Chapter12

Lecture 7
Setting Product Strategy

Marketing Management, 13th ed

Stephen Ginns 31oct08 Slide 1 of 31
 Questions for this week

• What are the characteristics of products and how

can they be classified?
• How can companies differentiate products?
• How can a company build and manage its
product mix and product lines?
• How can companies combine products to create
strong co-brands or ingredient brands?
• How can companies use packaging, labeling,
warranties, and guarantees as marketing tools?

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 Product

“Anything that can be offered to a market to

satisfy a want or need.”

Kotler

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 Components of the Market Offering

Value-based prices

Attractiveness
of
the market
offering

Product Services
features mix and
and quality quality
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 Five Product Levels

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Product Classification Schemes

Durability

Tangibility

Use

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 Durability and Tangibility

Nondurable
goods

Durable
Services
goods

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 Consumer Goods Classification

Convenience Shopping

Specialty Unsought

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 Industrial Goods Classification

Materials and parts

Supplies/
Capital items
business services

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 Product Differentiation
• Product form
• Features
• Customization
• Performance
• Conformance
• Durability
• Reliability
• Reparability
• Style

Stephen Ginns 31oct08 Slide 10 of 31

 Service Differentiation

• Ordering ease
• Delivery
• Installation
• Customer training
• Customer
consulting
• Maintenance and
repair
• Returns

Stephen Ginns 31oct08 Slide 11 of 31

 The Product Hierarchy

Item

Product type

Product line
Product class
Product family
Need family
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 Product Systems and Mixes

• Product system
• Product mix
• Product assortment
• Depth
• Length
• Width
• Consistency

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 Product Line Analysis

Core product Staples

Convenience
Specialties
items

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 Product-Item Contributions to a
Product Line’s Total Sales and
Profits

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 Product Map

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 Line Stretching

Down-Market Stretch

Up-Market Stretch

Two-Way Stretch

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 Product-Mix Pricing

• Product-line pricing
• Optional-feature pricing
• Captive-product pricing
• Two-part pricing
• By-product pricing
• Product-bundling pricing

Stephen Ginns 31oct08 Slide 18 of 31

 Factors Contributing to the
Emphasis on Packaging

Self-service

Consumer affluence

Company/brand image

Innovation opportunity

Stephen Ginns 31oct08 Slide 19 of 31

 Packaging Objectives

• Identify the brand

• Convey descriptive and persuasive
information
• Facilitate product transportation and
protection
• Assist at-home storage
• Aid product consumption

Stephen Ginns 31oct08 Slide 20 of 31

 Packaging has been
influenced by:

• Self-service
• Consumer affluence
• Company and brand image
• Innovation opportunity
• ECR – Lean Management.

Stephen Ginns 31oct08 Slide 21 of 31

 Functions of Labels

• Identifies
• Differentiates
• Grades
• Describes
• Promotes

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 Brand
• A trademark or distinctive name identifying a product
or a manufacturer.
• A product line so identified: a popular brand of soap.
• A distinctive category; a particular kind: a brand of
comedy that I do not care for.
• A mark indicating identity or ownership, burned on the
hide of an animal with a hot iron.
• A mark burned into the flesh of criminals.
• Has no value in accounting terms
• Brand has an associated image
“A name, term, sign, symbol or design, or a combination of
these, intended to identify the goods or services of one
seller or a group of sellers and to differentiate them from
those of competitors”
Kotler, 2001
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