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Setting Product Strategy

Marketing Management, 13th ed

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?

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

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Chapter Questions (cont.)
‡ 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?

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

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At the heart of a great brand is a great product

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What is a Product? A product is anything that can be offered to a market to satisfy a want or need. including physical goods. and ideas. experiences. properties. services. persons. 12-5 . places. events. organizations. information.

Components of the Market Offering 12-6 .

Publishing as Prentice Hall 12-7 .g. Inc. free health spar) ‡ Potential product²all the possible augmentations and transformations (e.. working lamps) ‡ Augmented product²exceeds customer expectations (e.. clean bed.Five Product Levels ‡ Core benefit ²service or benefit (e. hotel room includes a bed. bathroom..g.g.. desk. hotel guest is buying ³rest and sleep´) ‡ Basic product ²turn core benefit into basic product (e..g.g. free internet connections and use) Copyright © 2009 Pearson Education. fresh towels. dresser. and closet) ‡ Expected product ± set of attributes and conditions buyers normally expect (e. towels.

Product Classes  Two broad classes ‡ consumer products ‡ business products  Classes help in planning marketing mix needed  Based on how the customer views the product ‡ how consumers think about and shop for products ‡ how business/organizational buyers think about products and how they'll be used .

Product Classes Help Plan Marketing Strategy Consumer Products Business Products .

Goods and/or Services Are the Product (Exhibit 9-2) .

Differences in Goods and Services Devoted to erasing stereotypes .

Differences in Goods and Services Tangibility When produced relative to when consumed Where produced Differences (storing and transporting) Balancing supply and demand Contact with customer by producer of product .

Product Classification Schemes Durability Tangibility Use 12-13 .

Durability and Tangibility Nondurable goods Durable goods Services 12-14 .

Consumer Goods Classification Staples Convenience Products Convenience Products Impulse Products Emergency Products Homogeneous Shopping Products Heterogeneous Shopping Products New Unsought Products Regular Unsought Products Shopping Products Specialty Products Unsought Products .

and Operating Component Component Parts & Parts & Materials processed expense Materials items that become part of a finished product . Repair.Industrial Goods Classification Accessories short-lived capital Accessories items²tools & production equipment Installations Installations important capital items Professional Services specialized services to support a firm¶s operations--consulting services Business Product Classes unprocessed expense items that become a physical part of a physical good Raw Materials Raw Materials MRO Supplies Supplies for MRO Supplies Maintenance.

or physical structure Features²supplement basic functions Customization±individual versus mass Performance²level at which the product¶s primary characteristics operate Conformance²degree to which all the produced units are identical and meet the promised specifications Durability²product¶s operating life Reliability²probability that a product will not malfunction or fail Repairability²the ease of fixing a product when it malfunction or fails Style²product¶s look and feel to the buyer. 12-17 Copyright © 2009 Pearson Education. shape. Inc. Publishing as Prentice Hall .Product Differentiation ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Product form²size.

and advice that the seller offers to buyers ‡ Maintenance and repair²service programs for helping customers keep purchased products in good working order ‡ Returns Copyright © 2009 Pearson Education.Service Differentiation ‡ Ordering ease²how easy to place an order ‡ Delivery²how well product or service is brought to the customer ‡ Installation²work done to make a product operational ‡ Customer training²training the customer¶s employees to operate the vendor¶s equipment properly and efficiently ‡ Customer consulting²data. Inc. systems. Publishing as Prentice Hall 12-18 . information.

Dunkin¶ Donuts¶ Differentiation 12-19 .

Design Differentiation 12-20 .

Maintenance and Repair 12-21 .

The Product Hierarchy Item Product type (term life insurance) Product line²group of products within product class (life insurance) Product class²group of products with product family (financial instruments) Product family ²all product classes (savings and income) Need family²core (security) 12-22 .

Product Systems and Mixes ‡ Product system²group of diverse but related items (PalmOne) ‡ Product mix or assortment²various product lines ‡ Depth²variants of each product ‡ Length²total number of items in the mix ‡ Width²number of different product lines ‡ Consistency²how closely related various product lines are in some way 12-23 .

g. e.Product Line Analysis Core product (basic products.. e. digital moviemaking equipment) Convenience Items (peripheral items. laptop computers) Staples (items with lower sales volume but not promoted.. carrying cases and accessories) 12-24 . CPU. e.g..g..g. bigger memories) Specialties (items with lower sales volume but highly promoted. e.

Line Stretching Down-Market Stretch Up-Market Stretch Two-Way Stretch 12-25 .

Line Filling 12-26 .

meat and fat in sausage) ‡ Product-bundling pricing²offer products only in a bundle: product plus service Copyright © 2009 Pearson Education. Publishing as Prentice Hall 12-27 . films) ‡ Two-part pricing (fixed fee plus variable usage fee: telephone service) ‡ By-product pricing (production of certain goods often result in by-products. theft protection) ‡ Captive-product pricing (require the use of ancillary products: razors.Product-Mix Pricing ‡ Product-line pricing (various levels: $200. Inc. and $600) ‡ Optional-feature pricing (sunroof. $400.

Product Line Pricing 12-28 .

Two-Part Pricing 12-29 .

Co-branding 12-30 .

Ingredient Branding 12-31 .

12-32 . is all the activities of designing and producing the container for a product. sometimes called the 5th P.What is the Fifth P? Packaging.

Factors Contributing to the Emphasis on Packaging Self-service Consumer affluence Company/brand image Innovation opportunity 12-33 .

Inc. Publishing as Prentice Hall 12-34 .Packaging Objectives ‡ Identify the brand ‡ Convey descriptive and persuasive information ‡ Facilitate product transportation and protection ‡ Assist at-home storage ‡ Aid product consumption Copyright © 2009 Pearson Education.

Functions of Labels Identifies Grades Describes Promotes 12-35 .

Innovations in Packaging 12-36 .

Warranties and Guarantees 12-37 .

A. Augmented D. Publishing as Prentice Hall 12-38 . and use. Expected C. Inc. customer value hierarchy B.Study Question 1 Marketers have traditionally classified products on the basis of three characteristics: ________. none of the above Copyright © 2009 Pearson Education. tangibility. durability E.

A. Inc.Study Question 2 The consumer usually purchases ________ frequently. shopping goods C. Publishing as Prentice Hall 12-39 . immediately. and with a minimum of effort. personal goods E. specialty goods B. convenience goods Copyright © 2009 Pearson Education. ³must haves´ goods D.

Emergency goods B. Specialty goods E. A.Study Question 3 ________ are similar in quality but different enough in price to justify shopping comparisons. Inc. Publishing as Prentice Hall 12-40 . Homogeneous shopping goods C. Impulse goods Copyright © 2009 Pearson Education. Heterogeneous shopping goods D.

Study Question 4 Industrial goods can be classified as ________. Publishing as Prentice Hall 12-41 . or suppliers and business services based on their costliness and how they enter the production process. specialty goods E. Subassemblies C. capital items. Inc. materials and parts Copyright © 2009 Pearson Education. A. pieces and parts D. service components B.

component materials C. A. natural products B. Publishing as Prentice Hall E. Equipment Copyright © 2009 Pearson Education. They include two groups: installations and ________. Inc. operating supplies D.Study Question 5 Capital items are long-lasting goods that facilitate developing or managing the finished product. none of the above 12-42 .

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