LECTURE10 Setting Product Strategy Chapter Questions What are

LECTURE-10 Setting Product Strategy

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 Item State life Product type Term life insurance Product line Life insurance Product class Financial instruments Product family Saving & income Need family Security

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 5 th 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

Bibliography v Marketing Management – A South Asian Perspective by Philip Kotler, Kevin Lane Keller, Abraham Koshy & Mithileshwar Jha, 13 th Edition, Published by Pearson Education, Inc. v Strategic Marketing Management – Meeting The Global Marketing Challenges by Carol H. Anderson & Julian W. Vincze Published by Houghton Mifflin Company. v Principles of Advertising & IMC by Tom Duncan 2 nd Edition, Published by Mc. Graw-Hill Irwin. v Principles of Marketing by Philip Kotler & Gary Armstrong Thirteenth Edition, Published by Prentice Hall

"What lies behind us, and what lies before us are small matters compared to what lies within us. " Ralph Waldo Emerson The End…