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 the
Market Offering
Value-based prices
Services mix
and quality
Product features
and quality
Attractiveness of
the 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 Product
In 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 cost
2. 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 Levels
Potential product
Augmented product
Expected product
Basic product
Core benefit
Product Classification Schemes
Durability
Tangibility
Use (consumer or industrial)
Durability and Tangibility
1. 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 Classification
The 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 Products
Unsought Products
Shopping Products
Buy less frequently
> Gather product information
> Fewer purchase locations
> Compare for:
Suitability & Quality
Price & Style
Convenience Products


Special purchase efforts
> Unique characteristics
> Brand identification
> Few purchase locations
New innovations
> Products consumers dont
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 Classification
Industrial Goods Classification
Materials and parts: are goods that enter the
manufacturers 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 products 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 products 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 customers employees to
use the vendors 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 companys
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 Mix
BREADTH/WIDTH
(DIFFERENT LINES)
Detergents Toothpaste Soaps
Tide
Dash
Bold
Gleem
Crest
Camay
Safeguard
Oil of Olay
Each in various
sizes and prices
Each in various
sizes and prices
Each in various
sizes and prices
P&G Product Mix
Branding
Definition
Brand
Brand Name
Brand Mark
Trademark
The element of the brand that can be
vocalized.
Name, term, sign, symbol, design or
combination used to identify and
differentiate a companys 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.
Term
The Importance of Branding








For Consumers










For Marketers
Quality Assurance
Reduce
Search/Selection Time
Known Quantity
Prestige
Differentiates Product
from Competitors
Build Brand Identity
Improve Marketing
Communications
Effectiveness
Brand Relationships
Brand
Awareness
Brand
Image
Brand
Loyalty
Brand
Equity
Brand Strategies
Brand
Extension
New
B
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a
n
d

N
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Product Category
Line
Extension
Existing
Existing
Multibrands
New
New
Brands
Branding Strategies
Product Mix
Branding
Strategies
Individual Brand
Name Strategy
Family Brand
Name Strategy
Company Name
Family Brand for
Product Types
Family &
Individual Brand
Name
Packaging: The 5th P
All the activities of designing and producing
the container for a product.
Why Package Crucial as a Marketing
Tool
Self-service
Consumer affluence
Company & brand image
Opportunity for innovation
Functions of Packaging
Protecting
Storage

Facilitating
Disposal

Facilitating
Consumption
Promoting
Functions of Labels
Identifies
Grades
Describes
Promotes

Labels
Identify
Describe

Promote