pack is often designed to make its

contents look more than they really are. Those apparently

`artistic' designs, for example those which feature `cut-outs'

for use as handles, are frequently chosen to give a bigger

outline without using extra product; and in the hole for the

`handle' the supplier is selling `air'.

'Shelf display'. Alternatively, the pack may be designed to

make the most of the shelf space available; so this may even mean

making the pack as compact as possible, so that more may be

placed on the shelf. `Stackability', so that the shelf can take

several layers of product, is another possible pack feature.

These are all promotionally based design decisions. It should

never be forgotten, though, that the formal pack description,

typically on the label, must conform to any legislative standards

for the product category, particularly in terms of the list of

ingredients.

It should also be noted that some packaging represents an

important element of the physical product itself. Thus, it

delivers pharmaceuticals in tamper-proof and childproof

containers for dispensing exact quantities; occasionally with

built-in applicators, such as inhalers. Built-in handles allow

`giant economy' packs to be carried, albeit with difficulty. It

also delivers the aerosol spray of the hair product or deodorant;

and, again, it adds the stripe to toothpaste.

AUDIT 7.11

How does your own organization's `packaging' match up against the

product description, product image, product value and shelf

display headings? What changes would you suggest?

Services

At the beginning of this book, I confidently stated that much of

marketing activity could be just as easily applied to services as

to tangible products; with just the word `service' inserted

instead of `product'. This clearly poses most difficulty when it

comes to the element of `product' itself. Packaging, for one

example, does not appear to be relevant to services; although the

very handsomely produced printed portfolios which now accompany

the purchase of some services (from a financial service to a

holiday) indicate that many service providers find that even this

element has a role to play.

Service Categories

`Service', though, is a very general classification, which covers

a spectrum of activities, ranging from services which support

products to pure services which stand by themselves:

'Services related to a physical product'. The more complex

products, such as computers, demand sophisticated support

services. In cases such as these, service elements are ultimately

as important (and as costly) as the physical product itself;

although, typically, customers still continue to think in terms

of the physical product itself as being the dominant element.

'Services with a product attached'. On the other hand, some

services (which are clearly seen as such by consumers) revolve

around products. The home security service is based upon physical

intruder alarms and smoke detectors, for example, but many

householders will be happy to pay for a consultant to design and

fit them; and will expect a large part of the cost to be

accounted for by the `people' cost (design and fitting)

associated with the service.

'Pure services'. Then, of course, there are some services

which can reasonably be described as `pure'; consultancies are

one obvious example.

(Fig 7.18 near here)

A widely reproduced diagram by Shostack - 63 - clearly

illustrates the spectrum of product/service mixes (figure 7.18).

Within these overall categories there are other dimensions which

may also be used to categorize services:

People-based<>Equipment-based

Personal services<>Business services

Each of these dimensions has implications for the related

`product'.

A further dimension which can be applied to services is that of 'when' the service is supplied:

Before the sale

At the time of the sale

After the sale

'Before the sale'. Some products (such as fitted kitchens)

require a substantial investment of service support 'before'

the sale can be made. Thus, for example, designs may need to be

prepared, technical advice proffered or quotations submitted

(and, on the larger scale, tenders drawn up).

'At the time of the sale'. This usually represents the

service that the distribution chain offers, and the added value

that this represents. It may be related to the physical product;

for example, stockholding so that the product is immediately

available. On the other hand, it may once more relate to

technical advice.

'After the sale'. This element relates to after-sales

support, which is traditionally seen as the main element of

(product) service support.

AUDIT 7.12 (for service providers only)

Using the categories listed above (and any others which may be

relevant) categorize your organization's services.

Distinctive Features of Services

There are some distinctions which may apply to services, as

opposed to products:

Intangibility<>Inseparability

Variability<>Perishability

Intangibility

Pure services usually cannot be defined in terms of the physical

dimensions which are so important to many tangible products; and

the customer cannot see or feel them before purchase. This poses

problems in terms of defining these services, and in particular

of demonstrating their `quality'. Rushton and Carson - 65 -

state:

The evidence ... strongly supports the hypothesis that product

intangibility does have a profound effect on the marketing of

services. It also underlines the lack of guidance for service

marketers in tackling problems, and capitalising on the

opportunities, created by having a product which is predominantly

intangible ... The lack of knowledge and control is reflected in

inadequate and sometimes inappropriate use of generalised tools

of marketing such as conservative and often unsuitable pricing

policies, and promotional methods and messages which are confused

and which frequently focus on the fringe areas of the product

package simply because they are tangible.

Indeed, the customer for many services has to buy them `on

trust', since they cannot be inspected before use. This also

means that service consumers are often `loyal' to the service

which they have found justifies their trust. The competitive

suppliers' investment in overcoming that loyalty may be

correspondingly higher than in product markets, where trial use

is more easily obtainable. The result is often that, as indicated

in the quotation above, the few `tangible' elements that are

associated with the service become especially important:

'People'. People are often the most tangible evidence of

quality, from the face-to-face salesman selling financial

services in the customer's home to the counter clerk in the

travel agency. In many fields the service 'is' the people,

and in others the people are often the critical element in its

successful delivery. In the hotel and catering trades it is

people who make the difference between the good and the bad --

and yet, paradoxically, they are traditionally grossly underpaid.

'Place'. Where there are local centres for delivering the

service (bank branches or travel agents, for example), the

premises themselves become a means of demonstrating the quality

of the service.

'Promotion'. The image of the service, carried by all the

promotional material, may well become the main ingredient after

people.

'Branding'. Above all, suppliers of services have

considerable difficulty in differentiating their `product' from

all others. Even if they do manage to find a unique feature, it

is likely to be copied rapidly. As a result, the larger service

suppliers tend to rely on `branding', typically using the company

name.

Inseparability

Generally speaking, production and consumption of services are

inseparable; the `sale' occurs before both (but frequently only

just before). This means that distribution usually has to be

direct --the service cannot be stocked by a distribution chain.

Rathmell - 67 - graphically illustrates the difference (figure

7.22).

The purchaser of a `good' has that `product' in his or her

'ownership', to use as he or she pleases, in perpetuity. The

purchaser of a service, on the other hand, only receives the

direct benefit at the time it is taking place (although the

indirect benefits of, say, a haircut may last longer). Comparison

is, therefore, more dependent on the memory of previous

transactions.

This also means that, according to Gronroos, - 68 - there is a

need for marketing activities throughout the whole purchase

process, or customers may be lost at a number of stages.

Variability

Sometimes referred to in this context as `heterogeneity',

variability occurs largely as a result of the `people' content,

but also because the service is usually produced and consumed at

the same time. A hi-fi system or a television can be guaranteed

exactly to match the specifications each time one comes off the

production line, whereas a service often depends upon who is

actually providing it and under what conditions. A performance of

'Antony and Cleopatra' at London's National Theatre,

starring Anthony Hopkins and Judi Dench, probably had a very

different feel to the same play produced by a local amateur

dramatic society.

The most important implication is that services require much

higher levels, and standards, of management to ensure that the

service actually being provided matches the specification; and,

indeed, many service-based industries have a higher ratio of

managers to employees.

Training also has an important part to play. Japan Air Lines, for

instance, give their cabin crew longer etiquette and politeness

training than any other airline --and it shows (not least

because they now sell their training package to those other

airlines).

Perishability

As mentioned above, most services are produced and consumed at

the same point, and are totally perishable. The service may be

available over time, but if the `time-slot' is not available, or

is not sold, the lost revenue can never be recouped (whereas a

product held in stock can always be sold later). Surprisingly,

then, `stock' control becomes even more important for a service

provider.

AUDIT 7.13 (for service providers only)

Which of these features of services are most important to your

organization's operations, and why?

How do these problems affect the performance of your own

organization?

What strategies are in place to reduce, or compensate for, these

problems?

What changes would you suggest?

The elements of variability, perishability and people pose

problems for productivity, since there are bound to be periods of

lower volume when the staff are underutilized. This is mainly

dealt with by scheduling staff to overlap at peak times (or by

split shifts, as in the hotel and catering industry, to give the

same effect). Use of part-timers, called in at peak periods, or

seasonal staff is another approach. A further possibility is to

use job flexibility, so that peak-time employees in one function

can be redeployed into another (which is not time-sensitive) when

not needed in the off-peak; for example, line managers in the

hotel and catering industry are often forced to help with the

serving at peak times.

Core Services

In many service sectors, a `package' of services is offered.

Within this package there will often be a range of core services,

such as the provision of a bedroom for a hotel client, which the

customer must use. But there will often be a range of optional

services, such as the restaurant or leisure facilities, on which

the hotel may hope to make an extra profit (and indeed often

hopes to make most of the profit --the core services only

recovering the basic overheads). The balance of the various

elements of the package, and their management, is therefore a

major aspect of marketing in these industries.

Social Marketing

Some marketing, almost always originating in the non-profit

sector, is quite deliberately targeted at changing the behaviour

of its target audience; without selling any accompanying product

or service. Examples have been the various attempts to stop

cigarette-smoking or to increase donations to charities. Kotler

and Andreasen - 73 - define this as follows:

'Social behaviour marketing' is the design, implementation

and control of programs designed to ultimately influence

individual behaviour in ways that the marketer believes are in

the individual's or society's interests.

They also describe a range of such programmes (table 7.5).