12

Setting Product Strategy

Marketing Management, 13th ed

 Chapter Questions
• What are the characteristics of products
and how do marketers classify
products?
• How can companies differentiate
products?
• How can a company build and manage
its product mix and product lines?

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 Chapter Questions (cont.)

• 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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 Caterpillar: A Great Product

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 What is a Product?

A product is anything that can be

offered to a market to satisfy a want or
need, including physical goods,
services, experiences, events, persons,
places, properties, organizations,
information, and ideas.

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 Figure 12.1 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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 Figure 12.2 Five Product Levels

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 The Wedding Market
is a MetaMarket

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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
• Repairability
• Style

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 Dunkin’ Donuts’ Differentiation

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 Design Differentiation

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 Service Differentiation

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

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 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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 Figure 12.3 Product Item
Contributions to a Product Line’s
Total Sales and Profits

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 Figure 12.4 Product Map

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 Line Stretching

Down-Market
Down-Market Stretch
Stretch

Up-Market
Up-Market Stretch
Stretch

Two-Way
Two-Way Stretch
Stretch

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 Line Filling

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 Pruning

Pruning weak
brands can
strengthen the
remaining brands in
the line

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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

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 Product Line Pricing

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 Two-Part Pricing

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 Co-branding

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 Ingredient Branding

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 What is the Fifth P?

Packaging, sometimes called the

fifth P, is all the activities of
designing and producing the
container for a product.

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 Factors Contributing to the
Emphasis on Packaging

Self-service

Consumer affluence

Company/brand image

Innovation opportunity

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 Innovations in Packaging

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 Packaging Objectives

• Identify the brand

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

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 Functions of Labels

Identifies

Grades

Describes

Promotes

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 Warranties and Guarantees

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 Marketing Debate

 With products, is it form or function?

Take a position:
1. Product functionality is the key to brand
success.
or
2. Product design is the key to brand
success.

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 Marketing Discussion

 Consider the different means of

differentiating products and services.
 Which ones have the most impact
on your choices?
 Why?

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