Product Mix Strategies:

Product, Planning and Development, Product Life

Cycle, New Product development, Brands, Packaging
and Labeling
 What is a Product?

A product is anything that can be offered to a market that might satisfy a

want or need. It includes:

1.Physical goods 6.Places

2.Services 7.Properties
3.Experiences 8.Organisation
4.Events 9.Information
5.Persons 10.Ideas
Product Levels: The Customer –Value Hierarchy
Potential Product

Augmented Product

Expected product

Basic product

Core Benefits
• Core Benefits- Fundamental purpose of the product
• Basic Product- Core benefits to be converted to a basic product
• Expected Product- A set of attributes that a buyer usually expects when he /she
purchases the product.
• Augmented Product- Products that exceed customer expectations. In developed
nations brand positioning and competition starts at this level. In developing counties
at starts at expected product level.
• Potential Product- All possible augmentations and transformations the product
might undergo in future.
 Components of the Market Offering
Product
features &
Quality
Marketing planning begins with formulating an offering
to meet target customers needs or wants.
Customers judge the offering on three basic elements-
Attractiveness
of Market
Services mix
and Quality Offering Value Based
Pricing
 Product
Classification

Durability
and Usage
Tangibility

Durables Non
Services Industrial Consumer
Durables
 Product Differentiation
• Most prominently used marketing strategy of any firm.
• Important for product to be branded. To be branded, a product must be differentiated.
Factors on which products can be differentiated:
1. Form- Shape, size or physical structure
2. Features – Limited edition cars
3. Performance Quality-Consumers should feel adequate value for the price paid
4. Durability-Operating life under normal and stressful conditions. Customers pay premium
for durable products
5. Style- Customers pay premium for distinctive style (Apple/Harley Davidson)
6. Repairability
*When physical products cannot be differentiated, the key to competitive success may lye in
adding valued service of high quality.
 Product Life Cycle
According to Philip Kotler, 'The product life cycle is an attempt to recognize distinct
stages in sales history of the product’.
Most PLC portray a bell curve, typically
divided into four stages
• Introduction Stage – A period of slow sales growth as the product is introduced in
the market. Profits are non existent or low due to heavy expenses of product
introduction. Promotional expenditures are mainly on informing potential
consumers, induce product trials and secure distribution. Prices tend to be higher
because costs are high.
Advantages:
- Customer loyalty
- Higher rate of repeat purchases
Drawbacks:
- Product may be crude, imitators can surpass with better / improved products.
- Launch of lower priced product by competitors
• Growth Stage– A period of rapid market acceptance and profit improvement. New
competitors enter with added product features attracted by the opportunities. Price
stabilizes or fall slightly depending upon demand. Marketing expenditures are still high
(Buy my product) and unit manufacturing cost fall.

Strategy to stimulate sales:

✓ Improve product quality and add features.
✓ Add variants
✓ Enter new markets
✓ Add new distribution channels
✓ Lower prices to attract next layer of price sensitive buyers
• Maturity – The maturity stage divides into three phases- growth, stable and
decaying maturity. Firstly, its a period of slowdown in rate of sales growth as
product receives acceptance by most potential buyers. There are no new
distribution channel to fill. Gradually sales flatten (market saturation). Most
potential consumers have tried the product and future sales depend upon
replacement and population growth. Finally sales start to decline and customers
switch to other modified version of the product. The weaker competition
withdraws from the market.
Strategy to stimulate sales:
✓ Market modification
✓ Product modification
✓ Marketing program modification
 • .
Market
Modification

Expand the Increase usage

number of users rate

Make the
Enter new market Attract Make consumers Make consumers
consumers use the
Convert non users segment competitors’ use more quantity use the product in
product on more
customers of the product new ways
occasions
 Quality Offer improved
product to the
improvement customers

Feature Add size, weight etc.

and offer variety to
improvement customers

Style Increase the products

improvement esthetic appeal

Product Modification

Decline Stage– Sales decline due to number of reasons –technological advancements,

Shift in consumer taste and preferences, increased domestic and foreign competition.
As sales and profits decline, some firms withdraw. Those remaining reduce the number
of products offered, reduce markets and distribution channels, cut marketing budget
heavily. There is further cut in prices.
 Summary of PLC
Introduction Growth Maturity Decline
Charecteristics
1.Sales Low Sales Rapidly rising sales Peak sales Declining sales
High cost per Low cost per Low cost per
Avg cost per customer
2.Costs customer customer customer
3.Profits Negative Rising profit High profits Declining profit
4.Customers Innovators Early adoptors Middle majority Laggards
Stable number
Few Growing number Decline number
beginning to decline
5.Competitors
Create product Maximize market
Marketing Maximize profit Reduce expenditure
awareness and trials share
Objectives
Strategies
Offer product
Offer a basic Diversify brands & Phase out weak
extensions,services &
product items models products
1.Product warranty
Price to penetrate Price to match or
Charge cost-plus
2.Price market best competitors Cut price
Go selective:Phase
Build selective Build intensive Build more intensive
out unprofittable
distribution distribution distribution
3.Distribution outlets
Emphasise on Reduce to minimal
Build awareness &
Build product differences in level needed to
interest in mass
awareness and trial brands & encourage retain hard-core
market
4.Communications brand switching loyals
 New Product Development Stages:

Concept
Idea Idea Product Test Commerciali
Testing &
Generation Screening Development Marketing zation
Analysis
 Branding
• Brand is the name, term, sign, symbol, design or a combination of these used by companies
to convey the identity of its goods and services to customers.
• Brands give an identity to the product. Without brand name the product may not get
noticed in the competitive market.
• Types of Brands:
1. Manufacturers brand- Brands directly owned by the manufacturer.( Ex: Pepsi, Raymond,
Pepsodent etc)
2. Private brands-Brands developed and owned by resellers (Ex: Lifestyle, Big Bazaar,
Shoppers Stop have their own brands)
3. Generic brands-They are not specifically advertised, sold at comparatively lower prices at
local stores
 Brand Equity : Brand equity is the combination of assets and liabilities associated with a brand that enhances
or depreciates its value. It is determined by quality perception, awareness of the customer, loyalty, patents and
trademark.

Brand Strategy Decision : This decision should be taken in accordance with the strategies of the organization.
▪ Separate branding strategy – Different brand name for different products(HLL-Liril, Pears, lux , dove,
lifebuoy etc. )
▪ Umbrella branding strategy- Have different products with same brand name (Tata Tea, Tata Sampann, Tata
gold etc)
▪ Line Family branding strategy – Same name for a particular line of product (Chings Chinese range – noodles,
sauces, masala, Chinese soups)

Line Extension : Developing a product that closely associates with the existing product but with features that
meet different needs of customers. ( Moisturiser for dry skin, oily skin, combination skin etc)

Brand Extension: Extending the brand name to new product categories

 Packaging
• Packaging and labeling form an important element of product strategy.
• Packaging includes all the activities of designing and producing the container
of a product.
• Packages might have upto three layers-Primary package,secondary package
and shipping package.
• Packaging is widely used as an important marketing tool.
 Objectives of Packaging
• Identify the brand
• Convey descriptive and persuasive information
• Facilitate product transportation
• Assist storage
• Aid product consumption
To achieve these objectives, marketers must choose functional and aesthetic
components of packaging correctly.
 Labeling
• Labeling is a legally essential process of displaying important information on the
products package.
• Labeling regulations are issued by the govt from time to time.
• Functions of labels:
a) It identifies the product/brand
b) Label might describe the product- who made it ,where and when, list of
ingredients, how to use etc.
c) It might promote the product through attractive design.