THE INSTITUTE OF CHARTERED

ACCOUNTANTS OF SRI LANKA

POSTGRADUATE DIPLOMA IN BUSINESS

MANAGEMENT

MARKETING STRATEGY
SETTING PRODUCT STRATEGY

HAFEEZ RAJUDIN
SETTING PRODUCT STRATEGY

Marketing Planning begins with formulating an

offering to meet target customers’ needs and
wants.

The customer will judge the offerings by three

basic elements:
1. Product Features and Quality.
2. Services Mix and Quality.
3. Price
COMPONENTS OF THE MARKET OFFERING

Value-based prices

Attractiveness
of the
Market offering

Services mix and

Product features
quality
and quality
Product Characteristics and
Classifications

Definition of Product:
“ A product is anything that can be offered
to a market to satisfy a want or need.”

Products that are marketed include: physical

goods, services, experiences, events,
persons, places, properties, organizations,
information, and ideas.
Product Levels: The Customer Value
Hierarchy
Core Benefit

Basic Product

Expected Product

Augmented Product

Potential Product
Product Levels: The Customer Value
Hierarchy

1. Core Benefit:
the service or benefit the customer is
really buying
e.g. a hotel guest is buying “rest and
sleep” .
The purchaser of a drill is buying
“holes”.
(Marketers should see themselves as benefit
providers)
Product Levels: The Customer Value
Hierarchy

2. Basic Products:
at the second level Marketers has to
turn the core benefit into a basic
product.

Thus a hotel room includes a bed,

bathroom, towels, desk, dresser and
closet.
Product Levels: The Customer Value
Hierarchy

3. Expected Product
At the third level the marketer prepares
an EXPECTED PRODUCT, a set of
attributes and conditions buyers normally
expect when the purchase a product.
e.g. hotel guest expect a clean bed, fresh
towels, working lamps, and a relative
degree of quite.
Product Levels: The Customer Value
Hierarchy

4. Augmented Product:
At the fourth level the marketer prepares an augmented
product that exceeds customer expectations.

Differentiation arises on the basis of product

augmentation.

Product augmentation also leads the marketer to look

at the user’s total consumption system: the way the
user performs the tasks of getting and using the
products and related services.
Product Levels: The Customer Value
Hierarchy

The new competition is not between

what companies produce in their
factories, but between what they add
to their factory output in the form of
packaging, services, advertising,
customer advice, financing, delivery
arrangements, warehousing and other
things that people value.
Product Levels: The Customer Value
Hierarchy

Some thing should be noted about

product-augmentation strategy.
1. Each augmentation adds cost.

2. Augmented benefits become expected

benefits and necessary point-of parity
“ today’s hotel guests expect cable or satellite television
with a remote control and high-speed internet access or two
phone lines. This means competitors will have to search for
still other features and benefits”.
Product Levels: The Customer Value
Hierarchy

5. Potential Product:
This encompasses all the possible
augmentations and transformations
the product or offering might undergo
in the future.
Here is where companies search for
new ways to satisfy customers and
distinguish their offer.