Product Strategy

Any offering that can satisfy the need of a customer including physical goods, services, experiences,
events, persons, places, properties, organizations, information, and ideas.

5 Product levels:

1. Core benefit: Fundamental service or benefit that the customers are really buying. (e.g., hotel
guest is buying “rest and sleep”)

2. Basic product: Turn core benefit into basic product (e.g., hotel room includes a bed, bathroom,
towels and closet)

3. Expected product: A set of attributes and conditions that expected by the customer (e.g., clean
bed, fresh towels)

4. Augmented product: A product that exceeds customer’s expectations. (e.g., free health spa)

5. Potential product: Encompasses all the possible augmentations and transformations. (e.g., free
internet connections and use)

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Product Classifications:

1. Durability & Tangibility:

a. Non-durable goods- tangible goods. Available in many locations, and advertise heavily. E.g.soap.
b. Durable goods- tangible goods that survive many uses. E.g. refrigerators, clothing.
c. Services- intangible, inseparable, variable and perishable products. E.g. haircuts and repairs.
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2. Consumer-Goods Classification:
a. Convenience Goods- purchased frequently, immediately and with minimum of effort. E.g Rice,
sugar, soaps, newspapers etc.
b. Shopping Goods- products are compared on the basis as quality, price and style. E.g. Furniture,
clothing.
c. Specialty Goods- goods with unique characteristics or brand identifications for which the
customer is willing to make a special purchasing effort. E.g. cars
d. Unsought Goods- consumer does not know about or does not normally think of buying.
Persuasion is involved. (Require advertising and personal selling.) E.g. Life Insurance.

3. Industrial Goods Classification:

1. Material & Parts- enter the manufacturer’s product. E.g. raw material and manufactured
materials.
2. Capital Items- long lasting goods that facilitate developing or managing the finished product.
Includes installations and equipment.
3. Supplies & business services- short lasting goods and services that facilitate developing or
managing the finished products.
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Product Hierarchy Levels: 
1. Need family: Core need. E.g. security
2. Product family: All the product classes that can satisfy a core need. E.g. Savings.
3. Product class: A group of products having a certain functional coherence. E.g. Financial
Instruments.
4. Product line: A group of related (e.g. life insurance) functions, same customers, channels, price
range.
5. Product Type: A group of items within a product line that share on of the possible forms of the
product.
6.Item: A distinct unit within a brand or product line. E.g. prudential renewable term life insurance.
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LINE STRETCHING:
Down-Market Stretch:
Company from upper / middle market introduces a lower-priced line. The company may notice
strong growth opportunities in the down market. The company may find that the middle market is
stagnating or declining.
Up-Market stretch:
Companies enter the high end of the market to achieve more growth
Two-Way Stretch:
Companies serving the middle market might decide to stretch their line in both directions.