Setting Product Strategy

LECTURE-10

Chapter Questions

• What are the characteristics of products and how do marketers classify products?

• How can companies differentiate products?

• How can a company build and manage its product mix and product lines?

• How can companies combine products to create strong co-brands or ingredient brands?

• How can companies use packaging, labeling, warranties, and guarantees as marketing tools?

What is a Product?

A product is anything that can be offered to a market to satisfy a want or need, including

physical goods, services, experiences, events, persons, places, properties, organizations,

information, and ideas.

Five Product Levels

Five Product Levels

• Core benefit• The service or benefit the customer is really buying e.g.

A hotel guest is buying “rest & sleep”

• Basic product• e.g. A bed, bathroom, towels, desk, dresser & closet

• Expected product• e.g. A clean bed, fresh towels, working lamps &

quietness

Five Product Levels…

• Augmented product• Exceeds customer expectations

• Potential product• Offering might undergo in the future

Product Classification Schemes

• Durability

• Tangibility

• Use

Durability and Tangibility

• Non-durable goods• Tangible goods normally consumed in one or a few uses e.g.

soft drinks & soap etc.

• Durable goods• Tangible goods that normally survive many uses e.g.

Refrigerators, machine tools & clothing etc.

• Services• Intangible, inseparable, variable & perishable products e.g.

Legal services, appliance repairing & hair cuts etc.

Consumer Goods Classification

• Convenience• Purchase frequently, immediately & with minimum of efforts e.g.

soft drinks, newspapers & soaps etc.

• Shopping• Consumer compares on such bases suitability, quality, price &

style e.g. Furniture, clothing & appliances etc.

• Specialty• Have unique characteristics & need special purchasing efforts

e.g. Car, Stereo components & Photographic equipments etc.

• Unsought• Consumer doesn't know about or does not normally think of

buying e.g. Life insurance, encyclopedias & reference books etc.

Industrial Goods Classification

• Materials and parts• Raw materials

• Manufactured Materials

• Capital items• Component Materials e.g. Iron, Yarn, Cement,

Wires etc.

• Component Parts e.g. Small motors, Tires, Castings etc.

• Supplies/business services• Maintenance & repair items

• Operating Supplies

Product Differentiation

• Product form e.g. Size, shape & physical structure

• Features e.g. Basic functions of the product.

• Customization• Making product as per the requirements of an

individual.

• Performance • e.g. Level at which the product's primary

characteristics operate.

• Conformance Quality • e.g. Degree to which all the produced units are

identical & meet the promised specifications.

Product Differentiation…

• Durability• A measure of the product’s expected operating life

under natural or stressful conditions.

• Reliability• A measure of the probability that a product will not

malfunction or fail within a specified time period.

• Repairability• A measure of the ease of fixing a product when it

malfunctions or fails.

• Style• Describes the product’s look & feel to the buyer.

Service Differentiation

• Ordering ease

• Delivery

• Installation

• Customer training

• Customer consulting

• Maintenance and repair

• Returns

The Product Hierarchy

Need family Security

Product family Saving & income

Product class Financial instruments

Product line

Life insurance

Product type

Term life insurance

Item

State life

Product Systems and Mixes

• Product system• A group of diverse but related items that function in a

compatible manner.

• Product mix or Product assortment• Set of all products & items a seller offer for sale.

• Width• Refers to how many different product lines the

company carries.

Product Systems and Mixes…

• Length• Refers to the total number of items in the product mix.

• Depth• Refers to how many variants are offered of each

product in the line.

• Consistency• Refers to how closely related the various product lines

are in end use.

Product Line Analysis

• Core product• Items that produce high sales volume & heavily promoted but

with low margins e.g. Basic laptop computers.

• Staples• Items with lower sales volume & no promotion e.g. Faster CPU

or Bigger memories.

• Specialties• Items with lower sales volume but that might be highly promoted

e.g. Digital movie making equipment.

• Convenience items• Sell in high volume but receive less promotion e.g. Carrying

cases & accessories.

Line Stretching

• Down-market stretch• A company positioned in the middle market may want

to introduce a lower-priced line.

• Up-market stretch• Companies may wish to enter the high end of the

market to achieve more growth.

• Two-way stretch• Companies serving the middle market might decide

to switch their line in both directions.

Product-Mix Pricing

• Product-line pricing

• Optional-feature pricing

• Captive-product pricing

• Two-part pricing

• By-product pricing

• Product-bundling pricing

What is the Fifth P?

Packaging, sometimes called the 5th P, is all the activities of designing and producing the

container for a product.

Factors Contributing to the Emphasis on Packaging

• Self-service

• Consumer affluence

• Company/brand image

• Innovation opportunity

Packaging Objectives

• Identify the brand

• Convey descriptive and persuasive information

• Facilitate product transportation and protection

• Assist at-home storage

• Aid product consumption

Functions of Labels

• Identifies

• Grades

• Describes

• Promotes

Marketing Management – A South Asian Perspective by Philip Kotler, Kevin Lane Keller, Abraham Koshy & Mithileshwar Jha, 13th Edition, Published by Pearson Education, Inc.

Strategic Marketing Management – Meeting The Global Marketing Challenges by Carol H. Anderson & Julian W. Vincze Published by Houghton Mifflin Company.

Principles of Advertising & IMC by Tom Duncan 2nd Edition, Published by McGraw-Hill Irwin.

Principles of Marketing by Philip Kotler & Gary Armstrong Thirteenth Edition, Published by Prentice Hall

Bibliography

"What lies behind us, and what lies before us are small matters compared to

what lies within us." Ralph Waldo Emerson

The End…