Product Decisions

Tools of Marketing

• Product, price, place and promotion (4Ps) are known as

marketing mix or tools of marketing strategy
• Prof Jerome McCarthy, University of Michigan in 1960
first coined this term.

What is product?
 Product

What is it?

What does it do?

• It satisfies some need or want of consumer.

• A product is anything that can be offered to a market to
satisfy a want or need.
Product Satisfies Multiple Need
 Product

• Physical product
• Services
• Events
• Experiences
• Places
• Properties
• Persons
• Organisation
• Information
• Ideas
Levels of Product
Example: Hotel
Core Product Level
• Why of buying the product? Or the benefit for buying
the product
Basic Product Level
• Core benefit expressed through basic product
• Basic product delivers the core benefit
Expected Product Level

• Set of attributes consumer normally expect when they buy

the product
• Expected depends upon what competitors are offering
Augmented Product Level

• Attributes exceeds customer expectation

✓ Free dinner,
✓ complementary breakfast,
✓ welcome drink,
✓ fruit basket
 Potential Product Level
• All possible augmentation or transformation that a
product may go through in future.
✓Library
✓Spa
✓Wine
Product Classification:

• Based on consumer buying habits

• Convenience, Shopping, Speciality, Unsought
✓Convenience:
➢frequently purchased with minimum efforts
➢Low involvement decision making
➢Staple, impulse and emergency
✓Shopping
✓Speciality
✓Unsought
Shopping Goods

• Shopping goods are goods that consumer purchases by

undergoing comparative process of selection on basis
such as:
✓Price,
✓Suitability,
✓Style,
✓Quality,
• Compare across the brands
Specialty Goods

• These are the goods

✓with unique characteristics, or
✓unique brand appeal that is not replaceable,
✓for which the buyer is willing to make a special
effort, special purchasing effort to buy.
Unsought Goods
• These are the goods
✓People don’t like to buy
✓They know the existence of the product, but normally don’t
think of buying
✓Aggressive personal selling has to be done
 Product Mix
• It is the set of all the products, all the items that a
particular seller, which is a manufacturer or a marketer
who offers for sale.
• Also called as product assortment.
• Product mix has different product lines
Properties of Product Mix
• Length of product line/mix
• Breadth of product line/mix
• Depth of product item (line)
• Consistency of product line/mix
Product Mix and Product Line
• Product line
✓A group of products closely related.
✓They satisfy the similar type of needs.
✓They are sold to the same customer group and
✓They are marketed through similar distribution
channels.
Product Mix and Product Line
• The length of Product Line refers to the total number of
items that are there in a product line.

• The length of Product Mix refers to the sum of all the

items which are there in the different product lines in
the product mix.
Breadth of Product Mix
• The breadth or width of a product mix refers to how
many different type of product lines that the company
carries.
Depth of Product Mix
• The depth of a product item refers to how many
variants are offered for any individual product item.

• The depth of a product line is the average depth of all

the products in the product line
Consistency of Product Mix
• Consistency of a product mix refers to how closely
related the various product lines are.

• Consistency in terms of:

✓ End Use
✓ Product requirement
✓ Distribution Channel
 Steps of Product Line Analysis

• Two Steps of Product Line Analysis

1. Understand each product lines market profile and
performance

➢Spread of total product mix

➢Sales and profitability analysis

2. Review how the product line is positioned against

competitor
• Decision taken by product manager
✓Drop some items that are not doing well,
✓Put some resources to the items that are performing better
✓Introduce new items if gaps are available in the market
Optimizing the Product Mix

• If Product Manager can:

1. Increase the profit adding more product items then:

The product line is not yet optimal

2. Increase the profit dropping more product items then:

The product line is not yet optimal

But
How to decide what items to add and what items to drop?
Product Line Decisions
• Decision on Product line length
1. Length of the existing product line depends upon the
objectives of the company
2. Line stretching
➢Down-market stretch
➢Up-market stretch
➢Two way stretch
3. Line Filling
4. Line modernization, featuring and pruning
Line Filling
• Gap in the market – company decides to fill it
✓Incremental profit
✓Satisfying deals
✓Utilising excess capacity Most FMCG companies
follow this strategy
✓Becoming a full line company
Line Modernization, Line featuring , Line pruning
• Line modernization
✓modernize their offering and supersede their existing lines
➢Technological changes
➢Newer models have higher margins
➢Newer models have market potential
• Line featuring
✓Top managers introduce some models to showcase their
brand
• Line pruning
✓Dropping unprofitable product lines
Questions?
Comments?
Concerns?