Chapter 6 - Product Decisions

FUNDAMENTALS OF MARKETING IN NEPAL
CHAPTER SIX: PRODUCT DECISIONS

MEANING OF PRODUCT ................................................................................................................................ 2
CONCEPT OF PRODUCTS ........................................................................................................................... 2
LEVEL OF PRODUCT ................................................................................................................................... 3
TYPES OF PRODUCTS [PRODUCT CLASSIFICATION] .................................................................................. 4
MEANING AND STAGES OF PRODUCT LIFE CYCLE ........................................................................................ 6
MEANING OF PRODUCT LIFE CYCLE .......................................................................................................... 6
STAGES OF PRODUCT LIFE CYCLE .............................................................................................................. 6
PRODUCT LIFE CYCLE STRATEGIES ............................................................................................................ 9
PRODUCT ADOPTION AND DIFFUSION ................................................................................................... 10
CONCEPT OF NEW PRODUCT ...................................................................................................................... 11
TYPES OF NEW PRODUCTS ...................................................................................................................... 11
NEED FOR PRODUCT INNOVATION ......................................................................................................... 12
REASONS FOR PRODUCT FAILURE .......................................................................................................... 13
PROCESS OF NEW PRODUCT DEVELOPMENT ......................................................................................... 14
PRODUCT LINE AND MIX STRATEGIES (DECISIONS) .................................................................................... 16
SERVICE PRODUCT (SERVICE MARKETING) ................................................................................................. 19
CONCEPT OF SERVICE and SERVICE MARKETING ............................................................................... 19
TYPE OF SERVICES ............................................................................................................................... 20
NATURE / CHARACTERISTICS OF SERVICES ......................................................................................... 20
SERVICE MARKETING STRATEGIES ...................................................................................................... 21
BRANDING DECISIONS ................................................................................................................................ 23
REASONS FOR BRANDING: ...................................................................................................................... 24
REASONS AGAINST BRANDING: .............................................................................................................. 24
BRAND EQUITY ........................................................................................................................................ 25
TYPES OF BRANDING: .............................................................................................................................. 25
BRAND REPOSITIONING .......................................................................................................................... 27
ESSENTIALS OF GOOD BRAND NAME ..................................................................................................... 27
PACKAGING DECISIONS ............................................................................................................................... 28
LEVELS OF PACKAGING ........................................................................................................................... 29
OBJECTIVES OF PACKAGING.................................................................................................................... 29
FUNCTIONS OF PACKAGING .................................................................................................................... 29
ESSENTIALS OF GOOD PACKAGING ......................................................................................................... 30
LABELING..................................................................................................................................................... 31
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CASPIAN VALLEY COLLEGE
MEANING OF PRODUCT
A product is anything that is offered to a market for attention, acquisition, use or consumption and
that might satisfy a want or need. Products include more than just tangible goods. Broadly defined,
products include physical objects, services, persons, places, organizations, ideas or mixes of these
entities. Services are products that consist of activities, benefits or satisfactions that are offered for
sale, such as haircuts, tax preparation and home repairs. In other words, product is goods, ideas,
methods, information, objects, or services that are the end result of process and services as a need
or want satisfier. It is usually a bundle of tangible and intangible attributes (benefits, features,
functions, uses) that a seller offers to a buyer for purchase. For a marketers, product is the good or
service that most closely meets the requirements of a particular market or segment and yield
enough profit to justify its continued existence.
Goods
Information Services
Organizations Ideas
PRODUCTS
Properties Experiences
Places Events
Persons
CONCEPT OF PRODUCTS
a. TANGIBLE CONCEPT: A tangible product is a physical object that can be perceived by touch
such as a building, vehicle, gadget, or clothing. It is something that is palpable or can be
touched physically or smelled, or something that can be felt with the fingertips. It can be
either durable or nondurable goods. Nondurable goods are normally consumed in one or
few uses like beer and soap. Durable goods normally survive many uses like refrigerators,
machine tools, and clothing.
b. INTANGIBLE CONCEPT: An intangible product is a product that can only be perceived

indirectly such as an insurance policy. Services such as haircuts and repairs are intangible
products.
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c. AUGMENTED CONCEPT: A commodity that has both the primary physical attributes and
the non-physical attributes which are added to increase the product's value is augmented
product. Non-physical attributes of an augmented product may include a product warranty,
service or installation, and may increase the price of the basic product being purchased, and
allow the company selling the good to provide the consumer with other services that may
make using the product easier.
d. TOTAL PRODUCT CONCEPT: Total product is the combination of tangible, intangible and
augmented product concept. It focuses on features, advantages and benefits of a product.
Features describe a product. Advantages show why the product is better than competitors
and Benefits show what the product will do for the customer. Basically customers do not
buy features, they buy benefits.
LEVEL OF PRODUCT
a. CORE PRODUCT: The core product stands at the centre of the total product. It consists of
the problem-solving services or core benefits that consumers seek when they buy a product.
It is the fundamental service or benefit that the customer is really buying. A hotel guest is
buying “rest and sleep”. The purchaser of make-up kits is buying “beauty”. Marketers must
see themselves as benefit providers.
b. ACTUAL PRODUCT: Actual products may have as many as five characteristics: a quality
level, features, styling, a brand name and packaging. For example, Sony's Handycam
camcorder is an actual product. Its name, parts, styling, features, packaging and other
attributes have all been combined carefully to deliver the core benefit - a convenient, high-
quality way to capture important moments.
c. EXPECTED PRODUCT: Expected product is a set of attributes and conditions buyers

normally expect when they purchase this product. Hotel guests expect a clean bed, fresh
towels, working lamps, a relative degree of quiet etc.
d. AUGMENTED PRODUCT: It is additional consumer services and benefits built around the
core and actual products. Today, most competition takes place at the product augmentation
level. Successful companies add benefits to their offers that will not only satisfy, but also
delight customer. However, each augmentation costs the company money, and the marketer
has to ask whether customers will pay enough to cover the extra cost. Moreover, augmented
benefits soon become expected benefits: hotel guests now expect cable television, trays of
toiletries and other amenities in their rooms.
e. POTENTIAL PRODUCT: It encompasses all the possible augmentations and

transformations that the product or offering might undergo in the future. Companies search
for new ways to satisfy customers and distinguish their offer.
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TYPES OF PRODUCTS [PRODUCT CLASSIFICATION]
a. CONSUMER PRODUCT:
Consumer products are those bought by final consumers for personal consumption.
Marketers usually classify these goods based on consumer shopping habits. These products
differ in the way consumers buy them, so they differ in how they are marketed
i. Convenience Products: Those goods the customer usually purchases frequently,

immediately, and with a minimum of efforts are convenience products like soaps,
newspaper, toothpaste etc. It can further be divided into followings:
a. Staples: Those goods that consumers buy on regular basis, such as milk,
toothpaste or bread.
b. Impulse Goods: Those goods which are purchased with little planning or search
effort. These goods are normally available in many places because consumers
seldom seek them out. Thus chocolate bars and magazines are placed next to
checkout counters because shoppers may not otherwise think of buying them.
c. Emergency Goods: Those goods which are purchased when a need is urgent
like umbrellas during a rainstorm. Manufacturers of emergency goods will place
them in many outlets to make them readily available when the customer needs
them.
ii. Shopping Products: Those goods that the customer, in the process of selection and
purchase, characteristically compares on such bases as suitability, quality, price, and
style. Furniture, clothing, used cars, and major appliances fall under this category. It
can also be further classified into followings:
a. Homogeneous shopping goods: Goods which are similar in quality but
different enough in price to justify shopping comparisons are homogeneous
shopping goods like cookers, fridges etc. The seller has to 'talk price' to the
buyer for this goods.
b. Heterogeneous shopping goods: Goods which are differ in product features
and services that may be more important than price are heterogeneous shopping
goods like clothing and furniture. If the buyer wants a new suit, the cut, fit and
look are likely to be more important than small price differences. Therefore a
seller of heterogeneous shopping products must carry a wide assortment to
satisfy individual tastes and have well-trained salespeople to give information
and advice to customers.
iii. Specialty Products: Consumer goods with unique characteristics or brand

identification for which a significant group of buyers is willing to make a special
purchase effort are called specialty products. Examples are specific brands and types
of car, high-priced home entertainment systems, photographic equipments and
luxury goods. Buyers normally do not compare specialty goods. They invest only the
time needed to reach dealers carrying the wanted products. Although these dealers
do not need convenient locations, they must still let buyers know where to find
them.
iv. Unsought Products: Consumer goods that the consumer either does not know
about or knows about but does not normally think of buying. Most major
innovations are unsought until the consumer becomes aware of them through
advertising. Other examples of known but unsought goods are life insurance, home
security systems and blood donations to the Red Cross. By their very nature,
unsought goods require a lot of advertising, personal selling and other marketing
efforts.
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b. INDUSTRIAL PRODUCT:
Industrial products are those bought for further processing or for use in conducting a
business. Thus the distinction between a consumer product and an industrial product is
based on the purpose for which the product is purchased. If a consumer buys a lawn mower
for home use, the lawn mower is a consumer product. If the same consumer buys the same
lawn mower to use in a landscaping business, the lawn mower is an industrial product.
Industrial goods can be classified in terms of how they enter the production process and
their relative costliness.
i. Materials and Parts: Materials and parts are industrial goods that become a part of
the buyer's product, through further processing or as components. They include raw
materials and manufactured materials and parts. Raw materials include farm
products (wheat, cotton, livestock, fruits, and vegetables) and natural products (fish,
timber, crude petroleum, and iron ore). Manufactured materials and parts include
component materials (iron, yarn, cement, wires) and component parts (small
motors, tyres, castings). Most manufactured materials and parts are sold directly to
industrial users. Price and service are the most significant marketing factors, and
branding and advertising tend to be less important.
ii. Capital Items: Industrial products that help in the buyers' production or operations
are capital items. They include installations and accessory equipment. Installations
consist of buildings (factories, offices) and fixed equipment (generators, drill
presses, large computers, lifts). Because installations are substantial purchases, they
are usually bought directly from the producer after a long decision period. Accessory
equipment includes portable factory equipment and tools (hand tools, lift trucks)
and office equipment (fax machines, desks). These products do not become part of
the finished product. They have a shorter life than installations and simply aid in the
production process. Most sellers of accessory1 equipment use intermediaries
because the market is spread out geographically, the buyers are numerous and the
orders are small.
iii. Suppliers and Services: Industrial products that do not enter the finished product
at all are suppliers and services. Supplies include operating supplies (lubricants,
coal, computer paper, pencils) and repair and maintenance items (paint, nails,
brooms). Supplies are the convenience goods of the industrial field because they are
usually purchased with a minimum of effort or comparison. Business services
include maintenance and repair services (window cleaning, computer repair) and
business advisory services (legal, management consulting, and advertising). These
services are usually supplied under contract. Maintenance services are often
provided by small producers, and repair services are often available from the
manufacturers of the original equipment
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MEANING AND STAGES OF PRODUCT LIFE CYCLE
MEANING OF PRODUCT LIFE CYCLE

Like human beings, products also have an arc. From birth to death, human beings pass through
various stages e.g. birth, growth, maturity, decline and death. A similar life-cycle is seen in the case
of products. The product life cycle goes through multiple phases, involves many professional
disciplines, and requires many skills, tools and processes. Product life cycle (PLC) has to do with the
life of a product in the market with respect to business/commercial costs and sales measures. To
say that a product has a life cycle is to assert four things:
 Products have a limited life, and thus every product has life cycle
 Product sales pass through distinct stages, each posing different challenges, opportunities, and
problems to the seller,
 Profits rise and fall at different stages of the product life cycle
 Products require different marketing, financing, manufacturing, purchasing, and human
resource strategies in each life cycle stage
This product life cycle presents two principal challenges. First, because all products eventually
decline, the firm must find new products to replace ageing ones (the problem of new-product
development). Second, the firm must understand how its products age and adapt its marketing
strategies as products pass through life-cycle stages (the problem of product life-cycle strategies).
A company’s positioning and differentiation strategy must change as the product, market and
competitors change over time. Most product life-cycle curves are portrayed as bell-shaped. This
curve is typically divided into four stages: Introduction, Growth, Maturity and Decline.
STAGES OF PRODUCT LIFE CYCLE

As consumers, we buy millions of products every year. And just like us, these products have a life
cycle. Older, long-established products eventually become less popular, while in contrast, the
demand for new, more modern goods usually increases quite rapidly after they are launched.
Because most companies understand the different product life cycle stages, and that the products
they sell all have a limited lifespan, the majority of them will invest heavily in new product
development in order to make sure that their businesses continue to grow.
Introduction Stage –
The introduction stage starts when the new product is first launched. Introduction takes
time, and sales growth is apt to be slow. Well-known products such as instant coffee,
personal computers and mobile telephones lingered for many years before they entered a
stage of rapid growth.
In this stage, as compared to other stages, profits are negative or low because of the low
sales and high distribution and promotion expenses. Much money is needed to attract
distributors and build their inventories. Promotion spending is relatively high to inform
consumers of the new product and get them to try it. Because the market is not generally
ready for product refinements at this stage, the company and its few competitors produce
basic versions of the product.
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This stage of the cycle could be the most expensive for a company launching a new product.
The size of the market for the product is small, which means sales are low, although they
will be increasing. On the other hand, the cost of things like research and development,
consumer testing, and the marketing needed to launch the product can be very high,
especially if it’s a competitive sector.
Growth Stage –
If the new product meets market needs or stimulates previously untapped needs, it will
enter a growth stage, in which sales will start climbing quickly. The early adopters will
continue to buy, and later buyers will start following their lead, especially if they hear
favorable word of mouth. Attracted by the opportunities for profit, new competitors will
enter the market. They will introduce new product features, improve on the pioneer's
product and expand the market for the product. The increase in competitors leads to an
increase in the number of distribution outlets, and sales jump just to build reseller
inventories. Prices remain where they are or fall only slightly. Companies keep their
promotion spending at the same or a slightly higher level. Educating the market remains a
goal, but now the company must also meet the competition.
The growth stage is typically characterized by a strong growth in sales and profits, and
because the company can start to benefit from economies of scale in production, the profit
margins, as well as the overall amount of profit, will increase. This makes it possible for
businesses to invest more money in the promotional activity to maximize the potential of
this growth stage.
Maturity Stage –
At some point, a product's sales growth will slow down and the product will enter a
maturity stage. This maturity stage normally lasts longer than the previous stages, and it
poses strong challenges to marketing management. Most products are in the maturity stage
of the life cycle, and, therefore, most of marketing management deals with the mature
product. The slowdown in sales growth results in many producers with many products to
sell. In turn, this overcapacity leads to greater competition. Competitors begin to cut prices,
increase their advertising and sale promotions, and increase their R & D budgets to find
better versions of the product. These steps lead to a drop in profit. Often some of the weaker
competitors start to lag behind and soon drop out of the industry, which eventually contains
only well-established competitors. Although many products in the mature stage appear to
remain unchanged for long periods, most successful ones stay alive through continually
evolving to meet changing consumer needs.
During the maturity stage, the product is established and the aim for the manufacturer is
now to maintain the market share they have built up. This is probably the most competitive
time for most products and businesses need to invest wisely in any marketing they
undertake. They also need to consider any product modifications or improvements to the
production process which might give them a competitive advantage.
Decline Stage –
Eventually, the market for a product will start to shrink, and this is what’s known as the
decline stage. This shrinkage could be due to the market becoming saturated (i.e. all the
customers who will buy the product have already purchased it), or because the consumers
are switching to a different type of product. While this decline may be inevitable, it may still
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be possible for companies to make some profit by switching to less-expensive production

methods and cheaper markets.
The sales of most product forms and brands eventually dip. Sales may plunge to zero, or
they may drop to a low level where they continue for many years. This is the decline stage.
Sales decline for many reasons, including technological advances, shifts in consumer tastes
and increased competition. As sales and profits decline, some firms withdraw from the
market. Those remaining may reduce the number of their product offerings. They may drop
smaller market segments and marginal trade channels, or they may cut the promotion
budget and reduce their prices further.
Carrying a weak product can be very costly to a firm, and not just in profit terms. There are
many hidden costs. A weak product may take up too much of management's time. It often
requires frequent price and inventory adjustments. It requires advertising and sales force
attention that might be better used to make 'healthy' products more profitable or to create
new ones. A product's failing reputation can cause customer concerns about the company
and its other products. The biggest cost may well lie in the future. Keeping weak products
delays the search for replacements, creates a lopsided product mix, hurts current profits
and weakens the company's foothold on the future.
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PRODUCT LIFE CYCLE STRATEGIES
1. INTRODUCTION STAGE:
The firm seeks to build product awareness and develop a market for the product in this
stage.
PRODUCT PRICE PROMOTION PLACE

Product branding Penetration Aimed at early Selective
and quality level pricing to build adaptors and distribution until
established. market share innovators customer shows
Patents and High skim pricing Seek to build acceptance.
trademarks are to recover product awareness
obtained. development cost Educate potential
customers
2. GROWTH STAGE
The firm seeks to build brand preference and increase market share in this stage.

Product quality is Price is maintain Aimed at broader Distribution
maintained. as firms enjoy audience. channels are
Additional support increasing added.
services or features demand with less
may be added. competition
3. MATURITY STAGE
At maturity strong growth in sales diminishes. Competition may appear with similar
products. The primary objective in this stage will be to defend market share while
maximizing profit.

Features may be Price will be set at Emphasis on Distribution
enhanced to make lower level product became more
if different from because of new differentiation intense.
competitors competition Incentive may be
offered to
encourage
preferences
4. DECLINE STAGE
At decline stage, the firm may have several options:
a. Maintain the product, possibly rejuvenating it by adding new features and
finding new uses.
b. Harvest the product, reduce costs and continue to offer it, possibly to loyal niche
segment.
c. Discontinue the product, liquidating remaining inventories, or selling it to
another company that is willing to continue that product.
Marketing mix decisions may be change as per the strategy adopted. A product may be
changed if product is rejuvenated, or left unchanged if they are harvest or liquidated.
Similarly, price may be maintain if rejuvenated or reduce drastically if liquidated.
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PRODUCT ADOPTION AND DIFFUSION
A. PRODUCT ADOPTION
Adoption is an individuals’ decision to become a regular user of a product. The consumer

adoption process focuses on the mental process through which an individual passes from
first hearing about an innovation to final adoption. Similarly, a new product can be defined
as: “A good, service or idea that is “perceived” by some potential customers as new. It may
have been available for some time, but many potential customers have not yet adopted the
product nor decided to become a regular user of the product. Thus if they buy this product,
it is new product adoption.”
Research suggests that customers go through five stages in the process of new product
adoption or service: these are summarized below:
Awareness Interest Evaluation Trial Adoption
1. Awareness – the customer becomes aware of the new product, but lacks information
about it.
2. Interest – the customer seeks information about the new product.
3. Evaluation – the customer considers whether trying the new product makes sense.
4. Trial – the customer tries the new product on a limited or small scale to assess the value
of the product.
5. Product Adoption – the customer decides to make full and/or regular use of the new
product.
The new product marketer should facilitate movement through these stages. A portable
electric-dishwasher manufacturer might discover that many consumers are stuck in the
interest stage; they do not buy because of their uncertainty and the large investment cost,
but these same customers would be willing to use an electric dishwasher on trial basis for a
small monthly fee. The manufacturer should consider offering a trial-use plan with option to
buy. Thus if a customer goes through all the above stages he is assumed to have adopted the
product. There is various stages post adoption as well which decide whether or not the
customer will be retained with the product. One of such things is post sale service which is
extremely important to retain the customer.
B. PRODUCT DIFFUSION
Diffusion is the process by which a new idea or new product is accepted by the market.
The rate of diffusion is the speed that the new idea spreads from one consumer to the next.
When new product is launched in the market, various customer groups adopt the product at
different periods of time. People differ greatly in their readiness to try new products. In each
product area, there are 'consumption pioneers' and early adopters. Other individuals adopt
new products much later. These customers can be classified into the adopter categories:
a. Innovators: They are venturesome and are willing to try new ideas.
b. Early Adopters: They are guided by respect; they are opinion leaders in their
communities and adopt new ideas early but carefully.
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c. Early Majority: They are deliberate; they adopt new ideas before the average person.
d. Late Majority: They are skeptical; they adopt an innovation only after a majority have
tried it.
e. Laggards: They are tradition-bound; they are suspicious of change, mix with other
tradition-bound people, and adopt the innovation only when it takes on a measure of
tradition itself.
CONCEPT OF NEW PRODUCT

A new product can be defined as a good, service or idea that is “perceived” by some potential
customers as new. It may have been available for some time, but many potential customers have not
yet adopted the product nor decided to become a regular user of the product.
Improving and updating product lines is crucial for the success for any organization. Failure for an
organization to change could result in a decline in sales and with competitors racing ahead. The
process of NPD is crucial within an organization. Products go through the stages of their lifecycle
and will eventually have to be replaced.
As per Philip Kotler; “New products include original products, improved products, modified
products and new brands that the firm develops.”
TYPES OF NEW PRODUCTS

a. PRODUCT INNOVATION
Product innovation is the creation and subsequent introduction of a good or service that is either
new or improved on previous goods or services of its kind. This is broader than the normally
accepted definition of innovation to include invention of new products which, in this context, are
still considered innovative. The development of new products, changes in design of established
products, or use of new materials or components in the manufacture of established products is
called product innovation. In other words, anything which is new to the business and its product
range is counted as innovation, even if similar products are available elsewhere or if the change is
an incremental one.
b. PRODUCT MODIFICATION
Product modification means changing one or more of the product's features and may involve
reformulation and repackaging to enhance its customer appeal. Modifications can give a competitive
advantage, e.g., a company may be able to charge a higher price and enhance customer loyalty.
Product modification is often used as a way of extending the product life cycle of a product.
Modifications can be done into three distinct types: quality, design, and performance. Quality
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modifications relate to the product's dependability and durability; performance modifications

relate to the effectiveness, convenience, and safety of products (e.g., washing machines that use less
heat and water); and design modifications alter the aesthetic and sensory appeal of the product
(such as its taste, texture, sound, and appearance). Such modifications can act to differentiate
products in the marketplace, e.g., BMW cars have an immediately recognizable style.
c. PRODUCT IMITATION
Imitations are products that are new to the organization but old to the market. They are me too
products. For example: PODREJ for GODREJ, SANY for SONY, SAMSANG for SAMSUNG etc.
NEED FOR PRODUCT INNOVATION

Innovation is a major driver of sustainable growth. There are four ways for companies to grow:
1. Selling more of the products they already have;

2. Improving their current products incrementally with the goal of selling at higher margins or
volumes;
3. Creating new products and services; or
4. Expanding through a merger or an acquisition
As we’ve relearned over the past decade, however, the fourth way isn’t sustainable. Hence, the
following factors create the need for product innovation:
a. Technological innovations
The pace of technological innovations is very high. With the introduction of new technology,
the need for new products also arises. It is essential for survival in the market otherwise
existing products will be obsolete.
b. Market Leadership
Every product has its life. So, to stay as market leader, the product innovation is the most.
Therefore, market leaders like Samsung are always investing lots of money for research and
development.
c. Competitive Response
To be different from competitors, it is needed to gain competitive advantages by being first
in the market. Hence, continuous product innovation is required.
d. Changing Customer Preferences
No customer will be happy with the same products for lifetime. They may also require some
change or their taste, preference and choice may differ with time. Hence, new product
innovation is required to retain the customers.
e. Environmental Adaptation
Environment is ever changing. The needs and wants change with environment. Hence,
marketer should always try to innovate product that go with the environment.
f. Failure of New Products
It is not necessary that whatever product marketer introduces in market should pass
through various stages. If customers are not satisfied with the product then marketer should
search for new products (either through innovation or modification).
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REASONS FOR PRODUCT FAILURE

a. Development costs
If production cost or product development cost is very high, it will be very difficult to
sustain in the market, which eventually result in product failure. No company can run on
loss for long period of time.
b. Product Design:
If product is not designed as per the customer needs and wants, it is obvious to fail in
market. Only good promotion and cheap price will not determine the success of the product,
even product design should be attractive enough to fit into customer need and wants.
c. Market Size:
Sometime market itself will be so small to generate profit by increasing sales turnover that
results in product failure. This can be caused by wrong selection of market segment. Hence,
segment selection to be done by considering the size of the market as well.
d. Competition:
Intense and unhealthy competition can be another factor for product failure. Sometimes,
competitor can bring product first in market, sometime they can imitate the product and
introduce in cheap price and sometime they can launch better product in market. These all
may also lead to product failure.
e. Positioning:
Wrong positioning in the market can also lead to product failure. If consumer does not find
any difference between products of competitors and ours, they may not prefer to buy our
product if we introduce that product later than competitors.
f. Price:
Wrong pricing may also lead to product failure. Sometime product may be prices so high
that average market may not afford it and sometime it may be priced so low that it may be
perceived as poor or weak products.
g. Distribution:
Selection of right distribution channel is the most so that the entire consumer can get easy
access to the product whenever they need it. If customer does not get what they want in
time, they will shift to other alternatives and eventually results in product failure.
h. Promotion:
The customer will not get positive vibes without effective promotion of the product.
Sometime, due to lack of effective promotion, the customer gets unaware of the product and
leads to product failure even if the product is of superior quality.
i. Government Regulations:
Sometime the government may announced policy or acts what may not favor the product
which will leads to product failure. Regulations relating to environmental protection, quality
or consumer welfare basically determine the success or failure of product in market.
j. Favored idea:
Sometime product may be introduced in the market without doing proper market analysis
considering only the idea of top management which may not be as per the need and want of
customer.
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PROCESS OF NEW PRODUCT DEVELOPMENT

The seven stages of product development may seem like a long process but they are designed to
save wasted time and resources. New product development ideas and prototypes are tested to
ensure that the new product will meet target market needs and wants. There is a test launch during
the test marketing stage as a full market launch is expensive. Finally the commercialization stage
involves careful planning to maximize product success; a poor launch will affect product sales and
could even affect the reputation and image of the new product.
New Product Development starts with:
1. Idea generation: In this you are basically involved in the systematic search for new product
Ideas. A company has to generate many ideas in order to find one that is worth pursuing.
The Major sources of new product ideas include internal sources, customers, competitors,
distributors and suppliers. Almost 55% of all new product ideas come from internal sources
according to one study. Companies like 3M and Toyota have put in special incentive
programs or their employees to come up with workable ideas.
Almost 28% of new product ideas come from watching and listening to customers.
Customers: even create new products on their own, and companies can benefit by finding
these products and putting them on the market like Pillsbury gets promising new products
from its annual Bake-off; one of Pillsbury’s four cake mix lines and several variations of
another came directly from Bake-Off winners’ recipes.
2. Idea Screening: The second step in new product development is Idea screening. The
purpose of idea generation is to create a large pool of ideas. The purpose of this stage is to
pare these down to those that are genuinely worth pursuing. Companies have different
methods for doing this from product review committees to formal market research. It is
helpful at this stage to have a checklist that can be used to rate each idea based on the
factors required for successfully launching the product in the marketplace and their relative
importance. Against these, management can assess how well the idea fits with the
company’s marketing skills and experience and other capabilities. Finally, the management
can obtain an overall rating of the company’s ability to launch the product successfully.
3. Concept Development and Testing – The third step in new product development is
Concept Development and Testing. An attractive idea has to be developed into a Product
concept. As opposed to a product idea that is an idea for a product that the company can see
itself marketing to customers, a product concept is a detailed version of the idea stated in
meaningful consumer terms. This is different again from a product image, which is the
consumers’ perception of an actual or potential product. Once the concepts are developed,
these need to be tested with consumers either symbolically or physically. For some concept
tests, a word or a picture may be sufficient; however, a physical presentation will increase
the reliability of the concept test. After being exposed to the concept, consumers are asked
to respond to it by answering a set of questions designed to help the company decide which
concept has the strongest appeal. The company can then project these findings to the full
market to estimate sales volume.
4. Marketing Strategy Development and Business Analysis: This is the next step in new
product development. The strategy statement consists of three parts: the first part describes
the target market, the planned product positioning and the sales, market share and profit
goals for the first few years. The second part outlines the product’s planned price,
distribution, and marketing budget for the first year. The third part of the marketing
strategy statement describes the planned long-run sales, profit goals, and the marketing mix
strategy. Once the management has decided on the marketing strategy, it can evaluate the
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attractiveness of the business proposal. Business analysis involves the review of projected
sales, costs and profits to find out whether they satisfy a company’s objectives. If they do,
the product can move to the product development stage.
5. Product Development - Here, R&D or engineering develops concept into a physical

product. This step calls for a large investment. It will show whether the product idea can be
developed into a full- fledged workable product. First, R&D will develop prototypes that will
satisfy and excite customers and that can be produced quickly and at budgeted costs. When
the prototypes are ready, they must be tested. Functional tests are then conducted under
laboratory and field conditions to ascertain whether the product performs safely and
effectively.
6. Test Marketing – If the product passes the functional tests, the next step is test marketing:
the stage at which the product and the marketing program are introduced to a more realistic
market settings. Test marketing gives the marketer an opportunity to tweak the marketing
mix before the going into the expense of a product launch. The amount of test marketing
varies with the type of product. Costs of test marketing can be enormous and it can also
allow competitors to launch a “me-too” product or even sabotage the testing so that the
marketer gets skewed results. Hence, at times, management may decide to do away with
this stage and proceed straight to the next one.
7. Commercialization – The final step in new product development is Commercialization.

Introducing the product to the market-it will face high costs for manufacturing and
advertising and promotion. The company will have to decide on the timing of the launch
(seasonality) and the location (whether regional, national or international). This depends a
lot on the ability of the company to bear risk and the reach of its distribution network.
Today, in order to increase speed to market, many companies are dropping this sequential
approach to development and are adopting the faster, more flexible, simultaneous
development approach. Under this approach, many company departments work closely
together, overlapping the steps in the product development process to save time and
increase effectiveness.
Idea Generation
Idea Screening
Concept Development and Testing
Marketing Strategy
Product Development
Test Marketing
Commercialization
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PRODUCT LINE AND MIX STRATEGIES (DECISIONS)
1. PRODUCT LINE STRATEGIES

A product line is a group of products that are closely related because they function in a
similar manner, are sold to the same customer groups, are marketed through the same types
of outlet, or fall within given price ranges. For example, Suzuki produces several lines of
cars, Samsung produces several lines of television sets and Nike produces several lines of
athletic shoes.
Product line strategies consist of:
a. Product line length strategy: Product line length is influenced by company objectives.
Companies that want to be positioned as full-line companies or that are seeking high
market share and market growth, usually carry longer lines. Companies that are keen on
high short-term profitability generally carry shorter lines consisting of selected items.
Product lines tend to lengthen over time. Excess manufacturing capacity puts pressure
on product-line manager to develop new items. The sales force and distributors also
pressure the company for a more complete product line to satisfy customers; but as
items are added, several costs rise: design and engineering costs, inventory-carrying
costs, manufacturing-changeover costs, order-processing costs, transportation costs and
new item promotional costs. Eventually someone calls a halt; top management may stop
development because of insufficient funds or manufacturing capacity. Product line
length decisions involve line expansion and line contraction:
A company expands its product line in two ways; line stretching and line filling.
Line Stretching Strategy: Every company’s product line covers a certain part of the
total possible range. For example, BMW automobiles are located in the upper price
range of the automobile market. Line stretching occurs when a company lengthens its
product line beyond its current range. The company stretches its line down-market, up-
market and both ways.
Down-market stretch: A company positioned in the middle market may want to
introduce a lower priced line for any of three reasons:
The company may notice strong growth opportunities as mass retailers
The company may wish to tie up lower end competitors who might
otherwise try to move up market
The company may find that the middle market is stagnating or declining
In stretching downwards, the company faces some risks. The low-end item might
provoke competitors to counteract by moving into the higher end. The company's
dealers may not be willing or able to handle the lower-end products or the move
may confuse the customer.
Up-market stretch: Companies may wish to enter the high end of the market for
more growth, higher margins, or simply to position themselves a s full time
manufacturers.
Two-way stretch: Companies serving the middle market might decide to stretch
their line in both directions. Sony did this to hold off copycat competitors of its
Walkman line of personal tape players. Sony introduced its first Walkman in the
middle of the market. As imitative competitors moved in with lower-priced models,
Sony stretched downwards. At the same time, in order to add luster to its lower-
priced models and to attract more affluent consumers keen to trade up to a better
model, Sony stretched the Walkman line upwards.
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LINE FILLING STRATEGY: A product line can also be lengthened by adding more items
within the present range. There are several motives for line filling: reaching for
incremental profits, trying to satisfy dealers who complain about lost sales because of
missing items in the line, trying to utilize excess capacity, trying to be the leading full-
line company, and trying to plug holes to keep our competitors.
Product line managers must periodically review the line for deadwood that is
depressing profits. The weak items can be identified through sales and cost analysis.
Pruning is also done when the company is short of production capacity. Companies
typically shorten their product lines in periods of tight demand and lengthen their lines
in periods of slow demand.
b. Line Modernization Strategy: Product lines need to be modernized. A company’s

machine tools might have a 1950s look and lose out to newer styled competitor’s lines.
The issue is whether to overhaul the line piecemeal or all at once. A piecemeal approach
allows the company to see how customers and dealers take to new style. It is also less
draining on the company’s cash flow, but it allows competitors to see changes and to
start redesigning their own lines. In rapid changing product markets, modernization is
carried on continuously. Companies plan improvements to encourage customer
migration to higher-valued, higher priced items. A major issue is timing improvement so
they do not appear too early or too late.
c. Line Featuring Strategy: The product-line manager typically selects one or few items in
the line to feature. Sometimes a company finds one end of its line selling well and the
other end selling poorly. The company may try to boost demand for the slower sellers,
especially if they are produced in a factory that is idled by lack of demand.
2. PRODUCT MIX STRATEGIES
Product mix, also known as product assortment, refers to the total number of product lines
that a company offers to its customers. For example, a small company may sell multiple lines
of products. Sometimes, these product lines are fairly similar, such as dish washing liquid
and bar soap, which are used for cleaning and use similar technologies. Other times, the
product lines are vastly different, such as diapers and razors. The four dimensions to a
company's product mix include width, length, depth and consistency.
Width
The width of a company's product mix pertains to the number of product lines that a
company sells. For example, if a company has two product lines, its product mix width is
two. Small and upstart businesses will usually not have a wide product mix. It is more
practical to start with some basic products and build market share. Later on, a company's
technology may allow the company to diversify into other industries and build the width of
the product mix.
Length
Product mix length pertains to the number of total products or items in a company's
product mix, according to Philip Kotler. For example, ABC Company may have two product
lines, and five brands within each product line. Thus, ABC's product mix length would be 10.
Companies that have multiple product lines will sometimes keep track of their average
length per product line. In the above case, the average length of an ABC Company's product
line is five.
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Depth
Depth of a product mix pertains to the total number of variations for each product.
Variations can include size, flavor and any other distinguishing characteristic. For example,
if a company sells three sizes and two flavors of toothpaste, that particular brand of
toothpaste has a depth of six. Just like length, companies sometimes report the average
depth of their product lines; or the depth of a specific product line.
Consistency
Product mix consistency pertains to how closely related product lines are to one another--in
terms of use, production and distribution. A company's product mix may be consistent in
distribution but vastly different in use. For example, a small company may sell its health
bars and health magazine in retail stores. However, one product is edible and the other is
not. The production consistency of these products would vary as well.
Product Market Mix Strategy

Small companies usually start out with a product mix limited in width, depth and length;
and have a high level of consistency. However, over time, the company may want to
differentiate products or acquire new ones to enter new markets. A company can also sell
the existing products to new markets by coming up with new uses for their product.
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SERVICE PRODUCT (SERVICE MARKETING)
CONCEPT OF SERVICE and SERVICE MARKETING

It refers to a form of product that consists of activities, benefits or satisfactions offered for
sale that are essentially intangible and do not result in the ownership of anything like
accounting, banking, cleaning, consultancy, education, insurance, expertise or
transportation. That means services is not physical form of product but intangible and it
only indicates the activities or benefits or satisfaction that can offer in market for sale and it
can satisfy the consumer need and wants. It cannot separate from the service providers and
vary person to person.
Services marketing typically refer to both business to consumer (B2C) and business to
business (B2B) services, and include marketing of services like telecommunications
services, financial services, all types of hospitality services, car rental services, air travel,
health care services and professional services. The range of approaches and expressions of a
marketing idea developed with the hope that it be effective in conveying the ideas to the
diverse population of people who receive it.
The service marketing mix comprises off the 7’p’s. These include:
Product People
Price Process
Place Physical evidence.
Promotion
We have already discussed about 4Ps of marketing mix. Hence, let us discuss
additional 3Ps here:
PEOPLE: An essential ingredient to any service provision is the use of appropriate staff and
people. Recruiting the right staff and training them appropriately in the delivery of their
service is essential if the organization wants to obtain a form of competitive advantage.
Consumers make judgments and deliver perceptions of the service based on the employees
they interact with. Staff should have the appropriate interpersonal skills, aptitude, and
service knowledge to provide the service that consumers are paying for.
PROCESS: Refers to the systems used to assist the organization in delivering the service.
Imagine you walk into KFC and you order a chicken lollypop and you get it delivered within
2 minutes. What was the process that allowed you to obtain an efficient service delivery?
Banks that send out Credit Cards automatically when their customer’s old one has expired
again require an efficient process to identify expiry dates and renewal. An efficient service
that replaces old credit cards will foster consumer loyalty and confidence in the company.
PHYSICAL EVIDENCE: Where is the service being delivered? Physical Evidence is the
element of the service mix which allows the consumer again to make judgments on the
organization. If you walk into a restaurant your expectations are of a clean, friendly
environment. On an aircraft if you travel first class you expect enough room to be able to lay
down. Physical evidence is an essential ingredient of the service mix; consumers will make
perceptions based on their sight of the service provision which will have an impact on the
organizations perceptual plan of the service.
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TYPE OF SERVICES
a. People or Equipment Based:

People based include services of doctor, lawyer, teacher, banker etc.
Equipment based includes services of vending machine, ATMs etc.
b. Personal or Business
Personal service include haircutting, entertainment etc.
Business service include insurance, marketing research etc.
c. For Profit or Not-for-profit

For profit services includes banks, private colleges, nursing homes etc.
Not-for-profit includes government hospitals, government schools etc.
d. Client Presence or Absence

Services with client presence include teaching for students etc.
Services with client absence include shoe repair etc.
NATURE / CHARACTERISTICS OF SERVICES

Intangibility: Services are intangible and insubstantial. They cannot be touched, gripped,
handled, looked at, smelled, and tasted. Thus, there is neither potential nor need for
transport, storage or stocking of services. For example; the person getting a face-lift cannot
see the exact result before the purchase, and the patient in the psychiatrist’s office cannot
know the exact outcome.
Inseparability: Services are produced and consumed at the same time and cannot be
separated from their providers whether the providers are people or machines. The service
provider is indispensable for service delivery as he must promptly generate and render the
service to the requesting service consumer. This is not true of physical goods, which are
manufactured
Variability: Quality of service may vary greatly depending on who provides them and when,
where and how. Each service is unique. It is one-time generated, rendered and consumed
and can never be exactly repeated as the point in time, location, circumstances, conditions,
current configurations and/or assigned resources are different for the next delivery, even if
the same service consumer requests the same service.
Perish ability: Since when services is produced it needs to consume. For this reason, they
cannot be stored for later sale or use.
Simultaneity: Services are rendered and consumed during the same period of time. As soon
as the service consumer has requested the service (delivery), the particular service must be
generated from scratch without any delay and friction and the service consumer
instantaneously consumes the rendered benefits for executing his upcoming activity or task.
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SERVICE MARKETING STRATEGIES

Services marketing strategy focuses on delivering processes, experiences, and intangibles to
customers rather than physical goods and transactions. It involves integrating a focus on the
customer throughout the firm and across all functions. All company functions – marketing,
selling, human resources, operations, and R&D – must work together to create effective
services-marketing strategy. Rather than the traditional goods marketing focus on
transactions and exchange, services marketing strategy is centered on the customer, usage,
and relationships.
a. Service Product-Mix Strategies:

The product in service marketing mix is intangible in nature. Like physical products such as
soap or a detergent, service products cannot be measured. Tourism industry or the
education industry can be an excellent example. At the same time service products
are heterogeneous, perishable and cannot be owned. The service product thus has to be
designed with care. Moreover, its production and consumption are inseparable. Hence, there
is scope for customizing the offering as per customer requirements and the actual customer
encounter therefore assumes particular significance. However, too much customization
would compromise the standard delivery of the service and adversely affect its quality.
Hence particular care has to be taken in designing the service offering.
b. Service Pricing Strategies:

Pricing in case of services is rather more difficult than in case of products. If you were a
restaurant owner, you can price people only for the food you are serving. But then who will
pay for the nice ambience you have built up for your customers? Who will pay for the band
you have for music? Thus these elements have to be taken into consideration while costing.
Generally service pricing involves taking into consideration labor, material cost and
overhead costs. By adding a profit mark up you get your final service pricing.
c. Service Distribution Strategies:

Since service delivery is concurrent with its production and cannot be stored or
transported, the location of the service product assumes importance. Service providers have
to give special thought to where the service would be provided. Place in case of services
determine where is the service product going to be located. The best place to open up a
petrol pump is on the highway or in the city. A place where there is minimum traffic is a
wrong location to start a petrol pump. Similarly a software company will be better placed in
a business hub with a lot of companies nearby rather than being placed in a town or rural
area. Similarly, a fine dine restaurant is better located in a busy, upscale market as against
on the outskirts of a city. Similarly, a holiday resort is better situated in the countryside
away from the rush and noise of a city.
d. Service Promotion Strategies:

Promotions have become a critical factor in the service marketing mix. Services are easy to
be duplicated and hence it is generally the brand which sets a service apart from its
counterpart. You will find a lot of banks and telecom companies promoting themselves
rigorously. Why is that? It is because competition in this service sector is generally high and
promotions are necessary to survive. Thus banks, IT companies, and dotcoms place
themselves above the rest by advertising or promotions. This is crucial in attracting
customers in a segment where the services providers have nearly identical offerings.
e. People Strategies:
People are one of the elements of service marketing mix. People define a service. If you have
an IT company, your software engineers define you. If you have a restaurant, your chef and
service staff defines you. If you are into banking, employees in your branch and their
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behavior towards customers define you. In case of service marketing, people can make or
break an organization. Thus many companies nowadays are involved into specially getting
their staff trained in interpersonal skills and customer service with a focus towards
customer satisfaction. In fact many companies have to undergo accreditation to show that
their staff is better than the rest; definitely a USP in case of services.
f. Process Strategies:
Service process is the way in which a service is delivered to the end customer. Let’s take the
example of two very good companies – Mcdonalds and Fedex. Both the companies thrive on
their quick service and the reason they can do that is their confidence on their processes. On
top of it, the demand of these services is such that they have to deliver optimally without a
loss in quality. Thus the process of a service company in delivering its product is of utmost
importance. It is also a critical component in the service blueprint, wherein before
establishing the service, the company defines exactly what should be the process of the
service product reaching the end customer.
g. Physical Evidence Strategies:

As said before, services are intangible in nature. However, to create a better customer
experience tangible elements are also delivered with the service. Take an example of a
restaurant which has only chairs and tables and good food, or a restaurant which has
ambient lighting, nice music along with good seating arrangement and this also serves good
food. Which one will you prefer? The one with the nice ambience. That’s physical evidence.
Several times, physical evidence is used as a differentiator in service marketing. Imagine a
private hospital and a government hospital. A private hospital will have plush offices and
well dressed staff. Same cannot be said for a government hospital. Thus physical evidence
acts as a differentiator.
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BRANDING DECISIONS
Branding is the process involved in creating a unique name and image for a product in the
consumers' mind, mainly through advertising campaigns with a consistent theme. Branding aims to
establish a significant and differentiated presence in the market that attracts and retains loyal
customers. A brand is a "Name, term, design, symbol, or any other feature that identifies one
seller's good or service as distinct from those of other sellers.” A modern example of a brand is Coca
Cola which belongs to the Coca-Cola Company. Proper branding can result in higher sales of not
only one product, but on other products associated with that brand. Brand is the personality that
identifies a product, service or company (name, term, sign, symbol, or design, or combination of
them) and how it relates to key constituencies: customers, staff, partners, investors etc.
A brand conveys a specific set of features, benefits and services to buyers. It is a mark, a tangible
emblem, which says something about the product. The best brands, for example, often convey a
warranty of quality. A brand can deliver up to four levels of meaning:
Attributes: A brand first brings to mind certain product attributes. For example, Mercedes
suggests such attributes as 'well engineered', 'well built', 'durable', 'high prestige', 'fast',
'expensive' and 'high resale value'.
Benefits: Customers do not buy attributes, they buy benefits. Therefore, attributes must be
translated into functional and emotional benefits. For example, the attribute 'durable' could
translate into the functional benefit, 'I won't have to buy a new car every few years.' The
attribute 'expensive' might translate into the emotional benefit, 'The car makes me feel
important and admired.
Values: A brand also says something about the buyers' values. Thus Mercedes buyers value high
performance, safety and prestige. A brand marketer must identify the specific groups of car
buyers whose values coincide with the delivered benefit package.
Personality: A brand also projects a personality. Motivation researchers sometimes ask, 'If this
brand were a person, what kind of person would it be?' Consumers might visualize a Mercedes
automobile as being a wealthy, middle-aged business executive. The brand will attract people
whose actual or desired self-images match the brand's image.
Brand names come in many styles. A few include:
Initialism: A name made of initials such as UPS or IBM

Descriptive: Names that describe a product benefit or function like Whole Foods or Airbus
Alliteration and rhyme: Names that are fun to say and stick in the mind like Dunkin'
Donuts
Evocative: Names that evoke a relevant vivid image like Amazon or Crest
Neologisms: Completely made-up words like Kodak
Foreign word: Adoption of a word from another language like Volvo or Samsung
Founders' names: Using the names of real people, and founder's name like Hewlett-
Packard, Dell or Disney
Geography: Many brands are named for regions and landmarks like Cisco and Fuji Film
Personification: Many brands take their names from myth like Nike or from the minds of
ad execs like Betty Crocker
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REASONS FOR BRANDING:
Branding helps buyers in many ways:

Brand names tell the buyer something about product quality. Buyers who always buy the
same brand know that they will get the same quality each time they buy.
Brand names also increase the shopper's efficiency. Imagine a buyer going into a
supermarket and finding thousands of generic products.
Brand names help call consumers' attention to new products that might benefit them. The
brand name becomes the basis upon which a whole story can be built about the new
product's special qualities.
Branding also gives the supplier several advantages:

The brand name makes it easier for the supplier to process orders and track down
problems.
The supplier's brand name and trademark provide legal protection for unique production
features that otherwise might be copied by competitors.
Branding enables the supplier to attract a loyal and profitable set of customers.
Branding helps the supplier to segment markets. For example, Cadbury can offer Daily
Milk, Milk Tray, Roses, Flake, Fruit and Nut and many other brands, not just one general
confectionery product for all consumers.
Branding helps to promote products in efficient way.
Branding also adds value to consumers and society:

Those who favor branding suggest that it leads to higher and more consistent product
quality.
Branding also increases innovation by giving producers an incentive to look for new
features that can be protected against imitating competitors. Thus, branding results in
more product variety and choice for consumers.
Branding helps shoppers because it provides much more information about products and
where to find them.
REASONS AGAINST BRANDING:
There are few reasons why the companies do not prefer branding their products:
Branding requires great deal of long-term marketing investment, especially for advertising,
promotion and packaging.
Some companies produce perishable products which are worthless to brand.
Raw materials and food grains are difficult to differentiate hence they are not branded.
If product cannot perform consistently and is of low quality, branding is not preferred.
Since branding involves lots of legal formalities, branding is not preferred to save cost and
time.
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BRAND EQUITY
Brands vary in the amount of power and value they have in the marketplace. Some brands are
largely unknown to most buyers. Other brands have a high degree of consumer brand awareness.
Still others enjoy brand preference - buyers select them over the others. Finally, some brands
command a high degree of brand loyalty. A powerful brand has high brand equity. Brands have
higher brand equity to the extent that they have higher brand loyalty, name awareness, perceived
quality, strong brand associations and other assets such as patents, trademarks and channel
relationships. A brand with strong brand equity is a valuable asset. In fact, it can even be bought or
sold for a price.
High brand equity provides a company with many competitive advantages.

1. Because a powerful brand enjoys a high level of consumer brand awareness and loyalty, the
company will incur lower marketing costs relative to revenues.
2. Because consumers expect stores to carry the brand, the company has more leverage in
bargaining with retailers.
3. And because the brand name carries high credibility, the company can more easily launch
brand extensions.
4. Above all, a powerful brand offers the company some defense against fierce price
competition.
Marketers need to manage their brands carefully in order to preserve brand equity. They must
develop strategies that effectively maintain or improve brand awareness, perceived brand quality
and usefulness, and positive brand associations over time. This requires continuous R & D
investment to provide a constant flow of improved and innovative products to satisfy customers'
changing needs, skilful advertising and excellent trade and consumer service. Some companies, such
as Colgate-Palmolive, appoint 'brand equity managers' to guard their brands' images, associations
and quality. They work to prevent brand managers from over promoting brands in order to produce
short-term profits at the expense of long-term brand equity.
TYPES OF BRANDING:
1. OWNERSHIP BASED BRANDING
1. Manufacturer Brand
Manufacturer brands are created by producers and bear their chosen brand name. The
producer is responsible for marketing the brand. The brand is owned by the producer. By
building their brand names, manufacturers can gain widespread distribution (for example
by retailers who want to sell the brand) and build customer loyalty (think about the
manufacturer brands that you feel “loyal” to).
2. Own label / Distributors Brand

Own-label brands are created and owned by businesses that operate in the distribution
channel – often referred to as “distributors”.
Often these distributors are retailers, but not exclusively. Sometimes the retailer’s entire
product range will be own-label. However, more often, the distributor will mix own-label
and manufacturers brands. The major supermarkets (e.g. Bhat-Bhateni Super Store,
Salesways) are excellent examples of this.
Own-label branding – if well carried out – can often offer the consumer excellent value for
money and provide the distributor with additional bargaining power when it comes to
negotiating prices and terms with manufacturer brands.
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3. Licensed Brand
A product or service using a brand name offered by the brand owner to the licensee for an
agreed fee or royalty is licensed brand. Most manufacturers take years and spend millions to
create their own brand names. However, some companies license names or symbols
previously created by other manufacturers, names of celebrities, and characters from
popular movies and books, for a fee. Any of these can provide an instant and proven brand
name.
2. PRODUCT LINE BASED BRANDING
a. Individual Brand
Individual branding, also called individual product branding or multi branding, is the
marketing strategy of giving each product in a portfolio its own unique brand name. This
contrasts with family branding, corporate branding, and umbrella branding in which the
products in a product line are given a single overarching brand name. The advantage of
individual branding is that each product has an image and identity that is unique. This
facilitates the positioning of each product, by allowing a firm to position its brands
differently.
Examples of individual product branding include Procter & Gamble, which markets multiple
brands such as Pampers, and Unilever, which markets individual brands such as Dove.
The manufacturers argue that a multiband strategy - managing a stable of brand names
within the same product category - permits finer segmentation of the market, with each
brand name suggesting different functions or benefits for different customer segments.
Another advantage is that the firm can differentiate its new products more effectively with
individual brand names, while also reducing the risk of individual brand failures harming
the company's overall reputation.
Firms that favor a multiband approach are likely to create a new brand to differentiate a
new product, whether it is introduced into an existing or a new-product category. However,
for some companies, a new brand may be created because it is entering a new-product
category for which none of the company's current brands seems appropriate.
Introducing new brands within a product category can be risky as each brand might obtain
only a small market share and none may be very profitable. The company will have spread
its resources over several brands instead of building one or a few brands to a highly
profitable level. Companies should weed out weaker brands and set high standards for
choosing new brands. Ideally,
b. Family Brand
Family branding is a marketing strategy that involves selling several related products under
one brand name. Family branding is also known as umbrella branding. It contrasts with
individual, in which each product in a portfolio is given a unique brand name and identity.
There are often economies of scope associated with family branding since several products
can be efficiently promoted with a single advertisement or campaign. Family branding
facilitates new product introductions by evoking a familiar brand name, which can lead to
trial purchase, product acceptance, or other advantages.
Family branding imposes on the brand owner a greater burden to maintain consistent
quality. If the quality of one product in the brand family is compromised, it could impact on
the reputation of all the others. For this reason family branding is generally limited to
product lines that consist of products of similar quality.
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BRAND REPOSITIONING
However well a brand is initially positioned in a market, the company may have to reposition it
later; a competitor may launch a brand position next to the company's brand and cut into its market
share. Or customer wants may shift, leaving the company's brand with less demand. Marketers
should consider repositioning existing brands before introducing new ones. In this way, they can
build on existing brand recognition and consumer loyalty.
Repositioning may require changing both the product and its image. For example, Kentucky Fried
Chicken changed its menu, adding lower-fat skinless chicken, and non-fried items such as broiled
chicken and chicken salad sandwiches to reposition itself towards more health-conscious fast-food
consumers. It also changed its name - to KFC. A brand can also be repositioned by changing only the
product's image. Johnson & Johnson's baby shampoo was repositioned without a physical change
from a 'baby shampoo' to a 'mild shampoo' for adults who wash their hair frequently and want a
gentle alternative.
ESSENTIALS OF GOOD BRAND NAME
1. Brevity: It should be easy to pronounce, recognize and remember. Short names help.
Examples: Dove (soap), Wai Wai (noodles). But longer ones are sometimes effective.
Examples: "Love My Carpet' carpet cleaner.
2. Product Attributes: It should suggest something about the product's benefits and qualities.
Examples: Oasis (a still fruit drink), Kleenex (tissue paper), Frisp (a light savoury snaek).
3. Distinctive: The brand name should be distinctive. Examples: Shell, Kodak, Virgin.
4. Legal Protection: It should be capable of registration and legal protection, A brand name
cannot be registered if it infringes on existing brand names. Also, brand names that are
merely descriptive or suggestive may be unprotect able. For example, the Miller Brewing
Company registered the name Lite for its low calorie beer and invested millions in
establishing the name with consumers. But the courts later ruled that the terms lite and light
are generic or common descriptive terms applied to beer and that Miller could not use the
Lite name exclusively.
5. Adaptable: It should be usable in global marketing like Bajaj, Sony, Hulas etc.
Once chosen, the brand name must be registered with the appropriate Trade Marks Register, giving
owners intellectual property rights and preventing competitors from using the same or similar
name. Many firms try to build a brand name that will eventually become identified with the product
category. However, their very success may threaten the company's Individual Product Decisions
rights to the name. Many originally protected brand names, such as cellophane, aspirin, nylon,
kerosene, linoleum, yoyo, trampoline, escalator, thermos and shredded wheat, are now names that
any seller can use.
BINAYA RATNA SHAKYA

PACKAGING DECISIONS
Packaging includes the activities of designing and producing the container or wrapper for a product.
Packaging performs a vital function for most products. It protects goods from being damaged before
you buy them, helps keep, for example, foodstuffs hygienic and fresh, and is often necessary for
labeling and information reasons.
Philip Kotler- “Packaging is all the activities of designing and producing the container for a product.”
Many products offered to the market have to be packaged. Some marketers have called packaging a
fifth P, along with price, product, place and promotion. Most marketers, however, treat packaging as
an element of product strategy. Although the primary function of the package was to contain and
protect the product, in recent times, many factors have made packaging an important marketing
tool. An increase in self-service means that packages must now perform many sales tasks - from
attracting attention, to describing the product, to making the sale. Companies are realizing the
power of good packaging to create instant consumer recognition of the company or brand.
Developing a good package for a new product requires making many decisions.
The first is to establish the packaging concept: defining what the package should basically
be or do for the particular product. Decisions must be made on additional elements like
size, shape, materials, color, text, and brand mark. The various packaging elements must be
harmonized. The packaging elements must also be harmonized with decisions on pricing,
advertising, and other marketing elements.
Then, it must be tested. Engineering test is conducted to ensure that the package stands up
under normal conditions; visual tests, to ensure that the script is legible and the colors
harmonious; dealer tests, to ensure that dealers find the packages attractive and easy to
handle; and consumer tests; to ensure favorable consumer response.
These various elements must work together to support the product's position and marketing
strategy. The package must be consistent with the product's advertising, pricing and distribution.
There are various ways of packaging:
1. UNIT PACKAGING:
It is a way of packing one unit in one package like bar soap package, toffee package etc.
2. FAMILY PACKAGING:
It is way of packing similar items in one placed which means to be used by several
customers. It is also called economy pack like 3Dettol soaps pack.
3. LINE PACKAGING:
It is way of packing all similar items in identical packaging like real juice mango, real juice
pineapple etc.
4. BANDED PACKAGING:
It is way packing several related product items in one package. For example, Johnson baby
care box.
5. MULTIPLE PACKAGING:
It is way of using separate packages for various weight and size of the product. For example:
Phuchhe coke, jumbo coke, can coke etc.
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LEVELS OF PACKAGING
1. PRIMARY PACKAGE:
The container that directly holds the product is the PRIMARY package. That may be a can,
bottle, jar, tube, carton, drum, etc.
2. SECONDARY PACKAGE:
Any outer wrappings that help to store, transport, inform, display and protect the product
are SECONDARY packaging. The decorated carton or gift box is common examples.
3. SHIPPING / TERTIARY PACKAGE:
SHIPPING packaging is the grouping of products for storage and transportation. The
corrugated, brown carton is the most familiar. Large pallets of shrink- wrapped boxes are a
common ware house sight reflecting tertiary packaging.
OBJECTIVES OF PACKAGING
1. PROTECTION:
Packaging is needed to prevent spoilage, leakage, breakage, moisture changes, theft and
tampering. These packages seal out contaminants in the environment (germs, dirt, dust,
moisture, etc.) and protect against tampering, theft, breakage, and spoilage.
2. STORAGE:
Packaging is needed to facilitate sellers and consumers for storing the products till final
consumption. It helps to easily and safely move the product from the manufacturer, perhaps
to a warehouse, then to the retailer and finally, to the consumer. And storage space at these
various locations can be used much more efficiently when cartons are stacked.
3. INFORMATION:
Packaging is needed to identify the brand and any related companies, to explain how it
should be used, to warn about the hazards for misuse, and to reveal product contents. Much
of this information is required according to various laws and agencies.
4. PROMOTION:
Packaging is needed to print advertising messages and sales promotion schemes which
facilitate self service marketing.
5. POSITIONING:
Packaging can also be taken as tools for positioning the product. For example; when we
think of ‘2PM noodles’ we think of blue package.
FUNCTIONS OF PACKAGING
1. CONTAINMENT:
Most products must be contained before they can be moved from one place to another. To
function successfully, the package must contain the product. This containment function of
packaging makes a huge contribution to protecting the environment. A better packaging
helps to maintain the quality of the product and accessibility of the product in the
consumer's hand without spillages. It gives better image to the organization.
2. PRODUCT PROTECTION:
A basic function of package is to protect and preserve the contents during transit from the
manufacturer to the ultimate consumer. It is the protection during transport and
distribution; from climatic effects (heat and cold, moisture, vapor, drying atmospheres);
from hazardous substances and contaminants; and from infestation. Protection is required
against transportation hazards spillage, dirt, ingress and egress of moisture, insect infection,
contamination by foreign material, tampering pilferage etc. A package should preserve the
contents in 'Factory Fresh' condition during the period of storage and transportation,
ensuring protection from bacteriological attacks, chemical reaction etc.
BINAYA RATNA SHAKYA

3. IDENTIFICATION and PRODUCT DIFFERNTIATION:

Another function of the packaging is to differentiate product from that of competitors.
Packaging helps to identify the product from among the number of products in the stores.
The label, color, signs, design helps to identify the product and differentiate from among
others.
4. PROMOTION:
A major function of packaging is the communication of the product. A package must
communicate what it sells. When international trade is involved and different languages are
spoken, the use of unambiguous, readily understood symbols on the distribution package is
essential. It is the interest further that to get appropriate communication to the consumer
about the product, how to use it and other utility information. Packaging protects the
interests of consumers. Information includes: quantity; price; inventory levels; lot number;
distribution routes; size; elapsed time since packaging; color; and merchandising and
premium data.
5. DISTRIBUTION:
The paramount concern of packaging is the reach ability of the product without any damage.
No matter where and how the products are transported or shipped, they arrive at the
customer's door in working condition without need of repair or adjustment.
ESSENTIALS OF GOOD PACKAGING
1. ATTRACTIVE:
Packaging should be attractive which helps to grasp the attention of customers when they
go for shopping.
2. CONVENIENT:
Packaging should be convenient to carry, open, use and store.
3. ECONOMIC:
Packaging should be cost effective as well so that it does not add excessive cost to the
product.
4. REUSABLE:
Packaging should be design in such a way that it can be reusable or can have multiple uses.
5. ENVIRONMENT FRIENDLY:
Packing materials shall be as far as possible environment friendly that do not contaminate
environment. Recyclable materials shall be used. It should be easily disposable as well.
6. COMMUNICATIVE:
Packaging shall contain all the information about the product that is required by the law.
BINAYA RATNA SHAKYA

LABELING
Sellers must label products. The label may be a simple tag attached to the product r an elaborately
designed graphic that is part of the package. The label might carry only the brand name or a great
deal of information. Even if the seller prefers a simple label, the law may require additional
information.
Labels perform several functions:

Identify of the product and brand
Grade the product
Describe the product: who made it, where it was made, when it was made , what it contains,
how it is to be used, and how to use it safely.
Promote the product through its attractive graphics.
TYPES OF LABELS
a. BRAND LABELS:
It is name of Brand appears in packaging. Like mark of Samsung in TV and mobiles, Levis in
apparels etc.
b. GRADE LABELS:
It is indication of quality of product like ISO mark, NS mark etc.
c. DESCRIPTIVE LABELS:
It is the details provided in the packaging like its price, manufacturing date, batch no., expiry
date, ingredients, manufacturer, operating style and safety instruction.
BINAYA RATNA SHAKYA


Chapter 6 - Product Decisions

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FUNDAMENTALS OF MARKETING IN NEPAL

CHAPTER SIX: PRODUCT DECISIONS

CHAPTER SIX: PRODUCT DECISIONS

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CHAPTER SIX: PRODUCT DECISIONS

b. INTANGIBLE CONCEPT: An intangible product is a product that can only be perceived

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c. EXPECTED PRODUCT: Expected product is a set of attributes and conditions buyers

e. POTENTIAL PRODUCT: It encompasses all the possible augmentations and

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TYPES OF PRODUCTS [PRODUCT CLASSIFICATION]

i. Convenience Products: Those goods the customer usually purchases frequently,

iii. Specialty Products: Consumer goods with unique characteristics or brand

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MEANING AND STAGES OF PRODUCT LIFE CYCLE

MEANING OF PRODUCT LIFE CYCLE

STAGES OF PRODUCT LIFE CYCLE

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be possible for companies to make some profit by switching to less-expensive production

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PRODUCT LIFE CYCLE STRATEGIES

PRODUCT PRICE PROMOTION PLACE

PRODUCT PRICE PROMOTION PLACE

PRODUCT PRICE PROMOTION PLACE

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PRODUCT ADOPTION AND DIFFUSION

Adoption is an individuals’ decision to become a regular user of a product. The consumer

Awareness Interest Evaluation Trial Adoption

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CONCEPT OF NEW PRODUCT

TYPES OF NEW PRODUCTS

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modifications relate to the product's dependability and durability; performance modifications

NEED FOR PRODUCT INNOVATION

1. Selling more of the products they already have;

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REASONS FOR PRODUCT FAILURE

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PROCESS OF NEW PRODUCT DEVELOPMENT

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5. Product Development - Here, R&D or engineering develops concept into a physical

7. Commercialization – The final step in new product development is Commercialization.

Concept Development and Testing

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PRODUCT LINE AND MIX STRATEGIES (DECISIONS)

1. PRODUCT LINE STRATEGIES

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b. Line Modernization Strategy: Product lines need to be modernized. A company’s

2. PRODUCT MIX STRATEGIES

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Product Market Mix Strategy

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SERVICE PRODUCT (SERVICE MARKETING)

CONCEPT OF SERVICE and SERVICE MARKETING

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a. People or Equipment Based:

c. For Profit or Not-for-profit

d. Client Presence or Absence

NATURE / CHARACTERISTICS OF SERVICES

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