Product Concept, Level ,

Classification, Mix and

Product life cycle and its
management
 Learning Outcomes

1.Product Definition
1.2Product Concept
2. Level of Product
3. Types of Products
4. Product Mix
5. Product Life Cycle
(PLC)
6. Product Life Cycle
Management (PLM)

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 Product Definition

• Product: 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.

 Product
• A product can be anything that can be offered

to the market to satisfy a want or a need.

• A bundle of attributes, offering for

use/consumption by the final customer.

Product Concept

5
 Level of Product

• Product Levels: The Customer-Value Hierarchy

• Core Product: the service or benefit the customer is really buying

• Generic Product: Generic Product consists of basic feature of the product

• Expected Product: Expected Product a set of attributes and conditions which

buyers normally expect when they purchase the product.

• Augmented Product: The intangible component of the product along with the

generic and core components is called augmented product.

• Potential Product: The Potential Product is the one which encompasses all the

possible augmentation and transformations the product or offering might

undergo in the future.

Levels of Product

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Level of Product

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 Levels of Product

5 basic levels

Each level adds more customer value

• CORE BENEFIT

• BASIC PRODUCT

• EXPECTED PRODUCT

• AUGUMENTED PRODUCT

• POTENTIAL PRODUCT

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 Core product

• - Indicate core benefit or service

• - Explains what the buyer really buys

• - Basic step in designing products

• - Defines problem solving benefits/services that consumers seek

• - Standardization of technology does not lead to much of difference

from competing firms

 Basic Product

• At this level, the core benefit is turned into a basic

product.

• Basic step in designing products Unbranded, plainly packaged,

less expensive

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 Expected product
• Represents basic requirements, a customer
finds essential to buy a product
• - Attributes & conditions required by the customers –
identified-built into products
• - Includes brand name, features, design,
packaging,
quality level, styling, styling, attributes,
instructions manual

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 Augmented product

• Marketer prepares an augmented

product that exceeds customer expectations.
• Intangible component of the product
along with formal & core components
• Product built by adding consumer services
& benefits

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 Types of Products

1. Consumer Products:
• - Bought by final consumers for personal
consumption
• - Categorized as…
• a. Convenience products ;
• - Bought frequently, immediately with
minimum comparison and buying effort.
• - Are low priced
• - Available in many locations 14
 Types of product

• B) Shopping Product;
• - Characteristically compared on the basis of
suitability, quality, price and style while selection and
purchase.
• - Distributed through fewer outlets
• e.g. Furniture, clothing, used cars, major appliances,
hotel and airline services.

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 Types of product

• c. Specialty Product;
• - Has unique characteristics or brand identification for which a
significant group of buyer is willing to make a special purchase
effort
• - People travel even long distances to buy them (Lamborghini)
• - No comparison is involved in buying.
• e.g. Specific brands, types of cars, high priced photographic
equipments, designer clothes, services of medical/ legal
specialists

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 Types of product

• d. Unsought Product
• - Consumer either does not know about/ knows about
but does not normally think of buying it.
• - Require a lot of advertising, personal selling
and marketing efforts.
• e.g. Life insurance, pre planned funeral services and
blood donations.

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 Types of Products
• 2. Industrial Products:
Distinguished from consumer products on the basis
of usage
e.g. A lawn mower.
1. Materials & parts
i. Raw materials & parts:
- Farm products, (wheat, cotton, livestock,
fruits, vegetables)
- Natural products (fish, lumber, crude oils, iron ore)
ii. Manufactured materials & parts:
- component materials (iron yarn, cement, wires)
- Component parts ( small motors, tires, castings)

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 Types of Products

• b. Capital items

i. Installations:
- Major purchases (factories, offices)
- fixed equipment ( generators, elevators,
computer systems)
ii. Accessory equipments:
- Portable factory equipments and
tools (hand tools, lift trucks)
- Office equipments ( computers, fax
machines, desks)

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 Types of Products

• c. Supplies and Services:

i. Supplies
- Operating supplies (Lubricants, coal, paper, pencil)
- Repair and maintenance (paint, nails, brooms)

ii. Services
- Maintenance and repair services
(window clearing, computer repair)
- Business advisory services ( legal, management,
consulting, advertising)

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 Product Mix

• Product mix – Product mix is a combination of total

product lines within a company.
• The complete range of products present within a
company is known as the product mix.
• A company like HLL has numerous product lines
like Shampoos, detergents, Soaps etc. The
combination of all these product lines is the product
mix.

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 Product Line

• The product line is a subset of the product mix.

The product line generally refers to a type of
product within an organization

• In Nestle, there are milk based products like

milkmaid, Food products like Maggi, chocolate
products like Kitkat and other such product lines.
Thus, Nestle’s product mix will be a combination of
the all the product lines within the company. 22
 Product Mix Length

• The total number of products against the total

number of product lines forms the length of the

product mix. This equation is also known as product

line length.

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 Product Mix Width

• The width of the product mix is equal to

the number of product lines within a company

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9/27/2019 Jitendra Patel,Assistant Professor, PIMR 27
Product Life Cycle (PLC)

Saturation
Point

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PLC

Saturation
Point

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PLC and Profit

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 PLC - Maruti 800

9/27/2019 Jitendra Patel,Assistant Professor, PIMR 32

 About Maruti

• MARUTI UDYOG LIMITED was established in 1981

• Largest automobile company in India located at
Gurgaon, Manesar.
• Portfolio of 13 brands and 150 variants like,MARUTI
800,ALTO,WAGANOR,SWIFT,GRAND VITARA,SX4
AND SWIFT DZIRE etc.,
• Listed in BOMBAY STOCK EXCHANGE &NATIONAL
STOCK EXCHANGE.
• Honored with “METI” award from Govt. of Japan for
promotion of Japanese brand in India.

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 Introduction Stage 1983-86

• MARUTI UDYOG LIMITED Launched first ‘MARUTI

800’
,in Indian market on December 1983.
owned MARUTI
• It’s a and SUZUKI MOTOR
collaboration betweenJAPAN.
INDIAN
• STATE
Cheapest car in the Indian market.
• Also exported to countries like South Asia
and South American market.
• First car was presented to Lord Venkateswara of
Tirumala Venkateswara temple.
• First car was sold to Harpal Singh for Rs.48,000/- as a
lucky owner and received keys from Prime Minister of
India INDIRA GANDHI.
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 Growth Stage 1987- 1996
• MARUTI 800 comes up with new features like , AC version
and Music System in the car.
• Sales by 852 units to 20,269 units and
reached
increasedup to 31,314 units.
• First export began in 1987.
• Sales soared from about 63,763 units
about 1,89,061 unitstoin 1996.
• Strategies adopted:-
• Customer care has became a key element for Maruti,
• Increased Maruti service stations every 25 kms on
a highway,
• For increasing its market share it launched new car models,

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 Maturity Stage 1997-2002
• In 1997,MARUTI introduced a new car with Jelly Bean
shape . However it was not so successful in the market.
• Launched revamped version of MARUTI 800 EX, with new
engine, shock absorber, coil spring suspension, but this
model lost their sales gradually .
• Entry of competitors like General
Motors , Ford , Tata.
• In 2002, MARUTI launched ‘ALTO’ ,
with bigger stylish version of the Maruti
800.
• Introduced LPG & CNG variables, called Maruti 800 Duo
with new face lifts like newer grille and clear lens head
lamps
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 Maturity Stage 1997-2002 Contd…
Strategies adopted at this stage :
• Pricing strategy:– categoring to all segments ,car priced at
Rs.
1,87,000/- is the lowest offer on the road
• Developed different revenue streams in the form of
Maruti insurance, Maruti finance.
• Repositioning of Maruti products
• Introduced new facelifts model based on market responses
or
consumer feedbacks or the competitors moves
• Customer centric approach:
call centers bring Maruti
Partnership with to closer to its customer. OF
BANK INDIA
•organized
Committed tofinance
STATE motorizing India small towns enable
people
to to buy cars in Rs.2599/- scheme

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 Decline Stage 2002 to 2004
• Due to heavy competition from competitors like Hyundai
i10 , Maruti Suzuki Swift, Chevrolet Spark, sales of Maruti
800 was drastically decreased.
• The sales are went down from 1,51,976 units in the year
2000 to about 69,553 in 2007.
• Buyers are attracted by high end luxuries
small cars like NANO .
• In 2008-2009 experienced sales of only 1,288 units.
• Major competitor Tata Motors launched Tata Nano smaller
car yet offer more space than the Maruti 800
• Sales are continued in semi urban and rural areas till today .
• In 2012 Maruti introduces ALTO 800 in the place of Maruti
800 .
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Sales between 2000 - 2004

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 PLC Explained
• A new product progresses through a sequence
of stages from introduction to growth,
maturity, and decline. This sequence is known
as the product life cycle and is associated with
changes in the marketing situation,
thus impacting marketing strategythe and the
marketing mix.

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 Introduction Stage
In the introduction stage, the firm seeks to build product awareness
and develop a market for the product. The impact on the marketing
mix is as follows:

• Product branding and quality level is established, and intellectual

property protection such as patents and trademarks are obtained.
• Pricing may be low penetration pricing to build market share
rapidly, or high skim pricing to recover development costs.
• Place/ Distribution is selective until consumers show acceptance of
the product.
• Promotion is aimed at innovators and early adopters. Marketing
communications seeks to build product awareness and to educate
potential consumers about the product.

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 Challenges of the Introduction Stage
• Small or no market
• High costs
• Losses, Not Profits

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 Growth Stage
In the growth stage, the firm seeks to build brand
preference and increase market share.
• Product quality is maintained and
additional features and support services may be
added.
• Pricing is maintained as the firm
enjoys increasing demand with little competition.
• Distribution channels are added as
demand increases and customers accept the
product.
• Promotion is aimed at a broader audience.
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 Challenges of the Growth Stage
• Increasing Competition
• Lower Prices
• Different Marketing Appro ach

 Costs are Reduced

Greater Consumer Awareness
Increase in Profits
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 Maturity Stage
At maturity, the strong growth in sales diminishes.
Competition may appear with similar products. The
primary objective at this point is to defend market
share while maximizing profit.
• Product features may be enhanced to differentiate the
product from that of competitors.
• Pricing may be lower because of the new competition.
• Distribution becomes more intensive and incentives
may be offered to encourage preference over
competing products.
• Promotion emphasizes product differentiation.
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 Challenges of the Maturity Stage

• Sales Volumes Peak

• Decreasing Market Share
• Profits Start to Decrease

Continued Reduction in Costs

 Increased Market Share Through Differentiation

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 Decline Stage
As sales decline, the firm has several options:
• Maintain the product, possibly rejuvenating it
by adding new features and finding new uses.
• Harvest the product - reduce costs and
continue to offer it, possibly to a loyal niche
segment.
• Discontinue the product, liquidating remaining
inventory or selling it to another firm that is
willing to continue the product.

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 Challenges of the Decline Stage

• Market in Decline
• Falling Sales and Profits
• Product Withdrawal

⦿ Cheaper
Production
⦿ Cheaper Markets
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 Examples
• Introduction – 3D TVs, Holographic Projection
• Growth – Blueray discs/DVR, Tablet PCs
• Maturity – DVD, Laptops
• Decline – Video cassette, Typewriters

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 Product Life cycle Management
• Product Lifecycle Management (PLM) is an
integrated, information driven approach to all
aspects of a product’s life from its design
inception, through its
deployment manufacture, and
maintenance,
culminating in its removal fromand service
and final disposal.

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MANAGING THE PRODUCT LIFE CYCLE

• Modifying the Product

 Alter product quality
 Enhance performance
 Change appearance

• Modifying the Market

 Finding New Users

 Increase use
 Create new use situations

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EXTENDING THE PRODUCT LIFE CYCLE-
Repositioning

 Reacting to a Competitor’s Position

 Catching a Rising Trend-baby aspirin is now low dose

aspirin to reduce heart attacks

 Changing the Value Offered

• Trading : add value raise price

• Trading Down- remove Value & lower price

• Downsizing-reduce contents but maintain price

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 PLM
• Provide collaborative data environments that
manages the intellectual property associated
with the evolving engineering, construction, and
maintenance definition
• Provide an accurate technical knowledge
foundation and detailed history of the
configuration throughout the entire lifecycle,
from concept to disposal, while continuously
coordinating complex interdependent changes
initiated by various technical and business
stakeholders

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 PLM
• Strong relationships between PLM (Product
Lifecycl Management), MES (Manufacturing
e
Execution System), and ERP (Enterprise Resource
Planning) offers the ability to build a
comprehensive closed loop information system
• PLM is unique from other enterprise software
solutions, byproviding the application depth and
breadth needed to digitally author, validate and
manage the detailed product and process data,
PLM supports continuous innovation

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 Main Components of PLM
The Main Components:
Data management: It enables appropriate stage for
management. It provides information about product features, bills
of material, data distribution, project structure.
Program and project management: It’s about the process of
developing a product. It gives information on planning, management
and checking.
Cooperation: It supports project management and it relies on
WEB standards which are based on XML(Extensible Markup
Language)
Quality management: It provides an integrated
quality
management for each sector.
Management of corporate assets: It directs equipment
and physical assets
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