Product Strategy

.2
1 2
Levels
e of Product
u r
i g
F

Competition
in developed
countries

Competition
in developing
countries
Product Levels In planning
market offering
Core Benefit marketer need to
(Rest and sleep)
decide on
product level:
Basic Product
(Bed, bathroom, towels)

Expected Product Customer-value

(Clean bed, fresh towels)
Hierarchy

Augmented Product
(Free Internet; free breakfast)
Potential Product
(Future augmentations)
Augmentation adds to cost
Consumption needs to be
studied
Augmented features soon
become expected features
 Product Classifications
Durability and Tangibility

Nondurable goods
Purchased frequently
Marketing strategies:
1. Ensure widespread
availability
2. Small markup Durable goods
3. Constant reminders – Purchased infrequently Services
heavy advertisement Marketing strategies: Intangible
4. Induce trials 1. Personal selling Marketing strategies:
2. Higher markup 1. Quality control
3. Seller guarantees 2. Seller credibility
 Product Classifications
Convenience goods
Bought frequently with
Shopping Habits
minimum effort
Specialty goods
• Staples Unique characteristics /
• Impulse goods image
• Emergency goods e.g. Buyers make special
efforts to buy it
raincoat

Shopping goods Unsought goods

Consumers compare on price, quality, features ….
Product Differentiation

Form Features

Customization Durability

Performance Conformance

Reliability Repairability

Stgyle
Style
 Services Differentiation

Customer
Consulting
Delivery &
Ordering Ease
Returns

Training

Installation Maintenance & Repair

Product and Brand Relationships

– Is the firm marketing ‘optimum

set’ of products?
Product Hierarchy Product Systems/Mixes

Product Line Analysis Product Line Length

Product Mix Pricing Co-Branding

 Product Hierarchy

‘Core need’ because of which a product

Need Family
family exists

Product Family All products that satisfy the core need

e.g. Financial instruments
Products in a product family with
Product Class functional coherence e.g. Insurance /
Pension schemes
Closely related, similar function e.g.
Product Line
Health insurance
Possible forms of the product e.g.
Product Type
Equity linked

Item The actual product

 Product Hierarchy

Need Family ‘Core need’ - to clean

Product Family Cleansing agents – soaps, gels, home

made products, hand wash, shampoo …
Product Class For the body – soaps, gels, home made
products

Product Line Soap

Product Type Herbal soap

Item Medimix soap

Product Systems

Product System
Set of diverse but
related items that
function in a
compatible manner
Product Mixes

Consistency

Product mix
Set of all products sold by a
particular seller
Product Mix Dimensions:

Width: number of product lines

Length: total number of items in the mix

Depth: number of product variants

Consistency: degree to which product lines are

related

These 4 product mix dimensions help the

company to expand its business in four ways
Product Mix – P & G
Width
Shampoo Oral care Soaps & Babycare Personal Others
Detergents care
Depth
1. Ariel OxyBlu
2. Ariel Oxyblu Ultramatic
3. Ariel Front O Mat
4. Ariel 2in1
5. Ariel Complete

6. Olay Base Moisturizer

1. Olay Moisturizing Lotions
2. Olay Moisturising Creams
7. Olay Anti Ageing
1. Olay Regenerist
2. Olay Total Effects
3. Olay Age Protect
8. Olay Whitening.
1. Olay White Radiance
2. Olay Natural White.
Product Line Strategies - Length
• Create product line to induce up selling e.g. Maruti

• Create product line to induce cross selling e.g. IT

hardware companies

• Seeking high market share and high growth –

longer line

• Seeking high profitability – carefully nurtured

shorter line
Product Line Length

Introducing products that are priced

higher than the existing range

Up-market stretch

Introducing both
Line stretching Two-way kinds of products
stretch -priced higher and
priced lower

Down-market
stretch
Introducing products that are priced
lower than the existing range
Down-Market Stretch
Reasons
1. Stagnation in current segment
2. High growth in lower segment

Naming - Decision Points

• Use the parent brand name? Sony
• Use a sub brand name – Gillette Vector, Gillette
Guard
• Different individual name – Britannia’s Tiger
biscuits
Up-Market Stretch
Reasons

1. More growth
2. Higher margins
3. Positioning reasons

Using Company / Brand name?

Some companies do not use the company name: Honda –

Acura, Toyota – Lexus
Some do: Pampers Extra Dry; Tylenol Extra Strength
Two Way Stretch
• Both down market and up market
• E.g. Titan – medium priced; Now Sonata in Economy
segment; Titan edge, Nebula in Premium segment

Nebula, Titan edge, Xylus

Titan

Fast Track
 Product Line Length
Line modernization – Introducing more advanced
versions. e.g. Microsoft / Apple

Featuring – Product line manager chooses one or two

items in the product line to feature. E.g. iPhone, Nike
AirForce 1 basket ball shoe

Pruning – Eliminating product lines that eats into the

profit. HUL ‘Path to Growth’ – pruned ¾ of its 1600
brands by 2003.

Line filling
More items in current Caution:
price range Confusion
Cannibalisation
Product Mix Pricing
Product Mix Pricing: Pricing decided to maximise profit on
the total product mix.
1. Product line pricing – companies introduce product
lines than a single product. E.g. Louis Philippe shirts
are available at Rs.1600, Rs. 2000, Rs. 2500 and above
price ranges.

2. Optional-feature pricing – Optional features come at

a price. E.g. For cars leather steering cover, leather seat
covers, reverse indicator, luggage career etc. comes at
an additional cost thereby making it highly priced vis-à-
vis the base model.
Product Mix Pricing

3. Captive-product pricing: You need to purchase

another product to use the first product you purchased.
Usually first product will be priced low and second
product will be priced high. E.g. Printer and cartridges

4. Two-part pricing: e.g. Landline

5. Product-bundling pricing: Bundle different products

and price them together e.g. Prestige pressure cooker
3L + non stick wok + non stick pan comes at Rs.1799
instead of Rs. 2300 (hypothetical example)
Co-Branding and Ingredient Branding
Co-Branding / Dual Branding: Promoting two brands together
– usually from two different companies, but can be from one
company also.
• Joint venture e.g. IOC-Citibank credit cards
• Retail co-branding e.g. CCD in Hometown
• Intel Inside

Ingredient Branding
Creates brand equity for products / brands that are used as a
part / ingredient of the main product.
Restaurant serving ‘Godrej chicken’
Packaging and Labeling
Packaging Objectives Labeling Objectives
1. Brand identification 1. Identify
2. Information 2. Grade
3. Protection 3. Describe
4. At-home storage 4. Promote
5. Aid consumption
6. Differentiating the brand
7. Attracting customers
PepsiCo acquired Tropicana in
1998.
In 2009 it went for a massive
‘package redesign’
Idea was to highlight ‘100%
pure and natural”
Arnell Group was the agency