Product life cycle and Product Strategy

Submitted to:
Mr. S.K Chaddha

Submitted by:
Prabhgeet kaur Priya Tiku Priyanka Gunani MBA -B

Dell 2/4/2011

What is a 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.

PRODUCT CHARACTERISTICS AND CLASSIFICATIONS

Product levels: Customer-Value Hierarchy

In planning its market offering, marketers need to address 5 product levels. Each level adds more customer value, and the five constitute a customer value hierarchy. 1. Core Benefit-the fundamental need or want that consumers satisfy by consuming the product or service. 2. Generic Product-a version of the product containing only those attributes or characteristics absolutely necessary for it to function. 3. Expected Product-the set of attributes or characteristics that buyers normally expect and agree to when they purchase a product. 4. Augmented Product-inclusion of additional features, benefits, attributes or related services that serve to differentiate the product from its competitors. 5. Potential Product-all the augmentations and transformations a product might undergo in the future.

Kotler noted that much competition takes place at the Augmented Product level rather than at the Core Benefit level or, as Levitt put it: 'New competition is not between what companies produce in their factories, but between what they add to their factory output in the form of packaging, services, advertising, customer advice, financing, delivery arrangements, warehousing, and other things that people value.'

PRODUCT CLASSIFICATIONS
Marketers have traditionally classified products on the basis of Durability, Tangibility and Use (Consumer or Industrial).Each product has an appropriate marketing mix strategy. 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. 1. 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) 2. 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) 3. 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. 4. Unsought goods: are those the consumer does not know about or normally think of buying. Unsought goods require advertising and personal selling support.

INDUSTRIAL GOODS CLASSIFICATION 1. 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. 2. Capital items: installations and equipments. 3. Supplies/business services: operating suppliers, maintenance and repair items, maintenance and repair services and business advisory services.

PRODUCT DIFFERENTIATION
To be branded, products must be differentiated .Physical products vary in their potential for differentiation. Design has become increasingly important means of differentiation. 1. Product form: the size, shape or physical structure of a product. 2. Features: they supplement its basic functions 3. 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. 4. 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. 5. Durability: a measure of the products expected operating life under natural or stressful conditions, is a valued attribute to some products. 6. Reliability: It is the measure of the probability that a product will not malfunction or fail within a specific time period. 7. Reparability: it is the measure of the ease of fixing a product when it malfunction or fails. 8. Style: Describes the products look and feel to the buyer. 9. Design: it is the totality of features that affect how a product looks and functions in terms of consumer requirements.

SERVICES DIFFERENTIATION
1. Ordering ease: refers to how easy it is for the customers to place an order with the company. 2. Delivery: refers to how well the product or service is delivered to the customer. 3. Installation: refers to the work done to make a product operational in its planned location. 4. Customer training: refers to training the customers employees to use the vendors equipment properly and efficiently. 5. Customer consulting: refers to data, information systems and advice services that the seller offers to buyers. 6. Maintenance and repair: describes the service program for helping customers keep purchased products in good working order.

PRODUCT AND BRAND RELATIONSHIPS

PRODUCT HIERARCHY 1. Need family: the core need that underlies the existence of a product family. example: security 2. Product family: all the product classes that can satisfy a core need with reasonable effectiveness. Example: savings and income 3. 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 4. 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 5. Product type: a group of items within a product line that share one of the several possible forms of the product. 6. Item: a distinct unit within a brand or product line distinguishable by size, price, appearance or some other attribute

FOR EXAMPLE: 1. Need family: Information exchange. Communications. 2. Product family: Devices for electronic information exchange. Wireless information devices. 3. Product category (class): GSM devices. 4. Product line: GSM Smartphones. 5. Product type: GSM Smartphones with Symbian OS. 6. Brand: Nokia. 7. Item: Nokia N70. PRODUCT SYSTEM AND MIXES 1. Product system: it is group of diverse but related items that function in a compatible manner. 2. 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. 3. Width: the width of the product mix refers to how many different product lines the company carries. 4. Length: the length of the product mix refers to the total number of items in the mix. 5. Depth: the depth of a product mix refers to how many variants are offered to each product in the line. 6. 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. PRODUCT MIX 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: i. Width - number of different product lines ii. Length - total number of items within the lines

iii. Depth - the variety of sizes, colors, and models offered within each product. iv. Consistency close relationship of product lines.

PRODUCT LINE ANALYSIS In offering a product line,companies normally develop a basic platform and module that can be added to meet different customer requirements. 1. Sales and profit: Product managers need to know the sales and profit of each itam in their line in order to determine which items to build, maintain, harvest or divest. 2. Market profile: It shows how the line is positioned against competitors lines. The product map shows which competitors items are competing against companys items. It identifies market segments

PRODUCT MIX PRICING 1. Product-line pricing: Companies normally develop their product lines rather than single products and introduce price steps. In many lines of trade, sellers use well established price points for their products in the line. The sellers task is to establish perceived quality differences to justify the price differences 2. Optional-feature pricing: Many companies offer optional products, features and services along with their main product .e.g. automobile companies advertise entry level models at low prices to pull people into the show rooms. 3. Captive-product pricing: Some products require the use of ancillary products, or captive products. Manufacturers of razors, digital phones and cameras often price them low and set high markups on razor blades and film. 4. Two-part pricing: Service firms engage in two-part pricing consisting of a fixed fee plus a variable usage fee. 5. By-product pricing: The production of certain goods like petroleum products and other chemicals often results in by-products. 6. Product-bundling pricing: Sellers often bundle products and features. Pure bundling occurs when a firm offers its products only as bundle. E.g. tour packages offered by many tour operators in South Asia charge prices that include travel costs, sightseeing costs and stay and food expenses for a 7 or a 14 day tour to a exotic location.

BRANDING

THE IMPORTANCE OF BRANDING

BRAND NAMES

Strong brand names: Suggest benefits Suggest product qualities Are easy to say, recognize, and remember Are distinctive Should not carry poor meanings in other languages BRAND STRATEGY Varies by type of brand Functional brands Image brands Experiential brands Line extensions Brand extensions

Multibrands New brands Co-branding BRAND REPOSITIONING

A brand report card can be used to audit a brands strengths and weaknesses. Changes in preferences or the presence of a new competitor may indicate a need for brand repositioning.

PACKAGING-THE 5TH P
Packaging includes All the activities of designing and producing the container for a product. Packaging includes: The primary package The secondary package The shipping package

Many factors have influenced the increased use of packaging as a marketing tool. They are: 1. Self-service: Given that 50 70 % of all purchases are sold off on a self service basis, the effective package must perform many of the sales tasks : attract attention, describe the product features, create consumer confidence, and make a favourable overall impression. 2. Consumer affluence: Rising consumer affluence means consumers are willing to pay a little more for the convenience appearance, dependability etc. 3. Company & brand image: Packages contribute to instant recognition of the company. 4. Opportunity for innovation:Innovative packaging can bring benefits to consumers and profits to producers. e.g. Calcium Sandoz bottles targeted at children have been designed to make them attractive to the target customers.

LABELLING The label may be a simple tag attached to the product or an elaborately designed graphic that is a part of the package. It might carry only a brand name, or a great deal of information. Even if the seller refers a simple label, the law may require more. A label performs the following functions: Identifies Grades Describes Promotes

Labels eventually become outmoded and require freshening up. The label on Ivory soap has been redone at least 18 times since 1890, with gradual changes in the design and letters. Companies with labels that have become icons need to tread very carefully when initiating a redesign.

WARRANTIES AND GUARANTEES Warranties are formal statements of expected product performance by the manufacturers. Product under warranty can be returned to the manufacturers or designated repair centres for repair, replacement, or refund. Whether expressed or implied, warranties are legally enforceable.