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Chapter
13
Setting
Product Strategy

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Learning Objectives
1. What are the characteristics of products, and how do
marketers classify product?
2. How can companies differentiate products?
3. Why is product design important, and what are the
different approaches taken?
4. How can marketers best manage luxury brands?
5. What environmental issues must marketers consider
in their product strategies?
6. How can a company build and manage its product
mix and product lines?

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Learning Objectives
7. How can companies combine products to
create strong co-brands or ingredient brands?
8. How can companies use packaging, labeling,
warranties, and guarantees as marketing tools?

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At the heart of a great brand is a

great product

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Product Characteristics
and Classifications
• Product
– Anything that can be
offered to a market to
satisfy a want or need,
including physical goods,
services, experiences,
events, persons, places,
properties, organizations,
information, and ideas

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Figure 13.1
Components Of The Market Offering

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Product Levels: The Customer-

Value Hierarchy
• Figure 13.2: Five Product Levels

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Product Classifications

Durability

Tangibility

Use

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Durability and Tangibility

Nondurable goods

Durable goods

Services

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Consumer-Goods Classification

Convenience

Shopping

Specialty

Unsought

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Consumer-Goods Classification

Convenience : FMCG

Shopping :
Furniture/Clothing
Specialty : Cars, Stereo
system
Unsought : Smoke
detectors

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Industrial-Goods Classification

Materials and parts

Capital items

Supplies and
business services

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Product Differentiation
• Form • Reliability
• Features • Reparability
• Performance quality • Style
• Conformance quality • Customization
• Durability

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Services Differentiation

 Ordering ease
 Delivery
 Installation
 Customer training
 Customer consulting
 Maintenance and repair
 Returns

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Design
• Design
– The totality of
features that affect
the way a product
looks, feels, and
functions to a
consumer

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Design

 Is emotionally powerful
 Transmits brand meaning/positioning
 Is important with durable goods
 Makes brand experiences rewarding
 Can transform an entire enterprise
 Facilitates manufacturing/distribution
 Can take on various approaches

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Luxury brands
• Quality
• Uniqueness
• Craftsmanship
• Heritage
• Authenticity
• History

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Marketing Luxury Brands

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Environmental Issues
• Environmental issues
are also playing an
increasingly important
role in product design
and manufacturing

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THE PRODUCT HIERARCHY

6. Item

5. Product
type
4. Product
line
3. Product
class
2. Product
family
1. Need
family

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• The product hierarchy stretches from basic needs to particular items that satisfy those
needs. We can identify six levels of the product hierarchy, using life insurance as an
example:
• 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 a product category. Example: financial
instruments.
• 4. Product line—A group of products within a product class 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. A
product line may consist of different brands, a single family brand, or an individual brand
that has been line extended. Example: life insurance.
• 5. Product type—A group of items within a product line that share one of several possible
forms of the product. Example: term life insurance.
• 6. Item (also called stock-keeping unit or product variant)—A distinct unit within a brand or
product line distinguishable by size, price, appearance, or some other attribute. Example:
Prudential renewable term life insurance.

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Product Systems
and Mixes
• Product system
• Product
mix/assortment
– Width
– Length
– Depth
– Consistency

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Product Mix Width

Personal Care Home Care Food

Personal Skin care & Kitchen &

Wash Cosmatics Hair Care Deodorants Oral Care Fabric Care Floor Care Tea Coffee Food Ice Cream
Product Line Length

Fair & Brooke Bond Brooke Kwality

Lux Lovely Sunsilk Axe Close Up Surf Excel Domex Red Label Bond Bru Kissan Wall's

Lifebuoy Pond's Clinic Plus Rexona Pepsodent Rin Cif Lipton Knorr

Active Brook eBond 3 Annapoorn

Liril 2000 Vaseline Clear Wheel Vim Roses a

Brook eBond
Hamam Aviance Sunlight Taza Modern

Brooke Bond
Breeze Lakme Comfort Taj Mahal

Brook Bond
Dove Ayush Sunlight Sehatmand

Pears

Rexona
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Product Line Analysis

• Sales and profits

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Product Line Analysis

• Market profile and image

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Product line length

• Line stretching
– Down-market stretch
– Up-market stretch
– Two-way stretch
• Line filling
• Line modernization
• Line featuring
• Line pruning
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Product Mix Pricing

• The firm searches for a set of prices that
maximizes profits on the total mix
Optional-
Product line
feature
pricing
pricing

Product- Captive-
bundling product
pricing pricing

By-product Two-part
pricing pricing

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Co-Branding
• Two or more well-known brands are
combined into a joint product or marketed
together in some fashion

 Same-company
 Joint-venture
 Multiple-sponsor
 Retail

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INGREDIENT BRANDING
• Co-branding that creates brand equity for
parts that are necessarily contained within
other branded products

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INGREDIENT BRANDING

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Packaging
• All the activities of designing and
producing the container for a product

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Packaging
Used as a marketing tool
• Self-service
• Consumer affluence
• Company and brand
image
• Innovation opportunity
Packaging objectives
• Identify the brand
• Convey descriptive and
persuasive information
• Facilitate product
transportation and
protection
• Assist at-home storage
• Aid product consumption

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Packaging

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Labeling, Warranties, and

Guarantees
• Labeling
– Identifies, grades, describes, and promotes
the product
• Warranties
– Formal statements of expected product
performance by the manufacturer
• Guarantees
– Promise of general or complete satisfaction

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Thank you

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