SETTING PRODUCT STRATEGY

Dr. Ananda Sabil Hussein

This answer sheet is completed with purpose

to accomplish the Assignment of Principles of Marketing.

By:
Neysa Rakmasari Y

125020305121002

Ratri Anggarani

125020307121007

INTERNATIONAL UNDERGRADUATE PROGRAM IN ACCOUNTING

FACULTY OF ECONOMICS AND BUSINESS
UNIVERSITY OF BRAWIJAYA
Jl. M.T. Haryono 165 Malang, 65145.
2015.

PRODUCT CHARACTERISTICS AND CLASSIFICATIONS

Many people think that a product is a tangible offering, but a product can be more
than that. Product is everything that can be offered to market to satisfy a want or need.
Products that are marketed include physical goods, services, experiences, events, persons,
places, properties, organizations, information and ideas.
Product Levels
Marketers need to address 5 product levels: a. Core Benefit, the benefit a customer
really buys, e.g. Hotel guest buys rest and sleep; b. Basic Product, e.g. hotel room includes
bed, bathroom, desk, dresser, closet, towel etc; c. Expected Product, attributes that buyers
normally expect along with their product; d. Augmented Product, attributes that exceed buyer
expectations. In developed countries, brand positioning and competition take place at this
level, while in developing countries it takes place at expected product level; e. Potential
Product, it encompasses all the augmentations and transformations the product or offering
might undergo in the future.
Product Classification
Products can be nondurable goods, durable goods, or services. In the consumer-goods
category, products are convenience goods (staples, impulse goods, emergency goods),
shopping goods (homogeneous and heterogeneous), specialty goods, or unsought goods. The
industrial-goods category has three subcategories: materials and parts (raw materials and
manufactured materials and parts), capital items (installations and equipment), or supplies
and business services (operating supplies, maintenance and repair items, maintenance and
repair services, and business advisory services).
DIFFERENTIATION
Product Differentiation
To be branded, products must be differentiated. The seller faces an abundance of
differenciation possibilities, including form, features, customization, performance quality,
conformance quality, durability, reliability, repairability and style.
Design
Design has become increasingly important. As competition intensifies, design offers a
potent way to differentiate and position a companys products and services. In increasingly
fast-paced markets, price and technology are not enough. Design is the factor that will often
give a company its competitive edge. Design is the totally of features that affect how a
product looks, fells, and functions in terms of customer requirements.
Service Differentiation

When the physical product cannot easily be differentiated, the key to competitive
success may lie in adding valued services and improving their quality. The main services
differentiators are ordering ease, delivery, installation, customer training, customer consulting
and maintenance and repair.
PRODUCT AND BRAND RELATIONSHIP
Each product can be related to other products to ensure that a firm is offering and
marketing the optimal set of products.
The Product Hierarchy
It stretches from basic needs to particular items that satisfy those needs. It has six
levels of the product hierarchy, are: Need Family, Product Family, Product Class, Product
Line, Product Type, and Item.
Product System and Mixes
A Product system is a group of diverse but related items that function in a compatible
manner. The product mix means a set of all products and items a particular seller offers for
sale. It consists of various product lines. The product mix has four dimensions: width, length,
depth, and consistency.
Product Line Analysis
Product-line managers need to know the sales and profits of each item in their line in
order to determine which items to build, maintain, harvest, or divest.
Product-Line Length
One objective is to create a product line to induce up-selling. A different objective is
to create a product line that facilitates cross-selling. Another objective is to create a product
line that protects against economic ups and downs. Companies seeking high market share and
market growth will generally carry longer product lines. Product lines tend to lengthen over
time. Excessive manufacturing capacity puts pressure on the product-line manager to develop
new items. A company lengthens its product line in two ways: line stretching and line filling.
Product-Mix Pricing
Marketers must modify their price-setting logic when the product is part of a product
mix. In product-mix pricing, the firm searches for a set of prices that maximizes profits on the
total mix. Six situations calling for product-mix pricing: product-line pricing, optional-feature
pricing, captive-product pricing, two-part pricing, by-product pricing, and product-bundling
pricing.
Co-Branding and Ingredient Branding

Co-Branding, can generate greater sales, reduce cost of product introduction, and may
be a valuable means to learn about consumers and how other companies approach them. The
potential disadvantages of co-branding are the risk and lack of control in becoming aligned
with another brand in the minds of consumers, do not overcome the consumers expectations
generating dissatisfaction affecting both brand negatively. Ingredient branding is a special
case of co-branding. It creates brand equity for materials, components, or parts that are
necessarily contained within other branded products.
PACKAGING, LABELING, WARRANTIES, AND GUARANTEES
Most physical products must be packaged and labeled. Due to this fact, many
marketers have called packaging a fifth P, along with price, product, place, and promotion.
Most marketers, however, treat packaging and labeling as an element of product strategy.
Warranties and guarantees can also be an important part of the product strategy, which often
appear on the package.
Packaging
We define packaging as all the activities of designing and producing the container for
a product. Packages might include up to three levels of material. Well-designed packages can
build brand equity and drive sales. The package is the buyer's first encounter with the product
and is capable of turning the buyer on or off.
Labeling
The label may be a simple tag attached to the product or an elaborately designed
graphic that is part of the package. It might carry only the brand name, or a great deal of
information. Even if the seller prefers a simple label, the law may require more.
Warranties
All sellers are legally responsible for fulfilling a buyer's normal or reasonable
expectations. Warranties are formal statements of expected product performance by the
manufacturer. Products under warranty can be returned to the manufacturer or designated
repair center for repair, replacement or refund.
Guarantees
Guarantees reduce the buyer's perceived risk. They suggest that the product is of high
quality and that the company and its service performance are dependable. They can be
especially helpful when the company or product is not that well known or when the product's
quality is superior to competitors. Guarantees is more than legal statements that guides the
warranties, they can be seen as extra benefits to induce consumer to buy the product.