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Chapter Setting Product Strategy

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The Product

Anything that can be offered to a market to satisfy a want or need.

1) Product Charactersitics & Classifications (1/7)

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The Product
Product
Physical goods Services Experiences Events Persons Places Properties Organizations Information Ideas

Components of the Market Offering

1) Product Charactersitics & Classifications (2/7)

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Product Levels: The Customer Value Hierarchy

Core benefit (Hotel; Rest & Sleep) Basic product (Hotel Room with bed,
bathroom, towels, desk, dresser and closet)

Expected product (Hotel guests expect

clean bed, f resh towels, working and quietness)

Fiv e Product Lev els

Augmented product (May be

overwhelmed if a guest f ound fresh flower in his room af ter returning from shopping)

Potential product: all the possible

augmentation the product might undergo in the f uture (Fastest internet in cell phone for News Viewing)

Consumption System: the way the user performs the tasks of getting and using products and related services. (Important for Product Augmentation)
1) Product Charactersitics & Classifications (3/7) 26-4

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Product Classifications
Durability and Tangibility Nondurable goods (Soap; Consumed quickly and purchased
frequently.mark up should be low and advertise to induce trial)

Durable goods (Refrigerators, clothing that needs more personal

selling and higher margin and guarantee)

Services (Intangible; require more quality control, credibility and

adaptability)

Consumer-Goods Classification: Consumer Convenience goods

S taples: Regular basis; rice, toothpaste.etc. Impulse goods: Without planning; Candy, Magazine Emergency goods: Need is urgent; Umbrella
1) Product Charactersitics & Classifications (4/7) 26-5

Product Classifications
Consumer-Goods Classification: Consumer S hopping goods (In the process of selection and purchase,
characteristically compares on quality, price and style)furniture, clothing, used car.and major appliance

Homogeneous shopping goods: Similar in quality and different enough in price Heterogeneous shopping goods: Product f eatures and services are more important that
price

S pecialty goods: (Special characteristics or brand f or which buyers are

willing to make a special purchasing ef fort).Car, Photographic equipment

Unsought goods: Does not know or does not normally think of

buying.Lif e Insurance, grave, .advertising and personal selling is required to sell them.

1) Product Charactersitics & Classifications (5/7)

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Product Classifications
Industrial-Goods Classification Industrial Materials and parts: Raw materialsMfg Materials
Farm products: Wheat, Rice Natural products: Fish, Crude Petroleum Component materials: Cement, wire Component parts: Small motor, tires, castings

Capital items: Facilitate developing or managing finished product.

Installations: Buildings, heavy equipments Equipment: Hand tool, office equipment (Computer and desk)

1) Product Charactersitics & Classifications (6/7)

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Product Classifications
Supplies & business services (Short-term goods and service that (Shortfacilitate developing the finished products)

Maintenance & repair items (Paint, nails and brooms) Operating supplies (lubricants, coal, writing paper, pencil) Maintenance & repair services (window cleaning & repairing
service)

Business advisory S ervices (Legal and management consulting)

1) Product Charactersitics & Classifications (7/7)

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Product Differentiation
Product form (size/ shape/ physical structure) Features Customization Performance Conformance (is the degree to which all the produced units are identical & meet the promised specifications ) Apple iPhone 4 and Toyota Durability Reliability Repairability S tyle (products look & f eel to the buyer)
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2) Differentiation (1/4)

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Sachet (pronunciation saSH )

26-11

Design: The Integrative Force Design is the totality of features that affect how a product looks and functions in terms of customer requirements. Certain countries are winning on design: Italian design in apparel and furniture. Scandinavian design for functionality, aesthetics, and environmental consciousness. Braun, a German division of Gillette, has elevated design to a high art in its electric shavers, coffeemakers, hair dryers, and food processors.

2) Differentiation (2/4)

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2) Differentiation (3/4)

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Service Differentiation Ordering ease Delivery Installation Customer training Customer consulting Maintenance and repair Returns

2) Differentiation (4/4)

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Product hierarchy
Need family (Hunger) Product family (Food) Product class (Cereal Food) Product line (Rice, Flakes) Product type (Flavored
rice)

Item (Pran Chinigura

Rice )/Stockkeeping Unit/Product Variant

3) Product and Brand Relationships (1/10)

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R1

Product System and Mixes

Product S ystem: A product system is a group of diverse but related items that function in a compatible manner. Example: PalmOne smartphone product lines includes headsets, cameras, keyboards, presentation projectors, e-books, M P3 players, and voice recorders. e Product mix (Product Assortment/ Product Portfolio): Set of all products and items a particular seller offers for sale

Product mix has a certain:

Width/Breadth (Different product lines the company carries) Length (Length of line) Depth (Variants are offered of each product in the line, Tide comes
with mountain spring and regular)

Consistency (P&G product lines are consistent and consumer goods

are going through same distribution channel)
3) Product and Brand Relationships (2/10) 26-16

Slide 16 R1
RANA, 11/22/2009

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Product Line
A Product Line is a group of products that are closely related because they perform a similar function, are sold to the same customer groups, marketed through the same channels, make up a particular price range.
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3) Product and Brand Relationships (3/10)

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Table : Product-Mix Width and Product-Line Length for Unilever

ProductProduct-Mix Width Detergents Wheel Bar Power Surf excell Toothpaste Close Up (Gel) Pepsodent (Fluoride) Pepsodent Power Disposable Bar Soap Lux Haircare Susilk Dov e Dov e Clear Lif ebuoy Beverage Taaza Lipton

PRODUCTPRODUCTLINE LENGTH

3) Product and Brand Relationships (4/10)

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ProductProduct-Line analysis

Sales and Profits needs to analyze

Four types of Product classes:
Core product (Produces high sales volume and low
margin)

Staples (Basic Ingredient): CPU, Large Memories, (low

volume, no promotion and high margin)

Specialties: Low sales volume but high promotion;

Installation may needed.S pecial S oftware

Convenience items: S ell high volume but less promotion

and higher margin; Monitor, printers and software
3) Product and Brand Relationships (5/10) 26-20

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Product-Line analysis Market profile

Product Map for a Paper-Product Line

3) Product and Brand Relationships (6/10)

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ProductProduct-Line Length
Line Stretching
Downmarket S tretch
The company may notice strong growth opportunities as mass retailers attract a growing number of shoppers with value-price valuegoods The company may wish to tie up lower-end competitors, if lowerattacked by lower end competitors. The company may find that the middle market is stagnating or declining

Upmarket S tretch: High end market for more growth, higher

margin or to position full line mfg.

Two-Way S tretch: Middle market company may try to stretch Twotheir line in both directions

3) Product and Brand Relationships (7/10)

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Product-Line Length Line Filling

Just-noticeable difference Just-

Line Modernization, featuring, & pruning (Microsoft

S martphone Kin)

3) Product and Brand Relationships (8/10)

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Product-Mix Pricing
ProductProduct-line pricing: Price for low quality, average and high
quality items

Optional feature pricing: Optional products and associated

price. Fog light for car, extended warranty

CaptiveCaptive-Product Pricing: Camera and Film; Printer and Ink Two Part Pricing: Fix ed plus variable. Telephone bill ByBy-Product Pricing: Petroleum processingand pricing Product Bundle Pricing: Bundle price should be cheaper than
lose one.Shampoo and conditioner bundle

3) Product and Brand Relationships (9/10)

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Co-Branding and Ingredient Branding Co Co-Branding/Dual Branding: Product are often Cocombined with products from other companies in various ways. S ame company co-branding: Amul Milk and Butter co Joint venture co-branding: Citi Bank Visa Card; Jamuna & coBashundhara.

Multiple S ponsor Co-branding: Citibank/American CoAirlines/Visa credit card partnership

Retail Co-branding: Pizza + Pepsi Co-

Ingredient Branding: S pecial case of co-branding. Intel coand IBM.

3) Product and Brand Relationships (10/10)

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Packaging, Labeling, Warranties & Guarantees

Packaging and Labeling Packaging Package

Primary Package (Cologne comes in a bottle) Secondary Package (Cardboard box) Shipping Package (Contains 10 box in one big pack)

Factors which have contributed to the growing use of packaging as a marketing tool
Self -Service (books for example) Self Consumer affluence (better package means dependability and prestige) Company and brand image (company or brand) Innovation opportunity (easy to open or easy to carry)
4) Packaging, Labeling, Warranties & Guarantees (1/4)

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Tetra Pak - Aseptic Pack

4) Packaging, Labeling, Warranties & Guarantees (2/4)

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Packaging, Labeling, Warranties & Guarantees

Labeling
Functions
Identification (identify the product or brand) Grading (grade of the product) Description (describe) Promote (through attractive graphics)

Warranties and Guarantees

Products under warranty can be returned to the manufactured or designated repair center for repair, replacement or refund. Guarantee reduces buyers perceived risk. Money back guarantee if not satisfied which is suitable for new products.
4) Packaging, Labeling, Warranties & Guarantees (3/4) 26-28

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Packaging, Labeling, Warranties & Guarantees According to the 1975 Moss Magnuson Act, warranty and 197 guarantee are the same thing. A guarantee is a document to protect consumer rights. It is a promise by a seller with a buyer for complete replacement of the item/ article or product; usually guarantee is valid for a fixed period of time. It has a legal status, even if we do not pay for or it was offered free of cost by a seller. Warranty is also a document that protects consumer rights. It is more or less like insurance policy for that we have to pay certain amount to come into legal contract. S o on the basis of this legal bond the company can be taken to court if it does not bound what has been agreed in the warranty document. Warranty covers only repair of the article. Guarantee is more in manufacture, Warranty is more in distribution and reselling parts; for example, a company manufacture a scooter is liable for manufacture guarantee, on the other hand, some importer or distributor resell the products will use warranty
4) Packaging, Labeling, Warranties & Guarantees (4/4) 26-29

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