Presented by:-

Dr. Mandakini Paruthi

 Product
• A product is any thing that can be offered to the market that satisfy
customers needs and wants.

Product

Tangible Intangible
 Product
• A product is both what seller has to sell and what buyer has to buy.
• It is a bundle of physical, chemical or intangible attributes that have the
potential that satisfy present and potential customers wants.
• It means goods and services which combination of company offers to
the target market .
• A product is anything that can be offered to market to satisfy a want or
need.
• Product that are marketed include physical good, services, experiences,
events, person, place, properties, organization, information and ideas.
 Product Policy
• Product policy is defined as the broad guidelines related to the
production and development of a product. These policies are
generally decided by the top management of a company i.e. board of
directors. It is like a long term planning with respect to the product-
mix of the company in order to deliver maximum customer
satisfaction.
 Objectives

Survival: - The main objective of any company is to stay in the market profitably.

Growth: - Based on the long term goals of the company the policies are defined to get a good
growth in the market.

Flexibility: - The product policy needs to be flexible to the changing needs of the customers,
government regulations, global trends and economy.

Scalability: - The companies should use its resources properly to make the most of its valuable
resources. With time the company needs to develop economies of scale to improve profits.
Product Levels : The customer value Hierarchy
16-9
• The core product is the core, problem solving benefits that consumers are really buying
when they obtain a product or service. It answers the question what is the buyer really
buying?

• The actual product may have as many as five characteristics that combine to deliver
core product benefits. They are:
a). Quality level.
b). Features.
c). Design.
d). Brand name.
e). Packaging.

• The augmented product includes any additional consumer services and benefits built
around the core and actual products. When developing products, marketers must:
1). Identify the core consumer needs that the product will satisfy.
2). Design the actual product and finally
3). Find ways to augment the product in order to create the bundle of benefits that will
best satisfy consumer’s desires for an experience.

16-10
 CAMERA
Example: A person goes to market and buys a camera.
Core product
The customer is buying pleasure, nostalgia, a form of
immortality. benefit—a convenient, high-quality way to
capture important moments.
Tangible product
Technical features, quality, SLR, appearance
Augmented Product
Experience while buying the product (was the salesman
cooperative or was he rude?), Experience immediately
after buying the product (did the showroom staff explain
how to use the camera?), After sales service, Upgradation
facility (Can one exchange it for a new model three years
later?)

16-11
PRODUCT CLASSIFICATION
I. Consumer products
Consumer products are those products bought by final consumers for
personal consumption.

1. Convenience goods
2. Shopping Products
3. Specialty Products
4. Unsought Goods
PRODUCT CLASSIFICATION
• II. Industrial Products
• Industrial products are those purchased for further processing or for
use in conducting a business.

• For Example if a consumer buys a lawn mower for use around home,
the lawn mower is a consumer product. If the same consumer buys
the same lawn mower for use in a landscaping business, the lawn
mower is an industrial product.
The three groups of industrial products:
• The three groups of industrial products:
• Materials and parts
• Raw materials consist of farm products (wheat, cotton, livestock, fruits, vegetables) and natural products
(fish, lumber, crude petroleum, iron ore).
• Manufactured materials and parts consist of component materials (iron, yarn, cement, wires) and
component parts (small motors, tires, castings).
• Capital items are industrial products that aid in the buyer's production or operations, including installations
and accessory equipment.
• Installations consist of major purchases such as buildings (factories, offices) and fixed equipment
(generators, drill presses, large computer systems, elevators). Accessory equipment includes portable factory
equipment and tools (hand tools, lift trucks) and office equipment (fax machines, desks). They have a shorter
life than installations and simply aid in the production process.
• Supplies and services.
• Supplies include operating supplies (lubricants, coal, paper, pencils) and repair and maintenance items (paint,
nails, brooms).
• Business services include maintenance and repair services (window cleaning, computer repair) and business
advisory services (legal, management consulting, advertising).
 Product Mix

Product Line:- Is a group of products

within the product mix that are closely
Product Mix:- As the total composite of
related, either because they function in
products offered by a particular
a similar manner, are sold to the same
organization, consists of both product
customer groups, are marketed
lines and individual products.
through the same types of outlets, or
fall within given price ranges
 Product Mix
Product width: It refers to the no. of different product lines the
company carries.
Product length: It is the total no. of items the Company carries within
its products lines.
Product depth: refer to the no. of versions, offered of each product in
the line.
Product consistency: refers to how closely related the various product
lines are in end use, production requirements, distribution channels, or
some other way.
 Task
• Design Product-mix Width & Product-Line Length for CBIT
Product mix strategies
• Trading up - Offer high priced , prestige products to their existing
product line in an effort to increase the sale of their low priced
products and enhance the company image. E.g. – Lifestyle
• Trading down –new products, low priced to the existing line E.g –
Marriot Corporation introduced a new chain of Hotels called ‘Holiday
Inn’ to cater to the needs of not so affluent customers.
• Product line analysis – too short Vs too long
• Company’s objectives affect product line length
• Market share and Higher Profitability
Line stretching
• A company stretches its product line beyond the current range of
products.
• It can stretch its product line in either the down market , up market or
both
• Down Market stretch – introduce the products at a lower price. E.g –
3 Roses for the lower end market (HUL)
• Reasons- Middle market stagnation, potential for growth in Down
market ,aim to tie up with the lower end competitors
Up market stretch
• Enter the high end of the market
• The objective of the firm may be to have higher growth , increase its
margins, or to simply project itself as a full line mfgg firm
• E.g Lipton Yellow Label (HUL) is a high end stretch with Rs 75 for 250
gms tea .
• A company serving in the middle market might indulge in stretching
its product line both ways – upward and downward.
• Two Way Stretch - Companies serving the middle market might
decide to stretch their line in both directions.
Line Filling
• A product line can also be lengthened by adding more items within
present range.
• Line pruning - There is a tendency for product lines to lengthen over
time. Hence a review must be carried out regularly.
• Line modernization – Modernizing all products in the line
• Line featuring – Selecting a few items from the line and promoting
them aggressively to attract attention to the total line
Packaging
• Packaging involves designing and producing the container or wrapper for a product. The
package may include the product's primary container (the tube holding Dettol Shaving
Cream); a secondary package that is thrown away when the product is about to be used
(the cardboard box containing the tube of Dettol); and the shipping package necessary to
store, identify, and ship the product (a corrugated box carrying six dozen tubes of Dettol
Shaving Cream).
• Growing Use of packaging as marketing tool;
• Self service
• Consumer affluence: consumer are now willing to pay a little more for convenience,
appearance and prestige of better packages.
• Company & Brand Image: Instant Recognition
• Innovation Opportunity

• Labeling, printed information appearing on or with the package, is also part of packaging
Innovation in packaging
Packaging
Purpose of Packaging
1. Physical Protection
2. Convenience
3. Marketing
Advantages
1. Rising standards of Health and sanitation
2. Self-service outlets
3. Innovation opportunity
PRODUCT LIFE CYCLE (PLC)

18-31
18-32
PRODUCT LIFE CYCLE

• Way to trace the stages of a product's acceptance from its

introduction to its demise.
• One of the most familiar concepts in marketing
• A prevalent marketing management tool
• Refers to the life of the product category
• The time a product category spends in a stage of the product life
cycle may vary from a few weeks to decades.
• Does not predict how long a product category will remain in any one
stage
• A tool to help marketers understand
 where their product is now
 what may happen
 which strategies are normally appropriate.

18-33
GROWTH

Characteristics
Many competitors enter the
Sales grow at an increasing rate.
market.
Large companies may acquire
Profits are healthy
small pioneering firms.
Promotion emphasis
heavy brand advertising Differences between brands.
Gaining wider distribution is a key goal
Toward the end of this stage
prices normally fall profits reach their peak.
Development costs have been Sales volume has created
recovered economies of scale.

18-37
 Sales Rapidly rising sales

Costs Average cost per customer

Profits Rising profits

Marketing Objectives Maximize market share

Offer product extensions, service,
Product warranty
Price Price to penetrate market

Distribution Build intensive distribution

Advertising Build awareness and interest in the

mass market

18-38
 MATURITY

Sales continue to increase but at a The marketplace is approaching

decreasing rate
Annual models of many products
Product lines are widened or
extended
Heavy promotions to both the
dealers and consumers are
required.
saturation
An emphasis on product style
rather than function
marginal competitors begin
dropping out of the market.
Prices and profits begin to fall.

18-39
 Sales Peak sales

Costs Low cost per customer

Profits High profits

Marketing Objectives Maximize profit while defending

market share
Product Diversify brand and models

Price Price to match or best competitors

Distribution Build more intensive distribution

Advertising Stress brand differences and benefits

18-40
 DECLINE
Falling demand forces many competitors
a long-run drop in sales.
out of the market
The rate of decline is governed by
a.how rapidly consumer tastes change or A few small specialty firms may still
b.how rapidly substitute products are manufacture the product.
adopted.
Strategies
Dropping a product from the company’s
Deletion.
product line, is the most drastic strategy.
Company retains the product but reduces
Harvesting
marketing support

Promote more frequent use of the product

by current customers
•Find new target markets for the product
•Find new uses for the product
To prevent slipping into decline •Price the product below the market
•Develop new distribution channels
•Add new ingredients
•Delete old ingredients
•Make a dramatic new guarantee
18-41
 Sales Declining sales

Costs Low cost per customer

Profits Declining profits

Marketing Objectives Reduce expenditure and milk the brand

Product Phase out weak items

Price Cut price

Go selective: phase out unprofitable
Distribution outlets
Advertising Reduce to level needed to retain
hard-core loyal customers

18-42
Special Types of PLC
Special Categories of PLC
Style:- is a basic and distinctive mode of
expression. Like homes( colonial, ranch),
clothing (formals, casuals)

Fashion:- currently accepted or popular style

in a given field. Four stages:- distinctiveness,
emulate, mass fashion and decline.

Fad :- are fashions that come quickly into

public view , are adopted with great zeal,
peak early, and decline fast.
fashion
Generic Product Development
Process
Product Development Process
• It is a sequence of steps or activities which enterprise employs to
conceive, design and commercialize a product.
In 2005, AMF merged with Qubica, the industry leader
in scoring, entertainment and bowling management
software to form Qubica AMF Worldwide, creating the
industry’s premier product line.

. QubicaAMF continues this long history of innovation by

staffing the largest R&D team in the industry with the goal of
raising the revenue generating ability of our customers. The
fact is that no other company invests as much in product
development as we do every year
Generic Product Development Process
Phase 0: Planning
• A consideration of technology and market objectives generates the
project mission statement which includes target markets, business
goals, key assumptions, and constraints.
• Articulate market opportunity.
• Define market segments.
• consider product platform and architecture.
• Assess new technologies
Generic Product Development Process
• Phase 1: Concept Development: Target market needs are further developed and alternative
product concepts are reviewed. A single product concept is approved for future development
with its specifications and economic justification.
• Phase 2: System Level Design: This design phase includes definition of the product architecture
and the breakdown of the product into systems and subsystems with its assembly scheme. The
output of this step includes the functional specifications along with a preliminary process flow
diagram.
• Phase 3: Design Detail: The complete specification of the product complete with parts
specifications. An assembly process plan is defined with specifications of tooling and machine
requirements.
• Phase 4: Testing and Refinement: generation of pre-production versions of the product that are
evaluated as prototypes. Modifications are made as necessary.
• Phase 5: Production and Ramp-up: The product is produced via its intended production process
while testing out the equipment and training employees. The products produced undergo
extensive post production testing and at some point, the product is launched and becomes
available for distribution.
New Product Development (NPD) –
Models/Theories
1. Cooper’s Stage-Gate Model
The Stage-Gate process, also known as the phase-gate process, tends
to guide the new product development process through five main
stages. Between stages, a gate is used to determine whether the team
should move to the next stage or an iteration should be applied in the
current stage before moving to the next one.
Cooper’s Stage-Gate Model
Cooper’s Stage-Gate Model
• Stage 1: Scoping
The team evaluates the product idea and its scope. In this stage, the team tries to identify whether the idea is viable and can
present a market opportunity. This can be achieved through tools—such as the SWOT analysis—that help the team to evaluate
the idea based on strengths, weaknesses, opportunities, and threats.
• Stage 2: Build Business Case
Once the idea is formed and there is clear vision about the product, the team works to build a product definition and analysis,
a business case, a project plan, and a feasibility review.
• Stage 3: Development
In this stage, the team applies the plan formulated in the above stages and puts it into action by building a prototype for the
product. The timeline is this stage is very important to achieve five factors: specific, measurable, actionable, realistic, and
time-round (SMART). The timeline is always updated based on the production status.
• Stage 4: Testing and Validation
In this stage, the prototype is tested, and feedback is collected to improve the prototype. The testing includes team testing for
problems and issues in the product. Then, it goes for the field test, which includes consumer testing for the product in a beta
version and a marketing test to identify market feasibility for the product.
• Stage 5: Launch
Once the product passes all the stages, it moves directly to the launch stage, where the product is introduced to the market
based on a marketing strategy. In this stage, the marketing team plays an essential role in creating the market need and
increasing market exposure for the product.
2. Activity Stage Model of NPD

• Crawford (1997)’s activity stage model of NPD falls into the first
category- depicting the process as comprising of multiple overlapping
and interactive stages. Crawford’s model identifies four activities,
similar to those in other models. Its emphasis, however, is on
representing them as occurring concurrently, but with differing
degrees of importance as the project progresses
Activity Stage Model of NPD
Models of Innovation
Network Models
• Network models further develop understanding of NPD, focusing to a
greater extent on inputs and network interactions.
• It emphasize the external linkages coupled with the internal activities
that have shown to contribute to successful product development.
• All these models suggest that NPD should be viewed as a knowledge-
accumulation process that requires inputs from a wide variety of
sources.
However, these types of model have been criticized in terms of their ‘spaghetti’
representation of the process, and degree to which they are useful as an analytical
framework.
NPD- Innovation
• Innovation refers to the introduction of a new good or a new quality
of a good, method of production, market, source of supply, and/or
organization in an industry. It also refers to improving on an existing
concept or idea using a step-wise process to create a commercially
viable product.
Product Decisions
1. Managing Existing Products
2. Product Differentiation Through Quality, Design, and Support
Services
3. Product Deletion
Managing Existing Products
• Line Extension
• Development of a product that is closely related to existing products in the
line but meets different customer needs
• Is a less expensive, low-risk
alternative
• May focus on the same or a new
segment “Cheerios”
• Can be used to counter
competing products
• Many “new products” are really line
extensions. “Honey-Nut
Cheerios”

Copyright © Houghton Mifflin Company.

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All rights reserved.
Managing Existing Products (cont’d)
• Product Modifications
• A change in one or more characteristics of the product and the elimination of
the original product from the product line.
• Product must be modifiable.
• Customer must be able to
perceive modification has
been made.
• Modified product more
closely satisfies customers’ needs. Tide

Tide
with
bleach

Copyright © Houghton Mifflin Company.

12 | 66
All rights reserved.
Product Modifications
• Quality Modifications
• Changes in material or production processes related to a product’s
dependability and durability
• Reducing quality to offer a
lower price to customers
• Increasing quality to gain a
competitive advantage

Copyright © Houghton Mifflin Company.

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All rights reserved.
Product Modifications (cont’d)
• Functional Modifications
• Changes affecting a product’s versatility, effectiveness, convenience, or safety;
usually requiring redesign of the
product
• Aesthetic Modifications
• Changes to the sensory appeal
of a product such as altering
taste, texture, sound, smell, or
appearance

Copyright © Houghton Mifflin Company.

12 | 68
All rights reserved.
Product Deletion
• Product Deletion
• The process of eliminating a product from the product mix
• Reasons to remove a product:
• Slow sales create higher unit-production costs, inventory costs, and
distribution costs.
• To prevent negative
feelings from affecting the
company’s other products.

Copyright © Houghton Mifflin Company.

12 | 69
All rights reserved.
Product Deletion Process
• Stage 1 :- Recognition of the product to be deleted. This stage is performed by
examining the performance of the product against criteria that play the role of
‘guideposts’ signaling the initiation of the product deletion process to the firm, e.g.
market share, market growth rate and profit margin.
• Stage 2 :- Analysis and revitalization stage. At this stage alternative courses of corrective
actions are considered by management to restore the viability of a product, e.g. quality
improvements, price increase, and development of new markets.
• It may be counter intuitive to assume that all products which become deletion
candidates go through this ‘stage’ in the deletion process with equal attention. By the
same token it may be argued that situational factors may have an influence upon this
stage too.
• For example, evidence from organizational decision-making literature suggests that
situational characteristics such as time pressure and perceptions of the problem as a
threat or opportunity do have an influence upon the analysis stage of the decision-
making process.
• Stage 3:- Evaluation and decision-formulation stage. At this stage
management is called upon to decide whether it is in the best interest of
the company to delete or retain the product. Their decision is based on a
number of factors, which generally include the effect of the deletion on the
recovery of overheads, on ‘full-line’ policy and capacity utilization.
• Stage 4:- Implementation stage. This stage can be described by the
deletion strategy which is followed by the firm for the deletion of the
product, e.g. ‘drop immediately’, ‘milk’, ‘selling out’. Previous research has
already shown that some of these options may indeed be industry-specific,
but given the importance of product and situation-specific conditions, it
might be possible to offer quite specific advice to managers as to how they
might approach the implementation of the decision, once taken.
Product deletion Process
• Diagram
Triggers in Product Deletion

Poor Performance Triggers

Strategic Triggers

Operational Triggers

External Triggers
Poor Performance Triggers
Decline in market
potential
Poor sales performance
despite a viable market
Poor Profit
Performance

Poor Product Quality

Strategic Triggers

Resources required somewhere else

Rationalization due to M&A
Poor Fit with company image
Development of a new product
Operational and External Triggers
Operational Triggers
• Problem associated with raw material and parts
• Operational problem
External Triggers
• competition
• Third party decisions
• Government rules and regulations
 Resources required somewhere else
- ex (Unilever waves goodbye to Birds Eye)

https://www.ft.com/content/e3d5a972-993c-11da-a12a-0000779e2340
Rationalization due to M&A
Poor Fit with
company image
External triggers- Government rules and
regulations
• India’s ecommerce law forces Amazon and Flipkart to pull products
https://www.ft.com/content/29a96ff6-2615-11e9-8ce6-5db4543da632
Implementing the deletion
decision
Implementation Strategies
1. Drop Immediately – rarely used . Research suggests that only
companies in the fast-moving consumer goods (FMCG) industry
claim this as an option, since ingredients, pack stocks,
manufacturing lines and workers can be interchangeable and
resources can be used elsewhere
2. Phase out immediately -it allows for the run-down of finished
goods and raw materials, parts or ingredients, and allows the
option of satisfying orders received up until the decision day.
Adopted where a new product has been unsuccessful or where
there is a strategic decision taken to release resources. Apparent in
Service industries including retailing
Implementation Strategies
3. Run out (harvest/milk):- The run-out (also called harvesting or milking)
strategy is mostly applicable to products which have enjoyed some success
as fully mature products.
• products are maintained at a very low level – a typical, classic harvest
strategy: no investment, no advertising, but continuation of production of a
limited number of different versions and models of a product range, which
command a good price from customers from which extra profits accrue.
• The intention with this strategy is to reap as much benefit (in profit) as
possible, before the product’s sales become so low as to threaten its unit
contribution.
• Reasons for adopting a run-out strategy include keeping a presence in the
market while a new product is being developed
Implementation Strategies
• 4. Sell out:- The first is where the manufacturer sells finished stock to
a dealer or another company in one batch, allowing them to maintain
the product on the market for as long as stocks last.
• A second variation is where the manufacture of some deletion
candidates is switched to another of the international parent group’s
subsidiaries.
• More drastic variant on this theme is to sell the production capacity
on to another company.
Implementation Strategies
• 5. Drop the product from the standard range and re-introduce as a
‘special :-
• This occurs where a company will manufacture a negotiated batch,
provided the customer can wait and is willing to pay for a minimum
batch quantity.
• The logic of this strategy is that customers dependent on the product
are not left in any difficulty and the company can still make a profit
from a product which is unprofitable if still produced and sold as part
of ‘normal’ operations.