Marketing Management

Setting product strategy

THE MEANING OF “PRODUCT”

A product may be a good, service, place, person, or idea.

A product is a set of tangible and intangible attributes, which include packaging, color, price, quality, and brand, plus the services and reputation of the seller.

Components of theMarket OfferingComponents of theMarket Offering

Value-based prices

Services mixand quality

Product featuresand quality

Attractiveness ofthe market offering

Five Product Levels

Product Levels: The Customer Value Hierarchy Core benefit: It is the fundamental level. It is the service

or benefit the customer is really buying. Basic product: the marketer has to turn the core benefit

into a basic product. Expected product: a set of attributes and conditions

buyers normally expect when they purchase this product. Augmented product: That exceeds the customers

expectations. Potential product:: It encompasses all the possible

augmentations and transformations the product or offering might undergo in the future. Here is where companies are searching for new ways to satisfy customers and distinguish their offer.

Augmented ProductIn developing countries brand positioning and

competition takes place at this level. Differentiation arises on the basis of product augmentation also leads the marketer to look at the users total consumption system (the way the user perform the tasks of getting and using products and related services)

Product Augmentation Strategy: 1. Each augmentation adds cost2. Augmented benefits soon become expected

benefits and necessary point-of-parity, this means that competitors will have to search for other features and benefits.

3. As companies raise the price of their augmented product some competitors offer a “stripped-down” version at a much lower price.

Five Product LevelsFive Product Levels

Potential product

Augmented product

Expected product

Basic product

Core benefit

Product Classification Schemes

Durability Tangibility Use (consumer or industrial)

Durability and Tangibility1. Nondurable goods: are tangible goods consumed in one

or few uses like coke and soap, because these goods are consumed quickly and purchased frequently, the best strategy is to make them available in many locations, charge only a small mark-up and advertise heavily to induce trail and build preference.

2. Durable goods: they are tangible goods that normally survive many uses: refrigerator, machine tools and clothing. Durable goods normally require more personal selling and service, command a high margin and require more seller guarantees.

3. Services: they are intangible, inseparable, variable and perishable products. As a result they normally require more quality control, supplier credibility and adaptability, like haircuts, legal advice and appliance repairs.

Consumer Goods ClassificationThe vast array of goods consumers buy can be classified on the basis of shopping

habits. Convenience goods: consumer usually purchases frequently, immediately

and with a minimum of effort like tobacco products, soap and newspapers. it can be further divided into staple (goods consumer purchases on a regular basis) Impulse goods (are purchased without any planning and search effort) Emergency goods (are purchased when the need is urgent)

Shopping goods: are goods that the consumer in the process of selection and purchase characteristically compares on such bases as suitability, quality, price and style. Further divided into Homogenous shopping goods (are similar in quality but different enough in price to justify shopping comparisons) Heterogeneous shopping goods (differ in product features and services that may be more important then price. The seller of heterogeneous shopping goods carries a wide assortment to satisfy individual tastes and must have well trained salespeople to inform and advise customers)

Specialty: has unique characteristics or brand identification for which a sufficient number of buyers are willing to make a special purchasing effort. Specialty goods do not involve making comparisons; buyer invest time only to reach dealers carrying the wanted product.

Unsought goods: are those the consumer does not know about or normally think of buying. Unsought goods require advertising and personal selling support.

Specialty ProductsSpecialty Products Unsought ProductsUnsought Products

Shopping ProductsShopping ProductsBuy less frequently> Gather product information> Fewer purchase locations> Compare for:

• Suitability & Quality • Price & Style

Convenience ProductsConvenience Products

Special purchase efforts> Unique characteristics> Brand identification> Few purchase locations

New innovations> Products consumers don’t want to think about. >Require much advertising & personal selling

Buy frequently & immediately> Low priced> Many purchase locations> Includes:

• Staple goods• Impulse goods• Emergency goods

Consumer-Goods ClassificationConsumer-Goods Classification

Industrial Goods Classification

Materials and parts: are goods that enter the manufacturer’s product completely. They fall into two parts raw materials and manufactured materials and parts. Raw material can be of farm products and natural products.

Capital items: installations and equipments. Supplies/business services: operating suppliers,

maintenance and repair items, maintenance and repair services and business advisory services.

Product Differentiation Product form: the size, shape or physical structure of a product. Features: they supplement its basic functions Performance Quality: is the level at which the products primary

characteristics operate. most products are established at one of our performance levels: low, average, high or superior.

Conformance Quality: buyers expect that the product to have a high conformance quality which is the degree to which all the produced units are identical and meet the promised specifications.

Durability: a measure of the product’s expected operating life under natural or stressful conditions, is a valued attribute to some products.

Reliability: It is the measure of the probability that a product will not malfunction or fail within a specific time period.

Reparability: it is the measure of the ease of fixing a product when it malfunction or fails.

Style: Describes the product’s look and feel to the buyer. Design: it is the totality of features that affect how a product looks

and functions in terms of consumer requirements.

Services Differentiation

Ordering ease: refers to how easy it is fot the customers to place an order with the company.

Delivery: refers to how well the product or service is delivered to the customer.

Installation: refers to the work done to make a product operational in its planned location.

Customer training: refers to training the customer’s employees to use the vendor’s equipment properly and efficiently.

Customer consulting: refers to data, information systems and advice services that the seller offers to buyers.

Maintenance and repair: describes the service program for helping customers keep purchased products in good working order.

The Product Hierarchy

Need family: the core need that underlies the existence of a product family. example: security

Product family: all the product classes that can satisfy a core need with reasonable effectiveness. Example: savings and income

Product class: a group of products within the product family recognized as having a certain functional coherence. Also known as product category. Example: financial instruments

Product line: a group of products that are closely related because they perform a similar function are sold to the same customer groups, are marketed through the same outlets or channels or fall within given price ranges

Product type: a group of items within a product line that share one of the several possible forms of the product.

Item: a distinct unit within a brand or product line distinguishable by size, price, appearance or some other attribute

Product Systems and Mixes Product system: it is group of diverse but related items that

function in a compatible manner. Product mix: also called product assortment is a set of all

products and items a particular seller offers for sale product mix consist of various product lines. A company’s product mix has a certain width, length, depth and consistency.

Width: the width of the product mix refers to how many different product lines the company carries.

Length: the length of the product mix refers to the total number of items in the mix.

Depth: the depth of a product mix refers to how many variants are offered to each product in the line.

Consistency: the consistency of the product mix refers to how closely related the various product line are in the end use, production requirements, distribution channels or some other way.

The product mix is the set of all products offered for sale by a company.

A product line is a broad group of products, intended for similar uses and having similar characteristics.

A product mix has following dimensions: Width - number of different product lines Length - total number of items within the lines Depth - the variety of sizes, colors, and models

offered within each product. Consistency –close relationship of product

lines.

Product MixProduct Mix

BREADTH/WIDTH (DIFFERENT LINES)

Detergents Toothpaste Soaps

Tide

Dash

Bold

DEPTH

(ASSORTMENT

WITHIN A LINE) Gleem

Crest

Camay

Safeguard

Oil of Olay

Each in varioussizes and prices

Each in varioussizes and prices

Each in varioussizes and prices

P&G Product Mix

Branding

DefinitionDefinitionDefinitionDefinition

BrandBrand

Brand NameBrand Name

Brand MarkBrand Mark

TrademarkTrademark

The element of the brand that can be vocalized.The element of the brand that can be vocalized.

Name, term, sign, symbol, design or combination used to identify and differentiate a company’s products from competitors.

The element of the brand that cannot be vocalized.

A brand or part of a brand this is registered with the US Patent and Trademark office.

TermTerm

The Importance of Branding

For ConsumersFor ConsumersFor ConsumersFor Consumers For MarketersFor MarketersFor MarketersFor Marketers

• Quality Assurance

• Reduce Search/Selection Time

• Known Quantity

• Prestige

• Differentiates Product from Competitors

• Build Brand Identity

• Improve Marketing Communications Effectiveness

Brand Relationships

BrandAwareness

BrandAwareness

BrandImageBrandImage

BrandLoyaltyBrand

LoyaltyBrandEquityBrandEquity

Brand StrategiesBrand Strategies

BrandExtension

New

Bra

nd

Nam

e

Product Category

LineExtension

Existing

Existing

MultibrandsNew NewBrands

Branding Strategies

Product Mix Branding Strategies

Product Mix Branding Strategies

Individual Brand Name Strategy

Individual Brand Name Strategy

Family Brand Name StrategyFamily Brand

Name Strategy Company NameCompany Name

Family Brand for Product Types

Family Brand for Product Types

Family & Individual Brand

Name

Family & Individual Brand

Name

Packaging: The 5th P

All the activities of designing and producingthe container for a product.

Why Package Crucial as a Marketing ToolWhy Package Crucial as a Marketing Tool

Self-service Consumer affluence Company & brand image Opportunity for innovation

Functions of Packaging

ProtectingProtecting

StorageStorageFacilitatingDisposal

FacilitatingDisposal

FacilitatingConsumptionFacilitating

ConsumptionPromotingPromoting

Functions of Labels

Identifies Grades Describes Promotes

LabelsLabels

IdentifyIdentifyIdentifyIdentify

DescribeDescribeDescribeDescribe

PromotePromotePromotePromote