MM

MODULE 2
 Differentiation Strategies
• This involves differentiating ourselves from other
offerings in the market: Differentiation. Also, we aim at
a position in the market and in customers’ minds:
Positioning.
• the differentiation, which is the process of actually
differentiating the product to create superior customer
value, we can achieve the desired position in
customers’ minds.
• Positioning by attribute. The most frequent positioning
strategy. The focus is on a particular attribute, a product
feature, or customer benefit. CakeLove in Maryland
positions itself as “cakes from scratch” with natural
ingredients (not the least of which is butter, lots of it).
• The differentiation and positioning process consists of
three steps:
• Identifying a set of differentiating competitive advantages
on which to build a position
• Choosing the right competitive advantages
• Selecting an overall positioning strategy.
• Then, the company has to deliver its promises by
effectively communicating and delivering the chosen
position to the selected market.
• Successful positioning of a small business or its brand is
built on a well-defined target market combined with solid
points of differentiation. There are six approaches to
positioning that the small business owner should consider
• Positioning by price/quality. A very pervasive approach to
positioning. Some small companies and brands offer more
in terms of service, features, or performance, and a higher
price serves to signal this higher quality to the customer.
As an example, Derry Church Artisan Chocolates are very
expensive, but they position themselves as having the very
high quality that justifies a high price.Jim T. Ryan, “Sweet
Strategy: Artisan Chocolatier Eyes Internet, Corporate
Giving for Growth,” Central Penn Business Journal,
November 26, 2010, 3–6.
• Positioning by use or application. Focuses on how a
product is used or different applications of the product. A
solitary custom tailoring shop located in a downtown
professional office area could position itself as the only
tailor where you can conveniently go “for lunch.”
• Positioning by product user. The focus shifts from the product to the
user. KIND Snacks are cereal bars positioned as a snack bar for those
who are interested in a snack that is wholesome, convenient, tasty,
healthy, and “economically sustainable and socially impactful.”“Our
Story,” KIND Healthy Snacks, accessed December 8,
2011, www.kindsnacks.com/our-story. It is a great snack for hikers and
campers.
• Positioning by product class. Focuses on product-class associations. A
cleaning service that uses only green products and processes can
position itself as the green choice in cleaning services. Healthy Homes
Cleaning is an example of a green cleaning business.
• Positioning with respect to a competitor. Comparing a small business
brand to its competitors. Some comparisons will be very direct; others
will be subtle.Dana-Nicoleta Lascu and Kenneth E. Clow, Essentials of
Marketing (Mason, OH: Atomic Dog Publishing, 2007), 181. A small
manufacturer that does not miss delivery times and makes products
that are free of flaws can position itself on the basis of timely delivery
and manufacturing excellence.
 Competitive Strategies
• Leader: Largest share
• Challenger: Medium share, to challenge the leader
• Follower: No offensive posture against the leader
• Nicher: Small market size, segmentation other firms
cannot think of
■ Market leader. In the majority of industries there is one firm
that is generally recognized to be the leader. It typically has
the largest market share and, by virtue of its pricing,
advertising intensity, distribution coverage, technological
advance and rate of new product introductions, it determines
the nature, pace and bases of competition. It is this
dominance that typically provides the benchmark for other
companies in the industry. However, it needs to be
emphasized that market leadership, although often associated
with size, is in reality a more complex concept and should
instead be seen in terms of an organization’s ability to
determine the nature and bases of competition within the
market. A distinction can therefore be made between market
leadership that is based primarily upon size, and what might
be termed ‘thought leadership ’ that is based not so much
upon size, but upon innovation and different patterns of
thinking.
■ Market challengers and followers . Firms with a slightly
smaller market share can adopt one of two stances. They may
choose to adopt an aggressive stance and attack other firms,
including the market leader, in an attempt to gain share and
perhaps dominance (market challengers), or they may adopt
a less aggressive stance in order to maintain its market share
status by following the market leaders (market followers).
■ Market nichers . Virtually every industry has a series of
small firms that survive, and indeed often prosper, by
choosing to specialize in parts of the market that are too
limited in size and potential to be of real interest to larger
firms. A case in point would be Morgan specializing in
traditional sports cars. By concentrating their efforts in this
way, market nichers are able to build up specialist market
knowledge and avoid expensive head-on fights with larger
companies.
 Product life cycle strategies
• The product life cycle contains four distinct
stages: introduction, growth, maturity and
decline. Each stage is associated with changes
in the product's marketing position.
• Product introduction strategies
• Marketing strategies used in introduction stages include:
• rapid skimming - launching the product at a high price and high
promotional level
• slow skimming - launching the product at a high price and low
promotional level
• rapid penetration - launching the product at a low price with
significant promotion
• slow penetration - launching the product at a low price and minimal
promotion
• During the introduction stage, you should aim to:
• establish a clear brand identity
• connect with the right partners to promote your product
• set up consumer tests, or provide samples or trials to key target
markets
• price the product or service as high as you believe you can sell it,
and to reflect the quality level you are providing
• Product growth strategies
• Growth stage is when you should see rapidly rising sales,
profits and your market share. Your strategies should seek to
maximise these opportunities.
• Marketing strategies used in the growth stage mainly aim to
increase profits. Some of the common strategies to try are:
• improving product quality
• adding new product features or support services to grow your
market share
• enter new markets segments
• keep pricing as high as is reasonable to keep demand and
profits high
• increase distribution channels to cope with growing demand
• shifting marketing messages from product awareness to
product preference
• Product maturity strategies
• When your sales peak, your product will enter the
maturity stage. This often means that your market will
be saturated and you may find that you need to
change your marketing tactics to prolong the life cycle
of your product. Common strategies that can help
during this stage fall under one of two categories:
• market modification - this includes entering new
market segments, redefining target markets, winning
over competitor’s customers, converting non-users
• product modification - for example, adjusting or
improving your product’s features, quality, pricing and
differentiating it from other products in the marking
• Product decline strategies
• During the end stages of your product, you will see declining sales and profits.
This can be caused by changes in consumer preferences, technological
advances and alternatives on the market. At this stage, you will have to
decide what strategies to take. If you want to save money, you can:
• reduce your promotional expenditure on the products
• reduce the number of distribution outlets that sell them
• implement price cuts to get the customers to buy the product
• fin another use for the product
• maintain the product and wait for competitors to withdraw from the market
first
• harvest the product or service before discontinuing it
• Another option is for your business to discontinue the product from your
offering. You may choose to:
• sell the brand to another business
• significantly reduce the price to get rid of all the inventory
• Many businesses find that the best strategy is to modify their product in the
maturity stage to avoid entering the decline stage.
Product characteristics and Classification

• “Product is anything that can be offered to

someone to satisfy a need or a want.”
-Philip Kotler
• “Product is a bundle of utilities, consisting of
various product features and accompanying
services.”
-W. Alderson
 Product characteristics
1. Product is one of the elements of marketing mix or programme.
2.Different people perceive it differently. Management, society, and
consumers have different expectations.
3. Product includes both good and service.
4. Marketer can actualize its goals by producing, selling, improving, and
modifying the product.
5. Product is a base for entire marketing programme.
6. In marketing terminology, product means a complete product that can
be sold to consumers. That means branding, labeling, colour, services,
etc., constitute the product.
7. Product includes total offers, including main qualities, features, and
services.
8. It includes tangible and non-tangible features or benefits.
9. It is a vehicle or medium to offer benefits and satisfaction to
consumers.
10.Important lies in services rendered by the product, and not ownership
 Product Classification
1. Consumer Products:
• Consumer products are those items which are used by
ultimate consumers or households and they can be used
without further commercial and engineering processes.
• Consumer products can be divided into four types as
under:
i. Convenient Products:
• Such products improve or enhance users’ convenience. They
are used in a day-to-day life. They are frequently required
and can be easily purchased. For example, soaps, biscuits,
toothpaste, razors and shaving creams, newspapers, etc.
They are purchased spontaneously, without much
consideration, from nearby shops or retail malls.
ii. Shopping Products:
• These products require special time and shopping efforts. They are
purchased purposefully from special shops or markets. Quality,
price, brand, fashion, style, getup, colour, etc., are important
criteria to be considered. They are to be chosen among various
alternatives or varieties. Gold and jewelleries, footwear, clothes,
and other durables (including refrigerator, television, wrist washes,
etc.)
iii. Durable Products:
• Durable products can last for a longer period and can be repeatedly
used by one or more persons. Television, computer, refrigerator,
fans, electric irons, vehicles, etc., are examples of durable products.
Brand, company image, price, qualities (including safety, ease,
economy, convenience, durability, etc.), features (including size,
colour, shape, weight, etc.), and after-sales services (including free
installation, home delivery, repairing, guarantee and warrantee,
etc.) are important aspects the customers consider while buying
these products.
iv. Non-durable Products:
• As against durable products, the non-durable products have short life. They
must be consumed within short time after they are manufactured. Fruits,
vegetables, flowers, cheese, milk, and other provisions are non-durable in
nature. They are used for once. They are also known as consumables.
Mostly, many of them are non-branded. They are frequently purchased
products and can be easily bought from nearby outlets. Freshness, packing,
purity, and price are important criteria to purchase these products.
v. Services:
• Services are different than tangible objects. Intangibility, variability,
inseparability, perishability, etc., are main features of services. Services
make our life safe and comfortable. Trust, reliability, costs, regularity, and
timing are important issues.
• The police, the post office, the hospital, the banks and insurance
companies, the cinema, the utility services by local body, the
transportation facilities, and other helpers (like barber, cobbler, doctor,
mechanic, etc.,) can be included in services. All marketing fundamental are
equally applicable to services. ‘Marketing of services’ is the emerging facet
2. Industrial Products:
• Industrial products are used as the inputs by manufacturing
firms for further processes on the products, or
manufacturing other products. Some products are both
industrial as well as consumer products. Machinery,
components, certain chemicals, supplies and services, etc.,
are some industrial products.
• Again, strict classification in term of industrial consumer and
consumer products is also not possible, For example,
electricity, petroleum products, sugar, cloth, wheat,
computer, vehicles, etc., are used by industry as the inputs
while the same products are used by consumers for their
daily use as well.
• Some companies, for example, electricity, cements, petrol
and coals, etc., sell their products to industrial units as well
as to consumers.
• As against consumer products, the marketing
of industrial products differs in many ways.
• Industrial products include:
1. Machines and components
2. Raw-materials and supplies
3. Services and consultancies
4. Electricity and Fuels, etc.
 The product hierarchy
• The product hierarchy stretches from basic needs to
particular items that satisfy those needs. We can
identity six levels of the product hierarchy (using life
insurance as an example).
1 Need family – the core need that underlies the
existence of a product family. Example : security .
2 product family – all the product classes that can
satisfy a core need with reasonable effectiveness.
Example : savings and income .
3 product class – a group of products within recognized
as having a certain functional coherence . Also known
as product category. Example : financial instruments.
4. product line- a group of product within a product class
that are closely related because they perform a similar
function, are sold to the same customer groups, are
marketed through the same outlets or channels, or fall
within given price ranges. A product line may be
composed of different brands or a single family brand or
individual brand that has been line extended. Example :
life insurance.
5 product type – a group of items within a product line that
share one of several possible forms of the product,
example :term life insurance .
6 Item (also called stock keeping unit or product variant): a
distinct unit within a brand or product line
distinguishable by size , price, appearance, or some other
attribute, Example: ICICI prudential renewable life
• Using Cadbury Bournville as an example we can identify these levels of:
• Need Family – It refers to the core need that underlines the existence of
a product family. Bournville basically belongs to the confectionery
industry.
• Product Family – It means all the product classes that can satisfy a core
need with reasonable effectiveness. Bournville belongs to sugar
confectionery in confectionery industry.
• Product Class/ Category – It is a group of products within the product
family recognized as having a functional coherence. Bournville is a
chocolate brand which is produced by Cadbury.
• Product Line – They are a group of products within a product category
that are closely related because of similar functions performed by the
products. Cadbury is a multinational confectionery company that
manufactures Bournville.
• Product Type – It is the group of items within a product line that share
one of several possible forms of the product. 
• Item – It is a distinct unit within a brand or a product line which is
distinguishable. Cadbury Bournville is available in different sizes
 Product system and mix
• A product system is a group of diverse but related
items that function in a compatible manner. For
example, the extensive iPod product system
includes headphones and headsets, cables and
docks, armbands, cases, power and car
accessories, and speakers.
• A product mix also called a product assortment is
the set of all products and items a particular
seller offers for sale.
• Width
• The width of the mix refers to the number of
product lines the company has to offer.
• For e.g., If a company produce only soft drinks and
juices, this means its mix is two products wide. Coca-
Cola deals in juices, soft drinks, and mineral water
and hence the product mix of Coca-Cola is three
products wide.
• Length
• Length of the product mix refers to the total number
of products in the mix. That is if a company has 5
product lines and 10 products each under those
product lines, the length of the mix will be 50 [5 x
• Depth
• The depth of the product mix refers to the total
number of products within a product line. There can
be variations in the products of the same product
line. For e.g. Colgate has different variants under the
same product line like Colgate advanced, Colgate
active salt, etc.
• Consistency
• Product mix consistency refers to how closely
products are linked to each other. Less the variation
among products more is the consistency. For
example, a company dealing in just dairy products
has more consistency than a company dealing in all
types of electronics.
 Product line decisions.
• Product line length. Product line managers have to decide on
product line length. Product line length is influenced by company
objectives. Companies that want to be positioned as full-line
companies, or that are seeking high market share and market
growth, usually carry longer lines. A different objective is to create a
product line that facilitates cross-selling: Hewlett-Packard sells
printers as well as computers. Still another objective is to create a
product line that protects against economic ups and downs;
Electrolux offers white goods such as refrigerators, dishwashers, and
vacuum cleaners under different brand names in the discount,
middle-market, and premium segments, in part in case the economy
moves up or down. Over time, product line managers tend to add
new products either to use up excess manufacturing capacity, or
because the sales force and distributors are calling for a more
complete product line to satisfy their customers, or because the firm
needs to add items to the product line to increase sales and profits.
• A company lengthens its product line by two ways: line
stretching and line filling
1. Line Stretching. Each and every marketer’s product line covers
a only a certain portion of total possible range. For example,
Audi in India is selling its product only to the upper class
market. Line stretching is said to be done when a company
lengthens its product line beyond its current range. The option
lies with company to which side it want to stretch. It can
stretch downside, upside or both also.
A. Downside stretch. A company offering middle class or upper
class product line to current market may offer a new product
line to the lower market also. Downward stretching occurs
when a company that is located at the upper end of the market
later stretches its lines downwards. The firm may have first
entered the upper end to establish a quality image and
intended to roll downwards later. It may be responding to an
attack on the upper end by invading the low end.
b. Upward Stretch. Companies at the lower end of
the market may want to enter the higher end. They
may be attracted by a faster growth rate or higher
margins at the higher end, or they may simply want
to position themselves as full-line manufacturers.
An upward stretch decision can be risky. The higher-
end competitors not only are well entrenched, but
also may strike back by entering the lower end of
the market. Prospective customers may not believe
that the newcomer can produce quality products.
Finally, the company's salespeople and distributors
may lack the talent and training to serve the higher
end of the market.
c. Two way stretch. Companies in the middle range of the
market may decide to stretch their lines in both directions.
Sony did this to hold off copycat competitors of its Walkman
line of personal tape players. Sony introduced its first Walkman
in the middle of the market. As imitative competitors moved in
with lower-priced models, Sony stretched downwards. At the
same time, in order to add lustre to its lower-priced models
and to attract more affluent consumers keen to trade up to a
better model, Sony stretched the Walkman line upwards.
2. Line Filling. Rather than stretching into lower- or higher-end
segments, the firm can lengthen its product line by adding
more items within the present range of the line. There are
several reasons for product line filling: reaching for extra
profits, trying to satisfy dealers, trying to use excess capacity,
trying to be the leading full-line company, and trying to plug
holts to keep out competitors.
 Packaging, Labeling and Warranties
• Packaging:
• We define packaging as all the activities of designing and
producing the container for a product. Well-designed packages
can create convenience and promotional value. We must
include packaging as a styling weapon, especially in food
products, cosmetics, toiletries, and small consumer appliances.
• The package may include up to three levels of material briefly
described as follows:
• The primary package which is the product’s immediate
container. The 370ml. can containing Carnation milk is its
primary package.
• The Secondary package which protects the primary package.
• The shipping package which contains the secondary package
or packages. It provides ease of storage, identification and
shipping.
 Reason for Packaging
• There are several reasons for packaging products.
Among them are :
• It provides protection to products before and after
they are in the possession of the intended users.
Products need to be protected from the harmful
effects of outside elements. Packaging serves to
eliminate this problem.
• It provides convenience to the user. Many products
are now neatly packaged which provide convenience
for use just anywhere. The effort exerted from the
date of purchase to actual use of the product is
greatly diminished.
• It provides safety. Products like insecticides may
cause considerable harm unless they are contained
in suitable packages.
• It provides economy to both the seller and the user.
Buyers have different quantity requirements for
product. Some will need more in a single purchase,
while some will need less. In any case, purchasing in
various quantities is made possible by packaging.
• It allows sellers to effectively promote the product.
The package can be made to attract the attention of
the prospective buyer and further provide vital
information about the product. Children are
oftentimes attracted by fancy candy wrappers which
motivates them to buy the product .
 What Makes a Good Package

• Packages must be made to assist in the

marketing effort.
• Defective packaging may contribute to lost
sales and product damage.
• Too much packaging, on the other hand, may
be costly and will eat up profits.
• Labeling :
• That part of the product which provides information
about the product and the manufacturer is called the
label.
• It may be a part of the package, or a tag attached to
the product.
• Sellers must label products. The label may be a
simple tag attached to the product or an elaborately
designed graphic that is part of the package. The
label might carry only the brand name or a great deal
of information. Even if the seller prefers a simple
label, the law may require additional information.
• Brand label: It plays an important role in labelling as it
gives information about the brand. It can be removable or
non-removable.

• Descriptive label:  This label provides information about

the product: who made it, where and when it was made,
its content, how it is used and how to use it safely.
• Grade label: This label identifies the product’s
judged quality with a letter, number, or word like
“grade A”, “grade 3”, or “premium grade”. It
describes the aspect and features of the product.

• Promotional label: This label provides attractive

graphics to help promote the product.
• Warranties:
• All sellers are legally responsible for fulfilling a
buyer's normal or reasonable expectations.
Warranties are formal statements of expected
product performance by the manufacturer.
Products under warranty can be returned to
the manufacturer or designated repair center
for repair, replacement, or refund. Warranties,
whether expressed or implied, are legally
enforceable.
 Variation of Warranty
• A limited-coverage warranty is a manufacturer’s
statement indicating the bounds of coverage and
non-coverage of any deficiency found in the product.
• A full warranty is a statement of liability by a
manufacturer’s that has no limits of non-coverage
• Implied warranties are those that assign
responsibility of product deficiencies to a
manufacturer even if the item was sold by retailer.
• Warranties of whatever variation help the consumer
make his purchasing decision.
Thanks