Chapter 14

Product: Anything that can be offered to a market to satisfy a need

or want.

Product Levels (Customer value hierarchy)(Fig 14.2)

Today’s competition essentially takes place at the product

augmentation level.
Three Points about augmentation strategy:
1. Each augmentation adds cost.
2. Augmentation benefits soon become expected benefits.
3. As companies raise the price of augmented product, some
competitors offer a ‘stripped-down’ version at a much lower
price.

• Delighting customers is a matter of exceeding expectation.

Product Hierarchy
• Six Types

Product Classifications
1. Durability and tangibility
• Nondurable goods
• Durable goods
• Services
2. Consumer goods classification
• Convenience goods
Staple goods
Impulse goods
Emergency goods
• Shopping goods
Homogeneous shopping goods
Heterogeneous shopping goods

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• Specialty goods
• Unsought goods

3. Industrial goods classification

• Material and parts
Raw material
Farm products
Natural products
Manufactured material and parts
Component materials
Component parts
• Capital item
Installation
Equipment
• Supplies and business services
Maintenance and repair items
Operating supplies
Maintenance and repair services
Business advisory services

Product mix (Product assortment)

• Width
• Length
• Depth
• Consistency

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 Product-line decision
• Product-line length
LINE STRETCHING
• Downward stretch
1. Notice strong growth opportunity
2. Tie-up lower end competitors
3. Middle market is stagnating and declining.

Upmarket stretch
1. To enter the high-end of the market.
2. Higher margin
3. To position as full-line manufacturer
• Two-way stretch

LINE FILLING
1. For incremental profit
2. To utilize excess capacity
3. To satisfy dealer
4. To be leading full line company
5. To plug holes to keep out competitors

Brand Decisions
• Branding is the art and cornerstone of marketing.

It can convey up to six levels of meaning:

1. Attributes
2. Benefits
3. Values
4. Culture
5. Personality
6. User

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 • Companies need to research the position their brand
occupies in the customers’ minds.

Three research approaches to get at brand meaning:

1. Word associations
2. Personifying the brand
3. Laddering up to find the brand essence

• Single benefit vs multiple benefit positioning

• The strongest brands present more than a rational
appeal, they pack an emotional appeal.

Brand Equity
The positive differential effects that knowing the brand name has
on customer response to the product or service.

High brand equity provides a number of competitive advantages.

Four points (page 423)

An overview of the branding decisions

Fig 14.5

Product Category
Existing New
Brand Existing Line extension Brand Extension
New Multibrand New brand

Packaging and labeling

• Primary, secondary and shipping packages

Functions of packaging and labeling

Page 436 and 437

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