UNIT 7 PRODUCT CONCEPTS AND

CLASSIFICATION
Structure
7.0 Objectives
7.1 Introduction
7.2 Meaning of Product
7.3 Ctassificatio~lof Products
7.3.1 Consulner Goods
7.3.2 Industrial Goods
73.3 Durable Goods and Non-durable Goods
7.3.4 Serviccs
7.4 Product Mix
7.5 Product Mix and Product Line Strategies
7.6 Services - Meaning and Scope
7.6.1 What arc Services?
7.6.2 Difference between Services and Products
7.6.3 Interdependence of Products and Services
7.7 Service Classification
7.8 Challenges in Marketing of Services
7.9 l?heServices Marketing Mix
7.10 Let Us Sum Up
7.11 Key Words
7.12 Answers to Check Your Progress
7.13 Terminal Questions

7.0 OBJECTIVES
After studying this unit you should be able to
explain the meaning of product and its essential attributes
e distinguish between various types of products
e describe the terms "product mix' and 'product line' and explain product line
related strategies
explain the concept of services and characteristics that distinguish them from
prod~lcts
e describe the ways in which services can be classified
e explain the challenges in marketing of services
e identify the services marketing mix.

7.1 INTRODUCTION
In the previous two blocks you have learnt the basic concepts of marketing i.e.,
nature and scope of marketing, marketing environment, marketing information and
Prodnct Decisions research, buyer behaviour, segmentation, targeting and positioning. When a marketer
starts his operation, he has to contend with certain environmental forces that tend to
influence his activities. To match such forces, keeping organisational strengths and
limitiltiorls in mind, he develops an overall marketing programme called marketing
mix. The marketing mix is composed of four ele~nenlsviz., product, pricing, place and
promotion. It is also referred to as four 'Ps' of the marketing mix. In this unit you will
study the first element of tlie inarkeling mix - the product. You will study the meaning
and essential attributes of a product, types of products, product mix and prodiict Line
and related stralegies. The unit also explains the concept of service and how services
are different from goods, the service classification scheme, the chalIenges involved in
services marketing and the services marketing mix.

7.2 MEANING OF PRODUCT

We lake steel sheet, nuts and bolts, a motor, paint, and other accessories, process
them in a given manner and our effort may result in the form of a washing machine.
However, when the consumer buys the machine, it is not simply the machine that
emerged out of the efforts and things that went into it. The consumer buys it beca~ise
he has a specific want (i.e., solnething to aid in washing clothes) and the coilsuiner is
exploring a way to satisfy that want. H e looks for an accepted brand name, a
warranty, an assured after-sales service, some appealing physical features and ail
impressive colour. Thus, marketers should recognize that people are not simply
interested in buying the physical features of the product, but they buy to satisfy their
wants. For that matler some products which people buy do not have physical feature
at aIl. Take for instance an income-tax consultant. He sells his advice which does not
have any physical features. It means, apart from physical products. we must also
iilclude services within tlie scope of our discussion.
Thus, a product may be defined in a narrow as well as broad sense. In n narrow
sense, it is a set of tangible physical a i d chemical altributes in an identifiable and
reaclily recognizable form. In a broader sense we may loolc at it in the forin of an
ol~jecl,idea, sewice, person, place, activity, goods, or an organisation. It can even be a
combination of some of these factors.
Let us study how 'product' is being defined by various people. According to Philip
Kotler, n prurduct is liizytking that can he r@er~>cLto n nrarket ,/hi- utterztinn,
(lcq~tisilion,use or.cons~o77prio~z; it iltcl~~cles
plzysic~~l
ol?jects, se~vice,
per.soiznlities, place, organisntion ai7rl ideas.
Jay Diamond and Gerald Pintel stale that tlle totul product, irl ~rrlditiotzto tlio
plzysicul pmdcrct, includes guarclntees, instnllatiorl, irzsrr-ircrior~~s Jilr use,
pnckagirzg, bmrzdiizg rrizd the ~ l , ~ a i l c ~ Aof.'i lservice.
i ~ ~ ~ Tile tor01 pi.o$uct is what
the custonzer buys, oncl Jiaq~ientl?~ tile Ji-ii7ge c1zarcic.tcristic.s such ~1.s~ L I L I I Z I I I ~ ~ ~ . ~
aird s~i.l~iciizfi
CII.CJ (1s iilipol.tai1t LZS tlw pAysic~11 ~rocllictitself
Williani 3. Slanton defined the term 'product' as (1 .wt c?j't~li~giAle niid intangible
mi-ib11te.s inrluclirrg packaging, c o l o ~ i ~price,; ~ I ~ U I Z L ! ~ U C ~hL Iprl~stige,
~L'Y retnil~rlv
111-estiye(lnd ~ ~ ~ I ~ L $ L ~ ~clnd
. ~ Lrrtrrilel-'.r
I I - P I . services
'S 1v1zlc.h b~iyerrliuy acc.e])t
r?fer*ir~gsnri.sfczcrio~~of vvrnts or- nrcds.
As defined by Jerome McCarthy, (1 prorl~lc'tis i~ior-t~ ~liarzjust n p k s i r a f prod~ll'f
with its r.eLutecl fitncrio~zal urld c~e.stl1eticJ ' C L I I L I I P S . 11irzc.1~~do.s 17C( es.sorie.s,
insrall~rfion,irlstr~rctiorisor, use, the p~r~aklrge, pe1.hrrp.s C L / > I - I Z I L L ~ r~~rilie,
wliick
,firlfi'ls sonirJ p.s?;chological rreetl,s orrd rlze asslilnrlcc tlrcir ser.vice fc~cilities will bc
rrvizilablc to meet the cr~stoitlerkileecls c!fter the purcllrrse.
Accorcliiig to W. Alderson, a prorl~rc~ is a brirzdlr of ~itilitirsconsisting of wrious
proclrrct .featirws rzrld clcconzpnrz~iilgsel- vice.^.
Schwnrtz defined a product as solnething n fir-n~markets rhat will sntisfv a Product Concepts and
UlassiCication
~ ~ ,fill II h~sillesso r conz~?zercialneed; unrl includes all the
persn~lcll L I . ~ L I Ior
periplzeml jiiclor.~ thnt 17wy co~ztribz~te to co~~scrn~er'ss~ltl.sfcictiol~.
From the above definitions it can safely be concluded that the word product, in the
context of marketing, has a much wider connotation. It is applicable to any offeri~igto
a market for possible purchase or use. It encompasses physical objects (e.g., a
television), services (e.g., airlines), places (e.g.. lourisl resorts), organibations (e.g.,
Red CI-oss),persons (e.g., an athlete) and itleas (e.g., llootl relief aid). It also includes
supporting services e.g., design, brand, package, label, price, etc. To s i ~ mL L ~ n,
pmrluc.t is (1 c~on1hinntionof' physicul, ec-o~~onlic, social nrzd psvcl7ologic~ul
hen c<fit.s.

Essential Attributes of a Product

Based on the above definitions, we can list out the essential characteristics of a
product as follows:
1) Tangible or Intangible: It may be capable of being touched, seen and felt. For
example, products like a c o ~ n brefrigerator
, ant1 motor cycle are tangible. At tlie
sume time, a product need not necessarily be tangible. It can be intangible but
cnpilble of providing a service. For i~istance,repalring, hair-dressin,,0 msurance,
'

etc. are intangible but provide satisfaction to the customers.

2) Associated Attributes: A product consists or various product features and
nccompi~iyingservices. Thus, a product is comprised of attributes i~icluding
colour, package, brand name, accessories, installation, instn~clionsto use,
mmuf:lcturer's prestige, retailer's prestige, after sale service, etc. These
attributes differentiate the products From each other.
3) Exchange Value: A product must be capzible of being excl~angedbetween a
buyer and z1 seller at a mutually acceptance cost.
4) Satisfaction: It should be capitble of providing,satisf~~ction to the buyel; both
real and psychnlogical. As i'ar as Lhe sellcr is concer~ied,it should provitle the
much needed business benefit.
A procluct, theret'ore, cii11 be considered as comprising of tIi1-eedistinct levcls. Al the
First level is the core product i s . , the core henefit which the consumers scck lo buy.
The second level of the product can be described as tlie actual product. This i~icludes
the packaging, brand name, features of the product, 111e design, tlie shape, cluulity clc.
Tlie third level is the augmented product. In addition to the actual product, the
provider may give additional custome~.services such as afier sales scrvice, warlanly,
delivery, installation etc.

Checlc Your Progress A

1) What is a product?

......................................................................................................................
3) State whether the following statements are Tnie or Fz~lse.
i) A product is always tangible.
ii) A ~ r o d u c provides
t satisfuctio~ito the custonier.
Product Decisions iii) A product cannot be identified.
iv) Every product has exchange value.

7.3 CLASSIFICATION OF PRODUCTS

You have studied in Unit 5 that, in order to lnarket effectively, the markets are
segmented and marketing strategies are develbped for each segment. In the same
way, it is also useful to classify products into homogeneous groups, as different types
of products require different marketing approach. There are several ways of
classifying products:
I) On the basis of the user status, products may be classified as consumer goods
and industrial goods.
2) On the basis of the extent of durability, products may be classified as durable
goods and non-durable goods.
3) On the basis of tangibility, products may be classified as tangible goods and non
tangible goods. These non-tangible goods are referred to as services.

fl
Consumer
t>
Services

Goods

Fig, 7.1: Classification of Products

Look at Figure 7.1 carefully for a detailed classification of products. These
classifications are necessary for a marketer, as different types of products require
different marketing strategies.
Let us now take the following four major types, and analyse their characteristics and
marketing strategies:
1) Consumer goods
2) Industrial goods
3) Durable and Non-durable goods
4) Services.

7.3.1 Consumer Goods

wlzich are bought by the ho~iseholdsor
Consrinzer goods are those prod~~cts
 r/ltinzafe co~zsunlers,for personal non-br,rsiness use. Consumers use the product in Product Concepts and I

the form in which the product is being offered i.e., no further processing is done. For
Classification I
example, a tooth bmsh, a comb, a wrist watch or a moped are all meant for personal I

use of liouseholds mid are, thus, classified as consumer goods. Consumer goods may
be classified into three types as : i) convenience goods, ii) shopping goods, and
iii) speciality goods. Let us discuss these three categories in detail.

i) Convenience Goods
A class of co/zsumer goods thut people buy frequently with the least possible
ti~zearld e8hl.t are called 'conveni~ncegoods'. These are the products the
cons~iimerswant to purchase frequently, immediately, and with minimuni effort. Milk,
bread, butter, eggs, soap, newspaper, biscuits, tooth pastes, etc., are some examples
of convenience goods. This category of goocls has a low unit price, and not greatly
affected by fad and fashion. They have two significant characteristics : 1) the
consumer has colnplete knowledge of the products which he wants to buy and 2) tlie
product is purchased with a minimuni of effort. Convenience goods areusually sold
by brand name and are low-priced. Many of them such as bread, inilk and edible oil,
are staple items, and tlie supply must be constantly replenished. In most cases, the
buyer has already decided to buy a particular brand at a particular store and spends
little time deliberating about the purchase decision. So convenience goods must be
readily available when the consumer demand arises. To ensure this, the manufacturer
must secure wide distribution.
The consumers rarely visit competing stores to compare prices and quality while
purchasing convenience goods. The possible gains from such conipa~.isonsare
outweighed by tlie costs of acquiring the additional information. This does not mean,
however, that tlie consumer remains permanently loyal to one brand or cigarette, or
soap or biscuit. A consumer is willing to accept any of sevcral brands and thus, will
buy the brand that is most accessible. Since the price of most convenience goods is
low, trial purchases of competing brands or products are made with little financial risk,
and often new habits are developed.
Retailers usually carry several competing brands of convenience products, and are
not able to promote any particular brand. Tlierefore, the promotional burden to
develop colisulner acceplnnce for the products frills on tlie manufaclurer.

ii) Shopping Goocls .

Tilest cwcJ (1 class qf corisu~~zc~rgoocl.~that urlJ purchnsed olzly ajicr ihc hiryer
has sperzt son7e tir~learlcl @;7rt C O I ~ ~ Lprice,I Y ~ qirnlity,
~ Z , ~ style, colowr; rtc., of
~rlt~r/lativeprodlrcts in cnrllpeti~rgstares. The purchaser of shopping goods lacks
colnplete informalion prior to the shopping trip and gathers information during it. For
inslance, a woman intending to buy a new dress may visit many stores, try on a
number of dresses, and spend time making the final choice. She may go from store lo
store in surveying competing offerings and ultimately select the dress that appeals the
most to her. In addition to women's apparel shopping goods include such items as
jewelleiy, furniture, appliances, shoes, etc. It is important to place the shopping goods
in stores located near other stores cairying competing items, as it facilitates the
customers to compare the product. Shopping goods are typically more expensive than
convenience goods.
Some shopping goods, such as children's shoes, are considered homogeneous i.e., the
consumer views them as essentially the same. Others such as furniture and clothing
are considered heterogeneous i.e., essentially different. Price i s an important factor in
, the purchase of homogeneous shopping goods, while quality and style are relatively
more important in the purchase of heterogeneous goocls.
Product Decisions iii) Speciality Goods
A class of consullzer goods with perceived unique charucteristics, suclz that
colzsunzers are willing to sperzd special effort to buy tlzenz, are known as
Speciality Goods. The buyer of speciality goods is well aware of what he or she
wants and is willing to make a special effort to obtain it. The nearest camera dealer
may be twenty miles away, but the camera enthusiast will go there to inspect and buy
that camera. To purchase a colour TV a person in a village may require a special trip
to a nearby city which is several miles away. Still he will go there, spend his time in
inspecting several brands and finally buy a set of his own choice. Examples of some
of the speciality goods are photographic equipments, TV sets, video players, mobile
phones, automobiles, etc.
Speciality goods possess unique characteristics that cause the buyer to prefer that
particular brand. For these products the buyer possesses co~npleteinfoimation prior
to the shopping trip and is unwilling to accept substitutes. Speciality goods are
typically high-priced and are always branded. Since consumers are willing to exert ,

considerable effort to obtain them, fewer retail outlets are needed. Since brand is
important, the manufacturers of speciality goods adve tise extensively.
This three-way classificatio of consunzer goods allows the nlnrketing manager
to gain additto~zali~zfonnationfor ~Zevelopirzgan eflective ~narketiizgstrategy
for the product. For instance, once the new ,feud prorluct has been classified as
u cnrtveilielzce product, you gain insight about rnurketing strategies in
br.atzdi~zg,p~onzoting,pricing arzd disti-ibution methods.

7.3.2 Industrial Goods

I~zrlrrstrialgoods are those goods wlziclz are meant to he bought by tile buyer as
inputs in prodciction of other products or for rendering some service. The
product may, thus, undergo further commercial processing. Indcistrial prod~ictsare
nzeant.for. nun-perso~znland comnzercial use. Industrial goods include items like
machinery, raw matesials, components, etc. It may be worthwhile clarifying a point
that the same product may sometimes be classified as a consumer product and as an
industrial product depending upon the end-use. Take the case of cocoilut oil. When it
is used by a person as hair oil or cooking oil, it would be treated as a consulner
product. Howevel; when coconut oil is used in the manufacture of a toilet soap it is
treated as an industrial product. Similarly, take the case of car tyres. When it is used
by a cat. owner, it becomes a consumer product. The same tyre when used by a car
manufacturing company, it becomes an industrial product. Thus, inany products can
r However, the industrial
be treated as industrial goods as well as consumer goods.
buyer is cost-conscious and is concerned about the quality and standard of the
product being offered to him. An industiial buyer is not impulsive and is rational in
buying effort. Therefore, industrial goods are to be sold in a dtfferent way from
consumes goods.
Depending on how the goods enter the production process, industrial goods may be
classified into following five groups.

i) Raw Materials
Raw materials are those indus~rialgoods that become part of another physical
product. Raw materials include goods found in natural state such as minerals, marine
products, land, products afforests, elc., and agricultural goods like'cotton, fruits, milk,
eggs, etc. Marketing strategies for the two categories of raw materials are different.
First group of raw materials are normally bulky and have low unit value. They are
produced by a few large producers. Second category of raw materials (agriculture
products) is produced by a large number of sinall producers spread over a large area.
Most of the second category products are perishable.
ii) Fabricating Materials and Parts Concepts and
Prod~~ct
Classification
This category of industrial goods also becomes actual part of the finished product.
Unlike raw materials, fabricating materials and parts have already been processed, to
some extent, but may need further processing before actual use. For example, yam
being wove11 into cloth and pig iron being converted into steel.

iii) Installations
They are manufactured industrial proclucls, e.g., a generator and a large pump set for
city water supply scheme. They alter the scale of operations in a firm, Normally,
installations are directly sold to the industrial user and ~niddlemenare not involved.
Pre-sale and post-sale servicing is required for these products.

iv) Accessory Equipment

They are used to aid production operations of an ilidustrial buyer and do not have an
influence on scale of operations of tlie buyer. They do not form part of the finished
product.

v) Operating Supplies
They are low priced, short-lived items purchased with mininiuln effort and could well
be tenned as convenience goods of industrial fielcl. They aid in the firm's operations
without becoming part ofthe end product e.g., lubricating oil, stationery, etc.
It may be added that the demand for industrial products is derived, inelastic and
widely fluctuating. 'The buyer is knowledgeable and their number is limited. Because
of large size of demrlnd, an industrial buyer can influence the market to a large
extent.

7.3.3 Durable Goods and Non-Durable Goods

Tangible products with cl lorzg I@ uurttl lusting ~nrttlrzyyecrrs r!f active scrvicc~to
ohvrzer-a x trrrnerl as cl~~r~zhlr
goo0.s. Television, fan, refrigerator, pressure cooker,
etc., may be cited as examples of durable goods. A durable product would require a
lot of personal selling, and pre-sales ancl post-sales service. Such products provide a
higher margin to seller but require an assu~.eclafter sales guzuantee. Therefore in
case of refrigerators, the number of years of guarruitee (particularly for tlie
compressor) is an important consideration when a consumer malces his final selection.
If a custo~uerpurchases a photocopying machine or duplicating machine, it is
necessary for the salesman to 'follow through' and visit the customer to see how it is
installed and used. V e ~ yoften this product is operated by persons who may not know
how to use it. This results in poor duplication and copies look unattractive and the
customer gets the impression that the fault lies with tlie machine. So, while marketing
such a product, it is important to guide tlie actual use of the machines.
Products vvhic1.l are cot~surncdirz orle go or last a ,few uses rrrzrl get cfe]lletedon
cotzsurill)tiort are ternzed as norz-di.lrcrb1~goods. Soap, toot11 paste, cigarette, soft
drinks, etc., are some examples of lion-durable goods. For example, a bottle of soft
drink is consumed at once on one occasion within a matter of minutes. Soap obviously
takes a little longer. However, in both these cases, the goods are consu~nedvery fast.
The advantage of these goods is that they are purchased very often and, therefore,
there are Inally repeat purchases once the customer is satisfied with one product.
Therefore, one must ensure quality and appropriateness of price. These are the
products that have to be advertised heavily, with a view to inducing people to try them
out, and thus, build up brand preference and brand loyalty. In view of the fact that
such products are consumed very fast and require frequent purchases, they need to
be made available in a large number of sales points.
Product Decisions 7.3.4 Services
Services are specially mentioned here because it is generally thought that marketing is
related to products alone. It should be remembered that marketing ideas and practices
are equally applicable to services with slight adaptations in certain decisional areas.
Services in content are different from products. Sewices are those separately
identifiable, essentially intangible activities whiclz provide want satisfaction,
and wlzich are not tzecessarily tied to the sale of a product or another se'wice.
For example, courts offer a service. So are hospitals, the fire department, the police
and the post office. These are not prpducts in the normal sense and yet it is very ,

important for each of these institutions to have an appropriate image. The police are
often criticized; the fire department generally praised; the post office criticized for
delays; the hospitals perhaps criticized for negligence and exorbitant rates and so on.
It is obvious that controlling the quality of service is important for building up its
image.
Apart from government or public sector undertakings, there are 'non-profit'
organisations such as museums and charities. Although non-profit, they also have to
provide the best form of service for their popularity. The business and commercial
sectors which include airlines, banks, hotels, and insurance companies, and the
professionals such as chartered accountants, management consulting firms, medical
practitioners, etc. also need marketing. We will study services in details in sections
7.6 to 7.9 of this unit.

Check Your Progress B

I) Distinguish between consumer goods and industrial goods.

......................................................................................................................
2) Distinguish between durable aidnon-durable goods.

......................................................................................................................
3) What is a service?

......................................................................................................................
4) Which one of the following are durable goods and which are non-durable goods?
i) Television
ii) Tooth Paste
iii) Bath Soap
iv) Refrigerator
V) Desert Cooler
vi) Hair Oil
 Product Concepts and
7.4 PRODUCT MIX Clasqifiratinn

A product mix is the set of all products and items that a particular seller offers for
sale. It is also termed as product assortment. Product .mix consists of product lines.
For example, the product mix of ITC consists of product lines like hotels, cigarettes,
ready-made garments, grocery, and paper.
A company's product inix consisting of different product lines has a certain width,
length, depth and consistency. These concepts are illustrated in Figure 7.2 for
select%dHindustan Lever Limited (HLL) products:
i) Product Line: A product line is an expression generally used to describe a group
of closely related products. A group of products may be referred to as a product line
either because they cater to the needs of a particular group of buyers, or they
function in similar manner or they are sold through identical marketing facilities or fall
within the same price range. The crux of the situation is that such reasoning may be
consistently used for referring to a product group as a product line. A seller may
identify a number of product lines to be offered to buyers by keeping in view the
buyer's considerations, economy of production, distribution, etc. Figure 7.2 shows
different product lines of HLL viz. personal wash, oral care etc.
ii) Product Mix Width: This refers to how many different product lines the
company carries. Figure 7.2 shows aproduct mix width of six lines.
iii) Product Mix and Product Line Length: The length of the product mix refers
to the total number of items in the mix. 111 Figure 7.2, it is 18. We can also calculate
the average length of the product line by dividing the length of the product mix (here
18) by the number of lines (here 6). In this case average length of product line is ( l a /
6) i.e. 3. The length of the product line refers to the total number of product items
offered i n a product line. For example, in figure 7,2 the personal wash line has the
length of seven product items and the oral care line has two product items. A product
item can be defined as a specific version of a product that has a separate brand name
or designation in the seller's list.
iv) Depth: The depth of a procluct mix refers to how Inany variants are offered of
each product in the line. IS Pears comes i112sizes (75 gms. and 125 gms.) and four
formulations (Pears, Pears Oil Control, Pears Germ Shield and Peurs Junior), it has a
depth of (2x4) i.e. 8. The average depth oWLL product mix can be calculated by
averaging the number of variants within the brand groups.
v) Consistency: The consistency of the product mix refers to how closely related
the various product lines are in terms of end-use, production requirements, distribution
channels, etc.

Pruduct-MixWidth
4 +
Personal wash Oral care Laundry Deodorants Skin care Hair care

t
Pduct-
Lux
Lifebuoy
Lid
Pepsodent
Close-up
Surf Excel
Rin
Wheel
Axe
Rexona
Fair & Lovely
Ponds
Sunsilk
Clinic

Line Hammi
Length Dove
Pears
1 Rexona

Figure 7.2: Product Mix Width and Product Line Length for HLL Products.
Product Decisions
7.5 PRODUCT MIX AND PRODUCT LINE STMTEGIES
Product mix of a seller, while giving expression to its current position, is also an
indicator of the future. Thus, product mix is not a static position but a highly dynamic
concept. A company may withdraw a product from its existing mix, if the product is
not contributing to the profitability and growth of the company. Similarly, a new
product may also be added to cash on some attractive opportunity that comes its way.
Thus, the companies always attempt to maintain an optimal product mix with a view
to maintain a balance between current profitability and future growth and stability.
Towards this end, a company alters or modifies the existing product line in any of the
following ways:
1) Contraction of the Product Line: When a company finds that some of its
products are no more profitable, it may decide to suspend their production.
Similarly, changes in the marketing environment inay also necessitate withdraw1
of a product. A product may also be dropped froin the product line if it is found
that tlie same resources used for the production of the product can be put to
more profitable use by producing another product. Decisions relating to these
aspects are termed as "Co~itmctionof tlle Prodwcr Lil~e".Thus, tlzinning out
the prod~ict111ixeither by elinzirzating an entire line or sinzplifyirig the
product items within tlie lirze is called contraction o f product line. This is
also called Contraction of Production Mix or Product Line Simplification.
This strategy is adopted mainly to elilninate low-profit products and to get more
profit from fewer products.
2) Expansion of Product Mix: To cash on available opportunities, a company .
decides to expand its present product line. It may also increase the ~lurnberof
product lines and the depth within a line. Such new lines may be related or
unrelated to the existing product mix. For example, a company dealing in drugs
and chemicals may add products in a relatively new area like computers.
3) Changes in Quality Standards: When the market expectations undergo a
change, a film may have to react by altering quality standards of the existing
products. Such changes call be brought about through Trading Up and Trading
Down.
i) Trading Up : When we add a higher priced prestige product to the existing
low-priced product line, it is termed as trading up. This strategy is adopted
with the hope of increasing the sales volume of the existing low-priced
products. If conditions so demand in future, the company may increase
promotional efforts for the new product and thus add overall sales volume
through the new product, thereby improving profitability of the firm. In this
manner a conipany known for low-quality products tries to raise its image
of dealing in high-quality goods on the one hand and offering an alternative
to buyer to choose from. We often hear such terms as "Jaita Model" and
"Deluxe Model" and this illustrates the point.
ii) Trading Down: It is the reverse of trading up. When a firm adds low
quality products at relatively lower price to its line of high priced prestige
products, it is termed as trading down strategy. It helps in widening h e
marketing base and results in expanding overall sales volume. Introduction
of moped by a company manufacturing motor cycles is a case of trading
down.
4) Affecting Change in Modelfstyle of an Existing Product: The desire of the
consumer varies with varying times. To cope with such change in the consumer
mood, a company can react by offering new models of a product or changing
the style of an existing product.
5) Product Differentiation: Under this strategy, a firm tries to differentiate its Product Concepts and
products from the competitor's products or other products within the same Classification
product line offered by the company by highlighting quality or design. This
strategy is aimed at avoiding competition on price basis. The competition is then
met at non-price front and a pricewar is avoided. The firm, thus, promotes
awareness of the good attributes of the product offering. In view of the fact that
this strategy involves large pro~notionaleffort with huge financial outlays, it is
also known as pro~notionalstrategy.
6) Product Positioning: As an integral part of product segmentation, after the
market is segmented, it becomes necessary to pinpoint the needs of each
segment and offer products to satisfy the needs of specific segments. This
process is referred to as product positioning. It includes all activities from
identification of a market segment to directing marketing effort at it.
7) Ncw Product: In view of increasing competition, scientific advancements,
enhanced consumer expectations, it is necessary that new products are
introduced. Such introduction is essential for the survival and growth of an
organisation. The rate of increase in expenditure on Research and Developmen1
by many organisations is a clear proof of the need and realization to introduce
new products.

Check Your Progress C

1) What is the meaning of product mix?

......................................................................................................................
2) What is a product line'?

......................................................................................................................
3) Differentiate between trading up and trading down.

......................................................................................................................
4) What is contraction of product mix?

......................................................................................................................
5) Distinguish between product item and product line.
Product Decisions 6) Match the items in Column A with the items in Column B.

i) Trading up a) To avoid competition on price basis

ii) Product line b) Adding a low priced product to a high
priced product line
iii) Contraction of product line c) Group of closely related products
iv) Product Differentiation d) Adding a high priced product to a low
priced product line
V) Trading down e) Suspension of a product item from the
product line

7.6 SERVICES - MEANING AND SCOPE

Let us first understand the meaning of services, how they are different from products
and the interdependence between product and services.

7.6.1 What are services?

It is generally thought that marketing is related to products only. This perception is not
peculiar to India or developing world only. In fact, till recently services never found a
place i n multilateraldiscussions in GA?T(now WTO) or data and information relating
to services were never included in either international or national publication. It should
be remembered that marketing concepts and techniques are equally applicable to
services with relevant adaptations in certain decision areas. As mentioned earlier;
services are those separately identifiable, essentially intangible activities which
provide want satisfaction, and which are not necessarily tied to the sale of a product
or al~otherservice. For example, l~ospitals,universities, banks, insurance companies,
transport films, fire departments, police and post office.
To put it in simple terms, a product is an object, a device, a tangible thing; and n
service is a deed, a performance, an effort. This captures the essence of the
difference between products and services. Services are a series of deeds, processes
and performances; hence tend to be more intangible, personalized, and custom-made
than products. The services offered b,y,SBI,LIC, IGNOU and MTNL are not
tangible things that can be touched, seen and felt, but rather are intangible deeds and
performances. Silnilarly, the core offerings of hospitals, hotels, and utilities comprise
primarily deeds and actions perfoimed for customers.
Services are produced not only by service businesses such as those listed above, but
art: also integral to the offerings of many goods. For example, car manufacturers
offer warranties and servicing contracts, and industrial equipment producers offer
inaintenance services. White goods ~nanufachirersprovide after-sales services. Even
producers of items such as medicines and food items offer services to the consumers
i n the form of educating them through pamphlets as to how to use and maintain the
item. These are examples of deeds, processes and performances associated with
product offerings.
Co~npatiblewith broad definitions given above services may include all economic
activities whose output is 1lot.aphysical product, is generally co~lsurnedat the time it
is produced, and provides added value in forms (such as convenience, amusement,
timeliness, comfort or health) that are essentially intangible concerns of its first
purchaser. This definition has been used also to delineate the service sector of the
economy.
Details of industries classified within the service sector (as presented by Valarie Product Concepts and
Classification
Zeithalnl and Mary Jo Jitner, Services Marketing, McGraw Hill), is discussed below
for understanding of the broad spectrum of the services sector.

Transportation and Public Utilities

0 Transportation (Railroad transportation, Local and inter-urban passenger transit,
T~uckingand warehousing, Water transporeation, Air transportation, Pipelines
except rlamral gas, and other Transportation services)
r Communication (Telephone and telegraph, Radio and television broadcasting)
Electric gas and sanitary services

Wholcsale lkadc
Retail Trade
Finance, Insurance, and Real Estate
e Banlting
r Credit agencies other than banks
Security ancl com~nociitybrokers, and services
o Real estate

Holding and other Investment

Other Services
b Hotels and other lodging places
Personal services
Business services
Auto repair, services and garages
r Miscellaneous repair services
Motion pictures
Amusenlent and recreation services
Health services
Legal services
Eclucation services
Social services and membership organisations
Miscellilneous professional services
0 Private household services

Federal Government
Civilian
Military

Govcrilmcllt Enterprises
State and Local Government
Education
Other services
Though the above is not a very exhaustive listing, this should give a clear idea as to
how services encompass a wide range of activities.
w

Prnduct Decisinns 7.6.2 Difference between Services and Products

Based on the above discussion, we can identify four basic characteristics of services,
that differentiate them from products. They are : (1) intangibility, (2) heterogeneity,
(3) simultaneous production and consumption, and (4) perishability. Let us discuss
them in detail.

Intangibility
The most basic difference between goods and services is intangibility. Services are
performances or actions rather than objects. Therefore, they cannot be seen, felt,
tasted, or touched in the same manner that we can sense tangible goods. The
absence of tangible features means that it is difficult for the seller to demonstrate or
display services, and for buyers to sample, test or make a thorough evaluation before
buying them. For example, health care services are actions (e.g. surgery, diagnosis,
examination, treatment) performed by doctors and directed towards patients. One
cannot see or touch these services, although you may be able to see and touch certain
tangible components of them (e.g. equipment, hospital room). In fact, Inany services
such as health care are not easy for the consumer to grasp even mentally. Even after
a diagnosis or surgery has been completed, the patient may not fully comprehend the
services performed.

Heterogeneity
It is often impossible to assure homogeneity and consistency in the service provided
by a seller, because services are peifonnances rendered by human beings. Hence no
two services will be precisely alike. The service is performed and delivered by
employees (people), and people may differ in their performance from day to day or
even hour to liour. Heterogeneity also results because, no two customers are
precisely alike; each will have unique demands or experience and requires the service
in a unique way. For instance, take the case of a restaurant which is a hospitality
service. One customer may prefer a crisp Masala Dosa with sambar, while another
may prefer soft Masala Dosa with coconut chutney. The cook has to prepare and
serve according to their tastes. Thus, the heterogeneity connected with services is
largely the result of human interaction between employees and customers and all of
the vagaries that accompany it.

Simultaneous Production and Consumption

Most goods are produced first, then sold and consumed while most services are sold
firsL ancl then prociuced and consumed simul~aneously.For example, an auto~nobile
may be manufactured in Mu~nbai,shipped to Delhi, sold two months later, and used
over a period of years. But restaurant services cannot be provided until they have
been sold and the dining experience is essentially produced and consumed at the
same time. Similarly, in travel services, the ticket has to be bought first and then the
travel service has to be availed of. Very often, the customer is present while a service
is being produced ancl thus the views of the customer are taken into account in the
production process. For example, in the restaurant when one orders for a cup of
coffee, he may ask for strong coffee (more coffee, less milk) without sugar. Here the
customer has influenced the productioi~process of coffee. Frequently, customers may
interact with one another during the service production process and thus may effect
one another's experiences. For example, strangers seated next to each other in an
airplane may well affect the nature of the services experience for each other.
Another outcome of simultaneous production and consumption is that service
producers find themselves playing a roie as part of the product itself and as an
essential ingredient in the service experience for the consumer.
Persishability Prodr~ctConcepts and
Classification
Persihability refers to the fact that services cannot be saved or resold or returned. A
seat on an airplane or in a restaurant, an hour of a lawyer's time or telephone line
capacity not used canot be reclaimed and used or resold at a later time. This is in
contrast to goods that can be stored or resold another day, or even ret~lrnedif the
consumer is unhappy. It is not easy to reset a bad haircut nor is it possible to transfer
it to another consumer. Perishability makes this an unlikely possibility for inust
services.

7.6.3 Interdependence of Products and Services

Though, the products differ from services in many respects, there are so many
interlinkages between services and products in several instances. In fact, services
and products complement each other in many cases. Sales prospects of products that
are in need of substantial technological support and maintenance will be badly
affected if proper airangement for service is not made. For this reason, the initial
contract of sale of a product often includes a service clause. This practice is common
in the case of many durable goods. In the case of TV s, cars, refrigerators, washing
machines, etc., manufacturers provide free after sale service for a cerlain period.
Siinilarly, the sale of computer hardware is critically linked to availability of proper
servicing and software. Sellers of capital equipment often enter into maintenance
contracts with buyers. These are some instances of services complementing
products. Similarly ~ ~ r o d u calso
t s coinplement services. For example, an airline cannot
exist without airplanes. Without rooms, furniture and kitchen equipment, ahotel
cannot provide hospitality service. In the same way, hospitals (health care service)
cannot provide services without using tangible products such as operatloll insti-unienls,
testingequiprnent, medicines, hospital buildings, etc.
There is an increasing recognition of this coinplementary nature of.services and
products. Manufacturing based industries (such as autoinabiles and computers) are
recognizing the role of service ill improving the competitiveness oFa product. I11 many
industries providing quality service is no longer simply an oplion. The quick pace of
developing technologies makes it difficult to gain strategic co~npetitiveadvantage
through physical products alone. Customers not only expect high quality goods, but
also expect high levels of service along with them. Conipanies are realizing the need
to focus on service to keep pace with rising customer expectations and to coinl~ete
effectively. Similarly, various services sectors are depending on quality products to
inlprove their service quality. Good hospitals use the latest technical and testing
equipment, hotels provide well f~lr~iishecl rooms, TV channels use the digital
transmission equipment, banks use the A TM equipment, airlines use inost
comfortable airplanes, etc. Thus, continuous product improvement and service
improvement are siinultnneously going on in many sectors.
Michael Porter in his book, 'The Coinpetitive Advantage of Nations' identified thrce
distinct links between manul'acturing and services as explained below:
i) Buyer/supplier Relationship: Many service industries have come *into
existence through the de-integration of service activities by manufacturing firms.
An automobile manufacturer may outsource number of service activities 11ke
transportation, warehousing, marketing research, legal services, education and
training of its employees, information PI-ocessingetc. Service industries depend a
lot on manufacturing firins for a significant share of their sales.
ii) Services Tied to the Sale of Manufactured Goods: Sale of a wide variety
'
of manufactureil goods creates deinai~dfor associated services. The sale of
consumer durables require ongoing need for servicing, sale of coml>utersleads
to demand for training services and after sales services, exports of any .
Product Decisions inannfactured goods would require sale of insurance, financial services and
transport services.
iii) Manufactured Goods Tied to the Sale of Services: This link is reverse of
the previous one. The sale of certain services leads to demand for manufactured
goods, for example, sale of engineering or lnallagement co~lsultingfrom a nation
can lead to demand for equipment and other associated ~nanufacturedgoods
from that nation. Also provision of a service requires a lot of manufactured
goods.

7.7 SERVICE CLASSIFICATION

A large number of classification schemes for services have been developed to
provide strategic insights in managing them. Utilizing different bases, these schemes
allow us to understand the nature of the service act, the relationship between seivice
organization and its customers, the nature of service demand and Lhe attributes of a
service product. Let us discuss the schemes briefly.

1) The Nature of the Service Act

Using the two dimensions of tangibility of the service act and to whom services are
directed at, Lovelock classified services according to whether services are directed ul
people or possessions, at minds, physical possessions 01- assets. Table 7.1 will help
you understand this classification scheme.

Table 7.1

Nature of the Service Act Services Directed At

Tangible Action People Possession
Services directed Directed at goods,
at peoples bodies Physical possessions
Healthcare,Salons, Transportation
Restaurants, Transportation LaundryIDry cleaning
Lawn care
Intangible Action Services directed Services directed at
at peoples minds intangible assets
Education Banking
Broadcasting . Lcgal Services
Information Insurance
Museums Accounting

2) Relationship between Service Organisation and Customers

In the service sector both institutional and individual customers may enter into
continuing relationships with service providers w d opt for receiving services
continually. Services can therefore be classified on the basis of whether the nature of
the relationship is continuous or intennittent and whether a consumer needs to get into
a membership relationship with the service organisation to access and utilize tlie
service.
 Table 7.2 : Services and Customer Relationships Product Concepts and
- - -
Classification
- - -
Type of Relationship
I I

Nature of Delivery Membership Non-Membership

I I
Insurance Police protection
Education Public highway
Banking
1
I
Discrcte 1 Theatre seat subscription I Car rental, Pay telephone
Co~n~iiuter
tickets Restaurant

3) How the Service is Delivered

Lovelock has used two issues of number of delivery sites (whether single or ~nultiple)
and the method of delivery to classify services in a 2 x 3 matrix. The i~nplications
here are that the convenience of receiving the service is the lowest when the
customer has to come to the service and niust use a single or specific outlets. .As his
options multiply, the degree of convenience can go on rising, from being able to
choose desirable sites, to getting access at convenient locations. (Table 7.3)

Table 7.3: Service Delivery Mocles

Service Delivery Modes

Nature of Interaction between Customer Availabiiityof Outlets
and Organisation
Single site Multiple site
Custonicr gocs to service organisation Theatre Bus Scrvice
Fast Food Chain
Servicc orpanisntiun collies to tlic customer Lawn care Mail delivery
Pest control E~iicrgencyauto rcpair
Customer and orga~iisa[iontlmisact Credit cards Telephone conipany
business at anlis length Local TV station Broadcasting

4. Proportion of Tangibility and Intangibility

Using the characteristic of intangibility of services, Shostack proposed that all goods
and services can be placed on a tangibility intangibility continuum, with services
clustering towards low to high intangibility. Accordingly, services call be classified as
those with a low intangibility content (a fast food restaurant) and apure service,
having very high intangibility content (education, consultancy, medical advice).

5) Service Inputs
Services based on this criterion have been classified as primarily equipment based or
primarily people based service depending upon which input is primary applied to get
service outputs. The equipment based services can be further classified according to
whether they are f~illyautomated, or consist of equipment monitored by unskilled
persons (lift operators, delivery van personnel) or need the presence of skilled
personnel to Inan the equipment (quality control, diagnostic services).

6) Contact between the Consumer and the Service Provider

Services also differ in the extent of contact that needs to be maintained between the
Usel and Providel; the marketing implication in this case being the necessity of
physical presence of the provider as well as need to manage desired quality of
personnel in case of high contact services. On this basis all services can be classified
I'roduct Decisions as high contact or low contact services, depending upon the time a user needs to
spend with the service organisation/provider in order to utilizelacquire the service.
Examples of low contact services are telecommunications, drycleaning and
broadcasting while high contact services are education, hospitality, theatre
performance.

7) Profit and Public vs Private Services

Service can also be classified on the basis of whether they are primarily directed at
public at large or primarily at individuals. The public services include utilities and
infrastructural services like transport and communication. They also include services I
I
provided by the state for public welfare like hospitals, educational and vocational I

institution, parks and museulns etc. The private services on the other hand include the
whole gamut of services designed for and consumed by customers as individuals e.g.,
restaurants, beauty care and medical advice. The ilnplications underlined by this
classification manifest themselves In issues regarding planning and design of service
i
.4
1
for public vs. private consumption. Involved here are issues of process, volume and
distribution of services when they are designed as public services. Services have also
been classified by Kotler as services designed for profit and non profit services,
depending upon the marketing objectives to be pursued in the exchange of services.

7.8 CHALLENGES IN MARKETING OF SERVICES

The traditional marketing mix is composed of the 4 Ps viz., product price, promotion
and place (distribution). These elements appear as core decision variables in any
marketing plan. All these four variables are interrelated, and there is an optional mix
of the four factors for a given market segment at a given point of time. Though,
conceptually marketing of services is no different from marketing of products, the
strategies of the 4 P's, however, require some modifications when applied to services.
Because of the significant differences between goods and services, marketers of
services face some distinctive challenges. Such challenges revolve around
understanding customer needs and expectations, and the efforts to keep pro~nises
made to customers. The basic differences between products and services, and the
associated marketing implications, are shown in Table 7.4

Table 7.4 : Differences between Products and Services, and

the Associated Marketing Challenges

Goocls
I
Services 1 Resulting Marketing Implications
Tangi bIe Intangible Services cannot be inventoried
Services cannot be patented
Services cannot be readily displayed or.
communicated
Pricing is difficult
Service delivcry and customer satisfaction
depend on employee actions
Scrvice quality depends on many
uncontrollable factors
There is no sure knowledge that the service
delivered matcl~eswhat was planned and
promoted
Production . Sin~ultaneous Customers participate in and affect the
separate from production and transaction
consu~llption consulnplion Customers affect each other
 Product Coxicepts and
Employees afl'ect the service outcome Classification
Decentralisation rnay be essential
Mass production is difl'icult
Nonperisliable Perishable It is difficult to synclironize supply and
demand
Services cannol hc returned or resold
-
Source: Valarie A. Zeithaml and May Jo Bitner.ServicesMarketing, McCraw Hil1,New York.
Ilztungibility presents several marketing challenges. As services cannot be
inventoried, fluctuations in demand are often difficult to manage. For example, there
may bc very huge demand for hotel accornmodation i n Shirnla in summer as against
low demand in winter. Yet, hotel owners have the same number of rooms to sell year-
round. Services cannot be patented legally. Hence, new service concepts can be
easily copied by competitors. Since services cannot be readily displayed 01. easily
cotnmunicated to customers, it may be difficult for consumers to assess the quality of
a particular service before use. Decisions about what to include in advertising and
other promotional materials may prove challenging, as is pricing. The actual costs of a
unit of service are hard to determine and the pricelquality relationship is complex. As
services are not tangible, it is not possible to provide snrnples and significant physical
evidence. The physical evidence of services includes all of the tangible
representations of the service sucli as brochures, letterhead, business cards, report
formats, and equipment. These physical evidence cues ~x-ovideexcellent opport~~nities
for the film to send consistent and strong messages regarding the organisation's
purpose, the intended market segment, and the nature of the service.
The irztc~~igihility
of tlie service reduces the marketers' ability to provide samples,
This makes communicating the service offer iiiuch Inore difficult than communicating
a product offer. Brochures or catalogues explaining serviccs often must show a
"proxy" for the service in order to provide the prospective customer with tangible
clues. A cleaning servicc for instance, can show apicture of an individual removing
trash or cleaning a window or even a photograph of a clean room. However, the
picture will not fully succeed in communicating the quality of service.
As services are /ictc~r-ogc~neoi~s, ensuring consistent service quality is challenging.
Further, quality clepends on many factors that cannot be F~~lly controlled by the service
supplier, sucli as the ability of the collsu~nerto articulalc his or her needs, the
presence (or absence) of otlier customer, and the level of demand for the service etc.
Because of these complicating factors, n marketcr is often not sure whether the
service is being delivered as 01-iginally planned and promoted. A11 associated problem
is that, unlike in the case of products there is no objective yrurclstick to determine the
quality of a service. Laboratory tests can establish the quality of a product but the
quality of service is dependent on the perception of the customer.
Since services often are produced and consumed simultaneously, Inass production is
difficult, if not impossible. Moreover, it is not usually possible to gain significalit
econolnies of scale through ce~ltralisedproduction. Usually operations need to be
relatively decentralised so that the service can be delivered directly to the consumer
in convenient locations. Also because of simultaneous production and consumption,
the customer is illvolved in and observes the production process thereby affecting
(positively or negatively) tlie outcome of thc service transaction. Solrie customers call
cause probleins in the service setting, leading to loweriilg of customer satisfaction.
For example, in a cinema theatre, one person misbehaving with other audience can
create negative experience to the entire audience and may become a dissuacling
factor next time.
As services are perishable, they cannot be stored for future consumption. Hence,
demand forecasting and planning for capacity utilisation are challenging decision
Product Decisions areas for marketers. The fact that services cannot typically be returned or resold
implies the necessity for strong recovery strategies when things do go wrong. For
example, while a bad hair cut cannot be returned, the hairdresser should have
strategies for recovering the customer's goodwill when such a problem occurs. The
Iiair dresser may, by refunding the charges collected from the customer, perhaps,
recover part of the goodwill lost.
The role of persorzrtcl deserves special consideration in the marketing of services.
Because the customer interface is intense, proper provisions need to be macle for
training personnel. Major emphasis must be placed on appearance and behaviour.
Most of the time, the person delivering the service (rather than the service itself) will
communicate the spirit, values.and attitudes of service provider. All human actors
who playa part in service delivery influence the buyer's perceptions and provide cues
to the customer regarding the nature of the service itself. How these people are
dressed, their personal appearance, their attitudes and the way they interact with
customers, all influe~lcethe customer's perceptions ofthe service. Therefore, the role
of service provider or contact person is very important.
The areas of pricing and financing require.special attention. Because services cannot
be stored, much greater responsiveness to demand fluctuation must exist and
therefore, much greater pricing flexibility must be maintained. Hotels offering
discounts in room tariff during oft'seasons is part of the flexible pricing strategy. The
intangibility of services also makes financing more difficult. Financial institutions are
less willing to provide financial support to services than for products. This is because
of three reasons: (a) the value of services is more difficult to assess, (b) service
performance is more difficult to monitor, and (c) services are difficult to repossess.
Therefore, receiving payments may be much more troublesome for a financier in the
case of services than products. This poses a challenge to the marketer of services in
procuring finances.
Usually, shorl and direct channels are required for marketing of services. Closeness
to the customer is of overriding importance in order to correctly ~ulderstandwhat the
customers want, to reach them fast with minimum cost;to monitor the flow and
utilization of services, and to assist the construct i n obtaining a truly tailor made
service.

7.9 THE SERVICES MARKETING NIIX

The unique characteristics of services make the traditional 4 P marketing mix seem
inadequate. Careful management of these 4 Ps - Product, Price, Place and Pro~notion
rhough essential, are not sufficient for successful marketing of services. Further the
strategies for the four Ps require some ~nodificatioilwhile applying to services.
Since services are produced and consuined siinultaneously, the contact personnel or
the service delivery personnel become extremely important. It is during these
encounters of service providers and custoiners i.e. the process - on which a lot
depends with regards to the final outcome as well as the overall perception of the
service by the customer. The actual physical surroundiiigs during these encounters
have also a substantial bearing on the service delivery. All these facts lead to the
development of an expailded marketing mix with three new P's added'to the
traditional mix. These are:
r People All hurnan actors who playa part in service delivery mid
thus influence the buyer's perceptions; namely, the
firms's personnel, the customer, and other customers in
the service environment
e Physical evidence The environment in which the service is delivered and Product Concepts and
where the firm and customer interact, and any tangible Classification
components that facilitate performance or
communication of the service.
e Process The actual procedures, mechanis~nsand flow of activities
by which the service is delivered - the service delivery
and operating system
Because of the s~multaneousproduction, delivery and consu~nptionof services, the
nature of marketing departments and marketing functions become quite different as
compared to goods. The marketing function - all activities which influence the
preferences of the consumers towards the offerings - is mainly handled by marketing
departments in case of goods. Here as far as consumers are concerned, ~narketing
departments (the organisational entity which is responsible for some, but not
necessarily all marketing activities performed by the firm) can plan and implement
most of the marlteting activities i.e., the marketing department is able to control
almost the total marlteting function. In the service sector the situation is entirely
different. A traditional mnrkcting department in services can only control a minor part
of the ~nilrltetingfunction. Usually, it does not have the necessary authority to manage
the buyer/seller interaction. The marketing department therefore, cannot plan and
implement activities pertaining to interactive marketing function.
Therefore the marlteling ti~nction,which is a key fiinction in service sector require a
special lreatment. The total marketing in services include three different types of
marketing as shown in Figure 7.3 .

Company
(Management)

111/0rri(~/
M(~t.ke/i~~g E.rlcr.rrrt/Mcrr.kcti~lg
Eniihling ~ h Promise
c Setting thc Promise

Providers Cu'slornel.~
111trrncti~~e
M(ii.kc/il~g
'Delivering the Promise

Figure 7.3 : T h e Services Marketing Triangle

As can be seen from the triangle, the traditional marketing rnix and marketing
departments basically address to 'External Marketing' only. However, all three sides ,
are critical to succesbful services marketing and the triangle can't be supported in the
absence of anyone of the sides.

Check Your Progress D

I. Identify the cl~aracteristicsthat make services different from products.
Product Decisions 2. Explain the interdependence between products and services.
......................................................................................................................

......................................................................................................................
3. List out the elements of expanded marketing mix for services.

.....................................................................................................................
4. State whether the following statements are true or false.
i) Most services are first produced, then sold and consumed
ii) Healthcare service is an intangible action directed at physical possessions.
ii) As services are perishable, they cannot be stored for future consumption.
iv) The people element of services marketing mix refers to the film's
personnel only.
v) As per services marketing triangle, marketing of services includes three
different types of marketing.

7.10 LETUSSUMUP
A product is any offering to the inarket for possible purchase or use. It encompasses
physical objects, services, places, organisations, persons and ideas. Essential
attributes of a product include tangibility or intangibility, associated with some
attributes f& being identified and accepted, should have exchange value and should
provide satisfaction.
Products may be classified in many ways. Based on the user status, products can be
classified as Consumer goods and industrial goods. The goods which are bought by
the households or ultimate consumers for their non-business personal consumption are
called consumer goods. Consumer goods may be further classified as convenience
goods, shopping goods and speciality goods. Industrial goods are those products which
are meant to be used by the buyers as inputs in production of other products. They
can be classified into raw materials, fabricating materials and parts, installations,
accessory equipment, and operating supplies.
We can also categorise tangible products into durable and non-durable depending
upon the period during which a product is used by a cons,umer. Services are those
separately identifiable, intangible activities which provide want satisfaction, and which
are necessarily tied to the sale of a product or another service.
A product line is an expression generally used to describe a group of closely related
products. Product mix refers to all the products offered by a firm and has different
components, viz. width, length, depth and consistency. Product line strategies are: I )
contraction of product line, 2) expansion of product line, 3) changes in quality
standards, 4) changes in model and style of an existing product, 5) product
differentiation, 6) product positioning, and 7) new products.
The term service is rather general in concept and includes a wide variety of services.
Services are essentially performances. Marketing of services needs a different
26 treatment because of the unique characteristics of services that distinguish them from
l~roducts.These characteristics are intangibility, heterogeneity, inseparatability and Product Concepts and
perishability. Due to these characteristics services marketing includes three additional Classificatio~l
marketing mix elements viz. People, Physical Evidence and Process.

Consumer Goods: Products bought by individuals or households for their personal

lionbusiness use.
Contraction of Product Line: Dropping a product from the product line.
Convenience Goods: A class of consumer goods that people buy frequently with
the least possible time and effort.
Durable Goods: Tangible products with a long life and lasting many years of active
service to owners.
Fabricating Materials and,Parts: A category of induslrial goods that have received
some processing and will undergo further processing as they become a part of
another product.
Industrial Goods: Products bought by individuals or iilstitutions for use in the
production of other goods or for rendering some service.
Installation: Manufactured industrial products that directly affect the scale of
operation of an industrial user.
Non-durable Goods: Tangible products that are coi~sumedin one go or last a few
uses aiid get depleted on consumptio~~.
People: All human actors who playa part in service delivery and thus influence the
buyer's perceptions; namely, the firm's personnel, the customer, aiid other customers
in the service enviroi~ment,
Physical Evidence: The enviro~lmentin which the service is delivered and where
the firm and customer interact, and any tangible components that facilitate
performance or communicalion of the service.
Process: The actual procedures, mechanisms and flow of activities by which the
service is delivered - the service delivery and operating system.
Product: A set of tangible and intangible attributes including packaging, colour, price,
manufacturer's and retailer's services which buyer may accept as offering
satisfaction of wants or needs.
Product Item: An individual product offered by a seller.
Product Line: Refers to'a group of closely related products offered by a particular
seller.
Product Mix: Refers to all the products offered by a particular seller.
Raw Materials: A class of industrial goods that have not been processed in any way
and that will become part of another product.
Services: Esse~~tiallyii~tangibleand separately identifiable activities which provide
want satisfaction, and which are not necessarily tied to the sale of a product or
another service.
Shopping Goods: A class of consumer goods that are purchased only after the
buyer has spent some time and effort comparing price, quality, style, colour, etc. of
alternative products in competing stores.
Speciality Goods: A class of consumer goods with perceived unique characteristics
such that consumers are willing to spend special effort to buy them.
Product Decisions
7.12 ANSWERS TO CHECKYOUR PROGRESS
A. 2 i) False ii) True iii) False iv) True
B. 4 i) Durable ii) Non-durable iii) Non-durable iv) Durable
v) Durable vi) Non-durable

D. 4 i) False ii) False iii) True iv) False v) T ~ u e 1

INAL QUESTIONS !
I
1) What is a product? Explain the three distinct levels of a product. i
2) Distinguish between consumer goods and industrial goods giving suitable
examples.
3) Taking any organisation you are familiar with as an'example, explain the terms
product item, product line and product mix.
I
4) What do y.ou understand by the term service? How do services differ from
products?
5) Explain the different classification schemes for services giving suitable
examples.
6) Briefly discuss the expanded services marketing mix and the services marketing
triangle.
UNIT 8 PRODUCT DEVELOPRIHENT AND
PRODUCT LIFE CYCLE
Sturucture
8.0 Objeclives
8.1 Introduction
8.2 Product Innovation - Meaning, Types and Importance
8.3 Product Development Process
8.3.1 Idea Generation
8.3.2 Idea Screening
8.3.3 Conccpl Dcvelop~nent
8.3.4 Business Analysis
8.3.5 Engineering Development and Marketing Strategy Dcvelopmcnt
8.3.6 Test Marketing
8.3.7 Co~n~nercialisalic~n
8.4 Characteristics of Product Developinent
8.5 Why New Products Fail?
8.6 Product Life Cycle (PLC)
8.7 Implications of PLC on Marketing Strategies
8.8 Lct Us Sum Up
8.9 Key Words
8.10 Answers to Check Your Progress
8.1 1 Terminal Questio~ls

8.0 OBJECTIVES
After studyi~lgthis unit, you should be able to:
understand tlie meaning, types and ilnportance of product innovation
0 visualize the step-by-step process involved in product development
0 draw lessons for the success of a firm in product developmetit exercise.
0 analyse and evaluate the possible factors contributing to failure of new products
a tlie concept of product life cycle and its implications, at different
u~ider.sta~id
stages, on marketing strategies

8.1 INTRODUCTION
The rate at which "new" products are introduced in the market, has, in recent years,
accelerated and simultaneously "old" products are disappearing from the market very
fast. Why is it happening? Why should companies spend resources on introducing so
called "new" products with such high frequency? What are tlie risks involved in
product developinent? How do the companies decide that the time has come for
introducing "new" products? Is any scientific process i~lvolvedin developing a "new"
product? This unit seeks to address these issues.
 PRODUCT INNOVATION - MEANING, TYPES AND
P~.oductDecisions
8.2
IMPORTANCE
The term "innovation" means "bringing in novelties" or "making changes". As far as
"product innovation" is concerned, it covers a wide range from making minor or
major changes in the existing product to introduction of substitute products or totally
new products. It is true that it is not easy to claim any product as totally "new" since
the idea for a new product originates trom the existing products. That is why it is
advised that a company should define its business in broad terms i.e. it is in "dental
hygiene business" and not in "tooth paste or tooth powder business" or in
"transportation business" and not in "bicycle or automobile or rail road
businessW.Definedthis way, no product can be construed as a "new product". As far
as business is concerned, a "new product is one which the target consumer segment
considers new" in the sense the consumer feels that the need is met by the "new
product" cannot be met by any other substitute product at a particular point of time.
Why do companies go in for new products? A simple answer to this question is "to
meet the changes in environment". The changes can encompass one or more of
environment factors viz., competitive environment, technological environment, cultural
environment, political environment, legal environment. Thus, to meet competition,
which has come out with a better product or fearing that competitors may introduce,
in the market, a new product, companies go in for new products. Technology may
open up new avenues in the form of better raw materials or better production process
or better management, opening opportunities to make better products; the likes and
dislikes of consumers may change forcing changes in the type of products to be
produced; government and other policy formulating and enforcing authorities may
make it obligatory for a company to make changes in the existing product.
The above are all external environment factors forcing the firm to bring about
changes in the product. However, an enlightened conlpany should be always on the
look out, as a policy, for opportunities for product innovation, instead of waiting for it
to be forced into it by external factors because, this way, it will not only pre-empt
competition, but will also be able to build up an image of a firm always tlying lo meet
changing market requirements.
What are the alte~nativesavailable to a firm to make changes in its existing product?
The company can consider improving the functional quality of the product and project
the "new product" as one of better quality. This change call be brought about by use
of better quality inputs andlor better engineering as and when it is possible. This
option is advised if quality is the major consideration in the purchase of the product
and the market is a quality conscious market. High unit value consumer items and
engineering and chemical items normally fall into this category.
Another option for the company is to change the product features i.e. increasing the
number of real or fancied benefits of the product by redesigning so that the new
product offers more functions, convenience, safety, etc. Iteins like refrigerators,
television sets and washing machines fall into this category. The features frequently
added to products such as cell phones, automobiles and two-wheelers are common
knowledge.
Changes are also brought about in the style of the product to make it appear new. In
this case, what is attempted is to improve the aesthetic image of the product as
against the f~inctionalappeal. Highly personalized products like garments, footwear,
handbags and luggage, which are not high unit value items, undergo such changes
frequently. Shows such as summer wear and winter wear shows that are held
regulariy for garments, for instance, bear this out.
Product "innovation" or "change" does not end with the above. It encompasses a Product Development and
larger area. On account of availability of improved technology, it may be possible for Product Life Cycle
a company to "replace" the existing version of the product with another version,
which meets the same requirement of the consumer, but with more ease and
convenience. For instance, a brand of tooth powder may be replaced by the same
brand of tooth paste, ground coffee by instant coffee, tea leaves by tea bags and
shaving cream by shaving foam etc. These are instances of "adaptive replacement".
Introduction of substitute products for the existing product is also a case of product
innovation. Replacement by ball pens of fountain pens and pencils is a good e;ample
of this strategy. This has been made possible by technology. Substitution of steel by
plastics in Inany products also falls in this category. The point to be noted is that the
new products meet the same requirement of the consumer much better and, perhaps,
at cheaper cost, though they involve use of different raw materials and different
production processes.
In all the above types of innovation, the new product need not ~lecessarilybe "new"
to the company or to the industry. The competi~igfirms, or, even the concerned firm
itself, may be selling such versions of the product in other markets. What is important
is that the target market must consider the product "new". It is common knowledge
that most products are first introduced in a limited number of countries/limited parts of
a country and then they are taken to other countrieslother parts of a country,

8.3 PRODUCT DEVELOPMENT PROCESS -

It is very important for a company to be constantly on the look out for opportunities
for product development for long time survival and prosperity in today's fast changing
competitive environrnet~t.It should not be lulled into co~nplacencyeven if it is the
monopoly producer and seller of a producl, for the present. For, competition may not
emerge ftoln another producer of the same product but ftom other sources. For
example, jute is facing competition trom synthetic fibres aid technological
developments like bulk handling techniques; steel is facing co~npetitionfrom plastics;
minerals such as copper used in telecom~nunicationare facing colnpetition trom
plastics and fibre glass and, most importantly, from cell phones which use air waves;
a monopoly producer of tea lnay not have another tea manufacturer to compete with
him but a coffee or aerated drinks manufacturer; cane sugar faces competitio~~ trom
beet sugar and sugar substitutes. Thus, it is always in the interest of a company to be
at least one step ahead of other companies and introduce a "new product" before the
competitors do it. It will also project the company as the "leader" .
What then is a systematic way of going about for product development? Figure 8.1
presents the step-by-step process involved in product development.

8.3.1 Idea Generation

Product development exercise commences with sourcing for ideas. Ideas can come
from any source and, in fact, some even the most unlikely source. The most important
source is, of course, the user of the product. The problems faced by the consumers in
the use of the existing version of the product will throw up ideas for product
development. For instance, the problem posed by the heaviness and large size of the
tape recorder gave birth to Walkman. Similarly, distributors, retailers, employees of
the company, friends and relatives, independent researchers and consultants or, for
that matter, anyone can be a source for ideas. Incidentally, in a number of cases,
competitors have proved to be a good source for ideas because, a close watch on
their products and the problems faced by users of those products has thrown up a
number of ideas. What is important is that the management must encourage ideas and
Product Decisions Idea Gencra~ion I

G='
Idea Screening

+Concept Developilleilt

5+Business Analysis

Engineering Developinent
and Marketing Stralegy
Developn~ent

%--
Test Marketing

f
Commercialisation

Figure 8.1: Product DevelopmentProcess

keep its eyes, ears and mind open for ideas. There should be a deliberate policy to
generate and encourage ideas and reward the successful idea providers. Some formal
system such as institution of an "idea bank" may be considered in this regard.
Some of the commonly used methods of generating new producl ideas are
Brainstorming, Focus Group Interviews and Attribute Analysis which are briefly
discussed below.
Brai~zstorlnirzg:It is a poplular creative technique with a Long track record. It was
first developed in 1938 by A.F. Osborn and gained acceptance by the business world
in the 1950s. Brainstorming aids in idea generation by encouraging the creativity
latent in many of us. It irlvolves meeting, usually of a group of six to ten people,
where participants are free to express any and all ideas they concoct.
Focus Groups: The conducting of focus group interviews is very much like that of
brainstorming. But the members of the group are consuiners (rather than employees
of the firm) and, usually, are decided on by a market research agency. That is to say,
focus group interviews can be thought of as brainstorming with consumers/potential
consumers.
Attribute Analysis: By decomposing existing products into combinations of specific
parts, qualities, or attributes, Attribute Listing (or Analysis) seeks to modify one or
more of these to improve the whole product. Although Attribute Analysis may not
produce major breakthroughs, it can undoubtedly aid in "remarketing" - "new" and
"improved" products -and possibly in product differentiation.
Besides the above methods, scanning trade publications, visiting trade shows, setting
up an idea vault in the organization and allowing employees to review the ideas,
surveying customers etc. are some of the other means of generating new product
ideas.

8.3.2 Idea Screening

Once a reasonable number of ideas have been generated, the next job is to screen
32 them by a group representing as many interests as possible, such as management,
 labour, marlceting, finance, consumer, research.and development, engineering, etc. Product Development and
Such a screening enables the idcas being loolced at from various angles and the Product Life Cycle
implications of conversion of an idea into a product analysed, such as the nature and
extent of resources to be committed, the irnpact of product development on labour,
the problems likely to be faced ill production and sales, etc. At this stage, some ideas
may get rejected totally, some accepted "in toto" and some accepted with
modification. Some ideas may be referred back to the idea givers for modification,
seeking clarification, etc. w

Screening of new product ideas is essential for costs and risk of developling new
products run very high. Once a product reaches the market place, what is done
cannot be easily undone. Screening criteria usually concern themselves with three
factors - mnrlcets, products, and finances. More frequently used 'market criteria' are
market size, share; market growth; market positioning; distribution features etc. The
'product-criteria' are newness, feasibility; servicing requirements; legal considerations
etc. The 'financial criteria' are ~~rofitability;
retum on investment; cash flow etc.

8.3.3 Concept Development

The approved idea must now get transformed into a specific product concept with a
complete picture regarding the new offer of the company. This means spelling out, in
clear terms, details such as tlie profile of the target consumer segnlent, the speciFic
want [hat is sought to be met, the differences between the product presently being
used by the consumers and tlie new product, particularly its positive attributes, the
likely inipact of the new product on tlie company's image and on the other products
of the company, etc.

8.3.4 Business Analysis

Thc foregoing analysis is carried forward in the next stage, with detailed appraisal of
the proposal including sales forecasting, estimation of costs, prices and profits at
differen1 sales levcls, tlie possible retaliatory strategies of the competitors and the
company's likely response to the same etc. Since all the above cannot be estimated
with tots11 precision and, in any case, a number of assumptions are involved in the
exercise, it is generally the practice to work out different sets of figures under
different ilssumptions and so long as the final performance falls within an acceptable
range, the utility ol'this exercise is established.

8.3.5 Engineering Development and Marketing Strategy Development

During this stage, tlie technical personnel i.e. the engineering department responsible
for production, work on conversiot~of tlie approved idea into a product, with all the
suggested attributes. At this stage, anyone of the three possibilities exist; the
engineering department lnay meet with total success in manufacturing the product, or
it may. meet wit11 total failure, or it may be able to come out with a product that may
not fully, but only partially, reflect tlie original idea.
Sim~~ltaneously with engineering development, the comnpany also develops the
marketing strategy in terms of branding, servicing, packaging, pricing, distribution and
promotion. Individuals and groups within the firm are identified for specific
assignments and the sequence of events is worked out.

8.3.6 Test Marketing

Once the prototypes of the product are ready, the company does not go in for
carnmercial production immediately. Though all care might have been taken till now to
come out with a product that meets the present needs of the consumer, it is advisable

--
Product Decisions to "test market" before commencing commercial production. Test ma;keting is selling
the product underconditions, in a market, which, to the extent possible, reflect the
conditions likely to prevail in the market, at the time of commercial sales. Test
marketing will enable the company to get feedback on its offer so that the drawbacks
can be rectified before commercial production. Test marketing will also provide
information on the likely level of sales that the product can generate during
commercial sales. However, the company should guard against two problems during
test marketing; one,..it should ensure that competing firms do not benefit by advance
information on the company's strategy which may enable them take effective pre-
emptive measures and two, test marketing should not raise the expectations of the
consumers too much because, if the company is not able to rise to the expectations
subsequently, its sales will be badly affected.

8.3.7 Commercialisation
Test marketing is the last stage before a company takes a decision regarding whether
to go ahead with commercial production or what modifications are still required in the
product or to drop the exercise totally. Once it is decided to proceed to the next stage,
it should initiate steps for commercial production of the product. It is advisable to
keep the time lag between test marketing stage and commercial production stage to
the barest minimum since, if the time lag is large, there are possibilities of changes in
environmental factors such as government policies, the country's laws, technological
factors, consumer choices etc., which may make the entire exercise futile. It should
also be emphasized that the company should have the guts to abandon the product
development exercise at any stage if circumstances so warrant, notwithstanding the
fact that the investment made so far would go waste, since proceeding further will
only add to the losses.

8.4 CHARACTERISTICS OF PRODUCT DEVELOPMENT

Two aspects of product development merit mention. One, product development must
be treated as a continuous process, which does not have a beginning or an end. This
means that a company should not wait till the product sales stagnate or decline to
commence product development exercise. Even if the sales are increasing and, in
fact, as soon as a particular version of the product is introduced in the market, the
company should initiate action for coming out with the next version of the product as
early as possible. The motto should be "nothing is perfect; there is always scope for
improvement". The second aspect, which is equally important is, success in product
development is possible if only there is concurrency and healthy inter-relationship in
all the functions of a firm. Product development should not be construed as the
responsibility of any one department or one group or limited number of departments
or limited number of groups of persons in a company. 011 the contrary, it
encompasses all departments and the entire staff of a company, from the lowest level
to the top management, should get involved in the exercise and the activities of each
department should be geared to the requirements of the other departments and vice-
versa. The idea givers and evaluators should take into account the strengths and
limitations of the company and should not give utopian ideas; those who are in charge
of converting the idea into a product should strive to meet the requirements of the
market as conveyed to them. Profit is a function of total efficiency and not sectional
efficiency and no weak link in the chain should be allowed to snap the chain.
Risks in Product Development: Though, for long term survival in the market and
prosperity, a fir111should definitely go in for product development, it is, by no means,
an easy job. It is important that a company, before it embarks on product development
exercise, is aware of the risks it is likely to face during this phase.
First, the exercise involves substantial commitment of resources, depending on the Product Development and
nature and extent of the development that has to be brought about in the product. The Product Life Cycle I
i
firm should be cleal; right at the beginning, whether it can marshal1 the needed
resources for the exercise. Apart from the resources to be spent on bringing out the
new product, more resources have to be employed to successfully market the
product.
The second risk relates to the nature of research and development. There is high
wastage rate in research and development and it is quite likely that, even after
spending the resources, a company lnay not succeed in coming out with a "new
product" meeting its own perception. This means that the firm has to abandon its
efforts and the resources spent till then are dead investmelit.
The third risk arises due to tlie fact that markets all over the world are not generally
favourably inclined to accept new products easily. The failure rate of "new products"
is very high. Failure does not inean that not a single unit of the product was sold; it
means that the sales turnover was not sufficiently high to justity continuation of
production.

8.5 WHY NEW PRODUCTS FAIL?

Why is the rate of failure of "new products" very high? The obvious answer is that
the "offer" has not met with the customer requirement in terms of any one or more
than one val-iable. This arises because either the company has not read the custoiner
mind correctly or the customer wants have changed in the meantime or the company
has not fully siicceeded in translating the custoiner requirements into its offer.
Specifically, the Fdilure may be traced to one or more of the following factors:
Product: Prociuct factors such as functional quality, size, shape, colour, design,
materials used in its production etc. of the product not upto customers' requirement
Package: Functional quality, the material used in the package, size, shape, coloul;
design, and instructions on the package including the languages used, disposability or
reusability of tlie package, compatibility with the product, aesthetic appeal, ease of
opening and closi~igthe package etc., determine acceptability or otherwise of the
package and, along will1 it, the product.
Label: The size, colour, lsnguage(s) used, shape and material influence customer
preference.
Brnnd: Brand name and brand logo are, along with tpdemark, major considerations
in purchase clecisions.
Service: Pre-sale, point-of-sale and after sales service play a major role in the
purchase, particularly of high unit value durable consumer goods and capital
equipment. Before buying a product, the consumers want to be educated about it and
how to maintain and use it; they also desire that the seller should install the product
ancl train them to maintain it and finally they want quality after sales service at
reasonable cost at a time and place convenient to them for a reasonable length of
time. If a company fails in ally of these, the product fails.
Distribution: Selection of inappropriate channels and outlets, lack of motivation
among distributors, inconvenient location of distributors and poor service quality of
distributors are some of the problems associated with the failure of the product,
Pricing: Product q~~alitylprice relationship not being optimal, nonavailability of credit
for high unit value items, lack of incentives such as price discounts, and frequent price
revisions cause product failure.
Product Decisir)lls Pronzotion: Selection of inappropriate promotional tool, non-availability of effective
promotional tool, co~nmunicationmistakes, poor literacy level of the market, non-
availability of capable protnotional firms, problems in personal selling and sales
promotion lead to poor communication with the customer affecting product sales.
Elzvirollment: Changes in environment - technological, legal, competitive, cultural,
political -which could not be anticipated in advance and provided for, lead to product
failures.

Check Your Progress A

1) Give three reasons for a company to go in for a new product.

......................................................................................................................
2) List the various steps in product development

3) Are the following statements correct or incorrect?

i) Product innovation is not necessary for a company which already has a
successful product in the market
ii) The first step in product development is test marketing
iii) In afirm, product development is the sole responsibility of the marketing
department d

iv) The success rate of new products has always been low
V) Price is the main factor contributing to product Failure;

8.6 PRODUCT LIFE CYCLE (PLC)

It is generally said that products are like human beings; they are born, grow (in sales),
fall sick (declinelstationary sales) and ultimately, in most cases, die (disappear from
the market). New generation of products replace their earlier ones. Pencil has been
replaced by steel pen; fountain pen by ball point pen; mechanical typewriters by
electric typewriters, electronic typewriters and computers; blister packs have
replaced glass bottles in pharmaceutical industry; dial telephones have been replaced
by push button phones, chordless phones and cell phones; letters, as a means of long
distance comm~~njcation, have been replaced by telegrams, telephones, telefax and
electronic mail. The entertainment sector has seen many products, such as radio, tape
recorder, walkman, television, VCP, VCR, DVD, CD-Rom, cable TV etc.; washing
bar soaps have been replaced by cakes, synthetic detergents, powders and liquid
soaps, Such examples are too many to warrant exhaustive listing.
The above fact has been conceptualized in the product life cycle (PLC) concept.
Figure 8.2 is a useful reference for the PLC concept, indicating the different stages a
branded product normally passes through in its life.
 Product Development and
Product 1,ife Cycle

In~rod~~ction Growth Maturitylsaturation Decline

Time ---+
Figure 8.2: Product Life Cycle'(PLC)

The above figure has been drawn in terms of four stages but a five stage PLC or a
seven stage PLC can be thought of. The reference in the above figure is to a brand
(of the product) and not to the generic product. Just as a brand (a particular.
company's product) passes through a life cycle, a generic product (of the industly as
a whole) also has a life cycle. 111d~lstrylife cycles are long as compared to the life
cycle of a branded product. For a firm, what matters most is the life cycle of its own
branded product although if the generic pl-oductas a whole dies, its own brand will
also die.
Figure 8.2 refers to a typical product life cycle. It does not mean that all the products/
brands have to necessarily pass through the typical life cycle. The shape of the life
cycle curve will vary from product to product and from brand to brand. It may have a
steep rise and sudden fall; or slow rise, long maturity period and slow decline; or it
may move up and down; it may be long or short; generally for low technology low
unit value items and fashion goods, the life cycle tends to be short, in a seller's market
and for a high technology, high unit value item and for "necessities"for which no
effective substitutes exist, lhe life cycle tends to be long.
Thus, the concept of YLC can be made applicable to all types of products and all
brands. Competitors are always on the look out for opportunities to cut into the
market share of a successful product; they try to wean away the customers with
"better" offers in terms of product, package, brand, service, price, promotion and
distribution. Even so called "necessities" are "necessities" only at a particular point of
time: petrol may be a necessity today; but alternate sources of energy may pose
challenges to petrol at a future date; a particular foodgrain, such as rice or wheat,
may be a necessity today to a consumer group, but changes in food habits may lead
to decline in demand for rice and/or wheat after some time; same will be the case for
other 'food' items such as beverages, sugar, vegetable oils, pulses, etc.; agricultural
raw materials such as 'cotton and jute, which were considered as "necessities" not
long back, are facing cotnpetition from synthetic products today; minerals such as iron
ore and copper are being challenged by plastics, fibre glass and technological
developments; technological developments have also enabled production of low
weight and slnall sized products, resulting in reduced demand for raw materials. Thus,
just as some human beings and animals enjoy long life as compared to others, in the
product category also, "necessities" may have a longer life as compared to others.
What a company should, however, be concerned with, is the life cycle of its own
brand (or product), even if'it belongs to an industry that is producing a "necessity" for,
it is quite likely that its own brand may be in the decline stage notwithstanding the fact
that the industry (product) is in the growth stage,
Product Decisions What are the characteristics of a four stage PLC as depicted in figure 8.2 ?
Introduction Stage: During the stage of introduction of a new brandlmodified
product, sales tend to be low. This is because majority of consumers, being what they
generally are, do not have any high degree of awareness and are known, by and
large, to be reluctant to quickly switch over to a "new product" if they are not highly
dissatisfied with the brand they are presently using; only such of those consumers,
who are not many in number, who, generally, are quick to "experiment" with new
products and whose awareness level is relatively high, try out the new offer by the
company. On account of the low sales level, profits are likely to be low or even
negative. This is also the time when the competitors, like consumers, come to ltnow
of the new offer of the company and watch the response of the market to the new
offer before initiating retaliatory strategy.
Growth Stage: Assuming the company's new offer does not die in infancy and has
found customer awareness and acceptance, the sales graph rises slowly. It may
register a steep rise in the case of fashionlfad items or during periods of temporary
shortage or emergency. Demand for "face masks" rose rapidly throughout the world
during April-May 2003 when the fear of Severe Acute Respiratory Syndrome
(SARS) hit most countries. Similarly, during earthquakes, floods and other calamities,
demand for medicines, clothing and building materials rises shai-ply. Barring the above
exceptions, a "typical" growth in sales will be a slow growth. This is the stage in
which sales will grow maximum, profits will touch peak levels and the market size will
be the largest. In view of the foregoing three characteristics, competition will also be
growing during this stage.
Maturity Stage: By now, all those who have found the company's offer acceptable,
have started using the new product. Many rival companies have also started putting
their strategies in place, trying to wean away the custoiners by their "better offers".
Sales of the company are characterized by stagnation or, at best, a very slow growth.
Though the market size is still the largest, profits will show a tendency to decline
since the company may have to resort to price cutting on the one hand, and spend
Inore on promotion, distribution, etc. on the othel; to maintain the sales level.
Declinemeath Stage: If no action is initiated by the company to ensure
maintenancelgrowth of level of sales, or if the action taken does not succeed, then the
product sales start declining after some time since the inajority of consumers, as they
switched their loyalty from other companies' brands to this brand during the earlier
stages, start switching their loyalty once again, this time in favour of the "better
offers" made by other films. There may still be some laggards favouring the
company's product; those who were late in the beginning to accept the product
generally are also late in dropping the product. Sales being low, other things being
equal, profits also start declining during this stage and, at some point, may even turn
negative forcing the company to discontinue production.

8.7 IMPLICATIONS OF PLC ON MARKETING

STRATEGIES
What do all the above mean to a company? During the iiitroduction stage, the
company must deploy various techniques so that the product does not meet with early
death. It should try to build up awareness among the target group about the
"newness" of the product, its attributes etc. and provide attractive incentives to both
consumers and distributors through "introductory offerswinvolving price discount and
sales promotion. The company should spend rather heavily on promotion and target its
strategy to "innovative" customers. Taking into account only price and promotion,
four strategies are possible during the introduction stage. These are Rapid Skimming
(high price and high l~ro~notion
level), Slow Skimming (high price and low promotion Product Development and
level), Rapid Penetration (low price and high promotion level) and Slow Penetration Product Life Cycle
(low price and low level of promotion).
During the growth stage, the compruiy should attempt to take maximum advantage of
the rising demand. All activities in the colnpany should be geared to take advantage
of the demand growth. Under no circumstances production should be found wanting
and orders shoulrl be met immediately. Logistics should be streamlined so that the
product reaches the ultimate consumer with minimum time loss and at a place where
lie wants it. Promotion must ensure that brand insistence is built U P and, though a
loyal customer base may make a marginal price rise easy, complacency should not be
allowed to set in, just because the sales volume is high. It should shift from product-
awareness advertising to product-preference advertising. The prices tend to be
lowered in the growth stage to attract the next level of price-sensitive buyers. In
terms of product, product quality is improved, new product features are added and
new models are introduced. It must also be remembered that success invites
competition and the co~npaliyshould be ready with preemptive action to meet
compelitors' challenges.
It is during the maturity stage that the company should intensify its efforts to counter
the problems posed by stagnating sales. Stepping up promotional efforts, particularly
in terms of sales promotion directed both at the consumer and distributol; increased
allocation to adverlisemenl, rise in margins and other incentives to distributors, price
cutting, discounts, etc. are some of the strategies no~inallyadopted by majority of
companies. Most importantly, this is the time when "life cycle stretching strategies"
should be put into practice by the finn. "Repositioning" of the product in tune with the
changed environment is one of the strategies adopted by some companies. For
instance, most companies in cooking oil business have repositioned their products in
recent years highlighting, to the health conscious consumer segment, the cl~olest~ol
free attribute of their product; condoms have
been repositioned, the emphasis shifting from the original one of "family planning" to
"safe sex". Marketers should, therefore, consider some of the following points to
avoid or postpone the decline stage:
i) improve product quality
ii) add new product fealures resulting in extra benefits
iii) find new uses or new user segments
iv) reposition the product
V) give incentives to distribution channels
vi) expand distribution intensity
vii) improve advertising and sales effort.
When it is reasonably certain that no successful life cycle stretching strategy can be
put into practice or, the strategies attempted have not brought in the desired results,
the company should think in terms of withdrawing from the market either partially or
fully, so far as the present version of the product is concerned, at least momentarily.
Since overall profits become low or even negative during this stage, the firm should
undertake a detailed review of revenue and costs, segmentwise, and take a decision
regarding total or partial withdrawal. This is not an easy decision to take but it must
be remembered that "product elimination" is as much a part of product development
as product introduction or modification is for, unsuccessful products only add to the
company's losses.
What is'the basic philosophy behind PLC? The philosophy is "anything that is born in.
this world must die one day"; "nothing is pe~fectand there is always scope for
improvement". An enlightened company must shoot down its own product before the
Produet Decisions co~nl)etitorhhoots ~ t down;
s "a company must mess with success or, otherwise,
success will mess with the company".

Checlc Your Progress B

1) Define "Product Life Cycle".
......................................................................................................................

......................................................................................................................
2) List four stages of Product Life Cycle.

Are the followirig statements correct or incorrect?

(i) Sales will rise faster, at the introduction stage, as compared to other
stages, in the case of lnost products.
(ii) Profit levels will reach a peak, in the case or most products, at the growth
stage.
(iii) Products which are considered necessities do not go through a life cycle
(iv) Brand life cycle and industry life cycle will definitely follow the same
pattern.
(v) Product elimination is opposite of product development.

8.8 LET US SUM UP

Product decisions are more basic than decisions in respect of other inarlceting
variables, When a company claims that it has introduced, in the market, a "new
product" it does not necessarily mean that the product is a totally innovative one. A
"new product" may mean an existing product with minor or major changes or it may
be a totally new one in the sense that the market has not been exposed to it eai-lier.
Whnt is important is, the colisumer segrnent should feel that no close substitute exists
for the product at a particular point of time.
Companies go in for new products because of the changes in e~lviron~nent -political,
social, cuhural, economic, competitive, tecl~nological,etc. Changes in quality, features,
style, adoptive replacenlent and introduction of substitute products are all part of the
exercise to impart "newness" to the product.
Product Development (PD) exercise is answer to the company's search to impart
newness to the product. The exercise begins with generation of ideas and follows a
course comprising idea screening, concept develop~ne~it, busjness analysis,
engineering and marketing strategy development, test marketing and
co~~iiliercialization.
In the entire exercise, it must be ensured that all activities towards
product development i-un concurrently and there is healthy interrelationship among
various departments of the firm. PD should be considered a co~ltinuousexercise with
no beginning or end. The risks in PD must also be kept in view.
Though, basically, failure of a new product can be traced to the company's offer not
meeting consumer requirements, a combination of factors relating to all marketing
variables and environmentiil changes, which have not been provided for, contribute to Product Development and
p1.0ducrf a1' I ures. Product Life Cycle

Most ofthe products pass through a life cycle comprising, introduction, growth,
maturity and decline stages whether they are necessities, high unit value items, low
unit value items or fad items. A company should accept this fact and not only
fornlulate strategies appropriate to each stage of the product life cycle but attempt to
find out ways and m a n s of slretching the life cycle of the product as much as
possible. If it does not succeed in stretching the life cycle beyond apoint and finds
sales decline setting 111, it should not hesitate to eliminate the product.

8.9 KEY WORDS

New PI-oduct:A product that is considered new by the target user segment.
Product Developxnent: The changes that are brought about in a product in order to
make it more customer friendly.
Product Life Cycle: The stages through which a product goes through from the
time it is introduced i11 a market till its elimination from the market.
Repositioning: Creating n different iinage for the product among customers in order
to ;u.rest the decline in/i~nprovethe marltet share.
Test Marlteting: Testing the company's offer in a sample population ~ ~ n d e r
contlitions similar lo those likely to prevail (luring cornlnercial sales.
Target Scgment: The group of' people which a company colisiders as constituting
the mnrlcel I'or its offer.

8.10 ANSWERS TO CHECIC YOUR PROGRESS

A. I ) i) To fricc competition which may offer better products to tlie consumers;
ii) To take advantage of thc latest technology; and
iii) To meet the changing preferences of the consumers.
2) a ) ltlen generation: b) Idea screening; c) Concept development; d) Business
analysis; e) Engineering and marketing strategy development; f) Test
marketing; g ) Cornmei.cialisntion
3) i) Incor~.ect i i ) lncon'ect iii) Incorrect: iv) Correct v) Incorrect
B. 1 ) Protluct life cycle refers to the stages through which a product passes from
the ti~nei t is introduced in n market till its eventual elimiilationfrom the
~nnrket.
2) a) Introduction; b) Growth; c) Maturity; d) Decline
3) i ) Incorrect i i ) Correct iii) Incorrect iv) Incorrect v) Incorrect

8.11 TERMINAL OUESTIONS

I) What do you unclerstand by the term Product Innovation? Explain the need for
com~;u~iesto go in for new products.
2) Explain the various stages of P~.oductDevelopn~eiltProcess giving suitable
examples.
3) Disc~~ss
tlie I'eatures responsible for failure of new products.
Product Decisions What are the risks associated with test marketing? How can a company guard
4)
against the risks?
5) Give at least two examples of products that, you consider, are passing through
a) Introductory Stage
b) Growth Stage
C) Decline Stage.
Give reasons for your answer.
6) Discuss the life cycle stretching strategies adopted in the case of any one
product when its sales started declining.
7) Describe the various strategies adopted by companies at different stages of the
product life cycle.
UNIT 9 BRANDING, PACKAGING AND
SERVICING
Structure
9.0 Objectives
9.1 Introduction
9.2 Branding
9.2. I Mcaning and Importance
9.2.2 Advantages iund Disaclvantages of Branding
9.2.3 l31-andingDecisic~ns
9.2.4 Selccting n Good Brand Name
9.2.5 Elements ol'Brand Managerncnt
9.3 Packaging and L:lbeling
9.3.1 Meaning ;uid Functions of Packaging
9.3.2 Pncltaging Industry
9 . 3 . Packaging Slraccgies
9.3.4 Lahcling
9.4 Product Supporr Services
9.5 Let Us Sum Up
9.6 Key Words
9.7 Answers to Check Yoilr Progress
9.8 Terminal Questions

9.0 OBJECTIVES'
After studying this unit, you shoulcl be able to:
explain the terms branding, pacltaging, labeling and product support services
explain the concepts of brand identity, brand image and brand position
e x ~ l a i nv:trious branding clecisions and elements of brand management
e describe the various f ~ ~ n c t i oof
n spackaging
describe the composition of packaging industry
explain packaging strategies and labeling

9.1 INTRODUCTION
You have undel-stood that a product that is offered to the market has various levels.
The first level comprises of the core benefit of the product for which the consuiner
pays. A l-narket oppol.tunity analysis leads to identification of the core benefit and
expectation of the consumer. Then the physical product is developed at the next level
called tangible level. This level involves styling, featuring, branding, packaging and
labeling of the product. The rl~~ginented level of the product, the third level, involves
the after sales service and issues related to product support services like warranty
and guarantee. You have completed your study on definition of product, classification
of PI-oducts,product line strategies, new product development process and product
I
Protlurt Decisions life cycle in units 7 and 8. In thisunit we will discuss in detail about tlie second level
and third level of the product offer namely branding, packaging, labeling and product
support service issues. We will learn about how the branding decisions are taken and
how the product packaging and labeling serves various key functions for consumers
and marketers.

9.2 BRANDING
9.2.1 Meaning and Importance
Brands are valuable to orgganizatio~isand consumers. Their wealth generating
capabilities result from the way organizations seek to add value to customer lives.
Products need names, as we do, as it will help the consumer to have an instant recall
at the point of purchase. This serves as a key differentiator in business that provides
immediate attention and subsequent perception of value alllong customers. Brands
are clusters of f~~nctionaland emotional value. The tradilional branding strategy
speaks about initiating the process of branding by starting a brand name decision and
then building the benefits around tlie brand name for customer to remember the brand
name whenever he is confronted with buying situations.
There are various niethods by which we can give a bland name to a producl.
Deciding a brand name for a new product being introduced is n strategic decision.
Traditionally brand management has focused externally, seeking to understand
customer behavior from which a unique rnix of values is derived to enhance custolner
life styles. The l-udimentary method of branding evolved the idea of using the family
name or the product range as tlle method of branding like Tatas, Birlas, G0dre.j soaps,
Yamaha RX 100, RX200 etc. It seems the function that brand was supposed to
perform was either to indicate tlie source or tlie origin of the product or indicate the
product range. However, branding has emerged as one of tlie most important
elements of the marketing strategy in the recent times and will become more and
more cnicial as the competition intensifies in India. With the growth of services
sector- and the importance of service in product based brands, customers' increased
level of interaction with staff provide them with a powerful clue about brand values.
Let us understand what tlie conceptual meaning of tlie term brand and brand liaine is.
Brand: A traditional 1960 American Marketing Association (AMA) definition
describes a brand as a name, word, mark, symbol, device or a c01nbinati01i thereof,
used to identify goods or services of one seller and to differentiate them from those of
competitors. The definition clearly focuses 011the function of a brand, that is, to
identify, irrespective of the specific means emp toyed for the identification. David
Aaker defines a bmnd in zl similar meaning adding that it signals to the consuiner the
source of the product atid protects the consumer and tlie producer from the
competitors who would attempt to provide products that appear to be identical. A
modern definition talks about the clelivery of certain value to tlie consumer and hence
a brand is a mental patent that gives certain set of functional and emotional value to
the consumer in a uniclue way which are not found with another brancl.
Lesle de Chernatony has developed a brand spectivin to racililate the apprecialion of
the variety of interpretatio~isof what a brand is. He groups these interpretations of
brand into three categories. Tllese three categories are bclsed on wlietlier the
perspective is input based i.e. stressing branding as a particular way managers direct
resources to influence consumers, or output based i.e. consumer's interpretatio~isand
consideration of the way brands enable consumers to achieve more; and time based
recognizing their evolutionary nature. He concluded that brand consultants did not
have a single definition of a brand, but rather regarded the concept of a brand as a
link between the firm's ~narkeltingactivities, consumer perceptions of knctional and Branding, Packaging
emotional elements. Brands are complex offerings that are conceived in brand plans arld Servicing
but ulti~i~ately
they I-eside in consumer's mind. Brands exist by virtue of a continuous
process whereby tlie coosdinated activities across the organization, concerned with
delivering a cluster of values, are intelyreted and internalized by customers.
Brand Name and Logo: B ~ u i dname is the face of n brand consisting of a word,
letter, group of words or letters that can be vocalized. Comparing this definition with
tliat of a brand, it is found tliat the function remaining the same, brand name is only
one of the means that the bsand can use for identification. Brand name is a word or
a combination of worcls/lctters that is pronounceable, e.g. Pramise toothpilste, Rexona
soap etc. Brand as a logo is unique to that product as a product design and signage.
Examples of brands easily identifiable include theunique shape of Coca Cola bottle,
the distinctive rainbow mark of Wipro, the golden arch of McDonalds, part eaten
apple of Apple Macintosh. A Brand mark can be a design, a distinctive logo type or a
colouring scheme, u picture etc. In other words, it is not just a name but a means of
identification.

Brand as a Legal 1nstl.ument: Branding issignificant from a legal perspective. It is

used for ensuring a legally enforceable statement of ownership. Brand building
represents an investment and organizutions seek legal ownership of title as protection
against iiiiitator.~.Though briuid name ancl trade name are used synonymously, there
is diffesence between these two tenns. A trademark is tlie legal version of a brand.
Brand falls under tlie category of industrial property rights and therefore, subject to
certain rules and regulations.
It can be registered and protected from being used by ot1ie1.s. The American
Marketing Association defines a trademark as a bl-and tliat is given legal protection
because, uncler the law, it lias been appropriated by one seller. Therefore, we can
define a traclemark i!s a brnntl or a part that is given legal protection because it is
capable of exclusive appropriation. Trademark is essentially a legal term. All
trade~narksare brands, but a brand can be called as a trademark only when it is
legally protected and lias been appropriated by one seller. As all trademarks are
brands, a trademark may include words, letters 01.numbers that can be pronounced
and also may include pictorial design (brand mark). When a hand is registered, it
becomes trademark and such trademark is shown by clisplnying the letter R enclosed
in a circle, shown as 03.

Check Your Progress A

Select five non-clurable goods and five durable goods around you. Identify tlie brand
name, brand mark and tlademark notice O

' Brand Name Brand Mark Trade RlIark Notice O

Non-Durable Goods
I) .................................................................................................................
2) .......................................................................................................................
3) ...................................................................................................................
4) ......................................................................................................................
5 ) ...................... . .........................................................................................
,
Product Decisions Durable Goods

9.2.2 Advantages and Disadvantages of Branding

We have already explained that branding is a mental patent as it promlses certain
amount of value to the customers. Brand serves as an assurance to the customer
about product performance. Brand helps customers to identify the product in the shelf
and also in their decision making. Brands which are symbols of status and social
significance give psychological satisfaction to the consumers. Brand also serves as a
medium of social stratification as it reflects a person's choice and social class due to
specific usage.
Brands are used as a tool for product differentiation by the seller. It helps to create a
niche for the brand through this differentiation. Over a period of time the brand enjoys
a monopolistic advantage due to the brand name with a loyal set of customers.
Brands also help for the overall improvement of product quality in a society through
healthy competition to offer better product benefits to customers. They help in better
dissemination of product knowledge which helps the consumers to make decisions on
rational basis and improves the efficiency of use of scarce resources in the society.
Branding is not free from the critique of creating disadvantages for the customers.
Brand building is an expensive procedure for which the average cost of the product
goes high and in many instances this is passed to consumers and leads lo a higher
cost of the final offering. It is also felt that consumers become loyal to established
brands and may not be willing to shift to new brands. This,may ultimately prevent the
new producers form entering the market and the manufacturer may develop a
tendency to compromise on the quality over a period of time due to the strong brand
Image. There is also a scope for one-dimensional price enhancement by the
lnanufacturer due to high loyalty rate with consumers. Brand building involves a huge
expenditure by the firm and if this fails then the brand can not sustain the pressure of
these expenses and in many situations a higher budget may not lead to building a
stronger brand. As the expenses to retain the brand in customers mind increases, it
becomes unsustainable to sell the brand at a lower price.

9.2.3 Branding Decisions

Branding has moved from the domain of tactical marketing to strategic marketing as
it has the ability to sustain a business and provide long term value to customers.
Following are some of the decisions that a brand manager has to take with regard to
brand selection and it's positioning in business
To Brand or Not to Brand?
Whether to brand a product or not is a decision which can be tczken only after
considering the nature of the product, the type of outlets envisaged for the product,
the perceived advantages of branding and the estimated costs of developing the
brand. Historically, it is found that brand development is closely correlated with the
increase in disposable income, the sophistication of the distribution system and the
increasing size of the national market. The same trend is visible in India now. Even
few years back, nobody could have thought of selling branded rice or refined flour.
But now several firms in the recent past have become successful even in such
product categories. The basic reason is that the consumers are willing to pay more Branding, Packaging
for uniform and better cluality product represented by the brand. When customers and Servicitig
buy a branded product, they get the same quality in whichever retail shop they go.
Many other commodities, such as spices are also now being branded. There is no
doubt that this trend will become stronger in the coming years.

B r a n d Sponsorship Decision
The question of sponsorship of a brand refers basically to the decision as to whether
it should be a manufacturer's brand (also known as a national band) or a private
brand (also known as private label) or-partly manufacturer's brand and partly private
brand. In most developed countries where large chainldepartniental stores dominate
the retail distribution system, retailers buy the products form manufacturers and sell
them under their own brand. This is a growing phenomenon in Indian context as we
see emergence of organized retailing with large chain storcs corning up in different
product categories. Mother Diary, Ainul, Pantaloons, Big Bazaar, Shoppers' Stop,
Life Style, Kids Kemp, Cross Roads are some of the upcoming super marltets and
chain stores marketing exclusive and extensive product categories.

Brand Quality Decision

Since the brand delivers a higher value than a commodity, perceived quality is a
critical decision. The matrix of such attributes will decide Ihe product positioning. A
marketer has the option to position his product at any segment of the market viz. top,
bottom or the intermediate.

Individual Branding Vs. Umbrella Branding

You have to decide whether to adopt an umbrella brand or individual brand. Under
umbrellil bl-anding all the products gel the same brand name. This is also called family
branding. Godrej, Vidoecon and L&T follow this kind of policy. One basic advantage
of using the Family brand is that it reduces the costs of product launching and
promotional expenditure substantially. The firm has to promote only one brand,
which, if successful, would be able to sell the entire product line. Lining up the
distribution cliuinel ~nenlbersalso becomes comparatively easier. A family brand
name has been found to be very cost effective marketing. If one product does
exceptionally well, other products marketed under the same brand enjoy the success
of this brand.
It is however, necessary to be cautious in following family branding. It will be a very
ill-advised strategy if the products being offered are of highly uneven quality. It may
not also be a good strategy if tlie markets are quite dissimilar in terms of consumer
profile. A greater weakness of this strategy is that it does not recognize that each
product can be given a specific identity by a suitable brand, which can go a long way
to make it successful. Si~nilarlythe research says that the equity enjoyed with the
master brand not always get translated in lhe same way to the other brands. A
company s o ~ n e t i ~ ngets
e s identified with one brand and when this brand name is given
to other product categories, there can be c o n f ~ ~ s ion
o ~customer's
i part to believe that
tlie same brand is available in other product categories also.
Under the individual branding each product is given a different name. For example,
Hindustan Lever sells its products under different brand names like Rin, Surf, Lux,
etc. The weakness of family branding becomes the principal strength of individual
branding strategy. Recenl consumer researches have established that a name can
have varied associations and conjure diverse images. These psychological factors
can im~nenselyinfluence the buying decisions. The second advantage of this strategy
is tliat if there is a product failure in one product category, its damaging effect will be
limited to tliat particular product only and will not extend to tlie entire product line of
Product Decisions the company. Tlie basic disadvantage of individual branding lies in the economics of
developing an individual brand. It is obviously a costlier strategy than the other.
TO take care of these problems, some firms follow a slightly modified strategy. This
involves using individual brands but also giving prominence to the company name or
logo in all promotional campaigns as well as in product packaging. For example,
God[-ejfollows individual brand strategy but displays prominently the works 'Godrej
Evita or Godrej Locks'.
In many cases a brand extension strategy is adopted. This really is an effort on the
part of the manufacturer to secure additional mileage from a particular successful
product for launching either similar or even dissimilar product under the same brand.
A recent successful example is the decision to introduce Wills clothing range from the
Wills Cigarette class. Similarly, Surf has extended its name to Surf Excel, Surf
Excelmatic also.

Brand Portfolio Decision

A firm may decide to have several brands of the same product which to some extent
are competing with each other. The basic reason is that, at least in the consumer
products, various benefits and appeals and even marginal difference between brands
can win a large following. Similarly the brand manager can decide about the
combination of brands that the company should offer to the customers. Though
Hindustan Lever Limited has a bigger portfolio, they are concentl-ating on few brands
in their portfolio as power brands, which will give rich dividend to the company in
future.

Brand Repositioning Decision

Brands also undergo through an ageing process and the custo~ncrscorrespondingly
move in the value life cycle. So unless the brnnds are rejuvenated they will not elljoy
the market position what they were having in the past. Over the life cycle of a
product, several market parameters may also undergo change such as introduction of
a competing product andlor brand in the same category, shifts in consumer
preferences, emergence of new needs, etc. All and each of s ~ ~ cchangesli call for an
evaluation as to whether the original positioning of the brand is still optimnl or not.
Stagnating o~.decliningsales also point to a need for reassessment of the original
brand positioni~~g. For example, Lifebuoy has been repositioned several times in the
recent past, from the health segment to the sports segment and now in beauty
segment through Lifebuoy plus extension.

9.2.4 Selecting a Good Brand Name

One of the difficult tasks in marketing is finding a suitable brand name for the
product. This is so from two perspectives. The primary being the one that says that
the name should be one, which satisfies several marketing criteria. Secondly, the
name should not be one, which is already being used by another firm. This
necessitates extensive investigations.
A brand can be defined as a composite set of beliefs in the minds of consumers.
Conventionally a brand name is supposed to indicate the product's benefits, be
memorable and help in reinforcing the belief in the consumer's psyche. The name has
to be unique to rise above the clutter. However when unique names become m n of
the mill, then suddenly a simple name becomes a hit and people remember this name.
A simple brand name will be effective only if the overall brand personality supports
the "I am different brand promise". Brand names have to be relevant to the category
and audience also.
There is no simple solution lo the problem of selecting a brand name. However, Branding, Packaging
through exlensive resew-ch and past experiences, market researchers have developed and Servicing
certain principles which should be followed while selecting the brand name. Following
are thc general traits of a brand
I. Acceptable lo the social settings
2. Easy to recognize
3. A brand name should reflect directly or indirectly some aspect of the product
viz. benefit, i'unction, etc.
4. A blxnd sliould be distinctive, especially if there is a higher clutter in the
category
5. A brand name should be easy to pronounce.
6. It should be easy lo memorize and recall
7. It should be such tli~ltit can be legally protected, if necessary.
Brand huilding is an expensive exercise and it takes a long time to create a successful
brancl. It is observed that many competitors lake advantage of the situation and try to
imitate Llie brand which rnakes brand lnanagers to provide legal protection to the
brand through trademal-k ~~egislration.

Check Your Progl-ess B

1) Dif'ferenliate between umbrella branding and individual branding.

......................................................................................................................
(i) Write five umbrella brand names and analyze the products sold under each
o f these brands.

...............................................................................................................
ii) Prepare a list of five companies, which follow individual branding strategy
and iclentify their products.

iii) Based 0112 (i) and 2 (ii) above, analyse what kind of producls have umbrella
and individuals brands.
 Product Decisions 3) State whether the following statements are True or False.
I

i) Products can not be sold without a brand name.

ii) Brand mark and trademark are one and the same
iii) A brand is a mental patent against standard performance
iv) Branding helps in product memorization
v) From the society point of view, branding is always a waste.
vi) Trademark is a legal protection against copyi~igby other manulacturers
vii) A good brand is one which delivers the promised benefits

9.2.5 Elements of Brand Management

There are four elements of brand management namely brand identity, brand image,
brand position and brand equity. You should understand the differences between these
four terms and apply them to your business decision situations. We will discuss these
four terms from brand com~nunicationperspective.

Brand Identity
According to David Aaker brand identity is a unique set of brand associations that the
brand strategist aspires to create or maintain. These associations represent what the
brand stands for and imply a promise to customers from the organization members. It
helps in establishing a relationship between the brand and the customer by generating
avalue proposition involving functional, emotional and self expressive benefits. It
consists or twelve dimensions around four perspectives. The brand as a product
(product scope, product attribute, quality/value, uses, users, country of origin), brand
as an organization (01-ganizationalattributes, local vs. global), brand as person (brand
personality and brand customer relationship) and brand as a symbol (visual imagery1
metaphors and brand heritage). Brand identity structure includes a core and extended
identity. Core - the central, timeless essence of the brand-is most likely to remain
constant as the brand travels to new markets and products. The extended identity
includes brand identity elements organized in to a cohesive and meaningful grouping
that provide texture and completeness.

I "aid
Identity
1 +I signals
Transmitted
i bi 1
r;~
Colilpetition aud Noise

Piy r e 9.1: Brand Identity and Iniage

Brand Image
In simple words, what tlie customer perceive about the bl.nnd is called tlie brand
image. A brand may aspire to commuriicate lot wdny things through its brand
conimunication strategy but what the customers receive and perceive as the brand is
termed as the brand image. It is a combination of brand associations and brand
personality. It includes a set of brand associations usually structured in a logical
fashion.
 l
In understanding brand image, it is important to see and understand if consume;s see Branding, Packaging
themselves as 'fit' for the brand and vice versa. As there is a high level of brand and Servicing I
I
clutter, many brands enjoy similar kind of image and brands in the consideration set i

having a higher fitness get preference over others. Brand personality helps define the
personality of the brand as a combination of different traits that people tend to
associate with the brand. For example Horlicks is perceived as a great nourisher
whereas Boost is perceived as an energy drink of the sportsman due to its typical
positioning and celebrity endorsernent. The brand image o f ' Amritanjan' Balm is that
of an all puspose balrn where as that of Vicks Vaporub as a cold balm applicable
mostly to the children. These kinds of fit are well planned by the brand manager that
leads to the creation of brand image in the minds of customers. In summary brand
personality determines whether the brand and the audience are made for each other
or not. Psychologically audience try to build up some comparison and conclusion
between own personality and that of the brand.

Brand Position
After the decision of the brand identity and the value proposition leading to the
development of brand image, implementation of a branding strategy begins. The next
task is to establish communication objectives and plan the execution strategy. The
beginning of an execution strategy is the brand position statement. Brand position is
the par1 of the brand identily and value proposition Lhat is to be actively
communicated to the target audience and that demonstrates an advantage over
competing brands. When a brand position exists, the brand identity and value
proposition can be developed fully, with texture and depth.
There arc three places to look at within the brantl identity systeitl to identify elements
for including in the bl-and positioning statement. One is the core identity statement
which explains the central, timeless essence of the brand. The most unique and
valuable aspects ol' Lhe brand are often represented in the core identity. So brand
position sllould include the core identity so that the brand communications do not stray
way fro111the brand's essence. Secondly, a brand position can be based on a point of
leverage that is not necessarily in the core identity. Sub brands, features or service
can become a point of leverage. Thirdly, a customer related benefit is part of the
value proposition and forms a basis for brand customer relationship. For example, the
positioning statement of Titan as a 'Tata product" explains the core identity as a part
of brand positioil stateinent whereas the brand positioning statement of DHL courier
explains about the servlce component with 'No body delivers like us' . The BPL
washing machine with fuzzy logic technology explains higher value propositions
compared lo all other washing machines and serves as a positioning statement.

Brand Equity
Brand equity is a set of brand assets and liabilities linked to a brand, its name and
symbol that add to or subtrrtct from the value provided by a product or service to a
f i n and/or to that firm's customers. If the brand's name or symbol should change,
some or all of the assets or liabilities could be affected and even lose significance in
business. These equity componenls can be grouped into five categories namely brand
loyalty, name awareness, perceived quality, brand association in addition to the
perceived quality and other proprietary brand assets like patents, trademarks, channel
relationships.
To simplify the definition we can conclude that it is the incremental that the cuslomer
is ready to pay for a brand in place of a commodity. It is the additional premium
charged by the marketer that the customer is ready to pay when confronted with a
buyingsituation betweenra commodity and a brand. It is simply the price premium
that a cornpany can charge to customers or the irnpact of the name on customer
preference or stock price movement or future earnings or a combination thereof.
 Product Decisions
i 9.3 PACKAGING AND LABELING
A package is basically an extension of the product offered for sale. Sometimes the
package is more important than the product it contains as it contains the product and
protects it till the consumer is ready for the consu~uptionor use. Some marketers
even call packaging a 'fifth P', along with product, price, promotion and place. As
stated earlier, however, all the marketers consider packaging as an element of product
mix.

9.3.1 Meaning and Functions of Packaging

Packaging is necessary to deliver the product to the consumer in sound condition. For
example, one needs a bottle for delivering shampoo or a box with moulded shock
absorbing padding to protect delicate electronic precision equipment. The requirement
here is purely technical; the container has to be designed to be most efficient at
containing and protecting the product. In recent years, particularly as self service has
become a predominant feature in most distribution chains, the packaging of a product
has become a major element of the promotion of that product to the potential
consumer. Packaging requirements therefore include:
e Product Description: The pack must convey to the potential consumer not just
what the product is, but what it does; in terms of the benefits it offers- the
promotional message. This ]nay be conveyed by words, but for the most impact
graphics and over all design are usually chosen to deliver the main, initial
message. The potential buyer is expected to read these messages in a few
seconds and probably at a distance of three feet or more.
e Product Image: The packaging must also match the required image, so that the
boxes for expensive jewels look expensive themselves-so much so that one
almost hates the waste of throwing the packaging away.
e Product Value: The pack is often designed to make it contents look Inore than
they really are. Those apparently 'artistic' designs should show the value of the
content also
e Shelf Display: The pack should be designed to make the most of the shelf
space available which may mean making the pack loolc more compact as
possible, so that more can be placed in the shelf. Stakability so that the shelf can
take several layers of the product is another feature of a good pacl<aging.
Packaging as a function consisls of two distinct elements, (i) the positive aspects, viz.,
the science and technology related to package design, selection of packaging
materials, etc, and (ii) the behavioral aspects, viz., the art of product design which is
associated with consumer motivation research, buying research, etc.
The second aspect is highlighted in another definition of packaging 'Properly
designed, the package sbould enhance the value of its contained product, and impart
that impression, either directly or subtly, to the customer'. The role of packaging in
value enhancement is increasingly becoming important in consumer marketing today.
In marketing, packaging is defined as the activities of designing and producing the
container or wrapper for a product. The container or wrapper is called the
'package'. According to Philip Kotler and Gary Annstrong, the packaging may
include up to three levels of material. The primary package is the product's
immediate container. If you consider a toothpaste, the tube holding the toothpaste is
the primary package. The secondary package is the card board material that protects
the primary package and that is thrown away when the product is about be used.
The shipping packaging is the packaging necessary to store, identify, and ship the
product (a carton in this case, which contains hundred toothpaste units). Finally
labeling is part of packaging and consists of printed information appearing on or with Branding, Packaging
the package. and Servicing

To summarize the key functions of packaging we can say that packaging should
perform the following basic functions: it should (1) protect, (2) appeal, (3) perform,
(4) offer convenience to the end-users, and (5) be cost-effective. We will now
discuss these five key functions of packaging.
I) Protection: The primary function of packaging is to protect the products from
the environmental and physical hazards to which the product may be exposed in
transit from the manufacturer's plant to the retailer's shelves and while on
display on the shelves, The specific types of hazards against which protection
has to be sought would obviously vary from product to product. However, the
principal hazards, which are almost universal, are:
i) BreakageIdainage due to rough mechanical or manual handling during
transportation.
ii) Extremes of climatic conditions which may lead to melting, freezing, etc.
iii) Contamination, either bacterial or non-bacterial, such as by dirt or chemical
elements.
iv) Absorption of moisture or odors of foreign elements.
v) Loss of liquid or vapors.
vi) Pilferage during transit or storage.
2) Appeal: The package is increasingly being used as a marketing tool. The
importa~lceis also increasing clue to the changed structure of retail business,
especi;illy the emergence of self-service stores. In the case of consuiner
~roducts,package serves as a silent salesman. This is tiue, irrespective of
whether the products are a luxury, semi-luxury or an ordinary everyday use
product, The followil~gcharacteristics have been identified to help a package
pel-fonn the self-selling tasks:
i) The package must attract attention
ii) The package must tell the product story
iii) The package IIIUSL build confidence
iv) The pockage inust look clean and hygienic
v) The package must be co,lvenient to handle, to carry out, to store and to
use
vi) The package must reflect good value
Packaging, however, is of greater importance in the case of certain specific
types of articles. Industry-wise studies in several countries show that packaging
cost in the cosmetics industry is much higher than other industries. This
exce~sivel'~ high incidence is not due to the packaging, which is required for the
protective function, but for making the product attractive, a status symbol and
ego-satisfying. Other products such as chocolates in gift packs also are
instances where packaging perforins a basic marketing function by making the
products more appealing.
Consumer research on packaging concentrates on two aspects, which have an
influence on consuiner purchase decisions. The first one is color and the second
is the package or container design. Almost all researchers have come to the
conclusion that each color has its own distinct characteristics and, therefore, has
to be usecl in a package so that there is no mismatch between what is expected
of the package and the color used in the packaging.
Product Decisions One additional problem in this area is that people in different countries display
divergent color preferences, due to their diverse socjo-cultural-religious
backgrounds. Similarly, research is carried out on the desirable properties of a
container. Slender and cute containers are often used for beauty-care products
for the feminine sex, as these are expected to create an appropriate image of
the product. Graphics and Logo types are also impostant in designing and
conveying the total product image.
3) Performance: This is the third function of a pacliage. It must be able lo
perform the task for which it is designed. This aspect becomes C ~ L I '1C1~in' cerlain
types of pack ging. For example, an aerosol splny is not only a paclcage but
also an engineering device. If the package does not function, the product ilself
becomes totally useless.
4) Convenience: The package milst be designed in a way, which is convenient to
use. It should be convenient not only to the end user but also to the distribution
channel members, such as wholesalers and retailers. From the intermediaries
standpoint the convenience relates to handling and stocking of packages. The
specific attributes the intermediaries would seek in n package are:
i) The package must be convenient to stock
ii) The package must be convenient to display
iii) The package does not waste shelf-space.
iv) The package must retain its looks during the shelf-life
V) The matter
a of the package/cartons should be easy to dispose of
Because of the increasing concern with solid-waste disposal, the last factor has
assumed importance in the developed countries and is also a growing concern in
a populated country like India with less civic intervenlion for waste
management. From the standpoint of the domestic or institutional end users, the
convenience would refer to the ease of using the package, such as opening ancl
closure of the package, the repetitive use value, disposilbility etc.
5) Cost-effectiveness: The package finally must be cost-effective. Packaging
cost as a percentage of procluct cost varies dramatically from one industry to
another, from less than one percent in engineering industry to more than ten
percent in the cosmetics industry. It is important to appreciate tl~ntwhiic
analyzing packaging costs, it is not enough to consider only the cost of paclcage.
Cost in this supply chain includes:
i) Package costs incurred in inward delivery to the factory when the prodi1~1
is purchased from outside
ii) Storage and handling costs of the empty packages
iii) Filling cots, including quality control and l~ai~dling
of filled packages
iv) Storage costs of the filled packages
V) Tra~lsportcost for distributing filled packages
vi) Insurance cost for the transit period
vii) Losses due to breakage/spoilage of tlie product

9.3.2 Packaging Industry

An understanding of the packaging industry is necessary to f~lllyappreciate the
packaging revolution that has occurred in the consumer and inclustrinl goods sectors.
The packaging industry consist primarily of two distinct segments: I ) firttls whlcll
manufacture the packaging materials, viz,, tin, paper, plaslics, elc, and 2) I'irnls
engaged in the formation of packaging i.e. converting the packaging materials inlo
unit/master packages. 111addition there are other firms engaged in the printing of Branding, Packaging
labels to be used in the unit/master packages, and the marketing research agencies and Servicing
wliich conduct specialised packaging research, generally for package development
and adaptation.
Newer materials are consta~itlyemerging in the packaging field and in many cases
have eliminated or threatened the older materials such as wood and steel, because of
tlie relative cost advanlage or better performance characteristics. The important
packaging materials today are:
I. Metals - Alu~iiinum,tinplate and steel
2. Plastics - PVC, HDPE, etc
3. Wood -Wood and cellulose film
4. Paper - Paper, board, corrugated board, etc
5. Glass - Clear, tinted etc
6. Laminates - Aluminum foils, plastic film etc
7. Polyester - PET

Check Your Progress C

1) Distinguish between branding and packaging.

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2) What are the basic functions of packaging?

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3) State wliether the followilig statements are Tue or False.
i) Packaging also helps in l~ro~notion
function
ii) Packagc should nlso be capable of attracting the attention of buyers
iii) Colour of the package does not have any importance
iv) Packaging always increases the product cost
v) Package must be designed in a way it is convenient to'users and
intermediaries.
vi) Packaging helps in new product launch
vii) Packaging for cdibles is a waste
viii) Packaging is never misleading

9.3.3 Packaging Strategies

We have already mentioned that packaging plays a greater role in tlie promotion of
the product. It serves the core function of protection and also provides information to
the consumers. With the increase in the large number of self service retail outlets
where the consumers make a choice by tl~emselves,packaging provides ample
opportunity to communicate various sales promotion schemes for enticing customers
Product Decisions to go for a buy. For example, Colgate Dental Cream is always perceived in a red
color package. When the company decided to go for a sales promotion program of
giving 20% extra for every purchase of a 100 grams toothpaste, it brought a yellow
strip marked with 20% extra on red as a promotional tool which could catch the
attention of the customer on the shelf immediately compared to a full fledged
advertising campaign where every toothpaste manufacturer gives something as an
extra value proposition. So product package often plays an important role in
implementing sales promotion campaigns. Sonie of the widely used promotional
packaging techniques include
1) Discount Pack: A 'flash' in distinctive colour is superimposed on the package,
announcing the special price discount being offered. This is the most widely used
form.
2) Coupon-Pack: A coupon of certain values, either as a part of the package or
placed separately in the package, can be redeemed after the purchase of the
product.
3) Premium Package: A premium package can take three fonns. If the premium
accornpan:;~the product within the package then it is called in pack premium. If
it accompanies the pack as a separate unit then it is called with pack premium,
A coupon on the pack allowing a discount is called on pack premium package.
4) Prime Packaging: A specially made package having either a re-use or prestige
value is referred to as prime package. Instant coffee packed in glass tumblers
having colours is an example of the first type. The set of watches presented by
Titan for the married couple in a gold plated package called "Bandhan" is an
example of a prinle pack.
5) Self-Liquidators: The buyer has to send to the company a number of
packages or part thereof as evidence of buying the prod~~ct. In return, he lnay
purchase additional quantity of the same product at reduced prices or be
rewarded with a different product. Several companies in India, in the processed
food like Maggi and Top Ramen and Sargam Tea occasionally use this
technique.
6) Redesigning of the Package: Introduction of a new package can also be used
as apromotional technique. For example, till the very recent past, edible oils
were packed in tin cans in India, which looked messy and dirty. Most of the
larger firms have now started using transparent one-liter PET (polyethylene .
terephthalate) bottles, which look gleaming and fresh. The companies are using
this change of packaging quite effectively as an additional element in their
advertising campaigns. The change in packaging of liquid soaps is also used as
a promotional tool. Similarly Sargam tea started bringing pet jars for family
consumption and people inoved from card board tea packs to the brand to have
the jar for other consumption storage purpose.
7) Odd Size Packaging: Packaging can also be used ingenuously to avoid direct
price comparison with the competing products. This is done by a deliberate
choice of odd size, while the competing brands follow a standard size. A recent
example in India is the launch of soft drinks by Pepsi in 200 ml bottles at Rs 5
when the industry standard was 300 ml at a price point of Rs 7 and rest other
players immediately followed the brand leader with a 200 ml, pack size. The size
of Dove soap also is also odd enough for the slim bathing soap category in
Indian market.
8) Packaging the Product Line: Packaging can be used to develop a family
resemblance in the packaging of its several products. Identical packages or the
packages with some common features are used for all the products of a product
line. This kind of packaging strategy had the benefits of umbrella branding.

a
 Under this strategy, when new products are added to a line, promotional value Branding, Packaging
associated with old products extends to the new ones. and Servicing

9) Bundle Packaging: Placing inore than one unit in one container is referred to
as bundle or multiple packaging. This packaging strategy increases the sales to
a large extent. This is seen in bathing and washing soap category in India.
10) Packaging in Perishables: In specific product areas where shelf life is an
integral issue, packaging brings a combination of functional as well as
promotional value. For example in ice cream business, the refrigerator serves as
a status symbol for the retailer and also with the sale of the brand.

9.3.4 Labeling
The paper or the plastic wrapper attached to a bottle of medicine or a jam bottle
carrying product information is technically called a label. But as packaging technology
improves and cans and bottles become less prominent, labels become incorporated in
to the protective aspects of the package rather than simply being affixed to the
package. So labels may range from simple tags attached to products to complex
graphics that are part of the package.
The label helps in identification of the brand. It also describes several things about the
product. In a inediciiie bottle the label explains about the composition and maximum
retail price to the customer with directions of use and statutoly warnings. Normally a
label provides details about the mai~ufacturer,the place of manufacturing, the date of
manufacturing, its contents, the directions for use and the safety measures involved in
the product use and expiry date. In many cases the label also does the promotion
function due to its highly visible graphics. A label must also carry the suitable
inst~-uctioiifor the proper disposal of the product and its package or at least a plea to
consumers to avoid littering. As per the legal provisions a label must carry any
specific nutrition information, warnings and legal instructions as required by law. Most
consumer packaged goods are labeled with an appropriate Universal Product Code
(UPC), an array of black bars readable by optical scanner, The advantage of the
UPC which allows computerized checkout and compiling of computer generated
sales volume information have become clear to distributors, retailers and consumers
in recent years.
Labeling is affected by unit pricing (stating the price per unit of standard measure);
open dating (stating the expected shelf life of the product) and nutritional labeling
(stating the nutritional villues in the product). Package designers are relatively free to
design the packages under the conditions of the legal requirement about maintaining a
standard label. Business houses operating in a global scale have to decide whether to
use a single package with one language or a single package with multiple languages,
depending on the legal requirements of the host country. Decisions about colors and
symbols, protection in transit over long distances and other aspects of the package
design should be made only after local culture and usage patterns have been studied.
Many countries have laws against deceptive packaging. Packages intentionally
designed to mislead consumers, labels that bear false or misleading information or
packages that do not provide sequired warning soon draw the attention of the legal
authorities. I-Ience marketing inanager has to be careful about these issues.
A good label is one which helps a potential buyer to make his decision by providing
relevant and correct infoimation. Apart from the information, which must be
statutorily given, the label should therefore provide:
i) Picture of the product, accurate as to size, colour and appearance
ii) Description of raw products used along with methods of processing
. iii) Directions for use, including cautions against misuse
Product Decisions iv) Possible adverse effects, if any
V) Brandname

Check Your Progress D

1) What is bundle packaging? Give two examples

2) What is the objective of odd size packaging? Give two examples where this is
adopted.

3) Given below is a list of products along with their old and new types of
packaging. For each of the product category which is the best packaging form
in your opinion. State the reasons
i) Edible oil in (a) tin (b) HDPE poly jar and (c) transparent PET jar

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ii) Soft Drink in (a) boltle, (b) tin, (c) plastic pouch and (d) tetra pack

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iii) Fruit juice in (a) bottle (b) tin and (c) telra pack (e.g.Frooti)

8.4 PRODUCT SUPPORT SERVICES

Chstorner service is n key clement of ~Iieproduct stl-atcgy. Product S L I ~ ~ Oserviccs
I - ~
constilute the augmented par1 of the prodncl. In toclay's world when Lhe cost of
acquiring tlie customer is ao high, n good pl-ocluctsupport scrvicc strategy will
augment the customer retention slwtegy with a higher basc of loyill customers. More
and more firms are using pcoduct support services as a kcy clcmcnt oS cuslumo.
relationship mouagernerlt ancl for creating colnpetitivr aclvanlage,
As a m:uiager you should utilize the benefits of product support services in creating Branding, Packaging
and Servicing
better interaction with custotners. You should start surveying the customers regularly
to understand the need of the support service by the consumers by evaluating the
value of tlie current services and to find out gays if any in the service delivery. A
survey of tlie customer complaints will also help in identifying the new support service
mix bytlie firms. Once the company has assessed the value of the current services,
the expectation of tlie new services by the consumers, next it should go for finding
out tli2 cost of providi~igthe service. Then it can develop a service offer to delight its
consumers ~uidincrease the loyalty I-ate anlong existing consumers which can be
easily tri~nslateclinto additional profits. Product Support Services include product
warriuity, after sales service, delivery, installation, helpline, etc. Companies are using
~nultiplecustomer intelxction points in the for111of personnel, telephone, internet or
web and ~iiailas means to provide the information about these support ser.vices.
One of ~licltey procluct support service is the product warranty. A product warranty
cornmunicute.s u written guarantee of a product's integrity and outlines tlie
mnnufi~cture~-'s responsibility for repairing or replacing defective parts. It lnay
sub,\tantinlly reduce the risks tlie buyer perceives to be associated with the purchase.
Many a times consumer research suggests that warranties are difficult to understand
by the common Inan as they are written in legal jargons. Some of the marketers have
started writing these warranty statements in words like fillly guaranteed,
unconclitioni~llyguaranteed and life time guarantee which do not carry any meaning to
tlie buyers.
A warranty is part of the total product; tlie seller sliould not view it as a nuisance.
Efl'ective marlteters use [lie warranty as an oyportuni ty to create satisfied customers
;tiid to offer i111 intangible ptoduct attribute that many buyers desire. These services
are auxiliary cli mension of the procluct and create goodwi I I in the market.

LET US SUM UP
Brand is a name, terrii, sign, symbol used by the marlceter to create a differentiation in
tlic customer's inind and value PI-omise to the customer. A brand name gives the
~~roiluctn unique personality iuid n .successful brand s o ~ n e t i ~ ntakes
e s over the generic
PI-oductcittegory. Brands like Icerosene, Mobil, Xerox are examples of such long
standing brancls. Branding gives a mental assurance to the customer about a desired
iilnctioni~liund emotional performance.
The selection ol'brand name is an important decision. You can choose any brand
name you lilte LIS long as i t is ~ ~ ~ i i qeasy
u e , to read, write, pronounce and remember,
and does not liave any unl'avourable or negative meanings associated with it. There
are various brand n a m i n ~strategies available to a marketer. A brand manager can go
for inclividual branding or umbrella branding. Each choice has its advnntages and
dis;ldviwtages and there are enough cases of success and failure to justify your
ilioicc. Sollieti lnes even the most difficult sounding brand names succeed while
catchy ~uidsimple br,uncl names filil.
Packaginp is another crucial aspect of marketing because the buyer confronts the
product within the package in tlie inarket. Pacltaging does various functions inclucliiig
protection to the product, infor~iiationdissemination ancl n plnrform Ilor prod~ict
proniotion. Attractive pxcknges have an advantage in attracting the attention of the
buycrs in a cluttel-ecl market. There are, instiulces galore when the products wit11 high
quality liave fili led because the packaging was poor. Indian small-scale sector suffers
l'rom this problcn~of in;icirquate packagi~ig.New packaging materials have started
replacing tlie traditional packaging material. These are evident i n tetra paclts of
Prooti, Dli:lla edible Oil, Dove soap, potato chips, soacks and other fragile food items.
Product Decisions Some key decisions in packaging also cover the disposal of the package and waste
management, cost of packaging, health hazards, use of scarce resources and the
scope for consumer misleading. Labeling is gaining relevance today as more and
more self service retail outlets are coming up in urban markets it1 India. The Iabel
provides the product informatiou, usage information, ownership and shelf life issues.
Product support services are gaining relevance due to its inclusion in the overall
product strategy. As the cost to acquire new customers is increasing, firms are
concentrating on holding a large loyal customer base through product support services
in order to reduce the customer's dissonance in post purchase behavior.

9.6
- -
KEY WORDS .

Brand: A name, word mark, symbol, device or acombination thereof, used to identify
some product or service of one seller and to differentiate them from those of
competitors.
Brand Equity: Brand equity is a set of brand assets and liabilities linked to a brand,
its name and symbol that add to or subtract from the value provided by a product or
service to a firm and/or to that firm's customers.
Brand Identity: It is a unique set of brand associations the brand strategist aspires
to create or maintain. These associations represent what the brand stands for and
imply a promise to customers from the organization members. It helps in establishing
a relationship between the brand and the custoiner by generating a value proposition
involving functional, emotional and self-expressive benefits.
Brand Image: In simple words, what the customer perceive about the brand is
called the brand image. A brand may aspire to communicate lot many things through
its brand communication strategy but what the customers receive and perceive as the
brand is termed as the brand image. It is a combination of brand associatio~lsand
brand personality.
Brand Mark: That part of a brand consisting a mark, design, distinctive logotype,
colouring scheme or picture used for the puipose of identification.
Brand Name: That part of a brand consisting of a word, letter and groups of words
or letters that can be vocalized.
Brand Position: It is the part of the brand identity and value proposition that is to be
actively communicated to the target audience and that demonstrates an advantage
over competing brands.
Label: Part of package and consists of printed information appearing on or wilh the
package.
Packaging: The activities in product planning that involve designing and producing
the container or wrapper for a product.
Product Warranty: It commu~~icates a written guarantee of a product's integrity and
outlines the manufacturer's responsibility for repairing or replacing defective parts.
Trademark: A brand or a part that is given legal protection because it is capable of
exclusive appropriation.
Umbrella Branding: A branding strategy in which a group of products is given a
single brand. It is also called blanket or family branding.
 Branding, Packaging
9.7 ANSWERS TO CHECK YOUR PROGRESS and Servicing

B. 3 i) False ii) False iii) True iv) Ti-ue

C
V) False
3 i ) Ti-ue
vi) True
ii) Tnle
vii) True
iii) False iv) False
1
v) True vi) True vii) False viii) False

9.8 TERMINAL QUESTIONS

1) Why should a company brand a product? What advantages the cornpany will get
by branding its products? Discuss this issue by taking the toothpaste category in
Tnclian market.
2) What are the decisions that a brand manager has to take? Discuss giving
suitable examples.
3) What are the distinctions between brand identity, brand image and brand
position? Discuss them in the context of developing a branding strategy for the
rural rnarlcet of India.
4) Is there a difference in the branding strategy for industrial product, consumer
prod~lctand agricultural product'? Discuss thein in the context of developing a
brand coinmunication strategy
5) Packaging plays a crucial role it1 the self service retail outlets. Explain the
changing patterns of packaging in the context of emerging retailing scenario in
India.
6) Explain some of the widely used promotional packaging techniques giving
snitable examples.
7) Discuss the importaulce of laheling for marketers.
8) Product Support Services helps in customer retention. Discuss the statement
with the help of'examples.